Addressing Network Adequacy Issues With Innovative Business and Delivery Models

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1 Addressing Network Adequacy Issues With Innovative Business and Delivery Models December 12, 2013 Christine Clements & Jennifer Williams Crowell & Moring LLP

2 Agenda Existing Sources of Network Adequacy Requirements Network Adequacy Requirements under ACA Narrow Networks Recent Developments Regarding Narrow Network Recommendations Questions & Answers 2

3 What is Network Adequacy? A health plan s ability to deliver the benefits promised by providing reasonable access to a sufficient number of in-network primary care and specialty physicians, as well as all health care services included under the terms of the contract. * *Texas Department of Insurance, Report of the Health Network Adequacy Advisory Committee Senate Bill 1731, Section 11 Eightieth Legislature, Regular Session, 2007 (January 2009) (p. 8). 3

4 Existing Sources for Network Adequacy Requirements State Licensure and Certification Requirements NAIC Managed Care Plan Network Adequacy Model Act #74 Government Health Care Program Requirements Medicare Advantage State Medicaid Managed Care programs TRICARE Prime FEHBP 4

5 Network Adequacy under ACA 1311(c)(1)(B) The Secretary shall, by regulation, establish criteria for the certification of health plans as qualified health plans. Such criteria shall require that, to be certified, a plan shall, at a minimum (B) ensure a sufficient choice of providers (in a manner consistent with applicable network adequacy provisions under section 2702(c) of the Public Health Service Act), and provide information to enrollees and prospective enrollees on the availability of in-network and out-ofnetwork providers. 5

6 Proposed Network Adequacy Rule Network adequacy standards should be appropriate to States particular geography, demographics, local patterns of care, and market conditions. To ensure that Exchange network adequacy requirements are appropriate for QHP issuers and reflect local patterns of care, HHS proposed that each Exchange ensure that enrollees of QHPs have a sufficient choice of providers. Intentionally broad standard to allow for: Application of standard to QHPs in a manner appropriate to the State s existing patterns of care, Establishing specific standards where necessary and Leveraging existing State oversight and enforcement mechanisms in this area. 6

7 Proposed Network Adequacy Rule HHS sought comments on specific requirements: (1) Sufficient numbers and types of providers to assure that services are accessible without unreasonable delay; (2) arrangements to ensure a reasonable proximity of participating providers to the residence or workplace of enrollees, including a reasonable proximity and accessibility of providers accepting new patients; (3) an ongoing monitoring process to ensure sufficiency of the network for enrollees; and (4) a process to ensure that an enrollee can obtain a covered benefit from an out-of-network provider at no additional cost if no network provider is accessible for that benefit in a timely manner. 7

8 Network Adequacy Final Rule QHP issuer must ensure that the provider network of each QHP, is available to all enrollees: Includes essential community providers; Be sufficient in numbers and types of providers, including providers specializing in mental health and substance abuse services, to assure that all services will be accessible without unreasonable delay; and Be consistent with the network adequacy provisions of section 2702(c) of the PHS Act. See 45 C.F.R

9 Offering of Narrow Networks by QHPs As Americans have begun shopping for health plans on the insurance exchanges, they are discovering that insurers are restricting their choice of doctors and hospitals in order to keep costs low, and that many of the plans exclude top-rated hospitals. Washington Post, November 21,

10 What s the Big Deal? Narrow networks aren t new and aren t unique to QHPs Remember HMOs? Some employers like narrow network plans because they are less expensive Medicare Advantage organizations are introducing narrow networks in response to lower payments from CMS 10

11 Narrow Network Tradeoffs Narrow network Cost-effective providers Narrow network Lower payment rates in exchange for patient volume Narrow network Lower consumer premiums 11

12 Potential Implications of a Narrow Network Litigation Executive Action Legislation Regulatory Action (e.g., additional network adequacy requirements) Plans may have to pay out of network providers under state law QHP Decertification 12

13 Recent Developments Example of a State Governor Executive Order Seattle Children s Hospital v. Office of the Insurance Commissioner of the State of Washington, Case No Proposed legislation 13

14 Seattle Children s Hospital Case Hospital filed suit against Washington s insurance regulator for approving few marketplace plans that include it as a preferred provider Hospital argues that the Office of the Insurance Commissioner violated federal law which mandates access to essential community providers and abused its discretion by approving plans offered that do not cover care at the hospital 14

15 Other Developments Legislative Proposals Any willing provider requirements Mandated hospital contracting by county Frisbie Memorial Hospital, New Hampshire Can t we all just get along? Hitting the airwaves Regulator vs. Legislator 15

16 Focus on the member Transition of care benefits Out-of-network coverage Recommendations Comply with provider contracts Keep state regulator informed Support delivery system innovation Embrace team-based care and other innovative models to improve access, lower costs, and improve quality Focus on the quality of providers 16

17 QUESTIONS? Christine Clements (202) Jennifer Williams (202)