 Research Insights Health Plan Features: Implications of Narrow Networks and the Trade-Off between Price and Choice Summary coverage. Additional research is needed to help policymakers better The use of narrow provider networks in health insurance plans is a understand how to define and develop enforceable standards to mea- cost containment strategy that has gained popularity of late. Net- sure the adequacy of narrow networks. Research can also help iden- work design features differ among plans, but insurers generally seek tify the quality considerations to be incorporated into the network to offer lower premiums by limiting the group of providers avail- design process, the development of network adequacy standards, and able to plan enrollees. As interest in the use of narrow networks has the type of guidance that can help consumers understand plan differ- increased, so have concerns about their effect on consumers’ choices, ences when making choices among products. costs, and access to care. With the growth of narrow network plans, it is important to understand the effectiveness of existing and emerg- Overview ing network design strategies and the potential for policies to ensure The use of narrow provider networks in health insurance plans is a consumer access to high-quality care. cost containment strategy that has gained popularity of late. Narrow network plans have proliferated on the new marketplaces established This brief summarizes key points from an expert panel Academy- by the Affordable Care Act (ACA). They have also become more Health convened in December 2014 to examine existing research on common in Medicare Advantage and commercial plans. Increas- network design and use, to discuss the impact of narrow networks ingly, consumers have the option to choose plans that offer lower and tiered networks on consumers, to review policies and practices premiums but limit provider choice. Insurers may offer narrow for ensuring that networks are adequate, and to identify areas for network plans to attract price-sensitive consumers who are willing additional research. Research on the impact of narrow networks is to trade network breadth for less costly premiums and other out-of- limited, but early studies suggest that several factors affect whether pocket payments. Yet, anecdotal evidence suggests that the resulting narrow network strategies will succeed. These factors include the way provider networks may be narrower than consumers foresaw and, as networks are constructed, the characteristics of the broader market such, may leave them vulnerable to the financial burden of out-of- in which narrow network plans operate, and whether consum- network care for services not adequately covered within network. ers have the knowledge and tools to make informed choices about Narrow network plans conceptually offer one choice for controlling Genesis of this brief: This brief is based on a meeting for federal policymakers which took place in Washington, D.C., on December 10, 2014. AcademyHealth convened the meeting as part of its Research Insights Project. Funding for this conference was made possible by Grant No. 2R13HS018888- 04A1 from U.S. Agency for Healthcare Research and Quality (AHRQ). The views expressed in written conference materials or publications and by speakers and moderators do not necessarily reflect the official policies of the Department of Health and Human Services; nor does mention of trade names, commercial practices, or organizations imply endorsement by the U.S. Government. The Research Insights Project convenes invitational meetings, holds webinars, and produces reports and issue briefs to foster discussion of existing, relevant research evidence among policy audiences who need it to implement health reform and develop new policy. Additional information and publications may be found on the project’s website, http://www.academyhealth.org/researchinsights. Health Plan Features: Implications of Narrow Networks and the Trade-Off between Price and Choice out-of-pocket spending, but consumers may lack sufficient informa- Tiered networks, a variation of narrow networks, offer consum- tion to make informed decisions that take into account the potential ers a broader array of choices and more flexibility. Consumers are overall cost consequences of their choices. subject to different levels of cost-sharing such that consumers who choose providers in “high-value” tiers pay less. Tiered networks The Affordable Care Act requires that qualified health plans sold in encourage enrollees to use lower-cost providers but, unlike narrow Exchanges offer provider networks that meet a general “reasonable- networks, provide some coverage for other providers. Expectations ness” standard. Pre-dating the ACA, at least 20 states had established for the tiered network approach are that consumers can influence the network requirements governing one or more types of private health market if they choose lower-cost providers and that providers will be plans. Furthermore, the National Association of Insurance Commis- motivated to change their behavior in order to maintain or improve sioners is now in the process of updating their network adequacy their tier ranking and market share. The tiered network strategy takes model. Any consideration of appropriate policy responses to the advantage of recent advances in the use of data to develop profiles of growing number of narrow network plans must reflect an under- provider groups or individual providers. Networks can target