Medicare Advantage Hospital Networks: How Much Do They Vary?

This study documents, for the first time, considerable diversity in the breadth of hospital networks used by Medicare Advantage plans– an issue of potential importance to people on Medicare who say having access to specific hospitals and physicians is a high priority when choosing a plan.  Medicare Advantage plans are generally selective, with their networks including only a subset of the hospitals in the area.  The average size and composition of hospital networks varies within and across counties.  Plans with broader hospital networks are more likely to include Academic Health Centers and NCI-approved cancer centers than plans with narrow networks.  In 9 out of the 20 counties in the study, broad network plans were not offered and beneficiaries in these counties can only select a Medicare Advantage plan with a narrow or medium-sized network.

In general, hospital network size was not correlated with factors such as star quality ratings, plan premiums (for HMOs), per capita Medicare spending, number of hospitals in the county, or specific firms. None of the firms (with the exception of Kaiser Permanente) were more (or less) likely than others to have broad or narrow network plans across counties.  The size of a plan’s network may instead be explained more by the ability of individual plans to negotiate favorable rates with hospitals in their service area, as well as other market conditions.

While not the focus of this study, we encountered a number of issues in compiling this information that could pose challenges to consumers trying to determine the breadth of the hospital networks of Medicare Advantage plans offered in their area.  The Medicare Plan Finder does not include any information on provider networks.  Plans are required to make network information available to consumers upon request, but CMS does not require plans to release this information in a uniform format, putting the burden on consumers to sort through directories and search tools to determine if a particular provider is in a given plan’s network.  In the course of our research, it became clear that the directories used in this study were often riddled with errors, including the incorrect names or addresses for the hospitals, and other blatant mistakes such as the inclusion of hospitals that no longer existed.

It is not entirely clear how the networks of Medicare Advantage and ACA marketplace plans compare.  McKinsey & Company released a report in 2015 that examined the networks of plans offered in exchanges, using a similar but not identical taxonomy for classifying hospital network size.  Although the studies are not directly comparable because they used different methods (e.g., included different counties), this analysis suggests that a much smaller share of Medicare Advantage plans than exchange plans have broad hospital networks (23% of Medicare Advantage plans compared to 55% of ACA marketplace plans).¹  Further research is needed to compare the size and scope of plan networks in Medicare, the ACA marketplace, Medicaid, and employer sponsored insurance.

It is important to note that Medicare Advantage enrollees have the option of switching to traditional Medicare during the annual open enrollment period, and that traditional Medicare includes the vast majority of providers and arguably the broadest possible provider network.  Yet, switching between Medicare Advantage and traditional Medicare can be complicated by considerations such as the availability of Medigap plans and other supplemental coverage, and the need for a separate Part D drug plan.²  For these and other reasons, switching rates between Medicare Advantage and traditional Medicare are typically low.³

Policymakers could consider a number of options to improve the accuracy of information in the provider directories and the extent to which plans comply with network adequacy requirements.  CMS could, for example, review the provider directories more frequently for errors and compliance with network adequacy requirements.  As noted by the GAO,⁴ CMS currently reviews less than 1 percent of all provider directories and does not routinely review the networks of plans that are renewing their current contract.  More frequent reviews by CMS could encourage plans to keep their directories up-to-date and in compliance with CMS network requirements.

Additionally, CMS has stated that Medicare Advantage plans have less prescriptive network adequacy requirements than the ACA Qualified Health Plans (QHPs) and Medicaid Managed Care Organizations (MCOs).  While these three programs serve different purposes and different populations,⁵ CMS may want to review areas in which Medicare Advantage requirements are more lenient, and potentially beef up the requirements for Medicare Advantage plans and harmonize the requirements across the three programs, as CMS has suggested.⁶

CMS could also take steps to make it easier for consumers to obtain and compare information about Medicare Advantage provider networks.  Medicare.gov could post on its Medicare Plan Finder each plan’s provider network to make it easier for beneficiaries to access provider networks when they are comparing other features of Medicare Advantage plans.  CMS could require all plans to publish network information in a uniform format and develop a consumer-friendly online tool with up-to-date information on each Medicare Advantage plan’s provider network to facilitate plan comparisons.  CMS could also categorize the size of plans’ networks to allow beneficiaries and their caregivers to use this information when selecting a plan.  While the size of the network would likely not be the sole factor used to select a plan, it could be an important, relevant consideration when deciding between two otherwise similar plans.

Creating networks of providers is one of many strategies available to insurers to help control costs and manage the delivery of care, but narrow networks may also limit consumers’ access to certain providers and increase the cost for care obtained out-of-network.  For Medicare Advantage enrollees who place a high value on having access to a particular set of providers, or a broad range of providers, the results of this study underscore why it is important for beneficiaries to review provider networks before choosing among Medicare Advantage plans, despite the difficulties of doing so. The study also underscores the need for accurate, readily available information to make it easier for consumers, insurance counselors and others to compare provider networks across plans, and for ongoing oversight of network requirements to meet the expected and unexpected health care needs of beneficiaries enrolled in Medicare Advantage plans.