Narrow networks: Don’t let children get shut out

narrow insurance

Narrow networks—health insurance plans that sharply limit the providers a patient can see—have been winning the popularity contest among consumers, especially on the Affordable Care Act’s (ACA) insurance exchanges. Limited choices can equal cheaper premiums, which is why about 70 percent of plans sold on the exchanges last year featured a limited network, with premiums that were up to 17 percent cheaper than less restrictive plans (according to McKinsey & Company).

A telling new study examining physician networks for plans sold on the ACA’s online insurance exchanges revealed that 11 percent of plans are “extra small,” covering fewer than 10 percent of physicians in a plan’s region. Another 30 percent were “small,” covering between 10 and 25 percent of physicians. Just 11 percent earned “extra large” status by covering at least 60 percent of physicians in the area.

While limiting consumer choice in order to control costs rightly continues to be a hot-button topic, there’s a piece of the conversation that’s rarely voiced: how this affects children, and in particular, children who are extremely sick and require specialized care.

cost savings of limited network ACA plans
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The fact is, severely ill children need different networks than adults. To me, the danger is not for “healthy” kids, who are well served for primary care in Massachusetts. But it’s an entirely different case for children with more critical needs. It’s common sense but it’s also been proven: A child who needs a bone marrow transplant or congenital heart disease care is better served going to a specialized pediatric hospital that routinely cares for the sickest of children.

And this is where things get dangerous. Insurance companies have cut from their plans some hospitals and physician groups that are more expensive(on-paper—more on that later), like Boston Children’s and other dedicated pediatric hospitals. Are they doing this based on rational, quantifiable standards? Are their decisions evaluated by governing agencies whose goal is to address the health care needs of all children? Based on my experience, I don’t see this happening.

Size of ACA insurance networks
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I’ve found that with payers and policymakers, there’s a kind of cognitive dissonance. On the one hand, they acknowledge that children’s hospitals offer what no other hospital can, and they want to say to parents, “If your child needs a specialist at a pediatric hospital, we’ll approve it.” But in the same breath, they want to sell parents a product that doesn’t have places like us as an option.

Just like adults, the sickest children are the most expensive to treat, by far, needing multiple specialists, costly therapies and intensive monitoring. The number of children with these intensive medical needs—10 percent of health care users in the most recent rate year—account for about 70 percent of pediatric spending. In fact, the top 1 percent of the sickest children accounts for 25 percent of the spending. To my mind, the basic question is whether the network is adequate to provide most of the high-quality services required by this population of children—not whether it can serve most of the children (some of whom don’t even see a doctor in a given year).

A related, serious policy danger lurks here. If insurers are allowed to exclude the hospitals and doctors that best care for these children from their networks, they will avoid insuring the sickest, costliest patients. Given a choice, families may choose a different insurer or rely on state coverage. This frequently creates real financial problems (known as “adverse selection”) for the remaining “in-network” insurers that are left to cover sicker children whose treatment is more expensive.

Percent of pediatric spending by how sick children are
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The National Association of Insurance Commissioners is currently reviewing its model for regulating network adequacy. It’s time to ask tough questions like, “Who is making the basic decisions about which providers to include in a network?” “Are they using data to demonstrate the network is adequate for special needs children?” To date, it’s somehow been decided that the payers know best, despite their intrinsic conflict of interest.

Similarly, the Centers for Medicare and Medicaid Services recently released a draft regulation that defines ways states should oversee the network adequacy of Medicaid managed care plans.

If a child does wind up in a limited network, we need to ask other important questions, such as:

  • How much deference do you give a doctor who believes that child should go out of network?
  • What about a parent’s request?
  • How do we ensure that the reviews being conducted at the payer level are appropriate, and include specific evaluations for children with special needs?

This is a chance for policy-makers and providers to re-direct a system being propelled on an alarming trajectory. It’s a chance to spend money wisely—and in the process, improve the ways in which we provide care for the children who need it the most.

Joshua Greenberg, JD, is Boston Children’s Hospital’s vice president of government relations.