differ- standing of the effectiveness of existing and emerging network design ent types of providers such as hospitals, primary care physicians, or strategies and policies’ potential for ensuring consumer access to specialists. The tiered network strategy shifts costs to patients who quality care. go to the more expensive providers rather than spreading the cost of In December 2014, AcademyHealth convened a meeting that more expensive care across the whole population. brought leading academic researchers together with policy audi- In part, the lessons from the managed care experience of the 1990s ences to discuss the use of narrow networks and network design inspired the advent of tiered networks. With managed care, patients strategies more broadly. The meeting featured research drawn from indicated that having a choice of physicians was important to them. experiences with Medicare Advantage, Medicaid managed care, ACA Panel participants pointed out that, in the group market, employers marketplaces, and other commercial markets. Researchers presented want low prices but also want value for employees. In the nongroup findings on the impact and effectiveness of network design strategies market, consumers are more apt to shop simply on the basis of price. and on current efforts to measure and enforce standards related to One panelist noted that tiered networks may be more attractive than network adequacy. Attendees were asked to identify high-priority narrow networks to consumers who have enough disposable income areas of study related to narrow networks. to make real choices. Panelists also observed that some consumers may be attracted to tiered network plans because of the choice ele- This brief presents a summary of the December meeting. Given that ment, but others may be put off by the more complicated calculations the session was “off-the-record,” this brief conveys the general con- required to choose and use tiered plans. tent of the meeting without attributing specific comments to particu- lar participants. The discussion was informed by existing research, Results from an early study of stakeholder perspectives in 17 though neither it nor this brief incorporates a systematic review of states with state-based health insurance exchanges indicate that the literature on narrow networks. A bibliography of important cur- 10 of those states saw narrower provider networks for the ACA rent literature on the topic appears at the end of the brief. Qualified Health Plan (QHP) offerings in the first year; among the other 7 states, insurers in 2 states reported plans to narrow Understanding narrow and tiered network strategies networks in 2015. Insurers did not, however, have a universal Insurance plans with narrow networks seek to offer lower premi- strategy for network design. Some shifted from preferred provider ums by limiting the group of providers available to plan enrollees. organization– (PPO) style networks to health maintenance Consumers choose among a set of providers under contract with the organizations (HMO) or closed networks, some simply excluded plan. An assumption underpinning the narrow network strategy is high-priced providers, and others offered tiered networks. In all that narrow and limited networks can reduce costs by encouraging cases, though, insurers’ primary goal in designing networks was patients to seek care from low-cost providers and perhaps markets to offer competitive pricing. Generally, quality was not a criterion can be made more efficient given that currently, prices among the for exclusion or inclusion in a network. Some carriers maintained same types of providers vary. An examination of hospital prices, for or adopted broad networks. Fewer offered out-of-state network example, shows considerable variation.1 There is an expectation that benefits, but those who did saw it as a marketing advantage. providers may give plans a discount in exchange for the promise of greater patient volume and that negotiation between plans and pro- viders who wish to be in the network will help contain costs. 2 Health Plan Features: Implications of Narrow Networks and the Trade-Off between Price and Choice One discussant observed that developing narrow networks may Network design be simpler than developing tiered networks and suggested that the Several participants made the case for greater transparency regard- short time frame for product development may be one reason that ing the criteria plans use to develop networks. It is important to few tiered networks were offered. In addition, one expert speculated understand, for example, the interplay between cost and quality that the narrower, lower-cost products may have had greater appeal considerations. Participants explained that measuring the rela- for the population purchasing insurance through the exchanges. In tive cost, efficiency, and quality of health care providers is difficult. 