By Nancy Lombaer
There’s been a lot of talk lately about narrow provider networks but low adoption in employer-sponsored health plans. That’s beginning to change, however, as more employers realize they can save up to 17% on premiums.
At their best, narrow networks are subsets of the standard provider network – hospitals, physicians, clinics, labs and pharmacies – with proven track records for quality of care and a lower overall cost of care.
Still, while narrow networks comprise more than half of all the ACA Marketplace coverage offerings, adoption among employers has varied. An EBRI study found that only 7 percent of employers with health plans offered a narrow network in 2016, believing other strategies are more effective at delivering cost savings.
But there are narrow networks…and there are narrow networks. The concept has been refined to address popular misconceptions, including fear of not being able to access specialty practices or get appointments due to physician shortages. Here’s an explanation of three variations that are available to employers.
A benefit for fully- or self-insured employers
The “traditional” narrow network plan is available to fully- and self-insured employers from various carriers in geographic pockets across the country. There are both narrow hospital and/or physician networks. These tend to pull out the more expensive providers, without sacrificing quality. In this case, cost is the primary rationale for narrowing the network.
When cost, quality equal high performance
Another type is the “high performance” network. Both cost and quality are the basis of this network formation, and “cost” focuses more on value provided (based on health outcomes, for example) versus the price discounting that characterizes more traditional narrow networks. Examples include networks formed by a prestigious health system or an accountable care organization (ACO).
Centers of excellence offer high cost services
“Centers of excellence” provide certain specialized and high cost services. These might include organ transplants, spine surgery, cancer treatments or other complex surgeries. These are typically offered as an option to employees, with reduced cost sharing to encourage their use.
Narrow networks can be an attractive option to employers and employees – even more so as they continue to evolve to better meet both basic and specialty health care needs. What’s important is to take a close look before signing up to ensure that sufficient practitioners, specialty providers and overall quality standards are met.
Ultimately, narrow networks – along with other cost-management strategies – need to meet your goals and your employees’. Your HUB advisor can walk you through the ways a narrow network strategy can lower costs while also improving the quality of care.