Medicare Advantage Hospital Networks: How Much Do They Vary?

Introduction and Study Focus
  1. Jacobson G, Casillas G, Damico A, Neuman T, and Gold M. “Medicare Advantage 2016 Spotlight: Enrollment Market Update,” Kaiser Family Foundation, May 2016. Available at: https://www.kff.org/medicare/issue-brief/medicare-advantage-2016-spotlight-enrollment-market-update/

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  2. See Centers for Medicare and Medicaid Services, Memo to Medicare Advantage Organizations “Enrollment Opportunities for Individuals Affected by a Significant Provider Network Change,” August 27, 2015.

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  3. Jacobson G, Swoope C, Perry M, and Slosar MC. “How are Seniors Choosing and Changing Health Insurance Plans?” Kaiser Family Foundation, May 2014. Available at: https://www.kff.org/medicare/report/how-are-seniors-choosing-and-changing-health-insurance-plans/

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  4. For example, see Centers for Medicare and Medicaid Services, “CY2016 MA HSD Provider and Facility Specialties and Network Adequacy Criteria Guidance.” Available at: https://www.cms.gov/Medicare/Medicare-Advantage/MedicareAdvantageApps/Downloads/CY2016_MA_HSD_Network_Criteria_Guidance.pdf  For more information about requirements for Medicare Advantage plans and how they compare to Qualified Health Plans and Medicare Managed Care Organizations, see Lipschutz D, Callow A, Pollitz K, et al., “Comparison of Consumer Protections in Three Health Insurance Markets: Medicare Advantage, Qualified Health Plans and Medicaid Managed Care Organizations,” March 2015.  Available at: https://www.kff.org/medicare/report/comparison-of-consumer-protections-in-three-health-insurance-markets/

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  5. Centers for Medicare and Medicaid Services, “Announcment of Calendar Year 2017 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter,” April 4, 2016, page 157.  Available at: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2017.pdf  For more information about how Medicare Advantage requirements compare to requirements for Qualified Health Plans and Medicaid Managed Care Organizations, see Lipschutz D, Callow A, Pollitz K, et al., “Comparison of Consumer Protections in Three Health Insurance Markets: Medicare Advantage, Qualified Health Plans and Medicaid Managed Care Organizations,” March 2015. Available at: https://www.kff.org/medicare/report/comparison-of-consumer-protections-in-three-health-insurance-markets/

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  6. US Government Accountability Office, “Medicare Advantage: Actions Needed to Enhance CMS Oversight of Provider Network Adequacy,” August 2015. Available at: http://www.gao.gov/products/GAO-15-710

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  7. Gold M, Hurley R, Lake T, Ensor TW, and Berenson RA. “Arrangements Between Managed Care Plans and Physicians: Results from 1994 Survey of Managed Care Plans.” Selected External Research Series no. 3. Washington, DC: Physician Payment Review Commission, February 1995. Lake T, Gold M, and Hurley R. “HMO Provider Networks in Medicare+Choice: Comparing Medicare and Commercial Lines of Business.” Managed Care Quarterly, vol. 9, no. 4, autumn 2001, pp. 16-22. And Gold M, Mittler J, Draper D, and Rousseau D. “Participation of Plans and Providers in Medicaid and SCHIP Managed Care.” Health Affairs, vol. 22, no. 1, January/February 2003, pp. 230-240.

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  8. Coe E, Leprai C, Oatman J, and Ogden J. “Hospital networks: Configurations on the exchanges and their impact on premiums,” McKinsey & Company, December 2013. Available at: http://healthcare.mckinsey.com/hospital-networks-configurations-exchanges-and-their-impact-premiums; Bello J, Coe E, Kari K, Oatman J, and Rivera S. “Exchanges year 2: New findings and ongoing trends,” McKinsey & Company, December 2014.  Available at:  http://healthcare.mckinsey.com/exchanges-year-2-new-findings-and-ongoing-trends; Dorner SC, Jacobs DB, and Sommers BD. “Adequacy of Outpatient Specialty Care Access in Marketplace Plans Under the Affordable Care Act.” JAMA. 2015; 314(16): 1749-1750. Sloan C and Carpenter E. “Exchange Plans Include 34 Percent Fewer Providers than the Average for Commercial Plans.” Avalere, July 2015.  Available at: http://avalere.com/expertise/managed-care/insights/exchange-plans-include-34-percent-fewer-providers-than-the-average-for-comm/print; also reference the skinny on narrow networks; Polsky D and Weiner J. “State Variation in Narrow Networks on the ACA Marketplaces,” Robert Wood Johnson Foundation, August 2015. Available at: http://ldi.upenn.edu/sites/default/files/rte/state-narrow-networks.pdf

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  9. Bauman N, Coe E, Ogden J, and Parikh A. “Hospital networks: Updated national view of configurations on the exchanges,” McKinsey & Company, June 2014. Available at: http://healthcare.mckinsey.com/hospital-networks-updated-national-view-configurations-exchanges

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  10. Haeder SF, Weimer DL, and Mukamel DB. “California Hospital Networks Are Narrower In Marketplace Than In Commercial Plans, But Access and Quality Are Similar,” Health Affairs, May 2015; 34(12): 741-748.

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  11. Bauman N, Bello J, Coe E, and Lamb J. “Hospital networks: Evolution of the configurations on the 2015 exchanges,” McKinsey & Company, April 2015. Available at: http://healthcare.mckinsey.com/sites/default/files/2015HospitalNetworks.pdf

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  12. Manatt Health, “Directory Assistance: Maintaining Reliable Provider Directories for Health Plan Shoppers,” California HealthCare Foundation, September 2015. Available at:  http://www.chcf.org/~/media/MEDIA%20LIBRARY%20Files/PDF/PDF%20D/PDF%20DirectoryAssistanceProvider.pdf; Resneck JS, Quiggle A, Liu M, and Brewster DW. “The Accuracy of Dermatology Network Physician Directories Posted by Medicare Advantage Health Plans in an Era of Narrow Networks.” JAMA Dermatol. 2014; 150(12):1290-1297.

