Effect of cost efficiency reporting on utilization by physician specialists: a difference-in-difference study

To assess whether health plan implementation of specialist profile reports not associated with any health plan administered reward or consequence that measured physician cost efficiency relative to peers, and shared with specialists and primary care referral sources only, were associated with changes in specialist behaviour.

Blue Care Network of Michigan is a non-profit statewide Health Maintenance Organization and wholly owned subsidiary of Blue Cross Blue Shield of Michigan. This study used administrative data from 2002 to 2006 and included only providers and adult (ages 18-65) commercial membership located in Southeastern Michigan.

A difference-in-difference study design of before and after specialist cost efficiency reporting on six specialties to both specialists and primary care referral sources, but not health plan members, to determine whether specialists who performed worse than peers changed the level of utilization of their own physician services without any direct health plan reward or consequence.

Substantive changes were noted for interventional cardiology (-32.3%, P ≤ 0.01), orthopaedics (-13.3%, P ≤ 0.01) and otolaryngology (-15.9%, P ≤ 0.02). Less established, yet negative changes were noted for ophthalmology (-11.9%, P ≤ 0.01), gastroenterology (-3.2%, P = 0.23) and urology (-3.1%, P = 0.52).

Simple and transparent reports on specialist cost efficiency distributed to referral sources and specialists using a more laissez-faire style reporting only health plan programme can engage providers and be associated with reductions in utilization. Possible mechanisms include explicit pressure from referral sources or self-motivated change by specialists.