AMA: Insurers’ Cost Profiling Giving the Wrong Impressions

July 20, 2010
Keith L. Martin

The AMA and several state medical associations say cost profiles of physicians by the nation’s biggest insurers is “unreliable” at best and steering consumers in the wrong direction.

The AMA and several state medical associations say cost profiles of physicians by the nation’s biggest insurers is “unreliable” at best and steering consumers in the wrong direction.

In a statement, the AMA says that new research by the RAND Corporation unveiled “serious flaws” in the programs used by health insurance companies to rate individual physicians based on economic criteria. The single-number rankings place docs on a scale of spending, indicating who orders fewer tests, prescribes fewer drugs, etc., with those who spend the least get a better ranking. Some insurers give breaks on out-of-pocket costs to see more “favorable” physicians.

In fact, the RAND Corporation likens the system to the dollar signs you see in several restaurant rankings to let you know what you are in for when you walk through the front door for a meal.

Now the AMA and 46 other medical societies don’t find the rankings as appetizing, sending off a terse letter to insurers asking them to fix problems identified by RAND, including inaccurate ranking of docs leading to a number of bad rankings.

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

Insurers defend the system as a way to reward docs who provide better care in a more cost-effective manner and say the rankings include both cost and quality care.

The question is: How important are these numbers, stars and other designations used by insurers? Some would argue that the goal of any patient picking a doctor should include location, specialty and other factors and not the fact that a physician’s name has an insurer-produced stamp of approval next to it.

Post-health reform, there will be a lot more new customers searching for a doctor and they will use a myriad of ways to determine who is best for them. They way they will make that determination will vary on everything from how far away you are to their work to liking the sound of your name or your website.

So with the various factors at stake, are insurer’s cost profiles that important? Weigh in below and let us know.