Narrow network has been a big buzzword in healthcare over the last few months. Insurers' efforts to offer lower-cost, but more restrictive plans, are welcomed by cost-conscious consumers, but leave higher-cost hospitals worried.
While the volume of narrow networks plans is currently dwarfed by less restrictive employer-sponsored plans, growth in exchange-purchased plans and employer efforts to reduce healthcare costs mean we'll see more and more patients enrolled in these plans in the years to come. Will higher-price hospitals be shut out? And if they are, what does that mean for the hospital's survival?
A RAND study released earlier this week found that higher-priced hospitals don't provide higher-quality care. In fact, some lower-cost hospitals actually performed better on readmission and patient safety measures, which suggests narrow network plans offer access to a high-level quality of care, despite their lower price.
The RAND study does note, however, that insurers can't simply cut any high-priced insurer from their network and still offer a product with comprehensive access to care. For example, in markets where only one level one trauma center exists, that center will be a must-have provider, even if it's higher priced.
For patients in markets with multiple, competing health systems that offer the most comprehensive trauma care and subspecialty breadth, a narrow network plan has the potential to offer significantly lower premiums while maintaining access to high-quality, specialized care.
For those in markets with a single dominant player, the promise of narrow networks is, well, less promising.
A situation where narrow networks led to restricted access to specialized care is playing out in a rather dramatic fashion in Seattle, where Seattle Children's Hospital is out-of-network for many of the new plans offered on Washington State's health benefit exchange.
In October of last year, Seattle Children's went on the offensive, filing suit against the state's Office of Insurance Commissioner, arguing its approval of the narrow network plans fails to meet mandated requirements for adequate access to care.
According to a hospital statement announcing the lawsuit:
"Children's is the only pediatric hospital in King County and the preeminent provider of many pediatric specialty services in the Northwest. Some of these specialized services not available elsewhere in our area or region include acute cancer care, level IV neonatal intensive care and heart, liver and intestinal transplantation."
Without inclusion of Children's, current and future patients and families who obtain insurance from several plans offered will not be able to access care at Children's as an in-network provider. This lack of suitable access to pediatric services means that families enrolled in these plans may not receive the most timely, appropriate care, and face larger out-of-pocket amounts."
Yesterday, Seattle Children's PR team went after the Insurance Commissioner full force, distributing a press release detailing the number of children who received care without coverage at Children's in January, due to their enrollment in the new exchange plans.
Seattle Children's treated 125 patients enrolled in the exchange plans in the first month since they became effective. I confirmed today with the hospital that theses plans have no out-of-network benefits, meaning the patient is responsible for the entire cost of care — a situation that isn't so different from being uninsured.
The hospital has filed exception request on behalf of all 125 patients; 20 requests received responses, and 12 were approved. Eight, though, were denied.
As a consumer, I'm in favor of having a variety of low-cost plan options. But for families in Washington that didn't quality for Medicaid nor could obtain insurance through an employer, their coverage options don't include Seattle Children's, even if they were willing to pay more for it. Therefore, if their child is stricken by a rare or complex illness that is best treated by the specialized pediatric providers at the hospital, their only choice is to pay full cost.
To me, that suggests the exchanges' promise of improved consumerism has fallen significantly short — at least for parents and children in Seattle.