Insurance carriers know it. If you build self-funded plans, you know it. There are ways to reduce plan costs while ‘hiding’ the reduced benefits. One of the rapidly growing methods is to shrink the provider network, which impacts patients' access to healthcare.

When I shared about shrinking networks at a recent benefits conference, one of the carrier reps tried to correct me, saying I should refer to it as a “focused network,” a “tighter network,” or even an “efficient network.” He was definitely in the mindset of hiding what is really going on. I understand the positive spin to a client, but let’s not fool ourselves: it’s a smaller network and less choice for the member.

I’m sharing 6 FAQs about the history and future of networks, as well as 4 tips to help your clients deal with the trends…

Was it always this way?

No. It’s interesting to recognize how “normal” it had become over the past 10-15 years for most plans to include most doctors and hospitals. There was a time in the ‘90s (for those of us in the biz back then) when one of the first questions with every plan was about network adequacy. And there were these great network adequacy reports. Do you remember “GeoAccess Reports?” When I Googled this, I found a Wikipedia page that took me on a stroll down memory lane:

GeoAccess, Inc. was the company that pioneered the use of geographic data to analyze the accessibility of health care networks… GeoAccess developed software applications which allowed the accessibility of health care networks to be accurately measured based on the geographic coordinates of health care provider locations. For the first time, employers and government-sponsored programs could establish access standards to take the actual accessibility of health care providers into account when selecting health care networks. 
[NOTE: In 2002, this company sold to UHC.]

Why use a smaller network?

When plans focus their members to a select panel of physicians, the premium savings is too good to ignore. When the Provider-Relations Department at a health plan negotiates a price, they effectively promise a certain number of visits from their members. If the expected number of visits is twice as much because the carrier is only accepting half as many providers, then the negotiated rate per visit is substantially less.

Where are they shrinking?

I notice smaller networks becoming mainstream in at least half of the states – showing up on self-funded, fully-insured and individual plans. Of course, self-funded plans are where innovation typically happens, so they use smaller networks in most states. With individual plans struggling under the weight of Guaranteed Issue rules (while not being allowed to raise prices to appropriate levels) they are racing forward with miniscule networks in many states. The confirmation of this trend toward smaller networks is that half the states are implementing smaller networks even in fully-insured plans.

Will this continue?

Absolutely. As the above-stated trends show, clients are more willing to have smaller networks than they are to pay higher premiums. The markets will find a balance, but the days when all plans include virtually every doctor and hospital are over.

Any other applicable trends?

The coming physician shortage will have an effect. The Association of American Medical Colleges reports a doctor shortage by 2025 “ranging between 61,700 and 94,700, with a significant shortage showing among many surgical specialties.” This will help physicians negotiate higher reimbursements, but since the market won’t bear it, I believe the net result will be threefold:

• Smaller networks will be required to keep physician rates negotiated downward.

• We will see a real movement toward lower-level providers (PAs, nurses, technicians, etc.) providing care traditionally done exclusively by physicians. I also predict physicians will fight this tooth-and-nail, but it will ultimately happen.

• Using technology for access to healthcare will increase substantially, which will skyrocket innovation. 

What are the unintended consequences?

Complaints from members are always to be expected with plan changes. But you can expect shrinking networks to bring a few new ones:

• Employees will need help finding in-network physicians: family doctors, pediatricians, a surgeon and facility for that upcoming procedure, or that highly sought after autism specialist for their child.

• Getting in for simple issues with a new provider will be tougher (considering the coming doctor shortage). A real concern for every mom and dad with a sick child.

• There will be more out-of-network claims. There just will be. Employees will feel like their employer is playing games with them.

A few tools can help round out the challenges and unintended consequences of smaller networks. When cutting access to care in one channel, you need to increase access to care and support in other areas. If you don’t solve these issues, you’ll be blamed for a bad implementation and make yourself susceptible to other brokers who bring these strategies. Below are 4 tips I've seen to help clients deal with this trend of shrinking networks...

1. Telehealth

Teach different ways to access care. Telehealth is a fast, efficient, inexpensive, convenient way to give patients access to healthcare. Physician studies reveal up to 70% of all visits can be handled this way. Get clients to think about using in-person physician visits for substantial issues and accessing care in less expensive ways via phone, video or email for simpler uses. 

2. Plug-Ins & Wearables

We’ll see huge advancements in the next one, two or three generations of these, but we should embrace what we can learn by collecting people’s data inexpensively and continually.

3. Advocates

Give clients access to experts (that are NOT in your office!) to find lower cost options, organize all providers for a procedure, or schedule appointments with tough-to-reach providers (a big deal when you just moved them to that smaller network).

4. Medical Billing Experts

Clients will end up with more out-of-network claims. When this happens, refer them to medical billing experts who can review the accuracy of the bills (a high percentage have errors) and negotiate real discounts for out-of-network visits and procedures.

Apply these concepts as networks shrink. Members will be empowered. Employers will be relieved. And your reputation with clients will grow.

How else have you helped clients deal with shrinking plans? Feel free to post questions or ideas in the comments section below or email me at reid@freshbenies.com.