Colorado moves to regulate tiered networks

The state's bill follows national agreements by health insurers to make physician-rating systems more transparent and based less on costs.

By — Posted May 5, 2008

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Although some major health plans pledge to institute nationwide standards on how tiered networks are set up, Colorado isn't waiting.

A bill on the desk of Gov. Bill Ritter Jr. would require plans to disclose data and methodology in reaching physician grades and tiering, a process by which insurers group physicians based on purported quality, then offer a discount to members who only see doctors in the highest-rated tier.

The Colorado bill also spells out standards for data and how they are used, as well as asking for transparency. It says plans must use risk-adjusted data, and base grades and ratings at least in part on nationally recognized quality-of-care measures and not on cost alone. Physicians would have the right to review and appeal their ratings.

"Physicians their whole life have been graded," said Colorado Medical Society President-elect W. Ben Vernon, MD, a Denver transplant surgeon. "Getting stars is what doctors in our country are all about. We just would like those stars to be given in a way that makes sense and is correct."

The Colorado bill was based on discussions by the Physicians Advisory Council to UnitedHealthcare. The council was established by the state insurance commissioner as a condition of the United-PacifiCare merger in 2005, said CMS President David Downs, MD, an internist in Denver.

The merger between United and Pacificare created the state's largest insurer, and the state insurance commissioner required the formation of the council to discuss the merger's impact on doctors. The dialogue between physicians and United was the starting point for agreeing on what pay-for-performance programs should look like, Dr. Downs said.

Medical society CEO Alfred Gilchrist said the AMA assisted the state society in refining wording and gathering support for the bill.

Similar to Patient Charter

Some of the same principles in the Colorado bill were included in the recently announced national Patient Charter for Physician Performance Measurement, Reporting and Tiering Programs. Plans such as WellPoint, UnitedHealth Group, Aetna and Cigna signed the charter, which was put forth by a group backed by associations made up of large employers -- the plans' biggest customers.

Meanwhile, major plans also have pledged to take nationwide the settlements they struck late last year with New York Attorney General Andrew Cuomo, who threatened to sue plans over how they assembled tiered networks. Those settlements contain some similar language to the Colorado bill.

Michael Huotari, executive director of the Colorado Assn. of Health Plans, said there was some discussion during debate over the Colorado bill that, in particular, the national patient charter -- anticipated at the time -- might make state regulation unnecessary. "There is certainly an overlap," he said.

Though the national charter and the Colorado bill both address the same problems, CMS Immediate Past President Lynn Parry, MD, a neurologist from Littleton, said the two measures are "apples and oranges."

"Ours is much more specific as to what happens to doctors when they get designated," she said.

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