Report: Many Physicians are Misclassified by Insurers

03/22/2010

Metrics used by insurers to determine health care costs may be inaccurate, according to a recent report by Rand Corporation.

In an effort to control costs, some health plans encourage consumers to use "high performance" physicians. These individuals allegedly provide a high-quality service at a relatively-low cost. Data from the report shows that cost profile scores used to evaluate these physicians may be accurate.

Researchers first looked at physicians' reliability based on their own measurements and current insurer classifications. Factors under consideration included the number of observations, variations between physicians and random variation in scores. After looking at reliability, Rand researchers turned to cost.

"In an illustrative two-tiered insurance product, a large fraction of physicians were misclassified as low-cost when they were actually not, or vice versa," the report said.

Twenty-five percent of physicians with low-cost profiles were classified as such, while 75 percent were classified as "not low-cost." This type of misclassification can lead consumers to pay significantly more for health care than expected.

Individuals hoping to reduce spending on health insurance may choose to increase their deductibles. Doing this will raise the threshold of costs they pay out-of-pocket before their insurance kicks in.

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