What are Narrow Provider Networks?

Posted on: Wednesday, September 18, 2013

Regardless of your feelings about the Affordable Care Act, the reforms have begun, and they are steamrolling toward January 1, when full implementation and compliance takes place. As it does, and participation in state marketplaces becomes more common, evidence is growing that the most affected institutions will be hospitals. This is largely due to the fact that many providers to the marketplaces (also known as exchanges) are shifting to narrow provider networks. 

These networks are established by performance based metrics, measuring cost against quality of care. Many larger hospitals, which dominate their area market, are deemed overly expensive based on the new criteria. This is largely due to their reluctance to lower their rates. In response, health plans must either go with a higher reimbursement rate, or exclude these hospitals entirely. Naturally, many physicians and hospitals are concerned about the criteria levels used to make these determinations. However, insurers say they are able to charge lower premiums for narrow-network plans, and in some cases they are able to pay the providers lower reimbursement rates in exchange for funneling more patients to them. 

Some physicians groups, hospitals, and patient advocates fear that patients, particularly those who need specialized providers, may not receive the care that they need under this system. This is why the Obama administration issued a rule in 2012 specifying that insurers “must maintain a network of a sufficient number and type of providers … to assure that all services will be available without unreasonable delay.” It also required that “essential community providers” be included in all plans.

Ultimately, then, some area hospitals are simply removed from consideration in networks under the Affordable Care Act. If you have three hospitals in your area, and only one meets the standards under the narrow provider network, participants in state exchanges will be directed to that hospital (and its affiliated physicians) regardless of their personal history with that hospital.

Is this a return to the HMO model of the 1980s and 1990s, which consumers largely rejected because of severe limits on provider choices? Evidence suggests probably not. Employers and consumers have indicated that the weak economy has turned cost considerations into the highest priority for both. When insurers and employers collaborate in the health plan process, creating both competition and accountability, the consumer benefits.  

Do you have questions about the Affordable Care Act? We have a call center which is ready to help you navigate through the maze of complexities in the new world of health coverage.


Please call 1-877-214-2969. We’re ready to assist you.


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