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Narrow Networks Add Complexity to the Health Insurance Business

Posted by Laura McMullen on Thu, Apr 24, 2014

narrow networksThere’s been a lot of buzz in the media lately about narrow networks in health insurance plans on the federal and state health insurance exchanges. This has prompted a larger discussion about network adequacy and the trade-offs between cost control and choice. Carriers Defend Use of Narrow Networks as Fair, Market-Driven Options for Consumers, an article from Health Plan Week reprinted in AIS Health Reform Week on April 4, 2014, sums the situation up well, discussing network adequacy, consumerism, and transparency.

Here are some questions to think about when you are comparing provider networks, whether you are managing a network, selling insurance plans to employers, or purchasing a plan for your company or family.

1. Are the right types of providers in the network? When provider networks get narrower, the definition of network adequacy shifts from the size of the network to the types of providers that participate. Employers and other group benefit sponsors are asking questions like: Are there enough PCPs or optometrists? What about cardiologists or oral surgeons? How many radiologists or ER doctors are near my members? (Download our whitepaper All Provider Networks Are Not Created Equal for more.)

2. Is the carrier financially and administratively reliable? Narrow networks reduced one of the barriers to entering the health insurance market, namely the need to have a large provider network. Many new entrants to the market raise questions about financial solvency and claim payment speed. 

    • In the dental insurance industry, we’ve seen established brands like Prudential come back to the market with a leased network and outsourced back office only to exit after a few years. (See our blog post Prudential Exits Dental Benefits Market; Others to Follow? for more.) 
    • In the health insurance industry, more than 50% of hospitals and health systems responding to a June 2013 Advisory Board Co. survey said that they planned to launch a health insurance plan by 2018 or they already had one. (See our blog post More Health Systems Becoming Payers for more.)

3. Are the right providers in the network? From the consumer perspective, all networks are narrow – they only include the providers they use! Many people are accustomed to the large PPO networks that have been popular in employer-sponsored plans over the last several years, so they may be surprised by narrow networks that don’t include popular providers and academic medical centers. Communicating early and often, like B2C companies do, could make a big difference here. For more about how consumers look for health care information online, see our blog post Consumers Seek Real Data Online for Health Decisions.

Key questions for the Department of Health and Human Services in the coming weeks and months will be which types of providers are essential and how large is an adequate network. As they work on the answers for plans on the exchanges, carriers will be watching closely to see what the impacts are for plans off the exchanges.

How will you assess your network and your competitors’ networks?

Tags: compare networks, market comparison, network providers, health insurance, narrow networks, Affordable Care Act, healthcare reform, health reform, healthcare exchanges

 

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