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Methods
  1. Bauman N, Bello J, Coe E, and Lamb J. “Hospital networks: Evolution of the configurations on the 2015 exchanges,” McKinsey & Company, April 2015. Available at: http://healthcare.mckinsey.com/sites/default/files/2015HospitalNetworks.pdf

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Results
  1. The only other study that has examined the breadth of plans’ provider networks based on the share of hospitals included in each plan is McKinsey & Company’s study that examined plans available on the 2015 ACA exchanges.  That study found that 55% of these plans had broad networks, 22% had narrow networks, 17% had ultra-narrow networks, and 6% had tiered networks.  McKinsey’s “narrow network” size category corresponds to our study’s “medium” size category (30-69% of hospitals), and the “ultra-narrow” category is the same as our study’s “narrow” size (less than 30% of hospitals).  (See Table 1 for the differences in definitions.) A comparison of McKinsey’s results with ours indicates that broad networks were more common among ACA exchange plans than Medicare Advantage plans available in 2015.   The share of plans with networks that include less than 30% of hospitals is similar among ACA exchange plans and Medicare Advantage plans.  Our study did not separate tiered networks into a separate category because they accounted for less than 1% of the plans examined.

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  2. This would generally be true unless the HMO enrollee received authorization from the plan to receive care from an out-of-network provider.

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  3. Kaiser Family Foundation, “A Primer on Medicare,” March 2015. Available at: https://www.kff.org/medicare/report/a-primer-on-medicare-key-facts-about-the-medicare-program-and-the-people-it-covers/

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  4. Potetz L and DeWilde LF. “Cancer and Medicare: A Chartbook,” American Cancer Society Cancer Action Nework, February 2009. Available at: http://www.allhealth.org/briefingmaterials/CancerandMedicareChartbookFinalfulldocumentMarch11-1412.pdf

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  5. McClellan MB and Staiger DO. “Comparing Hospital Quality at For-Profit and Not-for-Profit Hospitals,” National Bureau of Economic Research, January 2000.  Pages 93-112. Foster D and Zrull L. “Hospital Performance Differences by Size and Teaching Status,” Truven Health Analytics, June 2013. Available at: http://100tophospitals.com/portals/2/assets/HOSP_12677_0513_100TopHospPerformanceClass_RB_WEB.pdf

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  6. McFarland DC, Ornstein KA, and Holcombe RF. “Demographic Factors and Hospital Size Predict Patient Satisfaction Variance – Implications for Hospital Value-Based Purchasing.” Journal of Hospital Medicine. 2015; 10:503-509. Blizzard R. “Does Hospital Size Matter for Inpatient Satisfaction?” Gallup, July 2004. Available at: http://www.gallup.com/poll/12499/does-hospital-size-matter-inpatient-satisfaction.aspx

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Discussion
  1. Bauman N, Bello J, Coe E, and Lamb J. “Hospital networks: Evolution of the configurations on the 2015 exchanges,” McKinsey & Company, April 2015. Available at: http://healthcare.mckinsey.com/sites/default/files/2015HospitalNetworks.pdf

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  2. For an example of the difficulties that may be encountered when switching from Medicare Advantage to traditional Medicare, see Neuman T, “Traditional Medicare … Disadvantaged?” March 31, 2016. Available at: https://www.kff.org/medicare/perspective/traditional-medicare-disadvantaged/

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  3. Jacobson GA, Neuman P, and Damico A. “At Least Half of New Medicare Advantage Enrollees Had Switched From Traditional Medicare During 2006-11” Health Affairs. January 2015; 34(1):48-55.

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  4. US Government Accountability Office, “Medicare Advantage: Actions Needed to Enhance CMS Oversight of Provider Network Adequacy,” August 2015. Available at: http://www.gao.gov/products/GAO-15-710

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  5. Lipschutz D, Callow A, Pollitz K, et al., “Comparison of Consumer Protections in Three Health Insurance Markets: Medicare Advantage, Qualified Health Plans and Medicaid Managed Care Organizations,” March 2015. Available at: https://www.kff.org/medicare/report/comparison-of-consumer-protections-in-three-health-insurance-markets/

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  6. Centers for Medicare and Medicaid Services, “Announcment of Calendar Year 2017 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter,” April 4, 2016, page 157. Available at: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2017.pdf  For more information about how Medicare Advantage requirements compare to requirements for Qualified Health Plans and Medicaid Managed Care Organizations, see Lipschutz D, Callow A, Pollitz K, et al., “Comparison of Consumer Protections in Three Health Insurance Markets: Medicare Advantage, Qualified Health Plans and Medicaid Managed Care Organizations,” March 2015. Available at: https://www.kff.org/medicare/report/comparison-of-consumer-protections-in-three-health-insurance-markets/

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Appendix
  1. Kaiser Family Foundation, “A Primer on Medicare,” March 2015. Available at: https://www.kff.org/medicare/report/a-primer-on-medicare-key-facts-about-the-medicare-program-and-the-people-it-covers/

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  2. US Government Accountability Office, “Medicare Advantage: Actions Needed to Enhance CMS Oversight of Provider Network Adequacy,” August 2015. Available at: http://www.gao.gov/products/GAO-15-710

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  3. See The Dartmouth Atlas of Health Care. Available at: http://www.dartmouthatlas.org/data/region/

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  4. See US Census Bureau definitions of Metropolitan and Micropolitan Statistical Areas. Available at: http://www.census.gov/population/metro/

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