By Sabrina Corlette, Jason Levitis*, and Lindsey Murtagh*
Policymakers and consumer advocates have long decried the phenomenon of “ghost network” health plans, where published provider directories list doctors who no longer practice, take new patients, or participate in the plan, leaving patients without real access to care. The frustration and anger generated by ghost network plans, however, is likely to pale in comparison to what consumers would experience with “non-network plans,” the latest health care reform trial balloon to be floated by the Trump administration.
The Trump administration’s proposed 2027 “Notice of Benefit & Payment Parameters” (NBPP), an annual rule governing ACA Marketplaces and insurance standards, would encourage Marketplace participation by plans that do not maintain a network of contracted providers who agree to accept the plan’s payment for services as payment in full. Instead, non-network plans determine what they will pay for services; if a provider wishes to be paid more than that amount, the patient is financially responsible for paying the balance.
As proposed, non-network plans would violate minimum requirements of the Affordable Care Act (ACA), harm consumers, and significantly destabilize the ACA Marketplaces, leaving consumers with fewer and more expensive coverage options.
Several provisions of the ACA make it clear that Congress intended for Marketplace plans to maintain a provider network. To be certified, all Marketplace plans must ensure a “sufficient choice of providers,” “provide information to enrollees and prospective enrollees on the availability of in-network and out-of-network providers,” and “include within their provider networks essential community providers (ECPs) that serve predominantly low income, medically underserved individuals” (emphasis added). This certification requirement clearly contemplates that enrollees’ access to ECPs must be through a provider network.
Further, the ACA contains several marketwide consumer protection standards whose protections are illusory if plans don’t maintain a provider network. These include the prohibition on insurers imposing cost-sharing for recommended preventive services and the requirement to cover the essential health benefits (EHB) package, which is not satisfied unless the plan limits the annual amount enrollees must pay in out-of-pocket costs. As proposed, non-network plans would expose enrollees to unlimited out-of-pocket costs for all services, including preventive care, making them incapable of meeting these minimum statutory requirements.
The proposed regulatory framework for non-network plans is unworkable
In its proposal, the Centers for Medicare & Medicaid Services (CMS) argues that it has developed an “effective, administrable approach” to measure whether non-network plans can ensure a “sufficient choice of providers.” But this is neither true nor possible.
Under CMS’s proposal, non-network plans would be allowed to participate in the Marketplaces simply by stating that they have identified an “assessed percentage” of available providers within the plan’s service area that accept the plan’s payment amount as payment in full. Notably, the proposed regulatory framework does not specify any minimum assessed percentage that would meet the ACA’s requirement that Marketplace plans provide a “sufficient choice” of providers, nor does CMS contemplate that plans would have to report the actual percentage of providers who agree to accept their payment as payment in full. CMS would leave it entirely up to the company selling the non-network plan to determine how many providers would constitute a “sufficient choice” needed to meet the ACA’s certification requirements.
The proposal also contemplates the barest minimum of regulator oversight, simply asking companies to attest, through “yes or no” statements, that they have processes and methodologies in place to:
- Conduct “continuous” outreach to available providers to determine whether they would accept the plan’s benefit amount as payment in full;
- Make payment amounts available to the public, including plan enrollees, potential enrollees, and providers, in an easily accessible and understandable format;
- Determine benefit amounts;
- Provide consumer-facing information about potential balance billing scenarios and expected out of pocket costs;
- Offer an exceptions process for enrollees who cannot find providers willing to accept the payment amount as payment in full; and
- Provide a customer service or online provider directory assistance resource to help enrollees and potential enrollees to find providers who will accept the plan’s payment amount as payment in full.
CMS estimates that certifying the company’s compliance with the above standards would demand 30 seconds to one minute for each question, for a total of 6 minutes per company. Such a minimalistic certification process cannot possibly give the Marketplaces, or state regulators, sufficient information to adequately assess whether these plans can meet the minimum statutory criteria for Marketplace certification.
These shortcomings are not unique to CMS’s specific non-network proposal. Without a network of contracted providers, a plan simply cannot guarantee that any provider, including ECPs, will accept its payment as payment in full. Even if the plan can identify providers who provide such an assurance at a given point in time, they have no way to ensure, even through “continuous” outreach, that those providers will continue to honor it. Without a contract, a provider could agree to accept a plan’s payment as payment in full on a Monday morning and decide by Monday afternoon they need a higher payment, leaving the patient with a large and impossible-to-plan-for balance bill.
