The ACA is driving much of the shift toward these narrow-network products, said Gerald Kominski, director of the UCLA Center for Health Policy Research in Los Angeles. The healthcare reform law standardizes health plan benefits and sets caps on out-of-pocket costs. So providers and insurers are using unique networks as a differentiator. “If you’re competing on price and you can’t vary copayment structure or deductibles, the only thing you can do is try and keep your networks as affordable as possible,” Kominski said.It’s not surprising to see providers and insurers try to copy Kaiser Permanente, said Peter Lee, executive director of Covered California, the state’s insurance exchange, at a virtual conference Wednesday organized by Modern Healthcare. “People understand when you pick Kaiser, you get a designated set of care delivery. I think it’s a very healthy thing for the entire health system to compete on delivery.”But experts caution that Kaiser has half a century of experience in operating a staff-model HMO, and other providers and insurers won’t be able to replicate that model quickly.
Narrow networks help bridge the tradeoff between richer benefits mandated by the ACA and keeping premiums affordable –which in turn promotes the spread of risk fundamental to the viability of all insurance products. However, for narrow networks to properly function in the marketplace, they have to be true provider networks and not simply a list of suggested providers offered along with a major caveat emptor that there’s no guarantee a particular provider is in the network and accepting plan members.
Why? Because individuals and families purchase health insurance for the peace of mind it provides and the certainty that care is available when needed and covered per the coverage terms. That’s the key value. Otherwise, it functions more like those garbage “health plans” the ACA was designed to do away with that offered discounted services provider lists that could not be relied upon as accurate and current. As a vertically integrated risk bearing and provider entity, Kaiser Permanente holds a major advantage over other commercial health plan issuers in that its providers are in house, sparing Kaiser members the risk associated with provider network volatility and uncertainty that can hamper other commercial health plan issuers.
Because by definition there are fewer available providers in narrow network plans, there’s also less room for error when a member is seeking an in-network provider. That’s why it’s essential narrow network plans have networks with provider rosters that are accurate and up to date.
Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email