Reliability and Misclassification in Physician Cost Profiling

• Activity Number: 143
• Type: Invited
• Date/Time: Monday, July 30, 2012 : 10:30 AM to 12:20 PM
• Sponsor: Health Policy Statistics Section
• Author(s): John Adams*+
• Companies: Kaiser Permanente Center for Effectiveness and Safety Research

Abstract

Physician cost profiles (also called efficiency or economic profiles) compare the costs of care provided by a physician to his or her peers. These profiles are increasingly being used as the basis for high stakes applications such as tiered physician networks and pay for performance. Tiers (low, average, high cost) are defined by health plans based on percentile cut-offs which do not account for statistical uncertainty. We have developed a method based on simple hierarchical models to estimate misclassification rates for these report card systems in the absence of a gold standard. We illustrate the method with commonly used commercial software to create episodes of care and assign responsibility for these episodes to physicians. A physicians' cost profile is created as the ratio of the sum of observed costs divided by the sum of expected costs across all assigned episodes. In an illustrative two-tiered insurance product, we show a large fraction of physicians were misclassified as low-cost when they were actually not, or vice versa. These findings raise concerns about the use of cost profiling tools, because consumers, physicians, and purchasers are at risk of being misled by the r