Narrow networks lead to rise in primary care appointments, fall in ED visits

Enrollees in a narrow network plan in Massachusetts who kept their primary care physicians (PCPs) ended up going to emergency departments (EDs) less often and saw their PCP more, which was the opposite of what researchers in a new study expected to find.

Massachusetts state employees were offered a three-month premium holiday in 2012 if they switched to a narrow network that would save the state money. An analysis of the offer and its effect on spending and savings was authored by Jonathan Gruber, Ph.D. of M.I.T. and Robin McKnight, Ph.D., of Wellesley College and published as a working paper by the National Bureau of Economic Research.

Narrow networks, also known as limited networks, offer lower premiums in exchange for access to a smaller network of providers. They typically exclude the highest-cost providers and steer patients instead to lower-cost doctors and hospitals that contract with the network. The plans are a popular choice among enrollees in plans offered through the healthcare insurance exchanges under the Affordable Care Act (ACA),  comprising 48% percent of all plans offered on the ACA exchanges.

But although they’re a hit with consumers, concerns have been raised about whether enrollees’ health will suffer because of limited choices.

The study analyzed a complete set of claims data for the years 2009 through 2012. It found that the premium incentive caused 10% of employees to switch to the narrow network. Municipal employees with the same insurance provider were not offered the incentive.

The insurer, Massachusetts Group Insurance Commission (GIC), realized a 4.2% reduction in spending because of the switch, says the study, while individuals realized a savings of 36% on healthcare spending.

“Overall, the findings suggest that the switch to limited network plans reduced spending without harming access to primary care or inducing shifts to more expensive tertiary care, ” said the study. It notes that the increase in PCP visits and spending is “more than offset by a decrease in specialist visits and spending.”

Concern about enrollees not being able find a nearby doctor was not reflected in the study’s findings, which found that “distance traveled to providers falls for primary care physicians, but rises for specialists and in particular hospitals.”

“The basic results hold even for the sickest patients, suggesting that limited network plans are saving money by directing care towards primary care and away from downstream spending,” the authors say. The report adds that there is no evidence that patients are using lower quality hospitals, or of harmful effects for chronically ill patients.

The authors note that the savings are concentrated among individuals who retained their primary care physician while moving to their current insurer’s narrow network plan or another insurer’s narrowed network plan. That finding suggests, “networks that are particularly restrictive on primary care access may fare less well than those that impose only stronger downstream restrictions.”

The results are in line with a study published by McKinsey & Company in December 2013 and updated in June 2014 that looked at payer data for 20,818 exchange plans across the five metal tiers of plans available through the healthcare.gov website, including 2,366 unique individual exchange networks.

That study found “no meaningful performance difference between broad and narrowed exchange networks based on Centers for Medicare and Medicaid Services (CMS) hospital metrics such as the composite value-based purchase score as well as its three sub-components-outcome, patient experience, and clinical process scores.”

Narrow networks have come under scrutiny in the past year, and CMS announced on March 14 that it would be reviewing such plans to see if they meet the standard of  “reasonable access.” The standard includes benchmarks for the number of PCPs, specialists and hospitals that need to be available to enrollees.

Insurers have been dropping providers from their plans as they tighten networks, including United Healthcare, which announced late in 2013 that it was dropping 30,000 doctors from its network plan. The backlash prompted a federal judge to issue an injunction against United Healthcare in December, delaying the move.

That court order expired in March, and United Healthcare sent a subsequent letter to members giving them until April 30 to find a new doctor. The company began a new wave of physician releases in July.