In the wake of the Patient Protection and Affordable Care Act (“ACA”), insurers have faced growing pressure to increase the access and quality of health care while still reducing cost. In response to this pressure, many of the major insurance providers offering plans on the individual and small group marketplace (“Marketplace”) have resorted to offering narrow network plans, a concept that first became popular with the rise of Health Maintenance Organizations (“HMOs”) in the 1990s. Under a narrow network arrangement, an insurer enters into an agreement with a limited group of providers who are willing to accept a reduced payment in exchange for an anticipated increase in patient volume that results from insureds having a limited choice of providers.1
Under the ACA, these narrow network plans are thought to encourage consumer value-based purchasing; narrow plans are aimed at individuals who are willing to sacrifice their choice of a provider for premiums that are, on average, 5 to 10 percent lower than open access plans.2 Currently, nearly two-thirds of the hospital networks on the Marketplace are considered to be narrow network plans.3 Some states are beginning to require that major plans offer a narrow network alternative.4 While approximately 7.1 million Americans have signed up for health insurance on the Marketplace, this number is expected to increase as the tax penalty for being uninsured increases and as employers choose to forego offering their employees job-based health coverage.
As individual enrollment through the marketplace increases, it is likely that the number of Americans who are insured under a narrow network plan will also increase. Additionally, some states have expressed an interest in implementing a narrow network model for their state Medicaid beneficiaries,5 meaning that excluded hospitals could lose a large portion of their patient population. While these plans offer an affordable alternative for those beneficiaries who are willing to sacrifice choice for cost savings, narrow networks threaten to exclude teaching hospitals, specialized care hospitals and small rural hospitals in areas that are dominated by a single insurer.6 In light of the popularity of narrow networks, many providers are beginning to question what remedies are available when they are excluded from a major health plan in their area.
Providers are increasingly turning to the court system to litigate network exclusions from Marketplace plans. As these suits proceed, the remedies available to excluded providers will become clearer. For institutional providers being excluded from Marketplace plans, some potential remedies may include ACA network adequacy standards, CMS and NAIC guidelines, state "any willing provider" laws and antitrust violations.
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1John Foley, Gerald Frye, Tracey Kline, Narrow Network Offerings- Market and Contracting Implications, American Health Lawyers Association Roundtable, 22 (May 20, 2013).
3Julie Appleby, Marketplace Plan’s Networks are Very Small, Study Finds, Kaiser Health News (Dec. 12, 2014, 2:41 PM).
4Rakel M. Meir, Narrow Network Health Plan Products- Does the Adage “Less is More” Apply to Provider Networks?, American Bar Association (Dec. 2013), (Massachusetts has required plans with 500+ enrollees to offer a narrow network option on the small group marketplace).
6Caroline Chen, Health Insurers Slash Specialty Hospitals to Keep Premiums Low, Bloomberg (Feb. 6, 2014, 8:04 AM).