2014, less than one-fifth of small and large employers used tiered Given the challenges associated with the construction of tiered networks. networks, participants voiced particular concern about the difficulty of interpreting the tiers. Another consideration is that the data on Broader market considerations which tiered networks are constructed may be from prior years and Participants discussed network strategies in the context of the therefore may not reflect current practices or circumstances. broader market. While some see the narrow network strategy as a means of increasing plans’ negotiating power and encouraging pro- Other complications arise when several health plans use tiered viders to lower prices, others characterize the arrangement as one networks in the same geographic market. Information from studies that allows insurers to benefit from existing competition. Several of benefit design changes sponsored by the Massachusetts Group participants noted that the supply of providers affects price. For ex- Insurance Commission (GIC), an agency that administers health ample, insurers may need hospitals that have monopolies in certain benefits for state and municipal employees, illustrates some of the geographic areas, but those hospitals may not be interested in com- complications. The group’s “tiering initiative” created a master promising on price. In areas where providers are in short supply, database of physician performance and gave it to participating plans such as many rural communities, providers may not have incentives with broad instructions to create tiered networks. Physicians were to negotiate with plans. Another point raised by researchers is that evaluated, first, on quality and, second, on cost efficiency. Physicians provider organizations with considerable market power that offer with an insufficient number of observations were placed in the mid- services not available from other providers in the market may be dle or the average-performing tier. All of the GIC health plans of- able to block the use of narrow networks by refusing to participate fered three-tier physician networks. However, there were differences or may be able to otherwise influence tier placements. in physicians’ tier rankings across plans that may have resulted from plans’ use of different thresholds to divide physicians between top Participants also noted that consumers’ strong loyalty to their physi- and lower tiers. Plans with more selective or smaller networks may cians, particularly their primary care physicians, might explain why have ranked the same physician lower (in percentile terms) than providers with thriving practices might not be motivated to partici- a broad network simply because they excluded lower-performing pate or negotiate. Several panelists pointed out that providers direct physicians from the network. Plans also may have considered ad- much of health care spending through referrals; recommendations ditional data on performance, leading to differences in tier rankings from primary care doctors often affect patients’ decisions about across plans. That doctors could have different rankings at the same which specialists to see. In addition, providers may face incentives time could be confusing for patients. apart from those presented by narrow network plans. If they are members of Accountable Care Organizations, for example, they Panelists stressed the importance of publicizing the measures are already affiliated with certain other providers. Further, many and formulas used by plans, noting that a better understanding provider systems are aligning themselves with specific carriers, thus of the metrics can help policymakers as they seek to determine reducing their incentive to negotiate favorable rates with competing whether plan design features are effective. They also observed carriers. that, to be able to improve their rankings, providers need specific information about how tier rankings are calculated. Finally, Practical considerations attendees emphasized that greater transparency is essential if the Discussants observed that the success of network strategies depends goal is to steer consumers to providers that offer the best value on whether networks are designed in an optimal manner and on rather than the lowest price. whether consumers have the information and tools they need to make informed choices. 3 Health Plan Features: Implications of Narrow Networks and the Trade-Off between Price and Choice Consumer awareness coverage effectively. A particularly serious concern raised by partic- Discussants agreed that consumers care deeply about health insur- ipants is that consumers are not aware that they may be financially ance costs and that they are receptive to benefit designs that may responsible when out-of-network providers participate in episodes reduce costs. Nonetheless, they questioned whether consumers of care. For example, a consumer who undergoes a procedure in have the knowledge and tools they need to make informed deci- an in-network hospital may be surprised to receive a bill from a sions about choosing narrow networks or choosing among tiers. hospital-based physician such as an anesthesiologist or pathologist Some participants noted that, while a certain amount of choice who is not in the consumer’s plan network. Thus, when selecting is desirable, too much choice can discourage consumer decision- plans, consumers need good information about the level of finan- making. cial protection provided by plans for out-of-network services. Current research indicates that consumers lack a basic under- Researchers noted that, in thinking about how to provide infor- standing of health insurance in general. For example, half or fewer mation to help consumers make choices, it is important to re- respondents to a consumer survey could correctly describe network member that consumers will only act on information that comes characteristics of HMOs and PPOs. Furthermore, the survey from a trusted source and that consumers generally do not view showed that consumers are overconfident in their own knowledge health plans as trusted sources for identifying better