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.
What Your Peers Are Reading
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.