Employers today are always looking for ways to contain healthcare costs. One factor that can impact the cost of a health plan is the provider network associated with the plan. In certain situations, the same health plan and covered benefits with a change in network can result in a significant drop in premium costs each month.
Most health insurers offer a choice of provider networks for employers to choose from when purchasing a health plan for their employees. Often, this variety of networks include “narrow” networks. So, what exactly is a narrow network? And why are employers on the fence about narrow networks? Keep reading for answers to these questions, common myths about narrow networks, and learn why a narrow network may be a good option for your business.
What is a “narrow network?”
A health plan network includes a wide range of healthcare providers including doctors, specialists, hospitals, facilities, etc. A narrow network excludes certain healthcare systems to gain an advantage in pricing through better contract rates with chosen healthcare systems and providers.
Better contract rates mean the health plan pays less for medical claims and has lower medical costs, resulting in lower premium costs for the employer and ultimately in savings for the employee.
Does PHP have a “narrow network?”
Yes, the PHP Options Network is considered a narrow network. The PHP Options Network is comprised of several health systems, including Lutheran Health System, IU Health, Select Health Network (St. Joseph Regional Medical Center), and the Goshen Health System. This network does not include Community Health Alliance (Memorial Hospital and Elkhart General Hospital) or the Parkview Health System.
Now that you know what a narrow network is, let’s discuss some of the common myths surrounding these networks.
Myth #1: The only cost savings is through lower premium costs
It’s true that narrow networks cost less (on average, 12-14% less for the PHP Options Network), meaning lower premium costs for health coverage. But the money saved in premiums isn’t the total cost savings associated with a narrow network plan.
With lower contracted rates for services, narrow network plans also offer savings for members out-of-pocket costs. If your office visit or service copayment is 20%, paying 20% of the lower cost in a narrow network results directly in savings for the member. Another opportunity for cost savings comes from increased use of a primary care provider (PCP). When a PCP is involved with your care, you can experience more coordinated, streamlined treatment plans, resulting in more cost-efficient care and a decreased need for higher-cost care from specialists.
Myth #2: Employees don’t want narrow networks
A roadblock to the selection of a narrow network by employers is that, as an employer, they do not want to choose the hospital system for their employees’ use of health services. This assumes that all employees need a comprehensive plan, but in reality, it exposes a fundamental need for better education and communication surrounding the health plan options and how to effectively utilize the benefits.
Ultimately, it’s not that employees don’t want narrow networks, it’s that they often don’t know all the facts about them. Once it’s understood that narrow network plans typically offer the same services with a more consistent, affordable premium and potentially lower out-of-pocket costs, employees often decide this option makes sense.
Myth #3: Narrow networks have limited or lesser care options
By definition, narrow indicates a limitation of some sort, which causes concerns of the network being too restrictive. This often causes worry that employees won’t have access to quality care providers or facilities. This is untrue.
Maybe a better way to think of these networks are as “high-value” networks. Excluding networks with higher costs or those where contracted rates aren’t as competitive does not mean excluding high quality healthcare. For example, the PHP Options Network includes top-quality health systems such as IU Health, Lutheran Health Network, Select Health Network, and the Goshen Health System, and collectively offers more than 35,000 provider locations.
The PHP Options Network also offers access to top Centers of Excellence such as Riley Children’s Hospital and the Cleveland Clinic along with value-added services for PHP members such as:
Is a narrow network right for your company?
Quality health benefits are necessary to attract and retain talent, especially in today’s job market. As employer’s work to keep this essential employee benefit as part of their comprehensive package, a narrow network can be an effective solution to contain costs without sacrificing quality care for their team members.
To learn more about the PHP Options Network or other plan options, contact the PHP sales team today at sales@phpni.com, call us at (260) 432-6690, or speak with your benefits advisor.