The lack of a network also makes it impossible either for any state or federal insurance official to ensure that enrollees ever have a sufficient choice of providers. Even if a state wanted to hold non-network plans to a stricter compliance standard by taking steps to verify that a “sufficient” number of providers accept the non-network plan’s rates, there is no good data source for a state regulator to consult to verify plans’ statements. Information on most providers’ billed charges is not publicly available. State regulators would be unable to verify that providers would accept the non-network plan’s payment in full.
CMS argues in its proposal that non-network plan enrollees will be able to “negotiate prices among available providers to find a provider who will accept the plan’s benefit amount as payment in full.” But the agency leaves unaddressed such critical questions as how non-network plans would protect enrollees from balance billing for health care services that are not reasonably shoppable, such as non-elective procedures, non-emergent services that must be performed rapidly, or for services for which there is limited provider choice. Nor do they address how the companies selling non-network plans would protect patients who are very sick or otherwise unable to engage in one-on-one price negotiations with providers.
The proposed rule also doesn’t consider the reality that care encounters often include multiple providers within a facility. For care provided in a facility such as a hospital, the patient cannot be expected to negotiate the price for their care not only with the hospital, but with each physician or billing health professional they encounter, for each health care service they receive. As CMS itself has learned through its experience implementing the No Surprises Act’s requirement that providers disclose a good faith estimate of expected charges to uninsured individuals, it is extremely difficult to coordinate cost estimates for a patient receiving services from multiple providers. CMS’s regulations require that the good faith estimate includes expected charges for the primary service (facility and professional services), as well as expected charges for all items or services that are likely to be provided in conjunction with that service, including if provided by other providers. Recognizing the challenges that providers face in producing a cost estimate that includes all provider and facility fees an individual would face during a care encounter, CMS has issued indefinite enforcement relief to providers regarding the requirement to include cost estimates that include charges from other providers or the facility. But here, CMS apparently believes it is reasonable to expect a patient to collect this information – and negotiate after receiving the information – when providers working within the same system haven’t been able to do so. Enrollees’ ability to assess and negotiate a price for health care services would be further complicated by the fact that providers and facilities are not currently required to provide insured individuals with a good faith estimate. Thus, there’s no guarantee that an enrollee in a non-network plan would receive an estimate from one provider, much less the facility and all the providers likely to be involved in their care.
Ironically, CMS proposes to certify non-network plans even as it has delayed for over four years implementation of the statutory mandate to provide plan enrollees by January 1, 2022 with an Advance Explanation of Benefits (AEOB). The AEOB requirements would require providers and facilities to send a good faith estimate to the insurer, and the insurer to send an estimate of out-of-pocket costs to the enrollee. If ever implemented, an AEOB could provide patients with a useful tool to assess their potential out-of-pocket financial liability prior to receiving a health care service. For enrollees in non-network plans, this could also be a tool to help them ascertain whether the facility and all providers expected to furnish services would accept the non-network plan’s payment as payment in full.
The proposed rule raises numerous additional, unanswered questions. Without provider contracts that “lock in” a negotiated price for the contract term, would enrollees be expected to negotiate prices each time they need a new or recurring service from the same provider? What if they are incapacitated or unconscious? What if they receive additional, unforeseen or unexpected care in the course of receiving scheduled services? Would enrollees have to negotiate prices for every item or service they receive? And, how likely is it that the same providers who accept the plan’s payment as payment in full for one service, also accept it for the other services a patient would use in the same episode of care? Further, some non-network plans in the market today (i.e., Sidecar) provide enrollees with plan-issued credit cards. Would the Marketplace establish any limits on the interest rate on health care charges the plan doesn’t pay or is slow to pay?
The proposal for non-network plans fails to take into account the realities of health care delivery in the U.S.
