Have you ever gone to the grocery store to buy potato chips, only to be overwhelmed by a massive number of seemingly identical options? Having more choices doesn’t necessarily lead to a better decision. The same can be true of provider networks. For employers, the best network isn’t necessarily the largest. It’s the one that gives plan members access to the right providers at the right cost.
Network Size Can Affect Costs
Narrower provider networks can help control health plan costs. KFF explains that health plans use narrow networks to reduce costs by limiting the number of participating providers. Other network strategies, including high-performance and tiered networks, can encourage plan members to use providers that offer lower costs or better performance.
The tradeoff is that restricted networks may also be less flexible, and this could negatively affect plan member satisfaction.
On the other hand, if plan members can’t afford to use their coverage, a large network won’t help anyone. As costs continue to rise, affordability is a major barrier to care. A more strategically designed network may create opportunities to control costs while maintaining access to needed care.
Ultimately, it comes down to the composition of the network. A good network, even if small, can meet the needs of your plan members, and bigger isn’t always better.
Quantity Is Not a Substitute for Quality
When you’re looking for a primary care provider, you want one doctor who meets your needs, not dozens of doctors who have bad reviews or aren’t accepting new patients.
Of course, a provider network needs more than one doctor. Different plan members will have different preferences regarding specialty, gender and other factors. Plan members also need access to a wide variety of specialist providers. The network should be large enough to satisfy these needs. At the same time, adding more providers to a network won’t necessarily improve it. The key is to contract with providers who align with the needs of your workforce and their families, not just to add more providers.
More Choices Can Make Comparison Shopping More Difficult
Price transparency has improved, but comparing health care costs can still be difficult. Even when pricing information is available, the amount a patient ultimately pays may depend on the provider, service, health plan and the patient’s cost-sharing requirements.
YouGov conducted a survey on behalf of AKASA, an AI developer for healthcare organizations, and found that most patients do not comparison shop for healthcare services. Of the 2,000 Americans surveyed, 64% said they had never sought out pricing for healthcare services before receiving care.
Research published in the Journal of General Internal Medicine may explain why. Despite legislative attempts to improve price transparency, many people still find it difficult to predict their costs.
When faced with a large network full of provider options, some individuals may simply go with the first option on the list. If they try to compare options, a large network can become overwhelming. It’s like trying to pick out a brand of potato chips when you’re faced with dozens of options and you don’t know how they’re different.
The goal isn’t to build the smallest possible network. It’s to build the right network, one that balances access, quality, cost and the specific needs of your workforce. A carefully designed network can make it easier for plan members to identify and access high-quality, cost-effective care.
Handling Out-of-Network Needs
No matter how big or small your network is, your plan members may occasionally have health care needs that cannot be met by the network. This can happen when a plan member:
- Is traveling outside the region. Networks are typically built around the region where the plan members live. It may not make sense to contract with providers on the other side of the country on the off chance that a plan member will travel there, but urgent care may be needed on vacations and business trips.
- Needs highly specialized care. A strong network of any size should include a variety of specialist providers. However, for very specialized types of care, limited number of appropriate providers, and they may not participate in the network.
- Prefers an out-of-network provider. Sometimes a plan member wants to see a provider who is not part of the network, often due to the provider’s expertise and reputation or because they’ve already established a patient-provider relationship.
National insurance companies may have arrangements to handle urgent care in other regions. However, depending on the plan design, members who seek out-of-network care may face higher out-of-pocket costs or reduced coverage.
Likewise, self-funded plans may also use higher out-of-pocket costs for out-of-network care, a tactic that can help control costs while encouraging plan members to use networks. When covered out-of-network claims occur, plans may use reference-based pricing, negotiated rates or other reimbursement methodologies to determine the amount payable, depending on the plan design and applicable law.
The Benefit of Contracting Directly with Community Providers
Even if your health plan has a large network, there’s a good chance that many of your plan members get the majority of their care from a small number of healthcare organizations. This is especially true for rural employers, where a single organization might meet the vast majority of local healthcare needs.
Instead of paying a national carrier for access to a large network with providers your plan members may never see, self-funded employers can consider designing a plan around strong access to the providers their plan members actually use.
The Health2Business direct partnership model enables employers to contract directly with local healthcare organizations and providers, creating opportunities to improve access, manage costs and build more sustainable relationships. Learn more about our direct partnership model.
