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.
