Two Minute Blog

Narrow Provider Networks Are Not All The Same. Know the Difference…Someone’s Life Could Depend Upon It.

With the official arrival of healthcare reform, a lot has been written lately about the topic of “narrow networks.” In fact, we’ve recently written about it here Keep Your Doctor? Your Preferred Hospital? Do Your Homework Before Selecting A Plan.

Employers and their employees should know this: There could be a huge difference between established narrow networks of healthcare providers (developed and offered prior to 2014) and some of the new networks created primarily to accommodate the new lower cost Obamacare plans offered on the exchange.

Many of the narrow networks offered prior to 2014, for example, placed a more discerning emphasis on contracting with high performing providers. These networks gave a nod toward the combination of higher quality and lower cost.

Many of the new narrow networks created for the exchanges are aimed primarily at low cost and bear a striking resemblance to Medicaid networks. They are comprised mainly of only those providers willing to accept Medicaid-like fee-schedules.

Describing how carriers built these new networks, one highly respected industry insider indicated that contracts containing these low fee-schedules were mailed out to the provider community. Carriers then waited to see which of the providers would accept this low rate of pay and sign-up. The new networks were then built accordingly.

So what’s the net for all of us?

Caveat emptor. If you or your employees know anyone considering plans utilizing a narrow network, especially one of the lower cost Obamacare plans on the exchange, it’s more important than ever before to review and understand what providers are in the network before selecting a plan. Ultimately, someone’s life could depend upon it.

Most Large Employers Are Keeping Coverage: Mandates, Rules and All

More on what large U.S. employers are choosing to do in the wake of added Obamacare mandates, rules and general confusion over what to do. A recent national survey shows one percent of employers have decided to stop providing health care this year while approximately five percent have decided they will exit the health care system completely. This information is from a survey of large employers conducted by Aon Hewitt, a large employee benefits consulting firm,

According to Jim Winkler, chief innovation officer for health and benefits at Aon Hewitt, “Employers remain committed to providing health benefits, but recognize the need for new approaches that fix those problems.”

The survey includes more than 1,230 employers who currently provide coverage to over 10 million employees and identifies that large employers intend to shift more costs to workers via a “house money / house rules” approach. About 40% of the employers who participated in the survey are shifting more responsibility on their workers by asking them to take a more active role in their health. This includes initiatives aimed at lowering costs and improving employee health by offering health screenings and more robust health care coverage along with lower premiums to those employees who maintain better health.

Another one third of the companies surveyed revealed their plans to move employees to a private health care exchange within three to five years. Employers who move to the private exchange approach plan to provide a subsidy or “credit” to each employee who will then take their “credit” to the exchange to purchase their own health care coverage. Employers will determine the amount they will provide as a subsidy and the amount will vary from employer to employer.

Aon Hewitt has developed it’s own exchange and claims more than 18 large employers with a combined 600,000 workers are already using it.

Winkler goes on to say that “Traditional cost management tactics do not address foundational issues in health care, including worsening population health and misaligned provider payment methodologies.”

This information is a summary of an article titled “Employers Keeping Coverage Despite Obamacare Mandates, Rules” that appeared recently on


More Changes / Delays to the Employer Mandate

3 Employer Take-a-ways

The administration announced late Monday yet another change-up to one of the major focal points embedded in the Affordable Care Act  –  the employer mandate. Here are the three biggest aspects of the announcement that employers of all sizes need to know:

Employers with 100+ Employees

Employers with 100 or more workers will only have to cover 70% (down from 95%) of eligible employees in 2015 to avoid fines. The original 95% benchmark now goes into effect in 2016 and beyond.

Employers with 50 – 100 Employees

Employers in this category get a reprieve of sorts through 2015 as the mandate is delayed altogether for another year. As things stand today, they must begin offering coverage to eligible employees in 2016 in order to avoid fines associated with the new law.

Employers with fewer than 50 Employees

Under 50 employers (already exempt from the employer mandate to provide coverage) will now be exempt in 2015 and each year going forward from the reporting requirements they were subject to as originally outlined in the new law.

