Out-of-network coverage in New York? We left it up to the insurers

Original Reporting | By Craig Gurian |

More broadly, in Coates’ view, the greater empowerment of insurance companies was accelerating a turn towards “a corporate medical model that threatens to squeeze the humanity out of our interaction with our patients.”

Now that there is a mandate for individuals to purchase health insurance, said Mark Scherzer, “what a stupid time to eliminate the consumer protection.”

Remapping Debate asked Imbriaco whether DOH was concerned about doctors not having sufficient leverage to negotiate the terms of their services with insurance companies. “We try not to get involved in the negotiations between insurance companies and providers,” she replied. “The only time we get involved is when consumers end up being put in the middle of this feud. And then we try to talk to the two of them to work it out.”

Imbriaco did agree with the premise that only having to deal with in-network doctors makes it easier for insurance companies to control their costs (and, conversely, that having to cover out-of-network care makes it more difficult). She said that, from the point of view of the marketplace, more cost control was a good thing, describing the closed networks as a “contributory factor” to what New York is touting as a 53 percent reduction in individual market premiums from their current, pre-exchange rates. (“We’ll see,” Imbriaco noted as a caution elsewhere in the interview, whether the closed-network-keeping-costs-down theory “actually plays out the way it’s supposed to.”)


Could “the marketplace” have done better?

Bill Schwarz, the director of the public affairs group for DOH, participated in the interview with Imbriaco, and later clarified in a follow-on email exchange that the principal reasons for the large reduction in individual market premiums from pre-marketplace status quo are an anticipated more than 36-fold explosion in the size of the individual market (from 17,000 to a projected 615,000), making for an enrolled population that is, on average, healthier.

Schwarz didn’t, however, answer two of Remapping Debate’s inquiries made in the course of that follow-on email exchange: Isn’t getting rid of out-of-network coverage a material factor in cost reduction? And, if not, why not have required insurance companies to provide plans with an out-of-network option?

Notably, the small individual market in New York had until this year required insurers to provide out-of-network coverage, but the market had faced one species of “adverse selection,” the problem attracting primarily the sickest people. In New York’s individual market, Mark Scherzer said, there was not adverse selection of one carrier as compared with others (since all were required to participate) but rather of the entire market. Scherzer attributed the adverse selection problem to the fact that New York had “a voluntary market, which took sick people and didn’t give anybody else the financial capacity to participate. And that’s what the Affordable Care Act is supposed to resolve.”

What if New York had required out-of-network coverage as the price of admission to a new pool of almost 600,000 projected enrollees? Scherzer said, “There was no imperative” to remove the requirement of out-of-network coverage. On the contrary, he said, it would now “not adversely affect the market to require that.”

“It has adversely affected the market up ‘til now to have generous benefits that sick people could buy only because the sick people were the only ones who bought it,” said Scherzer. That’s no longer the case. Now we have a mandate for everybody to buy it. So you’ve eliminated the problem that [the insurance companies were] running away from.”

Scherzer’s conclusion: “What a stupid time to eliminate the consumer protection.”

A conflict of interest?

The Community Service Society of New York (CSS) was founded in 1939 and describes itself on its website as “an informed, independent, and unwavering voice for positive action on behalf of more than 3 million low-income New Yorkers.”

We reached out to the vice president of health initiatives for CSS to speak with her about the choices that the New York exchange has brought and not brought to New Yorkers. An initial willingness to proceed was superseded when Jeffrey N. Maclin, director of public relations for CSS, explained in an email that we could have an interview as to CSS’s role as one of the many “navigators” with whom New York State has contracted to help New Yorkers seeking health insurance on the exchange, but questions about plans offered in the marketplace should be directed to the Department of Health.

We did want to know what CSS (as a navigator) says to individual New Yorkers who ask for assistance in purchasing a plan on the exchange that covers out-of-network physician services (“We inform them,” Maclin emailed back, “that there are no out-of-network options on the exchange and help them select a plan that has most of the client’s providers.”)

But we also wanted to know why CSS was not willing to speak to the consequences of the choices that are and are not available, what we understood to be a traditional advocacy role for CSS. So we asked via email. And we asked whether “the lack of out-of-network options are a concern of CSS or, by contrast, does CSS view the absence of those options as a sensible cost-containment measure?”  Did CSS have any thought as to why marketplace competition didn’t yield individual plans with out-of-network options? None of these questions were answered.


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