MCOL Thought Leaders: Implications of Narrow Networks

Today's Topic

how far will the trend towards narrower health plan networks go – and what are the implications?”

alexander domaszewicz

 alexander domaszewicz

Alexander Domaszewicz
Principal,
Mercer

ACA legislation put many guardrails on health program design – premium cost sharing must be affordable based on percent of pay and cost sharing through design requires at least a 60% value plan. Narrow networks are one of the few areas that insurers and program sponsors still have left to positively impact cost and quality while staying compliant. The increased use and focus on local plans through exchanges, both public and private, will also spur greater use of narrow networks. With so many forces encouraging folks to get the right care, at the right time, for the right price, with the right outcome, narrow networks will continue to grow, evolve and add value. Despite their opportunity, there are still substantial risks around member understanding. If more efforts aren’t made to educate participants about the trade-offs they’re making when electing less expensive but narrower network insurance offerings, there could be meaningful backlash against the trend.

mark lutes

 Lutes
Mark Lutes
Member of the Firm,
Epstein Becker & Green, P.C.

“Narrow networks” will be with us — but their etiology will not be predominantly through payors culling their networks via economic credentialing. More often beneficiaries needing more intensive case management will “opt in” to a care path administered by providers who are paid as their “home” or through shared savings. Also, “narrow networks” will occur through default–that is through the combined effect of higher deductibles and additional price transparency. As beneficiaries continue to shoulder more of the first tier of risk for their own care, and mobile tools become increasingly available forecasting the costs of episodes, de facto narrow networks of price competitive, accessible (and telehealth friendly) providers will emerge.

Universal American: A “Healthy Collaboration”

JP Morgan Healthcare Conference | Universal American

By Gregg A. Masters, MPH; originally posted at ACO Watch

I intended to post updates from Aetna and Cigna next in this series, yet today I received a tweet by Vince Kuraitis, aka @VinceKuraitis, calling attention to Universal American a managed care player I’ve not spent much time on. Yet they present a rather interesting profile and operating footprint some of which I will highlight below. According to their website Universal American (UAM):

...provides health benefits to people with Medicare. We are dedicated to a Healthy Collaboration, working together with healthcare professionals in order to improve the health and well-being of our members.

The JPMorgan Healthcare conference deck is here, and webcast here (you may need to register). Of note is with the recent release of CMS certified ACOs, UAM now operates ’31 ACOs approved for participation in the Shared Savings Program which include more than 2,000 participating physicians covering an estimated 300,000 Original Medicare beneficiaries in 13 states.’ So not only are they a player in Medicare Advantage (the end game for risk bearing ACOs), they have a presence in the gateway market as well. For complete details, click here. Two pieces from their narrative tell the story, 1) the ‘healthcare landscape': 

Good or perfect: Cutting the fastest path forward

Guest post by Patrick GordonDirector, Colorado Beacon Consortium

Early pioneers to Colorado did not have the luxury of waiting for railway or infrastructure to be in place before taming a new frontier. Their vision and determination laid the foundation for the settlers who followed. They used the tools and talents they had to develop an infrastructure and ultimately build viable, productive communities. Had they waited for the perfect conditions, they’d still be back east.

It’s a lesson we’ve applied to health care transformation. At the Colorado Beacon Consortium (CBC), we resisted the temptation to delay good learning opportunities and wait for perfect solutions. We embraced the ONC/HHS’ challenge to demonstrate how costs can be reduced and patient health improved by integrating health information technology (HIT) into a transformed clinical workflow. This pioneering effort requires new competencies with patient and population data, more sophisticated technology, and a supporting workforce. So far, we’ve offered technical assistance to more than 50 primary care practices in western Colorado. We are laying a foundation.

Employers Perceive that Health Plans Add Value to ACOs

A just released study from Aon Hewitt and Polakoff Boland — 2011 Employer Driven Accountable Care Organizations Survey Report — examines employer attitudes toward ACOs.  The report provides useful insights into an area that hasn’t yet received much attention.

A couple tables in particular caught my attention.

ACO

(click on the graphic to view a larger version)

Key findings in this table include:

The Practice of Medicine: from Marcus Welby to ???

by Jaan Sidorov MD, MHSA, FACP and Vince Kuraitis JD, MBA

Physicians face great uncertainty. According to a survey conducted by The Physicians Foundation, the great majority of physicians (89%) believe the traditional model of independent private practice is either “on shaky ground” or “is a dinosaur soon to go extinct.”

In the face of this uncertainty, many physicians are jumping to a conclusion that “I have to sell my practice to the hospital.” In this post of our series on The 100 Year Shift, we will examine physician practice.  We’ll show that the economic and clinical environment  is changing rapidly and that selling to the hospital is one option. However, it is not the only option.

