Listeners, how many times has this happened to you? You find a great doctor, you make an appointment, and you think everything is fine… until you get the dreaded call from the insurance company that your sweet new doc is “Out of Network.” Well, you aren’t alone – just in the past few months, limited provider networks have been making news, as Johns Hopkins, one of the most prestigious hospitals in the country, is leaving the CareFirst Blue Cross Blue Shield network, which could impact nearly 300,000 patients in the Baltimore area. In this episode, we’re going to demystify what these networks are and how they’re screwing us all and uncover the depressing history of how limited provider networks came out of the longstanding American tradition of screwing immigrants.
So what are “limited networks” or “narrow networks” in your health insurance? Gillian breaks it down: When your health insurance has a limited network, it means you can only get care from a small number of physicians or hospitals that have contracted with your insurance company, and agreed to accept lower rates to treat you. If you receive care “out of network,” it will either be completely uncovered by your health insurance, or you’ll have to pay a huge portion of your bill.
Health plans with “broad networks” usually cover around 70% of all providers in the local area – but “narrow networks” generally cover less than 25% of available providers, some even less than 10%. It’s VERY common for the largest hospital chains to be excluded – like the recent example of John Hopkins in Baltimore.
The result is that you generally pay a lower premium for a limited network plan: one study found that premiums were 16% lower for narrow network plans, which honestly isn’t much of a savings for the impact on patients’ lives!
Insurers LOVE limited network plans, because in addition to paying lower rates to providers, they also have the affect of “cherry picking” – since healthier individuals tend to opt into limited network plans, if they have a choice.
Ben is currently in a limited network plan, because under the Affordable Care Act (ACA) small employers like Healthcare-NOW get subsidies for health insurance they offer to their workers, but ONLY if they offer insurance through the ACA’s state exchanges. And as we’ll discuss about, limited networks plans have absolutely overrun the state exchanges. The impact on Ben has been difficulty finding specialists, having long waits for specialists, and his primary care doctor basically can’t coordinate his care at all, since the specialists she knows, trusts, and works with, are almost all “out of network” under his plan. Ben saw a sports medicine doctor who diagnosed his sciatica, who was in-network for him, but all of the physical therapists at the same sports medicine center – whose offices are right next to his – were out-of-network!
How did this all come about? Managed care plans in the 1990s first ushered in the idea of limited networks. These were when the insurer owned their own provider network (like Kaiser Health Plan), so if you had that insurance, you could only see the providers that they “owned.” Today, there aren’t a TON of traditional managed care plans like this – usually your insurance plan creates limited networks by negotiating with physicians and hospitals, and only accepting those willing to accept the lowest rates.
So who is most impacted by this new incarnation of limited networks? Ben says there are THREE groups of people most impacted by limited networks today:
- ACA plans sold on the state exchanges – really, anyone on the “individual market,” buying health insurance on their own. Includes virtually all self-employed people, contractors, artists, without a traditional employer;
- Medicare Advantage plans; and
- Student health plans.
- While slightly different from the above, we’re gonna add a DIS-honorable mention here for Medicaid. Because so many physicians do not accept Medicaid patients, or accept a limited number of Medicaid patients, Medicaid enrollees effectively face “limited networks” as well.
Gillian notes that modern-day limited networks really started to get wild with the ACA plans, because now insurers were going to have to sell their plans on exchanges, which heavily regulated insurance coverage, requiring pretty standardized benefits for Bronze, Silver, and Gold Plans. Because customers, for better or worse, generally pick their plans based on premiums, this lit a fire under the asses of insurance execs to find new ways (other than cutting coverage, or imposing higher deductibles and copays) to get those premiums as low as possible. Health plans hoping to participate in public exchanges responded by creating insurance offerings that gave patient members access to a smaller pool of providers—limited or narrow networks.
A small research survey by Catalyst for Payment Reform found that there is no consistent formula for how insurance companies choose what healthcare service providers are in network – they just accept whichever providers accept the lowest prices.
Currently there is no federal regulation of limited networks for ACA plans, which means you could end up buying insurance that you can barely use. Why? Beginning with the 2018 plan year, the Trump Administration ended direct federal oversight of the adequacy of Quality Health Plan networks, deferring to state oversight, accreditation by private organizations, or the issuer’s attestation. A federal court subsequently ruled this change was arbitrary and capricious, and as a result, federal oversight is scheduled to resume for the 2023 plan year.
Shifting from limited networks under the ACA, Ben points next to Medicare Advantage plans. We just talked about this on our recent episode about Medicare Advantage! This is the main reason that Medicare enrollees choose Medicare Advantage – the up-front price is lower. But many then discover that they have to drive a hundred miles to reach a dermatologist, or that the hospital down the street isn’t in-network, and so on. Limited networks – plus massive advertising spending – are the primary way that Medicare Advantage plans compete with public Medicare.
Want a striking example? Recently, the Mayo Clinic warned that at it’s Florida and Arizona facilities it will no longer accept most Medicare Advantage plans.
