BJC Falls Victim to Narrowing Networks Trend in Health Care
Part II in a Three-Part Series
With the continuing implementation of Health Care Reform, insurers and employers are seeking alternatives to keep costs low while still offering and/or providing coverage. A growing trend is the implementation of “narrow networks” — health insurance plans that place limits on the doctors and hospitals available to their subscribers. According to Mercer, a benefits consulting firm, in 2010, 24 percent of the largest employers offered smaller networks, chosen for lower costs, and in 2013, 27 percent offered them while 44 percent said they were considering them.
Insurance carriers also are offering narrow networks at an increasing rate. Under reform, individuals and small employers are now subject to insurance premiums based on a “community rating” rather than on the health and health history of the individual. By negotiating narrow networks with providers, the carriers are able to help control rising premium rates and the underlying costs of insuring the care they cover.
Within Missouri, the state’s health insurance exchange offers hundreds of plan options with limited carriers. For individuals choosing among plans in St. Louis County, approximately 25 plan options are available, but from only two carriers. One of the carriers, Anthem Blue Cross, offers 15 plans with a narrow network that excludes BJC Healthcare.
According to the Congressional Budget Office, lower premiums are anticipated to reduce health care costs by billions of dollars. The McKinsey Center for US Health System Reform has noted that narrow networks reduce the premiums charged for health insurance. The center’s 2013 annual survey results concluded “products with broad hospital networks reveal higher premiums, with a median premium increase of 26 percent between broad and narrow networks of the same carrier, product type and rating area.” Additionally, the survey found that the vast majority (70 percent) of plans within the insurance marketplace utilize narrow networks.
These networks can potentially reduce patient choice of covered providers and limit care based upon that needed care only offered outside of their specific network. Yet, in the Kaiser Family Foundation’s February health tracking poll, the majority of individuals (54 percent) purchasing their own coverage or without coverage favored lower priced coverage with narrow networks. Younger individuals and those with lower discretionary spending are almost equally split among their preferences, while those typically older with higher incomes prefer broader networks that are more expensive.
The providers of care themselves could see significant negative implications as a result of the increase of narrow networks. The reduced rates negotiated for care by the insurance carrier could reduce revenue for those providers, which may lead to reduced quality. Additionally, those providers that are excluded from the narrow networks could realize reductions in market share and, in some extreme cases, closure.
Because of these constraints for both consumers and providers, legal challenges to narrow networks are becoming more prevalent throughout the country. Providers are claiming undue harm through a patient’s potential limited access to care. For example, Seattle Children’s Hospital is out of network for several of the insurance plans offered on Washington State’s insurance exchange. The hospital has filed suit against the state’s Office of Insurance Commissioner claiming the plans do not meet requirements for adequate access to care. Anthem Blue Cross in several markets, including Missouri, was criticized for similar reasons because of claims that the exclusion of providers could limit access for services. Meanwhile in Maine, state regulators would not allow Anthem Blue Cross Blue Shield to switch patients to a narrow network available on the state’s exchange because it excluded six hospitals.
Key takeaway: Those who offer, pay for and use health insurance need to consider all options available to them and be aware of the implications of the changing health care landscape. See Part III of this series for practical solutions employers and consumers can utilize to implement reform regulations.