Narrow networks draw few complaints from consumers: study

Narrow networks were a popular health insurance option on the exchanges in the first enrollment period, with half of all plans for individuals offering limited groups of lower-cost providers, and new research shows consumers generally aren't griping about the products.

Researchers at Georgetown University's Health Policy Institute studied narrow-network plans sold on the individual-market exchanges last year in six states: Colorado, Maryland, New York, Oregon, Rhode Island and Virginia. Health insurers have said the healthcare reform law is spurring them to offer more narrow networks, which they say save them money and lead to lower monthly premiums in exchange for a smaller number of in-network hospitals and physicians.

After speaking with several state officials and insurers that offer exchange plans, researchers found that few consumer complaints have emerged to date about the networks' offerings.

“Insurance companies calculated that consumers would be willing to trade greater provider access for lower premiums, and to a large extent, our research confirms that,” said Sabrina Corlette, the report's lead author, in a statement.

However, confusion still existed. Under the Patient Protection and Affordable Care Act, insurers that sell plans on the marketplaces must maintain an up-to-date directory that shows all in-network hospitals and doctors within a given network. Many consumers and providers said directories were inaccurate, obsolete or not consumer-friendly. But part of the problem was that half of the states studied had lax oversight, researchers said.

Inadequate or misleading information on narrow networks is not uncommon. Indeed, some insurers in California face lawsuits over the issue.

Another interesting snippet from Georgetown's study: Some providers are pitching a narrow-network strategy to insurers. If hospitals or physicians know they offer similar quality outcomes as others but also have lower rates, they “were making conscious decisions to participate with specific insurers that might, for example, exclude their competitors,” a New York health plan official said in the study.

Although most of the growth in narrow networks has been on the Obamacare exchanges, a recent deal in California may be signaling a move in another direction as well. Anthem Blue Cross in California teamed up with seven hospitals and health systems last week, including traditionally higher-priced academic medical centers, to create a new type of narrow-network plan called Vivity. It will be marketed only to large area employers—many of whom have moved toward high-deducible health plans to rein in their costs. Anthem's parent WellPoint has plans to possibly replicate the strategy in other metropolitan markets across the country.

Jon Gabel, a senior fellow who studies insurance markets at the National Opinion Research Center at the University of Chicago, told Modern Healthcare in March that if narrow networks “spill over into employer-based health insurance, I think we'll see much more politically potent backlash.”

Follow Bob Herman on Twitter: @MHbherman