Narrow networks expand, raising concern

March 1, 2015

Narrow provider networks are gaining ground among insurers and could impact patient access to urologists. While insurers tout the approach to care as a way to control costs and preserve quality, urologists and others question whether the payment model is all about cost.

National Report-Narrow provider networks are gaining ground among insurers and could impact patient access to urologists. While insurers tout the approach to care as a way to control costs and preserve quality, urologists and others question whether the payment model is all about cost.

Dr. KaufmanJeffrey Kaufman, MD, a urologist in Orange County, CA and president of the AUA’s Western Section, says that while he doesn’t have personal experience with narrow networks, he’s aware that urologists are unhappy and concerned that these networks will disrupt doctor-patient relationships.

“The second concern is that a narrow network is going to be based primarily on cost. The insurance companies are going to pay lip service to the issue of value-quality divided by cost. But we all understand cost is the driving factor,” Dr. Kaufman said. “If equal or better quality can be delivered, then we’re happy to do it at a lower cost. But if companies are going to sacrifice quality in favor of reducing the cost, no one’s interests are better served.”

About narrow networks

Narrow networks are simply limited provider networks, says Linda Cushman, executive-in-residence, Cornell University’s master’s in health administration program, and a human resources professional with more than 30 years of health care consulting experience.

The concept is nothing new.

Health maintenance organizations (HMOs) were the original narrow network, Cushman says. Today’s narrow networks are among the payment models designed to rein in health care costs, she says. Insurance companies have lost the ability to risk adjust their premiums under Obamacare.

Ms. Cushman“For individuals and small employers enrolling via the exchanges, Obamacare has eliminated most of the ways insurance companies have traditionally used to control risk. The only way that insurance companies think they have now to control their costs is to eliminate higher cost providers from their networks, because they can’t eliminate higher cost people anymore. That’s the crux of it,” Cushman said.

“Under Obamacare, they can’t protect themselves against bad risk, or what we used to call adverse selection. So now, because they’re on these exchanges and they’re competing, the best way to compete is with a lower premium.”

Accountable care organizations (ACOs) are different than narrow networks in that ACOs focus on Medicare beneficiaries while narrow networks can involve all patients. But ACOs have important things in common with narrow networks, according to Jeffrey Frankel, MD, health policy chair at the American Association of Clinical Urologists (AACU) and a urologist practicing in Seattle.

“Both limit access to providers to save cost and tout improved quality, which has not been established. Urologists need to be aware of these models of care that may be established in their communities,” Dr. Frankel said.

Having said that, it could be to a urologist’s advantage to be part of a narrow network, Dr. Frankel says. Being part of a limited number of providers could increase a urologist’s or group’s market share.

Dr. Frankel, who says his group practice is part of Medicare Advantage plans, says these plans are narrow networks in disguise. Medicare Advantage plans appear to save money at first, but once seniors try to make appointments with a specialist of their choice or fill a prescription, the lack of choice and sticker shock set in, Dr. Frankel says.

“Those are privatized Medicare patients, who usually join a system of the hospital. They have very low premiums for their supplement and the network is very narrow. They have to go through a primary care physician, get a referral; then, if they want to see me, they have to pay $50. To me, that’s quite a bit. It’s an economic disincentive to see a specialist,” Dr. Frankel said.

“Narrow networks [including Medicare Advantage plans] are growing, and, politically, they’re going to continue to grow because Republicans like those Medicare privatized plans. It’s a way of limiting benefits.”

Next: Are these networks in your community?

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Are these networks in your community?

Aetna’s Aexcel narrow network is in 41 markets, and does not include tiering of hospitals, according to a response by Aetna prepared for Urology Times.

“As part of our provider performance evaluation, physicians are notified of their Aexcel designation status, and all physicians have the option of the reconsideration process,” according to the response. “Physicians may provide additional information pertaining to their care for Aetna members that might not be captured in claims data. Physicians have this option after they review member-level reports that we provide them in advance to a public display of their status. This is done to ensure that our decisions are made using the most comprehensive information and engage physicians as participants in the process.”

