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Micro-networks offer new health insurance option

By Mark Grisanti

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In the new health insurance environment, everyone is looking for a win-win: A solution that will provide great health care coverage to employees while minimizing the employer’s expense. This quest can be daunting, but one concept that holds promise for your benefits clients is micro-networks.

Let’s start with a definition. Micro-networks, also called “narrow networks,” have emerged over the last year and exist within carrier networks. They incentivize members to choose from a plan with fewer provider options and significantly reduced premiums. Most carriers will allow employers to offer a plan with a micro-network as an option, but not as a means of replacing the current network.

As we head to 2015, most major carriers are expected to implement smaller network options. They’re looking for ways to minimize costs for employers within the framework of the Patient Protection and Affordable Care Act (PPACA), which of course requires them to deliver affordable insurance to everyone, regardless of preexisting conditions.

Micro-networks were rolled out to public insurance exchanges this year. Conceptually they worked, although there were some issues.

Now, they’re being created for group employee plans. Micro-networks figure to be a big topic of discussion in 2015.

Stethoscope on dollar

Micro-networks in action

Each carrier is putting a unique spin on how its micro-networks operate. Some offer a tiered approach, meaning that employers (and therefore the employer’s employees) have access to a full network but pay less if they receive care in-network.

Carriers that implement micro-networks have very specific goals in mind: they’re seeking to create low-cost, high-value programs. Consequently, they’ve been aligning with providers that they determine to be doing the best job at keeping plan users healthy for the best price.

That means they’ve been seeking out providers following the accountable care organization model (ACO) (typically larger hospital provider systems), who may be more open to being reimbursed based upon results rather than fee-for-service.

This combination of criteria appears to make micro-networks a good way for employers to control their costs while also delivering a high level of health care to their employees.

However, they aren’t a perfect solution.

Man looking at a confusing diagram

Working out some kinks

Micro-networks are still a new concept and some challenges have emerged.

For the consumer, a micro-network looks like the same old plan; however, the benefits user doesn’t have access to the same number of providers that they may be accustomed to.

This means that employees may have a difficult time finding a doctor they already use and know.

Micro-networks can also create confusion. There are examples of employers not realizing they were enrolled in a micro-network after their group renewal with the same carrier. It was only brought to their attention after their participants had accessed health care and received invoices for treatment!

They’re not the only ones confused. We’ve also heard some stories of doctors who did not realize they were servicing patients who had joined micro-networks. The upshot was that neither the patient nor the physician knew there had been a change, and a patient the doctor had a long-term relationship with was no longer in the physician’s network. This can be an expensive mistake and a pretty unpleasant surprise.

One additional possible issue is that there will be increased patient volume for in-network providers. This could lead to an overwhelming demand for health care appointments.

Maze

Is a micro-network right for your client’s organization?

Employers who are considering joining a micro-network should allow plenty of time to plan and investigate the opportunity. Because of the very specific provider parameters around a micro-network, employers need to understand their employee population and the provider options available, and how they do or don’t mesh. It’s best to start by looking internally at an employer to get a good reading of employee health care needs, including how they access health care providers today. From there, employers should examine what’s available externally to gain an understanding of the provider network available to them and their employees.

Remember that each carrier has created their own version of a micro-network, so comparing apples to apples may be challenging. Employers need to talk to their benefits consultants carefully to understand the strategy that each carrier has chosen to operate its micro-network and find the one that best suits the needs of a plan’s participants. This is not a one-hour meeting; it requires rolling up your sleeves and digging into the facts. So, again, advise employers to think about this at least six months before their renewal dates, if at all possible.

In today’s difficult health insurance market, employers are looking for new paths forward. Micro-networks are a viable alternative, and this seems to be where the industry is headed. When properly created, a micro-network can be a win-win for your employer clients and their employees. But the devil is in the details of execution.

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