Can narrow networks increase health care quality?

American consumers value the freedom to comparison shop. We like to survey a variety of options and select “the one” that what we really want. If we want triple-ply, select-a-size paper towels with a blue shepherdess imprinted on them, then we expect to be able to find them in aisle 9. Deny us options and we’ll take our business elsewhere.

When it comes to health care, though, endless options may not be better. Consider the issue of “narrow” or “tailored” networks in health insurance — where insurers and other payers contract with a specific, select group of providers to care for their members.

These networks have been getting a lot attention lately because of the way they structure a patient’s choice of providers. Earlier this month the White House updated standards for health plans offered on federal exchanges after mounting pressure from consumers who found their desired providers were out of network. And recently we saw headlines about how comprehensive cancer centers are concerned that they are off-limits to many patients in state exchange plans.

Given the American preference for choice and freedom, it is understandable that the public is skeptical of narrow networks. For many consumers, going “out of network” is not an option. Doing so could be impractical or downright unaffordable. But for regulators who find themselves playing catch up to narrow network plans, it is important to take a hard look at the positive impact that a tailored choice of providers can have on quality and cost.

Narrow networks were initially conceived to support quality and curb costs by steering consumers to a select few contracted providers who deliver exceptional care. There is ample evidence that this approach would work: Some of the highest-quality insurers already are narrow network plans.

A recent Health Affairs study comparing quality and prices among hospitals provides further food for thought. The study authors found that high-cost hospitals fared much better on reputation-based quality metrics (e.g. “Top Hospital” magazine awards),but scored the same or worse than their lower-cost peers on outcome measures such as postsurgical complications or 30-day mortality measures. If patients are choosing hospitals that are not providing higher quality care (but instead maybe have better marketing departments) and those hospitals’ reputations empower them to charge more, then it is easy to see narrow networks’ advantage in  lowering costs while improving quality.

It is important that we keep a close eye on narrow networks as more people become aware of them and they become more common. While some existing plans might strive to include the highest quality providers, there can also be perverse incentives for payers to go to the cheapest provider without any consideration of quality. This is a particular concern given that some patients who have special health care needs or complex illness may choose providers based on cost rather than quality. When serious illnesses are not treated properly, the costs continue to rise.

One practical suggestion for federal and state regulators seeking to ensure quality is to require that narrow network plans offered on exchanges report a robust, common set of quality measures.  Doing so will allow plans to be compared on an “apples-to-apples” basis. As another gauge of tailored networks’ quality, soon health plans that NCQA accredits that use tailored networks may be required to compare their quality to those of plans that use wider networks.

As more people enroll in plans that offer a narrow network of providers, both in health insurance exchanges and elsewhere, we will began to see if they lead to better health and lower costs. If that’s the case, we’ll all be happy customers.

Margaret E. O’Kane is president, National Committee for Quality Assurance.

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  • MCDallas

    I checked the networks on two of the HMOs in Dallas. There was not a single Gyn Onc in network. I guess that’s pretty narrow if you have ovarian cancer.

  • Dr. Drake Ramoray

    Narrow networks were not designed to improve quality. They were designed to reduce access and make it easier for the insurance companies to control their costs. Quality has nothing to do with it.

    I’m interested in how your organization is going to adjust it’s “quality” standards to rural practices, and practices with unfavorable demographics of poverty, education, and employment status, all I which will increase the likelihood of treating patients with higher complication rates in say diabetes, just as one example, and thus reduce a providers perceived “quality” when compared to their peers with more favorable patient demographics in the affluent suburbs?

  • doc99

    You keep using that word “Quality.” I do not think it means what you think it means.