Tiered Provider Networks-Addressing the Spiraling Health Care Costs with Consumer Choice & Financial

Venue: Hyatt Regency Crystal City

Location: Arlington, Virginia, United States

Event Date/Time: Dec 02, 2004 End Date/Time: Dec 03, 2004
Registration Date: Nov 22, 2004
Early Registration Date: Oct 08, 2004
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Americans spent $450 billion for hospital care in 2001, according to the Employee Benefits Research Institute. Couple this with increasing employee resistance to limited HMO networks. The result is similar to prescription drugs where employers request tiered incentives for consumers to lower health care cost options.

6.8 million + subscribers are enrolled in tiered network health insurance products in the U.S (Health Affairs). These networks can save employers and insurers money if enrollees choose, for example, lower cost hospitals under provider networks. Enrollees benefit from lower co-insurance from choosing low cost hospitals. Employers hold that tiered provider networks will include all hospital and health systems in their plan and sensitize consumers decisions. Hospital copayments can range from $100/day - $400/day depending on the tier or non-preferred list. Employers argue tiering could result in providers renegotiating contracts if they are concerned about being in the highest cost tier.

However, hospitals warn that tiering that uses cost alone ignores differences in academic hospitals vs community hospitals who have other responsibilities such as research and special populations. Some providers say that higher tiered hospitals will not renegotiate and argue they have higher quality. Other critics say that quality information is a necessary requirement so tiering does not amount to cost shifting to consumers. In response, plans have developed programs based on quality outcomes as well as cost-effectiveness.

In addition to hospital tiered insurance plans, the National Business Coalition on Health sees tiered physician networks as a real payoff. 20% of patients who account for 80% of costs seek out high-performing doctors. If more of the population could be steered to seek out the higher performing physicians it would improve quality of care and save dollars.