Good take by @bjdickmayhew, but I'd adjust the editorial bias to consider that by excluding certain providers from networks, insurers are as or more interested in reducing the risk of certain physician practice patterns (cause) as they are avoiding patient utilization (effect). https://t.co/2rdI2LYAGs
— Marshall Votta (@ydeologi) October 24, 2018
This is a reference to a post earlier this week regarding how insurers can legally dodge high cost individuals if there were to be no risk adjustment payments that at least partially compensates them for risk. I mentioned network games:
only offer narrow networks with donut benefit design and only in certain counties… If their data says that there are a dozen individuals with hemophilia, they won’t offer coverage of the regional hemophilia treatment center.
This reply (rightly) calls me out for excluding some of the other very valid and far less nefarious reasons why an insurer may decide to exclude a provider or set of providers (hospitals or docs) from a narrow network product. There are several different types of decisions that can lead to an exclusion from a narrow network. Let’s assume that the narrow network that is being crafted is in an area with reasonably high provider density. Therefore adding or dropping any particular provider won’t run into any network adequacy (regulatory or marketing) concerns.
1) Practice patterns — if identical patients on all observables go to two different doctors and one doctor consistently orders far more intensive and expensive treatments than the other doctor without any validated improvements in quality, care or patient experience, then cutting out the high expense provider may make sense.
2) Quality — if one doctor has a consistent history of much higher than risk adjusted expected re-admissions or avoidable complications for their patients then carving out a bad doc improves both the financial performance of the network and the quality of the network.
3) Price level — Assuming a doctor has perfectly acceptable but not exceptional quality but has a contract that pays them twice what other, similar doctors are paid for the same procedure lists. Here exclusion is a cost control measure on the insurer. It would not be surprising if a renegoatiated contract at a lower price level would bring that doctor back into the narrow network.
4) Strange contracting reasons — Insurer-Provider contracts are a black box to me. There are frequently clauses that state if a narrow network is offered all providers under one contract must be in it OR narrow networks could be a take it or leave proposition between several individuals offering similar services in a micro-market.
5) Risk management/risk dodging — this is the hemophilia center example. If a practice is the only group that treats a very well defined, miniscule and expensive population, and risk adjustment/reinsurance is inadequate to cover costs, then cutting out the particular practice is attractive.
6) Halo effects leading to higher pricing — Academic Medical Centers (AMC) and dedicated Childrens Hospitals tend to be expensive on a per unit basis for regular services and really, really good at unusual services. There is a quality argument to pay very high prices for unusual services but unbundling the contract is tough. We saw this with ACA plans in Washington State with Seattle Childrens in 2014:
Washington State starkly illustrates this trade-off as the Seattle Children’s Hospital was excluded from most of the narrow network plans on the Washington State Exchange initially.
Mark Shepard has found that high prestige hospitals create significant selection effects.
7) Data infrastructure for population health management — as we move away from Fee for Service (FFS) towards some variant of alternative payment models (APM) and population health management, the data and infrastructure demands placed on practices have changed. Some practices might not be able/willing to be involved in this different care financing model or the insurer wants to keep the APM in a very small universe for testing and management control purposes.
8) Corporate walls — I came out of the integrated delivery network world of UPMC where corporate owned both the insurer and a huge hospital system. Some narrow networks were fundamentally build on UPMC owned and employed clinicians plus a miniscule smattering of other providers that were needed for regulatory purposes. A perfectly competent, reasonably priced doc that was on their own or in another system might never be invited into the narrow network.
9) Just because — weird stuff happens.
Is info in categories 1) and 2) publically available to aid consumer choice regardless of the individual’s insurance provider? Assume this would vary by state.
@p.a.: To the best of my knowledge, #1 is barely available to anyone except researchers in the public sphere and #2 is basically unknowable to anyone who does not have full claims data and more.
@p.a.: I wish. Even here in Covered California I am not aware of any of that and have chosen all my doctors by making them audition, wishing there were some database or website available. When the jagged pile of fragments that used to be my carpal bones sliced through the extensor tendons to two of my fingers, the hand surgeon I was originally referred to proudly told me he knew the name of my condition – Vaughn Syndrome, but he didn’t remember anything more and had never done the surgery, so he went to get his iPad to show me the details, I wrote him off immediately and was getting ready to tell him bye after I got the website he would show me. It was obvious from the people in the waiting room and his pictures of himself with athletes in NBA and MLB uniforms that he did not do much besides sports injuries on extremely young fit men and was not suited to my purpose. Fortunately, he wanted to operate on me as little as I wanted him to operate on me, so we parted without regrets after he gave me an overview. It was a massive waste of our time and Medicare’s money, but there you go.
@p.a.: @David Anderson: Once again showing how difficult it is to apply market-based reasoning to health care! Even if people wanted to shop around for every medical provider they see, it’s essentially impossible for the average consumer to access all the relevant data that (even economic market theory says!) they need in order to make decisions. Sigh.