Variation in tiered network health plan penetration and local provider market characteristics

Abstract

Objective: To understand variation in enrollment in tiered network health plans (TNPs) and the local provider market characteristics associated with TNP penetration.

Data sources and study setting: We used 2013-2017 Massachusetts three-digit ZIP code level employer-sponsored health insurance enrollment data, data on physician horizontal and vertical affiliations from the Massachusetts Provider Database, state hospital reports in 2013, 2015, and 2017, and the 2013-2017 Massachusetts All-Payer Claims database.

Study design: Linear regressions were used to estimate associations between TNP and local provider market characteristics.

Data extraction: We constructed measures of TNP penetration and local provider market characteristics and linked these data using three-digit ZIP code.

Principal findings: TNP penetration was at least 10% in all employer market sectors and highest among jumbo sized employers. All state employee health plan enrollees were in a tiered network health plan. Among enrollees not in the state employee health plan, TNP penetration varied from 6.0% to 19.6% across three-digit ZIP codes in Massachusetts. TNP penetration was higher in areas with less horizontal and vertical physician market concentration.

Conclusions: Market competition, rather than the absolute quantity of physicians in an area, is associated with TNP penetration.

Keywords: horizontal consolidation; market competition; tiered provider networks; vertical integration.