Tag Archive: narrow networks

Paying cash and negotiating price: Will it reduce the cost of health care and coverage?

Many of us now have high-deductible health insurance plans, which makes us “cash-pay” patients until we meet our deductibles. According to a Health Affairs health policy brief, high deductible plans are now much more prevalent in both individual and group markets.The higher the deductible, the lower the monthly premium. If you have a high deductible plan and don’t consume much medical care, you are most likely a cash pay patient. You might even avoid medical care because of the out of pocket cost. I know I have.I talked with a friend yesterday who has a $9,000 deductible. She has a torn meniscus. She is avoiding the surgery because she isn’t even close to hitting her plan’s deductible. I suggested she try asking for a “cash pay” price from her surgeon and the hospital or surgery center where her procedure would be performed. Negotiating cash pay prices for medical treatment has become a common practice. Often a cash-pay price for medical care can be much less than what you’d have to pay if you haven’t met your deductible.

Source: How cash-pay patients can beat high-deductible plans

The strategy of paying cash for medical care to get a better price originally appeared in The Los Angeles Times and is getting legs elsewhere such as here. That’s the way it was back in the 1950s and 1960s where people had “major medical” insurance that covered only large and unexpected medical care needs such as auto accidents and heart attacks. Everything else was paid on a cash basis.

Going forward, it bears watching to see if this gains momentum among those covered by high deductible plans. If it does, it could create downward pricing pressure on non-emergency medical procedures including primary care visits that aren’t preventative care and thus subject to out of pocket cost sharing.

Ditto high deductible plan rates. If more people pay providers directly rather than engaging in the paperwork exercise with their health plans for care falling well below their annual deductible, that reduces the administrative burden on the issuers of high deductible plans. As well as providers willing to negotiate a cash price knowing they’ll get paid sooner with less paperwork.

There’s an added bonus for high deductible plan members. At one time, having a high deductible plan meant a broader choice of providers. No longer the case with today’s narrow networks. Paying cash can potentially substantially widen the provider network to any provider willing to accept cash as payment in full for services.

 


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

Exchange subsidies, narrow managed care networks credited for stabilizing individual market

Before the majority of the individual market reforms of the Patient Protection and Affordable Care Act took effect in 2014, the individual health insurance market was mired in a death spiral of adverse selection and rapidly rising, unsustainable premiums. Now those reforms have brought stability to the market, with little risk of the market segment destabilizing, concludes a McKinsey & Company analysis. (h/t to Liz Osius of Manatt).

Key to achieving that stability are subsidies offered households with incomes not exceeding 400 percent of federal poverty levels and health plans’ use of managed care plans and narrow provider networks. The brief notes that an estimated 69 percent of households in the individual market qualify for premium and out of pocket cost sharing subsidies.

The individual market has little risk of entering a classic insurance ‘death spiral’ as long as the federal government continues to offer subsidies to those with incomes below 400% of the federal poverty level. Given the unique regulatory conditions of this market, the key determinants of its stability are not the traditional factors (risk and cost of care for this segment), but rather the ongoing subsidy payments.

McKinsey & Company’s review of plan issuer profitability correlated narrow networks with comparatively better loss experience and profitability compared to plans with wider networks as well as the ability of these plans to set lower premium rates. “The combination of the improving relative pricing of narrowed networks and their superior financial performance suggests that they may be emerging as one sustainable element of exchange plan design,” the McKinsey issue brief states.

Although the individual market has regained stability, profitability remained elusive in the first two years of the major reforms:

Our initial perspective, based on emerging financial results reported for 2015, is that aggregate losses in the individual market may have doubled from 2014, with post-tax margins between –9% to –11% (Exhibit 6). The larger losses are most likely the result of two primary factors: higher year-over-year medical loss ratios (MLRs) (around 4.5% to 5% margin reduction) and lower reinsurance payments (another 3.5% to 4% margin reduction).

 


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

California fines top health insurers for overstating Obamacare networks – LA Times

California regulators fined two insurance giants for overstating their Obamacare doctor networks, and said the companies will pay out millions of dollars in refunds to patients.The errors by Blue Shield of California and Anthem Blue Cross caused major frustration for consumers statewide during the rollout of the Affordable Care Act in 2014.The inaccuracies in their provider networks led to big unforeseen medical bills for some patients who unwittingly went out of network for care. The California Department of Managed Health Care said Tuesday that it has levied fines of $350,000 against Blue Shield and $250,000 for Anthem.

