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Obamacare plans often have smaller physician networks — is that a problem?

Obamacare plans often have smaller physician networks — is that a problem?

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Many Obamacare plans have "small" or "extra small" networks of doctors.
Many Obamacare plans have "small" or "extra small" networks of doctors.

About 40 percent of silver-level plans purchased on the Affordable Care Act’s federally run health insurance marketplace have “extra small” or “small” networks of physicians, meaning they include less than 25 percent of physicians in their region. Only 11 percent of plans fit the “extra-large” category, meaning they include at least 60 percent of area physicians.

Those are the findings of a new report from the Robert Wood Johnson Foundation (RWJF) that created the first database measuring physician networks under ACA marketplace plans, according to the report’s authors. The report analyzed about 400 physician networks nationwide for plans sold in 2014. Researchers used “T-shirt measurements” such as extra small to define networks, and did not evaluate concerns such as quality of providers, access or network adequacy – although they hope their data set is the first step in determining these other measures.  

The Affordable Care Act has prompted health plans to increase their use of smaller, or “narrow networks” of providers as a strategy for controlling costs, according to the report. Narrower networks can reduce costs since health insurers can contract with less pricey physicians and hospitals. And, insurance companies can also demand better pricing by selecting a smaller group of providers for their networks (doctors typically offer lower rates in exchange for a great volume of patients).

While those plans are popular on the marketplace for their lower premiums, consumers have little information to evaluate the trade-off between costs and network size. Network size is an important feature of a plan because narrow networks can leave consumers vulnerable to financial burdens if they have to seek out-of-network care. And, it can be challenging to find in-network providers as the pool of options shrinks. Even so, consumers are largely unaware of the size of their networks, which keeps the emphasis on cost, the authors wrote.

It’s worth noting, however, that the relationship between network size and quality isn’t as straightforward as you might think.

Earlier report: Smaller hospital networks don’t mean poorer quality

Earlier this month, Reporting on Health featured a Health Affairs study that examined California hospital networks under marketplace plans. Researchers found that the marketplace plans have hospital networks with comparable or even higher quality measures on average than their commercial counterparts. Smaller networks didn’t necessarily translate into poorer quality care.

Unlike the physician paper, which compares the size of the network as a percentage of the total number of physician in an area, the California hospital report compared marketplace networks to those sold outside the marketplace – an important distinction, said Simon Haeder, one of the Health Affairs article’s authors.

Haeder said his team decided to look into hospitals instead of physician networks at the time because there is more data on quality measures with hospitals. While some physician specialties such as cardiology might have more tangible data, it’s difficult to compile it for all practices.

“There are some efforts by Medicare to rate physicians but it’s somewhat challenging,” he said this week. “Hospitals are big systems so there’s lots of data for quality scores.”

Last week, Haeder and his colleagues published an opinion piece in the Journal of the American Medical Association (JAMA), which discussed the challenges private individuals have finding a provider based on quality data. There just isn’t enough information, making it hard for people to evaluate if a physician is good.

Insurance companies, with their treasure trove of data on providers, billings and outcomes, could change that.    

“The argument we make is that there are benefits for both insurers and private individuals if insurance companies provided better quality data,” he said. “There’s a significant potential.”

That’s because insurers could create narrower networks – thereby saving money – by excluding lower-quality providers. Excluding lesser-ranked providers could also generate incentives for caregivers to increase quality of care. And, consumers would benefit from the lower costs and better quality of care.

Haeder and his co-authors explain this further in the JAMA piece:

By deliberately excluding lower-performing hospitals and shrinking networks (i.e., by contracting selectively), insurance carriers can encourage competition based on the quality of care provided while simultaneously lowering the costs of care. Thus, using better-informed intermediaries — insurance carriers — to make better choices in terms of the quality of health care provided, offers substantial opportunities for improved health outcomes and holds the potential for cost-savings by, for example, reducing readmission rates and iatrogenic or avoidable complications. In short, consumers may be nudged into making better hospital and physician choices.

Ultimately, quality of care matters more than the size of a network for both hospitals and physicians, Haeder said.

“Consumers should be aware of what they purchase and thus make trade-offs between choice and cost,” he said. “Certainly from a policy perspective, we should be more worried if networks are narrow and of low quality than when they are narrow and of high quality.”

The quality question is a good one, said Daniel Polsky, an author of the new RWJF report on physician networks and the executive director of the Leonard Davis Institute of Health Economics at University of Pennsylvania. A well-informed consumer would likely be interested in considering more than just size when selecting a plan.

“Our report summarizes the first physician database measuring networks in the marketplace,” Polsky said in an interview with Reporting on Health. “This database has great potential going forward to measure more aspects of a network such as quality.”

[Photo by CleverCupcakes via Flickr.]


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Huge Out of Network costs are the real problem. I have a Narrow Network because I don't have any other choice in either of the only 2 companies that provide insurance in my region. If you have a condition that requires specialized treatment then you may not have coverage. Both insurers pay 50% of what they think a charge should be (it is often way lower than even what Medicare pays) and then patient is responsible for the rest of whatever the provider wants to charge. It's just like not having any insurance at all because there is no limit on how much a patient might owe. Medical bankruptcy is not a thing of the past if one is unlucky enough to get something that needs certain specialities. There are no limits on what one may owe when specialized care is needed.

I see a specialist as a follow up and although they take every insurance including Medicaid Blue Shield of CA refused to include them in the ACA networks. And for a simple office visit they only paid 65% of the amount Medicare allows for the same service. Many provider complain about Medicare rates but the private insurance corporations are worse for allowed amounts.

These Narrow Networks are worse than HMO's since in an HMO they will refer you out for specialized care. Narrow Networks just tell the patient you on your own.

I'm glad many more people now have some coverage because of the ACA but we still have a long way to go to resolve the insurance problems.

One suggestion is that health insurance should be viewed more like an annuity than a yearly cost. I'm almost old enough for Medicare but I have been paying a monthly fee for health insurance since I was a baby. If that money had been deposited into an annuity account and accrued interest I would have between $1 to $2 Million available now to cover medical care. Instead my monthly payments are funding yachts for insurance CEO and I'm paying $800 a month for a policy that still leaves me exposed to Medical Bankruptcy!


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