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NAVIGATION PNHP RESOURCES
Posted on December 6, 2006

Transparency in Health Care Insurance

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By Kip Sullivan
Z Magazine

Comedian Jon Lovitz used to do a skit for “Saturday Night Live” in which he played Tommy Flanagan, the pathological liar. Lovitz’s character was always telling tall tales that made him look good. When a tale would become so outrageous even he suspected he was about to be exposed, Flanagan would stop for a moment, then, with a huge grin, he would blurt out a new fib and proclaim, “Yeah, that’s the ticket.”

The health insurance industry is proving to be a master at the Jon Lovitz routine. For a quarter-century the industry and its apologists in business, politics, and academia told the public managed care would solve the health care crisis. When even diehard defenders of the industry realized in the late 1990s that managed care had flopped, the industry came up with a new excuse to justify its existence and to distract public attention from real health care reform. Of the several names bestowed on the new excuse, the most faddish is transparency in health care. “Yeah, transparency, that’s the ticket.”

Like “health maintenance organization” and “consumer-driven health plan” (to name two other misnomers coined by the insurance industry and their hangers-on), “transparency in health care” is terribly misleading. The phrase evokes glorious visions of a world in which:

  • Data on the quality of doctors and hospitals and other health care providers are published in great quantities (by whom is unclear)

  • This cornucopia of data forces providers to improve quality

  • The improved quality leads to lower costs

The odds against any of these steps occurring are great. The likelihood that all three will occur is zero. But the promoters of transparency dogma are powerful. Transparency evangelists come from the insurance and computer industries, big business, the Republican and Democratic parties, academia, and the world of corporate-funded think tanks. CEOs John Chambers (Cisco Systems), Steven S. Reinemund (PepsiCo), Frederick W. Smith (FedEx), and Ivan G. Seidenberg (Verizon) are just a few of the business executives who tout transparency. Senator Hillary Rodham Clinton (D-NY) is the most prominent Democrat in the movement. In 2005 she sponsored legislation promoting the computerization of all medical records (an essential component of the transparency fantasy) and held press conferences celebrating the magic of quality measurement with Senator Bill Frist (R-TN) and former Speaker Newt Gingrich.

Like managed care theology before it, transparency theology draws support from the elite because it is consistent with conservative fantasies about making “the health care market” work. The insurance industry and its conservative allies understand that if “market reform” fails to solve the health care crisis, greater regulation, possibly in the form of a single-payer (or Medicare-for-all) system, will come sooner rather than later.

George W. Bush is one of many conservatives who misrepresent what regulation or a single-payer system would mean (government will “tell your doctor how to practice medicine” is the usual misrepresentation) and then brandish that caricature as justification for their support. Bush’s opening remarks at a press conference in Minnesota last August, at which he endorsed “transparency in health care,” illustrate this tactic. “We’ve got an interesting debate in health care in America,” Bush intoned in front of an invited audience in a fancy hotel in a wealthy suburb of Minneapolis. “And I guess if I had to summarize how I view it, I would say there’s a choice between having the government make decisions or consumers make decisions. I stand on the side of encouraging consumers. I think the most important relationship in health care is between…the patient and the doc.… And health care policy ought to be aimed at bolstering the consumer, empowering individuals to be responsible for health care decisions—is kind of the crux about what we’re talking about.”

In Bush’s world transparency is the great weapon against further government involvement in the U.S. health care system, and transparency will be achieved by the publication of report cards on clinics and hospitals. The grades on these report cards will render doctors and hospitals transparent. Once transparency is achieved, a series of other events will occur, to wit: patients will “shop” for the best providers, quality will rise, costs will come down, and everybody but the crummy clinics and hospitals, which scored poorly on report cards, will be better off.

Bush announced he had selected Minnesota to endorse transparency in health care because it is the home of Community Measurement Project (CMP), a coalition of Minnesota’s largest health insurance companies that produces a report card on Minnesota providers. Bush told the executive director of the CMP, who was present at the event, that the CMP is a “leading edge” report card that will make providers transparent. The CMP report card (www.mnhealth.org) suffers from four defects:


  • It has very limited scope (it covers only a portion of Minnesota’s clinics and hospitals and attempts to measure only a tiny fraction of medical services offered by those providers)

  • It measures services at the “provider” level, not the individual doctor level

  • Grades tend to bunch up so that distinguishing one “provider” from another is impossible

  • The grades are inaccurate

A brief discussion of each of these defects shows how expensive it will be to fix them. First, the CMP report card is quite limited in the number of providers and services it purports to grade. It covers fewer than half of all clinics in the state and covers only child vaccination rates, well-baby visits to doctors, and treatments for six diseases (asthma, depression, diabetes, high blood pressure, cancer, and chlamydia) out of thousands of diseases and conditions for which people are treated these days. Obviously, collecting data on thousands of other medical services on all providers in the state will make this report card much more expensive.

