Exclusive Provider Organization (EPO) is an irreparably flawed concept

Anthem Blue Cross faces another suit over Obamacare doctor networks

By Chad Terhune
Los Angeles Times, July 9, 2014

Amid growing scrutiny statewide, insurance giant Anthem Blue Cross faces another consumer lawsuit over its use of narrow networks in Obamacare coverage.

A group of Anthem policyholders sued California's largest for-profit health insurer Tuesday in state court, accusing the company of misrepresenting the size of its physician networks and the insurance benefits provided.

A similar suit seeking class-action status was filed June 20 against Anthem, a unit of WellPoint Inc., The Times has reported.

In response to the two lawsuits, Anthem said "materials at the time of enrollment and in members' explanation of benefits have clearly stated that the plan was an EPO plan which may not have out of network benefits."

The company added that Blue Cross Blue Shield Assn. rules required the PPO designation on EPO member cards because coverage for emergencies is available in other states.

In May, two San Francisco residents sued Blue Shield in state court, accusing the company of misrepresenting that their policies would cover the full network.

Separately, California regulators are investigating whether Anthem and Blue Shield of California violated state law in connection with inaccurate provider lists and making it difficult for patients to obtain timely care.

To hold down premiums under the health law, Anthem and Blue Shield cut the number of doctors and hospitals available to patients in the state's new health insurance market.

These exclusive-provider organization, or EPO, health plans have been particularly troublesome for some consumers who were accustomed to having more conventional preferred-provider organization, or PPO, policies.

One of the major differences is that patients with an EPO plan typically have little or no coverage if they see an out-of-network medical provider and they are often responsible for the full charges.

"EPOs will continue to play a role," said exchange spokeswoman Anne Gonzales. "But we're going to have to do a better job educating people about how these networks work. We recognize the EPO model can be confusing."

Some supporters of the Affordable Care Act say the smaller size of the provider networks isn't the problem so much as clear information about what doctors and hospitals are available.

“The problem has been the transparency and reliability of the networks," said Micah Weinberg, a health-policy analyst at the Bay Area Council, an employer-backed group.

"That's the problem that we need to fix. If we focus on narrowness we will be focusing on the wrong thing," Weinberg added.



By Don McCanne, MD

Micah Weinberg, a health-policy analyst at the Bay Area Council, an employer-backed group, says, “The problem (with exclusive provider organizations - EPOs) has been the transparency and reliability of the networks. That's the problem that we need to fix. If we focus on narrowness we will be focusing on the wrong thing.” Really? Narrow networks are not the problem?

There is a general rule that when you are confronted with a problem you should provide a solution that corrects the problem at its origin rather than providing a solution that requires compliance by everyone else involved. In the case of EPOs it would have been far better to simply eliminate them and address cost issues by more effective policies rather than to try to get each individual to understand EPOs and comply with the restrictions on which health care providers will be covered - compliance which is sometimes impossible to achieve.

Once private insurers began using networks of contracted physicians and hospitals, compliance has been a problem for many reasons. The network lists are difficult to access. They undergo continual revisions. Frequently not all physicians providing coordinated health care services are contracted with the insurer. EPOs tend to use narrower networks to leverage more favorable contracts with those who do participate which further limits patients’ access and coverage. The individual’s selection of health plans often changes for a variety of reasons, and the networks change accordingly. This often disrupts continuity of care.

The only rationale for EPOs is for the insurer to negotiate lower prices. It is a terribly inefficient and disruptive way to do that. A far more effective way of pricing health care services appropriately would be to establish a single payer system. There would be no networks involved.

Much the same applies to PPOs. They differ from EPOs primarily in that they may cover a very modest portion of the charges outside of their networks, but they do not protect the patient from prices that are higher than the insurers’ usual contracted rates. By the rule that a problem should be corrected at its source, PPOs should be eliminated as well.

In fact, single payer advocates know that this applies to all private insurance plans. They should be eliminated and replaced with a single, publicly-financed and publicly-administered health program. You have eliminated the problem at its origin - the private insurers - and have replaced it with a program in which patient compliance is totally automatic - a single payer national health program.