Navigating the Challenges of Narrowing Provider Networks

Published in Member Communities on April 01, 2025

By Craig Douglas, SVP of HME, Respiratory, and Wellness, VGM & Associates

Throughout the past decade or so, the provider networks for payers have become more difficult for providers to either get into or remain a part of. Narrowed provider networks for payers have become far more common than they have ever been. Your view on whether these are good or bad may depend highly on which side of the network you currently reside; whether you are part of the narrow network or on the outside looking in. Payers are looking for different ways to achieve their goals while doing less work, and there are companies offering to provide solutions that will check those boxes for payers. We’ll discuss a few common reasons for that a bit later in this article, as well as how they can be seen as either a market disruptor or a market opportunity. Before we do that, let’s set the stage a bit and take a look at how and why we got to where we are. 

It probably goes without saying that as HME providers, you undoubtedly want to serve as many patients as you can. Taking care of patients is the single biggest reason you either got into or remain in this industry. To do that, you need to be a trusted and convenient solution to patients. Providers have collectively been working for decades to make yourselves easy to work with for patients; being in a convenient location, quick to respond, easy to order from, willing to educate them regarding pros and cons of certain products, carrying several product options for each product category you offer, and maybe even offering a friendly smile can all be part of the reason patients come to you whenever they or their loved ones have DME needs. 

For most providers, though, the reality is that simply being an attractive solution for patients is not enough. You also have to build relationships with referral sources (physicians, hospitals, rehab or long-term care facilities, etc.) to earn their trust and convince them that you are where they should send patients for their DME needs. 

As if all of that isn’t enough, there’s one more thing that’s extremely important when it comes to being able to serve as many patients as possible. In addition to making your business attractive to patients and referral sources, you also have to make yourself attractive enough for payers to want you as part of their provider network. Sure, if you are out of a network with a payer, you can sell products on a cash basis or submit claims to payers on an out of network basis when that option exists. However, patients who have insurance, for the most part, want to get their products and services from a provider who is participating in their insurance company’s network to minimize their out-of-pocket expenses. To get those contracts, you can simply reach out to all the insurance companies, request a contract, and in a couple of weeks or months you’ll be fully contracted and able to serve their patients, right? If only it were that simple. 

In the world of payer contracting, one of the most common questions I receive from our VGM members, whether they ask me 20 questions or two, will almost always include some iteration of the following: “How do I get contracts with all of the payers I want or need to have contracts with?” 

Gone are the days of payers simply offering contracts to any provider who shows an interest in being part of their provider network. Insurance companies don’t need to add you to their provider network. In fact, very few payers, especially private third-party payers, have specific guidelines governing network adequacy for DME specifically. They may have certain guidelines they have to follow and network numbers they need to meet for hospitals, physicians, and other specialties, but very few have them for DMEPOS services. Unless you can show them WHY they should add your company to their network and what VALUE you bring to them or their members, the likelihood of you becoming contracted with those payers is quite small. You have to know your value prop to them and be able to convey that value to them in a way they will understand. Otherwise, payers simply view adding your company as additional work for them. In their eyes, contracting with you, credentialing your company, and answering all of your staff’s questions that they’ve already answered for the existing network providers adds unnecessary administrative burden to their plate.

More and more frequently, payers are operating with smaller, narrower provider networks. In fact, we’ve seen payers actively cancel contracts with providers, intentionally shrinking their provider networks. Their reasons for doing this can vary; it can be to lessen the administrative burden I mentioned above, to remove underperforming providers, or to remove providers who have substantially higher fee schedules than others in the network. For the purposes of this article, the reasons don’t matter as much as the fact that they can narrow and have narrowed their networks.

I’ve heard several providers say: “Well I focus primarily on Medicare and Medicaid, and I have those contracts and am fully participating with both of those programs, so I’m good.”

These kinds of statements became even more prevalent once Medicare’s competitive bidding program was effectively put on pause during the current gap period, where you don’t have to have won a competitive bid contract to provide competitively bid products in the 130 competitive bid areas (CBAs) throughout the country. However, simply contracting with Medicare Fee-For-Service (FFS) and your state Medicaid program isn’t enough, either; not if you want to be able to service the entirety of the Medicare or Medicaid population. 

On the Medicare Advantage side of things, there are thousands of plans out there, and each individual Medicare Advantage plan would likely require its own, separate contract. For Medicaid, there are just shy of 300 Managed Care Organizations (MCOs) across the country; private insurance companies a state has contracted with to manage certain portions of the Medicaid population in their respective states. Again, each of those MCOs would require its own contract. Some state Medicaid programs which have chosen the managed care route for their state have just one MCO in place, while others have more than 20. By way of example, less populous states like North Dakota may only have one MCO in place for the whole state, while California, a much more populous state, currently has 22 MCOs contracted to manage some portion of the Medicaid program. Some of those may only be in place for one specific county or region of the state, while others will have a larger footprint.

To add some additional color to the current Medicare Advantage and Medicaid landscape, according to recent data published by the Kaiser Family Foundation, it is estimated that:

• In 2024, 54% of the Medicare population was covered through a Medicare Advantage Plan (MAP). That percentage should be closer to 57% for 2025.
• There are also roughly 4,000 different or individual MAPs throughout the country.
• The average Medicare beneficiary has 40 MAP options to choose from in their area.
• There are over 280 Medicaid MCOs operating throughout the country.
• 42 of 50 states currently have MCOs operating at least a portion of their Medicaid program. 

Medicare Fee-For-Service still uses an “any willing provider” method of allowing providers to join their network, which means that as long as you meet all of their requirements and agree to all of their terms, you can join their network, and it never really closes. MAPs do not, and are not required to, offer contracts to all Medicare certified providers, nor are they required to offer a contract to any willing provider, and their networks are often much narrower than Medicare’s network as a result.

If you think that it sounds like a lot of work to attempt to contract with all or even half of these different plans, you are not wrong. It is a lot of work for providers, but the insurance plans see it as a lot of work as well, which leaves them looking for alternative or easier solutions. There are several companies that are trying to solve that problem for payers. Their offerings certainly vary from one to the next, but most of them offer some combination of:

A provider network (they have built or will build a provider network on behalf of the payer so the payer will not have to do all of that provider contracting themselves).

A platform intended to simplify the process of getting DME ordered and in the hands of the patients that need it.

While some would argue the efficacy or necessity of these types of programs, the fact remains that they do exist, they are gaining some traction with payers, and they have received enough buy in from the provider community that they will continue to exist for the foreseeable future. It is important for providers to know their worth, know their costs associated with providing equipment to patients, and ensure they are being compensated fairly for what they do. It’s also important for providers to know these companies are often looking for cost savings and added value themselves much like a payer would be, and your conversations with them may sound very similar to conversations that you have with the payers you work with directly. The expectation will be for you to do more with less; to be as efficient as possible. That is likely not a new concept for you, but it is an endless ask.

In the end, knowing the value of what you as a provider are bringing to the table, and being able to articulate that value, will be paramount moving forward. VGM has been, is, and will continue to be your partner in helping you be as efficient as possible, so that you can sustain and grow your business for years to come, and remain relevant to patients, referral sources, and payer sources.

READ THE FULL ARTICLE HERE

This article was originally featured in the VGM Playbook: Forecasting 2025. To read the full article and more like this, download your copy of the playbook today! 

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2. medicare
3. playbook
4. reimbursement
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