Directing Patients to Higher-quality Doctors Yields Lower Health Plan Costs

Giving consumers the tools they need to make better health care choices could result in lower overall health care expenses, according to a new study conducted by Ingenix. This finding validates the theory that consumers receiving high-quality care incur fewer overall health care expenses and should reassure health plans that making an investment in consumer-targeted, quality transparency tools not only benefits their members, but helps the plan’s bottom line as well.

Health care costs on the rise

Because health care costs are rising, accreditation agencies, the federal government and consumers, especially those enrolled in consumer-driven health (CDH) plans, have called for greater transparency into cost and quality so patients can make informed decisions about their care.

“For years, other industries have found that better quality control results in lower costs, but that argument had not been tested in the health care arena,” according to Timothy J. Poehling, Ingenix vice president, Network Solutions Group. “We took pause at everyone saying that quality is the cure for all ills without knowing if there was indeed a correlation. We asked ourselves, ‘Could we identify areas where high quality would reduce overall health care cost?’”

Ingenix study: Achieving higher quality at lower costs

To help answer that question, Ingenix analyzed more than 260 million claims in the company’s commercial claims database. The Ingenix “Physician and Hospital Cost and Quality Study” was designed to determine the level of care provided by nearly 300,000 physicians – measured against evidence-based standards – and compare the cost of that care. “We thought it was time to quantitatively demonstrate whether the high quality/low cost paradigm holds true for health care,” Poehling says. 

Ingenix analyzed the data nationally, by state and by specific condition or illness to better understand the relationship between quality and cost. Using a level playing field – costs were representative of the entire episode of care and were risk adjusted using Episode Treatment Groupers® (ETGs) accounting for severity of illness of the members – Ingenix found that better quality care could in fact lead to lower costs.

Initially, when examining all conditions across the United States, the study found that the average cost per year for treating an episode ranged from under $470 if seen by a four- or five-star doctor (high-end rankings) to more than $891 if seen by a one- or two-star doctor (low-end rankings).

Not surprisingly, a strong correlation between cost and quality appeared when the physician had the greatest probability to affect outcomes. For example, a diabetic in the advanced stages of the disease who selects a highly rated endocrinologist would be more apt to realize greater cost savings than an early-stage diabetic selecting a high-rated internist, because endocrinologists are likely to prevent or limit both stays in hospitals and visits to emergency rooms for diabetics.

“Ultimately we found that following evidence-based medicine (EBM) principles resulted in lower total costs, most notably in advanced conditions requiring a specialist,” Poehling reports. “Then, even migrating a consumer incrementally from a one-star doctor to a two-star doctor provided that consumer with better, less expensive care overall.”

Based on objective EBM measures, Ingenix found that a health plan would save $159 ($1,764 vs. $1,923) for every diabetic who is directed from a low-rated endocrinologist to a four- or five-star endocrinologist. This relationship held true over geographic lines when examining the same scenario in the state of Texas. Based on EBM scores only, costs were reduced by $202 ($1,710 vs. $1,912) when higher-rated physicians were seen. Moreover, when utilization measures were factored in to derive an overall quality score, costs were $291 ($1,699 vs. $1,990).

Call for quality, cost data

Quality and cost transparency is becoming a priority for health plans because it is being strongly recommended by accreditation agencies and mandated by the federal government. As such, understanding how quality affects cost is not only an academic exercise, according to Poehling, but an important business advantage.

The National Committee for Quality Assurance (NCQA) now recommends that health plans publish specific physician and hospital information on their online directories and establish a new standard for those directories that assesses the information provided.

Further, President George W. Bush signed an Executive Order Aug. 22, 2006, requiring all providers of federally financed health care to adopt standards and quality-measurement tools for their information technology systems in 2007.

“To spend their health care dollars wisely, Americans need to know their options in advance, know the quality of doctors and hospitals in their area, and know what procedures will cost,” a fact sheet discussing the Executive Order states. “When Americans buy new cars, they have access to consumer research on safety, reliability, price and performance – and they should be able to expect the same when they purchase health care.”

Consumers participating in CDHs have long complained that the biggest obstacle to being in such a plan is that they do not have the tools and information they need to make effective health care decisions. American HealthWays, which provides specialized care and disease management support, says that 80 percent of insured adults indicate that they would like to select doctors using Consumer Reports-style quality ratings.

“Under CDHs, health care dollars are coming out of consumers’ own pockets and they are saying, ‘You are telling me to be smart about my health care choices, but you are not giving me the tools I need to do that,’” Poehling says. “And they are right. Traditionally that information has not been available. But we need to gravitate toward what consumers really need: comprehensive information about physician performance.”

Online directories point members toward high-ranked providers

This recognition that consumers value provider performance data –  paired with clear evidence that better care equals lower cost – inspired Ingenix to help health plans, which bear the burden of making quality more transparent, communicate these data to its members.

Ingenix offers a fully integrated solution with Provider Lookup Online (Web-based provider directory), Ingenix Physician Quality and Ingenix Hospital Quality to allow health plans to overcome three key obstacles in communicating this information to plan members: usability, credibility and acceptability.

“Seventy percent of the hits on a health plan’s Web site are on the provider search.  It’s the most logical place to integrate this information,” according to Poehling. Integrating provider performance information into a directory, he says, gives consumers the information they need on the first results screen, without having to toggle back and forth awkwardly between provider and ratings sites.

Ingenix makes it easy to tackle the credibility obstacle, because its cost and quality data are pulled from a large commercial database containing, 16 million lives and 700,000 physicians, and it measures performance against evidence-based standards. When working with a new health plan, Ingenix requests that the plan contribute its claims to the Ingenix database to “make it more robust,” Poehling says, “But they really don’t have to do anything to publish our ratings on their Web site. From a quality perspective, we really are a turn key solution.”

Because Ingenix employs logical and established methodologies and industry best practices, its product offerings are understood and well-accepted by health plans as well, he indicates.

“Ingenix provides plans with innovative, consumer-focused tools that enable consumers to make better, more cost-effective health care decisions,” Poehling contends. “We don’t just help consumers find a provider,” he says. “We help consumers select the right one for them.”

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