Understanding Tiered Network Health Insurance

What is a Tiered Network and How Does it Work?

A tiered network is a type of health insurance plan in which different healthcare providers, such as hospitals and clinics, are categorized into different levels or tiers based on their cost and quality of services. The tier level of a healthcare provider affects the cost-sharing arrangement between the insurance plan and the covered individual, with lower-tiered providers often having lower out-of-pocket costs for the insured.

In a tiered network health insurance plan, the insurance company will usually encourage patients to choose higher-tiered providers by making it more affordable. For example, if a patient visits a higher-tiered hospital, they may have a lower copayment or deductible than if they visited a lower-tiered hospital.

In France, for example, some health insurance plans use a tiered network, where private hospitals and clinics are typically in higher tiers and public hospitals are in lower tiers. The lower tier hospitals offer more basic services, while the higher tier hospitals offer more specialized care and services.

In Japan, tiered networks are also used by some health insurance plans, with certain healthcare providers classified as “designated medical institutions” and given higher-tier status. These designated institutions offer higher quality services and may have more advanced medical technology.

The main difference between a tiered network plan and a traditional health insurance plan is the cost-sharing arrangement between the insurance company and the insured. In a tiered network, the level of cost-sharing is directly tied to the tier level of the healthcare provider, while in a traditional health insurance plan, the cost-sharing may not be tied to the provider’s level of services.