Hospital networks: Evolution of the configurations on the 2015 exchanges

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Now that the 2015 open enrollment period (OEP) has ended, we have updated our network database to include all networks offered on 2015 exchanges. This has permitted us to compare the networks offered on the 2014 and 2015 exchanges, from which we have derived insights into how the networks are evolving in terms of price, and insurer and provider participation. We also conducted a consumer survey during the 2015 OEP to better understand what consumers know about these networks and what experience they have had with them.

Note: Throughout this Intelligence Brief, we use the phrase narrowed network to refer to narrow, ultra-narrow, and tiered hospital networks in the aggregate.1

Five key observations emerged:2 

  1. Consumer choice has expanded with a high number of new networks. Yet, many consumers remain unaware of network choices. Overall, the proportion of narrowed networks and their relative narrowness has not changed. 
  2. Median premiums continue to be lower for narrowed-network plans than for broad-network plans. 
  3. Some insurance plan designs (e.g., managed care features, limited out-of-network coverage) have a compounding effect on the median difference in premiums between narrowed- and broad-network plans.
  4. Plans co-branded by an insurer and provider have lower median premiums than plans offered solely by providers.
  5. Consumers who bought narrowed-network plans in 2014 reported less satisfaction with their payors than purchasers of broad-network plans did. Few of them switched to broad-network plans, though.

Choice has increased, but many consumers remain unaware of network types

Over 1,000 new networks were introduced in 2015. As a result, the number of exchange networks now totals 2,930. This year, 90% of consumers had access to both narrowed- and broad-network plans, up from 86% in 2014.

Many consumers, however, do not appear to understand the choices available to them or the impact of those choices (especially limits on access to care). In our consumer survey, 44% of those who bought an ACA plan for the first time this year reported that they did not know the network configuration associated with their plan.4 Nineteen percent of those who bought exchange plans last year also said that they were unaware of their plan’s network configuration.  

Across the country, close to half of the 2015 networks that consumers can choose from are narrowed; in the largest cities, almost two-thirds of the networks are narrowed (Exhibit 1). These percentages are consistent with last year. Large cities tend to have higher rates of provider and insurer competition and higher excess bed capacity—factors associated with higher rates of narrowing. 

Exhibit 1
Exhibit 1

Hospital configurations did not change for 53% of the 2014 networks re-filed for 2015, and for the remaining 47%, configurations changed by a median of only two hospitals. Ninety percent of last year’s broad networks remained broad, and 83% of narrowed networks remain narrowed.5  

Between 2014 and 2015, the median percentage of hospitals in each rating area participating in broad and narrowed networks remained relatively constant. Broad networks maintained a median of 100% participation; however, the absolute number of networks with 100% participation increased, due in large part to the networks introduced by new national entrants. Narrow networks maintained a median of 50% of hospitals. Ultra-narrow networks grew slightly in size; a median of 13% of the hospitals in a rating area participated in these networks in 2015, compared with 10% last year (Exhibit 2). 

Exhibit 2
Exhibit 2

The overall number of hospitals participating in exchange networks rose in 2015, primarily due to the increase in the number of networks. This year, 64% of all hospitals are participating in at least one narrowed network, and 93% are taking part in at least one broad network. Last year, the comparable percentages were 59% and 87%.

Similar to 2014, there continues to be no meaningful performance difference between broad and narrowed exchange networks based on Centers for Medicare and Medicaid Services (CMS) hospital metrics.6,7

Read our full Methodology

The authors would like to acknowledge Kija Kari, Brock Mark, Brendan Murphy, and Jim Oatman for their support.

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  1. Network narrowing can affect hospitals or physicians; we focused on hospital networks in this Brief. We defined networks and network breadth at the rating area level. Hospital participation is based on the AHA 2013 dataset. Network breadth was defined as follows: broad, more than 70% of all hospitals in a rating area participate; narrow, 31% to 70% participate; ultra-narrow, 30% or less participate; tiered if the payor has hospitals in different tiers with varying co-insurance rates.
  2. Most analyses in this Brief are based on all 2015 exchange networks in all metal tiers. A few of the more detailed analyses are based on the silver tier only for reasons outlined in the Appendix.
  3. Our database includes 333 payors and all 4,698 acute-care hospitals in the U.S.
  4. Respondents were identified as having bought an Affordable Care Act (ACA) plan for the first time in 2015 if their answer to the question, “Which of the following best describes your primary insurance coverage in 2014? For most of the year I was covered by ….” with the response “I did not have health insurance, I was uninsured.”
  5. Given the short time frame between the close of the 2014 open enrollment period and the date by which 2015 plans had to be filed, payors had little experience on which to base network configuration changes, which may explain why few changes to network configurations were made.
  6. Performance metrics evaluated include composite value-based purchase score as well as its three sub-components (outcome, patient experience, and clinical process scores).
  7. For last year’s findings about hospital performance, see our June 2014 Intelligence Brief, “Hospital networks: Updated national view of configurations on the exchanges.”