About WISHRM

By Melina Kambitsi, Ph.D., senior vice president, business development and strategic marketing

Deciding where the employees and dependents who use your health plan can go for in-network health care can make a difference to the plan’s cost, employee satisfaction and even health care outcomes.

So how do you decide which network of hospitals, doctors and health services will best meet your needs?

What’s Your Goal?
Setting a goal and then evaluating your options is an essential step. Most organizations that consider a network change are trying to solve one of these two problems:

1. You are fully-insured now and want to learn whether moving to a self-funded health plan will save money.
2. You are already self-funded and want to learn whether changing or reshaping your network options will save you money.

In either scenario, you need to figure out whether a network change will genuinely lower your costs.

Figure Out How Networks Differ
There can be big differences between networks that impact savings. These differences may include:

• Geographic coverage. This will include not only the territory covered, but the type of providers available in specific communities. A network might have doctors but not hospitals, for example.
   
• In-network providers. You should learn what types of providers are available in specific communities. The geographic area covered by the network could be large, for example, but might only contain providers from a single health system. Or it might have doctors but not hospitals in specific communities. Make sure the network is big enough to allow you to truly take advantage of opportunities to save. For example, your network should include providers who offer bundled pricing on elective surgeries or tests. When prices for a surgery or test are bundled, multiple elements of the service are covered by a single price that is known in advance.
   
• Ability to customize a specific employer’s network with tiers, narrow networks or other preferred options. Some networks will let you indicate that a specific network should get preference, with employees guided to the preferred network by lower out-of-pocket costs. Some employers want to discourage use of a specific high-cost provider or health system by making sure they are out-of-network, which triggers higher out-of-pocket costs for individuals.
   
• Contracting philosophy. For example, a network may emphasize inflation controls, paying for performance or aiming for high-value care. It may allow you to purchase some care using a bundle, where a single price that is known in advance covers multiple elements of care. It may make it possible to compare its rates to Medicare rates. Or, the network may focus solely on discounts.
   
• Steerage to high-value care. Networks should make it possible to identify high-value providers based on objective measures of quality, cost savings or both. This allows employers to create steerage programs that offer incentives to employees who pick high-value providers.

Comparing and contrasting multiple elements of each network will help you find the best choice based on your health plan goals. 

Your Next Step: Compare and Contrast Networks
Check next month’s SHRM eBlast for part 2 of “Picking the Right Provider Network,” which covers how “disruption reports” can help you compare and contrast provider networks.