Multi-tier heterogeneous Networks (HetNets) with dense deployment of small cells in 5G networks are expected to effectively meet the ever increasing data traffic demands and offer improved coverage in indoor environments. However, HetNets are raising major concerns to mobile network operators such as complex distributed control plane management, handover management issue, increases latency and increased energy expenditures. Sleep mode implementation in multi-tier 5G networks has proven to be a very good approach for reducing energy expenditures. In this paper, a Markov Decision Process (MDP)-based algorithm is proposed to switch between three different power consumption modes of a base station (BS) for improving the energy efficiency and reducing latency in 5G networks. The MDP-based approach intelligently switches between the states of the BS based on the offered traffic while maintaining a prescribed minimum channel rate per user. Simulation results show that the proposed MDP algorithm together with the three-state BSs results in a significant gain in terms of energy efficiency and latency.