Rising costs call for a network rethink
When costs rise, network design deserves a closer look — and a more intentional strategy. See why balancing access and value matters more than ever.
- Rising medical and pharmacy costs are prompting employers to consider bolder, longer-term affordability strategies
- Focused networks may help connect employees with providers evaluated for quality and cost efficiency and support more appropriate care coordination, which may lead to better health outcomes and lower costs
- Clear communication and support from carriers can reduce friction when network strategies shift and potential disruption occurs
For years, the health plan playbook was straightforward: Give employees access to the widest possible provider network, assuming that more choice would lead to greater satisfaction and fewer concerns about access.
But as health care costs climb to record highs — 9% for medical1 and 11.5%2 for pharmacy forecasted for employers in 2027 — that logic is coming under scrutiny. Many employers are quietly rethinking broad-access networks, questioning whether quantity is really a substitute for quality or value. The result is a shift toward more intentional network design that may be narrower, more curated and tied to measurable outcomes as employers seek to balance employee choice with the financial realities. In fact, nearly a third of large employers currently offer, or plan to offer, at least 1 non-traditional medical plan that supports employees choosing quality, cost-effective providers.3
The implications are clear: Incremental adjustments are no longer enough. More employers are pursuing longer-term, even disruptive, strategies to slow cost growth — and network design is emerging as a powerful strategy. A completely disruption-free solution may not be possible, but employers can take steps to manage the transition and minimize impact to their workforces.
Reevaluating the value of “everywhere” access
When evaluating network options, employers should consider whether employees can access the providers and care they need. Broad networks can be appealing because they generally preserve greater employee choice, but greater choice often comes at a higher cost to the employer. And with health care costs rising at record-setting levels, more employers are reevaluating their network strategy as a way to help control trend.4
While networks focused on value-based care may limit employee choices to a specific set of providers or sites of care, the intent is that the quality of care delivered by those providers and facilities is higher at lower costs — a potential win-win for both employees and employers. In fact, 92% of surveyed employers indicated they were implementing at least one value-based strategy by 2027, with Centers of Excellence (COEs) and Accountable Care Organizations (ACOs) among the most common.5
ACOs are groups of doctors, hospitals and other health care providers who voluntarily come together to provide coordinated care to those they serve. They hold themselves accountable for the cost and quality of care they offer — helping move the needle on cost management. At UnitedHealthcare, one ACO plan design that encourages the use of high-value providers has the potential to deliver as much as 20% in savings for employers.6
COEs are clinically superior, cost-effective health care centers designed to support complex conditions by using integrated, personally relevant health guidance, technology and services that meet strict network criteria. COEs may help lead to more accurate diagnoses, fewer readmissions and complications, reduced initial procedure costs and a simplified billing and payment experience.7 Most importantly, COEs may offer higher survival rates and better outcomes.7
Additionally, networks that require employees to select a PCP to coordinate care and provide referrals to network specialists can help lead to more appropriate and cost-effective utilization of the health system. For instance, employees who regularly engage with a PCP may have better compliance with screenings and improved results that can bring about lower costs long-term due to prevention of more serious health issues. Employees may also find that navigating the health system is simpler when a PCP can assist them and their covered dependents in accessing appropriate care at the right time and place.
“When members have a primary care physician, they tend to have a lower cost of care,” says Dr. Gerald Hautman, chief medical officer for National Accounts within UnitedHealthcare Employer & Individual. “And our research demonstrates that those members have a better experience because they’re able to better understand a complex health care system a little more easily.”
Regardless of the network configuration, it’s critical for an employer to consider what tools employees have access to that can help them navigate the health system and ultimately make more informed care choices along the way.
Reducing friction when network strategy shifts
Carriers are at the forefront of designing networks that are more affordable for employers and employees while providing access to quality care. UnitedHealthcare completes more than 2,000 provider negotiations annually as it strives to secure the most competitive and fair rates on behalf of the clients and members it serves, while maintaining one of the nation’s largest proprietary networks for over 10 years — today consisting of more than 1.8M physicians and health care professionals and over 5,600 hospitals.10
The word "disruption" can create anxiety among both employers and employees. Yet maintaining status quo may prove even more disruptive over time if rising health care costs force employers to reduce benefits, increase employee contributions or cut investment elsewhere in the business.
Employers can help manage any potential network disruption that may occur due to a change they are making by educating employees about the reasons behind the change. Employees need to understand the affordability challenges facing health care today and how they impact an employer’s ability to provide adequate care and coverage to employees while managing costs. When it comes to network strategy shifts, employers can frame them as efforts to preserve long-term benefit sustainability while maintaining employee access to quality care, rather than focusing on restrictions.
“Employers have to think differently about how they communicate to employees throughout the year. Explaining why provider A is a better cost and care choice than provider B and backing that with data can help employees better understand network changes and reduce friction,” says Jim Winkler, chief strategy officer for Business Group on Health.
Reducing friction can also be achieved by offering support during the transition and beyond. Personalized care navigation, provider comparison and search tools, advocacy services and robust educational campaigns can help employees adjust to changes and ensure they have the right resources to navigate any potential disruption. Employees are far more likely to embrace change when they understand how a recommended provider or care setting could improve outcomes and reduce costs.
Health care affordability challenges are unlikely to ease in the near future. In this environment, employers need to move beyond traditional approaches and examine the level of access their networks provide and how their network strategy supports smarter utilization, better health outcomes and lower costs.
Carriers are also not sitting idle. UnitedHealthcare is continuously evaluating its network options and exploring alternative approaches it can bring to clients in order to meet the needs of today and combat the cost trends of tomorrow.
Network strategy is no longer simply an access decision. It is becoming one of the most important affordability decisions an employer can make.
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