MLR

Six factors that affect insurers’ network decisions

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Provider networks have become a hot-button issue over the past year.

medical records

Industry eyes have been carefully watching how the many lawsuits filed protesting narrow networks on the insurance exchanges play out. Of particular interest is the lawsuit filed by Connecticut’s Fairfield County Medical Association against UnitedHealthcare.

The November 2013 lawsuit sought to prevent the insurer from cutting its Medicare Advantage provider network. UnitedHealthcare’s move was in response to the $200 million to be cut from the program’s federal subsidy over 10 years as required by the Affordable Care Act (ACA).

Health insurers contend that smaller networks enable them to maintain quality care at lower cost. In its amicus brief in support of UnitedHealthcare, America’s Health Insurance Plans (AHIP) noted that plans with more selective networks on the insurance exchanges “have 26 percent lower premiums than comparable plans with broader networks.”

While the cost of care varies widely from provider to provider, high cost does not necessarily mean better care. A study published in the January 2013 Annals of Internal Medicine found that the “association between health care cost and quality is inconsistent.”

Researchers reviewed 61 studies. They found:

  • Only 34 percent reported a positive or mixed-positive association between higher cost and higher quality.
  • 30 percent reported a negative or mixed-negative association.
  • 36 percent reported no difference, an imprecise or indeterminate association, or a mixed association.

Health insurers analyze a number of factors when determining whether to add physicians and other providers to their various networks:

1. Credentials

A physician seeking to join an insurers’ network must meet specific qualifications. These qualifications, among others, include:

  • Appropriate educational background
  • Current professional state license or registration to practice in a specific field
  • Appropriate specialty training
  • Current federal Drug Enforcement Administration registration or a state-issued Controlled Substance Registration certificate, if applicable
  • Hospital privileges
  • Maintenance of professional liability insurance

Credentialing usually involves an office site visit as well.

2. Competence and conduct

Physicians also must exhibit professional competence and exemplary conduct. Insurers search a number of resources to verify that potential network providers meet their standards.

Practitioners should not:

  • Be under Medicare, Medicaid or state disciplinary sanctions
  • Be excluded from any federal, state or local government program
  • Have been convicted of, or have pleaded to, a felony
  • Have lost hospital privileges
  • Have a pattern of malpractice
  • Have unexplained chronological gaps in their professional careers
  • Suffer from mental or physical conditions that could affect performance

If any information received from a source differs from disclosures on a physician’s application, the insurer will contact the applicant to provide an opportunity for the applicant to correct erroneous information. Additionally, a physician who does not pass the credentialing process can submit additional information as part of an appeal.

Passing the credentialing and review process does not automatically mean a physician will be added to an insurer's network. Credentialing and network contracting are separate processes.

3. Location

Network management involves making certain that there are sufficient numbers of physicians in any given geographic area to serve the covered population. Insurers look for where there are gaps in service availability. A physician seeking to join a network plan should be located in the plan’s service area.

Whether the physician will be accepted depends on marketplace needs. Some geographic areas may be well covered by currently contracted providers and may be closed to new providers.

4. Insurance product

Each plan offered by an insurer may have a different network, although there may be overlap between the networks.

Not all networks may accept new providers, again based on marketplace needs.

Insurers generally post network status on their websites to enable providers to determine which network is accepting applications for participation.

5. Specialty

Network managers seek to ensure that there are sufficient numbers of physicians in each specialty to serve the covered population. The need for a specific specialty varies in any given geographic area or plan network.

6. Unit cost

Decisions about whether to expand or contract a network are colored by financial considerations and competition.

Insurers can no longer control costs by excluding certain benefits, like maternity, or people with pre-existing medical conditions. Hamstrung by their inability to medically underwrite policies under ACA, insurers are increasingly using their leverage to squeeze savings from network physicians.

But physicians who provide cost-effective care in so-called high-performing networks can be eligible for incentive bonuses if they meet certain quality metrics. According to AHIP, financial incentives “encourage the utilization of higher-value treatments and services, such as evidence-based preventive care, and lower utilization of unnecessary treatments and services.”

A physician denied initial network participation usually can reapply. Each insurer’s policy on the timetable for reapplication differs, depending on the reason for the denial.