Narrow Provider Networks and Willingness to Pay for Continuity of Care and Network Breadth Lucas Higuera, MA – University of Minnesota, Medica Research Institute Caroline Carlin, PhD – Medica Research Institute Bryan Dowd, PhD – University of Minnesota Funding source: This work is supported by the Agency for Healthcare Research and Quality under grant R01HS022881. The content is solely the responsibility of the authors and does not necessarily represent the official views of AHRQ. 1 Medica Research Institute
Background Narrow networks: Health plans are restricting providers available to beneficiaries in order to curb costs or improve quality. Very common in the ACA exchanges: 41% of plans offered have ‘small’ or ‘extra small’ provider networks (Polsky, et al. 2016) • Increasing presence in the commercial market: 6-8% of employers now offer narrow network plans (KFF, 2016) Narrow networks have somehow succeeded reducing health expenditures (Atwood and LoSasso, 2016; Gruber and McKnight, 2016; Carlin et al., in process ) 2 Medica Research Institute
Background Narrow networks may become too narrow: • 15% of narrow network plans in the federal exchange lacked access to physicians in at least one specialty (Dorner et al., 2016). • Network adequacy regulations to guarantee a minimum network size. Restricting providers may disrupt continuity of care • A narrow network may not cover usual source of care. • "If you like your doctor, you can keep your doctor”. 3 Medica Research Institute
Background Importance of Factors when choosing a health plan 70 60 50 Percent 40 30 20 10 0 Plan price Benefits Which doctors Reputation of Number of included are included doctors doctors Source: The Harris Poll (2013). 4 Medica Research Institute
Objective Measure consumer valuation of: • Network breadth (‘number of doctors’) • Continuity of care (‘keep my doctor’) Analyze how these valuations change by consumers’ health status. • Relevant if narrow network plans seek favorable selection. Use information from a single-carrier private exchange, where consumers with employer-supplied insurance choose health plans. 5 Medica Research Institute
Setting Private health insurance exchange offered to employers by a health plan in the upper Midwest between 2011 and 2015 Employers “set up the menu” of plans, then employees choose… First, among 7-20 combinations of cost sharing: • Deductible: $300 to $5,250 • Coinsurance after deductible: 0% or 20% • Office visit copayments: $0 or $30 • HSA availability. Second, among 5 networks: • Broad PPO network • 4 narrow networks, built around IDS. 6 Medica Research Institute
Data Enrollment information: cost sharing and network Claims data to assess health status (Johns Hopkins’ ACG System) Continuity of care: is your usual source of care covered by the network? • Usual source of care: use previous year claims to identify provider with the plurality of Evaluation and Management visits (Higuera and Carlin, 2017). • Identified separately for primary and specialty care. Network breadth: • Broad PPO network. • 4 narrow networks. 7 Medica Research Institute
Methods Random Utility Model ′ 𝛾 𝑘 − 𝛿𝑄 𝑗𝑘𝑢 + 𝜀𝐵 𝑗𝑘𝑢 + 𝜄 𝐼𝑘 𝐼 𝑗𝑘𝑢 + 𝜀 𝐼 𝐵 𝑗𝑘𝑢 ∗ 𝐼 𝑗𝑘𝑢 + 𝜃 𝑗𝑘 + 𝜁 𝑗𝑘𝑢 𝑉 𝑗𝑘𝑢 = 𝑎 𝑗𝑢 Z: Age, sex, plan characteristics. P: Premium net of employer contributions. A: Usual sources of care covered (primary and specialty care). H: Health status (low, medium, high). Individual alternative-specific constant η~N ( η ,Ω ). • Taste heterogeneity • Relax IIA assumption 8 Medica Research Institute
Methods Measure of consumer valuation: Willingness to Pay • Marginal rate of substitution: how much of good A is a consumer is willing to give up to consume good B and have same utility level. W(A|H) = 𝜀 + 𝜀 𝐼 For continuity of care: 𝛿 𝜃 𝑗𝑘 + 𝜄 𝐼𝑘 ෦ W(𝑘|H) = 1 For network breadth: ෩ 𝑁 𝛿 𝑗 • Measure of relative preference for narrow networks relative to broad network. • Estimate with and without continuity of care 9 Medica Research Institute
Results – Network breadth Single plans - Without continuity of care in the choice equation Network 1 Network 2 Network 3 Network 4 0 -50 -100 *** -150 US$/month -200 *** *** *** -250 *** *** -300 *** -350 *** *** *** -400 Low Medium High 10 Medica Research Institute
Results – Network breadth Single plans - With continuity of care in the choice equation Network 1 Network 2 Network 3 Network 4 100 50 0 US$/month -50 *** -100 -150 *** *** -200 *** -250 Low Medium High 11 Medica Research Institute
Results – Continuity of care Primary Care Specialist 140 *** *** 120 100 *** US$/month 80 60 *** 40 *** 20 0 Low Medium High 12 Medica Research Institute
Sensitivity analysis Inertia in plan choice (Handel, 2013; Strombom et al., 2012): choice today depends on yesterday’s health plan choice • Switching costs (opt in vs opt out). • Cognitive burden. • Continuity of care. Unobserved inertia attenuates estimated taste parameters. Test our model using only first observed choice network. • Sacrifice taste heterogeneity and robustness to IIA. 13 Medica Research Institute
Sensitivity analysis – Continuity of Care Panel data First choice only Primary Care Specialist Primary Care Specialist 140 140 *** *** *** *** 120 120 100 100 *** 80 80 US$/month US$/month *** 60 60 *** *** 40 40 *** *** 20 20 0 0 -20 -20 Low Medium High Low Medium High 14 Medica Research Institute
Conclusion and Implications Consumers are willing to pay between $84-$275 and up to $115 for continuity of primary and specialty care, respectively (‘keep my doctor’) Once continuity of care is accounted for, network breadth is only relevant for the smallest network (‘number of doctors’). • Healthier consumers seem to value future provider choice. Network adequacy regulation is concerned with ‘number of doctors’. Our results show that continuity of care is more important to consumers. 15 Medica Research Institute
Thank you! higue003@umn.edu 16 Medica Research Institute
Supplemental 17 Medica Research Institute
Plan Enrollment Distribution For Members Offered Multiple Networks 12% 10% 8% 6% 4% 2% 0% Narrow PPO ACO 18 Medica Research Institute
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