The Sliding Scale of Health Coverage: Finding the Intersection of Cost, Access and Quality

by BakerHostetler

While not a new concept, the use of narrow networks has become a lightning rod for the controversy surrounding qualified health plans (QHPs) offered on the insurance exchanges created under the Affordable Care Act (ACA) and the consumer satisfaction with access to physicians and care they expect they are purchasing. Narrowly tailored network designs, including those that generally look to exclude providers, lower payment rates or provide for a tiered in-network approach rewarding consumers with lower cost sharing when they obtain care from an inner tier of preferred in-network providers, are emerging as insurers’ chosen methods of controlling cost for plans offered on the Exchanges. Many providers who have been dubbed "high cost" are fighting exclusion from these networks, including providers such as cancer centers, children's hospitals and certain specialty providers. A recent report, issued in June 2014 by McKinsey Center for U.S. Health System Reform, found that approximately 70 percent of the lowest price exchange plans offered this year were built on narrow, ultra-narrow or tiered networks (McKinsey Report).

An industry-funded study conducted by Milliman shows the narrow network strategy employed by QHPs has lowered consumer’s premiums by 5 to 20 percent. Similarly, the McKinsey Report found that, on average, the narrow network plans cost 13 to 17 percent less than plans with broader networks. One national poll executed by Kaiser Health suggests a majority of individuals likely to purchase coverage through an Exchange reported that they prefer narrow network plans with lower premiums over more expensive plans with broader networks. Indeed, as 90 percent of consumers in the ACA marketplaces have access to broad provider networks, it appears that price is the driver of consumer selection of such narrow plans. The question that has arisen is whether consumers purchasing these narrow network plans fully understand the limits of their network?

While some consumers may understand the trade-off they are making in provider choice by selecting a plan with lower premiums, others complain that the lack of transparency regarding network design and provider participation limits their ability to make informed choices. In California, consumers have filed class-action lawsuits accusing insurers of misrepresenting the size of physician networks and the insurance benefits provided, namely the lack of out-of-network coverage. At a minimum, these lawsuits, and the unwanted spotlight such coverage brings, have spurred such insurers to broaden their networks, an action state regulators in California have encouraged. The American Medical Association also has expressed concerns with insurers’ use of narrow networks, including the reliance on inaccurate provider directories and patient difficulties accessing appropriate care.

Although there is no universal definition of what constitutes a “narrow network,” there are protections that were built into the ACA and federal regulations, similar to those the National Association of Insurance Commissioners (NAIC) first developed in the 1996 Managed Care Plan Network Adequacy Model Act, that require all networks to have enough doctors of various types to ensure that services can be provided “without unreasonable delay.” 45 CFR § 156.230. Additionally, QHPs must include in their networks essential community providers (ECPs) that serve predominantly low-income, medically underserved individuals. 45 CFR § 156.235. However, some believe that the current standards are not sufficient to ensure access to care for these specialty providers and do not go far enough.

Although the Centers for Medicare and Medicaid Services (CMS) previously deferred to the states and accrediting organizations to establish network adequacy and relied on the state’s analysis and recommendation, CMS's Final 2015 Letter to Issuers in the Federally-facilitated Marketplaces, issued March 2014, seeks to impose higher regulatory standards on insurers concerning network adequacy. CMS advises it will use a “reasonable access” review standard and require issuers to submit a provider list that includes “all in-network providers and facilities for all plans for which a QHP certification application is submitted.” NAIC, in response to this, authored a letter to President Obama on April 30, 2014, protesting such oversight and indicated that “states are best equipped to balance the access, cost, and geographic variables that exist in their distinct markets.” Additionally, NAIC advises it is reviewing its 1996 network adequacy model law to update it to reflect “the needs of consumers in today’s insurance markets.” States have, in fact, taken some initiative. The National Conference of State Legislatures advises that several recent state statutes set standards or definitions related to network adequacy for plans sold on the Exchanges. Although some states adopted more detailed network adequacy standards than the federal “minimum,” many states opted to encourage insurer participation with loose network adequacy standards.

In a blow to arguments that academic medical center participation is a necessity, the McKinsey Report found that, although broad networks have higher rates of academic medical center participation, there is no meaningful performance difference between plans with broad networks of providers and those with narrower networks. Recognizing the need for greater network transparency regarding quality data, the National Committee for Quality Assurance (NCQA) recently released Health Plan Accreditation 2015, including prioritizing quality measures that emphasize outcomes, value and the needs of vulnerable populations and annual rescoring on a common set of practitioner and hospital quality measures.

The ACA set about to create a new market for health insurance and, indeed, the federal and state Exchanges have become the market envisioned. Providers and consumers are evaluating this new market and their desire to compete and participate. While cost appears to be the primary driver currently, for both insurers and consumers, limits to care and treatment that narrow networks may pose have not been fully explained or played out, either in the marketplace or within the implementation of the ACA.

The question for us all is how quality and excellence can be similarly evaluated in these markets and at what point does access to rare and unique services, available in only a few centers of excellence, become inaccessible to those on the Exchange? The commoditization of healthcare providers continues to become more of a reality, unless and until specialized providers of care can ensure that the care they provide is recognized and reimbursed in a manner sufficient to sustain their current model.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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