Keeping Your Doctor Under Obamacare Is No Easy Feat

The reform law is narrowing care networks

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From left: Narendra Parmar sits with Certified Enrollment Specialist, Laquanda Jordan, as he finishes the process of picking and signing up for health insurance through the Affordable Care act at a Miami Enrollment Assistance Center on Dec. 23, 2013 in Miami.

When Blue Shield of California was designing the new health plans it would offer individuals under the Affordable Care Act (ACA), the insurer made a simple request to doctors and hospital in its network — lower your prices or get left behind. The insurer asked providers to accept reimbursement rates as much as 30 percent lower than what Blue Shield previously paid through plans sold on the individual market.

Some providers got on board, but not all. According to the company, just 60 percent of the doctors and 75 of the hospitals that participate in the Blue Shield of California’s group plans will be included in individual plans purchased through Covered California, the state’s new insurance exchange. And among the providers who declined to accept the lower rates were some of the state’s most prestigious — and expensive — hospitals, including Cedars-Sinai Medical Center in Los Angeles and hospitals affiliated with the University of California.

As millions of new ACA health plans begin 2014 coverage on Wednesday, consumers in some parts of the country, including California, will find that the plans offered under Obamacare give them access to fewer providers than their previous plans or those offered to Americans with job-based health insurance. Narrowing networks — promising select providers higher patient volume in exchange for lower reimbursement rates — is nothing new, but as insurers compete on price in Obamacare’s new exchanges, avoiding expensive hospitals and doctors has new appeal, especially since insurers can no longer exclude sick people or charge them more. “Our goal was to provide affordable options for California consumers and there are few levers we have to get to an affordable price point,” says Steve Shivinsky, a spokesman for Blue Shield of California. “One of them is to ask the providers to contract with us at new rates and that led to smaller networks.”

A recent study suggests limited provider networks could become more common in the years ahead as the ACA takes hold. A Dec. 13 McKinsey study of 20 U.S. metropolitan areas found that two-thirds of ACA plans analyzed had “narrow” or “ultra narrow” networks, with at least 30 percent of top 20 hospitals excluded for coverage. The medium premium for plans with narrower networks, according to the study, was 26 percent lower than comparable benefit packages with broad networks.

“We’re very concerned with the impact that has on patients,” says Cedars-Sinai CEO Thomas Priselac, arguing that consumers shopping through California’s exchange will not have access to the world-renowned health care the hospital offers. Priselac says some insurers designing networks purely based on cost have replaced academic research institutions like Cedars-Sinai with lower-priced community hospitals that, in some cases, do not offer the same menu of services. Seattle Children’s Hospital, the top pediatric facility in northwest Washington state, and one of the most expensive, sued the state insurance commissioner in October after hospital was excluded from the networks of some insurers selling plans there under the ACA.

But while some might say insurers are sacrificing patient choice and quality in service of the bottom line, there’s another way to look at the narrow networks being offered through Obamacare. “Everyone needs to commit to thinking about ways to reduce the unsustainable year over year increases in the cost of health care,” says Shivinky of Blue Shield. Doctors and hospitals are now under new pressure to lower prices to get access to the flood of new customers shopping for insurance through the law’s exchanges.

“This is market competition,” says Karen Pollitz, a senior fellow at the Kaiser Family Foundation who studies the insurance market. “Whether you like it or not, this is what we signed up for.”

Pollitz, who worked for the Department of Health and Human Services helping to implement the ACA before taking a post at Kaiser, says it’s not clear if hospitals like Cedars-Sinai will lower prices to attract customers through Obamacare’s insurance exchanges. Consumers who buy insurance independently — the population the exchanges are built for — are a relatively small piece of the overall insurance market, meaning some providers may be able to ignore them without suffering financially. Priselac, of Cedars-Sinai, says it too soon to know if the hospital’s exclusion from most ACA plans in California will hurt the hospital’s bottom line. But, Pollitz says, ”in a city like L.A. that has a gazillion hospitals, it’s easier to kick a big one out.”

In other areas, the effects of narrow networks may be more acute. In Maine and New Hampshire, Anthem, a dominant provider of individual market insurance policies, excluded a number of large hospitals in those states  from its ACA plan network. For some residents in rural areas, according to Pollitz, this means they may have to drive long distances to get to in-network hospitals. “If you’re in central Maine, you have to go to Portland to find a hospital and some people were kind of upset about that,” she says. Texas Oncology, the largest cancer care practice in the state, said it has decided not to participate in the networks of any insurers selling 2014 policies through the Texas ACA exchange. Elsewhere, stories of major health care providers choosing to sit out next year’s ACA plans — or being excluded by insurers — are piling up.

In a report released Dec. 11, Covered California said more than 80 percent of doctors in the state are included in the network of at least one insurer selling plans through the exchange. Still, Dr. Jeff Rideout, the exchange’s senior medical adviser, concedes that many individual plans have networks that include fewer providers than non-ACA plans offered by the same insurers. But, he says, there is more upside than just lower prices. “Better value occurs when there’s better alignment between a plan and a relatively tight network,” says Rideout. In other words, when insurers and providers are more dependent on each other, there’s more motivation to deliver efficient care. Integrated health systems that provide both insurance and care have, in many cases, some of the country’s best health outcomes at the lowest cost. Very narrow networks may have a similar effect.

“It’s potentially a great thing, but the devil is in the details,” says Rideout.