For some light reading before I have my coffee this morning, CMS released their draft letter to insurers regarding rules for the 2017 Federally Facilitated Marketplace (FFM or Healthcare.gov). The one area of interest is the network adequacy guidelines. CMS is attempting to align Exchange provider network adequacy with Medicare Advantage. However, the guidelines are still very soft. These guidelines will change very few networks.
Let’s look at them as it starts on page 22
If finalized, these default standards would be similar to the time and distance standards applied today to Medicare Advantage plans, and would focus on the providers and facility types identified in Table 2.1. In general, under this default standard, a QHP issuer in a State would be required to ensure that a certain percentage of the potential enrollees residing in a county have access to a minimum number of providers or facilities of each type within the established time and distance standards, and that they meet specific minimum numbers of providers and facilities within specified geographic parameters
These are very soft standards. For very large metro counties, the minimal standard is one primary care provider in five miles. A single primary care provider could theoretically provide “access” to 74% of Manhattan. That is absurd. A single psych facility properly placed could provide minimal access to almost all of New York City.
Small towns like Hickory, North Carolina or Sault Sainte Marie, Michigan or or Devils Lake, North Dakota could see insurance plans be sold in their counties even if the closest in-network OB/Gyn is an hour away (assuming good weather on the roads) from the population center in the county..
These are bare bones standards. I doubt there are many plans that would have to modify their networks to meet these standards. A standard at this level will discourage the worst of the worse, but it will not provide effective access to many people.
Plan networks are created to match one of two sets of standards. The first is the NCQA minimal provider standards. These standards are usually ratio based where a plan is expected to have one provider in each specialty for every X thousand covered lives in each county. NCQA standards tend to be tighter/harder to meet than either federal or state regulator standards. The other type of standard is the marketing level standard. Marketing can’t sell a plan with minimal access. It might be cheap, but it can’t make money. This is less true in the individual market than the group market due to the subsidy structure of the Exchange, but a complete dogpile of a network will produce a strong public and political backlash that most insurers want to avoid as we are already perceived to be evil bastards.
In 2013, setting up my company’s Exchange networks ate up 2,500 hours of my time. Early in the process, the Big Idea Geniuses wanted to see a minimal network scenario. We made the skinnest network possible that met minimal requirements of the state regulators. It used 11% of the individual providers and 7% of the hospitals in Mayhew Insurance’s broad big group commercial network. It met state requirements at the cost of not meeting NCQA standards in half the counties. The narrowest network that we submitted for the Exchanges was actually three to four times the size of that mock-up. We needed the providers to meet NCQA and marketing standards in all counties.