Ask The AHIP Experts: Why Provider Networks Are Important

posted by AHIP

on December 27, 2018

Provider networks are a key tool for delivering the right balance of quality, affordability, and choice for consumers. They tend to feature smaller provider networks comprised of providers who have a track record of providing high-quality, efficient care to patients. Health plans use high-value provider networks to reduce premiums and promote more affordable coverage for consumers. We asked two of AHIP’s policy leads, Greg Gierer and Kate Berry, to explain why health plans are turning to high-value provider networks designed to improve and reward quality and effectiveness.

What are provider networks and why are they important to patients?

Greg Gierer: Provider networks have been a mainstay of private health insurance coverage for more than 35 years—providing consumers with access to a broad range of hospitals, physicians, and other providers along with financial incentives for members to obtain medical care within the plan’s provider network.

Provider networks enable health plans to make care more affordable for consumers by negotiating better prices with physicians and hospitals in the network. Network providers agree not to bill consumers for more than the amount agreed upon between the health plan and provider, protecting consumers from “balance billing” and extra costs.

Provider networks also allow health plans to select hospitals, physicians, and other providers that meet certain standards to be a part of their networks. This helps to ensure that consumers have access to high-quality and effective care.

How do plans develop their networks?

Kate Berry: Health plans evaluate doctors and hospitals for quality and safety performance before including them in a network. This involves ensuring that facilities and providers meet patient safety goals and credentialing standards. In fact, performance on quality measures is the key part of criteria used for provider selection and inclusion in a plan’s network—including high-value network plans.

In developing their networks, health plans also make sure they have the variety of primary care doctors, specialists, hospitals, and other providers that consumers need and can access in a variety of locations.

Health plans periodically reevaluate the qualifications of the providers and their performance within their networks to make sure the consumers’ needs are met.

With many patients frustrated by exorbitant out-of-network charges, how do networks protect patients against surprise medical bills?

Gierer: Consumers benefit when receiving care in-network because they have peace of mind that the provider meets standards for the quality of care they deliver as well as lower cost sharing and out-of-pocket costs. That is, consumers benefit from health plans’ negotiated payment rates to contracted providers and, likewise, participating providers are barred from charging any additional costs to subscribers. When a consumer goes out-of-network for care, if the doctor or hospital charges more than what the plan pays, the out-of-network provider can “balance bill” and the consumer is responsible for the difference.

When choosing coverage, what should patients know about their health plan’s provider network?

Berry: When making a decision about health plan coverage, patients should know if their current provider—primary care provider, specialist, or health care facility—is included in the plan’s provider network. Health plans are required under state and federal law to have up-to-date provider directories and health plans provide interactive search tools (such as online provider finders) to help patients locate providers and know whether they are participating in the plan or coverage.

For example, in the exchange marketplaces, consumer- oriented tools—such as the provider search tool—allow patients to shop for plans based on their preferred providers or facility. Providing consumers with easy-to-use information on participating providers and other key elements of plan design is one-way health plans are helping consumers select the plan or coverage that best meets their medical and financial needs.

How do patients feel about high-value networks?

Gierer: These smaller, high-value networks are the result of close partnerships between health plans and providers and consumers benefit by having access to more affordable, high quality care.

In the price sensitive exchange marketplace, consumers strongly value the affordable premiums that high-value network plans deliver. Those who are uninsured or purchase their own insurance strongly favor a less costly tailored network plan (54%) over more expensive plans with broader networks.

And, a majority of consumers surveyed (58%) prefer “less expensive plans with a limited network of doctors and hospitals” as compared with “more expensive plans with a broader network of doctors and physicians.”

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