If You Thought Managed Care Wars Were Ugly, Meet "Narrow Networks"

From the youngest patients to the oldest, the Affordable Care Act (ACA)’s promise that care will be provided despite pre-existing conditions is bumping against the challenge of keeping costs in check. From around the country come reports of pushback, which evoke the 1990s stories of managed care’s debut: limited choice.

To be sure, the stated commitment today is that cost is not the first concern, quality is. But that doesn’t mean that there aren’t some high-profile examples of premier institutions being left off certain plans for reasons of cost containment. Of note:

• In Pennsylvania, the state Attorney General is trying to force Highmark to expand its Medicare Advantage network to include the University of Pittsburgh Medical Center. But Highmark has argued before a US District court judge that state regulators are acting beyond their authority.
• In Washington State, Seattle Children’s Hospital has sued the Office of the State Insurance Commissioner in early September because so many of the plans on the state’s exchanges have left this key hospital out of network. In King County, for example, only 2 of 7 plans initally include it. In January, the hospital treated 125 children with hard-to-treat conditions who had lost access to the hospital because of a change in insurance status, and the hospital absorbed the costs. The lawsuit was later withdrawn after an agreement was worked out.

During a recent call with investors, Aetna CEO Mark Bertolini described the backlash from consumers over the issue, and he said “doc shock” would be a major issue. Insurers do respond he said, because if they are pressured to add to networks, prices are affected. The push and pull of whether to include certain providers will continue in the early years of the ACA and will affect the ability of insurers to keep prices down, experts have predicted, much the same as the early years of managed care.

The difference this time, of course, is the challenge for accountable care organizations to meet targets from CMS on population health, patient satisfaction and cost savings. Those last two would seem to be at odds—if high-cost providers are not included, patients might not be pleased, but allowing them in the network might hurt the cause of meeting savings goals.

Academic centers are pointing out that not all hospitals are the same; those specialized care centers that take the most difficult cases are, by definition, going to consume more healthcare costs, and this must be taken into account.

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