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High-performing networks: 4 reasons they're great

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Health insurance professionals face a new challenge: backlash against smaller provider networks, which are also known as high-performance or narrow networks, as their popularity and effectiveness continue to grow.

In the quest to cut health care costs while also improving service, these high-performing networks represent a viable strategy for delivering value and are becoming a widespread business practice.

Federal and state regulators, however, have a different perspective. They are seeking to require what they deem to be “adequate,” more expansive networks in an effort to “protect” consumers from high-performing network plans, and from the out-of-network costs that, they say, could result from individuals needing to settle for providers outside of the network. Such counterproductive regulations would make it more difficult for employers to forge strategies that control costs – and keep premiums low.

Amid these regulatory discussions, health insurance professionals will find it productive to focus on communicating key messages in order to influence policymakers. Regulators need to better understand that high-performance networks deliver cost-effective, high-quality care, and that by accessing care from these providers, consumers get the best value for their health care dollars.

There is strong validation that these select provider networks improve efficiency, clinical effectiveness and value, and offer one of the most significant opportunities for slowing unsustainable levels of health care spending.

The concept of a high-performance network now requires stepped-up communications: Regulators need to appreciate their value and discard the perception that they limit consumer choice in a negative way. The fact is, relying on sophisticated data analysis that identifies providers that deliver quality care while keeping costs low is inarguably in the best interest of every consumer. Any apparent limitation is very deliberate and intended to bring individuals an overall improvement to care.

Here are four other messages to deliver.

1. Smaller is better.

Research conducted by McKinsey & Co. found that the size of a plan’s network is not correlated to its performance as measured by the federal Centers for Medicare & Medicaid Services (CMS), in terms of outcomes, patient experience and clinical process. Nevertheless, skeptics want to know how less choice in a health plan translates into lower costs.

The answer is two-fold.

A health plan can decide to sign contracts only with the hospitals that charge lower prices. This is important given that there can be enormous variation in health care prices. For example, an appendectomy can cost anywhere from $1,529 to $186,955. By signing contracts only with providers who are much closer to the $1,529 end of that spectrum — and who demonstrate good outcomes — health plans can lower the price of providing health care without compromising quality.

Also, health plans that work with fewer providers have the ability to negotiate lower prices or change compensation models to outcome based approaches. Basically, they are promising to increase volume to a smaller set of physicians, and can therefore reduce the net effective cost they pay for each visit. This leads to lower out-of-pocket costs for plan members.

The bottom line is that high-performance networks are designed to drive consumers to better performing providers and facilities, while helping to reduce spending.

2. Small networks can exclude high-cost, ineffective providers.

High-performance networks enable employers and payers to identify providers with a demonstrated ability to deliver quality, efficient health care, while offering consumers incentives, such as reduced cost-sharing, to obtain care from those high-value providers.

This strategy has emerged in response to increased access to vital data from claims, prescriptions and clinical settings that can be used to identify and stratify those physicians who tend to order more tests, prescribe more brand-name drugs or in some cases take on more complex patients which impact results.

3. Smaller networks can help preserve health benefits programs, by reducing the cost of coverage.

Utilization of high-performance networks is also an important way to preserve benefits and keep premiums affordable in response to health care reform, which has forced employers to re-evaluate their plan strategies, open up options and clarify their obligation. In terms of retaining and attracting talent, offering health care coverage is important. It adds to employee satisfaction and helps to create a healthier workplace with managed care tools.

4. Smaller networks can foster collaboration across the health care continuum.

Smaller networks also make collaborations easier to implement and affect positive change in a given population. A majority of payers and providers are now recognizing the importance of clinically integrated networks to any effort to manage the care of defined patient populations. Payers, including Medicare, have endorsed collaborations to bring new models of care delivery and payment reform to create improvements in quality and the affordability of care.

Of course, the threat of strict new regulations is not the only obstacle high-performance networks face.

Organizers also face the possibility of plan member resistance, a lack of employer-provider alignment, a lack of providers agreeing to participate, the challenges of balancing quality and cost, low patient engagement, and a need for quality IT infrastructure. For the most part, however, these challenges are more about perception than reality, and they can be overcome by effectively communicating the advantages of high-performance networks to employers, plan members and policy makers.

The current health care environment revolves around defining, developing and demonstrating value. The strategy of choice for many provider organizations is to focus on quality over quantity. high-performance networks increase affordability and create transparent choices for members based on value, signaling a shift toward a more competitive environment that will benefit the health care system overall.

See also: PPACA plans could squeeze hospitals


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