Net­work squeeze

Con­tro­ver­sies con­tinue over nar­row health plans

Modern Healthcare - - NEWS - By Bob Her­man

Los An­ge­les col­orec­tal sur­geon Dr. Allen Kam­rava reg­u­larly faces fi­nan­cial chal­lenges re­lated to nar­row-net­work health plans. He re­cently per­formed a gas­troin­testi­nal pro­ce­dure on a pa­tient at a lo­cal hos­pi­tal. Both he and the hos­pi­tal were in­net­work providers for the pa­tient’s plan. But un­be­knownst to him and the pa­tient, the anes­the­si­ol­o­gists and pathol­o­gists in­volved in the pro­ce­dure were not. So the pa­tient ended up on the hook for $4,500 for those out-of-net­work provider ser­vices. Had the pa­tient gone to a nearby out-of-net­work out­pa­tient surgery cen­ter and paid for the en­tire pro­ce­dure out of pocket, the to­tal bill would have been less than $1,000.

“Many pa­tients are sim­ply ac­cept­ing pure cash pric­ing for pro­ce­dures—as if they had no in­sur­ance cov­er­age at all—be­cause it is cheaper than if they were to stick with their nar­row-net­work op­tions,” Kam­rava said.

Nar­row-net­work plans have grown in pop­u­lar­ity, par­tic­u­larly on the Af­ford­able Care Act’s in­sur­ance ex­changes, be­cause their cheaper pre­mi­ums ap­peal to price-sen­si­tive con­sumers. About 70% of plans sold on the ex­changes in 2014 fea­tured a limited net­work, and their pre­mi­ums were up to 17% cheaper than plans with broader net­works, ac­cord­ing to a study by con­sult­ing firm McKin­sey & Co. Re­gard­less of what hap­pens legally or po­lit­i­cally with the health­care re­form law, nar­row-net­work plans are likely to con­tinue pro­lif­er­at­ing be­cause of those price ad­van­tages.

But there is sig­nif­i­cant con­sumer and provider dis­sat­is­fac­tion with how many of th­ese plans are or­ga­nized, in­clud­ing con­cern about in­ad­e­quate ac­cess and in­for­ma­tion. Crit­ics say in­sur­ers have made many mis­steps in build­ing ad­e­quate net­works and main­tain­ing ac­cu­rate, up-to-date provider di­rec­to­ries. In some ru­ral ar­eas, there are too few in-net­work providers, forc­ing plan mem­bers to travel long dis­tances to see one. Some pa­tients find out that a hos­pi­tal or doc­tor was out-of-net­work only af­ter they re­ceive a shock­ingly high bill. So far, fed­eral and state reg­u­la­tions on nar­row net­works are vague and in­con­sis­tent, ex­perts say.

Car­men Bal­ber, ex­ec­u­tive direc­tor of Cal­i­for­nia-based ad­vo­cacy group Con­sumer Watch­dog, said to­day’s nar­row net­works are rem­i­nis­cent of the HMO-style plans that spurred a back­lash in the 1990s. There could be grow­ing po­lit­i­cal pres­sure to reg­u­late nar­row net­works, par­tic­u­larly if they start mi­grat­ing into the em­ployer health plan sec­tor. “If in­sur­ance com­pa­nies start to try mov­ing th­ese nar­row net­works to em­ployer­based plans, then we’ll hear a loud con­sumer groundswell against this prac­tice,” Bal­ber said. “We’re al­ready hear­ing it now.”

Some ob­servers pre­dict that in­sur­ers will have to ease up on how skinny they make their net­works. The Con­gres­sional Bud­get Of­fice said this month that it an­tic­i­pates pre­mi­ums for the sec­ond-low­est-cost sil­ver plans on the ex­changes will in­crease by 8.5% a year on av­er­age be­tween 2016 and 2018. It said the in­crease is partly be­cause in­sur­ers will not be able to sus­tain the lower provider pay­ments and nar­rower net­works that are used to hold down the pre­mium costs.

But Amanda Starc, as­sis­tant pro­fes­sor of health­care man­age­ment at the Uni­ver­sity of Penn­syl­va­nia, said nar­row net­works are likely to sur­vive, es­pe­cially if they suc­ceed in forc­ing higher-cost hos­pi­tals to lower their prices.

