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.

Appropriate Resource Use Measures

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

In response to affordability concerns, the California Pay for Performance (P4P) Program has developed a measure of Total Cost of Care (TCC) that captures the costs of care delivered to all commercial HMO/POS enrollees in each P4P participating physician organization. The TCC measure includes all covered professional, pharmacy, hospital, and ancillary care, as well as administrative payments, and is risk-adjusted to capture differences in patient population characteristics across physician organizations.

Measuring and understanding the drivers of total cost of care are key steps to assist providers in moderating the upward trend in healthcare costs.

Measuring Total Cost of Care: Issue Brief