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Narrow Provider Networks Set to Spread

Christopher Cheney, for HealthLeaders Media, July 15, 2014

As the healthcare industry focuses on cutting costs, narrow provider networks designed to deliver value are taking hold as a widespread business practice.

With their prominent cost-containing role in the new public exchanges, narrow provider networks have been the object of persistent healthcare industry hand-wringing this year.

But narrow networks are not only a well-established industry practice, thrifty consumers are also open to them, according to Joseph Berardo Jr., president and CEO of New York, NY-based MagnaCare, a health plan that features a provider network with 70,000 locations in the New York and New Jersey markets.

"There's been slowly, a narrowing of networks, quietly over time," he says, noting that narrow networks are appealing to small group plans. "There's a paradigm shift here. Small groups are price-sensitive."

Narrow networks are becoming an important factor in the large group market as well, Berardo says, with health plans offering narrow networks as an effective mechanism for controlling costs when companies operate in locations spread over a wide geographic area.

In May, the National Business Group on Health conducted a poll of 46 large employers and found that 17 percent already have a narrow network in place. The poll results, which were made available to NBGH members, also found that an additional 24 percent of large employers were considering narrow network health plans for 2015 and 2016, and another 20 percent were mulling narrow networks for 2017.

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