EBRI report: “Narrow provider networks” so far not spreading to employer health plans

BY JOURNAL STAFF

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So-called "narrow" provider networks, which limit covered health-care providers in health-insurance plans, so far do not appear to be crossing over rapidly from the Affordable Care Act's (ACA) state health exchanges into health plans offered by employers.

That's according to a new report published by the nonpartisan Employee Benefit Research Institute (EBRI) and Mark A Hall of Wake Forest University.

Narrow networks, which have grown in the state market exchanges under ACA, usually offer considerably fewer healthcare providers than is typical in the group health-insurance market. Also, the providers included in the plans are primarily offered based on price discounting.

"Narrow networks are receiving renewed attention, because of their increasing prominence in the ACA's individual marketplace health exchanges," Paul Fronstin, director of EBRI's Health Education and Research Program, and co-author of the report, said in a news release. "So far, this has not translated strongly to private-sector employers. But there are signs that employers' interest in narrow networks may grow in the near future."

To measure what is happening with narrow networks in employer health plans, the researchers conducted a literature review, interviews with HR directors at 11 large employers, and field research by healthpolicy experts in 11 states. The study's major findings include the following:

Despite the growing prominence of narrow networks in the ACA individual (nongroup) marketplace exchanges, this renewed interest so far has not translated strongly to employers. For example, in 2016, only 7 percent of employers with health plans offered a narrow network. Also, in 2014, employers ranked narrow networks the least effective among several strategies to manage health-insurance costs.

Reasons that employers gave for their lack of interest include absence of a track record showing sustained (year-over-year) savings; concern about antagonizing their employees; spotty availability of narrow networks, especially in rural areas; greater interest currently in other cost-savings strategies; and reluctance to adopt substantial changes in benefit structures until the future of the ACA's so-called "Cadillac tax" on high-value health plans is resolved.

There are signs that employers' interest in narrow networks may grow in the near future. More than a third of employers with 5,000 or more workers now offer some type of alternative network, including tiered or "highperformance' networks. Field reports indicate increasing adoption of narrow networks by both large and small employers, particularly in urban markets around the country.

Where narrow networks are offered, their adoption could be increased by giving workers stronger financial incentives to consider them, per the report Offering workers a fixed ("defined") contribution that does not vary by choice of plan is one way to confer such incentives, and private exchanges are a way to offer workers a broader range of choice, according to the report. Currently, however, neither defined contributions nor private exchanges are widely used by employers. EBRI said the report was prepared with support from the Robert Wood Johnson Foundation's (RWJF) Changes in Health Care Financing & Organization (HCFO) Initiative.

The full analysis, entitled "Narrow Provider Networks for Employer Plans," was published in the Dec. 14 EBRI Issue Brief, which is available at https://www. ebri.org/pdf/briefspdf/EBRI_IB_428.PvdrNets.13Decl6.pdf *