- A survey found 18% of large employers offer a high-performance or narrow network.
- More than 70% of those offering or planning a high-performance network said they will do so in regional or local plans, not national plans.
- Pandemic-related travel and treatment restrictions have created concern about a looming backlog of pent-up elective care demand.
Although large employers long have promised to move to narrow networks, a new survey indicates they may finally do just that.
Nearly one-fifth (18%) of large employers offer a high-performance or narrow network in at least one location in their employee health plans, according to the latest Willis Towers Watson 2020 Health Care Delivery Survey. And 40% of employees with access to narrow-network plans were enrolled.
Such networks have been hailed as a powerful tool to control cost increases and improve quality if providers are selected on that basis.
The latest responses echo narrow network rates found in previous surveys, including a 2017 Willis Towers Watson survey of other large employers, which found 15% used such networks and another 36% were planning to implement them or considering doing so by 2019.
However, a historic pandemic, maxed-out employee finances and a new focus on local and regional narrow networks may bring about changes.
“I really do believe the pandemic is going to change things,” said Drew Hodgson, national practice leader for healthcare delivery at Willis Towers Watson. “Affordability is becoming so important for employers. And the only way for them to be able to offer plans that won’t bankrupt their employees is to potentially use high-performing networks.”
Among large employers, 72% offer or plan to offer a regional or local HPN plan instead of a national plan, according to the survey. Employers’ interest in HPNs based on accountable care organizations and other provider arrangements has increased, he said, especially in the form of local pilots.
“They’re way more willing now to look at it locally and potentially offer alternate solutions, based on location and the market,” Hodgson said. “The idea that one-size-fits-all across the country I don’t think is correct.”
Other large-employer plans for high-performance networks (HPNs) include:
- 38% have adopted or are planning to adopt an HPN with between 25% and 49% of providers in the market included
- 33% have adopted or are planning to adopt an HPN with 75% or more providers in the market included
Hodgson is careful to differentiate between a standard narrow network, in which providers are selected solely on cost, and an HPN, in which providers are screened for the quality of their care delivery.
“The idea of a narrow network, and not a high-performing network, has had its day,” Hodgson said.
That notion was based on growing interest in HPNs on the part of employers with which Hodgson has spoken directly.
However, the survey also found that cost savings are the key consideration of large employers in adopting a more-restrictive narrow network. To consider adopting a narrow network with less than 25% of providers in the market, half of respondents indicated that costs would need to decline to a great extent, while a third indicated that quality would need to improve to a great extent.
COE approach gains support
The survey also found strong employer support for centers of excellence (COEs), a model in which employers guide employees to providers that have demonstrated high-quality performance for specific types of care.
COE-related findings for large employers included:
- 53% offer access to COEs within their group health plans
- 70% provide COEs as optional
- 21% provide COEs as mandatory
- 82% believe COEs will effectively reduce annual healthcare costs per employee
- 92% say COEs will effectively improve the quality of care provided to employees
Expanded use of COEs also was part of employers’ effort to control costs without shifting more costs onto workers through increases in out-of-pocket expenses or in the use of high-deductible health plans.
“It seems to me from the survey results that employers think the COEs are the highest-quality and highest cost-impactful of the solutions out there,” Hodgson said.
Employers are concerned that COVID-19-related government lockdowns, elective-procedure bans and travel restrictions affected the use of COEs, which often require employees to travel long distances for care.
“The idea of traveling across the country, obviously right now, is not front and center,” Hodgson said.
Employers also are nervously watching to gauge long-term effects of the pandemic on COEs.
“You saw a huge drop-off in elective procedures, which is what most COEs are there for, and that pent-up demand coming back,” Hodgson said. “Employers are a little afraid of that pent-up demand coming back.”
However, even with such restrictions, rural and regional COEs remain good — if underutilized — options, he said. Another option is virtual COEs, in which specialists provide tele-consults and high-quality image reading to local providers.
Overall concerns for employers
General employer concerns about healthcare delivery include:
- 84% cited access to comprehensive, high-quality mental health services
- 77% cited access to comprehensive, high-quality substance abuse treatment
- 85% cited affordability of specialty drugs
- 78% cited affordability of mental health services
- 77% cited affordability of specialty care medical services
The survey was answered by executives from 397 companies with a combined workforce of 7.1 million employees.