Confusion About Tiered Health Plans

Dr. Sarah Bechta tries to make sense of her tiered insurance options

The next time you sign up for health insurance, the cheapest option may well be a “tiered” plan.

This is insurance that rates doctors and hospitals based on the cost and quality of their care and then charges you based on your provider’s rating. Would this kind of coverage make sense for you and your family?

Choices

Sarah Bechta, a wife, mother and physician from Northborough sat down at her kitchen table with a folder full of brochures, pages from insurance websites and a hand drawn spreadsheet, to try to answer that question.

She started by comparing her premium for traditional insurance and a tiered plan. Tiered insurance would cut her premium in half and “would save about $1400 a year. It made me stop and think,” said Bechta.

But would she actually save that $1400 or would it be eaten up in higher co-pays and deductibles?

“That was the thing that was really hard to predict, I could not figure it out,” said Bechta, even though as a doctor, Bechta believes that she’s “as capable, or more capable than everybody else who’s looking at this information.”

“I could not figure it out.”

Bechta ran a few test cases. What would she pay, for example, if her daughter had appendicitis?

Bechta would take her daughter to the hospital her pediatrician recommends, “which is typically to MetroWest Medical Center in Framingham, but also Children’s (Hospital), or possibly to UMass (Memorial Medical Center). Each of those hospitals were different tiers,” says Bechta.

Which means that the cost of using these hospitals would be different for Bechta, possibly very different. Most insurers rate Children’s as a tier 3 or high-cost hospital, and would charge Bechta between $2,000 and $2500 for a hospital stay. At MetroWest, which is a tier 1 hospital, the charge would $500 or less. So one visit to Children’s, or any other tier 3 hospital, would wipe out Bechta’s premium savings.

But let’s say there are no trips to the hospital for the Bechtas this year. What would they pay for routine office visits?

“These are the different physicians I use, the primary care providers, eye doctors,” Bechta pulls out a simple chart she made with the names of all her family doctors down left side of the page and the names of the insurance companies across the top. In the boxes, where the names of the doctors and insurers intersect, Bechta has a 1,2 or 3 for the cost and quality tier assigned to each doctor.

“All of our primary care doctors were in different tiers for different health plans,” Bechta says, pointing to the numbers. “There’s no way my pediatrician can be tier one for one insurer and tier 3 for another, it just makes no sense.”

But it is happening.

Cost Effective vs. Quality Care

Here’s a glimpse into why.

Health insurers assign doctors and hospitals to tiers using a complicated formula of quality and cost measures. In short, the tiers are different because insurers don’t use all the same quality measures, because they give the measures different weight and because insurers pay physicians and hospitals different rates. The state will soon require that health insurers use the same set of quality criteria. But hospital and physician ratings will still vary because insurers will still weigh the criteria differently and because the prices insurers pay for office visits, tests and procedures are not the same.

But if there’s no agreement on which hospitals and doctors deserve the best or worst ratings, then how, asks Bechta, can the insurers claim that these plans are driving patients to the lowest cost, best quality providers?

“It doesn’t lead me to conclude that I can make an educated choice about a hospital and say I’m going to save the system money by going here,” says Bechta, “because the next person who has a different insurance plan is not saving money by going there and they’re getting the exact same test or procedure that I’m going to get.”

Bechta says there’s a lot of confusion among her patients about what the tiers mean. One woman thought Bechta, who is rated a one, two and three, with three different health plans, was charging a higher co-pay because Bechta is a better doctor.

“Whereas really what the insurance company was trying to say is, you’re paying more for this doctor because she’s less cost efficient,” says Bechta, shaking her head.

Confusion

The state’s top three insurers say they are concerned about confusion as members get used to their new type of insurance. “One of the things we’ve been trying to do is to make sure members know that doctors and hospitals are tiered based on quality and the efficiency of their care,” says Jonathan Chines, the Director of Commercial Provider Engagement at Tufts Health Plan.

“All of the health plans need to create easier to understand products with easier to use support tools, so that a consumer can find the knowledge we want to make available to them and use that knowledge to make health care decisions,” says Richard Weisblatt, Senior VP for Provider Network and Product Development at Harvard Pilgrim Health Care.

Bechta spent six to eight hours on her decision to stay with her traditional HMO plan.

“It was interesting for the first hour and after that it was frustrating,” says Bechta chuckling. She continued, “only because I’m stubborn and really wanted to get a handle on it, and wanted to get a handle on it so I could try to explain it to my patients. Otherwise I would have punted a long time ago.”

Insurers say a growing number of employers are offering tiered insurance plans because they are the best way to lower premiums while still giving consumers some choice in where they go for care. Limited network plans that restrict where patients go for care in exchange for lower premiums are the other option many employers are considering as they try to hold down rising health care costs. Insurers are watching the consumer response to these plans with great interest.

“Will members prefer tiered plans where there is some work on their part to figure out what their cost share is going to be for certain providers or would they rather something very simple but more limited where the network doesn’t include every provider in the state?” asks Dana Safran, Senior Vice President for Performance Measurement & Improvement at Blue Cross Blue Shield of Massachusetts.

More

We’d love to know what you think, whether you’ve signed on for a tiered or limited network plan, and how that coverage is working out for you. Tell us in the comments section, or on Facebook.  

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  • Alpappy

    This article underlines the fact that the present system does not make sense: It adds three levels of unproductive overhead ton the cost of healthcare; duplication of administration  cost in all the insurers supposedly running the same analyses; the cost to health providers of handling a multitude of plans; the direct cost to employers of an additional employment ‘tax’ — I think that this is the biggest hurdle for small businesses when thinking of hiring personnel.

    What makes sense is a single payer system in the form of an independent government owned, but not run, organization managed by a panel of doctors who are sworn to provide care to all within a given budget and to police the billing practices of health providers.

  • Reasonable?

    Doctors need to define quality metrics as a profession rather than letting insurance companies do so for them by blunt claims data.  This would require a change in how physicians document patietn records.