American College of Physicians: Internal Medicine — Doctors for Adults ®

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Physician fees are put under microscope

Price 'transparency' helps patients choose, but may not reflect the true cost of care

From the September ACP Observer, copyright © 2006 by the American College of Physicians.

By Bonnie Darves

Since last August, patients insured by Aetna in the greater Cincinnati area have been able to log onto the insurer's Web site, click on the name of a participating physician and find out exactly how much their doctors get paid for everything from a new patient office visit to a three-dimensional heart study.

A year later, Aetna is expanding its price "transparency" program to members in 15 more markets. Members in 12 of those markets can also go online to learn whether their physicians have met Aetna's volume, clinical quality and efficiency standards. To become "designated," a physician must see a certain number of Aetna patients, provide evidence-based care, such as giving beta-blockers or ACE inhibitors to heart patients, and demonstrate efficient use of resources.

Aetna, with more than 15 million members nationwide, was the first insurer to post the specific contracted fees that it pays internists for 30 commonly provided services. Other insurers—including UnitedHealth, Cigna, the Blues plans and a host of regional players—have since launched their own "transparency" programs. Even Medicare has jumped on the bandwagon, and in June started posting physician services and hospital fees in a handful of cities.

It's a step in the right direction by giving patients information about what physicians are getting paid, say proponents of transparency, but it falls far short of conveying the true cost of care.

“Simply giving a patient the unit price of a mid-range visit doesn’t get at that important piece of information—the total cost of an episode of care,” said Douglas Leahy, FACP, of Knoxville, Tenn., who chairs the College’s Third-Party Reimbursement Committee. “If, for example, an aneurysm is suspected, the patient will undergo tests and see specialists and may be in the hospital.”

Others contend that giving consumers limited quality and performance data can be misleading. That information doesn't take into account variations in internists’ patient populations, for example, which can make good physicians look like poor performers. Aetna's Web site cautions patients about choosing physicians based on price or limited performance data, but consumers have little else on which to base their decisions.

“It's time that patients understood what the costs of care are, but even I have trouble with the system," said Leonard Lichtenfeld, FACP, a general internist in Thomasville, Ga., and a member of Aetna’s physician advisory committee. "How do we expect ordinary folks to understand what [their total care] is going to cost them?”

Will patients take note?

Patients should understand that Aetna is not Consumer Reports, said Lexington, Ky., internist Gregory Hood, FACP. "Even Consumer Reports will tell you that sometimes the best product in a given category might not be the most expensive or the least expensive, he said. "And we all know, from the reports we’ve seen on quality in U.S. health care, that price—or cost—is a very poor marker for outcomes.”

While the purported purpose of transparency is to give “buyers” at the consumer level more information, it’s really more about the next iteration in cost shifting, contended Dr. Hood. “To look at this and say, 'This fixes everything,' is a gross misrepresentation of what this is,” he said. “It’s an endeavor to shift risk and expense back to the patient. But it’s one that has a bit of a smoke-and-mirrors game to make them think that this is no different than choosing the features on a cell phone or iPod.”

Using pure cost figures—calculated at a specific juncture in a patient’s care—has limitations, acknowledged Charles M. Cutler, ACP Member, Aetna's national medical director for quality management and clinical integration, based in Hartford, Conn. To address those drawbacks, Aetna uses tools such as the Cave methodology, which groups outpatient, inpatient and prescription claims associated with an episode of care and compares physicians to their peers in order to get closer to the total cost of care.

“We want to give people information that’s credible and understandable and feel comfortable with the data we’re sharing,” Dr. Cutler said. “It would be great if we could show the average cost and quality of care of a patient with diabetes over a period of time, but there are all sorts of technical challenges in doing that.” Those include figuring out to whom care should be ascribed, whether care was continuously provided, and the period of time for which reliable data was available.

Many internists interviewed for this article predicted that patients won't pay much attention to posted price information on primary care services. Patients, they said, are unlikely to change physicians based on fee differences alone—in part because spreads within a given community are likely to be small.

In Cincinnati, for example, where Aetna piloted its cost-transparency initiative, differences in visit charges among internists were in the $2 to $5 range. Far more variation was seen among specialists and surgeons, where an elective procedure’s fee might differ by several thousand dollars.

“I think people are much more emotional about those choices,” said Robert A. Lebow, FACP, a solo-practitioner in Southbridge, Mass., who heads the Massachusetts Chapter’s committee on health and public policy. "If they think their doctor is on their side, they’ll stay with him. I haven’t seen technology make a huge dent in that.”

Still, transparency is needed to allow consumers some way of assigning value to what they're buying, said Decatur, Ala., internist Michael Hennigan, FACP. “It’s going to have problems–there will be mistakes and the law of unintended consequences will cause things to happen that we don’t want. But let’s admit that and get started anyway.”

And internists shouldn't let the imperfections of the emerging transparency trend overshadow the fact that it might show their patients that physicians aren't charging exorbitant prices and are constrained by fee schedules, Dr. Leahy said. “I think we’re dealing with accountability.”

The emerging playing field

The BlueCross BlueShield Association (BCBSA), with 94 million U.S. members, is moving more tentatively on cost transparency. In June, it unveiled its Blue Distinction program—an initiative that will report quality and affordability information to its members. The quality reporting involves BCBSA’s initial efforts to designate cardiac care, transplant and bariatric surgery centers as Blue Distinction centers based on process and outcomes measures.

