Confusion About Tiered Health Plans

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

Dr. Sarah Bechta tries to compare tiered health plans. (Martha Bebinger/WBUR)

Dr. Sarah Bechta tries to compare tiered health plans. (Martha Bebinger/WBUR)

Making Choices On Health Insurance

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 $1,400 a year. It made me stop and think,” Bechta said.

But would she actually save that $1,400 or would it be eaten up in higher co-payments and deductibles?

“That was the thing that was really hard to predict, I could not figure it out,” Bechta said, 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.”
– Sarah Bechta, doctor

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 was different tiers,” Bechta said.

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 $2,500 for a hospital stay. At MetroWest, which is a tier 1 hospital, the charge would be $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 said, pulling out a simple chart she made with the names of all her family doctors down the 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 had 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 said, pointing to the numbers. “There’s no way my pediatrician can be tier 1 for one insurer and tier 3 for another, it just makes no sense.”

But it is happening.

Cost Effectiveness 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, asked 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,” Bechta said, “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 said there’s a lot of confusion among her patients about what the tiers mean. One woman thought Bechta, who is rated a 1, 2 and 3 with three different health plans, was charging a higher co-payment 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,’ ” Bechta said, shaking her head.

Confusion About The Tiered Insurance System

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,” said 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,” said Richard Weisblatt, senior vice president 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,” Bechta said, chuckling. “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?” asked Dana Safran, senior vice president for performance measurement and improvement at Blue Cross Blue Shield of Massachusetts.


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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  • Gentlewomanfarmer

    Single. Payer. Now.

    This is ridiculous.

  • Joseph Heyman

    Just received my tiers from four health plans.  Harvard says I am High Quality Low cost (Tier 1).  The others have different reasons for putting me in the middle tier.  Using Tiers, 85% of docs are in either the middle or most expensive tier.  Insurers are the winners, patients are the losers.  I can’t tell you whether I really am high quality or whether I am low or high cost.  I do my best and if someone would tell me where I could improve, I would do so.  But nobody ever does so in a meaningful way.

    Patients seem to trust and like me, and I love helping them out.

    • Marthab

      Hi Dr. Heyman – do you know if doctors can request the rationale for their tier?  I supposee that since many doctors are rated as a group or system, seeing the breakdown of your group “score” might not be that helpful.  What do you think?

  • interested party

    Some smart folks from the Occupy movement should grab on to this subject.  Many interesting facets for their consideration, including how many doctors are part of the 1% and how a tiered system will reinforce the 1%, who has money and can afford the highest tier, and the others who, through choice that’s financially dictated so not true personal choice, will have to relegate themselves to lower tiers and/or higher co-pays (or as the tiered system seems to work: you pay for insurance, for a co-pay, plus an additional co-pay for better quality care). 

  • Dr.B Steinberg

    I am not a fan of tiering——in fact I am strongly against it!!!!—-mainly
    because it is flawed….The methodology is far from perfect…..
    As a physician( in Mass) it is unfair and prejudicial from a professional
    point of view—-and it should be dropped!!!!  

  • Sitoga2007

    What about simplifying health care? I guess this country keep going into the other direction. In my opinion the cost and complexity of health care in this country are just mind-bugling. 

  • http://pulse.yahoo.com/_LLH7SFRBBDZ54YLFVP6POB6XAI ANNA

    It was the failure to extend Social Security to include health insurance
    in 1935 that started this problem. We need a
    single payer, Medicare for All system. This will get the inefficient
    private insurance industry, which cherry picks the healthy to keep its
    profits up, out of the picture so we can all have
    access to health care….because coverage is not care. We all have bodies and they all, cradle to grave,
    need maintenance. Insurance has nothing to do with it. We need
    single-payer and we need it now. HR 676, Medicare for All, will
    eliminate the 31 cents on every dollar wasted on private health
    insurance bureaucracy, the parasitic middlemen that enrich their execs,
    increase costs for the rest of us and deny or delay care to patients. HR
    676 will implement a single-payer system that will capture the savings
    and deliver comprehensive, high quality health care to everyone.

    All other industrialized countries have some form of universal
    government run health care. They get better care as measured by all 16
    of the bottom line public health statistics, and they do it at half the
    cost per person. If our system were as efficient, we would save about
    $1.3 TRILLION each year. If you put $1.3 TRILLION into the hands of the
    people, what effect do you think this would have on demand and
    subsequently, on job creation?

     It’s time for this. No more of the ‘it’s
    not politically feasible’ excuses!

    • Gretchen Robinson

      I could not agree more.  I work in a healthcare agency and we have RN’s calling all day talking to RN’s in insurance companies just to get approvals for care.  Then there’s the resistance to agreeing to provide care.  Right now I’m fighting to get my husband a medication that greatly improved his Parkinson’s Disease.  The insurance company doctors said, oh here, try this and put him on ritalin!! Insane.  Poor medical care and  cruel since the med he tried samples for was SO effective.  

  • http://twitter.com/doctor_reviews Healthcare Reviews

    Insurers have faced fierce opposition from strong lobby groups opposing ratings of their members. These insurers should try partnering with the private sector, like a doctor, hospital and health plan rating site like HealthcareReviews.com , why try to re-invent the wheel

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