Patients’ choices may narrow as insurers adjust standards for healthcare providers

The new federal healthcare law is bringing additional demands by insurance companies that doctors and hospitals be held to higher quality standards.

Although this push by insurers on quality implies that consumers will get better care because doctors and hospitals will be measured against the best performers, there may be an unintended consequence: It could leave patients with fewer choices of medical care providers, depending on which health plans they purchase.

Meanwhile, controversy is emerging as to how these doctors and hospitals will be selected to be on an insurer’s list of preferred choices. Insurance companies say quality is what gets the name of a doctor or hospital on its preferred choices list, but cost is also a major factor. A doctor who manages his patients’ medical care better and keeps costs low, for example, would be more apt to make the list.


Insurers contend that higher-quality medical care at a lower cost is attainable.

“Network participation will largely be based on quality outcomes, and it’s not now,” said Steve Hamman, vice president of networks at Blue Cross and Blue Shield of Illinois. “It’s well documented that quality care reduces costs.”

Consumers typically get medical care at a lower cost or discount through their insurance networks. A doctor who is selected or hospital procedure that is done out of network generally comes with a higher out-of-pocket price tag, which can eat into a deductible or result in the patient picking up the entire bill.

“The doorway to these [insurance company] networks is a quality doorway,” said Dr. Scott Sarran, chief medical officer at Illinois Blue Cross, the state’s largest health insurance company. “There will be winners and losers” in terms of which doctors and hospitals make these lists.

The trend toward quality measurements and standards has been in the works for several years, but implementation of the new health law is adding to the urgency.

Among measures to ensure quality, the law requires state-regulated health plans, largely those selling policies to individuals and small to medium-size businesses, to spend at least 80% of premium dollars on medical care. That’s squeezing insurers’ profits. As a result, health plans are using the quality measures as a way to scale back choices of doctors and hospitals in certain networks.

“Insurance companies are going to have to be more efficient with the money they collect,” Illinois Insurance Director Michael McRaith said. “They are going to expect more from the providers that they contract with.”

In the past, health maintenance organizations have been one way insurers controlled costs because these plans restrict provider choices to their networks. Illinois Blue Cross has two HMOs — HMO Illinois and BlueAdvantage — and is considering a third health plan with a smaller network. This third option would be designed to provide coverage on the coming state-regulated insurance exchanges, which will be created by 2014 under the healthcare law intended to expand coverage to 32 million Americans who don’t have health benefits.

Most health plans already regularly provide doctors and hospitals with information on how they perform against their peers as a nudge for them to improve. For example, insurers send profiles to gynecologists comparing how many of their patients get mammograms each year with the average within respective health plan networks.

Medical care providers have some concerns about the methodologies and criteria that will be used to make insurers’ preferred choices list.

The American Medical Assn. is worried that doctors could be penalized if they tend to provide services for populations that need more medical care, such as elderly consumers who are more apt to suffer from chronic conditions. That could skew the rating for a medical provider because those repeat visits may make it appear that the doctor isn’t doing an adequate job, when the reality is that the patient has a chronic condition that requires more care.

“What measures are going to be used to differentiate patients?” asked Dr. James Rohack, a Texas cardiologist and immediate past president of the AMA. “There could be problems if you measure an outcome and don’t risk-adjust. In a narrow network, a physician may be considered a bad doctor even if they are doing the right thing.”

But insurance companies say they have been working with medical groups and specialist societies that have helped provide data used to create the quality measures.

Dr. Sam Ho, UnitedHealth Group Inc.'s chief medical officer, said insurance companies could point to a plethora of evidence- and science-based data as an independent measure of how medical care should be conducted so providers could improve.

“It all starts with measures,” Ho said.

Insurers increasingly will provide doctors and hospitals enhanced payments if they meet certain quality measures, Ho said. Medical care providers “will be paid less and less on volume and more on value,” he said.