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You are here: Home / Anderson On Health Insurance / Baby, I want you in my network

Baby, I want you in my network

by David Anderson|  November 19, 20138:20 am| 12 Comments

This post is in: Anderson On Health Insurance

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Hill  Dweller asked a good question about networks yesterday:

Does the doctor decide which policies he/she will accept?

Yes and no.

Providers in most plans that offer multiple lines of business (Medicare, Medicaid, CHIP, Exchange, PPO, HMO etc) have a two stage process of being offered in a network.  An insurance company that only offers one product in a single line of business consolidates the two steps into a single one. 

The first stage is the application and validation stage.  At this stage, a provider gives the insurance company a letter of interest and a massive pile of paperwork that should prove that she is an adequately qualified provider.  Different insurance companies have different standards of “Adequate”.  One company may only want to have board certified providers in the network, while another will accept docs that are not board certified but are in process, and another will have looser standards.  These standards are flexible depending on location.   The credentialing group will verify that the doc has all of the current identifiers, current liability and malpractice insurance, no major legal issues outstanding or settled, licensure is up to date etc. 

These standards are often not absolute.  If there is a dermatologist who practices in the middle of the boonies, exceptions will be made during the credentialing process if that derm does not meet typical standards.  Other high demand, low count specialties will see more flexibility while general surgeons and ob/gyns won’t.

Once a provider is credentialed by the health insurance company, the produce assignment dance begins.  This is where it is a two-way option.  On broad scale network like the typical Medicaid, Medicare, Employer Group Commercial network, the insurance company will try to put a provider into as many products as possible.  Providers have the right of refusal.  A provider may receive an offer to be placed in Medicaid, Medicare, Commercial HMO, Commercial PPO, and CHIP but only accept being placed in Medicaid, Medicare, Commercial PPO and CHIP because the provider does not want to deal with Commercial HMO capitation payment models.  Networks in baseball terms are mutual options.  Once that option is exercised, the provider agrees to take a set fee for services rendered to members of the health insurnance company and the health insurance company agrees to pay that fee. 

Narrow networks such as the base Exchange networks that are being offered in most states have a different incentive structure, although it is still a mutual option.  The health insurance company will have an idea of what it wants a network to accomplish and within the boundaries of state regulation towards “adequate access” to providers, they’ll shift and shape their exisiting network into a new narrow network.  For instance, Mayhew Insurance could be attempting to create a low cost and narrow network of providers who are willing to take Medicare plus 5% and a seperate network of providers who are willing to take between Medicare plus 5% to Medicare plus 20% and a general network at commercial rates.  Providers or their employers if providers belong to large groups of docs, are then approached with an offer of new rates for the Exchange population and they either sign or don’t sign the agreement.  Once a network of sufficient density and diversity is signed, the network is filed with state regulators and the product can be sold.

The narrow networks are usually much more insurance company driven than provider driven as the narrow networks benefit the insurance company first and foremost.  Big, broad, general networks are usually provider driven in that any provider that meets minimal standards is included. 

And the final twist on this is the concept of delegated credentialing provider entity.  Large medical groups or hospitals that employ a lot of providers will often be their own credentialing authority over individual providers.  Health insurance companies can outsource their credentialing (step 1) responsibilities to these groups.  When networks are created, the individual providers employed or credentialed by the delegated credentialing provider entity don’t get a say, instead it is the entity and the health insurance company that negoatiates rates and network participation.

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Reader Interactions

12Comments

  1. 1.

    agrippa

    November 19, 2013 at 8:51 am

    Thanks for the article. This is very complicated and I begin to get a glimmer of understanding it.

  2. 2.

    bago

    November 19, 2013 at 8:52 am

    Well, I’m enrolled. It took a day to be approved. Of course I’m lucky enough to live in the Washington the has Capitol hills of the right height.

    I’ll just be up here in Seattle.
    Slinging code all the live long day.
    I’ll be far, far away, in the Pacific grey
    From the haters over down that way.

    A gun toting Texan boy named Perry,
    Well he was the worst,
    I Bush hadn’t done it first,
    and Grahams stilt singing Benghazaaaaay!

    fin.

  3. 3.

    raven

    November 19, 2013 at 8:57 am

    @bago: – Washington state resident Jessica Sanford was bursting with pride when President Obama mentioned her story during a Rose Garden event on health care reform last month at the White House.

    not so great

  4. 4.

    Slugger

    November 19, 2013 at 10:14 am

    These days many providers are part of larger entities such as big practice groups that tend to align with hospital systems or are outright owned by hospital systems. These hospital systems in turn often favor or even own certain insurance products.
    Personally, I believe that these de facto oligopolies act like one would expect and are responsible for a lot of the extra cost of American healthcare. In most metropolitan areas the doctors, hospital, and insurance are aggragated into a few groups.
    Independent Dr. Joe and free standing insurance company reaching a mutually agreeable contract is so last century.

  5. 5.

    kindness

    November 19, 2013 at 10:46 am

    At Kaiser if a new line is opened we have to bring it to the outside vendors and get their permission as to whether or not they would be willing to participate in the new members. This happened with ‘Self Funded’ plans. Most said fine but a few refused. So for those members, they don’t have the entire contracted network at their disposal.

  6. 6.

    superfly

    November 19, 2013 at 12:26 pm

    So I’ll ask this again:

    Cedars Sinai and all its affiliated doctors in Los Angeles are included in one bronze level plan on the CA exchange, how is that even possible?

    My insurer has eliminated them from their individual plans, but they remain in all the group plans, so I don’t see any rhyme or reason for the exclusion.

  7. 7.

    Carol

    November 19, 2013 at 1:13 pm

    What about levels of participation. Do doctors get paid the same for a gold plan beneficiary as a bronze plan beneficiary?

  8. 8.

    The Red Pen

    November 19, 2013 at 1:25 pm

    I got into with a wingnut on Facebook (I know, I know) about provider networks.

    The wingnut had some vague, but verified, experience in insurance and public policy. Nevertheless, he slung the usual wingnut talking points including the “doctors aren’t signing up for Obamacare” trope.

    My understanding is that the provider networks were in place before October 1, and that if you buy an exchange plan, there are doctors ready to accept you as a patient (as to quality or convenience, that’s a different story).

    Richard, what’s the reality?

  9. 9.

    Richard Mayhew

    November 19, 2013 at 1:31 pm

    @superfly:
    At the Bronze level, most insurers figure they are competing on price first and network 19th.
    Cedar Sinai is expensive (prestige hospital plus teaching hospital plus expensive real estate). It’s Medicare rate is significantly higher than most other nearby hospitals, so even if Cedar Sinai is willing to take Medicare plus X%, its Medicare plus X is much more expensive than Suburban General’s Medicare plus X% and Suburban General is only 4 miles away.

    California made a very aggressive effort to compress price bands within a metal, so most insurers adapted the same basic strategy of excluding high cost providers if they could do so while meeting other regulatory requirements.

  10. 10.

    Richard Mayhew

    November 19, 2013 at 1:41 pm

    @The Red Pen: Networks are always a fluid thing. Providers come in, providers die, providers move 3 time zones away to work on their golf game.

    However, the base networks for the Exchanges were filed with the states and the Feds last April and final approval was mid-September

  11. 11.

    The Red Pen

    November 19, 2013 at 1:47 pm

    @Richard Mayhew: That’s what I thought, thanks.

  12. 12.

    Richard Mayhew

    November 19, 2013 at 8:43 pm

    @Carol: depends on the contract/admin cost of creating that many different payment models. My company would pay out the same for different metal bands of the same product( Medicare + 5 vs Medicare +20 etc)

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