When it comes to provider choices, being narrow-minded may be best.
I’ve blogged in the past about how tiered networks will adversely affect patient choice. But what I’m about to say is nothing compared to that…
There is talk in the healthcare world about provider networks that are limited by design. Meaning you can only choose from a short list of providers. Why would one do this? Believe it or not, there are pretty good reasons behind it.
Before I dive into this, let me note that this is not a new idea, but an idea revisited (this tends to happen a lot, healthcare fans…) And I’m not the first to blog about it either. Here are a few other posts on narrow networks for perspective:
Back to this blog…
If you are a benefits manager at an employer with 500 employees with costs that are rising and double-digit premium increases from your health insurer year-over-year, your CFO may be leaning on you to do something about it.
So you look at the utilization reports from your broker and it shows that employees are utilizing high cost hospitals which is contributing to the high costs. What do you do? Maybe nothing. You explore cost cutting measures elsewhere.
But what if the data shows that your employees are using high cost hospitals…that have poor quality? Perhaps you’re more likely to do something.
Welcome to healthcare – 2011 and beyond.
Everyone knows that health costs are spiraling out of control. Benefits managers are tweaking plan designs to reduce costs. Health insurers are creating outcome-based contracts for their providers. Providers are looking at how to create meaningful ACOs to streamline care and share data.
And John Q. Public continues to blindly go to whichever hospital he wants.
Chances are, John Q. is also not participating in his company’s wellness program. Maybe he’s a smoker as well. And maybe he really enjoys Wendy’s for lunch – thus, he is likley obese.
Well, John Q., some might point at you as the reason costs are getting so high. But hey, you’re paying for health insurance, why not go wherever you want to go, right?
Maybe not for long.
Some employers are working with their brokers and insurance companies to explore the implementation of something known as “Narrow Networks’. In short, it is a select group of high quality, low-cost hospitals.
If there is a medium cost, ok quality hospital – sorry – not in the network. You can’t go there without paying the out-of-network costs. Or maybe…you won’t be able to go there at all depending on which product your company chose from the health plan.
Healthcare consumers may look at this as unfair. As yet another problem with the healthcare system – no more choice.
In fact, this type of thing may be just what the doctor ordered.
If the average healthcare consumer isn’t savvy about costs and quality, then they will go wherever they’d like. Perhaps a friend recommended it. If your friend drives a Porsche Boxster and recommends it, are you going to go out and purchase it? If it’s someone elses dollar and you’re only paying a smaller amount – you might.
Then there are the more savvy healthcare consumers. The ones who actually try to research and learn more about costs and quality. But the data isn’t always readily available. And even when you find it, it’s hard to decipher or the data is not specific to “Hospital A” that you’re exploring. Despite the efforts, the more savvy consumer may still end up at a high cost hospital.
And many probably go to the hospital that is most convenient to them even if it is low quality and high cost.
In all of the above scenarios, the employer ends up looking at the high costs in the utilization reports from their broker. This may lead them to deduce that leaving patients with a lot of options may contribute to high utilization at high cost, low quality facilities.
Since there is pressure to do something, the employer will explore all options.
Enter Narrow Networks.
Narrow Networks are designed to remove the high cost, low quality providers from the network. In a way…it’s simplification.
If you are not a mechanic and you’re told to choose the oil for your car’s oil change, you might be looking at a wall of motor oil brands…Quaker State, Pennzoil, Valvoline, Castrol, Mobil 1, Havoline, Interstate, Shell…(I won’t even get into the 10W40 vs. 5W30).
You might make an educated guess – maybe you watch a little NASCAR and you know that your favorite driver is sponsored by Mobil 1. Great. That’s a good way to decide how to best protect your $20,000 vehicle. If it’s good enough for Tony Stewart, it’s good enough for my car, right?
But what if that list was cut down to three? And there was an assurance that the three left to choose are high quality and have reasonable costs.
Well, that’s what Narrow Networks are about. Think of it as choosing between three dishes at a wedding to which you’ve been invited. You’re going to get a good meal, but lobster and hamburgers may not be on the menu.
Yes, it’s another step away from patient choice. Yes, it may be viewed as a little Big Brother-ish. Yes this type of thing was tried a few years back and was not very popular. And yes, you’ll be pretty ticked off if your local hospital is not on the list.
But until people begin to heed the wellness calls and make significant behavior changes to better manage their own individual health…well, narrow is the new broad.
Narrow-minded thinking will win the day.
Is it possible that this backfires? That patients choose out-of-network providers and the non-contracted, non-discounted providers end up at the top of the utilization report from your broker? Yes, I suppose it is. But it’s not likely. At least not in this economy. And especially not if high deductible health plans continue to grow in popularity.
The fact is that health plans, employers, and brokers aren’t thrilled about having to choose something like Narrow Networks. Some insurers already have the products. They’re just waiting for the employers to ask.
It’s the employers who don’t want to be the first one to roll it out for fear that they will lose employees and fail to attract new ones. But when push comes to shove, there are only so many plan design changes that a benefits manager can make.
So be on the look out for smaller networks with high quality, low-cost providers. Hopefully that provider is located just around the corner.
Now if you’ll excuse me, I need to send back my RSVP card with the “chicken” box checked. Normally I’m a steak guy, but at weddings, they never cook it the way I like it…