Insurance plans that limit which doctors have in-network status have become a mainstay of healthcare, helping keep costs down but stoking concerns and complaints from hospital administrators and regulators about patients' access to care.
Victor Filadora, MD, MBA
Whether you call them narrow, tiered, or high-performance networks, insurance plans that limit which doctors have in-network status have become a mainstay of healthcare, helping keep costs down but stoking concerns and complaints from hospital administrators and regulators about patients’ access to care.
On the federal and state healthcare exchanges, 45% of insurance networks nationwide fall into the “narrow” category, according to a recent McKinsey study.1 That includes the 17% that are considered ultra-narrow, meaning they cover 30% or less of area hospitals.
Insurers have been creating narrow-network HMOs and similar offerings for at least 2 decades, but like high deductibles and other cost-containment strategies, they have become more prominent in the last few years. Their relatively low premiums have proved attractive to consumers who are now required by law to buy health insurance and increasingly to employers trying to keep a lid on benefits spending.
Between 2007, when 15% of companies that offered workers health insurance included a so-called “high performance” provider network, and 2013, the figure climbed to 23%, according to the Kaiser Family Foundation.2
The plans really are cheaper, at least as far as premiums are concerned: on the exchanges, median premiums this year are 15% to 23% higher for traditional broad network plans than for the equivalent narrow network plans, the McKinsey study found. That’s a bigger difference than in 2014, illustrating their growing appeal. Narrow networks have become a common feature of the less expensive bronze and silver exchange plans.
The study also concluded that there is no “meaningful performance difference” between the broad and narrow networks based on Centers for Medicare & Medicaid Services (CMS) hospital metrics. Yet critics argue that by excluding major hospitals and cancer centers from popular, less expensive plans, insurers are at the very least inconveniencing patients who must travel farther for treatment, and in some cases forcing them to forsake their best options at the risk of being saddled with huge debts for out-of-network care.
“We find often that patients say they selected their insurance based just on the lowest cost at the time. All of a sudden you're diagnosed with cancer and then when you actually research the policy, there's very little coverage, horrible benefits, high co-pays and now, the new scenario is a very limited network,” said Terrie Kothe, vice president of managed care at Roswell Park Cancer Institute in Buffalo, New York.
The cost-cutting focus of narrow networks is particularly blind to the need for high-cost care for rare and complicated conditions treated at cancer centers and other specialty providers, critics say.
Roswell Park initially found itself excluded from 2 of the 7 exchange plans in its region and 11 of 16 statewide, the Associated Press reported last year.3 Since then the institute has seen some cancer patients opt to get treated elsewhere, only to receive inadequate treatment and subsequently return to Roswell Park sicker and in need of more intensive care, hospital executives said.
“After they make a decision not to be seen here because of co-pays or out-of-pocket payments, they go into the community, they get the care, and then in some instances they end up back here and we are working to manage their complications,” said chief of clinical services Victor Filadora, MD, MBA. “As you can imagine, the cost of care due to complications is high.”
“For a patient who tries to come to Roswell and is unable to, that can be devastating to them personally as well as financially and medically; that's our major concern,” Kothe said. “We're an entity that was set up to treat cancer and be available to everyone in the community, across the state or across the country. By virtue of these new narrow networks, there seems to be a new restriction on that. It's not fair to those people.”
Roswell Park is among a number of leading cancer centers that found themselves out of network for many local patients when the first exchange plans were released late in 2013, apparently because insurers considered them too expensive. MD Anderson Cancer Center said it was in less than half of the plans in the Houston area, and Memorial Sloan Kettering was included by just 2 of 9 insurers in New York City, according to the Associated Press.
Of 19 nationally recognized comprehensive cancer centers surveyed, only 4 said they were in all the insurance networks on their state exchange.
The situation may have improved slightly since then. In a more recent survey of 20 National Cancer Institute—designated centers in 19 states, all but 1 said they were in as many or more exchange plans as last year.4 Still, the survey by Avalere Health and the National Comprehensive Cancer Network (NCCN) found that a quarter of the centers said they were excluded from most networks in their state exchanges, and just 13% were covered by all the plans.