Question: what do the ACA exchanges and Medicare Advantage plans have in common, that the vast majority of insurers offer limited networks under those programs? They are both attempts by politicians to make markets in health insurance work, by creating heavily regulated “shopping” experiences where insurers have to cover the same benefits, letting you do a “side-by-side” comparison. So insurers of course looked for ways they could cut their costs – and underbid the competition.
For the third and final group affected by limited networks, Gillian has to tell you about student health plans, given her extensive experience as a grad student and professor. Students are typically forced to get most care at the campus health center, or pay “out of network” costs to get care anywhere else. Ben calls this like working at a “company town.” Gillian had the wonderful experience of being told INACCURATELY that she had cervical cancer at a campus health center. Don’t like false cancer diagnoses? Tough luck: if you’re on a student health plan, you don’t have a choice.
Ben mentions student health plans are a huge problem for students with disabilities or chronic health issues, who need continuity of care and primary care providers experienced with their particular needs, and may think twice about going to college if it means being forced into the most limited network you can imagine – having to use a single provider.
Employers are increasingly offering (or imposing) limited network plans for their workers, but it’s still not as commonplace as these other three groups of people (the ACA exchanges, Medicare Advantage, and student health plans). About 18% of large employers (with 5,000 or more employees) now offer limited network plans.
One aspect of limited networks has received by far the most attention in the press, and even in Congress: surprise billing – which is not as fun as it sounds!
Gillian explains a typical scenario: You have a heart attack on the street, the ambulance comes to pick you up, and they take you to the closest hospital, where the ER docs take care of you and keep you alive. Sounds great until you get the bill letting you know that the hospital where you were taken is not in your network, so SURPRISE, your care isn’t going to be covered by your insurance. Here’s an even shittier scenario: You have a heart attack on the street, the ambulance comes to pick you up, and you manage to gasp out the words, “Take me to an in-network hospital!” The ambulance takes you to the hospital, the ER docs take care of you, and most of your care gets covered by insurance. But SURPRISE – the anaesthesiologist on duty who took your case isn’t in network, so you now have a huge bill for a doctor you didn’t choose.
Luckily, in 2020, Congress passed the No Surprises Act:
- The Act bans surprise bills for emergency services, even if you get them out-of-network and without approval beforehand.
- It bans out-of-network cost-sharing (like coinsurance or copayments) for all emergency and some non-emergency services. You can’t be charged more than in-network cost-sharing for these services, and any cost-sharing you pay counts towards your deductible and maximum out-of-pocket limits for the policy year.
- Ban out-of-network charges and balance bills for supplemental care (like anesthesiology or radiology) by out-of-network providers who work at certain in-network facilities (like a hospital or ambulatory surgical center).
- Require that health care providers and facilities give you an easy-to-understand notice explaining that getting care out-of-network could be more expensive, and your options to avoid balance bills. You’re not required to sign this notice or get care out-of-network.
Unluckily, ground ambulances aren’t covered by the No Surprises Act, which we talked about in our episode on the ambulance industry… so there are still some surprises.
What are the origins of the modern limited network plan? Ben had a front-row seat in Massachusetts, which passed “RomneyCare” in 2006 and established the first state exchange in the country, becoming the template for the Affordable Care Act.
However, in 2009, the Massachusetts legislature was going through a budget crunch, and decided to kick a bunch of DOCUMENTED immigrants off of the new health plan to save money. These were immigrants that the federal government refused to contribute towards, so Massachusetts was paying their full cost, so about 31,000 people just found themselves without health insurance all of a sudden.
At about the same time, when the Affordable Care Act was moving through Congress, Centene (a for-profit insurer that specializes in government-subsidized health plans like Medicaid) decided they wanted to get involved in the Massachusetts market so they could gain some experience in how to compete on the new state exchanges that were likely to be created across the country. So Centene created a Massachusetts subsidiary called “CeltiCare,” which cut a deal with the Governor of Massachusetts to cover all of these immigrants under a dramatically reduced cost per person. They did this by reducing some benefits, but more importantly by creating an ultra-limited network, which consisted mostly of the (at the time) Catholic hospital chain in Massachusetts, the Caritas Christi Health System.
Doctors at Cambridge Health Alliance (CHA) had about 1,300 of these patients who suddenly couldn’t receive care at CHA any more. So they did a little research about their former patients’ access to care under their new CeltiCare plan: “.. we searched CeltiCare’s Web site for primary care providers within 5 miles of CHA’s ZIP Code. The search returned 326 providers, of whom 217 were nonduplicate adult generalists. Of these providers, 25% could not be reached at the telephone number provided. Of those available by telephone, only 37% were actually accepting new CeltiCare patients, and the average wait for an appointment was 33 days. In all, only 60 providers were accepting new CeltiCare patients, and only 38 could provide service for even one of the three major linguistic minorities [Portuguese, spanish, and haitian creole].” That’s 38 possible providers for all 1,300 patients! They called this “rationing by inconvenience.”
And thus was born the modern limited network strategy! By experimenting on vulnerable immigrants without much political power, and constructing a network so limited and culturally incompetent that “covered” individuals probably couldn’t find any physician willing to accept them and also speak their primary language, Centene was able to develop a new strategy that they then took to the Massachusetts state exchange, where they started offering limited network plans and underbidding other insurers. What an ignominious history!
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