Cheap or Good?

Physicians Fear Which Choice Insurers Will Make

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Cover Story -- August 2004  

By Walt Borges
Associate Editor  

Houston gynecologist M. Bruce Christopherson, MD, was astounded when Blue Cross and Blue Shield of Texas (BCBS) sent him a letter telling him he would not be part of its BlueChoice Solutions network. The network is offered to employers as a way to reduce health care costs by including only those physicians the insurer considers to be the most cost-effective.

The letter told Dr. Christopherson that he was eliminated because his costs were above average.

"I knew this had nothing to do with the quality of medicine I practiced," he said. "I had a low complication rate and had lowered my pharmaceutical rates. Every procedure that must be precertified had been precertified. But there was no explanation. If I was off base, I wanted them to tell me where I was off base."

Over the next two months, Dr. Christopherson attempted to pin down BCBS on what he had done to exceed average costs. The best answer he received was that the number of procedures and tests he ordered was high, an assessment he questioned.

Then in mid-June, he received a call from BCBS Regional Medical Director William Taylor, MD.

"He informed me that I was average or below in ordering procedures, surgery, and lab tests," Dr. Christopherson recalled. "He told me he was sure that I was above average because of the contract price for my services."

Dr. Christopherson is a member of Memorial Hermann Health Net Providers, a 3,000-physician independent practice association (IPA). The IPA negotiated a reimbursement contract with BCBS that considerably exceeds typical reimbursement for physicians, Dr. Christopherson says. While the IPA's astute contract negotiations had earned its physicians high reimbursement, Dr. Christopherson is paying a price for its business savvy.

Dr. Christopherson's experience illustrates why physicians have reacted skeptically to the use of economic profiling -- which measures a physician's cost against other doctors performing similar procedures or services -- to create super-networks of physicians. Cost matters, quality doesn't, these physicians say.

"It's the policy of the Texas Medical Association that it is inappropriate to use economic profiling without taking into account quality measurements," said Lewis Foxhall, MD, chair of TMA's Council on Socioeconomics. "From what I've seen, there is no reliable mechanism to track the impact of economic credentialing of physicians on quality."

Dr. Foxhall suggests that many Texas physicians are angered by health insurers' willingness to push forward with plans to use economic profiling, while the quality issue remains unresolved.   

A Tough Call  

Assessing the cost-effectiveness of treatment is not simple, says TMA Director of Health Care Financing Teresa Devine.

For example, a patient with a heart condition may undergo surgery if he uses Dr. A, but Dr. B may choose to treat the condition with medication. If the patient gets better after taking the medication, then Dr. A is the least cost-effective, and Dr. B earns an invitation to participate in a "high-performance" network.

But suppose the medication does not help Dr. B's patient? If the patient has a heart attack and dies, Dr. B remains more cost-effective than Dr. A even though the outcome was bad.

A third scenario: Dr. B chooses to treat initially with medication as the most cost-effective and medically prudent course of treatment. The patient does not improve and suffers a mild heart attack. Dr. B performs surgery and the patient recovers. Although Dr. B attempted to contain costs, the delay in corrective surgery added to the ultimate cost of treatment and made him less cost-effective than Dr. A.

Ms. Devine says the subtleties of analyzing physicians' treatment decisions cannot be discerned by a computer scanning a claim form. A review of medical records is necessary, at the very least, she says.

For example, one gastroenterologist told TMA that his exclusion letter from BCBS indicated he had above-average expenditures on diseases associated with menstruation. The physician does not treat gynecologic problems. After TMA health care financing staff became involved, BCBS informed the physician that he had twice evaluated abdominal pain in episodes that are grouped as a condition associated with menstruation.

The key point, the physician and TMA were told, is that all the doctors who participated in the episode share the episode score, so the gastroenterologist shared the high score generated by the other physicians treating the patient. The gastroenterologist was assured he would not have been included in the network even if the two episodes were excluded. The physician accepted that explanation.

Ms. Devine says scoring a physician who has a minor role in a treatment episode as if the doctor controlled the cost is both inaccurate and unfair.

In other situations, a physician is required by a BCBS contract to refer to specialists within a BCBS network. If those specialists generate excessive costs, the referring physician is tagged with the episode's excessive score, endangering participation in the network.

Dear Doctor …  

More than 29,000 physicians in BCBS Texas BlueChoice network received letters in May telling them if they had been selected for participation in the BlueChoice Solutions network. Approximately two-thirds made the cut, BCBS officials say.

Dee Whittlesey, MD, BCBS Texas vice president for physician advocacy, says physicians need to keep in mind that the Solutions network is a small piece of the Blues' overall preferred provider organization (PPO) network. "The BlueChoice network is the primary network, not this subset," she said.

Health insurers say they offer select networks to meet the demands of some of their largest customers, employers who may cut back on health benefits because of rising health insurance costs. The insurers estimate that employers can slash their health care costs between 4 and 10 percent by using cost-efficient doctors in the select networks. But the health insurers caution that those savings are likely to be maximized only for businesses with a large number of employees.

