Payors tend to misclassify physician cost profiles; AMA urges external review
If common cost-profiling methods are used, about 22 percent of physicians would be assigned to the wrong cost category, or wrongly assessed in their practice patterns by health insurers, according to a series of studies conducted by RAND research group.

In response to the findings, the American Medical Association (AMA) delivered letters this week urging the largest U.S. health insurance companies to improve the accuracy, reliability and transparency of physician ratings.

“Patients should always be able to trust that insurers are providing accurate and reliable information on physicians,” said AMA President Cecil B. Wilson, MD. “Studies show that economic evaluations of individual physicians are so unreliable that they are more often wrong than right.”

According to the Chicago-based association, serious flaws exist in health insurer programs that attempt to rate individual physicians based on economic criteria. Health plans then use the results of such classifications to assign costs of care to a physician, as well as to categorize physicians as low, average or high cost.

The letters, which were cosigned by 46 state medical societies, asked each health insurer to publicly document the accuracy of their physician cost profiles by submitting the programs for external review by unbiased experts.

The RAND studies--which assessed how physician cost profiles are created, the reliability of the profiles and how likely a physician is to be misclassified--found that misclassification rates varied across specialties.

Specifically, the report noted the following overall misclassification rates:
  • Internal medicine: 25 percent of the time;
  • Family practice: 21 percent of the time;
  • OB/GYN: 17 percent of the time;
  • Cardiology: 20 percent of the time; and
  • Cardiovascular surgery: 36 percent of the time.

The AMA hopes to begin to work with each health insurer to reevaluate their approaches for developing physician profiling programs. “Transparent, accurate information is critical when selecting a physician. Patients deserve to know that insurers are offering physician ratings that have a high risk of error and should not be the sole basis for selecting a physician,” concluded Wilson.