Despite speculation by many, as of yet there have been no changes or reprieves to the individual mandate that went into effect on January 1 of this year. It remains unchanged.

For more detailed information on Monday’s announcement see articles that appeared in the Washington Post and Fiscal Times

For an expert analysis, read Bob Laszewski’s piece at Health Care Policy and Marketplace Review.

Target Drops PT Employee Healthcare Coverage

The debate rages on about healthcare reform and how it will impact the insurance industry. A recent article from The Fiscal Times “More Companies Dump Employee Insurance for Obamacare,” discusses how Target recently announced it has dropped insurance for part-time employees, citing changes that have to do with new healthcare laws. Target follows in the footsteps of companies like Home Depot and Trader Joe’s, who have also dumped healthcare coverage for part-time employees in order to save on healthcare costs.

The companies claim that the action ultimately benefits their part-time employees since having employer-based health insurance disqualifies them from accessing coverage and subsidies through the new health exchange.

According to a report by CNN, Trader Joe’s company officials estimated that a large majority of their part-time workforce would be eligible for plans that cost considerably less money if they purchased insurance through the new health exchange.

There are many reports of the insurance industry’s lack of optimism in regards to Obamacare and how it will ultimately impact insurance. However, Brianna Ehley, author of The Fiscal Times article cited here, writes “…industry experts say it’s too early to tell how enrollments will affect market stability and premium prices.” She closes her article pointing out administration officials also say it’s too early to tell with about three months to go in the first enrollment period and that they expect most people to wait until the last minute to sign up, as was the case in Massachusetts.

2014’s Top 10 Healthcare Issues

PwC announced during a webinar earlier this month what they believe to be the top 10 healthcare issues of 2014:

1. Companies rethink their roles in the new health economy
2. Corporate funds invade healthcare venture capital space
3. Employers explore private exchanges
4. Industry picks up the pace of price transparency
5. Social, mobile, analytics and cloud come together
6. Technology is the new workforce multiplier
7. Twenty-first century tools refresh clinical trials
8. Fail fast, frequently and frugally for true innovation
9. States pursue Medicaid managed long-term care
10. New rules combat counterfeit drugs

PwC compiled this list based on polling data they collected in Fall 2013 from 1,000 consumers and interviews with top healthcare industry executives. For more information and comments from some of the webinar attendees, read Top 10 Healthcare Issues for 2014 as it appeared in Healthcare Finance News.

No Charge For Preventive Care Services? Verify Up Front to Avoid Out-of-Pocket Costs, Billing Hassles Later

The healthcare reform law requires that most health plans now cover common preventive care services without costing covered employees or their dependents anything out-of-pocket. However, the type of preventive service covered at no charge can be a moving target, especially based on where the service is performed, who performs the service, and how it is billed by the provider.  Correcting preventive care services billed incorrectly by a provider is a real hassle.

A prime example is described in the recent Kaiser Health News article Consumers Expecting Free ‘Preventive’ Care Sometimes Surprised By Charges.

To avoid unwanted and unwarranted charges and the hassles of getting a bill corrected, first verify with your insurance carrier that the service your provider is recommending is a valid preventive care service (covered at a 100% with no associated out-of-pocket cost or copay).  They should also be able to give you the correct billing code that providers should use.  Secondly, and just as important, insist that the provider correctly bill the procedure as preventive.

Oh to be a fly on the wall…when Obama meets insurance execs

Do you ever wonder what goes on behind closed doors between president Obama and insurance company executives? I sure do.

We’ve all had to work with people we don’t like or organizations we don’t align with philosophically at some point.  It happens. Sometimes the wheels come off and sometimes everything works out okay.

The Affordable Care Act, as it currently stands, needs for the Obama administration and the insurance companies to work together. I mean really work together.

Insurance companies know that they are rarely on the Christmas list of Americans (although studies indicate that they are appreciated more than one would assume).  But ever notice that insurance companies usually remain silent when there is a pile on? They lobby hard and support politicians but they usually just fade away and keep their mouths shut in a public fight. Hmmm.

