Narrow networks: 3 factors for success

The shift toward value-based payment and increasing financial responsibility for consumers spur renewed interest in narrow networks. But for new narrow networks to thrive, they must have several key characteristics, Vanessa Pawlak and Matthew Fadel of Ernst & Young wrote in Becker's Hospital Review.

1. Defined population: A critical but unpopular narrow network feature is that they involve an exclusive group of providers. That's because insurers must keep patients within a defined network to be able to control the costs of the defined population, according to the article. In addition to controlling costs, having a defined population enables the narrow networks to manage patient information and outcomes across all of the participating providers.

2. IT infrastructure: To address the needs of the populations served and implement process improvements, payers and providers need better data analytics and risk management tools, Becker's noted. With IT tools capable of population health management, narrow networks can improve performance using evidence-based guidelines. Population health tools should share claims and clinical data at the point of care to improve decision-making as well as support the creation and management of care plans, as FierceHealthIT previously reported.

3. Payer-provider alignment: Health insurers and providers should align their strengths to create successful narrow networks. Providers can use coordination and transparency to transform care models while health plans can leverage their reporting and risk management skills to enable data-driven decisions, according to Becker's. Collaboration between insurers and participating providers is critical for narrow networks because it fosters the provider engagement and data sharing needed to monitor costs and utilization for the populations served, FierceHealthPayer previously reported.

"As these networks become narrower, premiums can become smaller, creating an extremely competitive environment; however, exclusivity must be balanced with access," wrote Pawlak and Fadel.

There's no one policy to achieve the perfect balance between consumer choice and cost containment, but a May policy brief from the Urban Institute recommended narrow networks establish regulatory standards and transparency to protect consumers.

For more:
- read the Becker's article