Why Some Insurance Plans Limit Specialized Treatments

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Wharton's Dan Polsky and Laura Yasaitis explain why many patients are excluded from complex care despite having health insurance.

The American Cancer Society estimates that there will be almost 1.7 million new cancer cases in the United States this year, with just over 600,000 deaths from the disease. But securing specialized treatment could be tough for many patients who want to go to a facility designated by the National Cancer Institute, if they have a what is known as a “narrow-network” insurance plan. Many of those plans exclude doctors at those centers as well as doctors offering complex care for other diseases elsewhere. This news comes from research by the Perelman School of Medicine at the University of Pennsylvania. The study, recently published in the Journal of Clinical Oncology, was authored by Daniel Polsky, executive director of the Leonard Davis Institute of Health Economics and professor at the Perelman School, Laura Yasaitis, a post-doctoral researcher in health policy at the Perelman School, and Justin E. Bekelman, an oncologist and professor at the Hospital of the University of Pennsylvania. Polsky and Yasaitis recently appeared on Knowledge@Wharton’s SiriusXM show to discuss their findings.

An edited transcript of the conversation appears below.

Knowledge@Wharton: How many people fall into this group?

Daniel Polsky: The group here is mostly related to the insurance that’s sold in the individual market, which is like the Obamacare markets, which represents about 7% of the entire insured market where these narrow-network plans are more prevalent. But this is a trend, and we see more and more insurance companies offering narrow-network options.

Knowledge@Wharton: Is cost the reason why the insurance companies are saying no?

Polsky: I think it’s a complex issue because insurance companies and providers — whether they’re hospitals, cancer doctors or any doctor — negotiate for the price or the reimbursement that an insurance company is going to pay the doctor. That happens for all doctors. If you are a very unique specialist, you have a lot of negotiating power to get a really high rate. Sometimes the insurance company has to say, “That’s just too high, and I’m going to walk away.” I don’t think the intention is to leave out these high-end cancer specialists. It’s a sad fact that in private markets there’s negotiation that happens, and sometimes you have to walk away.

Knowledge@Wharton: Give us the numbers. You were looking at a data from different National Cancer Institute centers from about three years ago, correct?

“It’s a sad fact that in private markets there’s negotiation that happens, and sometimes you have to walk away.” –Daniel Polsky

Laura Yasaitis: Right. Most of the data we analyzed came from 2014, but we have no reason to believe that this is not still a continuing trend, especially as some of the more broader-network insurers have dropped out of the market. It’s something we should definitely still be concerned about.

When an insurance company creates an insurance plan, they contract with a group of physicians, and that’s their network. We identified 248 of these networks across 51 different markets. These markets are all ones that had at least one of these National Cancer Institute-designated hospitals. Just as a quick, broad-strokes view of it, we found that about a third of the networks included fewer than 25% of their market’s oncologists. Of every four oncologists, they included one or fewer of them. Of those networks, the included doctors are half as likely to be NCI-affiliated as the excluded doctors. If you look at the broader two-thirds of networks, the ones that include more than a quarter of their market’s oncologists, the included and excluded doctors are equally likely to be NCI-affiliated. So, it’s this very clear trend that’s happening, and it’s pretty prevalent. A third of all the networks that we identified in these markets are part of this group that’s narrow and more likely to exclude NCI-affiliated doctors.

Knowledge@Wharton: The impact for cancer patients in dealing with this is on their choices of who they can see. I would think that in a good many of these markets, there are probably many oncologists within that framework, but it just cuts down the options that patients have, correct?

Yasaitis: Right. There are probably quite a few more oncologists in general in these markets because they have these big centers. There are still quite a few covered oncologists that someone with one of these narrow-networks could see, but they are less likely to be affiliated with an NCI center. For many cancers, it’s fewer options, but it might not be a matter of life and death. But there are patients for which it could be, people with really rare cancers or very complex diseases in addition to their cancer who would need this complex care. Those are the patients we would worry about the most.

