Tiered-Provider Networks: Patients Face Cost-Choice Trade-Offs

Publication Date: November 2003

Publisher: Center for Studying Health System Change

Author(s): Glen P. Mays; Gary Claxton; Bradley C. Strunk

Research Area: Health

Type: Brief

Abstract:

The decline of tightly managed care and the resurgence of providers’ leverage in the health care marketplace have prompted health plans and employers to consider tiered provider networks as a strategy for containing costs while maintaining provider choice. New findings from the Center for Studying Health System Change’s (HSC) 2002-03 site visits to 12 nationally representative communities show that health plans are experimenting with tiered-network designs, but most have experienced significant operational difficulties and resistance from hospitals and physicians. While employers are interested in the concept, uptake has been modest so far. Whatever the long-term prognosis for the strategy, it appears unlikely that tiered networks will have much near-term influence on market dynamics or costs.