Changing Health Plans, Changing Provider Networks: What They Mean for Consumers and How States Can Help

By Sabrina Corlette and Sally McCarty

Early evidence suggests that health insurers have moved to restrict their provider networks in plans sold through the new health insurance marketplaces in order to offer consumers lower premiums. But those limited networks come at a price – recent media reports have documented the frustration of some consumers looking for – and not finding – particular doctors or hospitals on the new plan networks, and others who may face long drives in order to obtain in-network care. Of course, for individuals gaining health insurance for the first time, the ability to access any provider at all is a huge improvement. But for some individuals used to relatively unfettered provider choice through their previous health insurance plan, the limits on in-network hospitals and other providers may come as an unwelcome shock.

The President told the American people, “If you like your doctor, you can keep your doctor.” Was that a lie?

Most likely, the President was referring to the fact that there is nothing in the ACA designed to intrude on a patient’s relationship with his or her doctor. And in fact, nothing in the law prevents people from continuing a relationship with a doctor that they like.

However, we have – and will continue to have – a system in which health coverage is provided through private health insurance plans. And as long as restricted provider networks are used to manage costs, insurers will make decisions about networks that are in their own business interests – they can add or drop doctors and hospitals from their networks, change the way they pay providers, and change cost-sharing arrangements for policyholders.

Often the manner in which an insurer establishes a network results in cost-savings for plan enrollees because a plan that contracts with fewer physicians and hospitals can negotiate more patient volume in exchange for lower reimbursement rates, which may translate to lower premiums. However, those premium savings could be offset by additional cost-sharing if enrollees must obtain care from out-of-network providers.

Additionally, some insurers view the flexibility to restrict their networks as essential to garnering not only price concessions, but also commitments to delivery system and payment reform initiatives that could result in higher quality, more efficient care over time. These include efforts to reduce hospital readmissions, build primary care medical homes or accountable care organizations, and pay for the quality instead of quantity of services.

At the same time, providers themselves can make decisions to leave or join health plan networks if it’s in their business interest to do so.

The bottom line? Networks are constantly changing. That is true today and it has been true for a long time, and nothing in the ACA changes this.

So, while the President was correct that, in general, people can continue to get care from a doctor that they like, they may have to pay more for that privilege if their doctor leaves or is dropped from their insurer’s network.

What protects consumers if health plan networks are too limited, and they can’t get the care they need at an affordable cost?

For the first time, the ACA bakes into federal law an expectation that health plans offered on the marketplaces build a network that is adequate to meet the needs of their enrollees. But, as with so much of the insurance reforms in the ACA, the Obama Administration has largely left the implementation of that expectation to the states.

As CHIR recently documented for the Robert Wood Johnson Foundation’s State Health Reform Assistance Network, few states have developed robust standards for network adequacy. And, in their eagerness to encourage insurers to participate in the new marketplaces, many states did little to review plans’ networks or hold them to strict standards.

One exception is Washington Insurance Commissioner Mike Kreidler.  He rejected one company seeking to offer on his state’s insurance marketplace because its provider network did not include a pediatric hospital or a Level 1 burn unit.  However, Commissioner Kreidler’s decision was overruled by an administrative law judge and the board of the Washington State Health Benefit Exchange. He is currently working on rules to give his office more authority over provider networks. Until the plans that are utilizing narrower networks have become operational, it’s difficult to assess how problematic they will be for consumers. If and when state regulators begin hearing about network adequacy problems, it may become clear that more regulatory oversight is necessary.  If that happens, perhaps other state insurance regulators will follow Commissioner Kreidler’s lead and work to develop more rigorous network adequacy standards and use or acquire more robust authority to enforce the standards.

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The opinions expressed here are solely those of the individual blog post authors and do not represent the views of Georgetown University, the Center on Health Insurance Reforms, any organization that the author is affiliated with, or the opinions of any other author who publishes on this blog.