Putting a twist on the controversial narrow network could encourage high-quality, low-cost healthcare. Instead of outright excluding expensive providers from their health plans via narrow networks, insurers can sort providers into tiers based on cost-efficiency and quality performance measures to curb ever-rising healthcare costs, Meredith Rosenthal, Ph.D., associate professor at the Harvard School of Public Health, said Thursday in a presentation at the AHIP Institute in Seattle.
Rosenthal (pictured) shared several ways to get waste out of the U.S. healthcare system while doing as little harm as possible, including better price transparency, reference pricing and new delivery models.
In addition to those cost-control levers, Rosenthal said payers can implement tiered networks to incentivize patients and providers to move toward lower costs and higher quality. Payers can use financial incentives like cheaper copays to motivate patients to seek care from providers in the top tier, while still enabling consumer choice. Meanwhile, the ability to move up tiers can incentivize providers to reduce costs and improve quality.
Tiered networks already are popular among exchange insurers, and they do have an effect on where patients seek care, according to Rosenthal. For example, one analysis found patients visiting a cardiologist for the first time were more likely to pick a doctor in the top tier.
But the most significant effect of tiered networks was that more people moved out of the bottom tier rather than from the middle to the top tier. In a three-tiered system, with three as the worst, a tier three provider lost 15 percent of the market share of new patients compared to tier one and two physicians, Rosenthal noted.
However, there's still a lack of transparency around the methodologies used to create tiered networks--such as inefficient details about quality and cost comparisons and the characteristics of providers in the best and worst tiers. "That lack of transparency is a threat to the sustainability of tiered networks," Rosenthal said.
Despite industry concerns, tiered networks will become an important cost-control measure, pending regulatory intervention. "[G]iven all the requirements of the minimum coverage standard, the minimum actuarial value of the plan, the network design is one of the two degrees of freedom that health insurers have to maintain affordability," she told the audience.