Must-read: Richard Mayhew: “A California Earthquake for Narrow Networks”

Must-Read: Richard Mayhew: A California Earthquake for Narrow Networks: “[The] Covered California… exchange’s five-member board is slated to vote on…

…[whether] insurers would need to identify hospital ‘outliers’ on cost and quality starting in 2018. Medical groups and doctors would be rated after that. Providers who don’t measure up stand to lose insured patients and suffer a black eye that could sully their reputations with employers and other big customers. By 2019, health plans would be expected to expel poor performers from their exchange networks. The goal is to start trimming the inefficient high cost extremes.

In some ways, this is not an unusual move.  Narrow networks have been proliferating under the ACA, and they were around pre-ACA…. My employer’s best-selling commercial network is a narrow network built when Howard Dean was the favorite Vermonter among online liberals.  Narrow networks are usually built to get a better price and value proposition than a broad network… an insurer thinks it can steer thousands or tens of thousands of members to Provider A… so Provider A should give the insurer a volume discount.

When I was building narrow networks for Mayhew Insurance, there were a set of hospitals and provider groups that were in our broad network that we really tried not to use for the narrow products.  One… had good quality but a gold-plated contract that was paying them roughly twice the regional rate for a set of frequently used codes.  Another… tended to have very low HEDIS scores on basic things…. Other[s]… we were stuck using them as they were the only specialist of that type within forty miles, but we actively tried to… get new docs to those regions….

The interesting thing is the threat of en-masse exclusion to trim the outliers…. There are some significant concerns with implementation. The big one is what exactly is quality? Is it risk adjusted and if so, how is it just medical risk adjustment or is it medical and socio-economic risk adjusted? How does a provider appeal?  How does a provider get back in?… Even with those questions, this is an interesting experiment.