Health Plans to Docs: Curb Costs or We'll Kick You Out

Kenneth J. Terry, MA


May 09, 2014

In This Article

Insurers Are Taking Strong Action

In what came as a surprise to many physicians, some Medicare Advantage plans are dropping physicians they deem too costly. Meanwhile, insurance companies are excluding some physicians in their commercial networks from new plans being offered on the state health insurance exchanges. Both of these developments are part of a move toward so-called "narrow networks" that experts say could expand over time. As a result, some doctors have already lost a significant percentage of their patients, and other physicians can expect the same thing to happen to them in the near future.

In the best-known example of this trend, last fall UnitedHealthcare terminated an estimated 2200 physicians from its Medicare Advantage network in Connecticut. A federal judge temporarily delayed the company's action at the behest of two county medical societies, later allowing the terminated doctors to go to arbitration with United.

Nevertheless, it appears likely that most of these doctors will ultimately be dropped from United's Medicare Advantage network. Many of them will no longer be able to keep their UnitedHealthcare patients, some of whom have been with them for years.

The immediate impact of Medicare Advantage terminations across the country is greater than that of being excluded from the exchange plans, which also use narrow networks. Many members of the exchange plans never had personal doctors before. As a result, physicians may not lose patients if they're not invited to participate in those plans. But leaders of the Connecticut and Washington State medical societies say that the effects of some specialists not being included in the exchange plans is already being felt by the doctors who normally refer to them.

Most plans with narrow networks use cost as the primary basis for deciding which doctors to include in them, notes David Blumenthal, MD, MPP, President of the Commonwealth Fund, a New York research and advocacy organization that focuses on healthcare issues, in an interview with Medscape. Only a few insurers factor quality metrics into their network decisions, adds Blumenthal, who is also a former National Coordinator for Health Information Technology.

Observers say that the Affordable Care Act (ACA) has encouraged the growth of narrow networks. Blumenthal explains that the plans are using this strategy to be competitive on the state insurance exchanges. At the same time, some insurers are shrinking their Medicare Advantage networks in response to ACA-mandated cuts in government payments, says Paul Ginsburg, PhD, the Norman Topping Chair in Medicine and Public Policy, Sol Price School of Public Policy and Leonard D. Schaeffer Center for Health Policy & Economics at the University of Southern California. Ginsburg is also a senior fellow at the Brookings Institution and is former President of the Center for Studying Health System Change.

It's unclear how far the narrow network trend will go or how long it will last. But today, this is an issue of pressing concern for many physicians. Whether or not you're seeing it in your area, it's likely to affect you, sooner or later. Here are some of the early lessons that have emerged from this unfolding story.


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