Tiered Provider Networks: Steps to Cost Containment?
June 24, 2011
Tiered networks are not a new benefit design, but high and rising premiums for employer-sponsored health insurance as well as evidence from several markets of wide variations in prices among providers may be contributing to renewed interest in tiered network products. In tiered provider networks, health insurers classify hospitals or physicians into tiers (typically two or three) using cost (per episode, service, or stay) or some combination of cost and quality metrics. Consumers in those plans then pay higher cost sharing to use the higher cost or less efficient providers in the plan’s network. While not requiring the use of providers in the lower cost or more efficient tier, this type of plan design attempts to induce consumers to incorporate cost or efficiency differences into their choices of providers and encourage providers to become more efficient. But such plans have raised concerns for some providers and others about the accuracy of the information used to assign providers to tiers, particularly the methods used to assess efficiency.
In this session speakers discussed experience with tiered provider networks for privately insured populations. Anna Sinaiko, PhD, presented the evidence about consumer response to tiering, including findings from her work looking at consumer experience and behavior in tiered provider networks available to public employees in Massachusetts. Speakers from two insurers, Andrea Walsh, JD, executive vice president & chief marketing officer with HealthPartners in Minnesota and Amy Oldenburg, head of national provider networks with Aetna, discussed their tiered network products for large employee groups, including tiering methods, health care market conditions that influence the adoption and viability of tiered networks, cost sharing differences, consumer and provider response, and effect on premiums. Rakel Meir, JD, associate general counsel with Tufts Health Plan discussed legal issues related to tiering, provider contracting, and the recently expanded legal and regulatory framework for tiering in Massachusetts.
Anna D. Sinaiko, PhD, Post-Doctoral Research Fellow, Department of Health Policy & Management
Harvard School of Public Health; Andrea M. Walsh, JD, Executive Vice President & Chief Marketing Officer, HealthPartners; Amy Oldenburg, Head of National Provider Networks, Aetna; Rakel M. Meir, JD, Associate General Counsel, Legal Department, Tufts Health Plan