Willingness to Pay for Continuity of Care and Network Breadth Lucas - - PowerPoint PPT Presentation

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Narrow Provider Networks and Willingness to Pay for Continuity of Care and Network Breadth

Lucas Higuera, MA – University of Minnesota, Medica Research Institute Caroline Carlin, PhD – Medica Research Institute Bryan Dowd, PhD – University of Minnesota

Funding source: This work is supported by the Agency for Healthcare Research and Quality under grant R01HS022881. The content is solely the responsibility of the authors and does not necessarily represent the official views of AHRQ.

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Background

 Narrow networks: Health plans are restricting providers available to beneficiaries in order to curb costs or improve quality.  Very common in the ACA exchanges: 41% of plans

• ffered have ‘small’ or ‘extra small’ provider

networks (Polsky, et al. 2016)

• Increasing presence in the commercial market: 6-8% of

employers now offer narrow network plans (KFF, 2016)

 Narrow networks have somehow succeeded reducing health expenditures (Atwood and LoSasso, 2016; Gruber and McKnight, 2016; Carlin et al., in process)

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Background

 Narrow networks may become too narrow:

• 15% of narrow network plans in the federal exchange

lacked access to physicians in at least one specialty (Dorner et al., 2016).

• Network adequacy regulations to guarantee a minimum

network size.

 Restricting providers may disrupt continuity of care

• A narrow network may not cover usual source of care.
• "If you like your doctor, you can keep your doctor”.

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Background

10 20 30 40 50 60 70 Plan price Benefits included Which doctors are included Reputation of doctors Number of doctors Percent

Importance of Factors when choosing a health plan

Source: The Harris Poll (2013).

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Objective

 Measure consumer valuation of:

• Network breadth (‘number of doctors’)
• Continuity of care (‘keep my doctor’)

 Analyze how these valuations change by consumers’ health status.

• Relevant if narrow network plans seek favorable selection.

 Use information from a single-carrier private exchange, where consumers with employer-supplied insurance choose health plans.

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Setting

 Private health insurance exchange offered to employers by a health plan in the upper Midwest between 2011 and 2015  Employers “set up the menu” of plans, then employees choose…  First, among 7-20 combinations of cost sharing:

• Deductible: $300 to $5,250
• Coinsurance after deductible: 0% or 20%
• Office visit copayments: $0 or $30
• HSA availability.

 Second, among 5 networks:

• Broad PPO network
• 4 narrow networks, built around IDS.

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Data

 Enrollment information: cost sharing and network  Claims data to assess health status (Johns Hopkins’ ACG System)  Continuity of care: is your usual source of care covered by the network?

• Usual source of care: use previous year claims to identify

provider with the plurality of Evaluation and Management visits (Higuera and Carlin, 2017).

• Identified separately for primary and specialty care.

 Network breadth:

• Broad PPO network.
• 4 narrow networks.

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Methods

 Random Utility Model Z: Age, sex, plan characteristics. P: Premium net of employer contributions. A: Usual sources of care covered (primary and specialty care). H: Health status (low, medium, high). Individual alternative-specific constant η~N(η,Ω).

• Taste heterogeneity
• Relax IIA assumption

𝑉𝑗𝑘𝑢 = 𝑎𝑗𝑢

′ 𝛾𝑘 − 𝛿𝑄𝑗𝑘𝑢 + 𝜀𝐵𝑗𝑘𝑢 + 𝜄𝐼𝑘𝐼𝑗𝑘𝑢 + 𝜀𝐼𝐵𝑗𝑘𝑢 ∗ 𝐼𝑗𝑘𝑢 + 𝜃𝑗𝑘 + 𝜁𝑗𝑘𝑢

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Methods

 Measure of consumer valuation: Willingness to Pay

• Marginal rate of substitution: how much of good A is a

consumer is willing to give up to consume good B and have same utility level.

 For continuity of care:  For network breadth:

• Measure of relative preference for narrow networks

relative to broad network.

• Estimate with and without continuity of care

W(A|H) = 𝜀 + 𝜀𝐼 𝛿 ෩ W(𝑘|H) = 1 𝑁 ෍

𝑗

෦ 𝜃𝑗𝑘 + 𝜄𝐼𝑘 𝛿

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Results – Network breadth

*** *** *** *** *** *** *** *** *** ***

• 400
• 350
• 300
• 250
• 200
• 150
• 100
• 50

Network 1 Network 2 Network 3 Network 4

US$/month

Single plans - Without continuity of care in the choice equation

Low Medium High

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Results – Network breadth

*** *** *** ***

• 250
• 200
• 150
• 100
• 50

50 100

Network 1 Network 2 Network 3 Network 4

US$/month

Single plans - With continuity of care in the choice equation

Low Medium High

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Results – Continuity of care

*** *** *** *** *** 20 40 60 80 100 120 140

Primary Care Specialist

US$/month

Low Medium High

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Sensitivity analysis

 Inertia in plan choice (Handel, 2013; Strombom et al., 2012): choice today depends on yesterday’s health plan choice

• Switching costs (opt in vs opt out).
• Cognitive burden.
• Continuity of care.

 Unobserved inertia attenuates estimated taste parameters.  Test our model using only first observed choice network.

• Sacrifice taste heterogeneity and robustness to IIA.

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Sensitivity analysis – Continuity of Care

*** *** *** *** ***

• 20

20 40 60 80 100 120 140

Primary Care Specialist

US$/month

Panel data

Low Medium High

*** *** *** *** ***

• 20

20 40 60 80 100 120 140

Primary Care Specialist

US$/month

First choice only

Low Medium High

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Conclusion and Implications

 Consumers are willing to pay between $84-$275 and up to $115 for continuity of primary and specialty care, respectively (‘keep my doctor’)  Once continuity of care is accounted for, network breadth is only relevant for the smallest network (‘number of doctors’).

• Healthier consumers seem to value future provider choice.

 Network adequacy regulation is concerned with ‘number of doctors’. Our results show that continuity

• f care is more important to consumers.

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Thank you!

higue003@umn.edu

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Supplemental

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0% 2% 4% 6% 8% 10% 12%

Plan Enrollment Distribution

For Members Offered Multiple Networks

PPO ACO

Narrow