Payers take note: Tiered-network plans prove popular on one state's exchange

Health insurance, pen and stethoscope

Photo credit: Getty/Minerva Studio

Plans with tiered provider networks--a tactic yet to take hold in national markets--could offer a solution for insurers struggling to design the right products for the Affordable Care Act marketplaces.

These insurance plans have become the most popular health plan among New Jersey’s ACA marketplace enrollees, according to the Ashbury Park Press. Tiered networks offer two choices to consumers, where tier 1 networks are attached with the consumer incentive of lower out-of-pocket costs.

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The plans have been cost-effective solution for Horizon Blue Cross Blue Shield New Jersey: The payer requested a mere 5 percent premium increase for its tiered exchange plans 2017, a far cry from the national trend of spiking premiums, according to the article. But just 15.5 percent of ACA health plans nationally are considered tiered networks, according to Robert Wood Johnson Foundation’s Katherine Hempstead.

Though the plans are not a common insurance product, “an awful lot are in New Jersey,” Hempstead added. More consumers choose Omnia, Horizon’s tiered product, than any other type of plan from the insurer, the article says.

A previous analysis indicates that many marketplace plans are EPOs or HMOs, but at least one factor makes products like Horizon’s Omnia stand out from other limited-benefit plans: Consumers don’t need physician referrals to see specialists.

There is a drawback to the tiered health plans, however. They buck the trend of transitioning toward value-based payment models by reimbursing providers on a fee-for-service basis. Hospitals have lowered their agreed reimbursement rates in order to take care of more patients, however, the article notes.

Horizon’s tiered plans were the subject of legal backlash from hospitals that see tiered plans as a threat to their bottom lines, FierceHealthPayer has reported.  Horizon CEO Bob Marino countered that Omnia products emerged in response to consumers getting “crushed” by medical costs.

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