Source: California fines top health insurers for overstating Obamacare networks – LA Times

Among the moving parts of the Patient Protection and Affordable Care Act’s health insurance market reforms there are bound to be friction points. One such problematic interface exists between payers and providers participating in California’s health benefit exchange, Covered California, as this report illustrates.

In non-integrated, narrow network health plans like these where payers and providers function as separate entities (unlike integrated care systems like Kaiser Permanente), it’s critical that interface function properly lest it threaten to bring the entire reform mechanism to a grinding halt. Continuing the mechanical metaphor, the narrowness of the provider networks has little tolerance space — and room for error– between the working components. One area where the gears frequently grind in narrow networks is hospital care where the hospitals and physicians are contracted with disparate plans and not necessarily participating in the same plan covering a patient as this Modern Healthcare article explains in detail.

 


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

Health benefit exchanges post modest premium increases in 2015; ability of narrow networks to continue to moderate premiums uncertain

A review of plan year 2015 premium rates by the Robert Wood Johnson Foundation and the Urban Institute found premiums in state health benefit exchange marketplaces increased by 2.9 percent over 2014 plans. The report cautions continued overall modest premium rate growth is dependent on market forces in the provider and patient segments. On the provider side, health plan issuers have been able to get fewer providers to care for larger patient panels for lower reimbursement rates.

[W]hether these arrangements are sustainable and remain attractive to consumers over time is unknown,” the report concludes. “If consumers prefer broader networks and are willing to pay for them, the market will respond by offering such products, and premiums will consequently increase.”

Most observers, however, believe keeping premiums as low as possible – particularly in a mostly subsidized market like the exchanges – will trump other consumer desires, including wider provider networks. But as the report notes, the sustainability of the narrow provider network model is under pressure from patients who complain to regulators and public policymakers when they have problems finding a provider who will accept their coverage. That in turn could generate legislation and regulations making it harder for plans to rely on narrow networks to moderate premium rates. “States and the federal government could also engage in greater regulation of network adequacy; this, too, could cause premiums to increase,” the report notes.

In addition, the report cautions if underlying health care costs begin to grow at historical rates versus lower rates seen in recent years, “it will be hard for insurers to avoid reflecting this in their premiums.”

Click here for the full report.

 


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

Blue Shield pares individual market presence in California localities

From Fremont, Monterey, Nevada City and Point Reyes Station, wealthy and poor areas alike can no longer buy an individual insurance policy from Blue Shield. The gaps are particularly felt in Northern California, in areas where there is only one choice of insurer in the exchange.

“I have had clients from other areas of California, and they live in the bay area or here or there, and I do it for them and, wow, there’s six insurance companies or seven insurance companies,” says Lomas. “I think that was when I first realized how truly we were getting the shaft up here.”

Blue Shield of California declined an interview, but said it’s not selling in certain areas because it couldn’t find enough providers willing to accept payments that would keep premiums low. The company also said it is not selling in areas where there is no contracted hospital within 15 miles.

via After Blue Shield Pulls Out of Zip Codes, Consumers See Limited Insurance Options – capradio.org.

When networks narrow, it can be hard to find enough providers in a given local market willing to work for lower narrow network reimbursement rates employed to hold down premium rates. This development shows how difficult it is for health plans to achieve both affordable premiums and access to providers and what happens when that balance can’t be struck and the network begins to fray.

 


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

Healthcare Reform Update: More providers, insurers showing appetite for narrow networks | Modern Healthcare

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.

via Healthcare Reform Update: More providers, insurers showing appetite for narrow networks | Modern Healthcare.

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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

Covered California official concerned over provider network volatility, enrollee access

As California’s health benefit exchange marketplace, Covered California, prepares for Plan Year 2015 enrollment in November, at least one of its board members is openly concerned whether plan enrollees will have predictable access to in-network health care providers.

