Zebras in narrow networks

My mother is a zebra.

The regional teaching hospital loves her because she has presented several one in a million conditions over the past decade. None of them serious, but all of them weird. She knows that when she goes to that hospital, there is a note in her chart to assemble the interns for a teaching moment. She is still working. Her health insurance is a narrow network home host EPO. The network is anchored by a chain of community hospitals owned by the entity that she works for.

What did that gibberish mean?

Her insurance is set up so that she pays a low deductible and has high actuarial value coverage when she sees a doctor or goes to a facility owned by her employer. This works fine for routine care and common acute conditions. If she had pneumonia, her network would be fine. If she had breast cancer, her network would be fine. If she broke her hip, her network would be fine. Her network is fine when her allergies act up, her network is fine to identify the current zebra problem as “something really odd” (the exact diagnosis the doc told my mom). It is completely incapable of treating the zebra condition.

Insurers are required to pay for medically neccessary care.  How does that happen when the network is incapable of providing that level of care for a patient?

There are two major ways this is done.

The first is for zebra care, the “routine” odd ball cases.

My mother falls into this category.  This is fairly common even for larger regional networks as there is almost always someone with an odd condition.   Insurers with only narrow networks will have carve out/direct contracts with high end specialty hospitals where the truly unusual cases are pre-authorized to go to the hospital or provider group for medically appropriate care.  The specialty hospital will charge higher than typical commercial rates for these carved out services.

Claims will be routed through the normal payment system and held for manual review and approval.  The patient with the limited authorization will pay in-network cost-sharing and deductibles for the services that directly relate to the unique condition.  For instance if my mother’s issue is with a core organ and the regional academic medical center also treats her knee, she will pay regular cost sharing for the core organ issue and out of network cost sharing for the knee issue.  Narrow network insurers don’t advertise these relationships because they don’t want to be the heartless evil bastards that deny authorizations to high cost specialty hospitals for “routine” care.
High cost specialty hospitals don’t advertise these relationships as they want to be considered the go to center for both the unique and common care.
We saw this in 2014 with the Washington State exchange networks as Seattle Childrens’ was dropped from most networks:

there is a significant amount of research that shows more expensive flagship hospitals aren’t significantly better on routine care.  Instead, they specialize in one-off and low probability cases that require very high end care, and use the lower intensity patients as a means to cover the capital and open the door costs required by the highest end care.

For instance, when I got my vascectomy, I chose a regional academic medical center because it was on my bus line, not for quality.  That decision cost the insurance company several hundred additional dollars than if I had gotten snipped at either a community hospital or an outpatient ambulatory surgical center.  Some of that cost increase was due to cross-subsidization of medical provider training, but a significant portion of the increase was the academic medical center could charge more because there was significant demand for the perceived quality bonus that it had compared to community hospitals.  That perceived bonus is directly built from the regional medical center’s world class reputation for a certain class of transplants and another class of highly complex surgeries. But statistically, the high reputation and high costs hospitals don’t have a particular quality differential for routine care….

Ideally, the insurance companies that want to minimize their claims pay-outs want to have Seattle Children’s or any other high cost specialty hospital in network for a la carte services such as organ transplant and regional trauma centers of excellence, but out of network for pneumonia or routine elective surgery or setting broken ankles.  Most of the specialty hospitals don’t want to go to a la carte contracting as that cuts the cross subsidization that they need to cover fixed costs.


Routine oddball cases are managed this way for narrow networks. For insurers that offer both a narrow and broad network, the contracting situation is usually just an internal claims adjustment. Insurers offering only narrow networks will need a special carve out contract with a set of specialty hospitals and provider groups. But this is straightforward.

Now the other case is a bit more complex where truly unique care and equipment is needed. Ebola would be a good example. There are fifty five hospitals capable of safely caring for an individual with Ebola. My employer would probably ship covered individuals to Chicago or Denver as our first choice.  In this case, there usually are no long standing relationships built up between insurers with reasonably broad but not amazingly deep networks and the very few truly specialized hospitals capable of taking on these cases.  So instead the patients are shipped out as quickly as possible and the billing is handled in one of two ways.

