Innovation in Network Design

By Jillian Carlile, Senior Research Analyst, Zelis Network Analytics Insights


While we’ve been hearing about narrow networks for a few years now, there are new innovations in network design emerging – enter the micro-network.


These hyper narrow, local networks, are primarily built for the group market in a limited, often urban, geographic area. In order to control healthcare costs, these networks are designed to encourage members to utilize a limited group of providers who deliver high-value care at a lower cost relative to peers.[i] Carriers that implement micro-networks align with providers they have determined do the best job at keeping members healthy for the best price.[ii]

These micro-network models rely heavily on healthcare data and advanced analytics to identify high quality, low cost providers; often leveraging claims data to uncover provider and member insights.

These networks mainly exist in urban areas that have a sufficient number of competing hospitals or health systems and key specialist groups to permit selective contracting.[iii] While the geographic limitation means that provider access is restricted in these networks, even when looking at a limited geographic, urban area, these micro-networks contain far fewer providers than their narrow and broad counterparts.

The Zelis Insights team looked at several examples of these micro-networks and found that while narrow networks typically provide access to around 50-80% of the providers of a broad PPO network, these micro-networks were restricted to 20-50% of the providers found in PPO networks.



While narrow, tiered, or high-performance networks have been common on the Affordable Care Act’s Public Health Insurance Exchanges, provider networks in the employer market have traditionally been broader, but that is changing.

Half of U.S. employers are considering “condition-specific high-performance networks over the next three-to-five years,” according to human resources and benefits consulting firm Aon. [iv]

According to the Kaiser Family Foundation, six percent of firms offering health benefits said either they or their insurer eliminated a hospital or health system from a provider network in order to reduce the plan’s cost during the last year.i

Large employers are more likely to offer innovative network designs. However, these employers also continue to offer broader network options. These employers are more likely to adopt network designs that incorporate criteria of quality and overall value, rather than adopt narrow networks based principally on fee-for-service discounting.iii

Options for implementing plans with micro-networks:


Digital Startups

Health-tech startups are using technology with a foundation in analytics to design new network models; and they are being rewarded for it. Digital health startups disrupting traditional carriers have been successful in raising large funding rounds, fueling their growth and expansion efforts.

  • Bright Health (carrier – Individual & Family and Medicare Advantage): Bright Health works in tight partnership with a single health system within a region, which gives it a better understanding of physician cost and quality.[v]
  • Clover Health (carrier – Medicare Advantage): Clover Health’s goal is to reduce insurance costs using improved data analysis and preventative health measures.[vi]
  • Oscar (carrier – Individual & Family, Small Group, expanding to Medicare Advantage in 2020): The goal of Oscar is to use smart digital technology to make everything faster and easier for customers, and then use the data gathered to build radically new services. Pretty much everything that Oscar does internally to manage people’s health care was reinvented and rebuilt from a technology perspective. Oscar developed their own claims system, clinical management system, and has built their networks themselves. In new markets, Oscars looks to work with health systems that want to build a differentiated experience in a different network design.[vii]
  • Imagine Health (network development): Imagine Health specializes in building custom, high-performance networks of high quality providers for employers with large concentrations of employees in a single geographic area.
    • Hospitals and other care facilities are measured in 39 clinical categories.
    • Physicians are targeted based on their affiliation with Imagine Health hospitals and are selected for their achievement in complying with nationally recognized best practices.[viii]

Traditional Payers

Of course, it isn’t just startups that are pursing the micro-network option. Larger, established carriers are also developing these data-driven micro-networks. Responding to interest from employers, several national carriers are offering employers alternative network options in metropolitan areas.

  • Aetna (Sacramento, CA)
    • Aetna and Sutter Health, a 24-hospital not-for-profit system in Sacramento, Calif., have struck a deal to launch a health plan designed to lower healthcare costs for employers and their workers.
    • The 50-50 joint venture, in which Sutter and Aetna would focus on using data analytics to identify at-risk patients to treat them sooner.
  • Anthem (St. Louis, MO; Columbia, MO and Jefferson City, MO; Joplin, MO)
    • Anthem Alliance EPO is a collaboration with Health System in each city; available to groups with 51+ employees
    • Consumers can expect lower out-of-pocket costs and a robust technology platform for sharing clinical data, including an integrated electronic medical record (EMR). The network offers a best-in-class care model that features a full continuum of health management to allow doctors to better identify risk factors and gaps in care to ensure more proactive, cost-effective medical outcomes for patients.
  • Cigna (Maricopa County, AZ)
    • Cigna and Arizona Care Network
    • Available to local employers
    • “We recognize that one of the most pressing issues facing employers and individuals alike is the affordability of quality health care,” said Kim Shepard, president of Cigna’s Arizona market. “By assembling a customized network of primary care doctors, specialists and hospitals, we’re collaborating with local providers to make health care easier and deliver a personalized experience for Maricopa County customers focused on the greater use of evidence-based medicine to achieve better health outcomes.”
  • Humana
    • Humana and Oscar Health are launching a strategic partnership to offer commercial health insurance to small businesses in a nine-county Nashville, Tenn. area.
    • This unique partnership merges Humana’s deep expertise and experience in provider collaboration, coordinated care, and health and wellness with Oscar’s technology and data-driven approach to member engagement to offer a seamless, simple, and consumer-focused experience.

