About two-thirds of the health insurers offering PPO plans in the marketplaces last year have either cut back the number of PPO plans they’re offering or cut PPO plans altogether for 2016, finds a new study by the Robert Wood Johnson Foundation.
The study says carriers attribute the strategy to high costs making it impossible to price some exchange products affordably.
While the exit of so many PPOs in the 2016 marketplace will be a significant change, RWJF researcher Kathy Hempstead tells Healthcare Dive it remains to be seen whether the same will occur in the off-exchange market and employer-sponsored coverage.
She says the marketplaces were singled out for study due to the availability of data, so whether PPOs are disappearing across the industry remains a question.
“We don’t really know. I feel like some things are happening across the board,” she says. For example, Blue Cross and Blue Shield of Texas dropped their marketplace PPO—leaving no PPOs on the exchange in Texas—and did so for their off-exchange individual markets too, Hempstead says.
She adds what some carriers are calling a PPO are a lot less broadly based than what they offered as PPOs last year.
Why the change in strategy?
While PPOs tend to include more providers in their networks and offer some out-of-network benefits, it’s the latter part insurers are really trying to manage, Hempstead suggests, because controlling provider access ties in with efforts toward value-based care and risk sharing.
It appears carriers want to limit access to out-of-network providers, she says, because they want to keep patients funneled to the network providers that now have tightly controlled agreements to manage utilization in a particular way, and to share risk with the carrier.
“If you want that kind of control, you don’t want people sauntering outside of the network and going to see somebody else who might practice in a totally different way, even if they do have some co-insurance,” Hempstead says. “I feel like that is something that is going on across the market.”
Among the report’s findings:
- Just 33% of 2015 silver plan PPOs remain available for 2016;
- In 2015, 93 carriers offered PPO plans in 48 states, resulting in 131 unique carrier-state combinations (some carriers offered PPO plans in multiple states). Forty-three carrier-state PPO combinations remain for 2016;
- In 22 states, all of the PPO offerings were either dropped or reduced, with only 11 states keeping their offerings unchanged; and
- The dropping of PPO plans occurred either because carriers exited the market, or because they discontinued their PPO plans.
As for why PPOs are disappearing in 2016, it’s because carriers have realized they previously priced below cost, and because some carriers who offered them have exited the market the altogether, including a number of the failed co-ops, Hempstead says.
In addition, carriers are trying to cater to cost-conscious customers by limiting how much they raise premiums by focusing on the cost of providing the care. “That’s where you see this whole kind of network discipline come into play, and part of that is getting rid of broad networks and out-of-network benefits,” Hempstead says.
As for how marketplace consumers will react to the loss of so many PPOs, the average consumer says they would rather trade off access to providers for a lower cost, Hempstead says.
However, reactions may be stronger when it’s real, not theoretical. Given the majority of people who are going to be enrolled next year are people who were enrolled this year, a significant number will be losing access to providers they liked and realizing they’re being asked to pay more for a skimpier plan.
That said, Hempstead believes most health insurance consumers will continue to purchase health insurance, and will accept the exchange offerings because they probably have no choice.
“I do think people will probably bite the bullet and I would expect retention to be high,” she says.
She suggests carriers might look for ways to make the loss of provider access up to customers through better customer service, access to telehealth, or other such benefits.
Hempstead sees the decline of PPOs as a trend and plans to watch whether it unfolds in employer-sponsored coverage as well, musing, “To what extent is this going to become the way health insurance is, and is a PPO kind of like – an artifact from a prior time?”