Clinic Price Reductions in a Tiered Total Cost Benefit Design

Objectives

To understand responses of primary care clinics to inclusion in a tiered total cost of care insurance benefit design.

Study Design

We used a qualitative design beginning with longitudinal analysis of administrative data on consumer clinic choice, clinic tier placement, and clinic actions, followed by in-depth interviews with key informants from clinics, administering health plans, and program administrators.

Methods

We collected data via semistructured interviews with purposively sampled key informants selected from clinics that prospectively reduced prices to move to, or remain in, a tier with lower cost sharing. Data from interview transcripts were coded using qualitative coding software and analyzed for thematic responses.

Results

Our findings suggest that clinics respond to the incentives in the tiered cost-sharing benefit design. Two motivations cited by clinics are (1) concern over developing a reputation as a high-cost clinic and (2) concern about the possible loss of patients due to higher cost sharing. Some clinics have agreed to price reductions or risk-sharing arrangements to move to, or remain in, a tier with lower cost sharing. Clinic informants reported that price reductions alone are not scalable. They sought greater transparency in tier assignment and increased data sharing to help them reduce costly or unnecessary utilization.

Conclusions

Managers of primary care clinics respond to a tiered benefit design that holds them accountable for total cost of care. They respond by offering price discounts and expressing interest in reducing costly referrals and unnecessary use of services.