New York has been one of the most ag­gres­sive states in ad­dress­ing con­sumer com­plaints about nar­row net­works. A law that goes into ef­fect April 1 protects pa­tients who didn’t agree to or un­know­ingly re­ceived ser­vices from out-of-net­work providers. In­stead of pa­tients re­ceiv­ing bills, in­sur­ers and providers have to re­solve the is­sue through me­di­a­tion, said Jackie Selby, an at­tor­ney at Ep­stein Becker Green in New York City.

“Many pa­tients are sim­ply ac­cept­ing pure cash pric­ing for pro­ce­dures— as if they had no in­sur­ance cov­er­age at all— be­cause it is cheaper than if they were to stick with their nar­row-net­work op­tions.”

Af­ter con­tro­ver­sies over net­work ad­e­quacy led to sev­eral law­suits against in­sur­ers, Cal­i­for­nia health plans now face re­quire­ments en­acted by the state Leg­is­la­ture last year to en­sure they of­fer ad­e­quate provider net­works. In­sur­ers will have to pro­vide an­nual re­ports to the Cal­i­for­nia Depart­ment of Man­aged Health Care about their provider net­works, and the agency’s as­sess­ment of that data will be posted on its web­site.

In Fe­bru­ary, the CMS tight­ened net­work rules for Medi­care Ad­van­tage plans. The agency said Ad­van­tage plans could be fined or sanc­tioned if they “fail to main­tain com­plete and ac­cu­rate di­rec­to­ries” or do not have an ad­e­quate net­work of providers ac­cept­ing new pa­tients.

On the non-Medi­care side, how­ever, the CMS has been less ag­gres­sive. It said in Fe­bru­ary that it will not make any fur­ther changes to net­work ad­e­quacy rules un­til the Na­tional As­so­ci­a­tion of In­sur­ance Com­mis­sion­ers fin­ishes work on a model law. Ex­change plans will be re­quired to up­date provider di­rec­tory in­for­ma­tion at least once a month start­ing in 2016, as well as in­clude 30% of es­sen­tial com­mu­nity providers.

Over­all, how­ever, fed­eral and state net­work ad­e­quacy reg­u­la­tions “don’t have any bite and are not well-de­fined,” said Keith Eric­son, a Bos­ton Uni­ver­sity health econ­o­mist. And for some re­mote re­gions of the coun­try, nei­ther nar­row net­works nor the emerg­ing reg­u­la­tory pa­ram­e­ters are prac­ti­cal.

Mon­ica Lin­deen, Mon­tana’s in­sur­ance com­mis­sioner, told a House panel last June that she has urged in­sur­ers sell­ing plans in Mon­tana through Health­Care.gov to in­clude at least 80% of providers in their plans. “The fed­eral 30% stan­dard is not in the best in­ter­ests of Mon­tanans and could re­sult in the clos­est (es­sen­tial com­mu­nity provider) be­ing 400 miles away,” she said.

More-pop­u­lous states don’t agree on how an ad­e­quate net­work should be de­fined. Some use spe­cific stan­dards such as wait times for doc­tor ap­point­ments, while oth­ers merely re­quire plans to have a net­work that does not lead to an “un­rea­son­able de­lay” of care. “It’s ex­tremely dif­fi­cult for reg­u­la­tors to de­fine a suf­fi­cient net­work with speci­ficity,” said Peter Rich, a Los An­ge­les-based part­ner at McDer­mott Will & Emery who works with hos­pi­tals and in­sur­ers.

Other states, in­clud­ing Mis­sis­sippi and South Dakota, have en­acted “any will­ing provider” laws in re­sponse to nar­row net­works, re­quir­ing in­sur­ers to con­tract with all providers who ac­cept their terms. In­sur­ers have op­posed such laws be­cause they could re­duce their abil­ity to bar­gain on rates and keep pre­mi­ums down.

Well­mark, South Dakota’s Blue Cross and Blue Shield plan, de­clined to say how the state’s new any-will­ing-provider law, ap­proved by vot­ers in a bal­lot ini­tia­tive in Novem­ber, has af­fected its busi­ness. How­ever, it said, “It takes away the abil­ity of in­sur­ers, on be­half of their mem­bers, to de­velop a net­work of providers based on their ef­fi­ciency and qual­ity.”

