Network Overlap Reduces Quality

Many health insurers pride themselves on being highly-rated in terms of the quality of care they provide. However, physicians tend to contract with many different insurers and with each additional contract, quality of care declines.

Recent interest in sparking competition in the health care marketplace has prompted comparative rankings of physicians, hospitals, and even health plans. This study, seeking to validate the quality measures used to rank health plans, attempts to determine whether such quality measures are the result of plan differences or individual physician differences within each plan.

However, there is significant overlap of physician networks between plans. Most physicians contract with multiple insurers and competing insurers often contract with the same physicians. Thus, it is no surprise that a patient switching from one health plan to another needs to change his or her physician only fifty percent of the time.

Many of today’s quality outcomes for health plans refer to process measures largely determinable by physicians: prescribing beta blockers after a heart attack or the use of preventive screening tests such as mammography and Pap  smears.

The hypothesis tested by this study is that as physician networks begin to overlap, health plan quality measures will converge. The data sets used for this study derived from a proprietary list of physicians at health maintenance organizations (HMOs) covering two-thirds of the nation’s HMO enrollees. Data from the Healthcare Effectiveness Data and Information Set (HEDIS) and the Consumer Assessment of Healthcare Providers and Systems (CAHPS) data sets (two commonly used data sets for quality measures) were matched to physician lists in order determine health plan quality.

Results from this study clearly indicate that as health plan networks converge, so do quality measures such as breast cancer screening, childhood immunization rates, diabetic blood sugar control (HbA1C), and the patient’s perception of getting care quickly. However, these quality measures tend to converge toward lower levels of quality as health plans share overlapping networks of clinicians.

A similar analysis demonstrated that as physicians contract with more and more health plans, their individual performance on these same quality measures also declines. Yet, these reductions in quality measures, although significant statistically, are often small in magnitude.

For instance, the performance of diabetic eye exams, performed by about 60 percent of physicians who contract with only one health plan, declines only 1.5 percentage points for each additional health plan with which the physician contracts.  Network overlap has no stronger effect on any other quality measure studied by these researchers.

Adding strength to the findings of this study was the use of a negative control variable: claims processing.  Claims processing is believed to be a health plan specific outcome that should occur irrespective of the contracted physicians’ behavior. In both analyses, this negative control variable failed to demonstrate any significant correlation with network overlap or the number of contracts per physician. Thus, the authors conclude that when there is network overlap, health plans’ quality scores converge and usually to a lower level.

Commentary

This study demonstrates empirically a concept believed by most who view competition as the best ways to promote benefits for consumers, in this case quality care for patients.

Health plan network overlap decreases the competition between physicians. As physicians contract with multiple plans, the quality of care delivered tends to suffer. Although the real effect is quite small, policy makers may wish to investigate further whether or not there is a maximum number of physician-insurer pairings that may be beneficial prior to declines in quality.

The evidence from this study also suggests that efforts to promote quality care from programs such as Medicaid and Medicare may be limited if a physician elects to accept multiple other insurance types.

While promoting exclusive contracting between physicians and insurers seems extreme, it would offer payers of health care services the most leverage in promoting goals such as quality, health information technology, and pay-for-performance.

Maeng, DD, Scanlon, DP, Chernew, ME, et al. The Relationship between Health Plan Performance Measures and Physician Network Overlap: Implications for Measuring Plan Quality. HSR. 45; 4: 1005-1023.

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Cedric K. Dark, MD, MPH