Narrow Provider Networks Harm Consumers, Benefit Insurers

If you feel like the number of providers you have access to in your health plan is shrinking, it may not be your imagination. Many of the larger insurance companies are pruning their networks of doctors, hospitals and other providers.

The trend of constricting networks is accelerating as insurers look for new ways to increase their profits. With fewer providers in a network, the insurers are able to negotiate lower rates by telling the providers that they will see increased patient volume in a narrower network. If providers don’t agree to accept the reduced rates, they will be excluded from the network. Since managed care contracts bring in the bulk of revenue for many providers, losing participation in a major insurer network can severely impact provider income.

Consumers have fewer providers from which to choose. Whereas providers may have been available both near work and home, the new networks may not offer such flexibility. When people don’t have easy access or have to miss work to see a provider, they often delay necessary treatment. Again, the insurers benefit.  Fewer claims contribute to profit margins.