Second, despite Bush’s talk about “you and your doctor,” there is no information about individual doctors on the CMP report card. Grades are available only for entire “provider networks”—groups of clinics and hospitals, some with dozens of clinics and hospitals in them. Common sense and research indicate that to the extent patients want information on medical quality, they want it for particular health care professionals, not for entire clinic-hospital chains. The reason data on individual doctors is not offered is that the CMP is not collecting data on enough patients to make a statistical analysis of individual doctors possible. In other words, if the total number of patients in CMP’s current database were broken down by doctor instead of by provider network, the sample sizes for the vast majority of doctors would be too small to permit rigorous analysis. Collecting data on many more patients means, obviously, greater expense.

Like the first two defects, the third defect—bunched up grades—is due to CMP’s effort to make report cards on the cheap. CMP issues only three grades (one, two, or three stars; which look like the glittery little plastic stars elementary school teachers use) and the vast majority of networks get two stars. Even if you wanted to know the grade of entire provider fiefdoms rather than of individual doctors, CMP grades rarely distinguish one fiefdom from the other .

The fourth and most important defect in the CMP report card is that it is grossly inaccurate, and—to make this defect more insidious—the inaccuracy is not mentioned or even hinted at in the CMP website. On the contrary, the first page of the website assures readers that the report card contains “accurate, comparative details on the quality of care at Minnesota’s provider groups.” The grades are inaccurate for several reasons. The two most important of which are failure to adjust the grades to reflect differences in patients that doctors have no control over and failure to ensure that patients the CMP says are patients of Network X really are patients of Network X.

The grades are not adjusted for differences in the patients seen by each network, notably, differences in their health, quality of insurance, and income. It is much easier for doctors who see primarily healthy, well-insured, and/or upper-income patients to score well on CMP’s report card than it is for doctors who see primarily sicker-than-average, poorly insured, and/or low-income patients. “Some communities… have more resources to influence outcomes than others,” said Dr. Randall Maxey, an Inglewood, California nephrologist, in a recent interview with American Medical News about report cards the Bush administration is preparing for physicians who treat Medicare beneficiaries. “I may treat you exactly correctly and give you the right pills, but if you have to choose between buying pills and giving your baby milk, that drug may lose out and my performance may be judged as poor because of it.”

Consider two of the CMP “quality measures” for diabetes: percent of diabetic patients who have their HbA1c count (a measure of blood sugar) under 8 percent and percent who have their cholesterol under 130. The Neighborhood Health Care Network (NHCN), a coalition of six clinics which serves primarily poor, uninsured people in the Twin Cities, ranked very low on this “quality” measure. Only 46 percent of the diabetics who visited NHCN doctors in 2004 had their blood sugar under the target level and (apparently coincidentally) only 46 percent had their cholesterol under 130. By comparison, the average for all provider groups for both measures was 65 percent. The 46 percent score was so low compared to the other provider groups that CMP gave MHCN one star.

What should readers make of this bad grade? By assuring readers that the report card is “accurate,” the insurance companies behind the CMP project lead readers to think NHCN is doing an inferior job of getting the sugar and cholesterol levels of its diabetics down. But because the CMP did not adjust NHCN’s grades to reflect the fact that NHCN doctors treat a sicker, less well-insured, and poorer population, we cannot conclude that NHCN’s doctors are inferior. Given the circumstances NHCN’s doctors are up against, it’s possible they are superior doctors and their low grades reflect forces they cannot overcome. NHCN doctors may have prescribed appropriate cholesterol-lowering medications (such as Lipitor or Zocor) to all their diabetics, for example, but because many of those patients had insurance with no drug coverage, or drug coverage that required co-payments they couldn’t afford, they failed to fill their prescriptions.

The inaccuracy of the CMP grades is aggravated by the sloppy methodology used to “assign” patients to networks. The CMP simply assigns patients according to which network patients used the most in the course of a year. So, for example, if you were a diabetic who made seven visits to doctors in one year, and four of those visits were to doctors in Network A and three were to doctors in Network B, Network A will take all the blame or all the credit for your cholesterol level.

Like the other three defects, this fourth defect is fixable, but only at great cost. The CMP could, in theory, decide to adjust grades on diabetes care, for example, to correct for differences in factors outside doctors’ control—patient age, sex, cholesterol, and blood pressure levels when the patient first visited the clinic, number of years diagnosed with diabetes, history of other diseases such as coronary artery disease, education level, income level, and presence of co-payments for prescription drugs, to name a few. But the cost of collecting all that data will be immense. And that’s just for the diabetes scores.

When he endorsed transparency and the Community Measurement Project last August, Bush claimed the CMP-like report cards would lead to a cut in total health care spending of 25 to 30 percent. That will never happen.

The insurance industry, cheered on by the transparency crowd, may crank out lots of cheap report cards suffering from the four defects of the CMP card. Or it may spend enormous sums of money to produce report cards that don’t have those defects. Whichever route they choose, costs are more likely to go up than down. The transparency hype will, however, have distracted attention from the only solution to the health care crisis—single-payer or Medicare for all.



Kip Sullivan is author of The Health Care Mess: How We Got Into It and How We’ll Get Out of It (AuthorHouse). He is on the steering committee of the Minnesota Universal Health Care Coalition.