Managing health care costs while ensuring access to quality care remains a top concern for self-funded employers. Steering and tiering have emerged as powerful tools in guiding plan participants toward cost-effective healthcare options. Using steering and tiering can transform health care utilization, improve patient outcomes, and reduce costs for self-funded employers and plan participants.
Steering
Steering is a benefit design strategy that involves guiding plan participants toward specific health care providers, locations, and health systems (preferred-value providers) while still offering comprehensive access to a broad range of providers. Essentially, steering incentivizes plan participants to seek care from providers offering quality services at more affordable prices while retaining the freedom to choose providers they’re comfortable with.
This strategy can be integrated into the benefit plan design through tiering or introduced as supplementary incentives outside the plan structure. Outside the benefit plan, employers can incentivize their plan participants to utilize preferred-value providers by offering paid time off for appointments or providing transportation vouchers. They can also provide incentives for completing biometric screenings or wellness activities, rewarding plan participants for making healthy lifestyle choices. Employers should regularly discuss the benefits of using preferred-value providers with plan participants.
Tiering
Tiering is an example of steering that utilizes tiered networks to designate preferred providers within the benefit plan design.
With tiered networks, employers have the flexibility to select certain health systems, hospitals, or providers as preferable options over others. Tiers can range from offering the best value to providing the greatest choice. Employers can choose to cover care from preferred-value providers at lower costs, or even no cost to plan participants. This incentivizes plan participants to use providers who offer good care at lower prices, which saves the health plan money.
Employers seeking to effectively manage their health care spending through tiered networks can leverage options like The Alliance’s Premier Networks — the Premier Network Emerald and the Premier Network Ruby. These customizable networks allow employers to maximize savings by guiding plan participants toward preferred-value providers while still ensuring a broad range of choices.
The Power of Steering & Tiering
By encouraging plan participants to utilize specific health care providers offering quality services at more affordable prices, steering helps reduce overall health care costs for both plan participants and employers.
While all health care services have price variation between providers, the American Journal of Managed Care found price variation is the highest for laboratory tests and imaging services. Their study showed about half of lab and imaging services were billed by providers with prices above the market median. So, by guiding plan participants to use preferred-value providers for laboratory and imaging services, employers can achieve significant savings for their health plan and their plan participants. The Alliance networks include independent laboratory and imaging providers to give our employer-members more options for their plan participants.
To effectively reap the benefits of steering and tiering, employers need access to their data and guidance to understand it. Our Smarter Health analysis is a customized health care analytics report that empowers employers by providing data-driven insights, which, in turn, drive significant savings. The Alliance works closely with its employer-members to help them understand their data. When employers identify where health care dollars are being spent, they can pinpoint opportunities to guide plan participants to preferred-value providers, facilitating cost savings without compromising the quality of care.
To learn how steering and tiering can help your business manage health care spending while offering better benefits, reach out to our Business Development team.
Melina Kambitsi, Ph.D.
Senior Vice President
Business Development & Strategic Marketing
