KEY ADVOCACY POINTS #1: ESTABLISH SPECIFIC AND CONSISTENT NETWORK ADEQUACY STANDARDS

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1 NAIC MANAGED CARE NETWORK ADEQUACY MODEL ACT REVISION KEY ADVOCACY POINTS PAI urges the National Association of Insurance Commissioners (NAIC) to consider the following advocacy points as it works to revise its 1996 Network Adequacy Model Act. NAIC models are often utilized as templates for state legislative and regulatory initiatives. As such, it is important to voice the interests of physicians and patients as the NAIC continues its revision process. #1: ESTABLISH SPECIFIC AND CONSISTENT NETWORK ADEQUACY STANDARDS The current Model Act relies on each health plan to self- assess with regard to whether its provider network is sufficient in numbers and types of providers to assure that all services to covered persons will be accessible without unreasonable delay. There are no specific time/distance or patient- physician ratios provided in the Model Act. The health plan is able to demonstrate compliance by any reasonable criteria. In this revised Model Act, NAIC should direct states to establish specific, consistent and transparent network adequacy standards, monitored and enforced across all payers and products. These should include standards for networks to include sufficient numbers and types of physician specialists and subspecialists necessary to provide in- network care for all covered benefits to beneficiaries. States will vary with regard to the specific standards that they adopt, based on demographic and geographic factors. These standards generally include standards based on maximum time or distance or provider- beneficiary ratios. PAI, AMA and TMA have emphasized the need for quantifiable network adequacy standards so that states can assess adequacy accurately and consistently across plans, regardless of the specific type of standards adopted. #2: STRENGTHEN MONITORING AND ENFORCEMENT The Revised Model should specify the need for significantly stronger state oversight and enforcement than what exists currently. The increased use of narrow networks and tiered networks, as well as often en masse without cause provider terminations, make it critical that states move aggressively to ensure adequacy.

2 #3: ESTABLISH STANDARDS TO ENSURE MORE ACCURATE PROVIDER DIRECTORIES A key message to NAIC and state regulators individually is that they need to establish more rigorous standards and processes to ensure that health plans maintain accurate provider directories and submit accurate participating provider data to state regulators for assessing network adequacy. To date, there has been little attention paid by state regulators to assessing the accuracy of the provider directories and little incentive for health plans to ensure accuracy. In addition to considerable anecdotal accounts by physicians across the nation, surveys by TMA and CMA have revealed rampant inaccuracies in provider directories. This creates a host of obvious problems for patients and physicians alike. For patients, the process of selecting a health plan product often turns on whether a specific physician, physician group or hospital system is contracted. For physicians and other health care providers, inaccurate directories create problems when patients mistakenly believe they are covered under their in- network benefit and when providers are trying to find in- network referrals for patients. With regard to network adequacy, inaccurate provider directories generally signal inaccurate provider network data submitted to state regulators for assessing network adequacy. The integrity of the network adequacy review process is undermined when payers submit inaccurate contracted provider information. We are urging NAIC to adopt and enforce specific standards to improve provider directory accuracy and promote systems, practices and procedures within health plans that will clean up the bad data that has been allowed to persist. Prescribed and uniform standards for publishing the directory should include:! All Information regarding network providers necessary for patients to make informed choices, including office hours, availability for new patients, etc.! Specific standards for the format for publishing provider information, including a requirement that the information be online and searchable.! Updated on a regular basis, at least weekly, which is consistent with current industry norms. Mechanisms for verifying accuracy through monitoring and enforcement provisions that include:! A requirement that payers submit participating provider information to state regulators in prescribed electronic format at a regular interval, no less than weekly. In addition to the information included in the provider directories, this should include valid addresses for every physician/provider listed in the directory to facilitate direct testing via electronic means, such as enabling a state software program to generate a randomized verification sample.! Regular external audits to certify accuracy, or on an ad hoc basis as the result of complaint trends or a failed verification sample.! Ongoing secret shopping and spot- checking to identify potential access problem areas. 2

3 ! A closely monitored consumer complaint process to trigger state review and publicly report on complaint volume and trends, among other things. Such a process should also be accompanied by a consumer education campaign to ensure that consumers understand that access issues should be reported.! Comparing the submitted contracted provider data against the universal provider data source (UPD).! Automated verification if a physician or health care provider hasn t submitted claims for a plan s beneficiaries within a certain period of time.! Meaningful penalties for noncompliance with directory accuracy standards. #4: INCLUDE LANGUAGE TO PROHIBIT UNTIMELY PROVIDER TERMINATIONS Fair contracting provisions are needed to ensure against without cause provider terminations close to or following the open enrollment period. There was early debate about whether state regulators have jurisdiction to regulate provider contracts. The discussion was postponed. PAI and other physician organizations will argue that state regulators have authority over the payers behavior since it impacts network adequacy and constitutes the misrepresentation of health plan benefits to consumers. #5: APPLY NETWORK ADEQUACY STANDARDS TO TIERED PROVIDER NETWORKS The NAIC Subgroup has spent considerable time discussing how to best ensure against payers use of tiered networks in a way that undermines network adequacy. The following principles are important with regarding to the question of how states should assess the adequacy of tiered provider networks. States should assess network adequacy of providers by reviewing the tier of in- network providers with the lowest patient cost- sharing responsibility. Providers in higher- cost tiers can be too expensive to be considered in this determination. The criteria used in establishing provider tiers must be transparent and physicians must have an opportunity to appeal. The insurance industry argues that this assessment will undermine specific incentive programs to steer beneficiaries towards high quality providers. These specific programs may be exempted in regulatory language where warranted. #6: SUPPORT AUTOMATION PAI s letter asks NAIC to use this revision process to provide guidance to states that want to move to an automated system for network adequacy assessment. In our view, states will move to automation as it provides significantly more accurate and efficient network adequacy review. There are readily available network adequacy software products on the market today. Insurers may argue that adopting new systems will be costly. However, accessing technology solutions will add efficiencies for payers and ease regulators burden in assessing the adequacy of networks in their states. See the PAI s comment letter for more detail. 3

