The AMA's Doomed Crusade Against Doctor "Profiling" at Health Insurance Firms
Health insurers have been measuring how much individual physicians cost them for years. But as the carriers increasingly offer moderately priced plans with narrow doctor-and-hospital networks, the economic importance of this "physician profiling" is increasing. As a result, medical societies are making a bigger stink than ever about the methods that insurers use to profile physicians, and are even questioning the whole concept of profiling.
The latest salvo in this battle is a letter that the AMA and medical societies in 47 states sent to the major health insurers last week. Citing a recent RAND study that shows serious flaws in the health plans' profiling methods, the letter says, "This and the other studies call into question the advisability of the high-stakes use of cost-profiling tools to create tiered health plan products in an attempt to control health care spending."
Among the national insurers that offer these "tiered health plan products" are WellPoint (WLP), UnitedHealth (UHH), Aetna (AET) and Cigna (CI). Some of the tiered plans include only half of the doctors and two-thirds of the hospitals that these insurers would normally provide to employers. Until recently, mindful of the consumer backlash against HMOs in the 1990s, not many companies were willing to buy policies that restricted their employees' choice to this degree. But with the cost of insurance soaring, some employers are showing interest in these plans.
The medical societies say that they're not against all cost profiling. They just oppose the way that the insurers do it, and they say they want to work with the carriers to improve their methodology. They also want the companies to allow external review of their profiling. But at the root, physicians detest profiling and would like to see it go away. None of them want to be excluded from the insurance networks because they're not as efficient as other doctors.
The RAND researchers found that because of problems with the measures that insurers use in their cost profiling, nearly a quarter all physicians are misclassified. In some specialties, physicians are mistyped two-thirds of the time. "Some physicians have even been placed in three different efficiency tiers by three different insurers based on calculations using the same data," says the medical societies' letter.
But it's unclear whether the methods used by the researchers are any more accurate than those used by the insurers, because both parties base their calculations on insurance claims, which are notoriously untrustworthy. America's Health Insurance Plans, the industry trade association, points out that physician profiling for tiering purposes also takes into account the doctors' quality scores. But quality measurement is in an even more embryonic state than cost profiling. So if the narrow-network plans cost less because their health costs are lower, that probably means that their doctors are either more efficient or are being paid less than other physicians are.
The one thing that's clear is that the medical societies' letter will have zero impact on the growth of tiered networks. If there's a market for narrow-network plans, they'll continue to spread, and insurers will continue to profile physicians on the cost of their care.
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