Steerage

Steerage is the practice of guiding a plan member toward a specific facility or provider before care happens, usually one that is both higher quality and lower cost than the alternatives. It works through information (showing the member the prices and quality scores side by side), through plan design (lower cost-sharing at the preferred site), or through both.

The reason steerage exists is the spread in prices. A colonoscopy in the same city can be $700 at a surgery center and $3,500 at a hospital outpatient department under the same insurance plan, with no difference in the doctor or the outcome. A plan that moves 30 of its 100 annual colonoscopies from the second setting to the first saves about $84,000 without anyone getting less care. Steerage has a bad reputation when it's done by hiding options; done well, it means the member sees every option, the quality data, and the price, and chooses with full information. Some employers add a reward, such as splitting the savings with the employee or waiving the deductible at the chosen site.

The takeaway: ask your plan whether it steers, how, and to whom. If the answer is "we don't," ask why the plan is paying $3,500 for a $700 procedure. If the answer is "we do," ask to see the quality data behind the preferred list.