What if your health insurance’s preferred provider was also your most convenient provider? This is a fortunate truth for the countless people with tiered health plans who choose Chester County Hospital for their care.
“Chester County Hospital is a tier-one hospital, a distinction that is based on our ability to provide high-quality care at a low cost,” said Charmaine Rochester, Chief Financial Officer and Senior Vice President of Finance at Chester County Hospital. “Some of the well-known hospitals in the region are tier two and even three.”
So, what does this all mean?
As health plans experiment with ways to encourage patients to choose less-expensive hospitals and physicians, more are developing products that put hospitals and physicians into tiers based upon cost and quality measures.
These tiered network insurance plans use cost-sharing differences between the tiers to encourage patients to seek care from preferred providers. Tier one, for example, will offer the most comprehensive benefits, which means lower co-pays and out-of-pocket expenses. By contrast, tiers two and three typically encompass high deductibles and co-insurance payments, which is a percentage of the cost of care.
In other words, patients who elect to receive care from preferred providers (tier one) will pay less out of pocket. But the plan also preserves their ability to choose providers on non-preferred tiers.
By steering patients toward providers with lower costs and higher measured quality, tiered network plans attempt to enhance the value of the care delivered. And it appears to be working. The percentage of employers whose largest plan included a tiered or limited network increased from 16 percent in 2010 to 23 percent in 2013, and tiered plans are even more prevalent among very large employers. The growing popularity is believed to be driven in large part by employers seeking to rein in ballooning premiums, which can be significantly lower for tiered network plans, while preserving the scope of the benefits.
According to Rochester, this trend has caused healthcare providers to expand their definition of innovation to include not only medical advances but their ability to administer quality care at a low cost.
“We’re focused on making sure that we have high-quality clinical outcomes, high patient and employee engagement, and that we’re providing care at a low cost,” she said. “And it takes innovation to do that.”
Insurance payers are beginning to become more transparent about their processes for establishing the tiers, but the prevailing assumption is that criteria largely adhere to the Institute for Healthcare’s Triple Aim, which is a framework for optimizing health system performance by: improving the quality of care, improving the health of populations, and reducing the per capita cost of healthcare.
“The Triple Aim is starting to really take hold to facilitate value in healthcare today: a choice of providers, high-quality care and outcomes, and providing it at a low cost,” said Jeffrey Wise, Vice President of Finance at Chester County Hospital. “We are also seeing a greater willingness from insurance payers to collaborate on these goals with healthcare providers.”
In that regard, Chester County’s tier-one status is further validation of its prestigious five-star rating by Hospital Compare, which rates more than 4,500 Medicare-certified hospitals nationwide. But there’s something else at play, Wise says, that makes Chester County Hospital even more valuable than the typical tier-one hospital.
“It’s a kind of cross-pollination that is promulgated through our strong integration with our parent organization, Penn Medicine,” he said.
“Here we are, part of a world-class academic medical system, and we’re right here in Chester County,” Rochester said. “Should our patients ever need tertiary care or a more complex intervention, we have full and seamless access to those services within the Penn Medicine System.”