Anec­do­tally, nar­row-net­work plans have led to sur­prise out-of-net­work bills for con­sumers. Hos­pi­tals of­ten con­tract out for emer­gency physi­cians, ra­di­ol­o­gists, anes­the­si­ol­o­gists and other hos­pi­tal-based spe­cial­ists. While a hos­pi­tal may be in a pa­tient’s plan net­work, some of its doc­tors may not be—and pa­tients may face bills based on out-of-net­work rates.

EmCare, a large Dal­las-based physi­cian out­sourc­ing com­pany, said it tries to have its physi­cians on the same in­sur­ance con­tracts as the hos­pi­tals where they work, but ac­cept­able deals can’t al­ways be reached with plans. An EmCare spokesman said the prob­lem of pa­tients fac­ing out-of-net­work bills from EmCare physi­cians “comes up in some ar­eas on oc­ca­sion.” He added that “when (in­sur­ers) set ar­bi­trary rates, they force physi­cians out of their net­work.”

The ACA partly reg­u­lated th­ese out-of­pocket cost sit­u­a­tions for emer­gency care, said David King, an at­tor­ney with Bass, Berry and Sims who rep­re­sents providers in dis­putes with man­aged-care com­pa­nies. The law re­quires in­sur­ers to pay out-of-net­work emer­gency providers the largest of three amounts: the me­dian in-net­work rate, the amount the plan gen­er­ally pays for outof-net­work ser­vices, or the Medi­care rate. Providers then can bal­ance bill the pa­tient for the dif­fer­ence, but pa­tient cost­shar­ing must be treated as if it were in-net­work.

The ACA did not pro­hibit bal­ance billing in states where it was al­ready al­lowed. Only 13 states have laws that re­strict out-of-net­work providers from bal­ance billing peo­ple with health in­sur­ance, ac­cord­ing to the Kaiser Fam­ily Foun­da­tion.

In light of th­ese vary­ing reg­u­la­tions, lit­i­ga­tion has been fre­quently used to ad­dress is­sues as­so­ci­ated with nar­row net­works. Last year in Cal­i­for­nia, cus­tomers filed a clas­s­ac­tion law­suit against An­them, Blue Shield of Cal­i­for­nia and Cigna for al­legedly de­ceiv­ing cus­tomers about which hos­pi­tals and doc­tors par­tic­i­pated in their limited net­works. Plain­tiffs called the plans a “bait and switch.”

In New York, the state at­tor­ney gen­eral’s of­fice set­tled this month with Em­blemHealth, re­quir­ing the in­surer to cover anes­the­si­ol­ogy ser­vices that ac­com­pany in-net­work screen­ing colono­scopies, even if the anes­the­si­ol­o­gists are out-of-net­work.

Some hos­pi­tals have sued in­sur­ers for be­ing left out of plan net­works. Chil­dren’s hos­pi­tals and can­cer hos­pi­tals some­times have been ex­cluded from nar­row-net­work plans be­cause of their higher prices. How­ever, Amer­ica’s Health In­sur­ance Plans says “high-value provider net­works are help­ing to im­prove the qual­ity of care and mit­i­gate cost in­creases for con­sumers.”

Kam­rava said he tries to be in as many net­works as pos­si­ble. He has ad­mit­ting priv­i­leges at Cedars-Si­nai Med­i­cal Cen­ter, but that hos­pi­tal is ex­cluded from many pa­tients’ nar­row-net­work plans be­cause of its high prices. He’s con­sid­er­ing be­com­ing an in-net­work physi­cian at Prov­i­dence St. John’s Health Cen­ter, a hos­pi­tal seven miles from his of­fice, be­cause that would ac­com­mo­date more of his pa­tients.

But the move could be prob­lem­atic for him and his pa­tients. The com­mute could take up to an hour be­cause of L.A.’s bru­tal traf­fic. “It’s go­ing to be a ma­jor toll on my qual­ity of prac­tice,” Kam­rava said.

Be­low: Dr. Allen Kam­rava (right), Cedars-Si­nai Med­i­cal Cen­ter, Los An­ge­les with a pa­tient

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