On the winding road from volume to value in health care payment, today marks a milestone with the public reporting of total cost of care, alongside clinical quality and patient experience, at the physician organization level in California.
The culmination of a partnership between the nonprofit Integrated Healthcare Association (IHA) and the state Office of the Patient Advocate (OPA), the Medical Group Report Card is the largest statewide multi-payer public report card to provide side-by-side assessments of physician organization performance on all three key aspects of value: clinical quality, patient experience, and costs.
California physician organizations have reported publicly on quality measures through IHA’s Value Based Pay for Performance (Value Based P4P) program for years; data to support clinical quality ratings come from IHA, while patient experience ratings rely on the Patient Assessment Survey. But publicly reporting cost data is new for the more than 150 participating physician organizations caring for 9 million Californians enrolled in commercial health maintenance organization (HMO) and point of service (POS) products offered by 10 health plans.
The four-star rating system for total cost of care shown in the exhibit below, is based on actual risk-adjusted annual payments made for the care of each physician organization’s HMO/POS enrollees, including professional, pharmacy, hospital, ancillary services, and consumer cost-sharing amounts. Agreeing on a common way of measuring total cost of care (TCC) and gaining buy-in to report the results publicly took years of groundwork by IHA and participating physician organizations and health plans.
The investment paid off: consumers now have transparent, audited quality and cost information to consider when selecting a physician organization; purchasers and health plans have more complete performance information about their contracting partners; physician organizations can see how they compare with one another and, ideally, compete on quality and cost; and policymakers can identify care delivery and cost patterns across the state.
California Has Been A Bellwether On Advanced Payment Models To Reward Value
In January 2015, U.S. Health and Human Services Secretary Sylvia Burwell announced an ambitious pledge to tie half of fee-for-service Medicare payments to value through alternative payment models (APMs) by 2018. As part of her pledge, Burwell launched the Health Care Payment Learning and Action Network (LAN) to engage the “private, public, and non-profit sectors to transform the nation’s health system to emphasize value over volume” beyond Medicare.
Way back in 2001, during the dark ages of health care transparency, IHA partnered with health plans and physician organizations to launch a large-scale HMO-based pay-for-performance initiative focused solely on quality improvement. In recent years, by merging quality, cost, and resource use measures into a single physician incentive program across multiple health plans, IHA’s Value-Based P4P program has become one of the nation’s largest advanced APMs and was cited in a recent LAN report.
In California, most commercial HMOs delegate utilization management and other care responsibilities to physician organizations and pay them fixed per member, per month amounts—capitation—that cover all professional services and visits. We believe the delegated-HMO model—resting on a strong foundation of integrated care delivery—is a major reason that California is ahead of the curve on value-based payment to advance the triple aim of better care, better health, and smarter spending. Findings from our HEDIS by Geography project showed that California HMOs demonstrate strong quality results relative to preferred provider organization products, without using more resources.
Through Value Based P4P, California health plans, physician organizations, and other stakeholders convened by IHA are breaking ground in paying for value, recognizing excellence, public reporting, and illuminating variation — all to support performance improvement.
Paying For Value
At its core, IHA’s Value Based P4P incentive design is based on shared savings, adjusted for quality performance. Savings are generated by improvements in resource use, including inpatient care, emergency department use, and generic prescribing. Any net savings are shared between the health plan and the physician organization.
To be eligible to earn any shared savings, physician organizations must first meet quality standards and demonstrate a total cost of care trend of no more than the consumer price index (CPI) plus 3 percentage points. High-cost physician organizations, at the 90th percentile of the TCC distribution, must meet a more stringent standard of CPI plus 1 percentage point. In 2015, 14 percent of participating physician organizations missed the TCC trend “gate” and were ineligible for shared savings.
Recognizing Excellence
Since 2014, IHA annually has recognized physician organizations that achieve above-median performance on clinical quality and patient experience and that fall below the median on total cost of care. In 2015, 66 physician organizations performed in the top half of the distribution for both clinical quality and patient experience; of those, 23 delivered care at below-median cost and were designated Excellence in Healthcare Award winners.
Performing well on all three domains is a major distinction achieved by slightly more than one in 10 participating physician organizations. Of note, the new Excellence in Healthcare Award replaced the quality-specific awards of past years. While there was some dissension, stakeholder agreement was relatively widespread that quality alone was an insufficient yardstick. In the new value-based culture, physician organizations must perform well on both cost and quality to merit designation as outstanding.
Public Reporting
Reaching agreement on a standardized measurement approach for total cost of care required persistent effort and consensus-building. Moving from standardized measurement to public reporting was an equally heavy lift; difficult discussions surfaced tensions among negotiating partners, sensitivity to releasing competitive information, and concern about performance and public perception. To put the difficulty of such cross-sector agreement in health care into context, keep in mind that at the national level, the federal government, plans, providers, purchasers, and consumer groups “hammered away at a dreadful task” for more than a year to settle on mutually agreeable quality measures for the treatment of common conditions earlier this year.
