Managed Care Narrow Networks

Narrow networks (managed care provider networks that include a limited choice of participating healthcare providers and suppliers) have been widely criticized by consumers and consumer-rights groups, particularly in light of the number of narrow network products that are included in the ACA exchange marketplace.  Use of narrow networks by self-insured businesses is also growing more prevalent.  For consumers who have multiple options for insurance coverage, the question is often one of choice – am I willing to pay more in premiums in order to continue to see my existing doctor, go to the hospital of my choice, or have a wider range of options if I need to see a specialist?

From the doctor’s perspective, however, narrow networks are very confusing.  In many cases, it is unclear why a particular doctor is, or is not, allowed to participate in the network.  In some cases, only certain physicians are invited to participate in the network, leaving other physicians without knowledge that the plan even exists until a patient calls to find out why the physician does not participate.

While willingness by the physician or physician group to accept the reimbursement rates offered by the payor is one criterion for participation in the narrow network plans, other criteria come into place as well.  An invitation to participate in a narrow network may be based upon the payor’s rating of the ability of the physician to offer quality of care and to provide care efficiency (a cost-based rating system).  The tier and rating systems, however, are not consistent among payors and often criticized for producing inaccurate, irrelevant and unreliable results.  Physicians also worry that there may be a loss of professional autonomy if physicians are pressured, in the course of providing care, to meet the tier and rating criteria developed by the payors in order to participate in the narrow networks rather than to exercise independent medical judgement.

A number of measures have been recently introduced to address consumer-driven concerns with narrow networks.   The Patient Protection and Affordable Care Act – HHS Notice of Benefit and Payment Parameters for 2017 (available here: https://www.federalregister.gov/articles/2015/12/02/2015-29884/patient-protection-and-affordable-care-act-hhs-notice-of-benefit-and-payment-parameters-for-2017) proposes that states should be required to develop rules to test the adequacy of provider participants in payor networks.  In addition, the National Association of Insurance Commissioners has been working to update model legislation regarding plan network access and adequacy.  Finally, legislation regarding network adequacy has been adopted or proposed in a number of states.  Typically, state laws incorporate rules regarding maximum travel distances for a patient to see a participating provider, maximum wait-times and/or acceptable provider-to-beneficiary ratios.

If you have questions regarding your relationship with third-party payors, such as managed care contracting, billing audits, or inclusion in narrow networks, Parker Poe has a number of experienced attorneys able to assist.

Joy Hord

Joy Hord

Joy Hord focuses her practice on regulatory and compliance matters specifically related to the health care industry. Her clients include hospitals, physicians, pharmacies and other health care providers. Ms. Hord also has significant experience representing health care professionals and organizations with business law and transactional issues, such as mergers, acquisitions and joint ventures. Ms. Hord leads Parker Poe’s Health Care Practice, which includes attorneys from the firm’s North Carolina and South Carolina offices.

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Two New Exceptions to Stark to Become Effective in the New Year

Starting January 1, 2016, physicians and certain health care organizations will be able to take advantage of two new exceptions to the physician self-referral law (commonly referred to as the “Stark Law”).  Stark contains two broad restrictions.  First, it prohibits physicians from making referrals of certain designated health services (“DHS”) payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, unless an exception applies.  Second, Stark prohibits those entities from billing for the referred services.

The two new Stark exceptions, when satisfied, will permit (1) remuneration from a hospital, federally-qualified health center (“FQHC”) or rural health clinic (“RHC”) to a physician to assist the physician to compensate certain non-physician practitioners (“NPPs”) who will provide primary care or mental health services in the geographic area served by the hospital, FQHC or RHC (the “NPP Recruitment Exception”) and (2) arrangements in which physicians (or physician organizations) and hospitals may use one another’s space, equipment, personnel, items, supplies or services to provide services on a time-sharing basis (the “Timeshare Arrangements Exception”).

In announcing the new exceptions, CMS recognized several important policy considerations, many of which relate to increasing access to care.  CMS noted NPPs’ increased role in health care delivery in light of health coverage expansion under the Affordable Care Act and the looming shortage of primary care physicians.  Also, in a victory for mental health providers, CMS was persuaded to include clinical psychologists and clinical social workers within the definition of NPP and to add mental health care services to the scope of permissible services that may be provided by NPPs engaged under the NPP Recruitment Exception.  (The exception, as initially proposed by CMS, included only physician assistants, nurse practitioners, clinical nurse specialists and certified nurse midwives and restricted their services to primary care.)  The Timeshare Arrangements Exception reflects a similar acknowledgment that time-sharing may increase access to specialists in rural areas that cannot support a specialist on a full-time basis.

Both the NPP Recruitment Exception and the Timeshare Arrangements Exception include several elements that must be strictly satisfied in order for the arrangement to qualify for protection.  Health care organizations and physicians interested in learning more about the new exceptions, or whether arrangements they are considering might qualify, should feel free to contact Parker Poe.

Amanda Hayes

Amanda Hayes

Amanda Hayes counsels clients in connection with mergers and acquisitions, divestitures and other business matters, with a particular focus on the health care industry. She regularly serves as lead counsel on acquisitions and divestitures, guiding the client through deal structuring, due diligence, drafting, negotiation and closing. In addition to health care, Ms. Hayes’ mergers and acquisition experience includes a variety of industries, such as manufacturing, retail, automotive, contract research, environmental remediation, engineering and construction supply.

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