Many of the health plans taking effect in 2014 will utilize new “narrow networks” of providers. In some cases, these narrow networks have 15-35 percent fewer providers than existing networks. The move toward narrow networks appears to be driven by the health plans’ desire to minimize premiums. Assuming narrow networks are here to stay, providers in these networks should be prepared to face new challenges.
Providers participating in the narrow networks should be prepared to see patients who are high utilizers of healthcare services. Many of the people enrolling in the new exchange plans may have pre-existing conditions that previously prevented them from obtaining coverage. Also, with the introduction of premium and cost sharing subsidies, there is likely to be an increase in the low-income/high-risk patient population.
Being prepared for high users of healthcare services is especially important as the industry transitions from fee-for-service reimbursement to fee-for-value and capitation/risk-based reimbursement models. Under these new reimbursement models, providers are bearing the risk associated with the cost of providing care. To manage the high-risk populations likely to enroll in these narrow network plans, providers should have top quality electronic medical record technology and embrace predictive analytics to identify and mitigate risk within their patient population.
When possible, participating providers should also be prepared to manage cost sharing requirements prior to treatment. The silver and bronze exchange plans have 30 percent and 40 percent co-insurance requirements, respectively. Pricing for treatment should be transparent and communicated to the patient upfront. This will allow arrangements for the payment of these cost-sharing requirements to be made prior to treatment. Waiting to collect the cost sharing requirements until after care is provided will lead to an increase in bad debt and collections costs.
Additionally, patient registration and revenue integrity teams should be prepared to manage the pending of claims under the new grace period rules. New rules prohibit qualified health plans from automatically terminating an enrollee’s coverage for non-payment of premiums without first providing a 90 day grace period. During the first month of the grace period, the plan must pay all claims. During the second and third months of the grace period, the plan can pend the claims until the enrollee is caught up on premiums. Patient registrations teams should be prepared to verify coverage and payment of premiums and revenue integrity teams should be prepared to track pending claims so they do not turn into denied claims when the premiums are paid.
Strategies for excluded providers
Providers who are not currently participating in the exchange narrow networks face many strategic considerations. First and foremost is deciding whether they want to participate in these plans. In making this decision, consideration should be given to the risk that existing patients may migrate from current plans to exchange plans, the cost and risk associated with providing care for the population of exchange enrollees, and the mission of your organization.
Operating outside of the exchanges
If your organization is not going to participate in the narrow networks, notifying patients is a top priority. Information regarding who is in the narrow networks is difficult to find. Getting accurate information to patients regarding participation in the available plans will allow patients to seek out plans that best meet their needs.
Providers who fail to inform patients they are not participating in a given plan prior to treatment could face exposure to consumer fraud and deceptive business practice claims. Many patients, and providers for that matter, may struggle to distinguish between participating and non-participating plans for any given payer. Patients who incur large out of pocket charges when they thought there were receiving in-network care will look to hold the providers liable for these charges. Provider organizations must train their staff on which plans are accepted, how to distinguish between participating and non-participating plans, and how to effectively communicate these insurance issues to patients.
Out-of-network providers should be prepared to see more exchange patients in their emergency departments. With the narrowing of networks, it may not be feasible for patients to travel to the nearest participating hospital in a given region. Managing reimbursement for these out-of-network emergency services is likely to become critically important. Understanding new regulations that set a reimbursement floor for out of network emergency services will allow providers to maximize their revenue. These new rules permit balance billing but require the health plan to first pay the greatest of: 1) the median amount the health insurer pays in-network providers for the emergency services furnished; 2) an amount based on the same methods used by the health insurer generally uses to pay for out-of-network services (such as the usual and customary amount); or 3) the amount Medicare would pay for the emergency services provided.
Approaches for joining the narrow networks
Assuming your organization wants to participate, the next step is figuring out how to make it happen. Step one is to determine whether your existing contracts with payers apply to the exchange plans. If so, the payers may be obligated to include you in the narrow networks.
If your existing contracts do not apply to the exchange plans, there may be business solutions to explore for securing participation. The biggest concern for most exchange plans appears to be cost and premium pricing. Providers that are able to control cost, take on risk and transition to value-based reimbursement are having success in the narrow network environment. Consideration should be given to forming accountable care organizations, patient-centered medical homes, and other arrangements where the provider bears the risk associated with the care.
Other providers have taken a more adversarial approach after being excluded from the narrow networks. Legal challenges to the adequacy of the networks are starting to take place. Some of the adequacy criteria that a plan must meet are the inclusion of sufficient numbers and types of provider such that all services will be accessible without unreasonable delay.
In Washington state, Seattle Children’s Hospital filed much publicized administrative and court actions challenging the adequacy of the exchange networks. In Seattle Children’s situation, it is the only provider of certain specialty pediatric services in the state, and by being excluded from the networks, enrollees do not have access to these services. Geographic concerns may also affect the adequacy of networks. In rural and suburban settings, the exclusion of certain hospitals could force residents to travel for hours to find care, which may constitute unreasonable delay in accessing services.
Participation in these new narrow networks will include many challenges, these least of which is uncertainty. It is unclear how these narrow networks will take shape. Health plans could begin to migrate enrollees from other types of plans into narrow network plans, which could make participation in the narrow networks critical for long term success. Alternatively, political turmoil over patients losing access to their current physicians and lack of participation in exchange plans could render narrow networks a short-lived experiment. Whatever the future may hold, understanding the issues and proper planning are the keys to success.
Douglas A. Wolfe, JD, is an attorney with the Miami law firm of Kozyak Tropin & Throckmorton, P.A., where he practices in the areas of healthcare provider business litigation.
