Making the Grade

That lack of transparency has led to a string of legal battles. In 2005, United Healthcare's controversial Performance Program was dismantled in Missouri following a rash of doctors' complaints. In 2006, the American Medical Association challenged a Regence Blue Shield physician-ranking program in Washington state courts. And in 2007, New York Attorney General Andrew Cuomo issued a cease-and-desist order to several physician-ranking programs in his state after several physician groups raised concerns. His investigation found that many ranking programs were misleading consumers by using cost as a surrogate for quality.

This means patients who thought they were opting for the best doctor may be getting the cheapest one instead. That can make a difference in care, says Michael Painter, a physician-attorney who heads the healthcare quality team for the Robert Wood Johnson Foundation. "People often don't get that there is a real quality problem in healthcare," he says. "They assume all doctors are good doctors, and that assumption can be a naive one."

Reliable rankings of quality of care would help patients find a good doctor, which is why most medical experts say that some sort of rating system is needed. Studies have shown that when done in a fair and transparent way, physician rankings can improve the quality of care by nudging doctors in the right direction and appealing to their competitive streak. "But to accomplish any of those things, we need accurate, reliable measures of quality," says Nielsen. "And that means focusing on clinical outcomes, not just the bottom line."

But, according to some physicians, the current insurance company ratings are so flawed that even doctors who are minding the bottom line while providing good care, may be graded negatively.  "When I dug through my records," says Carstensen, "I found they had misclassified fully one third of my patients in a way that made their care seem more extravagant than it was." Carstensen says he is still waiting, more than a year later, for the insurer to respond to his request for an explanation. 

Other doctors complain about being penalized for patients who refuse to follow their orders. "I tell my patient that she needs to see a specialist, and I write her a referral, and she doesn't go. If she lands in the emergency room three weeks later, the insurance company doesn't see the referral I wrote, they only see that my patient was hospitalized for something that was preventable," says Aaron Siegal, a general practitioner in Plano, Texas. "Then I get dinged on cost and quality, because hospitalization is expensive." Siegal says that being deselected from certain plans has cost him patients.

After several years of complaints and legal skirmishes, the major insurance companies have also come to the conclusion that something has to be done to improve the current system. "We agree that transparency has been an issue, but the whole concept of performance profiling is still in its infancy, and we are all still learning how to do it better," says Sam Ho, medical director for United Healthcare.