American Academy of Ophthalmology Web Site:
Original URL:

May 2008

The Perils of Physician Profiling
By Stephen Barlas, Contributing Writer

Private health care insurers are pushing to rank doctors.

The why, what and how of this trend toward “physician profiling.”

When the letter from BlueCross and BlueShield of Texas landed on his desk last October, oculoplastic surgeon John W. Shore, MD, couldn’t believe his eyes. He had not made the cut. The insurance company was creating a new network of “low-cost” physicians who follow evidence-based practices, and BlueChoice Solutions was to be an all-star team. The Austin-based ophthalmologist who cofounded Texas Oculoplastic Consultants in 1997 sees patients from all the other BCBS plans—even the low-cost plans offered by BCBS that have unattractive rates. He thought for sure he would have made the Solutions team.

“We were rankled,” remembered Dr. Shore. “It wasn’t that we were going to lose that much money. It is more from the patient’s perspective. They were going to have to pay out-of-network prices to see us since we would not be a part of that plan.” After all, many patients needing oculoplastic surgery in Austin are likely to go to Texas Oculoplastic Consultants. It is the only practice in town limited to oculoplastic surgery. But suddenly, patients were walking through its doors and being confronted by potential roadblocks and significant financial barriers to care. “We knew some patients would not seek needed care because of significant out-of-network charges since we were excluded from the Solutions network,” Dr. Shore said. “We try to be proactive with our patients and make sure they understand the situation before they get here. We were sure we would get constant haggling about bills because of co-pays approaching 30 percent. For some people the difference between a $50 co-pay and a $210 co-pay is a major stumbling block.”

Ted Haynes, vice president of health care delivery, BlueCross and BlueShield of Texas, acknowledges that an individual choosing BlueChoice Solutions or an employee whose company only offers Solutions—and not the broader BlueChoice network, of which Solutions is a subset—does face some conflict over cost of the health plan vs. access to physicians.

We look at episodes and ‘case-mix adjust’ them, meaning we account for more serious versus less serious cases, and take into account comorbidities and any other complicating factors. —Mr. Haynes

And BlueChoice Solutions is not alone. Insurance companies across the country are introducing new, exclusive networks that cater to cost-conscious companies and consumers. These new plans offer lower premiums and co-pays in exchange for restricted networks, which ostensibly—and that is the key word, ostensibly—feature physicians whose per episode treatment costs are lower and who have shown they are “quality” providers.

Everyone agrees, said William L. Rich III, MD, medical director for health policy for the Academy and in private practice in Falls Church, Va., that a health plan which carefully and transparently evaluates physician costs and uses established, respected quality measures ought to be able to establish networks based on those clear, clean facts. But so far, none of these new networks advertised as “low-cost, high-quality” are fully transparent, nor are their cost and quality measures carefully developed.

Physician Profiling: Risks and Rights To learn more about the various issues around physician profiling, how it could potentially impact your practice, and what you can do to prepare for and respond to it, go to (you will need your password to log into the page). There you will find the following information:

Physician profiling. How to prepare your practice.

Tiered and narrow physician networks. How to challenge your profile or placement.

AMA Policies. Physician profiling, report cards and pay for performance.


New Networks for Lower-Cost Care

The trend toward “lower-cost, higher-quality” networks is growing. In January, UnitedHealthcare introduced a health plan called EDGE, which United’s CEO described as offering “an affordable alternative to consumers who receive care from specialists recognized for high-quality, cost-efficient care.”

In Massachusetts two years ago, the head of the Group Insurance Commission, a quasi-state agency, ordered all insurance companies offering health plans to all state and many municipal employees to group all physicians in two tiers. The health plans, be they Tufts, Harvard Pilgrim, Unicare or the others, do their tiering a little differently. But in all cases, the plans try to steer members to purportedly less-expensive/higher-quality “tier 1” physicians, visits with whom call for lower co-pays. Dr. Rich says similar plans are starting to crop up in states such as Georgia and Alabama.


How Physician Costs Are Calculated

Most health plans use the Ingenix database, the major health claims database owned by UnitedHealth Group. The plans then run the claims information through what is called “grouper” software, where the claims are grouped into episodes of care, and each physician is then given a total cost for an episode. The three grouper products out now are Ingenix’s Episode Treatment Group, MedStat Episode Groups and Cave Consulting Grouper. Of these, the Episode Treatment Group methodology has 90 percent of the market.

