Geographic Variation in Healthcare and Promotion of High-Value Care

1. Geographic Variation in Healthcare and Promotion of High-Value Care Margaret E. O’Kane November 10, 2010

2. Overview • Conceptual framework: sources of variation • Effective care • Supply sensitive care • At the health plan level • At the delivery system level • Delivery system innovations to drive change • Preference sensitive care • Recommendations

3. Conceptual framework Effective care (15%) Making health plans and delivery system accountable, reward results Supply-sensitive care (60%) Accountability mechanisms at the delivery system level, use incentives to drive results Preference-sensitive care (25%) Comparative effectiveness research, shared decision making and patient activation Source: Wennberg estimates based on Medicare claims

4. Effective care

5. Variation in the Quality of Care for Diabetes New England: +5.6 East North Central: +1.8 Middle Atlantic: +0.5 Pacific: +1.2 West NorthCentral: +1.3 Mountain: -0.8 +2.5% or more +1.0% to 2.5% Within 1.0% of mean -1.0% to 2.5% -2.5% or more South Central: -5.3 South Atlantic: -1.7 Regional Performance Relative to National Average: Commercial plans, 2009

6. Supply sensitive care: looking at plans and delivery systems

7. Relative Resource Use (RRU) Measures • Indicates how intensively a plan uses resources (physician visits, hospital stays, etc.) vs. similar plans • With HEDIS quality measures, RRUs let us talk about quality and cost together • This gives purchasers and plans a basis for discussing the value plans offer, not merely unit price and discount

8. Relative Resource Use: Total Medical Costs (excluding Rx) For Patients with DiabetesAll U.S. Commercial Plans, 2009

9. RRUs for Plans Show Wide Variation Within States: Florida 2009 HEDIS & Relative Resource Use Composite Measures for Diabetes

10. What Can We Learn From RRU? • No correlation between quality and resource use • Tremendous variation within regions among plans • High quality care can be delivered at either high or low resource levels • Moving to high-quality, low-resource use would yield significant savings

11. California Integrated Healthcare Association Pay-for-Performance – Looking at the Delivery System • Largest P4P program outside UK • Includes 7 insurers, 12 million commercial HMO lives • Aggregates insurers’ data to score results • Significantly increased reliability and physician trust

12. 2008 Variation in California Physician Organization Performance . (1) Lower rates indicate better performance for HbA1c Poor Control.

13. 2009 Variation in California Physician Organization Resource Use

14. California’s Integrated Healthcare Association • Now moving to also reward efficiency: • Inpatient Readmissions within 30 Days • Inpatient Utilization - Acute Care Discharges • Inpatient Utilization - Bed Days • % of Outpatient Surgeries Done in ASC • Emergency Department Visits • Generic Prescribing • And performance based contracting • Standardize utilization metrics and bring under the P4P umbrella (Total Cost of Care measure) • More info @ www.iha.org

15. Delivery system innovations to drive change

16. PCMH: Driving Quality and Cost Savings • 7 medical home demonstrations show: • Reduced hospitalization rates (6-19.2%) • Reduced ER visits (0-29%) • Increased savings per patient ($71-$640) • Four common features in demonstrations • Dedicated care managers • Expanded access to health practitioners • Data-driven analytic tools • Use of incentives Source: Fields, et al. 2010

17. What is an ACO? • Goal to meet the “triple aim:” • Improve people’s experience of care • Improve population health • Reduce overall cost of care • Aligns incentives and rewards providers based on the performance (both quality and financial) • Payment mechanisms such as shared savings or partial/full-risk contracts • Quality measures essential to assure needed care provided even with incentives to reduce costs

18. Medical Homes & ACOs • Medical Homes are basic building blocks for Accountable Care Organizations • NCQA’s ACO Guiding Principles: • a strong primary care foundation that promotes the delivery of services consistent with the principles of the Patient-Centered Medical Home • NCQA’s draft ACO criteria open for public comment until Nov. 19

19. Preference sensitive care

20. Decision-Making and Patient Engagement • The engaged patient: • Takes steps to be healthy • If unhealthy, understands medical condition and the therapies, asks questions, open to shared decision making • Prepares for expected events (childbirth, hospitalization, e.g. Coleman approach) • Understands the cost tradeoffs and the health tradeoffs • Policies and plan design can support patient engagement

21. CONCLUSIONS • There are high-performing plans and providers in low performing regions and vice versa • Different types of variation require different strategies • Bringing accountability to the delivery system level allows plans/payers to take action • Easier than mobilizing a community • Shared decision making can help • Improvement can/should be rewarded

22. Recommendations for the Committee to Consider • PCMH and ACO two key strategies to continue to pursue • but still need to address others who don’t participate (specialists) • Networks of PCMH, PCMH neighborhood • One option is to set quality/resource targets to reflect care patterns at the local level and rewards/penalties that are meaningful to providers • Tiered networks a good idea – worth trying in Medicare