Health insurers are making more use of provider network design as an offensive weapon. Companies like Aetna and UnitedHealth were already offering bigger and smaller network options before 2010, when the Patient Protection and Affordable Care Act (PPACA) became law.
PPACA started to phase in limits on how insurers could use annual benefits limits, medical underwriting and plan benefits choices to hold rates down. Insurers reacted by creating narrow, ultra-low-cost networks; narrow networks made up of providers with high quality scores; and big networks aimed at the Cadillac plan market.
Meanwhile, many PPACA exchange plan enrollment sites have had trouble displaying anything more detailed than photos of happy customers, and insurers have been struggling to update their provider directories to reflect rapid network changes.
Even the experts are finding it difficult. Dr. Robert Gottlieb, a health policy specialist at the American Enterprise Institute, told a House Ways and Means subcommittee in December that an institute research team looked hard for exchange plan provider directories for a project and had a tough time finding them online or anywhere else.
In the middle of this kind of confusion, how can agents and brokers keep the network decisions made today from leading to long, disturbing calls from angry customers’ attorneys a year from now?
1. Cling to your errors and omissions (E&O) insurance advisors.
When you sell health insurance, you want to see your customers exercising, eating properly and getting the recommended blood pressure screenings.
When you use E&O insurance to protect your health insurance business, you should be reading anything your E&O advisors send out about PPACA risk management, including anything about what you should and should not tell customers and prospects about the doctors and hospitals that are, aren’t, might or might not be in a plan’s network.
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Your marketing instincts may scream that the way to get ahead is to present yourself as a local provider network specialist. You may be the broker in your area who really knows which networks offer the best pediatricians and the best OB/GYNs.
But — as Swiss Re Corporate Solutions says in an E&O manual it prepared for an Independent Insurance Agents & Brokers of America convention — claims of expertise can affect the standard of care a court applies to an agent or broker.
If you voluntarily undertake a duty not required by your state, “you may be responsible for fulfilling all of the obligations associated with that duty for every customer,” Swiss Re warns.
If you decide you do want to accept the E&O risks involved with being a provider network specialist, you may want to limit that risk by developing standard procedures for talking about networks with customers, standard disclaimers for emphasizing your inability to promise which providers will be in a given network in the future, and standard procedures for documenting those conversations.
2. Understand the history of provider network fashions.
Americans go back and forth between wanting the most generous possible health coverage and something they can afford.
“Staff model” health maintenance organizations (HMOs) that owned their own hospitals and employed their own doctors tried to hold costs down in the 1980s by making HMO enrollees use the HMOs’ own employee doctors.
The staff model HMO approach backfired. Consumers complained about bad doctors and long waits for appointments.
In the 1990s, HMOs tried to keep networks small in what they hoped was a kinder, gentler way, by paying a fixed sum per patient to the primary care doctors in large group practices. The primary care providers were supposed to pay for specialist and hospital care with the capitation payments and make their money by preventing unnecessary use of care.
The patients once again complained about bad doctors and long waits for appointments, and the group practices went broke.
Insurers began to put together provider networks that included just about all of the hospitals in a community that were good about throwing out rusty scalpels, just about all of the primary care doctors who seemed to have medical degrees, and many of the specialists.
Aetna began moving the pendulum back around 2003 by publicizing a small effort to set up small networks of top-quality doctors in some markets.
Gde Merkl, a McKinsey consultant, noted in an analysis of early trends in PPACA public exchange filings that, in one exchange market, the exchange carriers are now using narrow network designs to cut premiums by as much as 24 percent.
“Although more restrictive features appear to be a way to meet consumer demand for low price points, it is yet unclear how consumers will actually respond to these features over the long term,” Merkl wrote in the analysis.
At press time, PPACA critics were beginning to wake up to the idea that network adequacy might be an issue they could use to attack PPACA. For example, Rep. Darrell Issa, R-Calif., chairman of the House Oversight & Government Reform Committee, announced that he was sending letters to big insurers to ask them about the state of their provider networks.