Restrictive plan types are not the same as narrow networks

Avalere is a health care consulting firm. They do really good work that informs both policy makers and the public. They just released an ACA study where their language conflates two distinctive concepts.

The number of providers in a network is not directly tied to the restrictiveness of the plan type.

New analysis from Avalere finds that health plans with more restrictive networks, including health maintenance organizations (HMOs) and exclusive provider organizations (EPOs), continue to be the most common types of plans in the exchange market, with 72% of the 2019 market comprised of such plans. The remaining plans are Preferred Provider Organizations (PPO) and Point of Service (POS) plans, which tend to offer comparatively broader coverage.

“Provider networks are getting narrower, which means it is more important than ever that patients understand what kind of plans they are buying,” said Chris Sloan, director at Avalere. “Unknowingly enrolling in a narrow network plan could lead to patients being unable to see their preferred doctor or go to their most convenient hospital.”

Narrow or broadness refers to the number of providers in a network.

Restrictiveness refers to gate keeping and out of network benefit structures.

These are two very different concepts.

We’ve looked at the in and out of network benefit and gatekeeper structures of the different plan types before:

Avalere’s first graphic makes a very good point that plan designs are moving towards more restrictive plans (HMO/EPO).

This is very valuable information. This is a good description of the reality on the ground. Insurers want more control over costs which means more control on which doctors and hospitals their policy holders use.

However an HMO is not necessarily a narrow network with few doctors in it. An HMO can be a narrow network. An HMO can also having a hundred hospitals and ten thousand doctors in network.

A PPO is not necessarily a broad network with every doctor around in it. It can be a narrow network.

Plan type does not dictate network size or breadth.

There may be correlations in network size and restrictiveness but there is not a requirement that a PPO be a broad network and an HMO be a narrow network.

Penn LDI’s Dan Polsky, Janet Weiner and Yuehan Zhang looked at the number of providers in networks through 2017.

This Issue Brief describes the breadth of physician networks on the ACA marketplaces in 2017. We find that the overall rate of narrow networks is 21%, which is a decline since 2014 (31%) and 2016 (25%). Narrow networks are concentrated in plans sold on state-based marketplaces, at 42%, compared to 10% of plans on federally-facilitated marketplaces.

They are looking into the question of how many doctors and hospitals are available to patients. That is a very different question than the one that Avalere is answering which is how many hoops do patients have to jump through.

It is a subtle difference but it is a difference worth teasing out.

Bronze ain’t bad

The Kaiser Family Foundation is pointing out that roughly a quarter of the currently uninsured could qualify for a $0 premium Bronze plan or better on

Bronze ain’t bad for a guaranteed issue, community rated plan.

Bronze plans have high deductibles and out of pocket limits with comparatively lower premiums. They can be very good plans for two cohorts of people.

  • People who have low expected healthcare costs
  • People who know they have very high healthcare costs
  • Read more

    Go sign up

    Anyone who needs to get insurance on the individual market should sign up by Saturday. This is the last day in almost all states where any coverage will start on January 1, 2019. The 15th is the last day of open enrollment for

    If you earn under 400% Federal Poverty Level or you can get your modified adjusted gross income (MAGI) down to that level by a combination of IRAs, HSAs and other legal tricks, you qualify for premium subsidies. These will keep premiums lower than they otherwise would be.

    Depending on where you live, there are some great deals if you are subsidized.

    In 12 counties in Oklahoma, a Gold Plan is free at any subsidized income level.

    In half the counties on, the lowest cost Bronze plan is no premium for some folks.

    Look around.

    And if you need help, raise your question in comments this morning.

    It’s only generic collusion conspiracy

    The Washington Post has a blockbuster on collusion between generic drug manufacturers:

    Executives at more than a dozen generic-drug companies had a form of shorthand to describe how they conducted business, insider lingo worked out over steak dinners, cocktail receptions and rounds of golf.

    The “sandbox,” according to investigators, was the market for generic prescription drugs, where everyone was expected to play nice…

    Officials from multiple states say these practices were central to illegal price-fixing schemes of massive proportion.

    Generic drugs have the ability to offer large costs savings. Those savings only occur when there is real competition. Research ** has shown that generic drugs are significantly cheaper than brand name drugs when there are many manufacturers.

    Collusion and c Conspiracy to fix prices is a direct pickpocketing by the generic manufacturers out of the pockets of patients and insurers.

    This is going to be a huge deal if the collusion conspiracy can be proven.

    ** December 28, 2017 N Engl J Med 2017; 377:2597-2598 DOI: 10.1056/NEJMc1711899

    Slogans to text is a big jump: New York Single Payer Edition

    New York will have a solid Democratic trifecta in 2019. The New York State Senate will have a 39-24 Democratic majority. This means any Democratic only bill can lose 7 votes or 18% of the Democratic Senate caucus and still maintain a minimal viable winning coalition. The New York House will have a 106-44 majority. Any Democrat only bill can lose 29% of the Democratic Assembly Caucus and still maintain a minimal viable coalition. As a reminder Senate Majority Leader had an effective 0% margin and Speaker Pelosi had a 14% margin within her caucus to pass the ACA.

    Politico reports that one of the major bills that is being debated and prepped for a 2019 introduction is New York state single payer. It is a bill that is splitting the caucus as major internal interest groups are at loggerheads.

    While public-sector unions in New York City have voiced concerns over the bill’s potential to curtail their generous health benefits, which POLITICO first reported last week, two leading health care unions are among those continuing to back the legislation….

