Why More Physicians May Be Excluded from Payers' Plans

March 9, 2015

More payers are forming narrow networks and excluding certain physicians from their plans. Here's what your practice should do about it.

There are more insured patients due to the Affordable Care Act, but that doesn't necessarily mean you will be seeing more of them at your practice. One reason: The pool of patients for which your physicians are considered "in network" may be getting smaller.

That's due to increasing use of narrow networks by payers, which greatly accelerated when the federal and state health insurance exchanges opened for enrollment in October 2013. In fact, a June 2014 report by the McKinsey & Company Center for U.S. Health System Reform found that narrow networks made up about half of all the exchange products across the United States (it defined narrow networks as having only 31 percent to 70 percent of area hospitals participating).

While the report did not include numbers regarding physician inclusion in narrow networks, Susanne Madden, president & CEO of healthcare consulting firm The Verden Group, says payers included only about 20 percent of their entire provider network in their 2014 exchange plans. "What we have is a situation where a lot of doctors got excluded from those plans, so even if they wanted to join those plans, in many cases they're not being permitted to do so, and that's pretty standard across the country," says Madden, adding that the narrow network movement is likely to continue in the coming years.

Here's more on what's driving this trend, how narrow networks are affecting practices, and what your practice should do about them.

THE DRIVE BEHIND NARROW NETWORKS

Since payers can no longer keep costs down through methods such as denying policies to consumers with pre-existing conditions or require those with chronic conditions to pay more for coverage, payers are looking to save money in other ways. The answer, for many, is to exclude the physicians who provide care at higher costs (such as those who refer to more expensive specialists and hospitals) from some of their plans, says Madden. This strategy may be more common in the exchanges because the plans offered there are often the cheapest available to consumers.

While cost is not the only factor behind narrow network formation, and Madden predicts quality will play a greater role in the coming years, a September 2014 study for the Robert Wood Johnson Foundation's project to monitor implementation of the health law suggests that cost has played a major role. The study, which focused on network changes in six states in 2013 and 2014, found that insurers generally did not report any efforts to design networks based on providers' performance on quality metrics or patient outcomes. Instead, price determined whether a physician was included.

CHALLENGES FOR PHYSICIANS

Narrow networks pose significant challenges for both excluded and included physicians. Excluded providers may find that they are in-network for fewer patients in their area, including some of their established patients. This was a common problem in 2014, when many patients who purchased exchange plans were surprised to find that their preferred provider was not included. In some cases, patients were automatically "rolled into plans" that excluded the physicians with which they had a long-term relationship, says Madden.

The American Academy of Family Physicians (AAFP) addressed this issue in a July 2014 letter to CMS. "The AAFP has evidence that thousands of patients, in multiple states, are being told that they must identify a new family physician in the next few months as a result of their physician being 'dropped' from certain insurance products as a result of insurers 'optimizing' their provider networks to better align resources," wrote AAFP board chair Jeffrey Cain. "Many of these patients will have [years-long] relationships with their family physicians terminated in the name of efficiency."

Providers included in narrow networks face other challenges. For one thing, the reimbursement rates found in many of the narrow network plans are lower. Exchange plan rates, for instance, are typically 10 percent lower than HMO market plan rates, says Madden.

Referrals also present potential problems for narrow network participants, as they may find that the physicians to which they typically refer are not included. This could lead to significant care quality issues, especially if quality and patient satisfaction were not considered when payers formed the network, says plastic and reconstructive surgeon Robert Pearl, who is chair of the American Medical Group Association's Council of Accountable Physician Practices, a consortium of medical directors from medical groups and health systems across the country seeking to improve healthcare delivery. "Even if you manage to get into these narrow networks, you have to make sure that other people to whom you are comfortable sharing patient care are there with you, or you [may] find yourself not being able to provide the best care to your patients," says Pearl, who is also CEO of the Permanente Medical Group in Oakland, Calif., and president and CEO of the Mid-Atlantic Permanente Medical Group, Rockville, Md.

WHAT TO DO ABOUT NARROW NETWORKS

1. Explore your options. If you have been excluded from a narrow network and want to be included, try to determine why you were excluded. If you can address the payer's concerns, by referring to less expensive specialists, for example, it may be willing to reconsider your participation, says Madden.

If you have been included in an exchange plan and want to get out, review your payer contract. You may be able to "opt out" at your anniversary or renewal date. "If you know that you want to leave, send in your termination notice now," says Madden, adding that practices usually need to provide notice 120 days prior to the anniversary date. "Don't miss that window for another year."

Proceed cautiously, however, when exploring opt-out options, says John Crew, a principal at healthcare consulting firm Strategic Health Partners. Since many contracts include an "all products" clause, you may be required to participate in all of the plans offered by that payer, or none of them.

2. Don't assume that you are still "in network" for your established patients. Make sure you verify, even with your established patients, that you are still a participating provider with their plan, says Madden. "...You have to really do your fact checking on every patient, you have to do a preauthorization on every patient just to make sure that you are in fact participating in that plan and can see that patient."

3. Watch for contract changes. Some payers may be able to amend their contracts without your written consent, so they may roll you into a narrow network without your knowledge, says Crew. Don't be caught unaware. "... I think it's imperative that physicians, on a routine basis, should reach out to any payer that they participate with and ask for a copy of the latest amendments, or amendments since the last time they had a request, to make sure that they're current and they actually understand what products they participate in," he says. " ... It's become incumbent upon them to be able to monitor their plans to see what changes are being made."

Aubrey Westgate is senior editor for Physicians Practice. She can be reached at aubrey.westgate@ubm.com.

This article originally appeared in the March 2015 issue of Physicians Practice.