April 20, 2020

Healthcare arbitrage #4: Patient steerage

Cedric Kovacs-Johnson

In the fourth part of our recurring series on healthcare arbitrage, we explain how plans can use steerage to help members get the same care at a lower cost.

Anyone who’s been in this industry for long knows that not all providers are equal. There are often wide discrepancies between what two providers will charge for the same care, as well as the quality of care they provide. And cost isn’t necessarily an indicator of quality. In fact, high-quality providers are often less expensive than their lower-quality counterparts.

Steerage occurs when a health plan works to direct members to high-quality, affordable providers, rather than just leaving members to blindly choose from a list of in-network providers. Effective steerage usually involves incentives for members to see the recommended provider, such as reduced or waived out-of-pocket costs.

Disruption: medium

Frequency: medium-high (plans can choose to steer patients toward certain providers for most care, or only for specific types of care)

Impact to quality: medium-high

Impact to cost: medium-high

The Patient Steerage Operating Playbook

  1. Include incentives for seeing recommended providers in the plan design.
  2. Work with the employer to determine whether to steer members in every situation, only for situations with high health stakes and/or high costs, or somewhere in between.
  3. Incorporate a Medical Management team that can make data-based provider recommendations into the plan.
  4. Monitor precertifications and claims for situations where member steerage is appropriate.
  5. Proactively reach out to members before they’ve already committed to seeing a certain provider.


What can go wrong

  • Member frustration: Members don’t always like being told what to do. It’s important to build trust with your members, and to include compelling incentives for them to follow the plan’s recommendations.
  • Lack of provider information: If the plan tells members that it can recommend high-quality providers, it needs to be able to fulfill that promise. Make sure the plan has access to reliable quality information about providers in areas where members live.

The role your TPA should play

  • Vendor coordination: Identify and incorporate an effective Medical Management team who can analyze quality data and make strong provider recommendations.
  • Actively monitor claims and precertifications: Have the claims-monitoring technology in place to actively identify opportunities for steerage, and respond in a timely fashion.
  • Member engagement: Reach out to members with provider recommendations, and make sure members understand the relevant incentives as well as what happens if they choose not to follow the plan’s recommendations (will they simply miss out on the extra incentives, or will they forfeit their coverage for that visit entirely?).

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