Insurers' Doc Ratings are Unreliable

An insurance company practice of steering patients to low-cost doctors may not be saving anybody money because the method used provides unreliable estimates.

That's according to a Rand Corp. study that found so-called cost profiling practices rarely produce accurate assessments. Cost assessments for surgeon specialists, in particular, were unreliable, the study appearing in today's New England Journal of Medicine found. In fact, about a quarter of almost 14,000 doctors studied would be misclassified under the common cost-ranking system used by insurers, the researchers say.

Insurers' medical costs are front and center in the health reform debate as President Obama and Democrats in Congress grill insurers on why their premium rate increases are so high. WellPoint Inc.'s Anthem Blue Cross has become the poster boy for a broken system after the insurer proposed rate increases as high as 39 percent for some individuals in California. The rankings are used to help determine which docs are included in a health insurance network. The network system has long caused tension between doctors and insurers.

"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 health care spending," says John L. Adams, lead study author and a senior statistician at Rand. "Consumers, physicians and those who pay for health care are all at risk of being misled by the results from these tools."

The statistical analysis, funded by the U.S. Department of Labor, looked at 28 physician specialties, analyzing insurance claims from four health plans in Massachusetts for 2004 and 2005. Less than half (about 40 percent) of doctors studied had cost-profile scores that were at least 70 percent reliable. (That 70 percent reliability figure is a benchmark for accuracy.)

Amost 40 percent of internists and about two-thirds of vascular surgeons determined to be lower cost using the rating system actually were not lower cost, the study found.

"These ranking systems may be useful for some purposes, but they are not reliable enough at this point to make decisions about encouraging patients to see certain providers or excluding some doctors from insurance networks," Adams says. "Much work remains to be done to improve these systems before they are used for high-stakes activities."