Illuminating Variation
Across California, the average total cost of care was $3,794 in 2014. Yet, there is significant variation in the total cost of care for HMO/POS enrollees, ranging from less than $3,158 on average per patient for “four-star” physician organizations—the least costly 10 percent—to more than $4,744 for “one-star” physician organizations—the costliest 10 percent.
Comparable data also allow geographic benchmarking: the highest-cost region, the Bay Area and Sacramento, had TCC of $4,106, while the lowest-cost region of Riverside-San Bernardino came in at $3,366. The magnitude of variation indicates significant savings are possible if higher-quality, higher-cost physician organizations can achieve performance levels comparable to their higher-quality, lower-cost peers.
Momentum Grows To Combine Cost And Quality To Measure Value
As the national health care dialog increasingly focuses on paying for results, the importance of comparative, publicly reported total cost of care data grows. Yet, measurement and reporting of cost information lags reporting of quality information.
While greater effort has been invested in generating cost data in recent years, progress has been limited by a myriad of challenges ranging from data availability and quality to competitive sensitivity to methodological obstacles. A recent Agency for Healthcare Research and Quality environmental scan of public cost reporting found that most websites providing cost information rely on provider charges, which are widely recognized to bear little resemblance to actual payments.
Efforts To Measure TCC
Yet, progress is occurring. Minnesota HealthScores measures and reports on total cost of care and quality measures for clinics and medical groups; users must look up and view cost results separately from quality ratings. Get Better Maine offers side-by-side quality and cost comparisons for providers, and the Network for Regional Healthcare Improvement is leading a total cost of care collaborative, working with members across the country on efforts to measure and report the total cost of care.
Quality And Cost Essential In The Value Equation
The new California Medical Group Report Card’s display of clinical quality, patient experience, and total cost of care data at the physician organization level represents a major step in supporting informed consumer choice. Research indicates consumers, in the absence of quality information, may view higher cost as a proxy for higher-quality care. Research also shows clearly that higher cost does not necessarily mean higher quality, findings consistent with our data that show weak correlation between cost and quality (See page 26).
Accordingly, it is imperative to link cost and quality information — obvious, perhaps, but not easy. To our knowledge, no other publicly available state report card presents total cost of care information (not facility or episode costs) alongside both clinical quality and patient experience at the physician organization level, where care is delivered.
MACRA, MIPS, APM, And CMMI
While the alphabet soup of national payment policy is packed with acronyms and jargon, it, nonetheless, is evolving into a clear roadmap for value incorporating both cost and quality. The Center for Medicare and Medicaid Innovation has launched an array of accountable care models that link shared savings to total cost of care — but only after accountable care organizations (ACOs) meet quality standards.
The Medicare Access and CHIP Reauthorization Act of 2015 outlines new Medicare payment models for physicians: the Merit-Based Incentive Payment System (MIPS) and the Alternative Payment Model (APM). MIPS features bonuses or penalties based on quality, resource use, meaningful use of health information technology, and clinical improvement; the APM pathway provides a bonus for physicians if a minimum percentage of their revenue flows through an alternative payment model. Taken together, these developments signal that today’s providers must actively manage not just quality but cost and resource use to prosper.
Miles To Go…
For all of us slogging through the trenches on a daily basis in the march from volume to value in health care payment, it’s easy to forget just how far we’ve come in a relatively short time. Fifteen years ago, the idea—let alone the reality—of publicly reporting quality, patient experience, and cost information at the physician organization level on a statewide basis was almost unthinkable. So let’s take a moment to enjoy the milestone … then get back to work. Many miles remain on the road to value and the day when public reporting on all facets of health care quality and costs is the norm and not the exception.
Editor’s note: For more on IHA’s initiatives regarding value-based payment in California, see:
- The Winding Path To Effective Bundled Payment, by M. Susan Ridgely and Peter Hussey
- The “Failure” Of Bundled Payment: The Importance Of Consumer Incentives, by James Caillouette and James C. Robinson
- Bundled Payment: Learning From Our Failures, by Tom Williams and Jill Yegian
- Bundled Payment Fails To Gain A Foothold In California: The Experience Of The IHA Bundled Payment Demonstration, by M. Susan Ridgely, David de Vries, Kevin J. Bozic, and Peter S. Hussey
- Value-Based Pay For Performance: Rewarding Affordability Alongside Quality, by Jill Yegian and Dolores Yanagihara
from Health Affairs Blog http://ift.tt/1SzKveP
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