As healthcare costs continue to rise in the United States, payers and providers alike are looking for new ways to curb spending while still delivering high quality care. One area that holds promise is healthcare payer network management. By optimizing provider networks, payers can lower costs for employers and individuals while enhancing the patient experience. This article will explore how payers are approaching network management and the key strategies they are using to balance affordability with access to quality care.
Challenges of Managing Provider Networks
Managing healthcare provider networks is a complex undertaking that presents several challenges for payers. Networks need to be broad enough to give patients access to the specialists, facilities and services they may need for their care. However, networks also need to be selective enough to keep provider reimbursement rates and overall costs under control. Balancing these two priorities is no easy task.
Payers also have to consider other factors like regional variation in provider markets, consumer preferences and health outcomes data. Networks that work well in urban areas may not translate well to rural regions with fewer provider options. At the same time, patients often want access to prestigious academic medical centers and top-ranked hospitals, even if they command higher prices.
Adding to the challenge is that healthcare provider markets are dynamic. Providers merge, acquire new technology and services, or go out of business. Networks need regular optimization to stay current with these market changes. All of these network management complexities put pressure on payers to institute sophisticated strategies and analytical capabilities.
Utilizing Data Analytics
In response to these complexities, payers are investing heavily in data analytics to help optimize their provider networks. Sophisticated data and predictive modeling help payers understand factors like:
- Utilization patterns and where members are actually receiving care. This helps identify low-volume providers that may not need to be included.
- Episodes of care across multiple settings. Analytics can pinpoint high-quality, lower-cost integrated delivery systems for certain conditions.
- Health outcomes per provider and facility. Payers want to steer patients to locations with superior clinical results.
- Key cost drivers by region. For example, payers may find certain elective procedures are lower cost in rural communities versus academic centers.
- Projected network impact of growth strategies. Analytics evaluate how provider mergers or new insurance products may change network design needs over time.
By leveraging extensive claims and clinical datasets, payers hope to develop networks that guide patients to the highest value sites of care. Advanced analytics methods allow for more databased, tailored network designs versus traditional one-size-fits-all approaches.
Tiering and Limited Networks
To both simplify network choices for consumers and keep costs in check, many payers are implementing tiered and limited provider networks. Narrow networks aim to deliver affordability by curbing inclusion of certain expensive specialty providers or hospital systems without clear value.
Tiered networks segment included facilities into preferred and non-preferred cost shares to steer utilization. Behavioral health providers are another area seeing tiering grow as payers strive for affordable coverage of these increasingly critical services.
However, limited network arrangements require careful implementation and communication. Payers need consumer testing to understand what providers really matter most to enrollees in each community served. Exclusion of major local academic systems, for example, may not be tenable even if they drive up premiums. Transparency around network composition is also paramount for maintaining goodwill with employers and individuals.
Value-Based Payment Models
While tiering is a useful short-term tool, experts argue true savings require transitioning to value-based payment models over traditional fee-for-service reimbursement. Shared-savings arrangements like accountable care organizations (ACOs) and bundled payments aim to reward providers demonstrating higher quality care and lower total cost of episodes or population health outcomes.
Many of the largest commercial insurers are now implementing selective contract strategies preferencing participation in ACOs and pay-for-performance programs for network inclusion, cost share tier placement or reimbursement rate hikes. The goal is to not only shape networks but also influence how care is delivered within them through payment reform that de-emphasizes volume.
Early returns show such alignment between network design, payment and care delivery could generate larger per-member per-month savings versus narrow networks alone. The key is ensuring providers have necessary infrastructure to manage and be accountable for defined patient populations over the long-term.
As the healthcare landscape continues shifting, payer network management will remain a crucial lever for affordability and access. Those organizations deploying robust analytics capabilities, tiering approaches and value-based payment models proactively demonstrate their commitment to developing high-performing networks in partnership with providers. Guided by data and a long-term view of payment reform, payers aim to better serve patients through optimized delivery systems focused on quality and total cost of care. Innovation in network strategies holds great potential for transforming the U.S. healthcare system.
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