Enrollment In A Health Plan With A Tiered Provider Network Decreased Medical Spending By 5 Percent
Author: Anna D. Sinaiko, Mary Beth Landrum, Michael E. Chernew
Employers and health plans are increasingly using tiered provider networks in their benefit designs to steer patients to higher quality and more efficient providers in an effort to increase value in the health care system. We evaluated the impact of a tiered-network health plan on total health care spending and on inpatient, outpatient, and outpatient radiology spending for nonelderly enrollees in a commercial health plan in 2008–12. The tiered network was associated with $43.36 lower total adjusted medical spending per member per quarter ($830.07 versus $873.43), which represented about a 5 percent decrease in spending, relative to enrollees in similar plans without a tiered network. Similar levels of spending reductions were found for outpatient (4.6 percent) and outpatient radiology spending (6.5 percent). These findings suggest that health plans with tiered provider networks have the potential to reduce aggregate health care spending.