Anderson On Health Insurance

The first stage is the application and validation stage.  At this stage, a provider gives the insurance company a letter of interest and a massive pile of paperwork that should prove that she is an adequately qualified provider.  Different insurance companies have different standards of “Adequate”.  One company may only want to have board certified providers in the network, while another will accept docs that are not board certified but are in process, and another will have looser standards.  These standards are flexible depending on location.   The credentialing group will verify that the doc has all of the current identifiers, current liability and malpractice insurance, no major legal issues outstanding or settled, licensure is up to date etc. 

These standards are often not absolute.  If there is a dermatologist who practices in the middle of the boonies, exceptions will be made during the credentialing process if that derm does not meet typical standards.  Other high demand, low count specialties will see more flexibility while general surgeons and ob/gyns won’t.

Once a provider is credentialed by the health insurance company, the produce assignment dance begins.  This is where it is a two-way option.  On broad scale network like the typical Medicaid, Medicare, Employer Group Commercial network, the insurance company will try to put a provider into as many products as possible.  Providers have the right of refusal.  A provider may receive an offer to be placed in Medicaid, Medicare, Commercial HMO, Commercial PPO, and CHIP but only accept being placed in Medicaid, Medicare, Commercial PPO and CHIP because the provider does not want to deal with Commercial HMO capitation payment models.  Networks in baseball terms are mutual options.  Once that option is exercised, the provider agrees to take a set fee for services rendered to members of the health insurnance company and the health insurance company agrees to pay that fee. 

Narrow networks such as the base Exchange networks that are being offered in most states have a different incentive structure, although it is still a mutual option.  The health insurance company will have an idea of what it wants a network to accomplish and within the boundaries of state regulation towards “adequate access” to providers, they’ll shift and shape their exisiting network into a new narrow network.  For instance, Mayhew Insurance could be attempting to create a low cost and narrow network of providers who are willing to take Medicare plus 5% and a seperate network of providers who are willing to take between Medicare plus 5% to Medicare plus 20% and a general network at commercial rates.  Providers or their employers if providers belong to large groups of docs, are then approached with an offer of new rates for the Exchange population and they either sign or don’t sign the agreement.  Once a network of sufficient density and diversity is signed, the network is filed with state regulators and the product can be sold.

The narrow networks are usually much more insurance company driven than provider driven as the narrow networks benefit the insurance company first and foremost.  Big, broad, general networks are usually provider driven in that any provider that meets minimal standards is included. 

And the final twist on this is the concept of delegated credentialing provider entity.  Large medical groups or hospitals that employ a lot of providers will often be their own credentialing authority over individual providers.  Health insurance companies can outsource their credentialing (step 1) responsibilities to these groups.  When networks are created, the individual providers employed or credentialed by the delegated credentialing provider entity don’t get a say, instead it is the entity and the health insurance company that negoatiates rates and network participation.