The Effect of Narrow Network Plans on Out-of-Pocket Cost

Estimate the effects of selecting a narrow provider network on outpatient utilization and outpatient out-of-pocket (OOP) expenditures among individuals who chose to enroll in a narrow network plan in 2014.

Study Design: Claims data from a large insurer in the southeastern United States.

Methods: The sample consisted of individuals continuously enrolled for 2 years (2013-2014) who had Affordable Care Act-compliant plans in 2014. We compared unadjusted results and then used difference-in-differences (DID) models to determine the effect of narrow networks on the number of outpatient visits and outpatient OOP expenditures.

Results: Our DID model found no significant change in visits or outpatient OOP expenditures for individuals who selected a narrow network plan in 2014. However, unadjusted outpatient OOP expenditures and premiums were lower for individuals who selected narrow network plans.

Conclusions: Our findings suggest that individuals who selected narrow network plans in 2014 were able to keep costs low without changing their overall number of outpatient visits. Narrow network plans can reduce costs to beneficiaries without affecting the volume of outpatient visits, if appropriate incentives to visit participating providers are followed.

Paper available online here.