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Tiered Cost-Sharing for Primary Care Gatekeeper Clinics

Bryan E. Dowd, Tsan-yao Huang and Tim McDonald

American Journal of Health Economics, 2021, vol. 7, issue 3, 306 - 332

Abstract: Efforts to improve the efficiency of the US health-care system involve both provider payment reform and efforts to give consumers the information they need to choose efficient providers and a financial incentive to do so. An example of the latter type of initiative is tiered cost-sharing. We analyze data from a long-standing tiered cost-sharing system for primary care gatekeeper clinics. These clinics control access to specialists and hospitals and are held accountable for their patients’ total annual risk-adjusted spending on covered health-care services. Consumers choosing higher cost clinics face higher levels of deductibles, copayments, and out-of-pocket maximums. We find that when choosing a primary care clinic, consumers are responsive to the clinic’s tier. Consumers exhibit a high level of inertia, but nonetheless, many clinics voluntarily reduce their fees to move to, or retain placement in, lower cost tiers.

Date: 2021
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Handle: RePEc:ucp:amjhec:doi:10.1086/714360