GAO Report Touts Benefits of Physician Profiling

Federal officials could use physician profiling as one part of an overall strategy to contain Medicare costs, according to a federal report scheduled for release by the end of April.

The report, by the Government Accountability Office, or GAO, studied the physician profiling programs of 10 health care purchasers and the Medicare treatment patterns of physicians in 12 metropolitan areas. It found that profiling has "the potential to generate savings for health care purchasers," said Bruce Steinwald, director, health care team, for the GAO.

Steinwald presented preliminary findings from the report (PDF file: 12 pages 165 KB. More about PDFs.) before the House Committee on Energy and Commerce's Health Subcommittee last month.

"We concluded that profiling is at least one approach that could be pursued to get a handle on spending," said Steinwald in a recent interview.

The study will generate discussion on Capitol Hill and within CMS about the potential of physician profiling as a cost-containment strategy that has clear advantages over the sustainable growth rate, or SGR, which currently determines physician payment rates under Medicare, said Steinwald. It could, in turn, influence debate about the future of the SGR, which Steinwald assails as a "blunt instrument that treats every physician the same."

"If there are doctors who are conserving resources and trying to be really prudent in the way they practice medicine, they get squeezed every bit as much as doctors who are ordering every test in sight and cause their patients to be very expensive," said Steinwald, describing the impact of the SGR.

Physician profiling, which uses performance and efficiency measures to assess a physician's performance, has the "capability of drilling down to the individual doctor to determine whether that doctor's patients are abnormally expensive," said Steinwald.

He added, however, that the report was not intended to portray profiling as "the magic bullet that solves every problem."

AAFP President Rick Kellerman, M.D. of Wichita, Kan., agrees that physician profiling is not a magic bullet.

"Physician profiling is not a fix to the SGR and should not serve as a substitute for the SGR," Kellerman said. He stressed that "all payment systems -- fee for service, salary, capitation and pay for performance -- have inherent positives and negatives. This is why the Academy has supported a blended payment formula combining a care management fee that rewards family physicians for the tangible worth we bring to the system," he said.

The GAO study consists of two evaluations. The first looked at 10 different purchasers ranging from traditional indemnity insurers to provider networks to government organizations, each of which placed emphasis on physician education to improve efficiency and, in most cases, quality. The plans used two basic profiling approaches to identify physicians whose medical practices were inefficient. The first approach focused on costs associated with treating a specific episode of illness, such as a stroke or heart attack, and the second gauged costs for patients in a physician's practice during a specified period.

"The purchasers we spoke with generally compared actual spending for physicians' patients to the expected spending for those same patients, given their clinical and demographic characteristics," said Steinwald.

Each plan used the results to promote efficiency by adopting a wide range of incentives -- from steering patients toward the most efficient providers to excluding a physician from a network. Some plans also established tiered copayments to give patients a financial incentive to seek out physicians who meet the standards of the plans.

The second evaluation in the GAO report examined Medicare claims data in 12 different metropolitan areas, attempting to identify overly expensive patients and, thus, determine which physicians were practicing medicine "inefficiently," Steinwald said.

"We divided patients into 31 different health status cohorts and then selected the 20 percent who were most expensive in each cohort," said Steinwald.

This part of the report, which studied physicians in family medicine, general practice and internal medicine, defined physicians as "outliers" if their overall proportion of expensive Medicare patients was abnormally high, Steinwald said.

"In each of the 12 metropolitan areas, we identified at least some fraction of the physicians who crossed our threshold for inefficiency," Steinwald commented.

"A major limitation of the GAO study is that it included only generalist physicians -- those physicians who are most under duress in the current dysfunctional health care system," said Kellerman. "I can guarantee that balancing Medicare cost savings on the backs of primary care physicians is a sure way to sink the ship."

However, he also acknowledged that the "GAO report makes some salient points about practice efficiency. The authors' methods included interviewing purchasers, Medicare agency officials and reviewing claims data," Kellerman said. "I would suggest the next step is some good old gumshoe detective work, and that means talking to physicians in practice. Without that, the GAO will have an incomplete picture of this issue."

The GAO submitted a draft of the report to CMS for comments and will address those comments in the final report.

"We will publish CMS' comments and our responses to the comments when the report is published later this month," Steinwald said.