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But there appears to be confusion among urologists about whether they belong to narrow networks or not. Urology Times reached out to two urologists designated as being on Aetna’s Aexcel network. One urologist’s assistant responded that the urologist knew nothing about it. The other urologist responded, wanting to remain anonymous, and said he didn’t know he was a preferred provider on Aetna’s narrow network.

Narrow networks, however, are a growing reality.

Dr. Frankel“What’s happening is [most] insurance companies are picking hospitals for these networks, initially. That’s where it gets a little dicey for the practicing urologist. If your hospital is not part of the narrow network, the odds are you’re not going to be part of it,” Dr. Frankel said.

Cushman, the consultant, says most patients are still covered by their employers. And most employer health plans are not going to narrow networks. It’s patients who are on the exchanges, Medicare, and Medicaid that will be most impacted, she says.

It’s true that the exchanges are pushing narrowed products, according to a report by the McKinsey Center for U.S. Health System Reform. The McKinsey study looked at data from 120 unique 2014 individual exchange market products in the silver tier offered by 80 carriers and characterized networks as broad, narrow, or ultra-narrow (defined by participating in the 20 largest local hospitals in a rating area). The report found 70% of all networks were narrow or ultra-narrow.

Narrow networks, however, are filtering in the mainstream. In a Sept. 16, 2014 article, the Los Angeles Times reported that “Anthem Blue Cross is joining forces with several big-name hospitals and their doctors to create an unusual health plan option for employers in Southern California. The joint venture… brings together seven rival hospital groups in Los Angeles and Orange counties, including well-known institutions Cedars-Sinai Medical Center and the UCLA Health System.”

The California Public Employees’ Retirement System signed up and started with the plan Jan. 1, 2015.

Narrow networks outside of exchanges are most likely to pop up where insurers have more options (in hospitals and providers) and more clout, Cushman says. And they appear to be more common in bigger cities, Dr. Frankel says, where patients can get adequate coverage even if their options for providers and hospitals are limited.

Next: Focus on cost

 

Focus on cost

Granted, businesses in the for-profit health industry can’t afford to ignore costs. Cost does matter. And extreme variations in provider and hospital costs do exist.

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The McKinsey Center analysis found broad networks tend to have higher premiums than narrower networks of the same carrier, product type (such as HMO or PPO), metal tier, and rating area. Academic medical centers were most often associated with broader networks. For example, 35% of the ultra-narrow networks in the analysis included an academic medical center in network compared to 94% of broad networks.

Insurance carriers also point to extreme variations in cost. A report released in January 2015 by the Blue Cross Blue Shield (BCBS) Association, based on independent BCBS companies’ claims data, found extreme cost variations for knee and hip replacement surgeries among hospitals and markets.

The study shows that while the average cost for a total knee replacement procedure was $31,124 in 64 markets, it could cost as little as $11,317 in Montgomery, AL and as much as $69,654 in New York City. These extremes exist even within markets. For example, in Dallas, a total knee replacement could cost between $16,772 and $61,585, depending on the hospital.

In its statement prepared for Urology Times, Aetna put it this way: “As the health care system transforms from fee-for-service payment models to outcomes, value-based payment models demonstrating clinical quality and efficiency will be critical to increasing patient base and optimizing revenue within urology.”

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Urologists are among physicians in 12 medical specialty categories that are eligible for Aexcel-designation within Aetna’s Specialist Performance Network. Urology, however, remains less exposed than some high-cost specialty areas. On its website, the Blue Cross Blue Shield Association says this about its Blue Distinction program: “The Blue Distinction Centers for Specialty Care program is evolving from a quality-focused designation to a more robust Total Value designation with the goal of further differentiating Blue Distinction Centers from other facilities. True to its original commitment as a quality-based program, Blue Distinction is evolving to become a value-based designation awarded to facilities that meet stringent quality measures, focused on patient safety and outcomes, as well as cost of care criteria.”

For now, BCBS is focusing on six specialty areas: bariatric surgery, cardiac care, complex and rare cancers, hip and knee joint replacements, spine surgery, and transplants.

Next: Why the urologist shortfall matters

 

Why the urologist shortfall matters

The shortage of urologists only adds to the complexity of how narrow networks might impact the specialty.

