Efficiency Rating under Medicare Must Use Accurate Data and have Physician Buy-In

Washington, D.C.–The American Academy of Ophthalmology is raising concerns about the findings of a Governmental Accounting Office (GAO) report released earlier this week that could lead to a link of Medicare physician pay to efficiency – defined as providing and ordering a level of services that meets the patient’s health care needs, but is not excessive, given the patient’s health status. The report claims that the Centers for Medicare and Medicaid Services (CMS) has the tools available to them today to profile physician practices for efficiency. Private purchasers have used profiling – the collection of data to compare doctors on their costs of providing services to rate doctors on the basis of the ratio of their actual costs to the expected costs for delivering a specified service or the care of a patient condition over a defined period of time. The obvious problem is who defines the expected costs and is the patient population risk adjusted.

If CMS had additional authority, it could also pay physicians similarly to how private sector plans are when they use profiling. A recent report conducted for the Massachusetts Medical Society, however raised questions about the accuracy of the data in a recent private sector experience. In addition, it determined that physician profiling at the individual level caused increased administrative burdens for insurers and unintended consequences for both physicians and their patients that affected quality of care.

“While we acknowledge the increased demand by consumers and payers for more transparency in order to enable them to value the delivered services, the use of billing profiling by CMS is unable to differentiate sub-specialists from generalists and among patients with differing co-morbidities,” said William L. Rich, III, MD, the Academy’s medical director of health policy. “Grouper software often used in profiling, which purports to be able to compare doctors on the basis of cost on similar patient populations, makes assumptions of risk adjustment on the basis of administrative claims data which have never been validated because they are proprietary,” he added. “For these reasons we suggest caution before proceeding on efficiency measures.”

GAO conducted the study on physician profiling under its broad 2003 mandate to examine aspects of physician compensation in Medicare. The study looked at how 10 healthcare purchasers accessed physician performance against an efficiency standard. The purchasers linked their physician evaluation results to a range of incentives from steering patients toward the most efficient providers to excluding a physician from the purchasers’ provider list because of inefficient practice patterns.

“The demand for quality at the lowest price is not just coming from CMS and commercial insurers but by patients that are paying out of pocket for services,” Dr. Rich stated. “Payers and the public want quality and value.”

If you would like to interview William L. Rich, MD, please contact Tracey Young 202.587.5816 by phone or by e-mail at tyoung@aaodc.org.