Network changes and Special Enrollment Periods

In every health insurance contract there is some fine print that says the networks are subject to change at any point and that a network change is not grounds for cancellation of the contract.

Most of the time that language is used to cover small changes in a network.  A doctor died, a doctor moved to someplace sunny to work on their golf game, an office burned down due to a meth lab explosion next door in the strip mall, a new group formed up and wants in, a hospital went bankrupt, a hospital got bought out by a competitor.  Those things happen all the time, but for most networks, there are few major changes within a contract year.

However, every now and then there is a major change.  An insurer in Ohio is pulling a fast one:

Some central Ohio consumers say a Westerville-based health insurer intended to keep quiet about its plan to drop OhioHealth hospitals and doctors from its provider network until it was too late for many of its enrollees to change their health plan…

During the first half of January, InHealth’s leaders decided to drop OhioHealth from the provider network. An official with the Ohio Department of Insurance said that InHealth contacted the department late on Jan. 15, triggering a required 15-day review period during which department officials review documents to ensure that insurance companies clearly explain provider-network changes to consumers….

Many consumers said they were not notified of InHealth’s plan to narrow its provider network until last week, though some received robocalls on Jan. 30, the day before the deadline to sign up for health insurance through the federally run health-insurance marketplace.

OhioHealth is a major player in central Ohio.  It has seven hospitals and 2,400 providers.  Dropping OhioHealth from a network is a major change.

I am assuming that InHealth’s network is still in compliance with minimal provider network adequacy standards.  Those standards are not hard to meet.  Eyeballing their provider directory, the standards are still easily met.

Minimal standards don’t mean much.  My company can build a minimal network with roughly 10% of the broad network providers.  It would be approved.  Our narrow network product on Exchange has roughly 30% of the providers.  People bought that product in large numbers because it seemed to be a good value proposition on the combination of price and network.  Our premiums were based on a 30% network.  Dumping the expensive half of that network to build a 15% network instead of a 30% network after the end of open enrollment would be a major dick move.  It would significantly alter our medical cost profile which should change our charged premiums but it would not.  It would be legal and it would not trigger an open enrollment period, but it significantly changes the value proposition that people thought they were buying.

This is a risk management/cost control move by InHealth.  And that is fine, if the people who bought the coverage had sufficient time to make a new decision.  The earliest notification went out with one day of open enrollment remaining.  Quite a few people were not told of a material change in their network until after they were locked into InHealth for the year.

Situations like this call for special enrollment periods.  That is not the case right now, but it should be the case when a significant network change occurs in a product that was approved for the Exchanges.

Now let’s go below to look at why this may be happening, in my opinion:

I entered the following information into Health Sherpa.  40 year non-smoker, not pregnant individual in zip code 43082 with an income that is above the subsidy level.

The benchmark Silver is an HMO from Care Source at $292 per month with a super narrow hospital network.  The InHealth’s least expensive Silver is #12 at $351 per month.  It is a PPO product with a small hospital network.

We can draw a few conclusions with that limited information.  We know PPO products are more attractive to individuals with significant health concerns.  We know that super narrow networks are more attractive to people with minimal current health concerns.  We know HMO products are more attractive to people with minimal health concerns.  We know that most people buying on exchange are buying predominately on post-subsidy price.  For those who are on Exchange but are not buying mostly on price, they are more likely to have significant current medical problems and costs.

My bet is that InHealth was attracting a lot of bad risk because they are priced higher and had a significant number of the local higher end hospitals and specialists in the network.  Dropping OhioHealth means a lot of their members will find ways to get on other coverage as well as drive down the price per unit for care as their remaining hospitals and providers are priced at a lower level.

NB: This is a market where United Healthcare should be doing pretty decent as they have the #3 Silver with a decent network that is only a couple bucks more per month than the benchmark.