Narrowed Networks: How to Navigate Fewer Choices in Health Care

Switching doctors because you're unsatisfied with the service is one thing. Being forced to change because your insurance company has a "narrow network" is quite another.

As health insurers look for ways to cut costs, narrowing their provider networks is an increasingly popular option. But not all consumers are happy with their lack of choices, even when a narrowed network translates to a cheaper policy.

A health care network is a group of medical providers who contract with a health insurance company to provide services to insured consumers at lowered rates. As a patient, if you visit a doctor or hospital in-network, your insurance company will pay a greater percentage of your care. If you go out of network, you'll pay more or even be stuck with the entire bill.

A McKinsey study found about 48 percent of all exchange networks are considered narrowed, and in large cities, such networks account for 60 percent of those present. Though these restricted networks aren't new, they are growing in prevalence.

Where Narrowed Networks Came From

Narrowed networks didn't begin with the Affordable Care Act. These networks were at the center of tightly controlled health maintenance organizations in the late 1980s and early 1990s. They spurred considerable consumer backlash and led lawmakers to propose minimum standards for provider networks. Since the implementation of the ACA, and a resurgence of creative methods to control health care costs, narrow networks have again become a topic of controversy.

The ACA restricted many methods that insurers were accustomed to using to control costs. High deductibles are now capped, denials due to pre-existing conditions are banned and health insurance plans must provide essential benefits in order to be compliant with the new law.

Network control is one of the few remaining methods for cost control, and with consumers demanding a wide range of plans to choose from, network adjustments allow insurers to offer a variety of plans at several price points.

What Narrowed Networks Mean for Providers

As health insurers seek out hospitals and providers that boost their bottom line, these providers, in theory, have an incentive to offer the highest-quality care at a lower price, increasing the likelihood that they'll earn themselves a spot in certain restrictive networks. Donald Furman, chief strategy officer for Alignment Healthcare, says these networks are seen more as selective rather than restrictive, from a medical provider's point of view.

Health insurance companies "have assembled a network of high-quality providers who will ultimately improve outcomes for their patients," he says. "Doctors who are part of a narrow network will see more patients from these exchange plans and will benefit when they work as a team under a coordinated care model."

For patients, Furman says, the benefits can be a lower premium and higher-quality care. But, as consumer backlash shows, narrowed networks have obvious problems.

What Narrowed Networks Mean for Consumers

Though having these plans as an option may benefit consumers who are comparison shopping for health insurance, key research has shown Americans would rather pay more and have access to a larger group of providers.

In a Kaiser Health Tracking Poll, 51 percent of respondents said they would opt for a larger network with a higher monthly premium, while only 37 percent said they would opt for a cheaper plan with a narrowed network. When respondents were informed such a network could mean having to find a new doctor, the difference grew even more pronounced, with only 23 percent opting for a narrowed network.

For patients in need of medical care, a narrowed network may mean having to change doctors when they change health insurance, or paying more for the physician of their choice.

For example, if an in-network family doctor charges $250 for an office visit, your insurance company hypothetically contracted a discounted rate that allows them to pay $140 for your visit, while you make a $35 copay. If, however, you go to an out-of-network provider where no discount has been negotiated, your insurance company may still pay $140 of the $250 bill, but you'll be responsible for the remaining $110.

When this logic is applied to a several-thousand-dollar hospital bill, the difference between going in and out of network can be substantial.

How to Navigate a Smaller Network

Whether you're shopping for new health insurance on the marketplaces or your employer has changed plans, successfully navigating narrowed networks requires you to do your homework.

Generally, narrowed networks come with lower premiums -- but don't assume that's always the case. A recent study from the Urban Institute found that some plans buck the trend, pairing a broad network with a low premium or a narrow network with a higher monthly price tag.

Health insurance providers generally make it easy to look for providers on their network. You can search for your doctor or other practitioners in your area. But don't rely solely on what the insurance company website says.

"Many health plans have been slow to update their roster of doctors under the narrower networks," says Furman, who suggests consumers double check with any providers they plan to visit.

If you call your current physician and find he or she isn't in the network you're considering or now a member of, ask for a referral. Your doctor may be able to steer you toward a provider of similar quality who's in-network.

Finally, if you're choosing between two plans during open enrollment -- one with a larger network and one with a narrower one -- consider your medical needs. People with chronic medical conditions or the need to see multiple specialists may find a wider network is worth the higher premium. Weighing all available options against your anticipated health care needs will help ensure you have the right coverage.