High-Priced Physician Practices Don't Deliver Better Care

Researchers find a weak association between physician practice prices and quality of care for Medicare patients.

High-price physician practices generate little added value compared to low-price physician practices, an analysis of Medicare and commercial-insurance claims data shows.

"We found that higher prices were associated with higher patient ratings of care

coordination and management and slightly higher vaccination rates.

Higher prices, however, were not associated with higher overall patient ratings of care or physicians, improved access, better performance on other process measures of quality, fewer hospitalizations, or lower Medicare spending," wrote the authors of a study published in Health Affairs.

The study shows a weak link between the commercial price for office visits at physician practices and the quality and utilization of care for Medicare fee-for-service patients.

The average price for an office visit at a high-price physician practice was $84. The average price for an office visit at a low-price physician practice was $62.

The primary sources of data include the FAIR Health commercial-claims database and Medicare's Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey. There were 31,267 CAHPS survey respondents, with 17,130 attributed to 4,972 high-price physician practices and 14,137 attributed to 6,697 low-price practices.

High-price practices were defined as those with prices above the mean for all practices in a Primary Care Service Area, a ZIP-code based measure of Medicare-beneficiary population density developed at The Dartmouth Institute for Health Policy and Practice.

The researchers made two key findings about high-price physician practices:

• They were much larger than low-price practices
• They set prices at rates 36% higher than low-price practices

"Our findings suggest that the benefits to patients from large-scale provider consolidation may be small relative to the price increases that occur when consolidating providers gain market power," wrote the study co-authors, who are based at Harvard Medical School in Boston.

The researchers drew their conclusions from several key data points:

• For high-price practices compared to low-price practices, Medicare patients did not report different care experiences in three of the four metrics in the study: overall ratings of care and physicians, timely access to care, and primary-physician interactions.
   
• For the metric coordination and management, high-price practices reported better performance in four of the six measures examined.
   
• High-price practices attained slightly higher immunization rates for flu and pneumonia, but there was no difference compared to low-price practices for mammography screening, diabetes services, acute care utilization, and total Medicare spending.
   
• When weighing the impact of practice size, large practices were substantially bigger that those the researchers categorized as small, with large practices averaging 155 clinicians compared to 11 at small practices.

Conclusions

In addition to concluding that high-price physician practices do little to generate more value than their low-price regional competitors, the study's co-authors identified a weak point in the shift to value-based care: transparency.

"The generally weak association that we found between practices' prices and quality of care deviates from the positive relationship that exists in markets for most other goods and services."

 "This underscores long-standing information problems in healthcare markets, arising in particular from the inability of patients and payers to reliably discern differences in provider quality."