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Tuesday, September 30, 2014

Two Takes: Can New Network Designs Hold Down Costs Without Hurting Consumers?

In this first installment of our “Two Takes” occasional series, two of our experts who come from different perspectives—Caitlin Morris, who focuses on health system improvement, and Claire McAndrew, who focuses on private insurance reform and consumer protections—take on the tough questions surrounding this issue. How can we stop the unsustainable growth in health care costs if we allow consumers to continue receiving care from providers who don’t deliver good value? And on the other hand, how can we ensure that consumers can obtain adequate, timely, geographically accessible care if we further restrict their networks?

As health care costs—and therefore insurance premiums—continue to rise, health plans and employers are looking for new ways to hold them down. Plans are showing an increased interest in altering the design of their provider networks as a way to address rising costs. We’ve seen this through plan designs like narrow networks, value-based provider networks (which include only those providers that meet pre-established price and quality criteria), and tiered networks (which charge consumers more for visits to higher-cost, lower-quality providers).

Question 1: Are these newer cost-containment network designs necessary?
Question 2: What are the risks of implementing these types of networks?
Question 3: Where should we go from here?

Question 1: Are these newer cost-containment network designs necessary?

Caitlin Morris: Yes, because not all providers are created equal. Some providers just do a much better job of consistently delivering high-value care than others. Not to mention, the price and quality of health care services can vary widely even within a small geographic region, making it difficult for consumers to identify high-value providers.

So here’s the challenge: We know that some providers charge way too much for their services and don’t deliver quality care. We also know that rising health care costs are putting a strain on health plans, employers, and consumers. So, how do we help consumers to select high-value providers and reduce health care spending at the same time?

One of the tools that health plans have at their disposal to control rising health care costs, promote quality, and ensure that premiums remain affordable is the design of their networks. Using cost and quality thresholds to define a provider network is one way to weed out the lower-quality, high-cost providers. And frankly, it’s appropriate and necessary for health plans to cut out low-value providers; it’s better for their bottom line AND better for consumers.

Claire McAndrew: I agree that it makes sense to adopt policies and systems that can prevent consumers from receiving care from high-cost, low-quality providers when other options for timely, accessible care are available. We may not know yet exactly what models achieve this goal, so testing different interventions is reasonable. However, these models must be implemented thoughtfully, with a baseline of consumer protections in place and a close eye on ensuring that enrollees continue to have access to the care they need.

Morris: Unfortunately, not all consumers are aware that their doctor might not be giving them the best care for their needs. Consumers often think that being able to see the doctor they want or to visit a nearby hospital is the most important feature of a good health plan, but that’s not always the case. Sure, choice is important, but if you end up with a bad doctor, you could be setting yourself up for a whole host of problems. Health plans can actually help ensure that consumers get better care by restricting their provider networks to only high-value providers. It’s counterintuitive but very true.

Think of it as a stick and carrot proposal: If you, Doctor A, aren’t providing high-value care, then you’re out of the network and lose access to all our enrollees (and their money). But if you improve care quality and reduce unnecessarily high costs, then we’d be happy to have you back in the network. Providers therefore have a strong incentive to deliver high-value care, and consumers can feel confident selecting any provider in their network. And high-value care isn’t just more efficient or less expensive care; it can actually lead to better health.

McAndrew: As long as the right protections are in place, I agree with those concepts. I think there is a misconception that consumer advocates want health plans to include every single hospital and every single provider in their networks regardless of value, and that just isn’t the case. Advocates are frustrated over inappropriately high costs for services. And we are very aware of the fact that high costs do not necessarily indicate high quality, but do strain all of our budgets.

Question 2: What are the risks of implementing these types of networks?

Morris: None of this should suggest that setting up a high-value provider network is all that simple. One key issue that can make or break a high-value network is how the plan defines “high value.” A big concern here is that a plan might select blunt measures of cost or efficiency when setting up the network without regard for quality. Cost is only one half of the value equation; quality is equally—if not more—important. Selecting the right quality AND efficiency measures, keeping in mind the specific needs of the beneficiary population, is critical and can mean the difference between a truly high-value network and just a restricted one. Health plans and employers should focus on transparency and consumer engagement and look to widely recognized, evidence-based measures of quality and efficiency.

McAndrew: I share all of those concerns about some plans implementing these designs carelessly—bluntly excluding providers and facilities they deem too expensive from their networks—without using actual data on value to select providers. I am also deeply concerned that some plans may be implementing these designs without first considering the inadequacy of the networks they are starting with.

For example, there are places in the country where—in a standard network that isn’t narrow or doesn’t have any tiering or value-based design—new enrollees still struggle to get a primary care appointment without having to wait a few months. And for certain specialties, people are facing problems getting appointments at all. These are serious violations of consumer rights.

What would happen if you implemented these newer cost-containment network designs on top of these problems? Long-standing, severe provider access problems could be exacerbated if plans implement new network designs that further restrict the providers that are available to enrollees, or available at the lowest cost, in places that already have provider network adequacy issues.

Finally, I worry about consumer confusion. Particularly in the health insurance marketplaces, many people are new to having coverage, so there is a learning curve even for basic insurance concepts such as deductibles and copayments. Therefore, when you bring in more complex elements such as tiered networks, I’m very concerned about whether these consumers would understand how to navigate their plan.

Question 3: Where should we go from here?

McAndrew: I do think we should continue to explore models that will give providers incentives to lower their prices and deliver only high-value care. Ultimately, I think that means excluding them from provider networks if they fail to meet those standards. However, this is workable only with consumer protections in place to guarantee that in these models, plan enrollees can still get the right care, at the right time, without having to travel unreasonably far.

To ensure that these rights to care are not violated, states and the federal government should implement network adequacy standards that apply to all plans. For example, these standards should set maximum thresholds for travel time and distance to providers and appointment wait times to ensure that enrollees have reasonable access to care. Consumers should also have the right to get care out of network at no additional cost when their plan does not include a geographically accessible in-network provider who can meet their medical needs in a timely manner.

Network adequacy laws passed in California and New York can serve as models for other states and the federal government, as can standards from Medicare Advantage. In addition, the National Association of Insurance Commissioners (NAIC) is currently updating its model law on network adequacy. (We describe these and other model standards in our recent issue brief, Improving Private Health Insurance Provider Networks for Communities of Color.)

Ultimately, I think everyone involved wants to get to a place where people can get high-value care from high-quality providers through their health plan. So it’s important to ensure that networks that are taking on new innovations in cost containment can fully meet the needs of their enrollees and don’t force them to go out of network for care or forgo care due to cost.

Morris: I agree completely. Using network design to address the rising cost of health care and drive value holds great promise, but only if consumers can continue to get the care that they need when they need it. Otherwise, it just becomes about shifting cost and forgoing care, neither of which addresses the root causes of the problem. If we can define value in a way that is accurate and meaningful and that ensures access through adequate consumer protections, I think that high-value provider networks can be effective. Besides, shouldn’t all care be high-value? Maybe this can help get us closer to that goal.