    The Municipal Labor Committee, an umbrella group of New York City unions, recently met with the bill’s sponsors — Assemblyman Dick Gottfried (D-Manhattan) and state Sen. Gustavo Rivera (D-Bronx) — in the Lower Manhattan offices of District Council 37 to express their concerns.

    They worry they will lose the option to select virtually full coverage because of a provision in the legislation that passes a fraction of a proposed payroll tax onto employees. They are also concerned about losing union-controlled “welfare funds” to which the city contributes about $1,500 per member. Those accounts pay for a variety of expenses, including prescription drugs, eyeglasses and hearing aids.

    The biggest challenge for national single payer is that it is massively disruptive. People who have good to very good benefits right now and who make significantly more than median income (ie high propensity voters) are going to be incredibly disrupted in the short term even if they are promised that they will be better off in the long term. The union fight in New York state is a good exemplar of how the political coalitions can be fractured.

    The biggest challenge at the state level is two parts of the same problem:

    • How does this get paid for
      • How does this work in a 2008-2010 scenario?
    • How do the waivers that are not yet legal get approved by the Feds

    The bill would cost an estimated $139 billion in new tax revenue each year, making its fate especially uncertain in the hands of a governor who has been reticent to raise taxes. Sponsors have argued that the price tag is misleading because the taxes displace money already being paid in co-pays and premiums…

    A state-level plan would need an unprecedented federal waiver to allow for federal Medicaid, Medicare and Obamacare funds to be redirected into the new system, among other complications….

    Single payer is a good slogan. Figuring out the nuts and bolts of how to implement this slogan into policy is an extraordinarily difficult political and policy act.

    Is the challenge and pain worthwhile?

    If the goal is to eliminate insurance companies it may be; if the goal is to make sure there is universal coverage that is good and affordable then other methods may be superior.

    Network information and buying decisions

    Networks are one of the major product differentiators.  If I needed to buy on Exchange, the Blue Cross and Blue Shield of North Carolina network is different than the Cigna network which is different than the Ambetter/Centene network.  Right now, my family is relatively healthy and low touch with the medical system so we would be fairly network agnostic once other factors such as premiums and cost sharing are involved.  However if one of my family members had the medical history that required continual relationships and specialized care, network would become very important in our decision making process.

    We would be relying on directories to make choices.  Our purchase choice would be locked in for a year while the directory may or may not be pragmatically accurate at the moment of the decision.  Today’s directory is guaranteed to be inaccurate six months from now.  The question is whether or not it will be materially inaccurate or just “normally” inaccurate.

    Wesley Sanders notes that there are few reasons for Exchange insurers to care strongly about their directories:


    People are locked into their contracts for a year. They can’t leave even if they had strong reason to believe that they were buying a policy with a critical provider set in it and then discover in January or February that those providers are actually not in network. If they made the buy/no buy decision partially on the basis of a particular specialist/hospital set being in the network and then find out that either those providers never were in the network OR their contracts expire early in the policy year, then the actual policy that is bought is materially different than the policy that the buyer reasonably thought they were buying.

    As long as we count on individual decision making as a means of unleashing market discipline, then we need to make sure that the variance between what people are thinking that they are buying and what they actually are buying is as small as possible.

    Are you open? Directory problems in Medicare Advantage

    The Center for Medicare and Medicaid Services recently released an audit study on the doctor and hospital directories that Medicare Advantage insurers are required to supply to members.  Directories are supposed to tell insurance buyers what doctors and hospitals are in network, where those offices are located, how to contact those offices and whether or not the doctor is taking new patients from a particular insurer.

    The results are abysmal.

    The majority of the MAOs (28 out of 52) had between 30% and 60% inaccurate locations.Because MAO members rely on provider directories to locate an in-network provider, these inaccuracies could pose a significant access-to-care barrier.
    Inaccuracies with the highest likelihood of preventing access to care were found in 41.7% of all locations.

    A few thoughts.  First, CMS is doing a damn good job of conducting effective oversight.  Secondly, I spent several years at UPMC Health Plan working making their directory and provider information systems hum.  I don’t think that it is ever possible to have a perfect directory.  As soon as the TRUTH is validated, it will change.  However there is a wide degree of errors.  Table 6 in the report gives me hope and disgust at the same time.

    Two insurers showed that good to very good directories are possible.  Two insurers make a complete farce out of the idea that people can rely on directories.

    Getting a directory right or at least good enough with a low error rate that is quickly corrected requires time, money and insurer management give a damn.

    The CMS report highlights some of the typical problems.  The biggest drive of bad directories is that the data is stale and the insurers rely on provider self-report.  Insurers see good provider information when they go over a doctor’s credentialing package.  This package is needed for the doctor-insurer contract.  It will contain licensing information, practice locations and contact information.  After the contract is signed, the data might be reviewed in three to five years.  Any updates usually happen because the provider reports something.

    I firmly believe that any data element that does not drive provider payment will not produce timely, accurate nor complete provider data.

    Insurers that want to get good directories need to spend money and give a damn.  They need to actively check provider information against national databases.  They need to audit at least a proportion of their provider universe on a consistent basis.  They need to send out account representatives to verify addresses.  When one of their employees goes by a soon to be knocked down strip mall on the way to a D-3 women’s soccer game he is about to referee, the insurer needs to update the address status of the large primary care office that was in the strip mall.  All of this takes time and money.

    Directories are still seen as mostly a cost-center and not a profit center.  CMS or state regulators can increase the costs of bad directories either directly with fines or indirectly by removing stars, changing auto-assignment policies for Medicaid managed care or increasing the scrutiny of plans that need state approval.  Giving a damn so that people know what the hell they are buying should be a minimal first step in an environment where we expect the individual buyer to assert market discipline on insurance premiums and medical costs in general.