Healthcare providers have brought back an old concept to try and reduce the cost of care for employers. The question is will their fresh spin on the idea work — or crash and burn?
In the early nineties, the HMO was in its heyday. The healthcare game back then was played with tight networks that were supposed to manage care efficiently and lower costs for employers and their workers.
The result? Employees grew to hate the lack of healthcare options they had, and most companies dumped their HMO offerings — opting instead to eat the increased costs of letting their employees go to just about any providers they preferred.
Fast forward to 2010
Today, after the passage of healthcare reform, HR and benefits pros are stressed that rapidly increasing healthcare costs will cripple their bottom line.
Enter Aetna, Cigna, the UnitedHealth Group and Wellpoint — all large insurance carriers testing a “new” concept: offering less-expensive plans that come with reduced premiums in exchange for a narrower selection of doctors.
The concept behind the narrow-network plans: The carriers say only higher quality, more efficient physicians will be included in the networks. The thinking is that more efficient docs will spur lower average recovery times, leading to fewer office visits and lower costs.
The carriers are testing the plans in large metropolitan areas like New York, Chicago and San Diego and are claiming employers can reduce their premiums by as much as 15% by providing their workers with the more limited care options.
Aetna, for example, is offering a plan that offers half the doctors and two-thirds the hospitals of its typical plans. People enrolled in the narrow-network plan are covered only if they go to a provider in the network.
Other insurers are letting people go outside of the smaller networks — but only if employees are willing to pay far greater out-of-pocket costs.
Will it work?
The carriers seem convinced the narrow-network options will save employers and workers money. But critics are saying cost isn’t the only thing to consider.
Employees still need to sign off on the plans, which according to critics isn’t likely to happen given the way HMOs fell from grace.
One way carriers, like Aetna, hope to keep consumers happy within narrower networks: By convincing them that only higher-performing doctors are included in the smaller networks — not just cheaper physicians.
Another major roadblock to the carriers’ plans: Medical societies, most notably the American Medical Association (AMA), are not fans of the methods insurers use to profile doctors and determine who should be included in the slimmed down networks.
In fact, the AMA and several other medical societies sent a letter to major health insurers that described flaws in the health plans’ physician profiling methods.
What’s right for your company?
The real question you may soon have to ask yourself should narrow-network plans become commonplace once again: What do my employees want?
The only way to know for sure, ask your employees:
- Would you rather have higher out-of-pocket expenses and still have access to a wide range of physicians, or
- Lower copays and deductibles but fewer physicians to choose from?
Tell us what you think: Would you consider switching to a narrow-network plan if it could save your company 15% in healthcare costs? How do you think your employees would respond to such a change?