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Home / News & IndustryManaged Care Insight and Analysis
Updated: March 1, 2011
Physician Cost Profiling Can Vary Widely, Study Finds

Profiles created for physicians based on the cost of the care they provide can vary widely, depending upon the methods used by insurance companies to create the profiles, a RAND Corp. study found.

Researchers said the findings add to the concern about the accuracy of physician cost profiles being created by insurance companies aimed at encouraging patients to visit low-cost physicians.

Physician cost profiles are still "a work in progress," said lead author Dr. Ateev Mehrotra, a RAND researcher and a professor at the University of Pittsburgh School of Medicine. The U.S. Department of Labor funded the study.

RAND researchers analyzed information from four commercial health plans in Massachusetts that enroll a total of 1.1 million adults. The findings were published in the Annals of Internal Medicine.

The study found that between 17 percent and 61 percent of physicians would be assigned to a differentcost category, depending on the methods used. Cost categories in conjunction with quality scores are used to assign physicians into performance tiers.

For example, a patient may have to make a $15 co-pay to see a physician assigned to the highest performing tier, but that co-pay might increase to $30 if the physician is in a lower performing tier. If physicians are assigned to a lower performing tier, their patients might leave them and switch to a physician in a higher performing tier.

RAND researchers also examined the methods that insurance companies use to assign responsibility for the cost of care when a patient sees multiple doctors.

For example, one rule might assign the cost of care for a patient to the physician who accounts for the highest percentage of patient visits. Another rule could assign the cost of care for a patient to the physician who accounts for the highest percentage of the costs incurred in delivering care.

Mehrotra said that an important step for the future is for insurance plans to be more transparent about the methods they use to assign care costs and suggested that insurance plans enlist physicians into efforts to create attribution rules used for cost profiling.

Address: Rand Corp., P.O. Box 2138, 1776 Main Street, Santa Monica, CA 90407-2138; (310) 393-0411,

  This article was taken from:
Pay-For-Performance Reporter

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