CMS’ proposal says nothing about the likely burden on providers, should enrollment in non-network plans grow. Most providers are staffed and equipped to negotiate prices with insurance companies, but not to engage in one-on-one price negotiations with individual patients. They also have less incentive to negotiate with patients, who cannot offer the promise of volume that comes with entering an insurer’s network. The likely result is not that providers will hire new staff to conduct those negotiations. Rather, most providers will either refuse to deliver non-emergency services to patients enrolled in a non-network plan, or present them with a take-it-or-leave-it price that would result in many forgoing needed care.
This proposal further fails to recognize the unequal bargaining position between providers and patients. Some providers may be willing to negotiate with patients only over services for which the demand is elastic and refuse to negotiate when they know the service is necessary and the patient has no other option. In a country where the vast majority of provider markets are considered highly concentrated, this latter scenario could be a common occurrence.
Non-network plans also raise quality and population health concerns, to the extent enrollees must pick and choose the services they use, based on whether and to what extent they can successfully negotiate a price in advance. This will result in many patients failing to adhere to prescribed treatment plans, resulting in poorer health outcomes. Further, as noted above, due to non-network plans’ inability to guarantee access to $0 preventive services, enrollees will be disincentivized from seeking preventive care and engaging in health promotion activities.
How would consumers know whether they are signing up for a non-network plan?
CMS’ proposal provides no insights into how non-network plans would be marketed to consumers. Does CMS contemplate that these plans would be offered side-by-side with network plans on Marketplace websites? How would non-network plans be differentiated from network plans, such that consumers fully understand what they are purchasing? If a consumer enrolled in a non-network plan and wished to switch to a network plan due to the impossible-to-anticipate financial liability for health care services, would they be given a special enrollment opportunity to switch to a network plan? CMS doesn’t answer these questions.
Offering non-network plans on the ACA Marketplaces would likely destabilize the market. Without the need for a network of contracted providers who agree to accept its rates, a non-network plan could have a much lower cost structure than network-based plans, allowing them to undercut network plans’ premiums on the ACA Marketplaces. This would result in a lower premium for the silver benchmark plan in the markets where such plans are offered, which would, in turn, greatly reduce premium tax credit generosity for all subsidized Marketplace enrollees. As a result, network plans could be less affordable for such individuals, adding instability to the individual market.
A recent actuarial analysis further raises the prospect that non-network plans could be at greater risk of insolvency than traditional Marketplace players. If non-network plans are priced aggressively low, as past experience suggests they might be, they could generate significant liabilities under the ACA’s risk adjustment program. The offering of such plans would place new burdens on state regulators to monitor these plans to ensure they have sufficient reserves and financial capacity to pay their risk adjustment charges.
Non-network plans will attract primarily young and healthy enrollees, leaving plans with a network with a sicker mix of enrollees
Although non-network plans would likely need to pay into the ACA’s risk adjustment program as a result of their healthier mix of enrollees, the program is an imperfect one and cannot fully compensate network plans for the inevitable adverse selection. This would harm consumers with pre-existing conditions, who could not safely gamble on a non-network plan and would be left paying more for a conventional plan.
More broadly, non-network plans would create market upheaval and instability at a time when Marketplace insurers are already grappling with the consequences of dramatic policy changes, such as the expiration of the enhanced premium tax credits and new limits on eligibility and enrollment as a result of H.R. 1, the 2025 budget reconciliation bill. Marketplace insurers are quickly approaching state deadlines for determining whether and where they will participate, and how to set their prices. Injecting an entirely new product into the Marketplaces with unknown implications for enrollment and morbidity could result in significant premium increases by network-based plans, and decisions by some carriers to pull back on their participation or even exit the market. Such actions would hurt not just Marketplace enrollees, but also unsubsidized individuals and individuals with Individual Coverage Health Reimbursement Arrangements (ICHRAs) shopping for coverage.
There is legitimate consumer frustration with traditional insurance companies who fail to maintain accurate, up-to-date provider directories and create hassles for patients seeking necessary services. But instead of proposing policies that remove those hassles, or hold insurers accountable for insufficient networks, the Trump administration is promoting plans that will leave consumers with an even greater number of hoops to jump through, increases their out-of-pocket costs, places their health at risk, and destabilizes the coverage safety net that the ACA Marketplaces have become.
*Jason Levitis, J.D. is a Senior Fellow at the Urban Institute and Lindsey Murtagh is a Distinguished Senior Fellow at Brown University.
