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Over the years, benefit plan design has evolved to incorporate strategies aimed at achieving this. Among these strategies, steering has emerged as a powerful tool in guiding plan participants toward cost-effective healthcare options.

Using steering can transform healthcare utilization, improve patient outcomes and reduce costs for self-funded employers and plan participants. Keep reading to learn the benefits of implementing steering in your benefit plan.

Steering

This is a proven benefit design strategy that involves guiding plan participants toward specific healthcare 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 a combination of cash, paid time off for appointments, and/or paid mileage. 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.

Most importantly, in my experience, employers who have successfully encouraged their plan participants to use preferred-value providers have shared their savings with plan participants so both reap the benefits – a well-designed incentive means everyone saves.

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, encompassing care delivered in various settings, including hospitals, standalone facilities, virtual platforms, and even in-home settings. 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 healthcare 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 Alliance can support up to four customized tiers. You can learn more about our Smarter Network^SM options here.

The Power of Steering & Tiering

Steering and tiering encourage plan participants to seek care from providers who offer good care at lower costs. These strategies offer many benefits including:

Cost savings

By encouraging plan participants to utilize specific healthcare providers offering quality services at more affordable prices, steering helps reduce overall healthcare costs for both plan participants and employers.

While all healthcare services have price variation between providers, the American Journal of Managed Care (AJMC) 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.

When employers offer lower or no copays for selected providers, they motivate plan enrollees to actively engage in their health and encourage the use of preferred-value providers for preventive care, mental health services, and shoppable procedures. Evidence shows that when people actively participate in their care, they experience better outcomes. By utilizing preventative care and maintenance health services, people can catch issues before they become more dangerous and expensive to treat. This can lead to lower healthcare costs for both plan participants and their self-funded employers.

Improved quality & efficiency

Guiding participants to preferred-value providers can optimize network utilization and streamline healthcare delivery processes. Steering directs plan participants towards providers known for delivering high-quality care, leading to better health outcomes and patient satisfaction. Preferred-value providers typically perform a large volume of specific healthcare services, a good indication that they perform them well.

Steering aligns the interests of plan participants, employers, and healthcare providers towards achieving better value in healthcare delivery, fostering a more collaborative approach to managing healthcare costs and improving outcomes. Rewarding providers who deliver high-value care at affordable prices with more business creates a mutually beneficial relationship between providers, plan participants, and employers.

Implementing Steering & Tiering

To effectively reap the benefits of steering and tiering, employers need access to their data and guidance to understand it. Our Smarter Health^SM analysis is a customized healthcare 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 healthcare 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 healthcare spending while offering better benefits, reach out to our Business Development team.

By: Melina Kambitsi, Ph.D., SVP, Business Development and Strategic Marketing, The Alliance

[email protected] | 608-210-6643