Spending more doesn’t mean getting more: Why high-value care matters 

Employer-sponsored health benefit cost is growing at the fastest pace in 15 years. Average annual health benefit cost — already approaching $18,000 per employee —  is projected to rise 6.7% in 2026, well above the general inflation rate. An overarching issue for employers is that much of this healthcare spending does not improve outcomes; life expectancy is not improving, nor is patient satisfaction. In fact, roughly 25% of U.S. healthcare spending is estimated to be wasteful. For employer health plan sponsors looking to better manage cost, the goal should be not simply to spend less, but to make sure health care dollars are buying genuinely high-value care.

Defining high-value and low-value care

Low-value care often appears in familiar forms: high-cost imaging before conservative treatment such as physical therapy; invasive surgical intervention when evidence-based medical management is appropriate; redundant diagnostic testing; specialty referrals that bypass primary care gatekeeping; or care delivered in high-cost settings when lower-acuity settings would be clinically equivalent.

High-value care, by contrast, gets the diagnosis right, uses evidence-based treatment and reduces complications, repeat visits and avoidable escalation. It is not about denying care — it is about directing care toward providers who consistently deliver better outcomes.

That distinction matters because physician-level variation is one of the most significant — yet under- addressed — drivers of plan cost and member outcomes. Two providers treating similar patients can produce very different utilization patterns, complication rates and follow-up needs. Without better quality data, employers have been largely blind to these differences.

The carrier-native approach: A necessary foundation with known limits

Most national carriers offer performance tiering based on both cost and quality or provider designation programs within their networks. These programs can help self-insured employers steer members to higher-value providers and support plan design incentives such as lower copays, coinsurance or deductibles. Mercer’s recent Survey on Health and Benefits Strategies for 2027 found that 14% of all large employers (500 or more employees) offer this type of plan to employees.

Still, these programs have limits. They usually rely on data from a single payer, which can miss the full picture of a physician’s performance. Some place too much weight on cost efficiency or assess facilities or groups instead of individual physicians — and none will drive meaningful change unless employers make the design visible and financially relevant to employees.

Independent provider selection tools: Greater precision, better steerage

For employers that want a deeper layer of provider insight, independent quality-based provider selection tools can help. These tools, which overlay an existing health plan, use multi-payer claims data and provide composite scoring of physician performance based on condition or surgical-level analytics to more precisely identify high-performing providers for a member’s specific care needs.

Some focus on incentive-aligned provider steerage, using outcomes-based scoring to rank physicians against local peers and connect financial incentives to higher-performing providers. Others take a broader measurement approach, evaluating appropriateness of care, effectiveness of care and cost of care against regional and national benchmarks. Both address the same core problem: employers often lack clear, actionable physician-level quality data, which makes it difficult to steer employees to better care. While these solutions are still relatively new to the market, the survey indicates that 8% of all large employers have engaged these third-party data sources or will in 2027; and an additional 31% are considering it for the near term.

Although these independent quality overlay search tools typically sit outside the core health plan offerings, they can, with careful implementation, be layered over complex ecosystems that include multiple carriers and point solutions to provide a seamless member experience.

A strategic framework for self-insured employers

A high-value care strategy is a different way to address rising healthcare costs. It aims to improve the quality of care that members receive, with the assumption that lower total cost of care will follow. The strongest strategies improve steerage to quality providers, support the employee experience and manage plan costs without forcing a trade-off or limiting access to care. Employers can take a layered approach to evaluating and activating the right model for their population, culture and geography. Some suggestions:

• Activate what you already have. Many employers already have quality steerage programs in place but have not fully integrated them into benefit design or employee communication. If employees do not understand the value signal, they will not change behavior.
• Consider independent quality solutions where more precision is needed. For some employers, that means adding a provider steerage tool with direct incentives. For others, it means embedding physician quality data into broader navigation and care management programs.
• Build high-value care into plan architecture. The strongest strategies tie cost-sharing to provider quality, reduce or eliminate out-of-pocket exposure for top-performing providers and align vendor partners around the same quality standards. They also connect with centers of excellence, chronic condition support and behavioral health so employees experience one coordinated strategy, not a set of disconnected point solutions. According to one vendor's estimate, self-insured employers that layer incentive design on top of quality data can estimate a 10–20% reduction in medical trend and meaningful improvement in clinical outcomes.

For employers, the question is no longer whether to pursue high-value care. Rather, the key questions are which model is right for their population, culture and geography; how to integrate it with the broader benefits ecosystem; and how quickly the right data can be put to work to help them spend more wisely, not just more.