At a Covered California board meeting this week, Board Member Kim Belshé observed there has been a “steady drumbeat” of media accounts of Plan Year 2014 enrollees having difficulty finding physicians willing to accept Covered California plans. Belshé pointed to an aggravating factor of what she described as nearly real time changes to plan network provider rosters. California Executive Director Peter Lee noted some plan issuers are updating their network provider lists as frequently as weekly.

That introduces a degree of uncertainty that devalues the plans by robbing enrollees of the peace of mind that they will be able to see a network provider without running the risk of being turned away or having to pay more for care from a non-network provider. With the use of smaller networks in order to hold down premium rates, the likelihood that a provider isn’t in a given plan’s network increases.

It appears to come down to money and specifically provider reimbursement rates. Media accounts such as this one point to provider dissatisfaction over reimbursement rates for Covered California plans. This San Jose Mercury News item explains:

Many doctors are upset about the discounted reimbursement rates that insurers have imposed on them to keep premiums low on the Covered California exchange. The new rates — as much as 30 percent lower than those paid by nonexchange plans — took effect Jan. 1, when the new health care plans of hundreds of thousands of Californians kicked in.

The Patient Protection and Affordable Care Act and California law require health plan issuers that offer plans both on and off the California exchange to offer off exchange plans at the same price as exchange plans. But there is no requirement that provider networks be the same among the plans. California law effective June 16, 2014 allows plan issuers to factor provider networks into setting premium rates. Narrower networks can decrease rates but with the tradeoff of access to a wider pool of providers that affords enrollees a greater level of certainty a given provider may be in their plan network.

 


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

Controlling Health Care Costs Through Limited Network Insurance Plans: Evidence from Massachusetts State Employees

We find that distance traveled falls for primary care and rises for tertiary care, although there is no evidence of a decrease in the quality of hospitals used by patients. The basic results hold even for the sickest patients, suggesting that limited network plans are saving money by directing care towards primary care and away from downstream spending. We find such savings only for those whose primary care physicians are included in limited network plans, however, suggesting that networks that are particularly restrictive on primary care access may fare less well than those that impose only stronger downstream restrictions.

via Controlling Health Care Costs Through Limited Network Insurance Plans: Evidence from Massachusetts State Employees.

 

 


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

Consumer survey findings bode well for exchanges offering narrow network QHPs

A recent survey of consumer healthcare provider preferences by Harvard University and Booz & Company via the Harvard Business Review blog (Registration required) came up with some rather counterintuitive findings that bode well for the health benefit exchange marketplace. In order to keep premium rates low, some participating exchange qualified health plans (QHPs) have narrowed their networks of providers.

Consumers don’t necessarily prefer a wide selection of hospital networks. The survey found consumers preferred a small network with a high-quality system. “Consumers worried about receiving care for an unknown illness at some point in the future, find more comfort in knowing they will receive high quality care from a discrete set of facilities than in pondering a sea of options with little expertise in how to make sound decisions.” That makes sense considering that hospitalization isn’t typically a planned use of medical care and that most areas of the U.S. tend to be served by a small number of hospitals.

What’s noteworthy is the survey found the desire for a high-quality hospital system trumps having one’s primary care physician (PCP) in network, with respondents ranking an in-network PCP only half as important as having a good hospital system in network.  In a surprising finding, having one’s PCP in network represented less than five percent of the value consumers attribute to their health insurance. “While a dedicated patient/PCP relationship was once sacrosanct, today’s consumers are increasingly comfortable with getting primary care at retail clinics (e.g., CVS, Walgreens, Walmart, and Target) or using online and tele-health services that are quicker, more convenient, and often more cost-effective than a traditional office visit,” the HBR blog post notes. “Furthermore, as consumers become savvier in their decisions about benefits, even those who truly value their relationship with their PCP quickly recognize that picking up the occasional $150 co-pay to see a PCP who is no longer in-network is a relatively minor trade-off compared to the potential for a five-figure bill at an out-of-network hospital.”

Having upper-tier hospitals and health systems in network such as academic medical centers didn’t rank as a “must-have” among consumers.  “While reputation remains an important factor in consumers’ decisions, our research indicates that many safety-net and local hospitals are also well-regarded by consumers — and in particular by those who are currently uninsured. As such, lower-cost, high-value networks designed around these ‘lower-tier’ institutions could be attractive and desirable offerings for consumers.”

 


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

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