Your Narrow Network Will Be ‘Basic’ But Will It Be Adequate?
Many physician and consumer groups cheered when the Obama administration proposed network adequacy standards for health insurance plans sold on state and federal marketplaces. They will be disappointed that many of these standards did not make it into the Final Rule published yesterday in the Federal Register.
The Centers for Medicare and Medicaid Services (CMS) had proposed that states establish quantitative measures of network adequacy to ensure sufficient access to health care providers. For states that didn’t institute their own measures, CMS proposed a default system that would rate network adequacy by a maximum travel time or the distance to providers. The proposal included a minimum provider-to-member ratio for some specialties. The proposed rule, however, met with fierce opposition from insurance companies and state insurance regulators, who have their own state-led model law on network adequacy.
In the final Notice of Benefit and Payment Parameters for 2017 (a fact sheet), CMS has backed away from quantitative network standards, opting instead to give states time to implement adequacy reforms through the National Association of Insurance Commissioners (NAIC) model law. The model law doesn’t mandate quantitative network standards, which the NAIC has argued against as unnecessarily burdensome to plan issuers. This is a win for the insurance industry and state regulators, while consumer advocates arguably lost this round.
The Affordable Care Act (ACA) set a national standard for network adequacy requiring “a network that is sufficient in number and types of providers,” and that “all services will be accessible without unreasonable delay.” But the interpretation of “sufficient” and “reasonable” was left to the states, and as such varies state-to-state. Meanwhile health insurance plans that could be called ‘narrow’, contracting with a limited set of providers, have proliferated on the ACA marketplaces. These plans tend to have lower premiums, making them an attractive choice for some consumers.
But without a well-enforced quantitative network adequacy standard there is no way to ensure that these health plans include providers that can deliver the right care at the right time without burdensome travel time for the consumer. The debate is whether the benefits of the added protections of this national minimum standard would outweigh the costs. In addition to concerns about the regulatory burden, insurers are concerned that a fixed standard would limit their ability to offer lower cost plan options, constraining them in their negotiations for their networks of limited breadth.
CMS shied away from the quantitative adequacy standard in their final rule, but an important provision on transparency of network size made the cut. The thinking goes that if consumers were fully informed about the network of providers when they selected their health plan, they could make a conscious choice about whether they preferred the plan with a limited network and a lower premium or a plan with a broader network that might make it easier to find the right care conveniently at the right time. [That is assuming they have the choice. A new McKinsey analysis of hospital networks shows a three-fold increase in the percentage of consumers who have access to only narrowed networks.]
The new CMS rule details how starting as early as 2017 on Healthcare.gov, CMS will label the breadth of each plan’s network in ways that will help consumers understand what they are buying. In the final letter to Qualified Health Plans (QHPs) for 2017, CMS says it will focus on hospitals, adult primary care, and pediatric primary care in its labelling process, either separately or as a composite measure. These areas were chosen based on feedback that access to specific hospitals and preferred primary care doctors is important to consumers when comparing plans. The new labels will compare a network’s breadth to other available plans in that county, categorizing the network as ‘Standard’ if within a standard deviation of a baseline Provider Participation Rate, or ‘Broad’ or ‘Basic’ if above or below it respectively.
CMS writes that when they applied this methodology to 2016 QHP issuer data, they found that approximately 68 percent of the plans would have been categorized as ‘Standard’, about 16 percent would have been classified as ‘Basic’ and about 16 percent would have been classified as ‘Broad’.
We recently made our own effort to understand the prevalence of narrow networks. We represented our findings in a five-level ‘t-shirt sizing’ approach and looked at 2014 Silver Plans across all health insurance marketplaces and by state and rating area. We categorized network size into five groups that are based on the fraction of the physicians in the market: x-small (less than 10%), small (10%-25%), medium (25%-40%), large (40%-60%), and x-large (more than 60%). The CMS methodology would likely correlate with our ‘x-Small’ and ‘x-large’ sizing, but our five-level analysis provides the consumer with more detail on the large percentage CMS groups under ‘Standard’.
The new CMS rules on network transparency focus on the number of doctors in a market and do not address the breadth of specialty networks, which remains a concern for consumers. Nor will network size be defined specifically for the exact location of each consumer. Our network analysis showed that currently there is not a great deal of variation of network size by specialty, but with CMS’s new labeling there would be an increased incentive to game the system by increasing the breadth among the lowest cost providers and limiting access to the highest cost providers. Recent research on access to specialists in marketplace plans found that nearly 15% of Silver plans available on Healthcare.gov lacked in-network physicians for at least one medical specialty.
Our ‘t-shirt sizing’ approach is one way in which network size could be shared with consumers in a way that’s easy to understand and supports their decision-making. Some states are taking the lead on these types of efforts and incorporating comparison tools that include network breadth. But we must continue to examine new ways to categorize networks as the size of a network does not necessarily express the value of that network to a consumer.
Network adequacy and transparency were just a small piece of the new CMS rules, and Timothy Jost has analyzed them in all their detail in a series of posts on the Health Affairs blog.