The Blues’ cost-transparency demonstrations, underway in 22 U.S. markets, provide information on absolute and relative medical costs, stopping short of providing specific physician fee information. BCBS executives said they made a concerted effort to engage physicians in the planning process.

“When we developed the [Blue Distinction] measures we asked physicians, 'is this measurable, meaningful?'” said John Fallon, FACP, BCBS Massachusetts’ chief physician executive and senior vice president of medical innovation and leadership. Although he said he is personally wary of rushing to post cost data without providing context, the pressure is on, he said, and physicians should try to understand what's driving it.

“There are market forces driving the issues of transparency–the employer community, the national consulting community—and the large national employer and local employer base,” Dr. Fallon said. “The demands for transparency are quite significant, and the two areas they seek in their own value equation are quality and cost.”

Insurers that don’t respond to those demands, citing imperfections in quality measures and difficulties obtaining accurate cost information, are not being well received. So some are forging ahead providing what they can, he explained. “Since ‘no’ is not an option, a lot of plans now are using claims data. But we’re looking at how we can make this better,” he said.

All's fair ...

If doctors have their costs and ratings posted for all to see, shouldn’t insurers do the same—and shouldn’t physicians’ insurer ratings also be publicly available? The College (see sidebar), the Medical Group Management Association, and the Massachusetts Medical Society, among others, have issued statements calling for some degree of reciprocity in transparency.

“Are the plans conducting provider satisfaction surveys and posting that data?” Dr. Leahy asked, adding that health plan members should also have access to information on how their premium is allocated.


M. Douglas Leahy, FACP: "If you're going to be transparent, it should be applicable to all of us."



For example, he suggested that plan members should be able to find out the portion of the premium dollar that goes to medical expenses, and how much is allocated for administration, marketing and the at-times controversial executive compensation packages.

“Will they be transparent regarding their costs and where revenues are being allocated—and are they meeting the quality needs of their constituents?” Dr. Leahy asked. “If you’re going to be transparent and accountable—and I believe that is where we should be as a society—then it should be applicable to all of us.”

Dr. Lebow noted that insurers should also reveal how they use controls in services utilization, such as for imaging, so that physicians and patients know how related authorizations or denials are decided.

“They want us to be transparent but they won’t be transparent. We’re being rated and ranked, and yet they have their own secrets,” he said.

Dr. Cutler countered that Aetna’s and other insurers’ HEDIS rates and other indicators have been reported publicly in newspapers and by many state health departments, and that financial performance data is readily available on publicly-traded companies. “I think plans have been fairly transparent, even if [the information] is not on our website.”

The MGMA and others have cited another issue that might tip the transparency scales in insurers’ favor: Physician practices are often prohibited, by virtue of health plan contractual restrictions, from disclosing pricing information. The MGMA, in its recent position paper on cost transparency, calls for requisite reporting of insurers’ total allowed charges and the methods used to calculate fees to physicians.

The missing link?

Finally, some physicians wonder how they can be graded on their efficiency and use of resources—testing, referrals and admissions, for example—when they do not have ready access to associated cost information when making decisions.

That's a very important missing link in the current cost-accountability equation, said B. Dale Magee, MD, president-elect of the Massachusetts Medical Society. Given that state's burgeoning physician cost-and efficiency-tiering, the society has gone to great lengths to emphasize this point.

“A lot of that [total cost of care] depends on the cost information I have at the time I deliver care,” maintained Dr. Magee, a gynecologist. “As I write a prescription, order a test or refer a patient to another doctor, if I don’t have cost information or guidelines that tell me it’s safe to go with a less expensive [drug] alternative, then I’m kind of out there. The tools available at the point of service aren’t aimed at making physicians cost conscious.”

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College cites pitfalls in posting data

Since quality and cost transparency initiatives hit the marketplace, the College has actively engaged in efforts to increase awareness of related issues and pitfalls in posting data.

ACP is a founding member of the Ambulatory Care Quality Alliance (AQA) in Washington, D.C., which is seeking standardization on what evidence-based medicine means—as well as uniformity on how quality and cost information flows to consumers and patients. The collaborative includes other physician organizations, America's Health Insurance Plans and the Agency for Healthcare Research and Quality (AHRQ), among others.

In late spring, the College presented a paper to Congress regarding members’ concerns about transparency initiatives in general—and pushed for a U.S. Department of Health and Human Services Web site that would compile information on total costs that would be easily accessible to and understandable by patients.

In its communications with industry and policymakers, including recent testimony before Congressional committees, the College has said the following are key issues in current cost transparency initiatives:

  • Physician fees have little relationship to the total cost of care or patients’ out-of-pocket expenses.

  • Most physicians, by virtue of their contractual relationships with payers, rarely have a single “retail” fee.

  • Posting prices of certain services, such as annual physicals, tests, or preventive health and screening services, could cause some self-paying patients to skip beneficial screening and/or treatments.

The College has recommended that members voluntarily provide retail prices to self-paying patients for the 10 most commonly provided services and procedures. ACP is also requesting that private insurers clearly indicate to consumers the actual negotiated rates they pay physicians for individual services—which would be more useful and meaningful than the current retrospective details insured individuals receive.

“The College’s position is that this [cost transparency] is a short-term fix,” said Dr. Leahy. “We’re deeply involved with AQA to standardize quality and cost reporting, but we also need to move the payment system so that we’re following good-quality medicine."

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