Bringing Consumer Transparency to the ACA Exchanges
As one should, before Sue Kearny purchased a health insurance plan from an exchange established by the Affordable Care Act, she confirmed that her preferred doctor and hospital were included as in-network providers in the plan she was purchasing. However, only a few months later she was surprised to learn
that her doctor was no longer covered under her plan. Either the provider directory was inadequate at the time (as a California audit found is all too common
) or her preferred doctor was dropped from the network after she purchased the plan and Kearny was never notified.
Kearny was then forced to search for a new doctor that would accept her insurance. She then found out that only one hospital in her county was covered and was unable to schedule an appointment for her lab tests for over a month. Kearny’s story, is unfortunately too common and demonstrates how the lack of consumer transparency in the ACA exchange purchasing process can negatively affect the enrollees. Kearny’s experience is also indicative of a phenomenon described by health care policy types as “skinny networks.”
Also known as “narrow networks,” “skinny networks” are byproducts of the pressure to keep health insurance premiums low. The concept involves leveraging the beneficiary base of a particular health plan to convince providers to agree to lower rates for their services.
Doctors and hospitals need a steady flow of patients to keep their doors open. Health insurance companies can provide doctors and hospitals with the patients they need by granting the providers “in-network” status. Patients will typically only see “in-network” providers in order to take advantage of their insurance and thus the health plans have considerable influence over where their enrollees go.
Health insurers want their customers to be as healthy as possible, while simultaneously being as inexpensive as possible to insure. One tactic used to lower the cost associated with insuring patients involves excluding the hospitals or doctors that are particularly expensive from the insurer’s “in-network” offerings. Another option is to offer a particular hospital, hospital network, or physician group exclusive “in-network” status (and thus a lot of business) in order to leverage lower reimbursement rates for services provided. Of course, the fewer “in-network” providers a particular plan offers, the greater the risk that the consumer choses a competitor’s health plan that has more options.
However, it turns out that most customers did not seem to mind that the plans they purchased had “skinny networks.” A study
by consulting firm McKinsey & Co revealed that around 70% of plans sold in 2014 on the individual exchanges created by the Affordable Care Act (ACA), featured what they defined as a “limited network” and those plans’ premiums were up to 17% cheaper than plans with broader networks. While the lower premiums may have attracted the consumers to these plans, many of these people are experiencing buyer’s remorse similar to Sue Kearny’s experience. There have been a number of reports
of consumer dissatisfaction because of the limited options of “in-network” providers these plans cover. This dissatisfaction is often compounded by inaccurate provider directories that are the only source of information the consumer has to determine which providers are in-network and which ones are out-of-network.
This dynamic has been recognized by policymakers, and there have been (and are) a number of efforts to address these shortcomings. In November 2015, the National Association of Insurance Commissioners (NAIC) finalized their Network Adequacy Model Act
, which is essentially a list of recommended regulations for states to adopt to address these problems. Notably, the recommendations include giving the insurance commissioner of each state the ability to:
set criteria for hours of operation of covered providers;
regulate allowable waiting times for an appointment;
ensure that provider networks have geographic variation to ensure that patients don’t have to travel long distances to get care; and
determine appropriate provider to covered-person ratios by specialty to ensure that there are sufficient numbers of specialists available for the covered-population.
It will be up to each state legislature to determine if they want to adopt some, all, or none of these recommended regulations. The Network Adequacy Model Act is simply a model for states to consider.
However, there are some federal regulations that have already been adopted in order to address the provider directory problems. In 2016, the Department of Health and Human Services (HHS) began requiring provider directories to be updated monthly. In the 2018 benefit year and thereafter, HHS will begin requiring insurers to notify patients if the doctor they use is dropped from the health network within 30 days. Another provision will require that if a provider is terminated without cause from the plan, the patients receiving active treatment from that provider may continue to receive that treatment for 90 days at in network rates.
HHS has also finalized that in 2017, the federal individual market exchange website (HealthCare.gov) include a rating system of each network offered by the qualified health plans (QHP) sold on the exchange. HHS would rate each network by calculating the percentage of providers in a plan’s network compared to the total number of providers in QHP networks available on a county by county basis. Each plan’s network will then be designated as either Basic, Standard, or Broad. This system is designed to help the consumer better understand the quality of the health network accompanying each QHP.
All of which is to say that there are numerous efforts underway at the state and federal level to ensure that scenarios, like the one Sue Kearny found herself in, can no longer occur. While the fate of the ACA still hangs in the balance, the “skinny network” phenomenon may very well live on regardless. As such, regulators are working hard to find a way to ensure that consumers have accurate and up to date information on the health insurance they are purchasing.