Private Sector Efforts in Value-Based Purchasing and Quality Improvement
Employers, labor unions, and other private group purchasers have increasingly demanded higher quality care for the dollars they spend on health coverage. One official at GTE stated, "We think that improved quality inherently costs less. Improve the quality of health care and, in turn, improve the quality of life" (The Business Roundtable, 1997). GTE found that in 1995, its high performance managed care plans had hospital costs that were 11.5 percent below the national average. Risk-adjusted mortality rates were 8 percent lower than previously expected. On the other hand, low performance managed care plans had costs that were 3.6 percent above the national average and risk-adjusted mortality rates that were only 2 percent lower than expected (Sheffler, 1996). Many private purchasers are developing quality improvement programs, developing report cards and other measurement tools to help assure that they can purchase health care based on quality, not just cost and benefits. By measuring and rewarding quality, all of these purchasers have invested their resources in an effort to improve care, increase satisfaction, and reduce costs. For example:
- GTE provides its employees and their families with financial incentives to enroll in "exceptional quality" plans (those with high ratings on quality measures and satisfaction surveys). Employees receive report cards on plans so that they can choose a plan based on cost and quality. Initial analysis of this approach showed that employees who considered making a health plan change were most sensitive to cost. However, they also relied significantly on specific quality information, with 30 percent considering GTE's designation of "exceptional quality," and 45 percent considering the quality scores based on HEDIS and participant satisfaction measures (Sheffler, 1996).
- General Motors blends several measures of health care quality into one amalgamated quality measure and draws from direct indicators of quality from HEDIS, employee satisfaction measures, accreditation status, and impressions gained from site visits. GM also works with its plans to develop quality improvement strategies and facilitate the sharing of best practices (Meyer, et al., 1997).
- Digital Equipment Corporation emphasizes value (which it defines as the sum of quality of care and consumer satisfaction, divided by costs) in its health care purchasing decisions. Using information yielded from its performance reporting requirements, Digital identifies the best plan in each region as the "benchmark" plan and bases its contribution to the cost of health coverage on the premium charged by that plan (Meyer, et al., 1997).
- The Pacific Business Group on Health requires HMOs to set aside 2 percent of the premium dollar and allows plans to keep that money only if they attain the performance standards set in customer service, quality, data collection, and other areas (Bodenheimer, et al., 1998).
- Seven leading business and employer organizations have recently announced a new initiative, the Employer Quality Partnership (EQP), to "accelerate the growing emphasis on quality in private health plans." EQP's has released informational guides and launched a Web site as part of their efforts to educate the public about the role of employers as health care purchasers.
- The United Auto Workers labor union requires quality accreditation for all health plans offered to its members, and it is working on a strategy to provide information, including NCQA accreditation status and some quality assessment based on HEDIS measures (AFL-CIO, 1997).
Recognizing that quality health care can also lead to increased worker productivity, health plans are developing quality improvement programs that improve productivity and reduce costs. For example, the Southern California Region of Kaiser Permanente developed an "Intervention for Employment Maintenance for Members with End Stage Renal Disease." This program involves a pre-dialysis orientation for patients. Six months before beginning dialysis, patients and their families are referred to a clinical social worker and nurse educator for evaluation and education. This collaborative team effort continues throughout the periods prior to and during dialysis, and routine monitoring and education is available for the patient. As a result of this program, blue-collar workers in the Kaiser program were 2.8 times more likely to maintain employment than a control group, with these individuals working an average of 35 hours per week. According to Kaiser, "Working patients had increased quality of life, self-esteem, better health, and a more positive attitude toward work and life than nonworkers." (Kaiser Permanente, 1996).
Return to Contents
Why We Need a National Effort to Improve Quality
Some effective strategies have been developed to improve the quality of health care delivered to patients every day. The promising developments described in this report, along with other efforts by private industry, labor unions, States, and the Federal government, are reason for optimism. However, it is also clear that a patchwork of efforts will not lead to significant, continuous nationwide improvements in health care quality.
As the President's Commission noted, "Incentives to improve quality have been diluted by measurement efforts that vary widely in their aims and scope, and that have been, at best, only informally coordinated" (Final Report, 1998). There are many areas that have been left
unaddressed by the current system. For example, there are few quality measures or quality improvement programs on chronic conditions, and little data about quality care in institutional settings, such as nursing homes or home health agencies. Moreover, there are millions of consumers and public and private purchasers that do not have access to any of this type of information.
Also, the current system is often burdensome and redundant. For example, health plans and providers often have to collect excessive data to satisfy the variety of different reporting requirements and information needs of purchasers and consumers. Testifying before the President's Advisory Commission, Dr. Steven Udvarhelyi of Independence Blue Cross of Pennsylvania characterized the development and application of performance measures as essential to improving quality. However, he also noted that to report separate versions of HEDIS 3.0 required for commercial, Medicaid, and Medicare populations and for each of three states, Independence Blue Cross had to file nine different reports with a total of 675
indicators. State-by-State mandates for ad hoc performance measures add to the quality measurement burdens facing his organization.
