ResourcesSmall Business Health Care Hub by JPMorganChase
How to choose a provider network
A provider network consists of doctors and hospitals that offer services at agreed-upon rates. Establishing a network helps control costs while ensuring employees have access to quality care.
Explore network types and strategies to help you create the network that best suits your business needs.
“Small businesses face unique barriers and challenges when it comes to navigating the health insurance process. This kind of information is so valuable in providing reliable guidance and support that SMBs need to confidently make informed decisions.”
Rodney Fong
President & CEO, San Francisco Chamber of Commerce
Choosing a provider network
First, consider the different types of networks available. Each of these types of networks contracts with a subset of providers in the service area. The types of networks listed are those traditionally available to businesses via a fully insured plan or through an administrator of a self-funded plan.
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| Choosing a provider network | Health Maintenance Organization (HMO) | Exclusive Provider Organization (EPO) | Point-of-Service Plans (POS) | Preferred Provider Organization (PPO) |
|---|---|---|---|---|
| Overview | Lowest premiums and consistent care | Lower premiums and a larger in-network group | Flexibility to see out-of-network providers with lower premiums than PPOs | Broad network and ability to see any doctor without a referral |
| Premium cost | Low | Medium | Medium | High |
| Network size | Small | Medium | Medium | Large |
| Coverage | In-network only | In-network only | In- and out-of-network | In- and out-of-network |
| PCP required | Yes | No | Yes | No |
| Specialist referral required | Yes | No | Yes | No |
Network strategies
Network strategies can help you save costs and improve health outcomes for your employees. Of course, strategies that save costs may require other tradeoffs. In exchange for more affordable and higher-quality care you may have to limit provider options and employee choice.
Direct Contracting
- Contract directly with hospitals, doctors, or medical groups to provide health care services, instead of going through insurance.
- Negotiate prices up front.
- Makes prices more predictable and often less expensive.
- Example: Negotiate a flat monthly fee per employee for primary care or bundle costs for maternity procedures into one set price called a bundled payment.
Advantages
- Control over health care costs.
- Quick access to care, reducing wait times.
- Fewer emergency visits.
Drawbacks
- Takes effort to set up and keep contracts.
- May not be ideal for smaller teams.
Narrow Network Plan
- Includes a smaller number of hospitals, doctors, and specialists.
- Offers better negotiated rates.
- Built around high-quality health care providers and hospitals.
- Saves costs while also ensuring employees have access to the best care.
- Good if your employees regularly use the same health care system.
Advantages
- Lower premiums and spending.
- Providers offer lower rates.
- Focus on high-quality care.
Drawbacks
- Limits choice of providers.
- May not suit teams wanting more options.
Tiered Network Model
- Providers are grouped into levels or "tiers" based on a criteria often built around cost and quality of care.
- Encourage employees to choose the best providers by charging less for providers in the top tier.
- Employees can still choose a lower tier provider, but will pay more.
Advantages
- Encourages choice of lower-cost providers.
- Flexibility to choose others at higher costs.
Drawbacks
- Can be confusing to understand options.
- May face challenges if preferred providers don't meet needs.
ACOs and CoEs
- Negotiate to include provider groups in your network that have formed Accountable Care Organizations (ACOs) or Centers of Excellence (CoEs).
- Deliver cost-effective care with financial incentives linked to performance standards.
- CoEs offer exceptional care for specialized services like cancer and musculoskeletal care.
- Encourage employees to utilize these programs for quality, affordable care.
Advantages
- Access to quality, affordable care.
- Rewards for good performance, improving outcomes.
Drawbacks
- Takes effort to set up.
- May require travel to access CoEs.
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