The Impact of Tiered Physician Networks on Patient Choices

September 2014

Several factors influence a patient’s choice of health care providers, including cost and quality. Increasingly, health plans, employers, and other payers are creating tiered provider networks to help guide patients’ decisions about care providers. A tiered network ranks providers according to cost and quality performance. Patients have a financial incentive (lower costsharing) to see a top-ranked provider. Even though tiering is most prevalent among private plans and employers, some state policymakers (e.g., in Massachusetts, Minnesota, Maine) have required health plans to begin developing or offering tiered network products.

Tiered networks are designed to encourage patients to make value-based choices without restricting access to physicians. A secondary consequence of the networks may be that physicians will improve their clinical performance in an effort to raise their ranking for their own sake. In a HCFO-funded study, Meredith Rosenthal, Ph.D., Harvard School of Public Health, and Anna Sinaiko, Ph.D., Harvard School of Public Health, examined the influence of tiering on the choice of physician or health plan. Specifically, the researchers tested:

  • Whether new patients prefer higher-ranked physicians
  • Whether higher-ranked physicians maintain their existing patients
  • Whether tiering causes patients to change health plans