Efficiency Measurement

Background

There is a nationwide trend in both private and government sponsored programs to measure efficiency and increase transparency of medical cost and resource use alongside quality to move forward the concept of value in healthcare. The IHA P4P program is on the leading edge of this effort. California stakeholders have the opportunity to build on this success by adopting standardized quality measures statewide and participating in the early development of efficiency measures, methodology and reporting using a collaborative approach. 

The use of both standardized and actual costs are considered essential to creating a balanced, fair, and comprehensive comparative view of physician group performance as part of P4P. While the movement toward efficiency measurement and transparency can cause apprehension among those being measured, it is critical to addressing healthcare affordability and is the way of the future.

Goal

The goal and desired outcome of efficiency measurement in P4P is to lower the cost of care without compromising quality of care. Three specific process objectives were identified to achieve this goal:

• Develop a reliable, transparent and valid set of efficiency measures;
• Implement a trusted process of data collection and aggregation, yielding comparative data and reports to physician groups to improve the efficiency of care delivery; and
• Collaborate with participating health plans to implement meaningful incentives for physician groups to promote more efficient care delivery.

Measures/Methodology

Three sets of efficiency measures were initially developed by the P4P Technical Efficiency Committee with guidance from Thomson Reuters Healthcare:  (1) overall efficiency for care of all members (population-based), (2) overall efficiency for all episodes of care, and (3) efficiency in treating selected clinical areas.  Results are expressed as a ratio of observed costs to expected costs, with expected costs defined as the risk adjusted average across all physician groups in the state or region.  The intention was to produce these measures using both standardized costs and actual costs to differentiate between number/types of units used and unit cost. However, due to contractual restrictions on sharing payment-related information, it will only be possible to apply actual costs to the population-based overall efficiency measure.

Current Status

The measures were tested in the Spring and Summer of 2008 using standardized costs, which led to the conclusion that the measures and underlying data does not support comprehensive efficiency measurement for incentive payment purposes.   Issues with data quality and completeness and small numbers when measuring at the episode group level bring into question the reliability of the measurement, especially for purposes of incentive payments or public reporting.   However, there may be value in sharing efficiency measurement results with physician groups for quality improvement purposes.   These findings were published in the September/October 2009 Health Affairs special edition on cost containment.

Data improvement efforts are underway and in-person meetings were held with the appropriate IT / data staff at each health plan to cover a detailed report on Thomson's findings on the specific data quality and completeness of each plan's data compared to the other plans. Similar data quality and completeness reports will be produced for physician groups.   It is hoped that these efforts will yield significant data improvements that will increase the reliability of the efficiency measurement.

IHA is also working with Thomson to conduct further analysis to determine whether a different approach to assessing episode-based efficiency results can produce meaningful and reliable information for incentive payment purposes and/or internal process improvements. The new approach uses an analytic method published in a MedPAC report that demonstrates whether the resources used by a physician group to treat its mix of patients is more or less efficient than average resources used in California to treat patients with the same characteristics.  Sample reports are being distributed to physician groups to determine whether this new approach to episode-based measurement provides valuable, actionable information.

Alternative Starting Point:  Appropriate Resource Use Measures

In the face of data and methodological challenges with sophisticated episode-based efficiency measurement, the P4P Steering Committee charged IHA with developing standardized appropriate resource use measures as a starting point for introducing cost and resource use into  the P4P program. These types of measures are currently being used for incentive payments by individual plans and physician groups. The goal of incorporating them into P4P is to align measurement across plans to allow consistent identification of unwarranted variation in care delivery. They will also provide an opportunity to address these areas to ensure more appropriate use of limited healthcare dollars in delivering quality care.

Measures were selected by a multi-stakeholder group of P4P committee and IHA board members, based on the resource use measures currently in use and the potential of standardization of these measures to impact the delivery of appropriate, quality care. Detailed specifications were developed by a technical work group of participating physician organizations and health plans, with technical support from Thomson Reuters Healthcare and the National Committee for Quality Assurance, and guidance from J. William Thomas, PhD, MBA, Professor of Health Policy and Management, University of Southern Maine.

Appropriate Resource Use Measures - Measurement Year 2009

• Inpatient Readmissions within 30 Days
• Inpatient Utilization - Acute Care Discharges
• Inpatient Utilization - Bed Days
• Outpatient Surgeries Utilization - % Done in ASC
• Emergency Department Visits
• Generic Prescribing