Polsky: I just want to point out that the concern we have is largely one of transparency. If I asked you to tell me who the doctors are in your network, the most you’d know is, “Oh, my doctor is in my network.” But cancer is something that you don’t really anticipate is going to happen to you. When it happens, it’s often a big surprise, and that’s the point at which you want to know if a cancer doctor that you’d really want to see is in your network. So, the challenge here is how can you inform a consumer, which is someone buying an insurance policy, about the potential doctors that they could see if something bad happened to them? There’s just no way they’d know.

The sad part here is that for the people who are getting a new diagnosis of cancer, they find themselves having purchased a plan with a limited set of options, one they would not have chosen had they had the opportunity to look with this full knowledge.

Knowledge@Wharton: Most people don’t think about cancer unless there is a family history, so that complicates the issues of understanding and the research that people need to do when choosing health insurance.

Polsky: Yes, as our president said, “Health care is complex. Who knew?” We’ve done some field work, asking experts who work with consumers to pick their insurance plans, “What do they care about? What do they think about when they’re picking their insurance plan?” One of the last things on their list is a full network. Is this a narrow or broad network of doctors? They don’t really understand the concept. But they do really care about, “Is my doctor in the network?” Often, that’s how they’re picking these plans. We’re trying to work to develop decision tools to help consumers understand these things that they might not normally be thinking about and the kind of complex cognition that goes into finding which insurance plan might be best.

“The concern we have is largely one of transparency.” –Daniel Polsky

Knowledge@Wharton: In part, this is about changing the mindset of the consumer, which is a very hard thing to do.

Polsky: I don’t think we can expect the consumers to fully grasp it. I think one of the things that we’re seeing in the marketplace is that the extent consumers know that a plan is a narrow-network plan — that there’s just a limited set of choices that they might have if they do get sick — they don’t like them. No one likes narrow-network plans. They like the fact that they’re cheaper, but they don’t like narrow-network plans. I think there’s a bit of a pushback. What are insurance plans going to look like five years from now in terms of how they use networks? I think things are going to move in two different directions. One is insurance companies are going to have to adapt to the fact that consumers just don’t like these plans, for good reason, and they’re going to have to find a new version. At the same time, we’re just going to have to find better ways to explain and communicate these plans to customers.

Yasaitis: Shopping for insurance is incredibly complicated for a lot of people. One of the easiest things to grasp is price, so one of the things that we’d been discussing was to create a more easily understandable indicator of what is included in a plan. It would be great if plans are required to include some sort of quick, easily understandable information about what is or is not included so consumers can make those trade-offs, they can assess that choice with greater knowledge.

Knowledge@Wharton: Knowing what is not included may be the bigger question right now. A lot of people say, “I know I’m going to have A, B, and C in a policy.” But they won’t go beyond that to say, “What am I missing here?”

Yasaitis: In an ideal world, perhaps you had a column or something that would say, “Is an NCI cancer center included, or access to one? Or to a comprehensive cardiovascular center?” And there was a check mark or no check mark. We can dream.

Polsky: I think what that brings up is that we talk about narrow-network plans, plans that have limited choice, but not all narrow-network plans are the same. Some could have a narrow-network plan that is all about the NCI cancer center. You could have a narrow-network plan that is just like, “I want to have a University of Pennsylvania plan,” but it’s still a narrow network. That’s probably something that the insurance plan would want to advertise because it’s a high-brand plan. Those do exist, like a Kaiser plan. Kaiser Permanente is a narrow network and has a very high-end brand in terms of the quality of care that it delivers. So, it could be a narrow network, but they could still really push their brand.

Yasaitis: I think that in an ideal world, that would be what narrow networks do. They steer patients towards the highest-value providers, the places that can provide this high-quality care at the reasonable cost. It just appears from the data we’ve seen, that’s not what’s happening. There are a lot of insurers motivated solely by the prices that they’re negotiating and not by the quality factors. As Dan said, there are some narrow-network plans where it seems they are negotiating solely with the high-quality providers, and that would be a great thing to see happen.

Knowledge@Wharton: You’re talking about one organization, the National Cancer Institute, and the impact that they are seeing from this. What does this mean from a business standpoint for the doctors who are affiliated with NCI?

