"Parents don't often know when they sign up for these products which hospitals are in and which are not. And insurance companies will often overstate" the capabilities of the hospitals that really are. A lot of these community hospitals that are in these narrow networks are woefully unprepared to provide care for children," he says.
As an example, one health plan initially would not include Seattle Children's in its exchange network, although it is now in negotiations to do so, Melzer says.
That health plan's CEO "said that services they provided in our market were at a community hospital… 30 miles from here, a small inpatient unit with virtually no pediatric subspecialists," he says. "And his answer to network adequacy was to say yes, when in fact it had none of the capabilities that would be available here."
Melzer says his hospital has not yet modeled the financial impact on his hospital, although that will come.
"The biggest risk now from narrow networks is a diversion of cases away from certain hospitals to other settings, reducing their revenue, reducing their cases available for teaching, etc.," notes Melzer.
"The associated risk is that those patients who have been sent to hospitals that may not be able to handle the problem… [may] end up back at Children's hospital and, in fact, the cost ends up higher than it would have been had they started out at the right point of care."
But for Melzer and Seattle Children's, "the broader issue is whether a state's networks should be allowed to operate without giving access for children."
Melzer says that at some children's hospitals around the country, which he declined to identify, "to avoid being tiered out of networks, [have] been forced to reduce their fees for certain types of non-unique services, like labs and radiology. We've seen this around the country, with some taking significant reductions to stay competitive, which has prompted other expense reduction efforts elsewhere in those organizations."