Last Updated Apr 12, 2010 2:10 PM EDT
A new study by RAND, reported in the New England Journal of Medicine, found that when health plans used claims data to separate physicians into cost tiers, it would misclassify 22 percent of them. Only 40 percent of doctors had claims-based profile scores that were at least 70 percent reliable. Medical societies pounced on the results as vindication of their longstanding argument that insurers' profiling methods are inadequate to classify doctors for contracting purposes or to steer consumers to those deemed to be the most cost-efficient.
Of course, some insurers will continue to give consumers cost and quality data on doctors and hospitals. But any-willing-provider laws and consumer preferences will foil their attempts to simply drop providers who they think cost too much. In Georgia, for example, Athens-based Northeast Georgia Cancer Care sued Blue Cross Blue Shield of Georgia, arguing that it had been illegally excluded from a Blue HMO. The lawsuit went up to the Georgia Court of Appeals, which punted the issue to the state insurance commissioner, John Oxendine, who's running for governor. Oxidine ruled that, under state law, the Blues have to accept any willing provider. This is a popular decision that could help him in his political quest, but one that's unlikely to lead to lower insurance costs.
In other states, enforcement of any willing provider laws has been variable. For example, when Humana dropped about 200 Kentucky physicians from its networks last year, the Kentucky Department of Insurance determined that the plan had not violated its AWP statute. And when the U.S. Supreme Court ruled in 2003 that state AWP laws were legal -- ironically, in a case brought by Kentucky's insurance industry association -- observers said that it would have little effect, because most plans had already broadened their networks.
Would costs drop if the carriers could exclude inefficient providers or encourage people to choose less expensive hospitals and physicians? That depends on your point of view. In the mid-1990s, when HMOs with narrow networks were ascendant, health cost growth declined substantially, and costs actually decreased one year. Of course, narrow networks were only one factor in this phenomenon. Nevertheless, it is a fact that when public outcries, pressure on employers, and state laws forced the plans to accept "any willing provider," health spending resumed its inexorable climb. As a result, insurance premiums doubled in the past decade.
Nevertheless, as costs continue to soar, there will be pressure to return to narrow networks and/or contract with "accountable care organizations" that can take financial responsibility for care delivery. And, despite the findings of the RAND study, the health plans will eventually find a reliable method to differentiate among physicians who use resources wisely and those who habitually waste them.
When such methods are developed, it would be better to apply them to groups of doctors than to individual physicians. Conclusions drawn from more data are likely to be more accurate, and this approach could be used to measure multiple providers who treat the same patients. But for this to work, doctors would have to join larger groups or independent practice networks.
Even then, having such groups contract with different insurers would likely restrict patient choice too much. That's an argument for a single payer system in which the competition is among provider groups, rather than insurers.
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