providers. of health insurance literacy.2 In the GIC tiering initiative, research- In addition, many consumers are influenced more by their own ers found relatively low awareness and use of the network design experience, particularly if they are loyal to current physicians, among plan enrollees.3 than by other measures or incentives. Several people emphasized the need for consumer-tested, validated summary measures to As noted, experience to date suggests that most consumers shop provide consumers with information such as whether networks on the basis of price, particularly premiums and copayments, and are narrow or broad; whether networks are high-quality or just do not necessarily understand other differences among health low-cost, both, or neither; and what level of financial protection insurance plans. Several participants noted that giving consumers a is available if out-of-network providers deliver care. Discussants choice of plans is often portrayed as a positive feature but is desir- said that, ideally, consumers should be able to make high-level able only if consumers are able to make informed choices. plan comparisons and then have access to details related to par- ticipating providers and quality of care. Panelists spoke specifically about the need for information on provider networks that is accurate and easy to understand. Impact of narrow and tiered networks Findings from the study of stakeholder perspectives in 17 states Research on the impact of narrow networks is limited, but early indicate that plan-specific provider directories are often outdated studies have looked at how various network approaches affect con- and difficult to locate. In addition, if carriers sponsor more than sumer and provider behavior and at the effect of these designs on one plan, consumers may have difficulty in determining which access to care and the cost of care. directory pertains to which plan. The study also reported that a lack communication from insurers about plan network affiliation Consumer behavior was confusing for providers who therefore were not able to give Researchers have examined the extent to which tiered network helpful guidance to patients.4 incentives influence consumer behavior. The GIC’s tiering initia- tive study found that patients exhibited significant loyalty to the Tiered plans pose particular challenges. To make the best choices, specialty physicians whom they had seen previously, even those consumers must be aware of the provider group—hospitals, with poor tier rankings and regardless of type of specialist. In ad- primary care physicians, or specialists—for which the tiers are de- dition, the tiers influenced consumers’ choice of new physicians; veloped. They must also be aware that “high-value” providers may physicians with the worst tier rankings drew fewer new patients— vary by service. Therefore, consumers need to understand the equivalent to a loss in market share of 12 percent—than their ramifications of plan choice if primary care physicians, specialists, top- and average-tier colleagues. Discussants also noted that other and hospitals are in different tiers. In addition, the need for more plan design features can affect consumer behavior. For example, if transparency about tier placement is essential for consumers plans impose out-of-pocket spending caps to protect consumers, comparing plans, especially when the same providers have differ- anyone who expects to exceed the cap in a given year will be less ent tier rankings across plans. likely to be affected by differential cost-sharing. Several people stressed that consumers should be well informed The GIC sponsored another initiative, a one-year “premium holi- not only in order to choose plans but also so that they can use their day” program that offered significant financial incentives for state 4 Health Plan Features: Implications of Narrow Networks and the Trade-Off between Price and Choice employee enrollees who chose narrow network plans. Those who cians to specialists or patients’ reluctance to visit out-of-network enrolled in narrow network plans did not have to pay premiums for specialists could have been contributing factors. Noting that the three months, with the potential for total savings of approximately great majority of enrollees in the program were able to choose nar- $250 to $750. Results from a study of that program indicated that row network options that included their primary care physician, many consumers were willing to accept the trade-off of a nar- researchers observed that the findings might not be relevant for row network for reduced out-of-pocket premiums. The offer of a other markets. Experts also questioned whether savings of the same premium holiday resulted in an enrollment increase of 12 percent- magnitude would occur in future years. age points in narrow network plans, nearly doubling the number of employees in narrow network plans (Exhibit 1).5 Several researchers Network adequacy noted, however, that consumers whose primary care physician was The adequacy of plan networks is a key consideration when narrow available in a narrow network plan were more likely to switch to network strategies are employed. In discussing the concept of network a narrow network plan and that 86 percent of GIC enrollees who adequacy, participants stressed the importance of understanding the had the opportunity to switch plans could opt for a narrow network goals that drive the formation of networks. They noted that carriers option that included their primary care