An example of why the current system is flawed. For ophthalmologists, a typical episode of care might be chronic open-angle glaucoma. Dr. Rich explained that when grouper software looks at chronic open-angle glaucoma, it tosses in an ophthalmologist’s charges to the insurance company for imaging of the nerve, diagnostic testing, surgery, drugs, facility fees for surgery and more. Total spending, of course, is probably greater in the practice of a glaucoma subspecialist where many end-stage patients are seen, as opposed to a general ophthalmologist such as Dr. Rich, for whom glaucoma patients may be only 20 percent of his patient load, with many in the early stage of the disease. Yet the grouper software compares Dr. Rich’s costs for treating chronic open-angle glaucoma with the costs of the academic physician and designates the latter as a “high cost” provider.

BlueChoice Solutions. Mr. Haynes says BlueChoice Solutions does not use the Ingenix data and uses MedStat Episode Groups as its grouper software. “We look at episodes and ‘case-mix adjust’ them, meaning we account for more serious versus less serious cases, and take into account comorbidities and any other complicating factors,” he said. However, they are unable to risk-adjust diseases like glaucoma with no comorbidities and only one ICD-9 code for both early and advanced disease.

The Academy’s Activities Issues of health care coverage and physician reimbursement, whether through CMS or private payers, are high on the Academy’s radar. At this April’s Mid-Year Forum, policy analysts, private insurers, Academy experts and physicians who have experienced profiling discussed changes in physician payment and how doctors can respond. In addition, the Academy with the AMA is educating federal policymakers on the challenges of profiling physicians under Medicare.


How Physician Costs Are Compared

Solutions may be risk-adjusting better than similar “low-cost” plans, but still, it has shortcomings. For example, Solutions averages episode costs among similar physicians in each of Texas’s 23 regions. In Dr. Shore’s case, his average costs are compared with the average costs for other eye surgeons, not oculoplastic surgeons, in an area that includes Austin and perhaps other nearby counties.

“The data they use are totally flawed in my opinion,” Dr. Shore said. He asked for, and was given by BlueChoice Solutions, bar graphs comparing his per-episode costs with those of other eye physicians, all of whom presumably were eye surgeons of some type. “We were being compared with practices whose patients did not need the same services our patients require.” For instance, as an oculoplastic specialist, Dr. Shore is called upon to repair complex lacerations, fractures, infections and major head and neck trauma. Patients with these injuries require intensive services such as CAT scans, hospitalization for intravenous antibiotics, or intensive nursing care. “Ours is an intense surgical practice,” he explained. “Therefore our use of hospital resources is more and our costs are correspondingly higher.”

Moreover, in Dr. Shore’s case, he may treat an episode of orbital inflammatory syndrome (pseudotumor) requiring a four- or five-day stay in the hospital as the result of a referral from an optometrist to a comprehensive ophthalmologist who then refers the patient to Dr. Shore. The episode costs for the patient’s office visits reported by the first two physicians may be thrown into Dr. Shore’s episode costs. That is because some insurance companies typically assign responsibility for each episode’s actual and expected costs to a physician based on an attribution rule such as: “Responsibility is assigned to the physician who accounts for 30 percent or more of professional and prescribing costs included in the episode.”1 For BlueChoice Solutions, an episode is billed to the physician or professional provider who bills the greatest total Relative Value Units in that episode (excluding those billed by anesthesiologists, pathologists and radiologists).

Another problem is that for a particular condition an ophthalmologist may have only a couple of episodes, and so it would be statistically invalid to assign him or her an “average” cost, yet they are ranked with this information.


Questions Around Quality

Not only are there imperfections in the way episode costs are calculated and analyzed for these new low-cost networks, but health plan claims that the networks contain “high-quality” physicians are also open to question. Mr. Haynes of BlueChoice Solutions says that its network doesn’t make a “high-quality” claim, only that the physicians included follow evidence-based measures. For ophthalmologists, the evidence-based measure is an annual visual field test for patients with primary open-angle glaucoma. Any physician who is more than two standard deviations from the mean is excluded from Solutions.