Table of contents for the series--The 100 Year Shift? Strategic Realignment among Physicians, Hospitals and Payers

  1. The 100 Year Shift? Introduction and Overview
  2. Payment Transformation: From Volume to Value
  3. Physician-Hospital Relationships: The Hospital Morphs from Revenue Center to Cost Center
  4. The Practice of Medicine: from Marcus Welby to ???

Physician-Hospital Relationships: The Hospital Morphs from Revenue Center to Cost Center

by Vince Kuraitis JD, MBA and Jaan Sidorov MD, MHSA, FACP

In our introductory posting of this series, we noted that economic incentives previously aligning doctor-hospital interests were changing. This creates the potential for The 100 Year Shift – physicians awakening to possibilities for stronger partnerships with payers than with hospitals.

In this post, we will zero in on the changing economic position of hospitals and the effect this is having on physician-hospital relationships. We will examine the trend of hospital employment of physicians and point out challenges and tensions for the future. [This is a long post...so now might be the time to refill your coffee cup.]

Table of contents for the series--The 100 Year Shift? Strategic Realignment among Physicians, Hospitals and Payers

  1. The 100 Year Shift? Introduction and Overview
  2. Payment Transformation: From Volume to Value
  3. Physician-Hospital Relationships: The Hospital Morphs from Revenue Center to Cost Center
  4. The Practice of Medicine: from Marcus Welby to ???

Payment Transformation: From Volume to Value

by Jaan Sidorov MD, MHSA, FACP and Vince Kuraitis JD, MBA

In our introductory posting, we suggested that a huge shift is underway in the health care industry.  Decades of hospital-physician cooperation are not only eroding, we suggest this trend could accelerate.  Instead of a natural clinical and economic affinity with hospitals, we foresee the potential for physicians forming a new dyad with insurer-buyers.

In this post, we will examine what we and many other commentators view as inevitable: the demise of volume-based payment systems and how the drive for greater value will cause physicians and insurers re-examine their normally antagonistic relationship.

Table of contents for the series--The 100 Year Shift? Strategic Realignment among Physicians, Hospitals and Payers

  1. The 100 Year Shift? Introduction and Overview
  2. Payment Transformation: From Volume to Value
  3. Physician-Hospital Relationships: The Hospital Morphs from Revenue Center to Cost Center
  4. The Practice of Medicine: from Marcus Welby to ???

The 100 Year Shift? Introduction and Overview

by Vince Kuraitis JD, MBA and Jaan Sidorov MD, MHSA, FACP

Gazing at the horizon, we foresee the potential for a tectonic realignment among physicians, hospitals and payers. Here’s a quick visual representation:

Past100

Next100

This essay is the first of a seven part series. In this first post we will capsulize our vision of this potential 100 Year Shift, answer initial FAQs, and lay out the structure for the rest of the series.

The Lynchpin — Changing Economic Incentives

In the past, physicians and hospitals have benefited from mutually supportive economic interests.

Table of contents for the series--The 100 Year Shift? Strategic Realignment among Physicians, Hospitals and Payers

  1. The 100 Year Shift? Introduction and Overview
  2. Payment Transformation: From Volume to Value
  3. Physician-Hospital Relationships: The Hospital Morphs from Revenue Center to Cost Center
  4. The Practice of Medicine: from Marcus Welby to ???

List of Top 10 Health Plan Issues — Out of Whack!

Healthcare IT News just published its list of top issues for health plans in 2011:

1. Administrative Mandates (Compliance HIPAA 5010, ICD-10, etc.).
2. Care Management, Data Analytics, and Informatics.
3. Health Insurance Exchanges and Individual Markets.
4. New Provider Payment & Delivery Systems (ACOs, PCMHs, etc.).
5. Bend the Cost Trend.
6. Medicare and Medicaid.
7. Health Information Exchanges and EMRs.
8. Consumer’s Role in the Modernization of Healthcare.
9. Reform Uncertainties.
10. Payer/Provider Interoperability.

Dear health plan colleagues,

Wake up! The order of this list is totally out of whack.

#2: Care Management, Data Analytics, Informatics. Good…sounds about right.

However,

#2 can’t happen before you address:

#7: HIEs and EMRs

#10: Payer/Provider Interoperability

Health plans can’t analyze the data and assist in care management unless they first have access to it. Payers need access to clinical data, and they are at risk of being cut out of the loop.

P.S.

Please also take a look at priority #1: Administrative Mandates (Compliance HIPAA 5010, ICD-10, etc.). This is completely reactive!

In these times of great change, is this how health plans want to posture themselves in the community?

The New ACO Rule is Here…The New ACO Rule is Here…and more!

429 p. Proposed ACO Rule

ACO Fact sheet from HHS

Medicare Fact Sheet: What Providers Need to Know

HHS press release

Don Berwick’s article on ACOs in the NEJM

ACO Quality Performance Standards Summary

FTC/DOJ Joint Antitrust Statement on ACOs

TheHill article “Leaked memo reveals Dem strategy for defending healthcare reg”

The leaked memo