As discussed on my last blog post, narrow networks are gaining a lot of attention in healthcare today, both from policy makers who both love and loathe them (depending largely on which side of the political aisle they come from) and healthcare providers, who worry about the impact of exclusion — either because they can't meet the cost and quality thresholds, or because they choose to decline the in-network rates offered by the insurer.
When price isn't a factor, consumer prefer greater access. But, price is very much a factor, and in fact, the most important factor for those selecting individual insurance plans.
Narrow networks are lauded by their supporters as a way to reduce the costs of healthcare for those who will accept a limited network of providers. In theory, narrow networks' ability to reduce costs is a no brainer; only efficient providers are included on the network. (Insurers would also ideally include quality thresholds for network inclusion, though this is not universally required by state insurance regulators.)
Narrow networks don't mean lower costs, analysis finds
However, a new analysis by U.S. News & World Report suggests consumers who select individual health plans with narrower networks offered on one state-based exchange won't necessarily pay less than those who selected plans with broader networks.
U.S. News compared network breadth and monthly premium cost of qualified health plans in the silver tier of the CoveredCalifornia exchange and found "little correlation between the monthly price a consumer pays for a plan and the number of hospitals in the plan's network."
As the title of the U.S. News' article on the finding reveals, "higher cost Obamacare plans don't guarantee more choice."
Thus, narrower networks — at least those for California exchange plans — don't mean lower costs.
This is certainly a concerning finding for those who argue restricting choice can reduce costs. However, all hope is not lost. What's not entirely clear is how deliberately (or not) insurers selected providers for the plans currently offered on the exchange. One hopes that if a network was designed specifically so an insurer could offer the lowest-cost plan on the exchange, a narrower network would mean lower costs.
What about narrow networks and quality?
So narrow networks may or may not lead to lower costs, depending on how deliberately they are designed. What about quality?
Well, U.S. News looked into that too and found that while narrow networks were less likely to "include hospitals that excel on the kind of quality measures, such as patient safety scores, that underpin the U.S. News hospital rankings," there were exceptions. That is, some narrow networks within the California exchange plans did include these higher quality hospitals. According to Ben Harder, managing editor and director of health care analysis at U.S. News, "narrowness should not necessarily be equated with poor quality."
What have we learned?
Well, for one, narrow networks don't equate to lower costs, but in theory they could be designed for that purpose. Second, narrow networks don't necessarily restrict access to higher quality providers, but they could if quality is not factored into network development.
This latter point is at the crux of the argument Ezekiel Emanuel, MD, made in his New York Times' op-ed, which I covered in detail in my last blog post, about narrow networks and healthcare quality. He argued policy makers should require the networks insurers develop include adequate access. He also called for improved transparency around insurers' guidelines for network inclusion, so that consumers know whether providers were selected on efficiency alone, or if quality was considered.
Only with greater transparency will consumers be able to make the best decisions for them regarding health coverage. Some will pay more for greater access; others will accept limited access if the quality is high and costs lower. Yet others will accept adequate quality (as opposed to the highest quality) if costs are significantly reduced. Only with clear, reliable information can consumers make these informed choices, like they do for nearly every other type of purchase they make.
But who is going to help consumers make sense of this information? The government? Insurers? Third-party watchdogs?
As Harder explained in a letter to the editor, published in response to Dr. Emanuel's column, his team is working to expand U.S. News' ratings of health plans to account for quality:
"We know that much of the insurance network data in the public domain is limited and unreliable. But in time, we expect to obtain better network data — and to add it to our existing ratings of health plans. That will help millions of consumers make more informed decisions about which insurance plan to purchase. We’re not the only ones who can or should be doing this, but so far, we’re the only ones we know of who are."
Currently, U.S. News' rates individual health plans based on star-system that takes into account the scope of benefits and cost-sharing dimensions of the plans. Quality isn't yet factored in, "because we don't have enough reliable data to draw conclusions nationwide," Harder told me.
When more reliable quality and network data is available — which will likely only occur when regulators and/or consumer demand it — organizations like U.S. News will need to be ready to help consumers make sense of it.
As Harder explains, "The emerging picture of network quality is nuanced and not very predictable. Consumers will need good advice to make the right decisions, and the informed (or uninformed) decisions they ultimately make will have major business implications for both payers and providers."