The adequacy of “narrow network” plans offered on the Affordable Care Act (ACA) Marketplaces continues to be a concern in the wake of exclusions of some high-cost providers and the incidence of “surprise medical bills” even in facilities that are in-network. Increasingly, federal and state policymakers are adopting quantitative standards for network adequacy, but a new study in Health Affairs questions whether these standards ensure access to pediatric specialty care provided by children’s hospitals.

The Trump administration has recently granted states greater oversight of plans’ network adequacy. A number of states have adopted time and distance standards for their health plans, reflective of those used in Medicare Advantage (MA). The MA regulations require plans to ensure that at least 90 percent of beneficiaries live within a certain time and distance from at least one in-network provider or facility of each type. The time and distance vary by the rurality of the county and provider type, but ideally, these requirements ensure that the plan has contracted with sufficient numbers and types of providers. 

In a recent Health Affairs study, Jeffrey Colvin, LDI Senior Fellow Evan Fieldston, and colleagues assessed the proportion of children’s hospitalizations that would fall outside network adequacy requirements if MA distance standards were applied. The authors examined 748,920 inpatient hospitalizations at 81 children’s hospitals from October 2014–September 2015. They found that nearly half of all pediatric specialty hospitalizations would be beyond the distance requirements – and potentially out-of-network – if measured by the MA distance standards specific to the rurality of the child’s home county.

Under another hypothetical scenario, the authors adapted the distance standards to pediatrics by calculating the 90^th percentile of distance traveled from the patient’s home zip code to the discharging hospital. The authors found wide variability among the hospitals; less than 1 to nearly 36 percent of pediatric specialty hospitalizations would be outside the requirements, and potentially, out-of-network. These findings are consistent with previous research on pediatric provider networks on the ACA Marketplace, which found that the prevalence of narrow networks was greater in pediatric than adult specialties (66 v. 35 percent). The McKinsey Center for U.S. Health System Reform also estimates that only 23 percent of the “ultra-narrow” network plans and 6 percent of the narrow network plans offered on the 2017 public exchanges included access to a children’s hospital.

After the passage of the Affordable Care Act, many insurers developed narrow networks of providers to control costs. Insurers constructing narrow networks contract with fewer providers and exclude high-cost providers, which often allows them to negotiate more favorable provider reimbursement rates and price plans more competitively. Although recent studies suggest that the prevalence of narrow network plans on the ACA Marketplace is declining, many insurers continue to use these networks both inside and outside the Marketplace.

The ACA established certain protections to ensure that plan networks are “adequate” and allow consumers to access needed care “without unreasonable delay.” The federal government and nearly half of all state Marketplaces have also adopted quantitative standards for network adequacy. This trend towards adopting quantitative standards demands greater attention as they may not be appropriate for measuring whether a network is adequate for all provider types, such as pediatric specialists. As Colvin et al. indicate, adopting adult distance standards for pediatric specialists could delay necessary care for children. Such standards could also shift costs to families who may be forced to seek care out-of-network or choose a broader network plan at a higher cost-sharing tier. With nearly one fifth of children nationally having special health care needs, these delays in care or high out-of-pocket costs could be particularly acute for families of children with complex or chronic conditions.

While narrow networks can be advantageous for insurers looking to lower costs, they can create serious tradeoffs for consumers between choice and affordability. Previous research has shown that consumers in Marketplace plans with narrow networks have lower monthly premiums than those in plans with larger networks. Consumers in narrow network plans, however, have more limited options for providers and may need to travel further to an in-network provider or face high out-of-pocket costs for out-of-network care. These tradeoffs can be particularly acute for consumers needing specialty care. Colvin et al.’s findings are consistent with other studies showing that narrow networks are likely to exclude mental health and pediatric providers, as well as high-quality oncologists.

The authors recommend that policymakers consider a more “nuanced” definition of network adequacy for pediatric care or amend current qualitative standards. Policymakers could also establish exceptions to time and distance standards that factor in the accessibility of pediatric specialty services, since many pediatric specialists are geographically dispersed or in short supply. Additionally, policymakers could look to expand programs such as telehealth to bolster network adequacy.

Currently, there is legislation in the House and Senate that would require the Department of Health and Human Services to create pediatric network adequacy standards for complex care coordination programs for publicly insured children at children’s hospitals. The authors note that this legislation could be an important first step in addressing the unique needs of pediatric patients, and highlight the continued need to define pediatric network adequacy standards for all children who require specialty care.