Businesses typically provide health benefits to their employees through an insurance company, which makes most of the decisions about the cost and benefits. However, Adventist Health decided to cut out the insurer – the middle man – and provide benefits directly to its employees through its own provider-based health plan. Adventist Health of Roseville, a not-for-profit health system with two hospitals in the San Fernando Valley area — Glendale Adventist Medical Center and Simi Valley Hospital — started this so-called narrow-network health care plan for its employees about four years ago. But now, the plan has drawn local interest, and Adventist Health says it is in discussions with approximately seven organizations, including Fortune 500 companies, government entities and small businesses both in the San Fernando Valley and greater Los Angeles area, to implement similar programs. If it works out, Adventist Health would provide health care directly to the employees of those companies, bypassing the need for the services of insurance companies. In fact, Adventist Health already has partnered with a national retail chain to launch a provider-based narrow network pilot program for the company’s employees in the Southern California region. The company did not want its name disclosed. “We’ve had good patient satisfaction and good access in our direct-to-employer program,” said Dr. Arby Nahapetian, chief medical officer for Adventist Health’s Southern California Region. “Other employers are paying attention and are actually very excited about it.” If an Adventist Health employee in the Southern California Region chooses the health system’s narrow-network plan (employees can choose different plans), he or she has access to Adventist Health’s facilities, which include four Southern California Hospitals and an additional 17 hospitals throughout California, Oregon, Washington and Hawaii. The plan also includes more than 100 other locations comprising urgent care clinics, imaging centers, outpatient surgery centers and more. In total, approximately 31,000 employees work for Adventist Health, and Nahapetian said the majority of employees choose to handle their health care within the network. A unique feature of the health plan is every employee can handpick his or her own doctor from any hospital in the system, including Glendale Adventist and Simi Valley Hospital, which combined have about 1,300 doctors. “Part of the appeal to employers is who better to be able to drive health outcomes than the actual health system itself?” said Nahapetian. “In the complicated world of health care delivery, we are trying to take away obstacles to what patients want and what we can offer.” Narrow networks Narrow networks have been a part of the health insurance industry for decades in the form of HMOs and other plans with the aim of maintaining a smaller network of providers to lower costs for the consumer. As health care costs continue to rise, health insurers, providers and businesses continue to seek other options for employees. “Narrow networks are not new to us,” said Jeff Hoffman, senior partner at global management consulting firm Kurt Salmon’s Health Care Group. “But what is new to the San Fernando Valley and Southern California is provider-based narrow networks, where I can actually buy direct contract provider-based networks.” Under the Affordable Care Act, employer-sponsored coverage must cost 9.5 percent or less of household income, after employer contribution, to be deemed affordable. The emphasis on affordability in the Affordable Care Act has led to insurance companies excluding certain doctor and hospital groups from its networks if the health care providers won’t come down on price. According to Hoffman, this has prompted some of these providers to create their own health care networks, simply to compete. Many also discovered they were able to save considerably on administrative costs by cutting out the insurer and taking on billing and related tasks themselves. According to a study by McKinsey & Co., in most cases, premiums for narrow network plans were 13 to 17 percent cheaper than their broader network counterparts. This drop in price for consumers is partly due to the limited number of hospitals and doctors in a network, which can be further realized in a provider-based narrow network plan like the kind Adventist has developed. For example, an employer can ask a provider to discount its prices in exchange for its employees only using doctors and hospitals within that provider’s health system. Thus, the provider and health system are promised more patients in exchange. This is how the employer purchasing the plan incurs savings, which can be passed along to its employees. Adventist Health would not disclose the range of projected savings, but said that cost-effectiveness is a big draw to the plan. Constrained choices The cost-saving aspect of narrow networks has made them popular options for companies, but critics feel these types of plans limit employee choice and accessibility. “Narrow networks, whether sponsored by insurers or providers, constrain consumers’ health care choices by design,” said Sally C. Pipes, chief executive of the Pacific Research Institute in San Francisco. “Narrow network policies may not cover the best or most-skilled providers in their community — or may force patients to travel long distances or endure lengthy waits for appointments with providers who will accept their insurance.” To combat this issue, provider-based narrow networks, like Adventist Health’s, contract sub-specialists that are not already available within the hospital system. This provides customers with a complete network that can address the full spectrum of health needs. Another way Adventist Health addresses the comprehensive care concern is through its wrap-around insurance offered through its plan. For example, if a patient has a medical emergency far from any Adventist Health location, the wrap-around insurance, which is contracted with a larger health insurer, will cover the individual’s treatment at that out-of-network facility. Furthermore, provider directory information must remain up-to-date, so employees don’t accidentally go out of network and incur high out-of-network costs. Surprise bills have been a major complaint of narrow network consumers. There have been many cases where an employee believed a doctor or service was covered under his or her plan, later to discover that he or she had been charged full price. “You can’t assume your doctor is in your new insurance program,” said Hector de la Torre, executive director of the Transamerica Center for Health Studies in Los Angeles and board member of L.A. Care Health Plan. “Health plans are like automobile manufacturers. They have different models with different features. Not every doctor and hospital that was covered before will be covered in this plan, so it’s always incumbent to check and double check that information.” According to Adventist Health’s Nahapetian, its provider-based narrow network plan allows the health system to have more control over the program, allowing Adventist Health to deliver higher quality outcomes and better patient experiences. Like other health plans, Adventist Health offers its employees an interactive website and app to stay connected and monitor health needs. The plan focuses heavily on preventative care, ambulatory and outpatient care, pediatric visits and overall promotion of health and wellness. In the future, Nahapetian hopes to incorporate a telehealth platform to the plan’s services, so employees can electronically access physicians to answer questions remotely. He also sees Adventist Health’s narrow network plan expanding to serve other regional businesses and organizations, like the several the health system is already in negotiations with. “Given what employers pay for health care, I think it is absolutely within their right to ask for value and quality like patient satisfaction and access,” said Nahapetian. “This (plan) is a way of creating a little more communication about the service lines we already have and patients we already have. What’s new about this is the connectivity for the employer.”
