U.S. physician payments vary widely, mysteriously: study

By Kathleen Raven

NEW YORK (Reuters Health) - Private insurance companies across the U.S. pay doctors dramatically different amounts for the same routine office visits and services, according to a new study.

Physicians at the high end of the reimbursement spectrum get more than twice as much as those at the low end for the same service, with little apparent reason for the difference, researchers say.

"We figured that if we looked at fairly similar office services across clinics, the amount received by doctors might not vary much," said Laurence Baker, co-author of the study and chief of health services research at Stanford University in California. "But that was not true."

In the push to contain healthcare costs, focusing on how much care patients use won't solve the problem unless the market forces determining what doctors charge and what insurers pay are better understood, Baker and his colleagues write in the journal Health Affairs.

Unlike other health care cost studies, theirs looks at actual reimbursement amounts to physicians, and not the amount billed.

The researchers analyzed more than 40 million claims filed in 2007 for nearly a dozen types of service ranging from five-minute check-ups to comprehensive exams.

The most common claim filed was for a "problem-focused" exam lasting about 15 minutes with a patient the physician already knew.

The lowest-paid 5 percent of doctors received $47 or less for the visit while the highest-paid 5 percent received $86 or more. The average reimbursement amount was $63.

For more complex, yet identical, office visits lasting longer and involving a new patient, the reimbursements ranged from $103 or less to $257 or more.

The study comes as state and federal government agencies are gearing up for national health insurance enrollment under the Affordable Care Act, beginning October 1.

The price differences couldn't be explained by the patients' age or sex, the physicians' specialty, the patients' insurance plan type - preferred provider organizations (PPO) or point of service (POS) - or whether the physician was in the plan's network.

Geographic location accounted for some of the price variation, but only about one-third of it.

Even with location taken into account, researchers could not pinpoint differences among specific cities because Truven Health Analytics, the company that provided the data, did not allow precise location information to be published in the study.

"The point is that (there is) very little that can explain these price differences, no matter what information you put into the model," Dr. Renee Hsia, professor of emergency medicine at the University of California at San Francisco, told Reuters Health.

"There is not much rhyme or reason as to why the prices are what they are," Hsia, who was not involved in the research, said.

Baker suggested that some variables, such as the quality of service provided by physicians, or the market power of insurance companies, could influence payments, but these were not analyzed in the study.

"The take-away message is to get a quote before you go to the doctor's office and consider shopping around," said Chapin White, a senior health researcher at Center for Studying Health System Change in Washington, D.C.

Comparison shopping on cost isn't easy for consumers, however, because the information is not readily available. Companies trying to bring price information to the public include the San Francisco-based startup Castlight and FAIR Health in New York City.

"We think it is important to push future analyses further to include information we were not able to look at here," Baker told Reuters Health. For example, the team did not know the size of the physicians' practices. Larger practices may be able to command higher reimbursements, he said.

"Some markets have very little variation in prices," White noted, which could suggest that those regions are dominated by a large health care provider, such as Blue Cross/Blue Shield.

He pointed out that detailed information such as practice size can be obtained through private data firms, but the information can cost upwards of tens of thousands of dollars. And different database sets rarely link together well when searching for meaningful patterns, he added.

Hsia, who has worked with Baker on other studies, said the amounts in the current analysis could provide a baseline of what is considered appropriate reimbursement amounts.

"Our system of health care pricing is unique in a negative sense," Hsia said. "No other country in the world comes up with prices like we do … It's a bargaining system between insurers and providers with market power."

"In America we like having market-based systems for the prices of groceries or gas. This study suggests that healthcare is probably one of those things where the market-based system doesn't provide the efficiency we hope for," she said.

SOURCE: bit.ly/19dxOfG Health Affairs, September 2013.