Moreover, at present, employers, labor unions and other group purchasers do not have a central repository for learning about best purchasing practices, nor do they have affordable access to the technical assistance that would permit replication of the practices of pioneers (Meyer, et al., 1997). Therefore, a program that has proven effective in lowering mortality following cardiac surgery in New York hospitals or a model asthma program that has improved health outcomes and saved purchasers money may never be borrowed by others interested in implementing similar initiatives.
Return to Contents
Proposing a Forum for Health Care Quality: Measurement and Reporting
It is clear that directing attention to measurement gaps, reducing the burden of multiple reporting requirements, and encouraging the sharing of best practices will require much greater coordination across sectors of the health care industry.
In its Final Report to the President, the Advisory Commission on Consumer Protection and Quality in the Health Care Industry recommended a Forum for Health Care Quality Measurement and Reporting that would:
- Develop a comprehensive plan for implementing quality measurement, data collection, and reporting standards to ensure the widespread public availability of comparative information on the quality of care furnished by all sectors of the health care industry.
- Establish measurement priorities that address the national aims for improvement and that meet the common information needs of consumers, purchasers, Federal and State policymakers, public health officials, and other stakeholders.
- Periodically endorse core sets of quality measures and standardized methods for measurement and reporting.
- Make recommendations regarding an agenda for research and development needed to advance quality measurement and reporting, and sponsor research and development activities if resources are available.
- Develop and foster implementation of an effective public education, communication, and dissemination plan to make quality measures and comparative information on quality most useful to consumers and other interested parties.
- Encourage the development of health information systems and technology to support quality
measurement, reporting, and improvement needs.
To be effective as a private sector entity, the Commission noted that the Forum must be broadly representative of key stakeholders in health care. Such participation will draw upon public and private group purchasers; individuals and organizations focused on representation of consumers and patients; health care providers; labor unions; experts in quality assurance, improvement and measurement; quality oversight organizations; health care researchers; and public health experts. This broad participation will enable the Forum to be attuned to the changing needs of the health care system, and as a private sector entity, afford it greater flexibility to respond. Substantial representation of purchasers and consumers in its governance will also position the Forum to marshall market forces needed to drive this
initiative forward. By coming together, this wide range of private and public purchasing power would be able to use their combined market power to assure they receive the information they need.
At the same time this effort would reduce the burdens on providers and health plans who would be able to collect a consistent set of data, reducing the duplication and burdens in the current system. Health care providers would also be able to use this information to develop targeted ways to improve their own performance. Moreover, by collecting and making this information publicly available, consumers, employers, and other purchasers would be able to make meaningful comparisons on the quality among plans and providers. For the first time, health plans and providers would compete on the quality of services not just costs and benefits.
Developing and disseminating these consistent measures of quality would also enable individuals to track the health care industry's progress in achieving national quality improvement aims and to guide public planning and policy making.
As the examples in this report demonstrate, collaboration does occur among providers, health plans, consumers, employers, and other health care purchasers, but these examples are far too few and often too isolated. It is no longer fair or sufficient to depend on these leaders to carry the full weight of this effort. There is a clear need to coordinate and build upon these leading edge efforts, so that many more Americans can benefit from this critical work to advance the quality of health care.
Return to Contents
Planning for a Forum
To launch a Forum for Health Care Quality Measurement and Reporting, the Quality Commission recognized the need to resolve important issues of governance, organizational structure, and financial support under the auspices of a neutral convener. The first stage of this process will be a 6-month period where a planning committee will work to lay the groundwork for the operations of the Forum, recruit stable funding, and ensure broad representation of stakeholders. Private and public purchasers, consumer groups, health plans, and healthcare accrediting organizations have welcomed the efforts to create this private sector entity and affirm the need for collaborative and coordinated efforts.
Building on the work of the Advisory Commission, this report highlights some of the best examples of what the public and private sectors can do to improve health care quality. Their leading edge efforts tell us that we can do better. By moving from a patchwork of public and private efforts to systemwide changes, we can bridge the gap between actual practice and best practice. Creating a Forum for Health Care Quality Measurement and Reporting is a critical step in this direction.
Return to Contents
AFL-CIO. Union Guide to Quality Managed Care, 1997.
Agency for Health Care Policy and Research and Kaiser Family Foundation. Americans as Health Care Consumers: The Role of Quality Information. 1996 October.
Bates D, Cullen D, Laird N, et al. Incidence of adverse drug events and potential adverse drug events: implications for prevention. Journal of the American Medical Association 1995; 274: 29-34.
Bates D, Spell N, Cullen D, et al. The costs of adverse drug events in hospitalized patients. Journal of the American Medical Association 1997; 277: 307-311.
Bergstrom N, Allman R, Carlson C, et al. Pressure Ulcers in Adults: Prediction and Prevention. Agency for Health Care Policy and Research Clinical Practice Guideline ,
Number 3. AHCPR Publication No. 9209947. May 1992.
