What is a narrow network in health insurance?

When shopping around for health insurance plans, it's important to weigh the balance between cost and access to healthcare providers. Many individual health plans can have narrow networks, which can leave you wondering how it affects your care options. Narrow network plans can be a cost-effective solution for many, but they come with specific trade-offs.

In this article, we'll go over the benefits of narrow network care and the possible downsides you should consider.

In this blog post, you'll learn:

• What a narrow network of providers means for you.
• How it can lower monthly premiums by limiting provider choices.
• The impact it may have on accessing preferred doctors or specialists.

What is narrow network care?

According to KFF¹, there's no universally accepted definition of a narrow network plan. Some researchers define these plans as those covering less than 25% of the physicians in a given coverage area.

Here's an overview of Health Insurance Marketplace enrollment in 2023 from KFF:

• 23% of enrollees were in narrow network plans.
• 70% of enrollees were in plans that covered no more than half of the doctors in their area.
• 4% of enrollees had plans that covered at least 75% of local physicians.
• 1% were in plans that included 85% or more of their area's doctors.

How does a narrow network health plan work?

Narrow network health insurance plans often include health maintenance organizations (HMOs) and exclusive provider organizations (EPOs). They limit coverage to a specific group of primary care physicians, specialists, and hospitals. Keep in mind that a narrower network still consists of high-quality providers. You just have fewer to choose from.

Health insurers negotiate lower rates with participating providers for network services and pass the savings on to you. A narrower network is more affordable than a larger network, but if you receive care outside your limited network, you're responsible for any out-of-pocket expenses.

What are the advantages of narrow network plans?

People might choose a narrow physician network for several reasons. The big reason is cost savings. Narrow network plans often have more affordable premiums and lower out-of-pocket costs. This makes them appealing to individuals who want affordable coverage without sacrificing quality of care.

Why is this the case? Since network types like HMOs and EPOs limit providers to those that are in-network, they can better negotiate rates. This decreases overall healthcare costs for the insurer. Plus, with an HMO, the insurance company requires a referral from a doctor for you to see a specialist. This reduces potentially unnecessary costs. These plans then pass on savings with lower premiums than wider network plans like preferred provider organizations (PPOs).

Plus, a narrow network plan provides a straightforward approach to managing your healthcare needs. With fewer network providers to choose from, it's easier to navigate your care options.

If you're someone who prioritizes value, you may not mind the limited choices, especially if you live in an area where the narrower network includes all of your preferred providers.

What are the disadvantages of narrow network plans?

There are some drawbacks to narrow network coverage. Suppose you suffer from chronic conditions and require specialty care. In that case, you'll want to do your research and make sure your preferred doctor or specialist is part of a health plan's narrow network.

Additionally, if you receive care from an out-of-network provider, whether intentionally or unintentionally, you'll have to cover the bill yourself. Before signing up for a narrow network plan, ask yourself if you can handle the additional cost of an out-of-network expense. KFF² found that half of Americans wouldn't be able to pay an unexpected medical bill of $500 in full without going into debt.

Rural areas may also be disproportionately affected by narrow networks, as these places may only have one or two health plans available on the Marketplace.

The federal government has also taken note³ of the rise in narrow networks. In a proposed rule by the U.S. Department of Health and Human Services, the government commented that the growing number of narrow networks “presents a number of potential consumer protection concerns, including whether a narrow network has sufficient capacity to serve plan enrollees, or whether providers may be too geographically dispersed to be reasonably accessible.”

Conclusion

A narrow network plan differs from a broad network plan in size, not quality. You pay less in monthly premiums in exchange for a limited choice of providers. While it's generally a more cost-effective health plan option, you'll be responsible for the full expense of medical services if you go outside your network for care.

1. KFF Private Insurance
2. KFF Health Costs
3. Federal Register