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Reform Update: More providers, insurers showing appetite for narrow networks

A new health plan collaboration in Wisconsin between a hospital system and an insurer is the latest sign that providers and insurers are betting on narrow networks even as controversy continues over whether these plans offer adequate provider access for consumers.

Aspirus, a not-for-profit health system based in Wausau, Wis., and not-for-profit health insurer Arise Health Plan this week unveiled their co-branded health plan for individuals and small businesses with fewer than 50 workers, said Brett Davis, vice president of provider relations at WPS Health Insurance, Arise's parent company. WPS covers about 250,000 people across the state.

Consumers and employer groups that purchase the plan will receive discounted in-network care at Aspirus' six hospitals and from any physicians employed by Aspirus or doctors who contract with the system. Executives said the plan will have “affordable” monthly premiums but declined to be more specific. They declined to say whether the plan will be offered on Wisconsin's insurance exchange under the Patient Protection and Affordable Care Act.

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Other providers and insurers across the country also partnering to launch narrow-network plans. The Mayo Clinic, Rochester, Minn., and Medica will be offering a narrow-network plan on and off Minnesota's exchange for 2015; its monthly premiums are mostly in line with other exchange options. In September, Anthem Blue Cross and seven Los Angeles-area hospital systems announced a joint venture HMO to better compete with Kaiser Permanente and other narrow-network plans.

The ACA is driving much of the shift toward these narrow-network products, said Gerald Kominski, director of the UCLA Center for Health Policy Research in Los Angeles. The healthcare reform law standardizes health plan benefits and sets caps on out-of-pocket costs. So providers and insurers are using unique networks as a differentiator. “If you're competing on price and you can't vary copayment structure or deductibles, the only thing you can do is try and keep your networks as affordable as possible,” Kominski said.

It's not surprising to see providers and insurers try to copy Kaiser Permanente, said Peter Lee, executive director of Covered California, the state's insurance exchange, at a virtual conference Wednesday organized by Modern Healthcare. “People understand when you pick Kaiser, you get a designated set of (care) delivery. I think it's a very healthy thing for the entire health system to compete on delivery.”

But experts caution that Kaiser has half a century of experience in operating a staff-model HMO, and other providers and insurers won't be able to replicate that model quickly. So they say it will take unique and appealing plan benefits and participating providers to attract consumers who are accustomed to broader choices of hospitals and doctors. Medica hopes that offering Mayo's prestigious network will appeal to consumers.

For Aspirus and Arise, gaining traction involves emphasizing preventive-care benefits. Members who choose the plan will receive coverage with no copay for prescription drugs for certain chronic conditions such as diabetes and hypertension. Aspirus and Arise also will reimburse members up to $30 a month if they visit a participating fitness center at least 10 times per month.

Executives said the strategy is to remove patients' financial barriers to care, incentivize the right behaviors and provide a network that all parties can trust. “When patients leak or go outside of network, we have no control over that cost of care or quality,” said Dr. Christopher Reising, executive medical director for Aspirus Network, the system's physician-hospital organization. “We need to get control of that.”

The plan also talks up its data analytics capacity. Providers often have patient data stored in their electronic health records, but insurers rely on their claims database. Combining those two tools and analyzing patient-care trends “are critical to reducing cost and improving the quality of healthcare,” Reising said.

Narrow network plans have been mostly discussed in the individual market, where roughly half of all plans sold on the exchanges in 2014 were narrow-network products. But that group only represents 6% of the entire nonelderly population, while employer plans cover about 56% of nonelderly people.

Still, UCLA's Kominski said everyone is looking for ways to keep health benefits affordable, including his own employer, UCLA, which recently adopted a narrow network for its self-insured plan. “If this is the direction at least a piece of the market is going, the bigger group market may follow suit,” Kominski said.

Minnesota's PreferredOne premiums to skyrocket

The Star Tribune reports that PreferredOne, the provider-owned health plan with the highest enrollment share in Minnesota's Obamacare exchange and that exited the exchange for 2015, will be raising monthly premiums to members by an average of 63% in 2015.

PreferredOne had offered some of the lowest rates to exchange customers for 2014. But the insurer said in a written statement that the increases were a “significant step at stabilizing our rates” and were necessary considering it was paying far more in medical costs than it was collecting in premiums. Minnesota said earlier this month that the average 2015 rate increase for exchange plans was 4.5%. But that figure only factored plans that stayed in the exchange. Thousands of Minnesotans who had enrolled in PreferredOne through the exchange this year will have to switch insurers if they want to keep their Obamacare premium subsidies for 2015.

Why uninsured Coloradoans aren't buying health insurance

More than four out of five uninsured Colorado residents declined to buy health coverage in the ACA's first open-enrollment period because of the high costs of plans, according to a report from the Colorado Health Institute (PDF).

Data from the Colorado Division of Insurance show monthly premiums in 2014, before factoring in federal subsidies, ranged from $233 to $667 for a 40-year-old person buying a silver-tier plan on the exchange. Colorado's monthly premiums with the same parameters for 2015 are similar, ranging from $202 to $641.

Other reasons uninsured Coloradoans didn't buy insurance: They lost coverage (such as when a family member lost a job), or they didn't think they needed health insurance.

Follow Bob Herman on Twitter: @MHbherman



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