“No one likes narrow-network plans. They like the fact that they’re cheaper.”  –Daniel Polsky

Polsky: That’s a good question. I think the NCI centers would like to be in every plan, and they’d also like to get reimbursed a high amount. So, some of the coverage that’s happened from our article seems to have a tone of shame, like, “How could these insurance companies exclude these high-end providers?” It’s shameful. There’s an ethics of how one should be delivering health insurance, and it should be to have a perfect choice for everybody. When you bring up the business aspect of it, I think we just have to acknowledge that health care is delivered in this quasi-free market. This is a business. The business implications are that this is a negotiation, and it’s a negotiated price. Everyone’s going to use every leverage at their disposal to get the best payment they possibly can. Cancer happens to be an area where the providers have an incredible amount of leverage.

One of the shameful things about cancer care is also that it costs an extreme amount, and a lot of that is because of the prices that providers can charge. So, there’s really shame on two ends. It’s not just the shame of insurance companies leaving out these providers, but the providers are trying to get paid the highest dollar they can. I think there has to be, from a business perspective, a push and pull, and we can’t just say one group is right and the other is wrong.

Knowledge@Wharton: What is the difference between cancer care and complex care?

Yasaitis: There are a lot of cancers for which the treatment is relatively straightforward — early-stage breast cancer and such. A lot of patients are very successfully treated by community providers, with great outcomes. But say a cancer has metastasized so it’s showing up in multiple locations in someone’s body. They haven’t caught it early enough, and the patient needs more than just the first-line treatment — or they have other illnesses. You can’t use certain treatments if you have certain other complicating illnesses. Or they have very rare tumors, things that most doctors would never have seen in their life, so they would have to receive care at a more specialized place. That’s what we mean by complex care.

Polsky: A lot of the advances in cancer are now around what we’re calling personalized medicine. You can look at the individual’s genetics to find out which treatments may or may not work. Those types of treatments are being offered in places like these NCI cancer centers, and not all across the country. It’s still kind of experimental, and we’re trying to learn as we move forward about new ways to treat in a more precise way. One thing that could start to develop is that, based on your genetic sequence, you might have a type of cancer that is so personalized that it could only be effectively treated in these places that treat the complex cases.

There are some regulations out there that say even narrow-network plans have to have what’s called network adequacy. You have to have at least some doctors nearby that could treat your condition. But some of the conditions might be so specialized that it could only be treated in an NCI cancer center. So, the technology is hitting up against our regulations to make these insurance plans fair.

Knowledge@Wharton: Could we get to a point of more uniformity in the coverage being offered?

Polsky: That would be a terrific solution. I think it has some implications for how one thinks about the fact that our health insurance and provider negotiations happen in a free market. If we insisted that there is some uniformity and that all providers need to be on insurance plans, prices would continue to go up. The only other option is to somewhat fix prices, which gets us into more government control, and there’s a big debate going on in our nation about whether we want to have more or less government control.

“I think we just have to acknowledge that health care is delivered in this quasi-free market. This is a business.”  –Daniel Polsky

I think that I’m not going to get into that debate here, but it brings up these larger questions about how we want to organize our health care system. We have to take the idea that we have a free market, and a lot of how our health care system is organized allows for this development of very complex, high-end care, thinking about curing cancer by getting super-specialists to really dig in, and they should be rewarded for their efforts. But then they could be excluded, and not everyone gets care. It’s just kind of how the free market works.

Knowledge@Wharton: This data was collected from 2014. A lot of others who contracted cancer since then are in this same situation, correct?

Yasaitis: Yes, it’s definitely still an issue. The other colleague on this paper is a radiation oncologist, and he’s heard personally of several stories of patients who have a narrow-network plan and needed to seek care at Penn, and they had to come up with all sorts of exemptions for them to be able to pursue that care. It is, unfortunately, a problem out there very much still.

Knowledge@Wharton: Is there a path to a solution?

Polsky: Some of it is tied to these larger questions about how we organize our health care system. I think that’s how we decide to organize it. It could be more on a free-market way, where we have to accept this as one of the consequences. Or are we going to go to more control, where we can really address some of these issues of fairness?

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