4 #7: DO NOT SHIFT THE FINANCIAL RESPONSIBILITY FOR OUT- OF- NETWORK SERVICES CAUSED BY INADEQUATE NETWORKS TO NON- CONTRACTED PHYSICIANS Inherent in the concern over inadequate provider networks is the risk that patients will not have access to their full health plan benefits. Patients in overly narrow networks may have no option but to seek treatment from out- of- network providers for covered benefits. In these circumstances, there is consensus within the NAIC Subgroup that consumers should be protected from higher costs of out- of- network services. The revised Model Act will likely include provisions to hold the patient/beneficiary harmless for additional out- of- network expenses when the insurer s network did not include reasonable access to an in- network provider. As the Subgroup discusses how to implement a hold harmless policy for these deficient network situations, PAI and other medical associations will continue to raise the following points. Rigorous network adequacy standards and enforcement are needed to guard against insurer practices that limit risk at their beneficiaries expense.! By developing narrow network plans, insurers are looking beyond conventional cost- sharing tools to limit their risk of loss by restricting the number of in- network providers, whom the insurer pays in full. Out- of- network expenses impose greater financial exposure on consumers by design. Holding an insurer to strict network adequacy requirements addresses this problem. The hold harmless remedy for an inadequate network that results in out of network care must fall on the insurer. Provisions that would in any way shift the financial risk caused by inadequate networks to non- contracted physicians are inappropriate and undermine efforts to promote network adequacy.! Insurers offer network products and promise, through the policy terms and advertising, to have in- network benefits reasonably available. To meet this promise, some insurers invest resources, time and effort in the development of a physician and provider network. The network benefit is the heart of the insurance product sold by insurers. To allow them to escape their commitment to offer an adequate network is misleading at best and undermines states effort to protect the public from junk health insurance policies.! Policies that impose the insurer s obligation to hold- harmless patients upon non- contracted physicians rewards insurers that do not invest in the development of the networks the insurer promised and promoted to enrollees. It would be inappropriate for the NAIC to use this revised Network Adequacy Model Act to establish a broad policy precedent that undermines the rights of physicians and other providers who are not contracted. Network adequacy regulations should limit hold harmless provisions that alter the financial responsibility for out- of- network care to situations when the network fails to deliver on the in- network benefits promised to beneficiaries and required by law. 4

5 ! There are myriad reasons why a physician or other health care provider may not be contracted with a specific payer or for a specific product. With the advent of narrow networks, it is increasingly common that a physician was not offered a contract by the insurer or was terminated. In other situations, the physician may have declined a contract that was inadequate or onerous (e.g., the payment rates were insufficient to maintain the practice, the contract required participation in other current and future products or would result in unsustainable administrative burdens, etc.). In any of these scenarios, it is inappropriate for state regulators to step in to assign non- contracted physicians responsibilities that they have not assumed with regard to the insurer s beneficiaries. Regulators should pay particular attention to how insurers structure their networks with regard to emergency care.! Because emergency care traditionally carries high site- of- service costs, insurers sometimes utilize networking strategies to reduce their risk (for instance, by offering emergency physicians sub- market reimbursement rates). These strategies allow insurers to improve profit margins at the expense of their beneficiaries. When a patient presents in an emergency, emergency physicians provide care without inquiry into ability to pay or type of insurance coverage. If the insurer does not ensure adequate in- network emergency coverage for beneficiaries, it almost guarantees that beneficiaries will bear the cost of significant out of pocket costs at a time when they are most vulnerable. This model should include provisions aimed at promoting transparency and improving beneficiaries understanding of their benefit design and attendant responsibility for out- of- network care.! To protect patients from unexpected out- of- network charges, the NAIC is likely to include language emphasizing the need for transparency with regard to consumers obligations for out- of- network charges. Policies to ensure payer and hospital notification for patients who are treated by out- of- network physicians within an in- network hospital setting are vitally important.! The ACA- required Summary of Benefits and Coverage outlines the impact of treatment by an out- of- network provider and explains the effect of an out- of- network benefit design to insured persons. However, all parties within the system must do a better job to educate beneficiaries about their specific health plan benefit design and financial obligations to avoid unexpected expenses. The NAIC should prohibit economic credentialing agreements between payers and contracted hospitals. TMA raised the need for NAIC to address economic credentialing policies essentially work to coerce hospital physicians into accepting network contracts that they would otherwise not accept by tying hospital medical staff privileges to the physician s network contract status. This undermines quality because hospitals will base medical staff privilege decisions on a physicians network contract status rather than clinical or quality considerations. These provisions also impede access because physicians are forced to forfeit medical staff privileges when they refuse to sign an onerous network agreement. 5

6 #8. DO NOT ALLOW HEALTH PLANS TO SECURE DEEMED STATUS BASED ON ACCREDITATION BY AN ENTITY OTHER THAN THE STATE REGULATOR TMA also raised the well- considered point that the current Model Act drafting note that promotes state recognition of network adequacy certification by nationally recognized entities. This would undermine the goals of securing uniform, transparent and comparable network adequacy assessment in the state. For information on the NAIC process or any of the points identified in this document, please contact Kelly C. Kenney at 6