Health Insurers Fight Back: Small Network Products that Exclude Large Hospital Groups


Harvard Pilgrim Health Care has recently announced a new product that is promising to cut health insurance premiums by 10%. The new product, “Focus Network MA” still awaiting approval from the Division of Insurance, offers a health insurance plan that uses a small cross-section of the larger Harvard Pilgrim Health Care network. This smaller network is made up of 50 hospitals and 16,500 doctors across the state, all of which exclude practitioners in Partners HealthCare System and other highly priced providers of health care. This approach is said to encompass a sect of underutilized hospital and provider groups that are more moderately priced such as Tufts Medical Center, Boston Medical Center, and Beth Israel Deaconess Medical Center and regional providers such as Lahey Clinic in Burlington and Baystate Medical Center in Springfield.

In order to be included in this subset of medical providers, Harvard Pilgrim is requiring that the cost of medical services be cut by a certain percentage. Further, part of the long-term strategy is to put pressure on the higher priced providers, such as those in Partners HealthCare, to reduce their fees in order to compete for market share.

This concept has been designed as a solution to consumers, especially employer groups, to slow the pace of inflation. Members may inevitably complain about the lack of choice associated with these plans and the likelihood that a change in physician will be necessary at some point. Harvard Pilgrim Health Care feels that the Focus Network MA product might have a more “select” network of providers, but it is still vast and varied enough to satisfy members across the health spectrum.

Developing a health insurance product that uses a smaller provider of networks is not a new concept. In fact, last fall Steward Health Care System, LLC, a hospital coalition, partnered with Tufts Health Plans and unveiled a similar, though narrower, small network HMO product for small employer groups called “Steward Community Choice” which they claim will cut health insurance premiums by up to 30%. This is an effort, Steward announced, that is aimed at stimulating the small business economy to create jobs in the state of Massachusetts. With the “Steward Community Choice” product, the ultimate goal is to promise volume to local providers by keeping available healthcare community-based. The Steward Community Choice Network is made up of 10 acute-care hospitals and 1,200 physicians. In order to be eligible for the product, an employer group must be located within one of the communities serviced by a participating area hospital. The 10 hospitals are:

  • Carney Hospital, Dorchester
  • Good Samaritan Medical Center, Brockton
  • Holy Family Hospital, Methuen
  • Merrimack Valley Hospital, Haverhill
  • Morton Hospital, Taunton
  • Nashoba Valley Medical Center, Ayer
  • Norwood Hospital, Norwood
  • Quincy Medical Center, Quincy
  • St. Anne’s Hospital, Fall River
  • St. Elizabeth’s Medical Center, Brighton

Further, the product provides that medically necessary services that are not available at a Steward facility will be provided by either Massachusetts General Hospital (MGH) or Brigham and Women’s Hospital (BWH) with prior approval. Additionally, the Partners Health Care pediatric network, Affiliated Pediatric Providers (APP), is included for pediatric services.

Health insurance products like this might mean that health insurers and independent networks of providers have grown weary of trying to negotiate the price of healthcare with powerful hospital conglomerates that often won’t play ball. Instead, they are going at it from a different angle by steering their membership to lower-priced, underutilized, and community health care providers that are clamoring to compete with the teaching hospitals. If it causes a consumer shift away from the big hospitals, they may start paying attention.

In a way, efforts toward health insurance cost-savings come full circle. Chris Nadeau, Practice Leader of Employee Benefits at William Gallagher Associates makes the observation that the small network products that are recently emerging are, “a refreshing return to the earliest versions of managed care where a network was truly select, providing cost-savings, quality and overall value for consumers.”

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