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Life Health > Health Insurance > Health Insurance

We've got your doctor

By Allison Bell

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Marketing experts usually advise clients to “segment the market” and find a way to appeal to the preferred market segments by setting themselves apart from the competition.

For health insurers, the Patient Protection and Affordable Care Act of 2010 (PPACA) could make standing apart from the competition complicated.

Joseph Berardo Jr., the president of MagnaCare, a company that develops provider networks for health plans, believes that he has the answer: provider networks.

Some insurers could set themselves apart with broad networks, he said, and others could set themselves apart with “micro networks,” or “pods.”

“It’s all going to center more and more around integrating care management,” Berardo said. “The whole goal is just to manage care better.”

PPACA
A lawsuit, a House Republican repeal bill or a House Republican budget bill could still kill PPACA dead before Oct. 1, when PPACA exchanges are supposed to start selling individual and small group coverage that will begin to take effect Jan. 1, 2014.

Right now, however, the big health insurers, benefits brokers and benefits consulting firms seem to be proceeding on the assumption that the exchanges are coming, along with the PPACA employer health coverage mandate; the PPACA tax penalty to be imposed on individuals who fail to own “minimum essential coverage”; a requirement that all health plans offer a basic, state-created “essential health benefits” (EHB) package; a requirement that plans issue coverage without taking personal health information into account; tight restrictions on use of personal health information in coverage pricing; and a full ban on annual and lifetime benefits caps.

PPACA already requires carriers to spend 80 percent of individual and small group premiums on health care and quality improvement efforts, and it already requires carriers to jump through disclosure hoops when they increase rates more than 10 percent.

Top executives at UnitedHealth Group Inc. (NYSE:UNH) and WellPoint Inc. (NYSE:WLP) have said that all of the PPACA-related change and uncertainty will lead their companies to be relatively conservative about how they price new business over the next year or two.

If health insurers and agents are afraid of underpricing coverage and getting stuck with big, PPACA-related losses, and they can’t tinker very much with the list of benefits offered, how do they set themselves apart?

PPACA does still give insurers some flexibility when it comes to deciding which doctors and hospitals to include in their networks.

PPACA and state laws and regulations do impose minimum provider access requirements.

PPACA Section 1311 requires that a health plan qualified to sell coverage through the new PPACA exchange system “ensure a sufficient choice of providers” to comply with the network adequacy provisions in Section 2702(c) of the Public Health Service Act.”

A qualified plan also must “include within health insurance plan networks  those essential community providers, where available, that  serve predominately low-income, medically-underserved  individuals,” and the plan must meet a plan accreditor’s “network adequacy and access” standards along with other accreditation standards.

But, as long as exchange plans meet the minimum access standards, and as long as the networks function well enough that the plans earn reasonably high scores on plan enrollee satisfaction surveys, plans can have provider networks that are as big, as small, as traditional, or as radically innovative as plans want.

The plans sold outside the exchange system can offer any networks large enough to meet the state and federal requirements in effect 

The pods
In theory, a plan could offer a network in which every doctor had a great fish tank, or every pediatrician had a Wii in the waiting room.

In the real world, plans tend to offer big networks or small networks of providers who get high marks for quality, price and efficiency.

In the long run, another selling point might be how well a plan’s network, or a super-preferred pod within the main network, is integrated.

PPACA itself and an earlier law, the Health Information Technology for Economic and Clinical Health (HITECH) Act, include provisions that are supposed to encourage providers to work together to get patients good care as efficiently as possible.

The HITECH Act, for example, provides bonuses for doctors and hospitals that treat Medicare and Medicaid patients that use electronic health record (EHR) systems, to increase the likelihood that the providers will be able to use electronic systems to coordinate and analyze care.

A major PPACA pilot program encourages Medicare providers to join to form “accountable care organizations” (ACOs), or integrated provider groups that are supposed to work closely together to coordinate a patient’s care and share in access to incentive payments tied to the quality and efficiency of the care provided.

For now, “I don’t think there are many true ACOs,” Berardo said. But, in part because of the influence of PPACA, he sees hospitals integrating with providers, and providers integrating themselves into independent practice associations (IPAs).

“All of these activities are going on feverishly,” Berardo said.

The physician-led pods tend to be more nimble than the hospital-led pods, and the physician-led pods tend to be better at holding costs down, Berardo said.

Hospitals that acquire physician practices often increase the practice fees, and pressure to fill hospital beds may conflict with the goal of minimizing use of inpatient hospital care, Berardo said.

So far, Berardo has not seen any signs that the narrower networks are interfering with patients’ access to care. The pods have been using urgent care clinics to fill in gaps, and the providers within the pods have been using nurse practitioners and physicians’ assistants to increase capacity, Berardo said.

Unlike some health reform ideas that seem to have more of a presence in seminar slideshow presentations than in the health insurance market, the narrow network is getting buyers’ attention.

Employers and brokers often ask about pods, and the concept is particularly popular with large employers, suh as school districts or municipalities, that are looking for ways to set their plans apart, Berardo said.

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