How did we get here?
A recent study by PwC projects that 2019 will see a continued, stable rise in insurance costs for employers. The 6 percent increase is consistent with the past five years’ data, though still a significant — and growing — expenditure. The study also identified factors that act as ballast to curb the ever-increasing expenses of healthcare. Primary among these deflators are high-performance networks, which “emphasize high-quality care and customer satisfaction alongside cost savings.”
These costs are felt significantly by employees, many of whom are enrolled in high-deductible health plans (HDHPs) with exorbitant out-of-pocket payments that may ultimately lead them away from necessary services such as preventive care.
The good news is the economy is turning around, and employers are incentivized to offer higher quality, lower cost insurance packages in order to preserve their greatest asset, their employees, who could jump ship to work for a competitor with a stronger compensation package. To avoid this situation, employers have started to shift from HDHPs to narrow networks.
What are narrow networks?
Narrow networks, which are defined as insurance plans that comprise 30 to 70 percent of providers in a given area, are formed when payers select a small group of high-performance providers who provide high-quality care at a lower total medical cost.
President of Privia Medical Group – Georgia Amy Cheslock, who previously helped execute Anthem’s payment innovation and provider collaboration programs, explains how narrow networks reduce consumers’ financial burden.
“In an era when individuals find themselves in high-deductible health plans, many of the costs of increased healthcare services are borne by individuals. Employers face an ongoing need to mitigate rising medical trends that outpace the rate of inflation. There is a pronounced and growing interest and opportunity to narrow networks or create plans that preferentially steer individuals toward selected providers as a way to offset medical costs that can’t be absorbed by individuals or managed through benefits designed by employers.”
The movement toward narrow networks is welcome news for primary care physicians. One study indicates that a privately insured American with an HDHP and no health savings account (HSA) is significantly less likely to see a primary care physician and receive preventive care. Why is this? Evidence suggests that up to 20 percent of individuals with HDHPs aren’t educated about their plans and don’t know whether deductibles apply to preventive care, which creates a financial barrier to even wealthy Americans.
How can primary care physicians benefit?
Narrow networks often also place an emphasis on high-value primary care services. As narrow networks proliferate, patients are increasingly incentivized to visit their primary care physician. They’re no longer discouraged by confusion surrounding their deductibles for routine visits. These preventive visits pay off in downstream savings through early detection of chronic diseases and pre-crisis treatment plans. In fact, well-designed narrow network benefit plans have been correlated with a rise in primary care appointments and a fall in emergency department visits. Furthermore, there is less onus on the patient to research quality metrics, weigh the data against cost-effectiveness, and find the ideal care, especially when in a precarious position due to sickness or injury. The average patient lacks access to meaningful data from which to make decisions, and many forgo necessary preventive care for fear of a staggering bill. By their nature, narrow networks already have this high-quality, low-cost optimization built into them and their referral networks.
What can you do to prepare for the inevitable? In short, ensure that patients are educated and aren’t paralyzed by complexity.
“Nobody — patients, employers, providers — actually desires more complexity; what they want is more simplicity at a lower cost,” Cheslock says. Horror stories surrounding narrow networks perpetuate the belief that they’re woefully understaffed or even predatory. In one case, a patient who underwent a gastrointestinal procedure at an in-network hospital was surprised by a $3,000 bill because the anesthesiologist was out of network. To combat the reluctance and uncertainty that accompany any new venture, doctors are best positioned to assist directly in the design and construction of the narrow network and can therefore act as liaisons who can adequately communicate to patients the benefits of narrow networks in terms of cost and quality.
“Nobody — patients, employers, providers — actually desires more complexity; what they want is more simplicity at a lower cost.”
“That to the extent that primary care physicians practice in an environment that enables them to have at their fingertips the network configurations of their patients — “Who is participating in those patients’ benefit plan networks?”— they can serve as a trusted referral source to make sure the patients are getting both to a high-quality but also in-network provider,” Cheslock says.
Next steps and closing thoughts
Disruption is always unsettling, though often constructive. While narrow networks benefit patients, payers, and providers, there is one glaring caveat: you need to be in-network. Deciding whether or not to opt in first requires a break-even calculation that analyzes your patient demographics and payer reimbursement rates. It’s possible that, even with stellar quality metrics, a narrow network isn’t a good fit for your patient population. Not only do narrow networks privilege high-performing providers while driving down costs and barriers to access for patients, they may also incentivize patients to seek providers in accountable care organizations, thereby acting as a stepping stone to value-based care.
Disruption often paves the way for change and improvement. Watch this two-minute video to learn about Privia’s mission of “changing healthcare to what it ought to be.”