BCBS told TMA leaders last year that the Employees Retirement System of Texas (ERS) asked it to help the state save $100 million in health care costs. After conferring with other BCBS plans serving state employees, BCBS Texas developed a network option using a tier of physicians identified through economic profiling. ERS nonetheless rejected BlueChoice Solutions as a major health offering for state employees in 2004-05.

An ERS spokesperson said the agency decided not to offer an untested health plan for 500,000 state employees and pensioners until it had been tried by other private and public employers and proven to generate savings.

During TexMed 2004 in May, BCBS officials said they were going ahead with plans to roll out BlueChoice Solutions. The announcement was met with skepticism among TMA leaders, as well as physicians who had received rejection letters.

"We all understand that the cost of medicine is rising and the ability of businesses and individuals to obtain health care is becoming more and more of a problem," Dr Foxhall said. "We understand that there are reports that indicate that 82 million Americans under 65 are without health insurance. But we don't think this sort of limited-access network based solely on the costs that were associated with individual physicians in the treatment of patients is a viable solution."

Dr. Foxhall points out that health plans are asking doctors to become increasingly aware of their cost-effectiveness, but most plans do not recognize that the rising cost of pharmaceuticals is a major driver of the cost of care that is beyond the control of physicians.

The same problem applies when physicians are contracted to use facilities that have higher reimbursements than the average or when geographic or quality-of-care considerations encourage physicians to refer to such high-price facilities.        

A Silver Lining?

Some physicians, including the one TMA asked to review the BCBS process for selecting doctors for BlueChoice Solutions, believe using computer programs to mine claims data may help physicians learn how to be more cost-efficient.

Robert Haley, MD, a professor of internal medicine at The University of Texas Southwestern Medical School at Dallas, reviewed the BCBS Texas process and found it wanting when it comes to considering quality factors.

But with significant tweaking to include quality, he says, the process could be used to give physicians information about physician practices that generate excessive costs. He says BCBS officials are willing to make the criteria and performance data available to doctors and to work quality factors into their determinations, if possible.

"This might be a contribution to cost-effective medicine," Dr. Haley said. "It has great potential if done right. It has the potential to put incentives for cost-effective care into the system where they properly belong.

"With the crisis in the rising cost of health care and the rising number of uninsured, we should be looking at providing quality care in a cheaper way."

Dr. Haley, a former president of the Dallas County Medical Society, has a background in epidemiology and experience in analyzing large databases. He was suggested to TMA and BCBS Texas by local medical society officials.

Dr. Haley says BCBS Texas officials have taken positive steps in providing evaluations of a physician's cost-effectiveness that allows the physician to pinpoint where costs of care are high. The doctor can then move to modify his or her practice to keep those costs under control.

"The doctor can challenge the BCBS findings or make a change," Dr. Haley said. "That's a whole different matter than being evaluated through a black-box analysis conducted by a third party."

Katherine Grigsby, manager of a Houston oncology practice excluded from a Humana network, agreed that the transparent BCBS system has potential. (See "Economic Profiling Is Headed Your Way.") She contrasted it with the practice's experience with Humana.

"They sent us a standard letter telling us we did not meet the criteria to be in the system," Ms. Grigsby said. "We could not get them to tell us why. We suspect it was because we did not accept their HMO product, and they had no data on us."

By comparison, Ms. Grigsby learned from BCBS that the practice had been accepted by BlueChoice Solutions, in part because its utilization rates were low.

Open Issues  

Whether quality of care is adequately balanced against cost-effectiveness is at the top of physicians' list of concerns about how they are selected for health plans' limited networks.

 Aetna Senior Medical Director Don Liss, MD, says selection for his company's Aexcel network starts with existing PPO specialists, applies a "volume screen" that removes physicians with numbers of cases that are statistically insignificant, and then applies measurements of clinical performance.

"These are measures that are consistent with those recommended by prominent medical societies in each specialty," Dr. Liss said. "The clinical measurements are markers of quality considerations."

About 5 percent of specialists in the large Aetna PPO networks are eliminated on the basis of their clinical performance. Aetna analyzes the remaining physicians using the Symmetry program that groups claims data into episode-related treatment groups. That allows physicians to be compared for the cost-effectiveness of treatment for similar medical conditions.

Dr. Liss says the combined screening leaves between 40 and 70 percent of Aetna PPO specialists in the Aexcel network, varying by market.

BCBS incorporates quality considerations through a multitiered review of physicians joining the PPO network, says Dr. Taylor, the BCBS Texas medical director. The company reviews each physician's hospital credentialing, Texas State Board of Medical Examiners records, and BCBS's internal patient complaints that have medical quality implications.

Dr. Taylor says a key feature of BCBS quality evaluation is a peer review process in which doctors practicing in Texas review utilization outliers and make recommendations on participation in the BCBS network.

Evaluating quality versus cost is difficult, says Dr. Whittlesey. "There's not one measure of quality than can be applied across all the specialties. One or two quality measures are not going to do it," she said.