Robert Carlson, MD
In states with tiered networks, a variation of a narrow network in which a patient’s out-of-pocket costs vary according the provider’s tier, most of the centers were stuck in tiers 2 or 3, resulting in greater expense for patients. Thirty percent of centers actually rejected offers to be included in certain plans because the reimbursement rates were too low, said NCCN CEO Robert Carlson, MD.
“Some of the centers stated they believed that they actually had been offered contracts with rates that were so low that the carrier knew that they would not agree,” he said. “It was really a lowball offer so they would not have to cover the NCI-designated cancer center.”
Exclusions from narrow networks have led to lawsuits and calls for regulatory reforms. In October 2013, Seattle Children’s Hospital sued Washington’s state insurance commissioner when it learned it was not in-network for 5 of the 7 plans in its county. A month after the exchanges opened, the hospital said it had already treated 125 children whose families had lost contracted access to Seattle Children’s.5
Sandy Melzer, MD
“This is a dire situation for our patients,” senior vice president Sandy Melzer, MD, said at the time. “We can’t continue providing services to these patients without reimbursement from their insurance companies. Eventually, these patients will have to seek care elsewhere, and for the treatment of many conditions, there is nowhere else to go in the region.”
Two of the companies soon agreed to include the hospital in its plans, while 2 others gave in shortly before the trial was to begin, Melzer said in a recent interview. The state insurance commissioner also approved new rules on network adequacy designed to ensure that enough providers are in-network near the areas where plan members live.
“When you have a situation where very highly specialized services are offered, you have to be very careful that the unintended consequence of narrow networks doesn't happen, which is that basically people can't get the care that they need, care that's only available at a specialized facility, be it cancer or pediatrics,” Melzer said. “That's what people really have to guard against.”
As insurers started excluding providers, some were accused of not telling the truth about their networks. In California, 2 insurers were accused of a bait-and-switch in which they listed out-of-network doctors as being in-network, leaving consumers with newly purchased policies in the lurch. The group Consumer Watchdog filed class-action lawsuits against 3 insurers, and state investigators alleged that Anthem Blue Cross of California and Blue Shield of California had violated state law by listing doctors in online directories who were not actually in their networks.6,7
The Affordable Care Act attempts to head off the problem of insurance networks with insufficient numbers or types of providers through its list of essential health benefits (EHBs). Among other requirements, the Act states that insurers must cover mental health and substance abuse services and include providers who predominantly serve low-income patients.
A number of states also have their own rules on the proximity of members to doctors, appointment wait times, patient-doctor ratios, and office hours. After the complaints in Washington state, standards for all those factors were made more detailed; for example, 80% of plan enrollees must have providers within a set distance, which varies according to the type of provider and whether the area is rural or urban.8 The state also began requiring monthly updating of provider directories.
The implicit and sometimes explicit criticism of cancer centers’ high costs that has accompanied the battle over narrow networks has left them defending the expensive comprehensive services they provide, including treatment of rare cancers, clinical trials, psychosocial support, and charity care. Carlson, for example, cited a 2014 study that found higher survival rates among patients treated at NCI-designated cancer centers.9
“If you then exclude people for whatever reason from accessing a major cancer center, it may be you're disadvantaging them in terms of their likelihood of surviving their disease,” he said.
Implicit in such arguments is the suggestion that the group oncology practices that narrow networks more frequently do include do not provide treatment that is sufficiently specialized or high-quality. Community oncologists naturally reject that claim, saying they are highly effective at relatively low cost.
“You're going to see more narrow networks, you're going to see more tiering come down the road, and in an odd way, that actually may end up benefitting community cancer clinics,” said Ted Okon, executive director of the Community Oncology Alliance.
Contrary to the view of the cancer center representatives, Okon said narrow networks could be “good and bad” in that they restrict patient options but can steer patients toward more efficient providers. But he admitted that those networks, along with high deductibles and other cost-saving features of cheaper plans, could become a bigger issue as demand for oncology care grows in the aging population.
“Under-insurance is a huge problem that is rearing its ugly head already, and I think will even more so as we go on further with the growth of the exchange plans, especially if the growth keeps on occurring in those low-premium plans like the bronze and silver,” he said.