Making things clear on cost and quality

President Bush's order for transparency is good, but it's only one step to ensure that patients get the correct read on doctors' costs and effectiveness.

Posted Nov. 6, 2006.

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With his executive order requiring transparency in federally administered or sponsored health plans, President Bush has taken a highly influential step toward the important goal of getting all consumers the price and quality information they need to be in greater control of their health insurance decisions.

While President Bush's order encompasses the philosophy the AMA and others have when it comes to transparency, it's short on details. Also, private-pay plans are not affected by this mandate. Nevertheless, the rule -- even in what's missing -- does provide a starting point to describe what's really needed for reporting that works.

For transparency to be true to its name, consumers need to know that the price information reflects what they actually will pay their doctors. And the quality information needs to reflect the care patients actually will receive. Without getting those details correct, you don't have the fully informed decision-making that the medical profession and many stakeholders strive for in an age of greater consumer control over health costs.

The pricing part of the president's order, which takes effect Jan. 1, 2007, says each federal agency shall make available to beneficiaries and enrollees how much is paid "to providers in the health care program with which the agency, the issuer or [health] plan contracts."

Sounds clear enough, but given the fact that most federal agencies have set charges for physicians that don't vary, except by geography, this order won't achieve a key goal of transparency -- competitive pricing. Even the administration sees this move as mostly symbolic, a prod aimed at businesses to make the same demands from its insurers.

At least the order appears to recognize that third-party payers, and not physicians, set the price of care. It is a contrast to some private-pay transparency programs that list "physician charges," not making clear to consumers that what a physician might charge an insurer and what an insurer might pay a physician are often two very different rates -- and the lower rate is always the one the physician gets.

Where the order gets murkier is in quality transparency. The order demands each agency to develop and identify its own "approaches that encourage and facilitate the provision and receipt of high-quality and efficient health care." What those approaches are, the order does not mandate. The order does allow for pay-for-performance models -- themselves a work in progress -- to be used in these approaches

Private health plans have had varying definitions of "quality" in their attempts to launch pay-for-performance initiatives or as a means of identifying who are presumably the best physicians. Often, what's called "quality" care is merely based on claims data, which can mean that "quality" physicians are simply those deemed to cost insurers the least.

If President Bush's order is to be successful, and if it is to influence private plans and businesses in the correct way, federal agencies need to use physician-developed quality measures as a basis for quality transparency.

The AMA-convened Physician Consortium for Performance Improvement provides the best path. The consortium, convened in 2000, includes more than 90 medical specialty and state societies as well as independent quality improvement groups, physician group practices and IPAs, and even a few health plans. It already has developed 115 quality measures, with another 55 expected by year's end.

The importance of the consortium is that as a group of physicians, it has the people who are best in the know to develop quality measures. It is taking into account risk-adjusted care so that physicians who take on sicker patients aren't penalized.

The measures also reflect what responsibility each physician has in the course of a patient's care. For example, a patient with diabetes could see physicians in eight different specialties, so true quality transparency would break down the role of each necessary doctor.

President Bush's order is a boon for transparency. Now what's needed is something physicians are well-qualified to provide: some well-founded policy on the true price of care and what constitutes real quality in medicine.

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