The Affordable Care Act stipulated coverage and essential health benefit mandates which increased the cost of plans because few 2013 plans met the standards (See our InfoStat for further information). Thus, a common method many insurance companies used to keep premium prices low on exchanges was to substantially reduce the network size of hospitals and physicians. In recent years narrow networks have become more popular.
A narrow network applies to any health insurance plan that limits the doctors and hospitals that are available to their beneficiaries. Generally plans do not cover medical services obtained out-of-network or they will charge higher copayments or higher coinsurance rates. Some plans have exceptions for medical services obtained out-of-network if they were related to emergencies.
It remains to be seen the long-term impact of narrow networks, especially as they continue to spread to small group plans, private exchanges, Medicare, and Medicaid plans. Regarding the impact on hospitals, hospital officials are concerned, saying network exclusion negatively impacts patient referrals and volume, while increasing costs. Some claim that unless their hospital agrees to significantly lower reimbursements, insurers will exclude them from plan networks.1
A poll conducted in February indicated that overall the majority of consumers preferred broad-network plans that are more expensive over cheaper narrow-network plans. However, the opposite results were found for potential Obamacare exchange consumers.2
In order to minimize out-of-pocket costs as a consumer, you should always check to see if your primary care physician or specialists are within your plan's network in the event you change plans or renew your plan. HealthPocket offers a tool which helps you find plans accepted by your doctor but it is always recommended to ask your doctor(s) whether or not they accept a health insurance plan before you enroll if you wish to remain under their care. It is also important to remember that not all doctors working in the same hospital are necessarily in the same network so you should inquire before any medical services have been received.
Prompted by patient advocates, Federal officials are currently examining health plans to make sure consumers have "reasonable access" to health care in 2015.3
Federal officials recently announced new rules that would protect seniors when insurers make significant network reductions. These new rules to protect seniors were spurred by UnitedHealthcare's decision this past fall to reduce the number of doctors that provide services to seniors enrolled in Medicare Advantage plans in CT. The new rules which go into effect next year require insurers to give CMS at least 90 days advance notice and beneficiaries at least 30 days advance notice if their network was changed significantly. A concern of patient advocates is that what qualifies as "significant" will be determined by the insurer. Additionally, insurance companies must provide information about options in the event a provider decides to leave their plan. Some Medicare Advantage members will also be granted special enrollment periods that allow them to either change their plan or return to the traditional Medicare program if their current Medicare Advantage program reduced its networks.4
1 Gearon, Christopher J. Hospitals Get the Squeeze from Insurers' Narrow Networks. (April 10, 2014) USNews.
2 Hamel, Liz; Firth, Jamie; Brodie, Mollyann. Kaiser Health Tracking Poll: February 2014. (February 26, 2014). Kaiser Family Foundation.
3 Pear, Robert. White House Tightens Health Plan's Standards After Consumers Complain. (March 14, 2014). New York Times.
4 Jaffe, Susan. Feds Issue Rules To Protect Seniors Enrolled In Medicare Advantage Plans. (April 8, 2014). The Courant.
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