provider. As a result, large want to include lower-cost providers in their networks and that they numbers of consumers were able to remain with their primary care generally try to ensure that the number of providers is adequate. They physician and pay less. Discussants cautioned that the findings from were less certain about how often access considerations come into the study may not be relevant in other circumstances. play, and they observed that the issue of quality has not received much attention. Participants also asked whether patient characteristics are Access a consideration when networks are formed, noting that it is difficult Another important research question is whether access to care will to build an adequate network for certain types of patients, such as for diminish for consumers who enroll in health insurance plans with those with multiple chronic conditions or with disabilities or for those narrow networks. At this point, information about access is very for whom English is a second language. They suggested that, unless limited. The early study of stakeholder perspectives in 17 states with risk adjustment accounts for differences in patient mix and health state-run health insurance exchanges documented access problems status is employed and working well, the constructions of narrow related to mental health and substance use services. Researchers networks could be used to discriminate against patients with complex noted that, while access to such services is not a new problem, it is a conditions and greater needs. They also noted that questions about the continuing concern. The study took place too early in the imple- effectiveness of risk adjustment remain unanswered. mentation process to provide information about what a change in networks means for access to most other types of care.6 Current information about network adequacy measurement stan- dards and enforcement comes from experience with managed care Results from the GIC premium holiday study suggest that the pre- products associated with the Medicaid and Medicare programs, the mium holiday did not reduce access to high-quality care. Research- QHPs sold through health insurance exchanges associated with the ers saw no change in the quality ratings of the hospitals to which Affordable Care Act, and other commercial products. patients were admitted. Effects on the distance travelled to provid- ers were mixed. Patterns were similar for those with and without Exhibit 1. Enrollment in Narrow Network Plans Enrollment in Narrow Network Plans chronic illness.7 Experts cautioned that the results may not be gen- 35 erally applicable because the study was conducted in Massachusetts, a state with a high density of hospitals and other providers. 30 25 Cost containment Percent of Enrollees Research on the impact of narrow networks on cost containment 20 has also been limited. Researchers studying the GIC premium holi- 15 day program reported a 36 percent reduction in health spending for enrollees who were induced by the premium holiday to switch to 10 a narrow network plan. Lower spending was related to reductions 5 in the cost and quantity of care. Greater use of primary care and reduced use of specialty care occurred. Savings were concentrated 0 2010 2011 2012 among consumers who could keep their primary care provider.8 Municipalities State The reasons for the changes in care patterns were not clear, though Source: Gruber, Jonathan and Robin McKnight, “Controlling Health Care Costs Through Limited Network Insurance Plans: discussants suggested that fewer referrals from primary care physi- Evidence from Massachusetts State Employees.” NBER working paper #20462, September 2014 5 Health Plan Features: Implications of Narrow Networks and the Trade-Off between Price and Choice Measurement standards sential Community Providers, a component of the ACA’s reasonable A review of network specifications across a range of sponsors and network standard, are included in QHP networks as an indicator regulators that purchase or oversee network-based coverage dem- of adequacy and accessibility. Essential Community Providers en- onstrates that current requirements or guidance regarding network compass certain types of health care entities such as health centers, adequacy is apt to rely on general statements such as a “network women’s health clinics funded under Title X of the Public Health has to be reasonable” or plans must “ensure that people have access Service Act, and other providers that predominantly serve low- without unreasonable delay.” Despite the development of specific income and medically underserved communities and populations. requirements and measures in recent years, states, programs, or various types of plans have failed to apply them consistently. Panelists agreed that measurement standards relating to the quality of network providers are desirable, but they acknowledged that Specific measurement standards for network sufficiency are often more work is needed to develop and test quality standards and to quantitative and based, for example, on numbers of providers or encourage plans to make consistent use of such measures. The Na- ratios of providers to enrollees. An important question raised by one tional Quality Forum has endorsed more than 700 provider perfor- attendee is whether standards take expected enrollment into account mance measures, but there has been little research to show which when network adequacy is initially assessed. Early in the implemen- measures are effective. A survey of