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By Sara Hansard
June 12 — The restrictive medical provider networks and drug formularies featured by many Affordable Care Act marketplace health plans will become more prevalent in the commercial insurance market and in Medicare, a free-market think tank analyst testified June 12 at a House hearing.
Scott Gottlieb, a physician and resident fellow with the American Enterprise Institute (AEI), told the House Energy and Commerce Subcommittee on Health that narrow networks and formularies are “one of the primary cost control tools that the insurance companies have left to them under the ACA rules,” which include mandated coverage of a wide range of benefits and prohibitions against refusing coverage or charging more to people who have medical problems.
“You're going to see these narrow networks start to roll out in other aspects of the market—the commercial market, the Medicare Advantage market. This isn't going to just be confined to the Affordable Care Act marketplace.”—Scott Gottlieb, American Enterprise Institute
In contrast with the 1990s, when health maintenance organization-type restrictions led to a political backlash from legislators and regulators, “the environment now prevents that backlash from happening,” Gottlieb said. “You're going to see more insurance companies take advantage of these tools, and I fully expect that you're going to see these narrow networks start to roll out in other aspects of the market—the commercial market, the Medicare Advantage market. This isn't going to just be confined to the Affordable Care Act marketplace.”
An AEI analysis found that effective, expensive drugs used to treat two chronic diseases, rheumatoid arthritis and multiple sclerosis (MS), aren't adequately covered by many plans sold in the ACA marketplaces, Gottlieb said. That leaves consumers with annual costs as high as nearly $58,000 a year for the MS drug Avonex, he said. In some cases those costs can't be used to satisfy annual deductibles, he said.
Gottlieb suggested that Congress amend the ACA to allow a wider choice of preferred provider organization plans by permitting any plan that previously met state eligibility requirements before the law's passage to be offered on the marketplaces.
Studies show that compared with typical employer-sponsored plans, ACA marketplace plans in the “bronze” tier, which cover 60 percent of claims for a typical population, and in the “silver” tier, which cover 70 percent of claims, include far fewer doctors, specialists and hospitals, Health Subcommittee Chairman Joe Pitts (R-Pa.) said. Most of the plans sold in the marketplaces are in those two tiers.
“This trend is particularly dangerous for those dealing with serious diseases that may have to go out-of-network—and therefore bear significant cost—to find a provider to meet their unique needs,” Pitts said. Even when expensive drugs are covered, patients in marketplace plans pay much higher cost sharing than people in traditional employer-sponsored plans, he said.
Energy and Commerce ranking member Henry A. Waxman (D-Calif.) argued that expanded coverage under the ACA is providing increased access to health care for millions of people. “Insurers and providers and drug companies' private contractual negotiations have always been contentious, and regulators have an important balance to strike between broad access and affordability,” he said. As enrollment and competition in the marketplaces increase, there will be more choice and a broader range of benefit packages, he said.
Montana Insurance Commissioner Monica Lindeen, a witness called by Democrats who is also president-elect of the National Association of Insurance Commissioners (NAIC), said in her written testimony that the ACA “has probably accelerated the trend in the individual and small group markets” toward the use of narrow networks by sharpening competition between insurers selling coverage on the marketplaces “and by eliminating other avenues for cost reduction, such as medical underwriting and preexisting condition exclusions.”
In her oral testimony, Lindeen said that “given the importance of striking a balance—particularly with respect to trade-offs between breadth of network and cost—and the differences in local geography, demographics, patterns of care and market conditions, it is important that responsibility for assessing the adequacy of networks remain with the states.”
Networks are “inherently local,” and state regulation has been proven to be effective, she said.
“It is very important for consumers to understand the network features of a plan,” Lindeen said. Most network adequacy complaints received by her office over the past year were due to a lack of transparency about available providers and a lack of understanding about how the networks work, she said.
Consumers found it very difficult to find provider networks when they were shopping for insurance, which made it difficult to choose the correct plan, Lindeen said. “The marketplace and insurance companies need to do a better job” of providing accurate network lists, she said.
The NAIC is working on updating its model network adequacy law to account for new network plan designs and hopes to complete it by the end of the year, she said. Until then, the Centers for Medicare & Medicaid Services “should not engage in further rulemaking until the states have time to act,” she said.
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