HealthLawProf Blog

Editor: Katharine Van Tassel
Akron Univ. School of Law

A Member of the Law Professor Blogs Network

Monday, December 6, 2004

New Level for Tiered Health Care

Amy Tsao writes in the Dec. 6 Business Week On-line that "some insurers are now offering lower co-pays for patients who use certain hospitals or doctors":

In the battle to trim health-care spending over the last several years, so-called tiering of prescription drug benefits has become a standard strategy. According to a Kaiser Family Foundation survey, adoption by employers of three-tier drug-benefit plans jumped from 27% to 63% between 2000 and 2003. Under the system, a patient is charged a co-payment of, say, $10 for a generic drug, vs. around $20 for a brand-name drug on the insurer's approved list and $30 or more for a drug not on the list. Tiered-drug benefits can save 11% or more on health-insurance costs for employers compared to plans without tiering, according to the 2004 Medco Drug Trend Report.

The cost savings are pushing insurers and employers to expand the tiering concept to include doctors and hospitals. The idea is to direct patients -- by charging lower co-pays -- to the most efficient providers. For example, a patient who belongs to a tiered plan and needs to select a hospital for colon surgery would have a report card of hospitals. The patient is charged a substantially lower co-payment at a hospital that scores well on cost and performance measures.

EARLY ADOPTERS. Insurers and employers see tiering as a way to control costs while at the same time encouraging doctors and hospitals to improve quality. Leapfrog, a coalition of large health-care buyers, counts nine insurers that offer tiered plans, and CEO Suzanne Delbanco says as many as 20 plans are in the works. Rick Siegrist, CEO of Healthshare, a software consulting company that specializes in health care and helps insurers and hospitals develop benchmarks for medical quality, says he knows of two major national insurers that plan to offer tiered plans in 2005, though he won't disclose which ones.

One insurer that already has adopted the system is Healthshare client Tufts Associated Health Plans, a regional insurer in New England. Its Navigator plan for Massachusetts state employees places hospitals in one of two tiers for services in three broad areas -- adult care, pediatric care, and adult surgery. Under the plan, patients are charged co-payments of $200 per hospital admission if the hospital ranks in the top tier in quality of care and cost-efficiency for the particular service -- and $400 if the hospital is in the lower tier.

One of the points of contention in all this is how the insurers measure quality:

Perhaps not surprisingly, physicians and hospitals have serious misgivings about such initiatives. "We're in favor of diminishing costs, but we think this is the wrong approach," says Dr. John C. Nelson, a Salt Lake City obstetrician-gynecologist who's president of the American Medical Assn. "There's no way to accurately delineate [quality]." The methodologies by which tiers are set and the data that are used to rank doctors are unreliable, Nelson argues.

DELAYS IN CARE?  Measuring the quality of medical services is much less black-and-white than choosing a generic over a brand-name drug. When deciding between a hospital that has an average of 25 medical errors per day vs. one with two or three per week, the choice may seem obvious. However, the hospital with more errors may simply lack the technology to detect them all. Patient population, too, is a major factor that could affect how doctors and physicians are rated. Wealthier patients tend to be healthier, Nelson notes. "That needs to be factored in," he says.

Another issue is the impact of the tiering system on acces to health care.  "If it shifts too many patients to too few hospitals and doctors, tiering also could make it harder for some patients to get care in a timely fashion, worries Jim Bentley, senior vice-president for strategic policy planning at the American Hospital Assn."

http://lawprofessors.typepad.com/healthlawprof_blog/2004/12/new_level_for_t.html

| Permalink

Comments

Post a comment