Silver-Spamming is the practice of an ACA exchange insurer offering two nearly identical silver plans as the cheapest plan and the second cheapest silver plan. This strategy compresses the silver spread between the benchmark and cheapest silver. Smaller spreads reduce the affordability margin between the cheapest plan available to the benchmark plan when compared to a counterfactual universe where the benchmark silver plan is significantly higher. This higher benchmark could be because of monopolist pricing strategies designed to maximize enrollment or the benchmark being offered by a second insurer. Silver-spamming is bad for subsidized enrollees as it raises relative prices of all plans except for the benchmark plan. Silver spamming as a strategy is a choice by the low cost insurer to accept a larger proportion of a smaller and sicker enrolled population.
#silvergap helps consumers by leaving a really cheap silver plan, #silverspam clusters similar plans at lower end, hosing consumers https://t.co/g4gpw8OZfm
— Patrick O’Mahen (@PatrickOMahen) October 25, 2016
Virginia has a bill that seeks to make Silver Spamming less plausible as an actual strategy:
“Narrow network plan” means a silver-level plan offered on the exchange that includes fewer than 20 percent of the health care providers in the geographic region in which such plan is offered as in-network providers.
“Silver-level plan” has the same meaning as provided in 1302(d) of the Patient Protection and Affordable Care Act, P.L. 111-148, as amended.
B. No health carrier that offers a narrow network plan in a geographic region shall offer any additional narrow network plan in the same geographic area if any two narrow network plans offered by such health carrier in the geographic region would have the two lowest monthly premiums of any silver-level plans offered by the health carrier in the geographic region.
A very narrow network insurer can offer multiple silver plans in a given region. An insurer can offer a broad network and a very narrow network. That broad network can have a dozen different plans layered on top of it. The theory is that when all else is equal, a narrow network will be lower premium than a network with more providers.
I think that a 20% of available providers definition of a “narrow network” is a very low bar to clear as a network. Important work by Weiner and Polsky from 2015 applied a “T-shirt” size system to networks. They defined a Medium network at 40% of available providers. Applying a “medium” threshold to this law would make it much harder for an insurer to offer a 15% of local provider network and a 21% local provider network that would just clear the requirement to effectively silver spam the region. An insurer could still offer a 15% network and a 41% network but the premium spread is far more likely to be significant due to the broader network.
States have significant capability to shape their individual marketplaces to be more or less friendly to buyers. States can find ways to manage spreads and product quality to achieve local goals. Higher benchmark premiums can and often will lead to greater affordability for buyers.
Butch
So, David, not on topic but I don’t know who else to ask. We went in for a checkup in January 2019; Blue Cross denied payment so I paid the amount in full, and then started getting bills every two weeks – account balance zero, payment due zero, payment must be submitted immediately. Kind of zen, huh? Anyway, after many, many phone calls and letters, the clinic finally tells me that there’s an outstanding insurance claim from the visit that we may still have to pay. Can they actually come at us for $107 more than a year after the visit?
(I now know from sad experience that the Blue Cross SOP is to deny everything and then sit back and see how you react. Once you appeal, however, Blue Cross does set an internal deadline of 60 days and sticks to it, so if the clinic had actually done anything to file this claim they’d have an answer by now. I also discovered that the folks at the state agency supposedly set up to deal with these situations seem to think their job consists of answering the phone and telling you there’s nothing they can do.)
Thank you – sorry for the long post.
Barbara
@Butch: I don’t have enough facts to give you a recitation of your possible legal rights, but you can try telling the clinic that their failure to file in a timely manner means that you now have no recourse with the insurer. Therefore, you will agree to a payment of $X, X being half or less of the original amount. If they agree to that, make sure you talk to the billing manager so that it gets internally accounted for as a zero balance.
Yutsano
Once again: vvoting matters.
p.a.
David, what are the points of contact between insurers, state and fed regulators, and legislatures, particularly in regards to: “well if x happens (at whatev gvt level, by any branch) we may have no recourse but to leave the state/county”? Is this type of pressure usually applied by lobbyists, or more directly by insurers?
ProfDamatu
This is really interesting legislation! I do wonder, though, if it will mostly affect the larger metro regions that have a broader possible network spread (which also tend to have more insurers and more competition to hopefully bring down prices). Still worth doing, though it will end up leaving out lots of the places where silver spamming is really hosing consumers.
I’m thinking in particular of small cities like Charlottesville and Harrisonburg, where it’s going to be very difficult to offer a network so narrow that it would trigger this law. In a city of 50,000, a network that included only 20% of the providers would be so narrow as to be completely non-functional; I could see a network like that ending up with fewer than 10 primary care docs, for instance. I guess my town is a special case, in that a good chunk of the doctors and almost all of the facilities in the area are owned by the same corporation as one of the two insurers offering plans in the area. That insurer would find it impossible to offer a network narrow enough to trigger that law because it wouldn’t make any kind of sense to exclude any of that company’s facilities or doctors from the network (and, surprise surprise, that company has been silver spamming – though at least they actually started doing significant silver loading for this year).
Interestingly, the narrow-network products being offered by one of our insurers this year (Optima) simply exclude most of the UVA facilities and doctors (which are 50 miles away but still close enough to be in our network in the past). Even so, given the concentration of ownership, I’d be surprised to find that even the narrow network included less than half of the providers in the 50-mile radius…just because there aren’t that many, and so many work for the same company.
(As a side note, our other option – Anthem HealthKeepers – doesn’t bother with separate networks; they just put all of the more expensive UVA providers in a higher tier with breathtakingly high coinsurance, or exclude them altogether.)