large commercial plans shows tation of the ACA, for example, some carriers designed QHPs with substantial variation in which measures are used and indicates that narrow networks to keep premiums low and attract market share, but about half of the measures in use are process measures.9 they then had to accommodate greater-than-expected enrollment. A forthcoming brief will report on a review of network adequacy Geographic considerations, such as the time or distance patients standards applicable to marketplace plans in each of the 50 states and must travel, are fairly common, sometimes with consideration the District of Columbia at the outset of marketplace coverage in 2014. given to available modes of transport and whether the service set- The brief will focus on quantitative standards adopted by states to test ting is urban or rural. Generally, greater travel distances and longer the sufficiency of provider networks and on requirements designed to waits are seen as more acceptable for specialists than for primary ensure consumers’ access to updated provider directories. care providers. Several people also noted a need for standards for emergency care. In addition, specific criteria may be needed to Enforcement activity help ensure that services for certain populations are available, for Discussants observed that simply establishing measurement standards example, obstetrics and gynecology and pediatrics for Medicaid will not ensure that enrollees have access to adequate networks of enrollees. The Medicare program relies on well-developed time and providers. They stressed the importance of consumer confidence in distance standards, though discussants noted that the basis for the both the standards and the methods that will be used to judge whether standards is not clear. Similarly, state Medicaid programs and state networks conform to the standards. In addition, panelists said that all regulators have developed measures for time and distance to reach parties should have a clear understanding about whether the stan- providers, but there is little consistent basis for the measures, which dards will be used as signals or guidance of best practices for plans to vary from state to state. Some states use geo-access software that follow or whether these standards will be enforced. For example, will can highlight gaps in service areas, but the accuracy or effectiveness sanctions be imposed if plans fail to meet adequacy standards? of this method is not proven. In discussing the need to develop and enforce network adequacy Many participants viewed provider network standards as part of measurement standards, several people noted that some degree a broader issue of accessibility. They cited examples of providers of deference to plan sponsors might be necessary in order for who participate in networks but are not taking new patients or who network strategies to achieve certain goals such as cost contain- have long wait times for appointments. Participants also said that ment. They spoke about the delicate balance between ensuring measuring accessibility factors could provide more accurate assess- that networks are adequate and providing plans with the flexibility ments of networks. Provider characteristics—for example, whether to negotiate with providers. providers have the capacity to accommodate patients with particu- lar language or cultural needs or patients with disabilities—can also They also recognized that, in some cases, the level of available in- be indicators of accessibility for some populations. The sense in the vestment or resources might not be adequate to satisfy network re- Medicaid program, for example, is that, in the absence of commu- quirements. For example, state Medicaid programs have developed nity health centers, which are part of a subsidized system, managed some of the most stringent criteria regarding network adequacy, but care plan networks would lack sufficient primary care providers to having the regulations on the books has not guaranteed that enroll- meet adequacy tests. Participants also cited the extent to which Es- ees have access to adequate networks. Many physicians are reluctant 6 Health Plan Features: Implications of Narrow Networks and the Trade-Off between Price and Choice to participate in Medicaid because of low reimbursement rates. In Given the relative weakness of current requirements and enforce- many parts of the country, specialty care for Medicaid beneficiaries ment activities regarding network adequacy, several participants is severely limited despite the criteria for network adequacy. concluded that there is a need for insurers to institute explicit poli- cies regarding exceptions that allow enrollees whose needs cannot Panelists said that limited funding and insufficient staff hamper the be met within networks to see out-of-network providers. They also ability of State Departments of Insurance (DOI) to engage in more noted that states can limit balance billing or, in some circumstances, aggressive monitoring. For the most part, DOIs assess network require insurers to pay out-of-network providers. In addition, they adequacy on the basis of consumer complaints. Discussants pointed spoke about the need for measurement standards to gauge how rap- out that the majority of consumers do not even know of the DOIs’ idly and appropriately carriers respond to ensure out-of-network existence or how the agencies operate. access when necessary. The consensus among participants pointed not to fewer measures Finally, panelists noted