President Obama, on the other hand, has been quite vocal in his assessment of insurance companies. Some of his most forceful language in support of his law has been to point out that the carriers will no longer be able to do harm to Americans.  He has come close to declaring them flat out evil to the core (it’s up to you to decide whether he is right or wrong).

However, now they have to work — I mean really work — together to make the
ACA operate well for the American people.

So, here is what I would love to know: Behind closed doors, does the conversation between President Obama and insurance execs go like…

Obama door number 1.  “Ok, guys and girls, I need to beat the hell out of you in the public eye but we need to get this thing done. We will all thrive if we work together.  Just don’t pay any attention to my rhetoric. You with me?”

Obama door number 2. “Well, this is the law that got passed.  I tried to obliterate you but I had to compromise, so you better play the game.”

Obama door number 3. “You know where I’m  headed here.  You have have a half life left. You need to decide if you want that to be a long half life or a
short one. You got me?”

On the flip side, are insurance company execs thinking…

Insurance door number 1. “This law will be SO awesome for us!”

Insurance door number 2.  “There is NO way we can survive without the federal government supporting us and our efforts.”

Insurance door number 3. “We are SO screwed and the only hope we have for long term survial is if this ACA law implodes.”

Oh, I wish I were a fly on the wall in the room when these SEEMINGLY strange bedfellows meet behind closed doors…


Keep Your Doctor? Your Preferred Hospital? Do Your Homework Before Selecting A Plan.

With healthcare reform and the Affordable Care Act almost in full bloom, more potentially game-changing unintended consequences are starting to emerge.  One such consequence stems from the introduction of “narrow networks.” Initially intended for or Exchange based products, most carriers have utilized the narrow networks to round out the low end of their 2014 individual and employer sponsored group plan offerings.

Employers changing plans in 2014 will have to pay closer attention to network selection. Or, potentially pay the price when you or your employees learn that preferred, familiar, closest and, in some cases, the best doctors and hospitals may not be in your plan’s network.

Until now, network size has not been a huge determinant in selecting carriers and plans. Most of the major insurance companies in the group market provided access to a vast selection of doctors and hospitals, especially those providers with the best reputations. With the advent of the Affordable Care Act and its impact on rate structures, benefits, and plan designs, carriers have less discretion on plan designs and rate setting. As a result, they are turning to these “skinnied” down networks as a primary means to manage costs, differentiate, and vary premium across their respective plan offerings.

In order to gauge the impact, I checked the online directories of two of the major group health plans in one large county in the Tampa Bay market where I reside. While decidedly informal and unscientific in nature, it nevertheless highlights the contrast.

I compared a few key categories of each respective carrier’s heretofore “staple” network (still offered; higher rates than the narrow network plans) against the new skinnier network offering (newly offered; lower rates than staple network plans). In both cases the “staple” networks contained a significantly greater number of providers, were described as open access, and did not require referrals. The new skinnier networks offered fewer participating providers, required designation of a Primary Care Provider (“PCP”), and required PCP referrals to obtain other services.

In comparing several categories of specialists, the narrow networks were on average comprised of about 50% fewer specialist physicians than the traditional networks.  However, the biggest difference between the customary networks and the newer narrower networks came when comparing participating PCPs and hospitals.  Here’s the breakdown:

Carrier 1

Carrier 2

OA Network

Narrow Referral-Driven  Network

OA Network

Narrow Referral-Driven  Network

Primary Care





Hospital Primary and Secondary


3 (includes 1 major)


10 (includes 1 major)

We’ll be monitoring further developments, reporting more on this issue in future posts as well as discussing practical alternative strategies to this growing cost vs. access issue (eg. direct contracting, plan customization, buying a lower cost plan and supplementing, etc.).

In the meantime, what can you do?

When it comes to changing to new plans, look before you leap.  Or, at least plan on doing some homework.

To read more about this topic go to these recent articles in the Washington Post, Insurers Restricting Choice of Hospitals and Doctors to Keep Costs Down,” and at Health Care Policy and Marketplace Review, If You Like Your Doctor You Will Be Able to Keep Your Doctor. Period.”

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