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Health insurance is complicated and complex. If it wasn’t I would not be have my current job. We need to think and speak with clarity when we think about trade-offs. There are two sets of trade-offs that are often conflated. The first is provider network adequacy. The second is provider gatekeeping. These are two very different concepts and should not be used as proxies for one or the other attribute.

An adequate network is a set of contracted physicians, hospitals, and other medical providers that can reasonably provide appropriate services to most people in an affordable and timely manner. You will note that I’m aggressively staying away from precise definitions and quantification. A big network with a lot of doctors might be adequate. It might not be. A tiny network could be pragmatically amazing or hideous and horrendous. For most of the 2010s, my insurance had narrow networks, with at most 30% of the doctors and hospitals in the region in the network.

I had really good networks though that were readily adequate. My first network was effectively any place with a UPMC logo on the side of the building. My PCP was literally a 3 minute walk from my house and my physical therapist who made sure my ankle was not a complete mess was 1 exit down the Parkway East on the same side of the Squirrel Hill Tunnel. The maternity hospital was 6 minutes west of us, and the community hospital was 15 minutes east. Once I moved to academia, my network changed to any building with DUKE on the side. If I needed access to care, I could quickly make acute care appointments and the few specialty visits I or my family needed were easy enough to schedule. These were good networks for me even as traditional measures of network size and breadth would say that these were small and potentially low value networks.

Now if someone lived in Bradford County Pennsylvania and had the skinny UPMC employee plan, then the networks might not be that good as there were few UPMC hospitals or docs on the PA-NY border but this is an individual level analysis. Urban residents can likely find good to them networks in situations where the network has a small percentage of all available docs and hospitals in the region. Rural residents likely need broader networks because there are just far fewer docs and hospitals in rural areas.

The other thing we need to keep in mind is that some networks are restrictive and others are YOLO. Strict Health Maintenance Organizations (HMOs) require gatekeeping and prior authorization for anything more than a primary care visit. Furthermore, an HMO will not (normally) pay for any out of network care. On the other extreme, a Preferred Provider Organization (PPO) will allow any appointment to be made and it will pay something for out of network care. All else being equal, a PPO is substantially less restrictive than a strict HMO and from purely an option value perspective, a PPO is likely more valuable than an HMO all else being equal.

However an HMO can plausibly offer a massive network that is pragmatically excellent while a PPO can offer a local network that is tiny and barely useful. The opposite can be true as well. There is nothing about the plan organizational types that dictate network size or usability.

We need to keep these value factors distinct when we think about plan quality and access to care.

Clarity on networks and restrictions for health insurancePost + Comments (11)