Controversial narrow networks may help lower healthcare costs
With the health insurance industry shifting toward a more consumer-centric mindset, providing shoppers with choices is imperative so they can make informed decisions about their care. And while narrow networks may impede consumer choice, they could also provide benefits, according to an opinion piece published in the Journal of the American Medical Association.
The insurance marketplaces serve as a key component of the Affordable Care Act because their purpose is to improve the amount and quality of information available to consumers, the article notes. But this isn't always the case--a recent report found that 41 percent of silver exchange plans had small or extra-small narrow networks, which are defined as covering fewer than 25 percent of physicians in a given area, FierceHealthPayer previously reported.
To avoid narrow networks, the ACA created several provisions that ensure physician and hospital networks are broad enough to guarantee access to healthcare services, according to the article. Nevertheless, narrow networks are becoming more prevalent nationwide.
About half of marketplace networks are considered narrow when compared with networks that include all potential hospitals and physicians, the article points out. What's more, as more insurers offer plans with narrow networks, consumers are increasingly willing to give up a broader selection of providers to save money on their healthcare costs.
However, narrow networks can also improve the healthcare system, the article notes, as well-informed entities such as insurance carriers can effectively nudge consumers into making better hospital and physician choices.
"By deliberating excluding lower-performing hospitals and shrinking networks, insurance carriers can encourage competition based on the quality of care provided while simultaneously lowering the costs of care," the authors write.
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