The Patient Protection and Affordable Care Act's nudge toward narrow health care provider networks caused a minor uproar among both providers and consumers. The providers — mostly hospitals — who got left out of the networks were, understandably upset. But with consumers, the concern was focused on whether a narrow network would offer the same quality of services one received from broader networks.

A narrow look at a narrow network's experience in Massachusetts may offer some clues about the outcomes to be expected from the shift to narrow networks. Two Massachusetts academic researchers studied a pre-PPACA shift to narrow networks in the Bay State, and reported two major findings: lots of money was saved on health care following the switch, and the quality of care seemed to be just about the same as with the broader network.

The researchers — Jonathan Gruber and Robin McKnight — did their work under auspices of the National Bureau of Economic Research. They were presented with a case study: In 2011, the state offered covered employees three premium-free months of coverage if they'd switch to a narrow network. The researchers were then able to compare the experiences of those who switched to their previous broad-network experience, and to the experiences of those employees who didn't switch. Essentially, they looked at three years of data: 2010, prior to the switch; 2011, the year of the switch; and 2012, the second year into it.

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The entire paper is drenched in detail. Gruber and McKnight looked at considerable comparative data, such as what the "new" providers in the narrow network charged vs. the "old" providers; how many trips to the ER folks made; hospital 30-day readmission rates; trips to seek primary care services; trips to specialty medical services (X-rays, scans, etc.).

Beyond the big-picture conclusions that the narrow network delivered equally good medical services at a much lower cost to the employer, the researchers offered other more detailed observations:

  1. "Enrollees are very price sensitive in their decision to enroll in limited network plans, with the state's three month "premium holiday" for limited network plans leading 10 percent of eligible employees to switch to such plans."
  2. "Those who switched spent considerably less on medical care; spending fell by almost 40 percent for the marginal complier. This reflects both reductions in quantity of services used and prices paid per service."
  3. "Spending on primary care actually rose for switchers; the reduction in spending came entirely from spending on specialists and on hospital care, including emergency rooms."
  4. "Distance traveled falls for primary care and rises for tertiary care, although there is no evidence of a decrease in the quality of hospitals used by patients."
  5. "The basic results hold even for the sickest patients, suggesting that limited network plans are saving money by directing care towards primary care and away from downstream spending."

They also added this caveat: "We find such savings only for those whose primary care physicians are included in limited network plans, however, suggesting that networks that are particularly restrictive on primary care access may fare less well than those that impose only stronger downstream restrictions."

The researchers were careful to point out that theirs was a serendipitous experiment, and that it is only one case study. They cautioned against extrapolating too broadly about cost savings and quality of care of narrow networks compared to broader ones.

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Dan Cook

Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.