Clinic price reductions in a tiered total cost benefit design

Tim McDonald, Katie M. White, Tsan Yao Huang, Christopher M. Whaley, Bryan Dowd

Research output: Contribution to journalArticlepeer-review

5 Scopus citations


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.

Original languageEnglish (US)
Pages (from-to)E316-E321
JournalAmerican Journal of Managed Care
Issue number9
StatePublished - Sep 1 2021

Bibliographical note

Funding Information:
Author Disclosures: Dr Whaley has received grant K01AG061274 from the National Institute on Aging. Mr McDonald, Dr White, Dr Huang, and Dr Dowd report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Funding Information:
The authors gratefully acknowledge the assistance of the Minnesota Department of Management and Budget, especially Joshua Fangmeier, and the State Employee Group Insurance Program. They also thank Jon Christianson, Susan Ridgely, and Julie Sonier for their valuable insights and suggestions in preparation of this paper and the Robert Wood Johnson Foundation’s State Health Access Reform Evaluation program, the Donaghue Foundation, and the Horowitz Foundation for Social Policy for funding support.

Publisher Copyright:
© 2021 Ascend Media. All rights reserved.


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