Many of the health plans that will be sold on the new state insurance exchanges in January will offer substantially smaller networks of hospitals and physicians than current health plans generally offer.
Nearly half the exchange plans in 13 states with early filings will be of the narrow-network type, according to an unpublished McKinsey & Co. analysis of 955 plan offerings. Enrollees in such plans will have limited or no coverage if they seek care outside their plan network. In exchange, subscribers will enjoy lower premiums than they would pay for plans with broader networks, insurers say.
Insurers believe millions of exchange subscribers of modest incomes will accept that tradeoff. That would be a big change from the 1990s, when Americans largely rejected HMO-driven restrictions on provider choice and access. Up until recently, only a small fraction of people in employer-based and individual plans have been enrolled in HMOs.
Insurers including Aetna and Health Net say narrower networks, made up of hospitals and physicians selected using cost and patient-outcomes criteria, are necessary to keep their exchange plan premiums affordable while still meeting the requirements of the Patient Protection and Affordable Care Act. They increasingly have offered such plans to employer groups over the past few years, touting annual cost savings of 10% to 25%. In the large-employer market, Aetna's narrow panels are 15% to 35% smaller than its standard preferred provider panels. Blue Cross and Blue Shield of Illinois says its exchange plans using narrow networks will cost 20% to 30% less than its exchange plans with bigger networks.
Insurers say they are able to charge lower premiums for narrow-network plans because they can select more cost-effective providers, and in some cases they are able to pay them lower reimbursement rates in exchange for funneling more patients to them.
But some physician groups, hospitals and patient advocates say they are concerned that many of the insurers' networks have not yet been publicly announced less than two months before open enrollment begins Oct. 1. They fear that patients, particularly those who need specialized providers, may not have adequate access to care. Last year, the Obama administration issued a rule that insurers “must maintain a network of a sufficient number and type of providers … to assure that all services will be available without unreasonable delay.” It also required that “essential community providers” be included in all plans.
Dr. Reid Blackwelder, president-elect of the American Academy of Family Physicians, said that family physicians need to work in tandem with specialist physicians whose work they know and trust and that health plans whose provider networks are too small could make it more difficult to do that.
Bill Barcellona, vice president of government affairs for the California Association of Physicians Groups, which represents physicians working in managed care, said his group has tried to get the network filings from the state, “but we haven't got our hands on anything.” He called the adequacy of the insurers' exchange plan networks “a big issue.” Member physicians also haven't been able to find out what rates the exchange plans will be paying.
Several insurers contacted for this article acknowledged that their networks were not yet final and won't be announced before August and September deadlines for the exchanges.