Healthnet is entering into an agreement with Banner in Arizona - to provide a unique HMO arrangement - deeply discounted rates if care is limited to the Banner Network. While the concept of a network itself is not really new, what is interesting about this arrangement - is that care is restricted to a single provider. Banner is a Not for Profit integrated healthcare provider consisting of primary care physicians, specialists and hospitals, spread across 7 states across the US. This arrangement will see cost going down by about 20% as compared to the traditional PPO offering by the same insurer. The concept of narrow networks is also not very new - Other insurers like Aetna and United have also offered plans - but this particular development is an aggressive attempt by the insurance company to sell the HMO concept - which has fallen out of favor over the past decade or so. While the idea of driving down costs is always welcome, the key to success to such models will be accessibility and choice. Narrow networks will probably work fine in areas where there is a significant degree of concentration by a single provider and also - the provider is large enough to address concerns of network adequacy as well. Surely - in going ahead with this arrangement, healthnet must have done the math - as far as access goes - but it is really critical that both Banner and Healthnet continually engage with member to gauge if members perceive a significant difference in accessing care compared to any earlier arrangements.
While surely most members would consume normal care within a certain radius of their homes - which further builds a strong case for narrow networks, insurers will surely face challenges selling the concept of narrow networks to members. Consumers would definitely welcome reducing premium as well as out of pocket costs to some extent, even if that means sacrificing choice to a certain extent. But having said that, surely there is a tipping point somewhere - no one wants their choices to be too restrictive.
Insurers will still need to walk the tightrope between developing narrow network arrangements versus making the healthcare choices too restrictive or reducing access. Surely - the narrow network concept will not be successful everywhere - provider concentration will be a key determinant for network adequacy, and in turn, the success of a network. Another interesting angle would be the concept of quality and outcomes - what if the provider with which the insurer is entering into a network arrangement scored low on quality parameters for a specific set of services - would that mean enforcing lower quality care on consumers within a network? For sure, this aspect merits some attention - when evaluating network adequacy - not just access, but also quality performance will need to be taken into account, if the narrow network arrangement needs to stand any chance of long term survival. These gaps will definitely need to be addressed.
Not really sure - where these kind of arrangements stand - in terms of antitrust regulations - these arrangements would surely discourage competition on the provider side of the market? .
By the way - apparently healthnet is not the first to offer the narrow network HMO plans - state employers like University of california and california public employee's retirement systems - have also turned to narrow networks to attack healthcare costs. It will be interesting to see if the HMO concept is all set to rebound, particularly with all the noise around increasing healthcare cost inflation.