that, while consumer feedback should not or less enforcement but rather to greater attention to developing be the primary method used to monitor network adequacy, it can and supporting reasonable and effective means of ensuring network be critical to understanding whether networks are effective. For adequacy. Panelists suggested that more proactive monitoring of example, DOIs can reach out to consumers and can expand op- network adequacy is needed. They observed that current measures portunities for consumers to communicate via online mailboxes. of network adequacy are weak and depend heavily on health plans’ Participants endorsed the idea of conducting consumer surveys self-reported data. and publishing survey results. They noted that making the survey results available could permit comparisons among plans, thereby Several discussants referred to the increased amount of secret shop- encouraging plans to improve networks and, when responses are ping that currently occurs among Medicaid programs, sometimes favorable, promoting plans or programs. in combination with geocoding, and asked whether DOIs could use the technique to a greater extent to call network providers to de- What are the highest-priority questions for re- termine whether they are available and accessible to plan enrollees. searchers to study? Discussants also raised the question of the timing of monitoring. In the course of AcademyHealth’s meeting, panel participants They discussed the Medicaid program’s disintegrating networks as discussed the design, use, and impact of narrow network strategies, a current issue of concern in the Medicaid program, along with the and they raised a number of questions to consider in planning for one-time assessment of networks that often occurs in the commer- future research. For example: cial market. Panel participants recommended network assessments not only at the time plans seek certification but also as part of an • How do network and broader plan design elements affect outcomes? ongoing process to determine whether networks remain adequate. Participants suggested the following elements for further study: the type or types of providers included in networks, the criteria Panelists also suggested that more requirements for and monitoring for network inclusion, the amount of copayments charged for of directories of network providers would be helpful. Discussants nonpreferred tier providers, the methods used to adjust for risk, said that provider directories are often out-of-date or inaccurate and the use of caps on consumer spending. and can be difficult to locate because historically insurers have not invested in updating directories. They agreed that accuracy • What is the impact of narrow networks on access to care? is the most important feature for directories but also suggested Researchers were interested in understanding whether the that the utility of the directories could be improved by including narrow networks formed in different markets are sufficiently information on provider features such as language proficiency and robust. Are there sufficient numbers and types of providers? Do accessibility for patients with disabilities. Participants stated that networks include high-quality providers? Where are providers stronger requirements and oversight are essential to help ensure located in terms of geography and distance patients must travel? that consumers have access to accurate directories. One participant Also, when narrow networks do not include a needed provider, suggested possible value in relying on independent third parties to how quickly and easily can the need be met? validate the directories. Another mentioned the potential for re- quiring carriers to update directories within a certain period when network changes occur. 7 Health Plan Features: Implications of Narrow Networks and the Trade-Off between Price and Choice • What measurement standards are most appropriate for results. Given that the narrow network strategy relies on consumer narrow networks? behavior, a recurring theme was the need to educate and assist con- Attendees were concerned not only with the development of sumers in making informed choices. Panel participants emphasized standards but also with ensuring that standards are enforceable. the importance of considering quality as well as cost in the design, implementation, and evaluation of narrow network plans. • What are the best ways to increase consumer awareness and pro- mote consumer choice? About the Author Participants called for studies that examine the current consumer Laura Summer, M.P.H., is a senior research scholar at Georgetown experience. What do consumers understand? What are they con- University’s Health Policy Institute in Washington, D.C. fused about? Related research questions pertain to how particular concepts or information about networks may be conveyed. What Selected Bibliography tools are best for conveying the information? How and why will Narrow Networks consumers act on the information? Do they understand not only Bauman N, Coe E, Ogden J, and Parikh A. Hospital networks: Up- how to choose their coverage but also how to use it? Given that dated national view of configurations on the exchanges. McKinsey & consumers often rely on providers for information and guidance, Company. 2014 June;1-20. http://healthcare.mckinsey.com/hospital- research on the best way to inform and involve providers is needed. networks-updated-national-view-configurations-exchanges • What is the best way to incorporate the consideration of quality CMS. 2015 letter to issuers in the federally-facilitated marketplace. into network design strategies? 