Pathology groups and medical laboratories may benefit if federal and state legislators legislate broadening of provider networks

Insurers are increasingly using narrow networks as a business strategy to control costs. As a consequence, more consumers are complaining even as some excluded providers are suing health insurers. For pathologists and clinical laboratory managers, this accelerating trend of excluding providers means increasingly restricted access to patients.

Health Insurers Walk a Fine Line between Cost and Access

Many health plans currently sold on the new state insurance exchanges offer substantially smaller networks of providers than was typical in recent years, according to a story published in Modern Healthcare. The payers say narrower networks are necessary for two reasons.

First, narrow networks can keep premiums affordable. Second, health insurers say narrow networks help them address the requirements of the Patient Protection and Affordable Care Act (ACA).

Health Insurer Networks Must Meet Adequacy Requirements

“These networks had to meet adequacy requirements that were in place before, and then expanded by the ACA,” wrote the authors of a recent report by McKinsey & Company. “[T]hese requirements include the minimum number and types of providers, and the maximum driving distance and wait time, to ensure that patients have adequate access to care.”

Narrow Networks Mean Lower Premiums and May Impact Access to Care

Narrow networks are a reality of the new health insurance landscape, according to another Modern Healthcare story. In its report, McKinsey categorized the new exchange plans networks as follows:

• Broad networks have more than 70% of all hospitals in the rating area participating.
• Narrow networks have 31 to 70% of all hospitals in the rating area participating.
• Ultra-narrow networks have 30% or less of all hospitals in the rating area participating.

Nearly half of all insurance plans sold on the public exchanges in 2014 were narrow network plans, the McKinsey report stated.

Aetna CEO, Mark Bertolini, pictured above, indicated during a recent call with investors that he expects what he terms “doc shock” to be a major issue. He pointed out that insurers do pay attention to the backlash from consumers and providers because it impacts pricing. Other experts forewarned that, if state and federal governments push to broaden networks, it will impact the ability of payers to keep prices down. (Photo copyright Aetna)

Prestigious Hospitals Offering Specialty Care Are Sometimes Excluded

Last year, physician groups, hospitals, and patient advocates expressed concern that some patients may not have adequate access to care, Modern Healthcare reported. Other concerns included coordination of care, risk-selection problems, and disruption of physician-patient relationships. Some even argue that disruptions in care could actually increase costs. For example, switching providers could mean that patients undergo duplicative exams and medical laboratory tests.

In October, Seattle Children’s Hospital filed suit against the state of Washington’s Office of the Insurance Commissioner (OIC). A number of the exchange plans offered in the state excluded Seattle Children’s from their networks. The suit claimed that the OIC failed to ensure adequate network coverage in several of the state’s exchange plans.

‘Dire Situation’ for Some Patients

“This is a dire situation for our patients.” stated Sandy Melzer, M.D., Senior Vice President and Chief Strategy Officer at Seattle Children’s, in a hospital press release. “The notion that a major insurance plan is going to exclude us from their network is truly precedent-setting and represents a new level of degradation in children’s access to care,” added Melzer in a story 87 published by the Seattle Times.

Seattle Children’s Hospital is concerned about the trend of narrow networks, which restrict patients’ access to prestigious hospitals that offer specialty care. Pictured above is Sandy Melzer, M.D., who is Chief Strategy Officer for Seattle Children’s Hospital. He says the trend of narrow networks “represents a new level of degradation in children’s access to care.” (Photo copyright Seattle Children’s Hospital.)

In fact, health insurers could try to save money by covering so few doctors that patients can’t get the care they need, one reporter wrote in a story in the New York Times.

After Purchasing Plans, Consumers Remain Unclear About Networks

In its April consumer survey, McKinsey reported that 26% of respondents who had enrolled in an ACA plan were unaware of the network type they had selected. Similar claims arose in the Seattle Children’s case. “Families were confused about their new benefits,” stated Melzer in the Seattle Children’s press release. Many didn’t know that Seattle Children’s is not included in their network.”

In California, consumers recently filed a class-action suit against Anthem Blue Cross, according to Modern Healthcare. The suit alleges that the insurer misled millions of individuals about whether their doctors and hospitals were covered by exchange plans.

Election Year Jitters Could Yield Legislation to Expand Networks

Narrow networks may be here to stay, but there will likely be some tweaking going forward. Some experts agree that health insurers and providers need to do a better job of providing consumers with accessible, easily understandable information about networks when they shop for coverage, noted Modern Healthcare. Further, both federal regulators and state lawmakers are looking for ways to get insurers to expand their provider networks. The Centers for Medicare and Medicaid Services (CMS) signaled it will increase scrutiny of provider networks.

Meanwhile, pathologists and clinical laboratory managers will want to remain alert to developments regarding exchange plan networks. Congressional Democrats are concerned that narrowing networks could turn into an election issue by election day.

Thus, it could be political forces led by congressional Democrats that result in some type of legislation or regulation that causes health insurers to expand their provider networks. If that were to happen, it would benefit local medical laboratories that are typically excluded from many payer networks.

—Pamela Scherer McLeod

Related Information:

Obamacare’s narrow networks are going to make people furious—but they might control costs

Left off many networks, Seattle Children’s sues

Seattle Children’s Hospital Treats 125 Patients in January Who Lost Contracted Access Through Washington’s Health Benefit Exchange

Less cost, lower premiums

Pressure builds over narrow networks 

Providers, insurers grapple with narrow-network backlash

Hospital networks: Updated national view of configurations on the exchanges

A Health Trade-Off That’s Here to Stay: Lower Cost, Limited Choice