PROJECT SUMMARY/ABSTRACT The discrepancy between health spending and outcomes in the United States compared to other developed countries suggests persistent inefficiency in the nation's health systems. Current provider payment systems often inadvertently penalize, rather than reward, providers who produce better health outcomes at lower cost. One approach to improving efficiency is to give consumers information about higher-quality, lower-cost providers and financial incentives to choose them. Tiered cost-sharing is one such health insurance benefit design that provides information and incentives to patients, thereby rewarding efficient providers with greater patient volume. This study will examine one of the longest-running tiered cost sharing systems in the United States – the State Employee Group Insurance Program Minnesota Advantage health plan (SEGIP). The SEGIP plan covers 130,000 State employees and their dependents across the state, which includes dense urban centers and remote rural areas. Each year SEGIP employees select a primary care “gatekeeper” clinic that is responsible for coordinating the entirety of their care, including referrals to specialists and hospitals, and pharmaceuticals. Clinics are assessed on their risk-adjusted total cost of care and placed into one of four cost-sharing tiers. The cost-sharing differentials are substantial, giving consumers a strong incentive to choose lower-cost clinics. We have addressed some of the initial questions regarding consumer responses to tiering in research funded by the Robert Wood Johnson and Donaghue Foundations. In this proposal, we move to the next step to investigate responses of clinic leaders to inclusion in a tiered cost-sharing system. We will use both quantitative and qualitative methods as part of a triangulation mixed methods design. Our research will assess what actions clinic leaders have taken in response to inclusion in a tiered cost-sharing system, how they think strategically about tiered cost-sharing, and what barriers they face as they try to practice more efficiently.