The Impact of Tiered Physician Networks on Patient Choices

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In a tiered network, health insurers sort providers into tiers based on cost and quality performance, and patients have a financial incentive (they pay lower cost-sharing) to see a provider in a higher performing tier. Cost-efficiency is typically gauged using episode-level costs and utilization, while quality is judged through claims-based process measures, external certification, and, in some cases, use of health information technology. In this article, the researchers use administrative claims and enrollment data to estimate the impact of tier-rankings on physician market share within a plan of new patients and on the percent of a physician’s patients who switch to other physicians within fixed effects regression models. They found that the effect of tiering appears to be among patients who choose new physicians and at the lower end of the distribution of tiered physicians, rather than moving patients to the “best” performers. These findings suggest strong loyalty of patients to physicians more likely to be considered their personal doctor.

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