The first is that the insurer has some type of wrap-around national network built up.  The Blues can use another Blue’s local contracts as their wrap-around national network.  Non-Blues and non-Aetna/Cigna/UHC carriers often have contracts with network management companies that will contract with out of area hospitals.  These rates will be very high, often two or three times standard in-network rates but it beats the alternative.  The alternative is that the insurer pays the Usual and Customary charges which are basically whatever the provider has the gall to ask for.

So that is how zebras get paid for in narrow networks.  All of these work-arounds have the patient paying as if they are receiving care at an in-network facility by in-network doctors.  The insurers will often have very tight authorization requirements and they will do their best to move people from the out of network/high cost facility to an in-network facility and to the care of an in-network doctor as soon as possible but until the unique work is done, they pay for out of network charges.

21 replies
  1. 1
    Hillary Rettig says:

    Two things I’ve learned:

    1) If someone is really sick or injured, get them stabilized and then drive (for hours if necessary) to a first-rank hospital. Don’t mess around with anything but the best, and don’t listen to the community hospital when they tell you they’re “just as good” as the big city.

    2) You can actually check someone out of one hospital ADA (“against doctor’s advice”), drive them right to the emergency room of a better one, and check them in.

    We saved the life of a loved one doing these two things. I had no idea you could do the latter until someone in the medical profession told us it happened all the time.

    Also, when we told the dietitian at the local hospital that we were moving our loved one to a better hospital, she leaned in and whispered, “Good idea. We can’t take proper care of him here.” But no one said a word about doing that during the weeks he was languishing in their care, which is infuriating – and probably immoral. (Hippocratic Oath anyone?)

    Any thoughts Richard?

  2. 2

    @Hillary Rettig: AMA is definately a choice if the circumstances are right. You might be at legal risk if anything happens to an individual between the AMA check-out and the ER of the preferred hospital.

    Community hospital quality varies significantly. I can’t speak to any particular cases. In my region, the hospital to the immediate south of me, I would avoid at great effort and expense if I had a condition that did not need care in the next seven minutes. The one to the west of me by 15 minutes if I had a common problem (knee/CHF/basic neurological problems etc) I would be fine with as they have an agreement to ship their weird cases to a great regional medical center and a willingness to do so.

  3. 3
    Hillary Rettig says:

    Thanks. In our situation, the community hospital did look like an excellent one – lots of up to date equipment, for instance. But it just didn’t compare with where we delivered our guy – Beth Israel in Boston. BI saved his life.

    Also, and I’m guessing this frequently gets overlooked – the rehab in Boston was so much better than in the boondocks. And the BI social worker really sweated to get him into the best rehab. Whereas the rural rehab was really just a nursing home that did just a tiny bit of rehab. So ineffective and also really depressing.

    Considering that he spent as much time in rehab as in the hospital itself this was crucial.

    Here in Kalamazoo the health care has been surprisingly good, probably because Upjohn/Pfizer and Stryker are both located here. I’m told the cardiac care is excellent, and the preventative care has also been excellent. But if I had cancer or another noncardiac emergency I would prolly head somewhere else.

  4. 4
    MomSense says:

    I have a narrow network plan but because I am also a zebra, they just send me to the big city hospital when something goes wrong. It is apparently more cost effective to do so since they are more equipped to treat me.

    Speaking of mothers and Ebola. My mom spent a week with a friend and halfway through the visit her friend had to be rushed to the hospital. Last night my mom told me the hospital finally figured out what she has and she told me Ebola and that she must have gotten it on the cruise she was on. Then my mom told me about her conversation with the doctor and how the doctor said she should be fine and finally the expression on my face must have shocked her into thinking she may have gotten the diagnosis wrong.

    Turns out it was E.coli.

  5. 5
    manyakitty says:

    Off-topic, but your first sentence is pseudo-Faulknerian. See “My mother is a fish.”

  6. 6
    PhoenixRising says:

    In the post-Exchange world, we zebras who also happen to be self-employed get to network shop. My family switched this year to in-state network because my striped condition is on a follow up schedule of odd summers only. Unless it becomes symptomatic.

    It looked sensible until we had a couple of big fires that caused both my eyes to swell shut due to air quality issues. Then I had to spend down a deductible that is roughly what the Crusaders paid to ransom Richard the Lionhearted to be screened through the network up the scale of specialty until I got to the docs who know what the stripes look like.

