Skinny Networks are Being Offered to Reduce Costs

As the 2015 benefits enrollment season approaches and employers gear up for their second year of coverage mandates, as outlined in the Patient Protection and Affordable Care Act, it seems some employers still offer non-compliant health plans.

A survey released in August by the National Business Group on Health revealed 16 percent of large employers planned to offer a health package that doesn’t meet minimum PPACA requirements – along with a health package that does meet requirements – in 2015.

These “skinny” plans, which typically cover preventive care but not hospitalization or other acute or urgent facilities and resources, are one way for employers trying to save money in this era of rising health care costs; however, the bottom-line impact on employees could cause problems for employers who follow this tactic.

“These plans are missing a major part of medical plan coverage,” says John Barlament, a partner in the Employee Benefits Group at Quarles, who also notes “skinny” isn’t a legal term and that “non-minimum-value plan” is the terminology attorneys use. “If you get really sick, you’d have no coverage.”

Another technique both payers and employers are using to help cut costs are “skinny” or “narrow” networks, sometimes referred to as EPOs or exclusive provider organizations. As the terminology suggests, these are networks that comprise a relatively small number of care providers, most of which have been selected because of high-quality performance; the theory is that restricting care to only high-quality providers will result in overall cost savings for payers and employers.

These “skinny” plans, which typically cover preventive care but not hospitalization or other acute or urgent facilities and resources, are one way for employers trying to save money in this era of rising health care costs; however, the bottom-line impact on employees could cause problems for employers who follow this tactic.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary