After a successful launch last year in Kent County, Priority Health has extended a narrow-network insurance product into Southwestern Michigan for consumers who buy their own health coverage.
The Grand Rapids-based Priority Health has begun selling individual policies that exclusively use Bronson Healthcare Group’s doctors, hospitals and care facilities in Kalamazoo County and portions of neighboring Calhoun and Van Buren counties.
The individual narrow-network policies using the Bronson care network cost 18-percent less than Priority Health’s individual plans that use a broad, statewide network, said Marti Lolli, Priority Health’s senior vice president of commercial markets.
“Our number-one mission is to offer affordable options to individuals in the region that we serve and the communities that we serve,” Lolli said.
Priority Health also added Bronson Healthcare to a tiered network product for small and large group employers that includes Spectrum Health and Metro Health in Grand Rapids, plus Holland Hospital.
Narrow-network products generally work with a single health system, while tiered networks use multiple health systems within a region, although typically far fewer than the standard broad care network.
Tiered networks offered enrollees preferred benefits such as lower cost-sharing for using a care provider in the network. Priority Health launched a tiered network offering known as West Michigan Partners in July 2015 that costs 6 percent to 8 percent less than policies using a broad care network, Lolli said.
“We think we might get some traction on that in the West Michigan area, particularly if we can expand that to a little bit bigger geography,” she said.
Care providers and insurers bill tiered and narrow care networks as more affordable options for individuals and employers.
The idea behind a narrow network is that by keeping a patient within a single health system, you can better drive out waste, get better coordination of care, and push quality higher — all while cutting costs.
“Costs keep going up, so partnering with a high-quality delivery system where we can strategically manage that patient care together allows us to offer a more affordable product,” Lolli said. “If you can keep all of the care within the same system, and a system that’s connected through technology and through a vision like with Bronson, they know everything going on with that patient and can manage the care better than they would be able to otherwise.”
Because of their lower costs, narrow-network health plans have been gaining favor as an option for consumers who buy their own health coverage.
Priority Health began offering a narrow network product in 2015 in Kent County that exclusively uses the care network of parent company Priority Health. In its first year, the Spectrum Health Partners plan enrolled more than 5,000 individuals and exceeded expectations, Lolli said.
Driving the appeal is the willingness of consumers to trade limits of where they can receive medical care in exchange for lower-cost insurance premiums.
In a survey two years ago of 1,000 Michigan residents, the Ann Arbor-based Center for Healthcare Research & Transformation found cost issues were twice as important to consumers buying individual health policies compared to the size of the care network, as long as quality remains high.
Among respondents, 88 percent said price was “very important” in buying an individual health policy and 12 percent rated it as “somewhat important.” Only 41 percent rated network size as “very important,” 38 percent said it was “somewhat important” and 21 percent ranked it as not important at all.
However, narrow networks have not caught on as well among employers large and small as an option for group coverage.
In the 2016 survey of more than 2,900 employers nationwide by the Kaiser Family Foundation and Health Research & Educational Trust, just 6 percent of respondents said they offered a narrow-network option to employees. That’s the same percentage as a year earlier and down from the 8 percent in 2014 that offered a narrow-network plan.
“That type of product just doesn’t work for a lot of the employees. Employers just aren’t ready to take on that disruption in their employee population,” Lolli said. “It’s just a little too limiting to most employers in terms of the geography.
“I think they’ll get there, but they’re just not quite ready for it.”
Employers in Kent County, for example, would end up having employees who commute to work from a neighboring county with limited options for accessing care where they reside, Lolli said. That limits the potential for using narrow networks for employer-sponsored group coverage, especially for companies with multiple locations or with a dispersed workforce.
A narrow-network plan could work “really well” for small employers with employees who all reside within the county or market covered by its care network, although a stabilization in premiums the last few years has fewer small employers looking at wholesale changes in their benefits structures, Lolli said.
“They haven’t had the burning platform to move on to more aggressive products that are limiting in terms of their breadth of network,” she said.
Despite the present limited potential for the group market, Priority Health does want to extend the narrow network model into other markets for individual policies, Lolli said. The health plan has nothing in the works now, but is willing to form a narrow-network product elsewhere in the state.
“We would welcome an opportunity to partner with other health systems on this type of product in new markets,” Lolli said.