Physician payment can vary widely for same procedures
■ Some doctors get twice the rates of others in the same area, a new study says. Researchers suggest lowering higher fees to cut health spending.
By Victoria Stagg Elliott — Posted July 12, 2010
Physicians working in the same geographic area and performing the same tasks often are paid at different rates, according to a study presented at the AcademyHealth annual research meeting June 29 in Boston.
"Some physicians may be in locations that are particularly of interest to health plans. Or they may be in larger groups and more able to negotiate effectively," said Laurence Baker, PhD, lead study author and a professor of health research and policy at Stanford University School of Medicine in California. "But it does have an element of randomness to it."
Researchers analyzed 2006 data from Thomson Reuters MarketScan to confirm the existence and extent of payment variation. The database includes information on 12.2 million claims made through the health plans of large employers in 100 metropolitan areas.
The study's authors expected to find differences from town to town, but they were surprised to discover that pay to some physicians in the same geographic area was almost double that of others. This was true even after removing the outliers from the top and the bottom of the pay scale.
Also, the AcademyHealth study "is consistent with findings that price differences are not related to quality," said Eric Linzer, senior vice president of the Massachusetts Assn. of Health Plans. "It's the market climate that is the main factor. If we're going to do something to make health care affordable for employers, particularly for small businesses, we are going to have to do something about the rates that particular providers charge."
Researchers at the Boston meeting indicated that both the number of physicians and the structure of the health care market in a particular locale may play a role in some doctors earning more than others. They said cutting fees at the higher end may be one way to reduce escalating health care costs.
But some physicians said that just because some doctors receive more pay than others does not mean they are overpaid. Rather, those at the high end may be getting paid correctly while others are underpaid.
"There's nothing in this study that says what is the appropriate fee," said Steve Furr, MD, president of the Medical Assn. of the State of Alabama.
Physicians in many areas of the country say they have little negotiating power because of consolidation in the insurance industry. For example, Alabama has the most highly concentrated health insurance market in the country, according to "Competition in Health Insurance: A Comprehensive Study of U.S. Markets," published Feb. 23 by the American Medical Association.
"In our state, we don't have that much variation. We don't have as many different players," said Dr. Furr, a family physician in Jackson, Ala.
The 2010 AMA report, based on data from Jan. 1, 2007, and gathered by HealthLeaders-InterStudy, also found that in 24 of the 43 states studied, the two largest insurers had a combined market share of 70% or more. That was true for 18 of 42 states studied in the report issued in 2009.
AcademyHealth is a Washington, D.C.-based professional society for health services researchers and health policy analysts.