You’ve undoubtedly heard of the term “Narrow Network” if you
have been listening to any of the rhetoric surrounding the Affordable Care Act
(ACA) and the Marketplace (Exchange) plans.
We have discussed this concept numerous times over the past several
years. Well, brace yourself, because the
reality of narrow networks is about to hit everybody, even those willing to pay
for a large network.
A network is a collection of hospitals and health care
providers that have agreed to specific terms when caring for patients who are
members of an insurance company’s specific health plan. When receiving care from a network provider,
the member will receive discounted rates and more favorable terms for co-pays
and out of pocket expenses. When using a
doctor or health care facility that is “Out of network,” the costs to the
member are typically significantly higher.
Pretty simple concept and understood by most health care consumers.
Recently, health insurance companies have created health
plans with narrow networks to provide more economical premiums for their
members. The narrow network assists the
insurance company in controlling costs and the health care provider gains
greater market share, thus allowing it to provide the services at a better value
to the member. So what’s the catch?
American consumers, especially those accustomed to
employer-sponsored health insurance, have typically not been astute consumers
for health care services. They have
enjoyed large provider networks with an abundance of choice pertaining to where
they receive care (Excluding those who are in an HMO program). For the time being, it appears that the
employer (Group) plans will continue to have a choice when implementing a plan
that supports a large network. However,
for individual plans, be prepared to enter the narrow network domain.
Recently, a major regional carrier announced that beginning
in 2016 they would no longer offer their Broad Network PPO plan. This plan type typically included dozens of
hospital networks, including teaching hospitals in the Chicago market and
hundreds of doctor groups. They will
replace those Broad Network Plan options with a narrower network, which will
likely exclude many of the most sought after teaching hospitals and popular
doctor groups in the Chicago region.
The reason is simple.
Over the past couple of years, with the requirements of the affordable
care act upon them (Us), many health insurance companies aggressively sought
business in the individual markets and added thousands of members as customers. Unfortunately, those members cost much more
money than our government and the health insurance companies anticipated. For example, one company had a negative swing
in profits of over $900,000,000 in 2014 and the trend in 2015 is no better. In fact, we’re not the only state with this
problem. The same situation is occurring
in Texas, whereby a similar strategy will be enforced in 2016.
So how does this affect you?
Be prepared for the trend to continue.
If you have had the luxury of receiving care at the facility of your
choice, the market is changing. You will
likely have to invest time and energy to insure that the health plan that you
choose includes the hospital(s) and provider(s) that you desire. If you are familiar with the HMO model of
care, whereby your primary care physician acts as your quarterback and a
specific hospital network is where you receive in-network care, you will likely
see opportunities for savings on premiums and likely see an abundance of people
shift back to that model. Modern day
HMOs are somewhat related by design to Accountable Care Organizations (ACO)
which are rewarded for the quality of their care. Since they are compensated differently, they
might be motivated to get you well and to keep you well.
You will undoubtedly
see the trend continue and sooner or later even penetrate the employer (Group)
sponsored plans. In fact, there are many
companies already practicing the narrow network model across the many markets
that they serve, including in the large and small group markets.
So now is the time to prepare to choose. Choice networks have always been misnamed, as
they typically allow for less choice. So
as the New Year and the open enrollment period approaches, prepare to narrow
your choices, unless you want to pay dearly for your health care needs.
