Tiered Hospital Benefits

The benefits offered for hospitalization have changed recently, as health plans experiment with ways to encourage consumers to choose less costly hospitals. Some health plans have developed products that put hospitals into groups (or “tiers”) based on costs. The plans require that consumers pay more for services from higher-cost hospitals.

For example, in a typical two-tier HMO product, a consumer might pay nothing out-of-pocket for a stay in a lower-cost hospital, but be subject to a $100 to $400 charge if hospitalized at a higher-cost facility. Some health plans offer hospital tiering as an optional benefit; others have made it a mandatory feature of all small group products.