Insurers restricting choice of doctors and hospitals to keep costs down - Experts say that routine care offered at cheaper, community-based hospitals is often comparable to that of pricey academic medical centers.

From The Washington Post:

As Americans have begun shopping for health plans on the insurance exchanges, they are discovering that insurers are restricting their choice of doctors and hospitals in order to keep costs low, and that many of the plans exclude top-rated hospitals.

The Obama administration made it a priority to keep down the cost of insurance on the exchanges, the online marketplaces that are central to the Affordable Care Act. But one way that insurers have been able to offer lower rates is by creating networks that are far smaller than what most Americans are accustomed to.

The decisions have provoked a backlash.

The result, some argue, is a two-tiered system of health care: Many of the people who buy health plans on the exchanges have fewer hospitals and doctors to choose from than those with coverage through their employers.

A number of the nation’s top hospitals — including the Mayo Clinic in Minnesota, Cedars-Sinai in Los Angeles, and children’s hospitals in Seattle, Houston and St. Louis — are cut out of most plans sold on the exchange.

In most cases, the decision was about the cost of care.

In Seattle, the region’s predominant insurer, Premera Blue Cross, decided not to include the children’s hospital as an in-network provider except in cases where the service sought cannot be obtained anywhere else. “Children’s non-unique services were too expensive given the goal of providing affordable coverage for consumers,” spokesman Eric Earl­ing said in an e-mail.

For example, a pediatric appendectomy at Children’s costs about $23,000, he said. At another community hospital, the cost is closer to $14,100. Melzer said his hospital often bills more than community hospitals for comparable procedures because the children it treats are often gravely ill, so even a routine tonsillectomy may be more complicated.

Experts say that routine care offered at cheaper, community-based hospitals is often comparable to that of pricey academic medical centers.

In some cases, the goal of lowering costs has prompted the opposite reaction: Providers themselves have balked at being in exchange networks because they are unhappy with the reimbursement rates or are concerned that the exchanges could be dominated by sick people who won’t be able to pay their portion of the bills.

The Cleveland Clinic said it decided to limit itself to plans on Ohio’s exchange that offered higher reimbursement rates and were backed by brand-name insurers.

Some advocates argue that these narrow networks are a fine way to cut costs. They note that the majority of people expected to buy coverage on the exchanges are uninsured, and that even a narrow network is better than nothing.

Insurers “looked at the people expected to go on the exchanges and thought: ‘These are people coming out of the ranks of the uninsured. They don’t care about the Mayo Clinic or the Cleveland Clinic. They will go to community providers,’ ” explained Robert Laszewski, a consultant to the health-care industry.

Insurers will typically cover out-of-network costs in an emergency. And most hospitals are included in at least one plan.

The Affordable Care Act requires insurers to provide enough doctors and hospitals to ensure quality care. But there is no detailed guidance from the federal government on what this means.

“It’s been mostly up to the plans to attest to it, and for now everyone’s taking their word for it,” said Karen Pollitz, a senior fellow at the Kaiser Family Foundation who focuses on health reform and insurance.

In New Hampshire, consumers who purchase insurance through the exchange have only one choice of carrier — Anthem BlueCross BlueShield— because no other insurer applied to join the exchange. The company’s network includes access to only 16 of the state’s 26 acute-care hospitals.