BCBS officials say an exact determination of quality by outcomes would require a review of medical records for each claim. Reviewing the records of 30,000 BlueChoice physicians would be a costly administrative nightmare for BCBS that would be a burden on physicians and their staff.

Dr. Haley says the criticism leveled at BCBS Texas by physicians at TexMed 2004 had an impact on the health insurer. "I followed up with Blue Cross officials," Dr. Haley said. "They appear to be trying to incorporate the quality component in BlueChoice Solutions."

He suggested BCBS use existing software that measures quality to modify its cost analysis of claims.

"The whole [Symmetry] approach relies on episode groups in a software program," Dr. Haley explained. "The same software company also has several quality-measuring software products that can establish quality indices. My suggestion was that [BCBS] combine them."

The programs Dr. Haley mentioned analyze claims data and sift out episodes for multiple diseases. One program suggested by Dr. Haley measures treatment against evidence-based clinical guidelines for 20 diseases, including coronary artery disease, diabetes, HIV/AIDS, and sickle cell anemia.

The concern over whether quality of care is reduced by lowering the cost of care is based on assumptions rather than hard facts, Dr. Haley says.

If health insurers like BCBS incorporate quality-of-care measurements into their network selection programs, "the first thing we want to know is whether there is a difference in the outcome of care above and below the median cutoff in cost intensity," Dr. Haley said. "We don't know what that answer will be. If the outcomes are the same above and below the cutoff, this would reassure physicians that using cost-efficiency to create networks is not always a bad thing."

But Dr. Haley said a second, long-term issue must also be addressed: "If you influence doctors and they reduce the cost-intensity of their practice, does it produce a lower quality of care over the long run?"

Dr. Taylor says most physicians are concerned that utilization review will lead to underutilization of medically appropriate services. He says doctors who under-treat to reduce costs may have to take expensive corrective measures later.

"There is a lower cost when you do it right," Dr. Taylor said.

Josie R. Williams, MD, a member of the TMA Board of Trustees and one of the association's experts on quality, says the administrative burden of reviewing paper records is difficult, if not impossible, for insurers. Electronic medical records could provide some relief, says Dr. Williams, director of the Rural and Community Health Institute for The Texas A&M University Health Science Center.

Dr. Williams will join Dr. Haley in continuing to review the BlueChoice Solutions process

She said BCBS has "done a good amount of work" on measuring performance through claims data, something physicians have not done because of a lack of centralized data-collection systems. She says she wants to make sure BCBS performance measures are based on hard science and establish performance measures that area "bare floor" of what must be done to treat certain types of illnesses and conditions.

"We physicians fuss because the health insurers are attempting to measure quality, yet medicine has done little to collect the information. We may have to change the way we practice to measure for quality," said Dr. Williams.


Economic Profiling Is Headed Your Way

Blue Cross and Blue Shield of Texas and three other major health insurers have already established select networks in Texas or are planning to do so by Jan. 1.

In the Dallas-Fort Wortharea, Aetna Inc. offers a super-network of specialists under the Aexcel name. About 70 percent of the specialists in Aetna's north Texas PPO network are included in the Aexcel network, offered to employers with self-funded health plans. Aexcel began as a pilot program in Texas, serving the company's own 3,000 employees. Another 61,000 members were enrolled in Washington state and north Florida. Aetna plans to expand the offering to six other markets across the nation in 2005.

CIGNA has CareNet, a network of specialists that will be offered to employers with self-funded plans. Only a "small percentage" of CIGNA network physicians will be left out of the super-network, CIGNA officials told an industry newsletter. CareNet already can be used by self-funded employers in Texas, but the Houston and Dallas-Fort Worth markets are targeted for expansion in 2005, according to the newsletter.

Humana is testing its SmartNet in health plan options offered to its own employees. Humana plans to establish its super-network of primary care physicians and specialists nationwide by the end of the year. The company estimates the network will include 70 to 80 percent of its national network of 380,000 physicians. In Texas , SmartNet is used by three school systems in the Houston area.

SmartNet has already drawn fire as the exclusive network used by some school districts, says Katherine Grigsby, practice manager for Oncology Consultants. The Houston-area practice was excluded from the network.

"A lot of our patients learned that we were out of the network used by the school districts. It was disruptive for most of them because patients who are fighting cancer don't like to change. And we were still listed on Humana's Web site and in network booklets as still being in the network," she said.

"Our patients' only choice was to go with SmartNet or use the out-of-network product with its $1,000 deductible and 40-percent share of additional costs. That really is something teachers can't do when treatment for cancer may cost $10,000 a month. It really impacted the care for many of our patients."

Ms. Grigsby questions whether Humana considered the quality of care in deciding that the practice would be excluded from SmartNet. Oncology Consultants, she notes, uses a computerized system that lists all the protocols and guidelines for treating cancer to calculate appropriate care and even to calculate and recommend the appropriate dosage of anticancer drugs.

Humana had no comment on the situation.     

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