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Making the Grade

Doctors say insurance company rankings of doctors are based on cost, not quality. Will a new patient charter resolve the debate?

Jeneen Interlandi
Newsweek Web Exclusive
Updated: 8:28 AM ET Apr 17, 2008
READ full article: http://www.newsweek.com/id/132496

Dr. Earl Carstensen says he has never failed a test in his life. So he was surprised when, in October 2006, one of the insurers he works with informed him that his Colorado-based practice had failed to meet their cost-efficiency standards. They told him he was at risk of losing his contract with them.

The level of care Carstensen provides wasn't an issue. He ranked in the 80th percentile on the company's quality of care measures. Nonetheless the insurer explained that he would have to make some changes in his practice, like cutting down on the length of patient visits, or finding less expensive emergency rooms, lest he risk being kicked out of the network. "None of the extra things I did, like providing reams of information to my patients or being available to them 24-7 made any difference," Carstensen says. "They could still yank my contract based on a low efficiency score, and that would hurt my reputation and cost me patients." (Carstensen asked that the name of the company not be made public.)

Scoring systems like the one used to rate Carstensen have touched off a contentious battle between doctors and insurance companies, two groups whose relationship was already strained. Insurers say the ratings are intended to help patients get the right care at the best price. But being graded by insurers makes doctors uneasy. A growing number of physicians have accused giants like Cigna and United Healthcare of using dubious and secretive ranking systems to steer patients to the cheapest doctors, by claiming those are the best doctors. "There is a huge conflict of interest for the insurer," says Nancy Nielsen, president-elect of the American Medical Association (AMA). "Their primary objective is to keep cost low."

Insurance companies point out that the impetus for cost-based ratings and networks comes not from insurers, but from their customers. Bill Taylor, the regional medical director for Blue Cross Blue Shield in Midwest Texas explains that "for small employers, the alternative to a low-cost network is no network at all."

One thing is sure, evaluating the roughly 800,000 doctors in the United States on both efficiency and quality is no small feat. Insurance companies began the task about eight years ago in an attempt to address both the needs of employers looking to curb health care costs and patients who were demanding more information about their doctors and the services they provide.

Under the existing physician-ranking programs, insurers rate doctors in their networks on quality, cost, or some combination of the two. One plan might offer lower co-pays and deductibles for patients who use high-ranking doctors; another might devise an entire network that consists only of these 'preferred doctors'; a third might threaten to cancel the contracts of individual physicians who fall below a certain threshold, removing them from the consumer's list of choices. While doctors complain that the bases for the rankings are secretive, insurance companies maintain that the calculus used is proprietary. Neither patients nor doctors are given a detailed explanation of the basis for the ratings.