Featured in Health Business Daily, Oct. 3, 2017

Employers Keep Testing High-Performance Networks, Despite Employee Pushback (with Chart: More Employers Are Adopting High-Performance Networks)

Reprinted from HEALTH PLAN WEEK, the most reliable source of objective business, financial and regulatory news of the health insurance industry. Subscribe today!

By Diana Manos, Senior Reporter
May 15, 2017Volume 27Issue 17

In the constant quest to contain health care costs and improve outcomes, employers are moving in droves to high-performance networks, despite pushback from some workers who say these networks are too narrow, employee benefits consultants report. And even some advisors question how effective the networks are at improving quality and containing costs.

A recent National Business Group on Health (NBGH) survey found that 43% of large employers offered at least one high-performance network in 2016. The “Large Employers’ Health Plan Design Survey” also found an additional 37% of employers intend to add that offering by 2019 (see chart, p. 3).

Chantel Sheaks, a director at PwC, says high-performance networks are becoming more widespread, but her clients aren’t so eager to take the risk with them if it means employees will be unhappy once they sign up and find that their doctor isn’t in the network.

Some third-party administrators help steer employees to top-ranked providers by listing them first in the directories, rather than alphabetically, she says. Employees tend to pick one of the names near the top of the list.

Health Plan Week

Sheaks warns that high-performance networks are a relatively new product and are still in what she considers to be the trial stage. “We don’t have enough data yet to know if these narrower networks will really decrease costs, especially if there are fewer doctors for people to see,” she says.

There hasn’t been enough time to know if high-performance networks will have a negative ripple effect, she says. It’s hard to determine whether insurers have found that perfect ratio of provider-to-covered-life where employees get both quality and access, “and everything else that goes with it,” Sheaks says. And then there are rural areas to be considered, which already operate on “narrow” networks because there are so few doctors. She wonders if high-performance networks will have any impact there.

Despite that, Sheaks says she understands the concept behind high-performance networks, “and the concept makes sense. Conceptually [they] should lower costs,” Sheaks says. “But when it comes to ‘super narrow networks,’ we don’t know yet if they will lower costs or have unintended consequences. But that doesn’t mean we should shut it down too soon.”

Still, some evidence is beginning to trickle in. A new study, funded by the Commonwealth Fund and published in the May issue of Health Affairs, provides some evidence that tiered networks can save money. The study, conducted by Blue Cross Blue Shield of Massachusetts, found that tiered network plans saved $43.36 per member per quarter compared to members enrolled in similar plans without a tiered network. The result was a 5% decrease in spending, according to the study.

Employers Experiment With Cost-Saving Ideas

“The balance between consumer choice and provider cost and quality performance is a delicate one that employers continually are testing each year,” says Cary Badger, principal at Healthscape Advisors and a former Regence Group executive.

Examples of some of the more recent experiments include the use of consumer transparency tools; provider incentives and benefit design, including tiered networks; waiver of cost sharing; and on-site clinics. “There is no perfect solution, because health care is a very localized decision for these employees,” he says.

In addition, consumer tools are also rapidly evolving and new models of care are becoming more prevalent, such as team-based delivery at the patient’s home for poly-chronic conditions, Badger says.

He predicts that insurers will take a more collaborative role with key provider partners in the future. “Even joint ventures are happening to align incentives and risk between the organizations,” he says. “This may prove to have more long-term impacts than exclusionary tactics or tiering.”

Dan Delaney, managing director at HealthScape Advisors, says high-performance networks are most effective when health plans and providers design them in partnership. This works especially well within a closed system of managed care, where the risk is shared. An example of this model is Innovation Health, the joint venture health plan operated by Aetna Inc. and northern Virginia-based Inova Health System (HPW 7/25/16, p. 4). High-performance networks will have a decade-long journey, at a minimum, to success, Delaney predicts. Good progress is being made in some areas, but since the dynamics vary so much across markets, it’s hard to clearly see results yet.

Health plans or employers who want to undertake the use of high-performance networks need to be prepared to make a greater investment in tools such as the technology needed to connect providers and insurers to coordinate and manage care. Without that and new payment models to incentivize physicians, narrow networks might not succeed, Delaney says.

Nonetheless, there are great advantages to a narrow network. “Particularly when you align that network with a value-based arrangement, the benefit could be very strong,” he says.

High-performance networks “by their very definition allow you to change the behavior of the physicians,” according to Delaney. “It’s not easy to ask physicians to change their referring patterns. You have to get the right incentives in place.”

Steve Wojcik, vice president of public policy at NBGH, says with higher cost sharing, employees have a much bigger stake in finding affordable health care than they have had in the past. This makes employees more willing to participate in high-performance networks with reduced cost-sharing features. Those incentives, coupled with higher quality of care, have encouraged employees to buy in, even if their doctor isn’t found among the first tier.

Justin Barnes, on the advisory board of iHealth Solutions, a health technology and consulting firm, says innovative and highly collaborative networks, like those found in high-performance networks, “are ultimately how health care is going to look.”

This model brings the focus on preventive care as a way of keeping costs down. “If packaged and messaged appropriately, that message can be really strong,” he says. “It’s just the beginning; it’s the future of health care.”

More Employers Are Adopting High-Performance Networks

More Employers Are Adopting High-Performance Networks

SOURCE: National Business Group on Health, “Large Employers’ 2017 Health Plan Design Survey,” August 2016. Visit www.businessgrouphealth.org

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