Analysing Legality Of Physician Ranking When Used By Health Insurers To Improve Health Care Quality

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Legality Of Physician Ranking

A legal analysis released by The George Washington University School of Public Health and Health Services (GW) and the Robert Wood Johnson Foundation (RWJF) affirms the legality under federal and state law of physician ranking systems used by health plan provider networks. Recent efforts by health plans to measure and disclose physician performance on quality and efficiency have created a backlash, with some questioning whether such practices are legal.

Funded by RWJF and conducted by a team of GW researchers, the analysis examines the principal legal allegations that might be raised against the practice of tiering physicians in networks based on quality and efficiency measures. The analysis concludes that well-designed tiering arrangements pass legal muster.

"The GW analysis demonstrates that, done properly, physician rankings should not raise legal concerns, either for those who are pushing the standards, or those being measured," said Michael W. Painter, MD, JD, senior program officer for the Robert Wood Johnson Foundation. "Physician rankings are a critical component of the broader movement to measure and publicly report on physician and hospital performance to help improve the quality and value of health care Americans receive."

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The analysis comes at a time when an increasing number of health care plans are creating tiers that rank physicians' performance by the quality and effectiveness of their care. State-level criticisms of physician-tiering arrangements have recently emerged. In August 2007, New York Attorney General Andrew Cuomo wrote letters to various insurers objecting to a physician ranking program and requesting that the tiering system be justified. Also in August, Regence BlueShield and the Washington State Medical Association (WSMA) settled a lawsuit brought by the doctors, who objected to the rating process. A July 2007 lawsuit, filed in Connecticut, by the Fairfield County Medical Association, charged several insurers with violations of state unfair trade laws because of the use of "elite" physician designation programs.

Ensuring the legality of public reporting is critical because many experts believe that the public needs significantly more information about the quality and cost of care in order to drive improvements in the quality and efficiency of health care. For instance, state and community alliances across the nation, such as those participating in the RWJF project Aligning Forces for Quality: The Regional Market Project or those working with the Department of Health and Human Services, are using quality measures and publicly reporting them in an effort to lift the quality of care. A growing number of health plans rate physicians on certain quality and efficiency measures to design insurance products that classify physicians in tiers. Additionally, plan members are given incentives to select certain high performing physicians.

The GW legal analysis concludes that transparency is critical when designing a tiering process. The analysis notes that the Washington state settlement, which established a process to include physicians in the rating process, illustrates the premium the legal system places on action that "is visible to affected populations and allows their input."

"Classifying doctors based on the quality and efficiency of their services is legal, and so is publishing information regarding health care quality," said lead author Sara Rosenbaum, JD, Hirsh Professor of Health Law and Policy and chair of the Department of Health Policy at the GW School of Public Health and Health Services. "It is undertaking these efforts in the dark that can lead to a legal backlash."

The analysis further notes that transparent standards, a transparent development process in setting tiers and assigning individual physicians to tiers, and a clear and accessible process for identifying and correcting errors that arise as tiering positions should ensure the legal soundness of these systems.

The analysis suggests that standards could be developed by state insurance regulators in the case of insured plans, the Centers for Medicare and Medicaid Services in the case of Medicare and Medicaid plans, and by the United States Department of Labor in the case of ERISA-governed plans.

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