A closed network is a payer network which currently has participating providers similar to you and, therefore, is not adding more similar providers, including you, to their network.
A narrow network means it has just a few par providers of a certain type and are not looking to expand further.
Network Types
Open or “Any Willing Provider” Narrow Network Closed Network
Why the distinction?
- It often is more likely that a provider with the right value
proposition can get into a narrow network. - Providers with unique and innovative offerings may be able to
break into a closed network. - Sometimes the two scenarios are effectively the same.
Payer Contracts’ Types
⇒ Commercial
PPO, HMO
Fee for service, capitated, value based
⇒ Government
Medicare (Medicare Advantage)
Medicaid
Method of Contracting
- Direct with Commercial or Gov’t Payer
- ACOs (Medical Practices, Ancillary Providers and ASCs)
- ASOs / Third Party Administrators
- Self Insured Employer Groups
- GPOs
Which contract(s) are best?
- Am I price sensitive?
- Is my product useful to Medicare and Medicaid patients?
- Who are the large commercial payers in the area?
- Who are the large employer groups and which payers do
they use to cover their employees?
Medicare Access and CHIP Reauthorization Act
- Payer Contracts mostly continue to be Fee for Service Based
with an expanding value based component - “Doc Fix” bill, repealed the Sustainable Growth Rate (SGR)
and replaced it with a new payment modality for Medicare
payments. - 2015 to 2019, automatic .5 percent increases on Medicare
physician fee schedule. - 2019 to 2025, reimbursement remains flat unless
participating through MIPS (Merit Based Incentive Pay
System) or APM (Alternative Payment Model).
What products and services do payers want?
Based on an informal survey of large payers across the USA
our findings are:
- New technology that is a game changer
- Products or services that save cost
- Non Par Providers with high utilisation
- Service benefits that demonstrate better compliance and
clinical outcomes - Products which enable patients to move out of the hospital while awaiting surgeries
- Products that provide alternative treatment methods vs.surgeries and procedures
- Key referrals – providers and employers
Implications to Providers
- You will likely need a unique value proposition to get into a
closed or narrow network - Often price competitiveness coupled with value is key; can revisit
after initial contract term
Strategies for Closed and Narrow Networks
- First: Focus on a combination of pricing and value
- Third Party Payers and Silent PPOs
- “Any Willing Provider”
- LOAs
Tactics to get into narrow and closed networks
- First, there are no silver bullets
- Complete a SWOT Analysis with a focus on competitive differentiators
⇒Product related
⇒ Service related
⇒Treatment related
⇒Or all of the above
3. Often price competitiveness coupled with value is key, can revisit
after initial contracts term