Health insurance plans that push patients toward physicians who keep medical costs lower are based on unreliable estimates of physician performance and may not save money, according to a study in the March 18 edition of the New England Journal of Medicine.
Described as the first major assessment of physician cost profiling, the RAND Corp. study found that about one-fourth of the 13,788 Massachusetts physicians they reviewed would be misclassified under the system of cost ranking commonly used by insurance plans.
"One of the ideas that is pretty popular for saving costs is to squeeze the doctors. What we are concluding here is that would be great if you really knew which ones were expensive," John L. Adams, the study's lead author and a senior statistician at RAND, tells HealthLeaders Media.
"Our findings raise questions about the utility of cost profiling tools for high-stakes activities, such as tiered health plans, and the likelihood that wide use of these strategies will reduce healthcare spending. Consumers, physicians, and those who pay for healthcare are all at risk of being misled by the results from these tools," Adams says.
The study examined 28 physician specialties and found that only about 40% of physicians had cost profile scores that were at least 70% reliable. Fewer than 10% of physicians had cost profiles that were at least 90% reliable.
Among physicians in a hypothetical two-tiered insurance plan, for example, nearly 40% of internists and nearly two-thirds of vascular surgeons labeled as lower cost were not, the study found. Physicians in surgical specialties appear to have low reliability cost profile scores, while dermatologists' cost profile scores were the most reliable.
American Medical Association President J. James Rohack, MD, says the RAND study "verifies the AMA's longstanding contention that there are serious flaws in health insurer programs that attempt to rate physicians based on cost-of-care."
"The RAND study shows that physician ratings conducted by insurers can be wrong up to two-thirds of the time for some groups of physicians," Rohack says. "Inaccurate information can erode patient confidence and trust in caring physicians, and disrupt patients' longstanding relationships with physicians who have cared for them for years."
"Given the potential for irreparable damage to the patient-physician relationship, the AMA calls on the health insurance industry to abandon flawed physician evaluation and ranking programs, and join with the AMA to create constructive programs that produce meaningful data for increasing the quality and efficiency of healthcare," Rohack says.
Calls by HealthLeaders Media seeking comment from several health insurance industry trade groups were not immediately returned Wednesday.