Mr. Haynes says this evidence-based measure comes from the Academy. It is taken from the Academy’s Preferred Practice Patterns guidelines, said Flora Lum, MD, Academy policy director for Quality of Care and Knowledge Base Development. But the PPPs, while thoroughly researched to outline recommended best practices, are not intended to be used as performance measures for public accountability, such as those developed by the Academy for CMS’ Physician Quality Reporting Initiative (PQRI), she said.

In Massachusetts, according to Cynthia Mattox, MD, vice chairwoman and director, glaucoma and cataract service at the New England Eye Center, Tufts University, and a member of the Academy’s Health Policy Committee, health plans use as their quality determination whether a diabetic patient had a dilated exam in the past year. That is it. What made it worse, at least initially, was that the companies were only counting exams billed by an ophthalmologist using Evaluation & Management CPT codes. The Bay State’s Group Insurance Commission was not recognizing diabetic dilated exams when the claim listed a “V” code, which is used for documenting “routine eye exams” billed to vision care plans. Michael J. Price, MD, president-elect of the Massachusetts Society of Eye Physicians and Surgeons, uncovered that discrepancy and brought it to the attention of the Group Insurance Commission, which corrected the oversight. Overnight, the percentage of ophthalmologists rating in the highest-quality tier went from 65 percent to 98 percent.

The data they use are totally flawed in my opinion . . . We were being compared with practices whose patients did not need the same services our patients require. —Dr. Shore


Federal Measures Are the Most Promising

The Centers for Medicare & Medicaid Services developed a Medicare PQRI in 2007, which is being continued in 2008, where physicians are offered a 1.5 percent bonus based on their reporting of stated quality measures, eight of which were included in 2007 exclusively for ophthalmologists, and which were developed by a work group cochaired by the Academy. In the 2008 PQRI, ophthalmologists have five measures.

For primary open-angle glaucoma, an ophthalmologist has to dilate the pupil and evaluate the optic nerve in 80 percent of the patients he or she sees. For age-related macular degeneration, the quality standard is a dilated macular examination with documentation of presence or absence of macular thickening or hemorrhage and the level of macular degeneration severity. For diabetic retinopathy, there are two indicators. For one, the physician has to document the presence or absence of macular edema and the level of severity of retinopathy. The other requires communication with the primary care physician managing the ongoing diabetes care. The fifth indicator, new in 2008, is a diabetic eye exam annually, or every two years if there was a negative exam performed the year before. There are also two structural measures available for all physicians: whether a physician has and uses electronic health records and whether he or she uses electronic prescribing.

Typically, ophthalmologists have to bill the “quality” codes for 80 percent of their patients, and for three indicators. (They can bill fewer indicators if they do not see patients for whom those indicators come into play. In some instances, an ophthalmologist may show 80 percent for only one indicator.) The annual Medicare bonus amount for the average ophthalmologist participating in 2008 is approximately $4,400. Dr. Rich says that it is very simple for ophthalmologists to document those quality measures and points to the fact that eye care providers, at 60 percent, have the highest participation rate of any specialty in the PQRI.

The private low-cost, high-quality networks now cropping up around the United States are neither as credible nor as transparent as the PQRI, said Dr. Rich. But some, like BlueChoice Solutions, offer physicians an appeals process if they feel they have been unfairly excluded. Mr. Haynes says a peer-review committee composed of physicians hears appeals, one of which was made by Dr. Shore. “We stood up to them,” Dr. Shore said. “As soon as someone looked at data, they said, ‘We’ll let you guys in.’” But Dr. Shore surmises that the reason he really won his reprieve, probably, was that his practice is the only one in Austin limited to oculoplastic surgery. That would be less likely to happen in a larger city, for example, where there is a greater supply of eye surgeons.

Ultimately, Drs. Mattox, Rich and Shore agree, it is the patients, not the physicians, who are hurt by these networks, which shift higher costs onto patients, and save the insurance company money. Said Dr. Mattox, “Patients will be penalized for seeking subspecialty care, even if that is the most cost-efficient way for them to get their care.”

1 “Pay-for-performance, physician economic profiling, and tiered and narrow networks,” an Executive Report from the AMA Board of Trustees Meeting.