    At least I’m not in Philadelphia.

  7. 7
    RuthieC says:

    Richard, you provide such important and valuable information here. I look forward to your posts because your explanations are so clear and understandable. You are the only one I have ever read on this subject who doesn’t make my eyes roll back in my head. Thank you so much for sharing your insight and knowledge.

  8. 8
    Yutsano says:

    @Richard Mayhew: I feel for your mother. Like her I am a purple squirrel for medical conditions, to the point that there are images of my back in medical textbooks now. I do a lot of my routine stuff here in town but anything major I go to Swedish in Seattle for. In fact in the next couple years I have an impending back fusion coming up and not doing that locally, to the great annoyance of my family. I say fuck em. It’s my medical care.

  9. 9
    Bob2 says:

    @MomSense: I’m glad your mom’s zebra case of ebola went away so easily.

  10. 10
    maurinsky says:

    I don’t know what kind of animal I am – I have the misfortune to have a hip so deformed after a series of problems with it beginning with hip displaysia, followed by Legg Calve Perthes, a slipped epiphysis, and osteoarthritis, that no orthopedic surgeon (and I’ve been to several of them) is willing to do surgery to replace it. Luckily, I’ve also developed ankylosing spondilitis, which sounds really bad, but at least it keeps the deformed joint from moving, so it does reduce the pain. So, whatever animal they call it when you have a bunch of shit wrong with you but no one will fix it so you just muddle through.

    @yutsano – in my 20s, my hip x-ray was used in board certification tests for new orthopedists.

  11. 11
    MomSense says:


    I was starting to look outside for people in hazmat suits not to mention the state troopers our governor would surely call.


    You can’t believe how many times I have been told by a doctor that s/he saw a patient die of a nosebleed when still a resident. They always freak out with me.

  12. 12
    Docg says:

    @Richard Mayhew: So hospital accreditation standards are not really of much value as far as implementing and maintaining quality of care? Another medical business CYA scam?

  13. 13

    @Docg: I am not saying that. I don’t have the expertise to say much about hospital accreditation standards besides the logos look really nice.

    I just know which hospitals my doc and nurse friends go to and which ones they work very hard to avoid.

  14. 14
    StringOnAStick says:

    This is all such good information. It also is one more brick in the wall of “Jesus, our medical system is such a giant kluge-fest”.

  15. 15
    dp says:

    I, too, am a zebra, and I’m traveling this road now with my narrow-network carrier. Problem is, there is a single surgeon in our state (and one of about 20 across the US, I’m told) who performs the bizarre surgery I need (so bizarre that there is no CPT code for it), but he is on medical school faculty and of course out of network. So we’re jumping through the various hoops necessary to get it approved.

  16. 16
    Victor Matheson says:


    Victor Matheson here. Former USSF national referee and economist. I have become somewhat of an expert on the economics of the ACA as it applies to legal liability cases. Question for you:

    As your best guess what is an average comparison of Medicaid charges vs Medicare rates vs. standard negotiated private insurer rates vs. private rates for a person paying out of pocket ( maybe your usual and customary rate).


  17. 17
    Richard Mayhew says:

    @Victor Matheson: short answer… it varies a lot by state by insurer by provider by network etc

    Short intuition where Medicaid =1
    Medicaid 100%
    Medicare 125% to 175% Medicaid
    Chip 120% to 175% Medicaid
    Cheap Exchange 5%-15% more than Medicare
    ESI narrow network 20% more than Medicare
    ESI and expensive Exchange 200-250% Medicaid or 150% Medicare

    Rental network 1.5x ESI
    Out of network UCR 500% to 1000% Medicaid billed settles for 25% to 40% billed

  18. 18
    Richard Mayhew says:

    @Richard Mayhew: cash prices somewhere near ESI rates plus a bit

  19. 19
    Richard Mayhew says:

    @Victor Matheson: zack Cooper at Yale and Martin Gaynor at Carnegie Mellon would be good resources

  20. 20
    Richard Mayhew says:

    @Victor Matheson: here is a tweet I had on this subject in April Check out @bjdickmayhew’s Tweet: https://twitter.com/bjdickmayhew/status/725658474663841793?s=01

  21. 21
    Victor Matheson says:

    Thank you. Very helpful.

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