The Negative Impacts of Network Leakage for Health Plans and ACOs

Network leakage is a significant and growing issue for health plans and Accountable Care Organizations (ACOs). It occurs when patients seek care outside of the health plan’s or ACO’s designated network of preferred providers, resulting in higher costs, reduced care coordination, and compromised health outcomes. Despite the growing emphasis on cost control and value-based care, network leakage remains a costly problem that undermines the goals of both health plans and ACOs.

Increased Costs

One of the most immediate and tangible impacts of network leakage is the financial strain it places on health plans and ACOs. When patients receive care outside of the network, health plans often face higher reimbursement rates, and ACOs miss out on achieving shared savings goals. This can lead to inflated healthcare spending that could otherwise be minimized through in-network providers, who have negotiated lower rates and adhere to value-based care models designed to control costs and improve care.

Disruption in Care Coordination

Health plans and ACOs thrive on a coordinated care model, which ensures that patients receive appropriate, timely care while minimizing unnecessary treatments and duplicative services. When patients seek care outside the network, it disrupts this coordination. Providers outside the network may not have access to patients’ medical histories, increasing the risk of redundant or inappropriate treatments. Moreover, the lack of communication between out-of-network providers and in-network care teams makes it harder to track patient progress and manage chronic conditions effectively.

Compromised Quality of Care

Health plans and ACOs carefully select their network providers based on quality metrics, ensuring that patients receive the highest standard of care. When patients go outside the network, they may end up with providers who do not meet these standards, potentially receiving lower-quality care. This can lead to negative health outcomes, which ultimately reflect poorly on the ACO or health plan, especially in value-based care arrangements where outcomes directly affect reimbursement levels.

Difficulty in Achieving Value-Based Care Goals

Value-based care depends on cost-effective treatments, quality improvement, and patient satisfaction, all of which are jeopardized by network leakage. Out-of-network providers often do not follow the same care protocols, making it difficult for ACOs to meet their targets for patient outcomes and cost management. This also puts at risk the financial incentives tied to value-based care arrangements, where savings are shared between the ACO and its provider network based on meeting quality and cost benchmarks.

Strategies to Reduce Network Leakage

To mitigate the impacts of network leakage, health plans and ACOs can implement several strategies:

1. Strengthening Patient Education: Patients need clear information on the benefits of staying in-network, including cost savings and better care coordination. Providing easy-to-understand materials, transparent pricing, and detailed provider directories can help guide patients to make informed choices.
2. Enhanced Provider Alignment: Strengthening relationships with in-network providers through robust partnerships and incentive programs can help ensure that they recommend in-network referrals and maintain communication with patients.
3. Technology and Care Navigation Tools: Offering tools like mobile apps and patient portals that facilitate in-network care navigation can make it easier for patients to find and schedule appointments with preferred providers.
4. Referral Identification: HealthCorum’s proprietary referral identification technology leverages data exclusively from insurance claims to track patient flow, providing health plans and ACOs with the ability to effectively monitor and manage out-of-network referrals.

In conclusion, network leakage poses a significant threat to the financial sustainability and care quality objectives of health plans and ACOs. By addressing this challenge through improved care coordination, patient education, and the adoption of technology, organizations can ensure better health outcomes while controlling costs and achieving their value-based care goals.