Employer Interest in Narrow Networks To Control Cost Increasing

July 27, 2016

A growing number of health insurers are implementing so-called “narrow networks” of medical services providers to control costs. But while about half of all plans on public exchanges had narrow networks in 2014, it has taken longer for employers to embrace them. According to Trevis Parson, chief actuary of Health and Group Benefits for Willis Towers Watson, employers have been waiting to see evidence that narrow networks still deliver value in addition to lowering cost.

In a recent article in Business Insurance, Parson explained what motivates employers to consider narrow networks. “Really finding value is what employers are after,” he said. “That’s the fuel for these narrow networks on the large-employer group side.”

Narrow networks are networks that limit providers to those that have the best outcomes and lowest cost. While these types of networks in theory are what large employers seek, there are still too few of them to support a wholesale shift, said Parson. This is primarily because large employers need coverage across many states.

However, while Parson noted that early data on narrow networks is promising, “[Employers] want to see evidence before they act. The last thing they want to do is disrupt employees.”

For the complete article in Business Insurance, click here.

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