2014 Feb 4. (http://www.cms.gov/CCIIO/Resources/Regulations- This question was central to discussions of network design, mea- and-Guidance/Downloads/draft-issuer-letter-2-4-2014.pdf surement standards, and the development of materials to help consumers differentiate among plans. Corlette S, Volk J, Berenson B, and Feder J. Narrow provider net- works in new health plans: Balancing affordability with access to • Does the narrow network approach help contain costs? quality care. Georgetown University Health Policy Institute & Urban In addition to this basic question, participants want to know: If Institute. 2014 May. http://www.rwjf.org/content/dam/farm/re- narrow networks are associated with cost containment, what are ports/issue_briefs/2014/rwjf413643 the reasons? Does provider behavior change? Do providers lower prices? Do consumers shift to lower-cost providers? Are net- Florence CS, Atherly A, and Thorpe KE. Will choice‐based reform works designed to attract lower-cost consumers? As cost contain- work for Medicare? Evidence from the federal employees health ben- ment occurs, does quality improve, decline, or remain constant? efits program. HSR 2006;41(5):1741-1761. http://onlinelibrary.wiley. com/doi/10.1111/j.1475-6773.2006.00580.x/full • What is the relationship between broader market factors and the potential for narrow network approaches to succeed? Gruber J, and McKnight R. Controlling health care costs through Participants discussed the need for studies that examine the limited network insurance plans: Evidence from Massachusetts state number, variety, and quality of providers in particular markets, employees. NBER 2014; w20462:1-47. http://www.nber.org/pa- along with studies that look at how networks perform and how pers/w20462 they affect the broader market over time. Health Management Associates. Ensuring consumers’ access to Conclusion care: Network adequacy state insurance survey findings and recom- The AcademyHealth panel focused on the design and operation mendations for regulatory reforms in a changing insurance market. of narrow and tiered network plans and what early experience November 2014. http://www.naic.org/documents/committees_con- suggests about how the networks can become more effective. liaison_network_adequacy_report.pdf Participants acknowledged the importance of striking a balance between flexibility for insurers in designing networks while ensur- Howard DH. Adverse effects of prohibiting narrow provider ing consumer access to high-quality care. They discussed the need networks. NEJM 2014;371(7):591-593. http://www.nejm.org/doi/ for greater oversight of and better standards to measure network full/10.1056/NEJMp1402705 adequacy. Experts agreed that the long-term implications of narrow networks remain to be seen. In identifying areas for research on National Association of Insurance Commissioners (NAIC). Draft narrow networks, they emphasized that research should account model regulation for states. NAIC November 2014. http://goo.gl/ for market factors, both in the study design and in interpreting the ESskdL 8 Health Plan Features: Implications of Narrow Networks and the Trade-Off between Price and Choice Tiered Networks Talbot JA, Coburn A, Croll Z, and Ziller E. Rural considerations in Robinson JC. Hospital tiers in health insurance: balancing consum- establishing network adequacy standards for qualified health plans er choice with financial incentives. Health Aff 2003;22(3):W3-135. in state and regional health insurance exchanges. 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HSR 2014;49(4):1348-1363. http://on- 2.Data extract from American Institutes for Research’s new health insurance literacy linelibrary.wiley.com/doi/10.1111/1475-6773.12165/abstract measurement tool. See http://aircpce.org/health-insurance-literacy-measure-hilm- publications Measurement, Standards and Regulation 3.Sinaiko A, & Rosenthal M. (2010). Consumer experience with a tiered phy- Blumberg LJ, Peters R, Wengle E, Arnesen R. Physician network sician network: Early evidence. Am J Medical Care, 16(2) Retrieved from transparency: How easy is it for consumers to know what they are http://www.ajmc.com/publications/issue/2010/2010-01-vol16-n02/ AJMC_2010febSinaiko_123to130/ buying? Urban Institute 2014 August:1-11. http://www.rwjf.org/ content/dam/farm/reports/reports/2014/rwjf415098 4. Corlette, S., Lucia, K., & Ahn, S. (2014 ). Cross-cutting issues Six-State Case Study on Network Adequacy, Center on Health Insurance Reforms Georgetown University Health Policy Institute. Retrieved from http://www.rwjf.org/content/dam/farm/ CMS. CY2015 MA HSD provider and facility specialties and net- reports/reports/2014/rwjf415649 work adequacy criteria guidance. 2014;1-13. http://www.cms.gov/ 5. Gruber J, & McKnight R. (2014). Controlling health care costs through limited Medicare/Medicare-Advantage/MedicareAdvantageApps/Down- network insurance plans: Evidence from Massachusetts state employees.” NBER loads/CY2015_MA_HSD_Network_Criteria_Guidance.pdf working paper #20462. 6. Corlette S, Lucia K, & Ahn S. (2014). Cross-Cutting Issues Six-State Case Study on Corlette S, Lucia K, Ahn S. Implementation of the Affordable Care Network Adequacy, Center on Health Insurance Reforms Georgetown University Act: Cross-cutting issues Six-state case study on network adequacy. Health Policy Institute. 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