“There are limited numbers of urologists. We have 500 leaving practice per year through attrition and about 260 to 270 graduating residency. So, we’re short,” Dr. Kaufman said. “And there may be an unequal distribution of patients in these networks. So you may have doctors overwhelmed with patients or patients unable to gain access to physicians.”

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If there are too few urologists, insurance companies deal with access, first. Access trumps cost as an issue, according to Cushman.

Narrow network hospitals and providers are based on cost, access, and quality indicators through the Affordable Care Act, according to Cushman.

Aexcel-designated specialists, Aetna says, have demonstrated effectiveness in the delivery of care based on a balance of certain measures that include volume, clinical performance, and efficiency in the use of health care resources. The National Committee for Quality Assurance serves as an independent ratings examiner for Aetna, according to the company’s statement.

Volume has to do with identifying urologists and other specialists who have managed at least 20 episodes of care for Aetna members during the past 3 years. Clinical performance indicators include: readmission rates, acute care complications, a doctor’s industry recognitions and board certification, and whether the doctor uses electronic prescribing or an electronic medical record. Efficiency includes costs, resources to treat patients, and number and types of services performed, according to Aetna’s website.

Define quality

But good quality data for including urologists in narrow networks isn’t available, Dr. Frankel says.

He speaks from experience. Dr. Frankel’s practice was excluded from Aexcel a few years ago, he says, and his patients received letters indicating that the network is restricted to promote high-quality providers. But he discovered his group’s exclusion had nothing to do with quality.

“I met with the [insurer’s] medical director in the Northwest who admitted that they did not have urology-specific quality data, but the network was narrowed to the urologists who admitted at their preferred hospital,” Dr. Frankel said.

The industry’s metrics aren’t fine-tuned enough for insurers to determine who is and is not a high-quality urologist, Dr. Frankel says.

“So, their quality measures are based on cost,” he said.

Dr. Frankel says the AACU’s message regarding narrow networks is that they are not a sign of quality.

“It’s a managed care model. It’s an economically based system,” Dr. Frankel said. “I can’t say it’s not going to lower costs. It might. But there are some significant disadvantages. We have a limited number of urologists and it’s very difficult to get guaranteed coverage.”

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Dr. Kaufman says he understands the motivation to provide value, and that’s a good thing.

“But I’m not sure narrow networks is the best way to go. If there is an opportunity for an insurance company or payer to identify outliers-doctors who are providing less than desirable quality or just are outrageous in their costs-I have no problems with eliminating them. Patients may choose to see a doctor outside of network and that’s their right,” Dr. Kaufman said. “We know there are some great physicians and there are some lousy physicians, but the majority of physicians are somewhere in between, where they’re delivering reasonably good quality, abiding by the guidelines, and they’re trying to watch costs.”

Next: Specialists will be scrutinized

 

Specialists will be scrutinized

Urologists should take steps now to better understand narrow networks and how they might fit into the payment model.

They should understand that as more data comes online, like the cost data on knee and hip surgery, other specialties will be scrutinized for cost and quality indicators. Urologists should know how their practices are doing in relation to their peers’, Cushman says.

“Specifically, [narrow networks] eliminate the high-cost and/or low-quality providers,” Cushman said.

“Too often, physicians are passive bystanders and cede control to payers. In the future as more data becomes available, the savvy specialty groups will use that data to improve the cost and quality profiles of their physician members.”

Aetna recommends: “As inpatient and outpatient facility-based costs do impact efficiency, specialty providers should consider the quality and efficiency of facilities and ensure they are informed about the most appropriate places to provide services.”

To protect their market shares, urologists should be proactive, analyzing whether narrow networks play a significant role in their communities.

“I think you need to find out who is going to be included in narrow networks and see if you want to be part of it, if you want to stay viable,” Dr. Frankel said. “It all comes down to referrals. If you’re not in a narrow network, you’re not going to get referrals from the primary care physicians.

“You have to be careful. You have to understand the business and politics of medicine. No matter how well you do on board recertification, you may find yourself excluded if you don’t keep up with this stuff.”

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