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Startup health insurer embraces narrow-network plan design

Denver-based Melody Health Insurance hopes to drive down prices by being choosy about providers

Despite the controversy surrounding the rise of narrow-network plans, a health insurance startup based in Denver aims to amplify the trend as it designs products for individual consumers, reports the news website BusinessDen.

Melody Health Insurance aims to sell plans on state exchanges starting in 2017, and recently closed a funding round in which it received $2 million from investors. It joins a growing group of startups seeking to disrupt the health insurance sector, including the technology-driven Oscar Health.

Melody's business plan is to design several bundles of low-premium plans that feature very narrow provider networks from which individual consumers can choose, according to the article. The company hopes to negotiate greater discounts on procedures if it steers more customers to a smaller number of providers.

And Chief Operating Officer Dave Pinkert is betting that consumers will be willing to trade a better price for less choice, given what he sees as the unnecessarily long list of providers most group plans offer. "Most people will say, 'I could get a plan that's mile wide and an inch deep, or I could get something that covers what I really care about,'" he told BusinessDen. For instance, a family might want more pediatric care while a healthy person might want a plan that focuses on preventive care.

A recent study, however, found that as many as 14 percent of health plans on the federal Affordable Care Act marketplace lack physicians in at least one common specialty from their networks, raising questions about whether such plans comply with the ACA's requirement that they provide "reasonable access" to a sufficient number and type of providers. To address such concerns, the National Association of Insurance Commissioners recently unveiled a model law for states in order to increase consumer protections. A new set of proposed ACA reforms from the federal government also asks states to establish standards for provider network adequacy.

Nevertheless, there are signs that consumers are increasingly willing to trade choice and access for price when it comes to health insurance, as a rising number are purchasing narrow-network plans.

To learn more:
- read the article

Related Articles:
More consumers enrolling in narrow network health insurance plans
Changing landscape: Fewer PPOs, CO-OPs in marketplace plans
Proposed ACA marketplace reforms address consumer, insurer concerns
Insurance commissioners propose more narrow-network controls
Study finds some marketplace health plans lack network doctors in key specialties