Direct Contracts

Employers are showing increased interest in working through third parties such as health plans to assess alternative network strategies.[ix] In 2015, only about three percent of self-insured companies nationally had some form of direct contract with providers, according to the National Business Group on Health.ix However, according to the National Business Group on Large Employers’ 2019 Health Care Strategy and Plan Design Survey, nearly half of respondents (49%) are either driving changes in the delivery system directly or through their health plan, leveraging digital solutions, or both.

  • 35% are implementing alternative payment and delivery models such as Accountable Care Organizations (ACOs) and high-performance networks (HPNs) either directly or through their health plan.ix
  • Direct contracting with health systems and providers is expanding. A recent Willis Towers Watson survey found that in 2018 6% of employers contract directly with providers, but 22% are considering it for 2019.[x]
  • Direct contracting between employers and Centers of Excellence (COEs) is also rising sharply, from 12% in 2018 to 18% next year. Cancer, cardiovascular and fertility COEs are experiencing the greatest growth.[xi] According to benefit consulting firm Willis Towers Watson in 2016, employers’ use of centers of excellence is “growing dramatically,” possibly reaching almost three quarters of large employers by 2018.iii

Large, sophisticated employers can use the size of their workforce to negotiate directly with health systems. We are beginning to see more examples of this happening:

  • Boeing: Boeing is one company that has entered into direct contracts with large health systems. The first was in 2015 when Boeing offered a plan to their 30,000 workers in Seattle.[xii] In 2016, Boeing employees in Charleston, S.C., and St. Louis were offered a similar, optional narrow-network plan. Employees who choose the option pay less for premiums . . . but workers must seek care from a limited network.[xiii]
  • Whole Foods: In 2016, Adventist Health began delivering healthcare services to Whole Foods’ employees in Southern California. The partnership, in which Whole Foods negotiated directly for services from Roseville, Calif.-based Adventist, gave the supermarket chain access to a tailor-made health plan.x
  • General Motors & Henry Ford Health System: Nearly four years ago, General Motors decided it needed to create a new contracting model that moved away from fee-for-service medicine and encouraged quality and value-based care. Now, General Motors has a direct contract with Henry Ford Health System with open enrollment beginning in October 2018 and coverage beginning January 1, 2019. Blue Cross Blue Shield of Michigan will be the contract’s third-party administrator. GM also launched three value-based payment plans with Aetna, in Austin, Texas; Atlanta, Georgia and Phoenix, Arizona. This year GM plans to launch two new carrier-sponsored value-based contracts with Blue Cross plans in Fort Wayne, Indiana, and Kansas City, Missouri.[xiv]



These micro-network models focus on providing access to high quality providers and rely heavily on healthcare data and advanced analytics in the development of these new network designs.

Using smarter technology and improved data analysis allows for more effective and efficient network design, giving a better understanding of physician cost and quality when developing these micro-networks.

The Next Generation of Network Analytics

Modeling combines the industry’s leading network analysis with an advanced platform for leveraging comprehensive provider and network evaluation criteria to support network adequacy, design, and access challenges.

Combine the data metrics you use internally with physician quality data from Zelis and other third-party sources to enable advanced decision-making for building and maintaining networks tailored for your unique markets and client requirements.



Want to learn more about how you can leverage this next generation network analytics tool, Network Modeling?

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[i] Kaiser Family Foundation. 2017 Employer Health Benefits Survey. (Sept. 19, 2017). Available at:

[ii] Corporate Synergies. Healthcare in s smaller package: carrier micro-networks. (Dec. 16, 2014) Available at:

[iii] Mark A. Hall and Paul Fronstin. Employee Benefit Research Institute. Narrow Provider Networks for Employer Plans, EBRI Issue Brief, no. 428. (Dec. 14, 2016). Available at:

[iv] Japsen, Bruce. Forbes. Employer Plans Join Obamacare in Narrowing Doctor Networks for 2018. (Aug. 27, 2017). Available at:

[v] Christina Farr. Start-up health insurer led by former UnitedHealthcare CEO is off to a good start, filings show. (Apr. 16, 2018). Available at:

[vi] Lizette Chapman. Alphabet-Backed Startup Clover Health Posts $22 Million Loss in 2017. (Mar. 1, 2018). Available at:

[vii] Nicholas Thompson. Health Care is Broken. Oscar Health Thinks Tech Can Fix It. (Aug. 14, 2018). Available at:

[viii] Available at:

[ix] Aon Hewitt. 2014 Aon Health Care Survey. (2014). Available at:

[x] Les Masterson. More employers go direct to providers, sidestepping payers. (Mar. 14, 2018). Available at:

[xi] National Business Group on Health. Large U.S. Employers Eye Changes to Health Care Delivery System as Cost to Provide Health Benefits Nears $15,000 per Employee. (Aug. 7, 2018). Available at:

[xii] Joseph Burns. With Direct Contracting Boeing Cuts Out the Middleman. (Oct 31, 2017). Available at:

[xiii] Melanie Evans. Modern Healthcare. Rising healthcare costs send Boeing to the negotiating table. Aug 8, 2015). Available at:

[xiv] Jay Greene. Modern Healthcare. In a first for Michigan, Henry Ford Health signs direct contract with GM. (Aug. 6, 2018). Available at: