Obamacare's narrow networks might be about to get a little bit wider.
In a letter to health plans, the Centers for Medicare and Medicaid Services has proposed new rules that would more aggressively regulate the number and type of health care providers that insurance plans include in their networks.
More specifically, the Obama administration plans to increase the percentage of "essential community providers" that health plans need to include in network from 20 percent to 30 percent of those in the local area. These are health care facilities that typically cater to a lower-income population, such as federally-qualified health clinics and certain hospitals.
The federal government will also take a more active role in reviewing which providers health insurers include in network. Last year, the administration relied on states to do this work and ensure that their various exchange plans would provide patients with enough access to health care. In 2015, the feds will actually collect plan's providers list and determine whether they provide adequate access. "It will focus on access to hospital systems, mental health providers, oncology providers, and primary care providers," Tim Jost writes in his analysis of the new proposal in the Health Affairs blog. "CMS intends to use its review to develop time and distance or other standards for future network review."
This could be the start of a backlash against narrow network plans, which have made headlines for limiting patients' access to doctors. While patients tend not to like these limits, there's a reason they exist: to hold down premiums by only including less expensive providers. That doesn't mean, by the way, excluding better hospitals: There's a lot of health economics analysis that shows little, if any, relationship between price and quality in health care.
Back in the 1990s, there was a similar push toward limited network Health Maintenance Organizations. Most health economists think these similarly-narrow plans contributed to the health cost slowdown during that decade. But patients weren't fans. They didn't like going through a primary care doctor to see a specialist, or having a smaller pool of providers to choose from. HMOs began to shrink in the early 2000s, right around the time health care costs began rising faster.
We may be hitting another inflection point, in the midst of a health cost slowdown in which consumers are unhappy with some of the less-expensive care offerings. There's a trade-off here between the cost of care and the choices available. The Obama administration's proposals might tilt the exchange plans more in the direction of choice, with slightly higher costs as a result.