Patients were no more likely to switch away from lower-tiered physicians than higher-tiered physicians within their health plan, especially if the physician was considered the patient’s personal doctor, according to findings of “The Impact of Tiered Physician Networks on Patient Choices,” published in Health Services Research
In a tiered physician network, insurers sort providers into tiers based on cost and quality performance. Patients have a financial incentive—they pay lower cost-sharing—to see a provider in a higher performing tier. The insurer uses this approach in the hope that tiered networks spur quality improvement and cost control by motivating physicians to attain a higher tier ranking.
But Anna D. Sinaiko, PhD, and Meredith B. Rosenthal, PhD, found that patients who already had a relationship with a physician continued seeing the physician, even if the physician was in a low-ranking tier. The tier ranking could not overcome the loyalty a patient felt towards his personal doctor.
Using tiers is not a new phenomenon; it’s commonly used for formularies and prescription drugs. There is strong evidence that consumers respond to the cost sharing associated with tiers by switching to drugs in preferred tiers as designated by the plan. But prescription drugs are very different than physician visits, and drugs are generally viewed as interchangeable.
“Choosing a provider or a health plan is complicated for patients, and there are many factors and sources of information that patients can take into account when making these decisions,” said Sinaiko, a research scientist in the department of Health Policy and Management at the Harvard University School of Public Health. “Tiered networks can be an element of this process, so providers will want to be aware of the potential for tier-rankings to impact their patients' choices both on their own and as part of referrals.” Sinaiko reviewed administrative claims and enrollment data on 171,581 nonelderly beneficiaries enrolled in the Massachusetts Group Insurance Commission health plans that include a tiered physician network.
The researchers report that tiered networks have an effect on physician market share through “channeling of new patient visits away from the lowest tiered physicians.” This finding is consistent with economic theory and common sense: unknown physicians are more likely to be viewed as “substitutable” by patients than physicians with whom patients have a relationship.
“While patients in our study sample exhibited considerable loyalty to their physicians, the use of tiers affected the choices of patients who were selecting new physicians,” said Sinaiko. “These results are economically important for physicians, as these results correspond to a loss in market share of new patients for a doctor in the bottom tier of 12% compared to physicians with better tier-rankings.”
The authors note that the findings might not be generalizable to other populations, such as Medicare or Medicaid, or to tiered networks that impose larger copayment differences across physicians.