Proposed Federal and State Regulations Push to Widen Narrow Networks

Physicians and patients in California have complained about the effects of narrow networks under Covered California, California’s Exchange under the Accountable Care Act. Pursuant to the concept, health insurers contract with fewer doctors and hospitals, pay them less money, and give them more patients. The expectation is that because of quality and cost metrics, medical care will become more efficient. This has translated into patients losing their doctors, or finding that their doctors are no longer under the same plan as their hospital. There are widespread reports that patients cannot find specialists. In short, patients’ choice has been greatly limited.

Federal and State Regulators.    Federal regulators are proposing that networks be widen. While the state exchanges were thought to be best ran by local boards with few federal regulations, the new regulations from HHS show an increase in federal assertion of power over this issue.  According to Kaiser Family Foundation’s Karen Pollitz, who commented on an earlier version of the rules, the move away from allowing individual exchanges to monitor participating plans is a big change. “It’s much more specific, and it’s going to involve a lot more direct federal oversight,” she told the Wall Street Journal.

While prior regulations only required that there be “reasonable access” to providers, the proposed regulations specify a percentage of how many providers must be in a certain network. For example, CMS will require insurers to have contracts with at least 30% of “essential community providers in their service areas.” See the proposed regulations, here.

David Jones, the California Insurance Commissioner, is likewise seeking to expand existing network adequacy rules in California.  The Department of Insurance held a meeting in December seeking comment but proposed rules have not been released.

Covered California itself has declared that it will do nothing to expand the exchanges and instead will work with insurers to manage the narrow networks.   Increases in the size of the networks, and inclusion of high cost providers, will raise premium rates under the plans, something the Covered California Board is seeking to avoid.

Matt Kinley, Esq.   877.923.0971.