Narrow, Tailored, Tiered and High Performance Networks: An Emerging Trend

Re-posted from BDC Advisors  |  Authors:  Bill Eggbeer, Managing Director, and Dudley Morris, Senior Advisor, BDC Advisors, LLC


A recent BDC survey of national and regional Health Plans indicates there is a resurgence of narrow, tailored, tiered and high performance networks products in the market with premiums substantially below traditional open access offerings and with a new focus on quality. These new benefits plans are now being embraced by the market after falling into disfavor over the past decade for allegedly sacrificing quality for cost, as benefits managers opted for full service HMOs and open access PPO alternatives. Now with employers and patients seeking greater value for their health care dollars, businesses are showing a new willingness to offer narrow network products which encourage members to use more efficient health care alternatives, either by restricting networks to the most efficient providers and/or by having different copays and coinsurance for providers in different tiers of the network.

BDC’s survey indicates these new narrow, tailored or high performance networks will be substantially different from the first generation narrow networks in the 1990s. Instead of focusing almost exclusively on reducing cost, the new network products are being designed to also maximize value and provide sustainable affordability. They are being rebranded in some instances as “accountable care partnerships” and “tailored” or “high performance networks,” and are designed with new payment mechanisms which include performance-based contracts, bundled care / episode payments, shared risks and savings, and even capitated budgets with prices at 15% to 25% below standard PPO and HMO rates.

Clinically integrated networks (CINs), which combine well designed market coverage with a care delivery model that can “move the needle” on cost and quality, will provide a strong foundation for these network offerings, as well as equipping providers to participate effectively in the expanding individual market, if and when Health Insurance Exchanges take hold in 2014. As a result of the narrow network resurgence, the market will continue to shift from traditional open access PPOs to these new “high performance networks” and “accountable care partnerships.” As a result of the accompanying focus on quality in addition to cost, these new health plan offerings may be less about being a “Narrow Network” and more about a care delivery model that provides the highest value and most efficient performance…MORE

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