Cost-Profiling Methods Often Found Inaccurate


Current methods for profiling individual physicians as to whether they provide low-cost or high-cost care are often inaccurate and produce misleading results, according to a report in the New England Journal of Medicine.

Health plans use cost profiling to limit how many physicians get in-network contracts and to allot bonuses to the physicians whose “resource use” is lower than average. In each case, there must be a method for determining physicians' costs, yet the accuracy of these methods has never been proven, according to John L. Adams, Ph.D., of Rand Corp., Santa Monica, Calif., and his associates.

Dr. Adams and his colleagues assessed the reliability of current methods of cost profiling using claims data from four Massachusetts insurance companies concerning 1.1 million adult patients treated during 2004-2005. A total of 12,789 physicians were included in the study. They were predominantly men who were board certified, had been trained in the United States, and had been in practice for more than 10 years.

The physicians worked in 28 specialties, including obstetrics and gynecology, cardiology, endocrinology, and gastroenterology. Family physicians, general physicians, and internists comprised approximately one-third of the sample.

The investigators estimated the reliability of cost profiles on a scale of 0-1, with 0 representing completely unreliable profiles and 1 representing completely reliable profiles. They then estimated the proportion of physicians in each specialty whose cost performance would be calculated inaccurately.

Overall, only 41% of physicians across all specialties had cost profile scores of 0.70 or greater, a commonly used threshold of acceptable accuracy. Only 47% of internists, 30% of cardiologists, 41% of family or general physicians, 57% of ob.gyns., 59% of gastroenterologists, and 22% of endocrinologists received scores of 0.70.

Overall, only 9% of physicians in the study had scores of 0.90 or greater, indicating optimal accuracy.

The proportion of physicians who were classified as “lower cost” but who were not in fact lower cost ranged from 29% to 67%, depending on the specialty. Fully 50% of internists, 40% of cardiologists, 39% of family or general physicians, 36% of ob.gyns., 32% of gastroenterologists, and 50% of endocrinologists were misclassified as “lower-cost” providers when they were not.

In addition, 22% of internists were misclassified as “higher cost” when they were not in fact higher cost.

This same misclassification occurred as well for 14% of cardiologists, 16% of family or general physicians, 10% of ob.gyns., 11% of gastroenterologists, and 19% of endocrinologists.

These findings indicate that standard methods of cost profiling are highly unreliable, and that many individuals and groups are basing important decisions on inaccuracies. “Consumers, physicians, and purchasers are all at risk of being misled by the results produced by these tools,” the investigators concluded (N. Engl. J. Med. 2010;362:1014-21).

The study findings also suggest that using cost profiles that are based on these unreliable methods will not reduce health care spending. “There are serious threats to insurance plans' abilities to achieve cost-control objectives and to patients' expectations of receiving lower-cost care when they change physicians for that purpose,” they added.

Disclosures: This study was supported by the Department of Labor, the National Institutes of Health, and the Robert Wood Johnson Foundation. The investigators' conflicts of interest include support from the Integrated Healthcare Association, American Medical Association, American Board of Medical Specialties, American Board of Internal Medicine Foundation, Massachusetts Medical Society, Physicians Advocacy Institute, and Ingenix Inc.

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