Do quality report cards play a role in HMOs' contracting practices? Evidence from New York State

To answer two related questions: (1) Do managed care organizations (MCOs) in New York State (NYS) consider quality when they choose cardiac surgeons? (2) Do they use information about risk-adjusted mortality rates (RAMR) provided in the New York State Cardiac Surgery Reports?

(1) Telephone interviews with and contracting data from the majority of MCOs licensed in NYS; (2) RAMR, quality outlier designation, and procedure volume for all cardiac surgeons, as reported in the Cardiac Surgery Reports.

Interview data were analyzed in conjunction with patterns revealed by contracting data. Null hypotheses that MCOs' contracting choices were random with respect to the information published in the Cardiac Surgery Reports were tested.

Sixty percent of MCOs ranked the quality of surgeons as most important in their contracting considerations. Although 64 percent of MCOs indicated some knowledge of the NYS Cardiac Surgery Reports, only 20 percent indicated that the reports were a major factor in their contracting decision. Analyses of actual contracting patterns show that in aggregate, the hypothesis of random choice could be rejected with respect to high-quality outlier status and high procedure volume but not for RAMR or poor-quality outlier status. The panel composition of the majority of MCOs (80.2 percent) was within two standard deviations of the expected mean under the null hypothesis.

Despite a professed preference for high-quality surgeons, the use of publicly available quality reports by MCOs is currently low, and contracting practices for the majority of MCOs do not indicate a systematic selection either for or against surgeons based on their reported mortality scores. This study suggests that policy initiatives to increase the effective use of report cards should be encouraged.