Providers in narrow network plans have demonstrated their ability to deliver care efficiently and cost effectively. As a result, these plans help contain costs without sacrificing care.
Employers are looking for different and better ways to contain health care costs. They realize shifting more of the cost to employees isn’t a viable long-term solution. And they understand that reducing their costs by reducing the benefits they offer employees has consequences: higher turnover, more sick days, and decreased productivity.
One option attracting the attention of many companies, especially smaller businesses, is narrow network plans. With an integrated approach to health that focuses on outcomes, these plans can help improve workers’ health – and in turn their productivity — while delivering care more affordably.
Narrow networks are comprised of local, community-based medical providers who are invested in the health of their communities. Providers in these plans have demonstrated their ability to practice and deliver care more efficiently and cost effectively by focusing on health outcomes instead of more services.
Narrow networks help lower costs while maintaining benefit levels. So why are some employers still on the fence when it comes to offering these plans? It may have to do with these three common misconceptions.
Narrow networks do reduce premiums, and that’s a huge draw for both employers and their employees. But consumers also benefit from these plans through lower overall out-of-pocket expenses.
So how do these plans work? Narrow networks contain longer-term costs by encouraging individuals to develop a relationship with their primary care providers (PCPs). Most of the cost savings comes from increased use of PCPs and decreased (or more-efficient) use of specialists.1
Additional cost savings are attained through better adherence to plans of care. Research shows that consumers with PCPs on their healthcare team are more likely to take medications that are prescribed to them.2 And because their PCP coordinates care that is focused on outcomes, they’re also less likely to undergo unnecessary procedures, or to visit the (costly) ER for non-emergencies.3
Many employers assume that offering a comprehensive plan, constitutes use. But this overlooks the fundamental need for education and communication that enables effective utilization of broad network plans.
By encouraging preventative care, narrow networks increase touch-points with PCPs, who become the navigators to specialists. Having a collaborative community of doctors eliminates the confusion that often comes with self-directing and coordinating care, while also helping to achieve and maintain health.
Through the one-on-one-attention and individualized care that PCPs provide, consumers experience better success managing chronic diseases, lower healthcare costs, and are generally happier with the care they receive.4
So it’s not that employees aren’t interested in narrow network plans, it’s that they just don’t know all the facts. When employees understand that these plans typically offer the very same services as broader network plans, they often decide that these policies make sense.
The big difference with these value-based plans is their emphasis on care coordination and the central role of the PCP. Narrow networks also include a wide range of top-tier healthcare professionals and specialists who are committed to providing high-quality care that is focused on outcomes.
As their name implies, these networks are “narrow,” but they’re not restrictive. By enabling affordable access to PCPs, narrow network plans encourage consumers to seek care. In turn, that early intervention results in better care, more cost-effectively, and that reduces the costs for everyone.5
The belief that reducing healthcare benefits ultimately reduces costs overlooks the impact a healthier workforce has on the bottom line. Indirect costs of poor health including absenteeism, disability, or reduced productivity may be costlier to employers than direct health and claims costs. A recent study found the total cost of reduced productivity and lost workdays to health-related problems at $1.1 trillion per year.6
Employers know they need to offer health benefits to attract – and retain — top talent. Narrow network plans, by saving money while improving health outcomes, provide a way to contain costs without sacrificing care.
1National Bureau of Economic Research; September 2014.
2Medication Adherence: WHO Cares?”; Mayo Clinic; 2011; http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3068890/ (link opens in new window)
3Freundlich, Naomi; “Primary Care: Our First Line of Defense”; The Commonwealth Fund. http://www.commonwealthfund.org/~/media/files/publications/health-reform-and-you/health-reform_primary-care_612.pdf (link opens in new window)
4Mendis, Paul; “The Importance of Having a Primary Care Physician”; Commonwealth of Massachusetts; 2013. http://www.mass.gov/anf/employee-insurance-and-retirement-benefits/manage-your-health/health-care-tips/the-importance-of-having-a-primary-care-physician.html (link opens in new window)
5Burns, Joseph; “Narrow Networks Found To Yield Substantial Savings”; Managed Care; 2012. http://www.managedcaremag.com/archives/1202/1202.narrow_networks.html (link opens in new window)
6“An Unhealthy America: The Economic Burden of Chronic Disease”; Milken Institute; 2007. http://www.milkeninstitute.org/publications/view/321 (link opens in new window)
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