Consumers might not like the trend among insurance carriers to control costs and reduce premiums by narrowing their choices of doctors and hospitals, but it's one of the few tools that payers have left.
Under the Affordable Care Act, insurers can't cut costs by discriminating against people with pre-existing conditions. They can't offer spare coverage because health care reform mandates minimum essential elements.
Instead, insurers or payers are turning to narrow or "high value" networks to reduce escalating health care costs. The narrow network gives insurers greater leverage in negotiating prices with providers.
Insurance plans save money by signing contracts with providers who charge lower prices and have the best health outcomes. They can use this guaranteed supply of patients to negotiate even lower prices from doctors and hospitals.
United Healthcare, the largest Medicare provider in the country, said it is reducing its Medicare physician network in the Denver market — letters went out last week telling customers they might need to select a new physician.
Many of the physicians being dropped from the network see relatively few Medicare plan members, said Dr. Robert Beauchamp, United Healthcare's senior medical director for Colorado.
The reduction amounts to less than 1 percent of its 7,600-plus Medicare Advantage network in Colorado, he said.
"What we're trying to do at United is to work more closely and collaboratively with a more focused group of physicians," Beauchamp said. "We regret the inconvenience to consumers. But gone are the days when insurance companies just pay claims."
Consumers who signed up for silver or bronze plans on exchanges under the new health care law have found that insurers limited the networks of doctors and hospitals. Many employer-sponsored plans are doing the same.
"The negative with narrow networks is that patients are losing their doctors," said Greeley physician Richard Budensiek, head of the Colorado Academy of Family Physicians. "One of the most important predictors of patient outcomes is a continuing patient-physician relationship built on trust."
Pat Swenson of Lakewood said she agonized over the decision when her employer offered a choice between a managed-care plan and a more expensive broad-network plan. She weighed the savings, almost $100 a month, against keeping her family doctor of 14 years.
"I'm pretty healthy," she said, "so I had to go with saving money. It didn't feel great."
Health insurance plans that place limits on what doctors and hospitals are available to members do so by either not paying for services out of network or by charging higher co-payments for providers who aren't preferred.
A July report by the actuarial firm Milliman for America's Health Insurance Plans found that smaller networks resulted in costs savings that led to premium reductions of 5 percent to 20 percent when compared with broad network plans.
"We don't like the term 'narrow' network," said Tim Giess, Aetna's vice president of network management for Colorado.
He calls Aetna's networks "patient-centered medical home environments" in which primary care physicians are medical "quarterbacks" who follow up with patients and any specialists to ensure the highest quality of care.
Insurance carriers are trying to evolve away from a fee-for-service system that didn't track a patient's care toward a quality measure such as patient satisfaction, industry executives said.
Providers may accept discounted fees in exchange for greater access to patients covered by the health plans or for more electronic record-keeping and information sharing. Some agree to share in the expected cost savings from more integrated and comprehensive care of patients.
Insurance carriers can offer a range of incentives for providers who agree to a greater degree of accountability, said Ruth Benton, chief executive for New West Physicians, a large group in most networks.
"The only way insurers can lower costs is to narrow their networks to high-performing physicians," Benton said. "I think it's going in the right direction."
Nationwide, among all employer-based plans, 23 percent were so-called narrow networks by 2012, up from 15 percent in 2007, according to a Kaiser Family Foundation study from last year.
Denver Health Medical Plan, on the other hand, is bucking the trend. In order to better compete, the Denver Health system has offered plans that allow members to go outside its system to access the University of Colorado Hospital and Children's Hospital Colorado.
"It made our plan more competitive," said Laurie Goss, Denver Health's director of marketing and commercial products.
Division of Insurance spokesman Vince Plymell said the state is evaluating the adequacy of carriers' proposed networks for 2015 under federal and state guidelines.
Colorado requires that plans demonstrate their network can provide access to care "without unreasonable delay" and allow insurers to set patient-provider ratios according to "reasonable criteria," a subjective and flexible standard, says The Center on Health Insurance Reforms at Georgetown University.
Colorado also requires that insurers whose networks don't meet a patient's needs allow the patient to obtain care out of the network at the in-network price, the center reports.
Consumer Health Initiative policy analyst Matt Valeta said the insurance industry's use of network size to control costs is a good tool.
"It makes a difference," Valeta said. "But consumers need to have transparency upfront about who and what is available in their plans."