Lawsuits. Surprise Bills. Are ‘Narrow Networks’ a Speed Bump, or a Scandal?

Everything about “narrow networks” suggests they were destined to be unpopular.

  • Patients don’t like having fewer choices: The model relies on insurance companies using quality and cost metrics to trim the number of covered health care providers.
  • Providers don’t like being denied access to revenue: For many hospitals and doctors, suddenly being excluded from said plans is a cause for concern.
  • The connotations of a ‘narrow’ version aren’t great: Some advocates of the model say the terminology is potentially inflammatory — so much so that they’re encouraging replacement terms like “high-performance networks.”

In a “Road to Reform” column last month, policy analysts and other experts tried to make the case that narrow networks were, at worst, a necessary speed bump on the road to reform.

Who didn’t agree: Some readers — and regulators.

“As of April 23, my doctor at the Tri-Valley Orthopedic Specialists, consisting of 8 doctors, will no longer accept Anthem Blue Cross Covered CA insurance because of the poor Anthem reimbursement rates,” one reader told California Healthline.

“What a disaster the Affordable Care Act has become.”

Looking Closer: Why Narrow Networks Are In Vogue

Narrow networks aren’t new. The idea of trading lower choice for lower health spending dates back decades in health care, and the model was gaining in popularity among insurers and employers several years before Obamacare’s passage.

But narrow networks are at the heart of many of the new health plans rolled out through the ACA. The law’s ambitious goals to simultaneously expand health coverage while keeping costs low forced insurers to push some providers to take less money — or push them out of networks altogether.

“This is really the only way to get to the price point that I think everyone believes will be attractive to the consumer,” MagnaCare CEO Joseph Berardo recently recently told NJBiz. “You’re looking at a price point that could be 15 and 20 percent below the broader network.”

All told, about half of the plans sold on HealthCare.gov and the other new insurance exchanges in 2014 were “narrow networks,” McKinsey found.

On a broad scale, there’s no reason to think that patients would be negatively affected. A number of studies have found that there’s not much connection between provider choice and patient outcomes. Drew Harris at the Jefferson School of Population Health even suggests that a narrow network could lead to better provider teamwork — and potentially better care.

And the thing is — as patients were briefed on the concept behind narrow networks, they grew to like them. According to a Kaiser Family Foundation tracking poll in February, most would-be exchange customers preferred narrow networks after they were told they could reduce their health spending by 25%.

Patient Pushback and Peeved Plaintiffs

But the vision of narrow networks is encountering a more troublesome reality. In California, hundreds of residents have filed complaints against Anthem Blue Cross and Blue Shield of California, suggesting that the provider lists provided by Covered California are at best inaccurate and at worst misleading.

“I thought I had done everything right, and it’s been awful,” one cancer patient told Chad Terhune of the Los Angeles Times, after receiving an $8,000 bill. “How am I going to come up with that much money?”

A number of patients in remote areas also say they’ve had problems finding specialists who take their new insurance.

Having been hit by unexpected bills, some unhappy patients have turned to the courts to try and seek resolution.

A class-action lawsuit filed in May charges that individuals who purchased PPO plans from Blue Shield were misled by the number of providers who would actually be covered.

The plaintiffs specifically allege that they received numerous medical treatments this year between January and March but later discovered — thanks to exorbitant out-of-pocket spending — that their providers were not covered under their network.

(It’s not just patients who are suing, either. In Washington state, a lawsuit over whether Seattle Children’s Hospital was unfairly excluded from narrow-network plans has dragged on for months.)

The broad surge in complaints has spurred regulators to get involved.

California’s Department of Managed Health Care is in the middle of a two-month investigation into the accuracy of provider lists provided by Anthem Blue Cross and Blue Shield of California. (See this California Healthline roundup for more detail.)

“There’s always going to be bumps along the way,” acknowledged Shelley Rouillard, DMHC’s director, “but the consumers who are purchasing coverage need to know that what they’re buying is really being advertised correctly.”

The findings won’t be released for several weeks, but according to a DMHC spokesperson, the department’s initial investigation “gave us good cause to believe there are violations of the law.”

Around the nation

Here’s a quick look at what else is making news on the road to reform.

CMS will examine whether Medicaid beneficiaries can find care: In a first, the agency plans to conduct national research into whether providers are accepting (or avoiding) patients covered by Medicaid, Virgil Dickson writes at Modern Healthcare.

Health care is more than care delivery: According to Elizabeth Bradley and Lauren Anne Taylor, authors of “The American Health Care Paradox: Why Spending More Is Getting Us Less,” ignoring the social welfare — like nutritional programs and housing assistance — contributes to long-term health problems and the nation’s higher spending.

How one insurer is trying to tamp down cancer spending: The Washington Post‘s Jason Millman examines United Healthcare’s bundled-payment pilot program, finding that it successfully reined in overall costs…but surprisingly raised spending on chemotherapy drugs.

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