Study: Narrow networks typify exchange plans


About 70 percent of hospital provider networks on the exchanges are either narrow or ultra-narrow, according to a new study by the consulting group McKinsey & Company. And wide hospital networks result in a 26 percent higher median cost than plans with smaller networks sold by the same insurer, the study found.    

Other key findings include hospital network size correlates with product type, frequency of narrower networks differs by insurer, and academic medical centers participate mainly in broader, higher-priced exchange offerings.      

The study did not review physician networks. 

McKinsey examined 20 urban rating areas chosen for geographic diversity across federal and state exchanges. These areas represent almost a quarter of the nation's non-elderly uninsured population. The consulting group reviewed hospital network data from 120 individual exchange products offered by 80 payers.

Researchers tagged the top 20 hospitals by bed count and location within 50 miles of the area's most populous zip code. The sample included 398 hospitals. 

McKinsey measured network size using three criteria: Broad networks contained 15 or more large participating hospitals, narrow networks included seven to 14 and ultra-narrow networks had six or fewer.    

Building different-sized provider networks in response to market demand is "fundamental to the success of health reform," former secretary of the U.S. Department of Health & Human Services Michael Leavitt told Kaiser Health News.  Cost-conscious marketplace shoppers may accept the trade-off of less choice for lower premiums, as FierceHealthPayer reported; but other Americans expect wide-ranging provider options regardless of cost, KHN noted. In fact, insurance regulators in some states are blocking efforts to thin networks in response to public outcry.

McKinsey also examined enrollment data and found exchange plan purchases in four states--California, Florida, New York and Washington--represent about half of all enrollees.

And exchange customers tend to be older, the study showed. Enrollment in California, Maryland and Washington "skews toward the aged and mimics the background of the [existing] individual market, not the uninsured," McKinsey Director Paul Mango said at a conference Thursday, KHN reported.     

For more:
- here's the study (.pdf)
- read the Kaiser Health News article

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