Quality, Performance Measurement Take Center Stage in Health Care Reform

A key element of health care reform is to improve the quality of care to drive better outcomes at lower costs.

“One of the main goals of health care reform is to make care more affordable, while improving quality,” said Dan Dunn, senior vice president, Ingenix. “To make that happen, there needs to be a standard methodology for measuring current performance against stated goals, and making improvements based on that data.”

According to Dunn, health care improvement efforts must balance three factors –quality, access and affordability – each dependent on measurement. “Almost every aspect that you hear about health care reform will require measurement, whether it is used to identify improvement opportunities, to devise incentives or to track how well providers share vital information about their patients,” he said.

Indeed, in a recent article in The New England Journal of Medicine (NEJM), Michael E. Porter, Ph.D., states, “without comprehensive outcome measurement, it is hard to know what improves value and what does not.”¹ Understanding why measurement is important and what methodologies are available will help to inform health care stakeholders about the importance of this element of the national health care reform debate.

Rewarding quality

By 2007, heath care expenditures in the United States had grown to over $2.2 trillion per year – more than 16 percent of the U.S. economy. The current 6.1 percent annual growth rate in health care spending outpaces inflation, and is projected to continue at least through 2018.² Previous efforts to rein in costs have not been successful. With the worldwide economic downturn exacerbating the stress on the health care system, health care reform has been the subject of intensified focus.

Some of health care’s problems stem from the system’s focus on paying for volume instead of quality. For example, those providers who order or complete more services, such as tests and procedures, currently receive additional payments under existing reimbursement rules, regardless of their patients’ health outcomes. Accordingly, payment reform is critical to health care reform, and, Dunn explained, payment reform models hinge on the ability to measure performance effectively.

“The system needs to change from a service-based model to a value-based model,” he said. “In a value-based model, providers are paid based on their ability to improve outcomes for the patient. You can’t determine whether that quality bar is reached without standard and agreed-upon measurement processes.”

According to Porter, “Measurement and dissemination of health outcomes should become mandatory for every provider and medical condition. Results data not only will drive providers and health plans to improve outcomes and efficiency but also will help patients and health plans choose the best provider teams for their medical circumstances.”³

Transitioning to value-based care

Today, many payers use an approach known as pay-for-performance to assess care quality and reward value. This process bases payment on physician’s compliance with evidence-based medicine (EBM) standards.

For example, the Centers for Medicare & Medicaid Services (CMS) is implementing its value-based purchasing (VBP) program for hospitals, which links hospital payment to performance.⁴ A key part of this program is a performance measurement model used to score a hospital and then determine incentive payment levels. Under the CMS model, a hospital scoring 94 percent of possible points would earn 100 percent of the payment, while a hospital scoring 57 percent of the total points would only receive 80 percent of the payment.⁵

There are early signs that such a model can have a positive effect on patient care. Hospitals participating in a CMS VBP demonstration project recently announced that they had increased their overall quality rating by an average of 17.2 percent over four years, improving their performance on 30 nationally standardized and widely accepted care measures covering five clinical areas.⁶

Measurement methodology, transparency matter

Regardless of the model, all of the approaches noted above require some degree of measurement. Evaluating and measuring the quality and cost of care – especially when payment is dependent on its accuracy – is neither an easy task nor a readily accepted practice. Creating measurement standards requires a great deal of time, effort and investment, and physicians often are wary of new yardsticks by which they will be assessed, according to Dunn.

“Transparency is critical,” he said. “When providers become familiar with how they are being measured, they start to accept and even embrace those standards,” he added. “Transparent standards and common goals help all parties to reach their objectives as early as possible in the process.”

Ingenix offers stakeholders its Symmetry™ Suite of measurement tools and methodologies for valid and practical health care measurement and analysis. The Symmetry Suite includes:

• EBM Connect, which enables users to compare patient care with research-based guidelines
• Episode Treatment Groups (ETGs), which combine related services into a medically distinct unit describing a complete care episode to provide the basis of valid comparisons
• Procedure Episode Groups™ (PEGs), which create a new unit of analysis to evaluate surgical providers.

PEGs describe not only the anchor surgery, but also services directly related to its performance, Dunn explained, including care prior to the procedure, such as the workup or conservative care (e.g., physical therapy), and post-procedural activities, such as repeated surgery and follow-up care.

“Some physicians manage diagnoses and some physicians manage procedures, so it’s important to use the right tool for the right purpose,” he said. “These tools fit together, with ETGs as the diagnosis-based unit and PEGs as an ETG subset for procedures.”

For example, many health plans use ETGs to create patient episodes of care and identify the physicians managing those episodes. The mix and severity of episodes assigned to each physician is summarized, along with the resources used in caring for those episodes. After adjusting for differences in episode mix and severity, a physician’s cost and utilization per episode can be compared with that of other physicians – or with “best-practice” benchmarks. Results are shared with physicians to provide insights into opportunities for improving performance. For some organizations, rewards are provided to those physicians delivering care at a lower cost while still meeting high quality standards.  

To advance transparency and trust regarding their measurement tools, in March 2009 Ingenix announced that it was offering participants in the patient’s circle of care (care purchasers, governments, health plans, hospital systems and physicians) access to the company’s ETG core content and methodologies for 542 currently supported disease conditions. Participants were invited not only to learn more about the ETGs, but also to provide input regarding how to improve them.

As of September 16th, Ingenix also invites stakeholders to examine and comment on the PEGs methodologies at www.ingenix.com/transparency.

“Just like with our ETGs, we want to fine-tune our PEGs methodology in an open and transparent manner,” Dunn remarked. “We want to know how these tools and technologies can better support measurement, reporting and, ultimately, better, more affordable care for all patients.”

¹ Porter, Michael E., Ph.D.; “A Strategy for Health Care Reform – Toward a Value-based System,” The New England Journal of Medicine (July 9, 2009).
² Centers for Medicare & Medicaid Services, “National Health Expenditure Data.”
³ Porter, Michael E., Ph.D.; “A Strategy for Health Care Reform – Toward a Value-based System,” The New England Journal of Medicine (July 9, 2009).
⁴ U.S. Department of Health and Human Services, “Report to Congress: Plan to Implement a Medicare Hospital Value-Based Purchasing Program,” Centers for Medicare & Medicaid Services (Nov. 21, 2007).
⁵ Id.
⁶ “Model Hospital Value-Based Purchasing Program Continues to Improve Patient Outcomes,” Business Wire (Aug. 17, 2009).

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