Bergstrom N, Allman R, Alvarez O, et al. Treatment of Pressure Ulcers. Agency for Health Care Policy and Research Clinical Practice Guideline, Number 15. AHCPR Publication No. 95-0652. December 1994.
Berlowitz D and Halpern J. Evaluating and Improving Pressure Ulcer Care: The VA Experience with Administrative Data. Joint Commission Journal on Quality Improvement. 1997 August; 23(8): 424-433.
Berman S, Byrns P, Bondy J, et al. Otitis media-related antibiotic prescribing patterns, outcomes, and expenditures in a pediatric medicaid population. Pediatrics. 1997 Oct; 100(4): 585-592.
Bernstein SJ, McGlynn EA, Siu AL, et al. The appropriateness of hysterectomy. A comparison of care in seven health plans. Health Maintenance Organization Quality of Care Consortium. Journal of the American Medical Association. 1993; 269(18): 2398-2402.
Brennan T, Leape L, Laird N, et al. Incidence of adverse events and negligence in hospitalized patients: results of the Harvard Medical Practice Study I. New England Journal of Medicine 1991; 324(6): 370-376.
Bodenheimer T, Sullivan K. How large employers are shaping the health care marketplace? New England Journal of Medicine 1998; 338(14): 1003-1007.
The Business Roundtable. Quality Health Care is Good Business: A Survey of Health Care Quality Initiatives by Members of the Business Roundtable, September 1997.
Centers for Disease Control. Medicare influenza vaccine demonstration—selected states, 1988-1992. Morbidity and Mortality Weekly Report 1992; 41(9): 152-155.
Centers for Disease Control. Influenza and pneumococcal vaccination coverage levels among persons aged >65 years—United States, 1973-1993. Morbidity and Mortality Weekly Reports 1995; 44: 506-515.
Centers for Disease Control. National Breast and Cervical Cancer Early Detection Program Fact Sheet. 1998.
Chassin MR. Assessing strategies for quality improvement. Health Affairs 1997; 16(3): 151-161
Clarke SC and Taffel SM. State variation in rates of cesarean and VBAC delivery: 1989 and 1993. Statistical Bulletin/Metropolitan Insurance Companies 1996 Jan; 77(1): 28-36.
Classen D, Pestonik S, Evans S, et al. Adverse Drug Events in Hospitalized Patients: Excess Length of Stay, Extra Costs, and Attributable Mortality. Journal of the American Medical Association 1997; 277: 301-306.
Cleveland Health Quality Choice Program. The Greater Cleveland Consumer Report on Hospital Performance: A Summary of Information from The Cleveland-Area Hospital Quality
Outcomes Measurements and Patient Satisfaction Report, November 11, 1997.
Department of Veterans Affairs Health Services Research and Development Service,
Management Decision and Research Center. Practice Matters. 1996; 1(1).
Goldenberg R, et al. Low Birthweight PORT Final Report: Patient Outcomes Research Team on Low Birthweight in Minority and High-Risk Women. Agency for Health Care Policy and Research. 1998. Unpublished.
Gonzales R, Steiner J, Sande M. Antibiotic prescribing for adults with colds, upper respiratory tract infections, and bronchitis by ambulatory care physicians. Journal of the
American Medical Association 1997; 278: 901-904.
Govaert M, Thijs C, Masurel N, et al. The efficacy of influenza vaccination in elderly individuals. Journal of the American Medical Association 1994; 272(21): 1661-1665.
Graves E and Gillum B. National hospital discharge survey: annual summary, 1994. Vital and Health Statistics 1997; 13: 1-146.
Greineder DK, Loane KC, Parks P. Reduction in resource utilization by an asthma outreach program. Archives of Pediatrics and Adolescent Medicine 1995; 149(4): 415-420.
Group Health Association of America. Innovative Answers for America's Health Care: Best Practices in HMOs. 1995.
Hannan EL, Kilburn H, Racz M, Shields E, Chassin MR. Journal of the American Medical Association 1994; 271: 761-766.
Hannan E, Kumar D, Racz M, et al. New York State's Cardiac Surgery Reporting System: four years later. Annals of Thoracic Surgery 1994; 58: 1852-1857.
Joint Commission on Accreditation of Healthcare Organizations (JCAHO). Sentinel Event Policy Reference Manual. Chicago: JCAHO. 1998.
Jordan H, Staus J, and Bailit M. Reporting and using health plan performance information in Massachusetts. Joint Commission Journal on Quality Improvement 1995; 21: 167-177).
Kaiser Permanente. Quality Notes. May/June 1996.
Kleinman L, Kosecoff J, Dubois R, et al. The medical appropriateness of typanostomy tubes proposed for children younger than 16 years in the United States. Journal of the American Medical Association 1994; 271: 1250-1255.
Krumholz H, Radford M, Ellerbeck E, et al. Aspirin in the Treatment of Acute Myocardial Infarction in Elderly Medicare Beneficiaries: Patterns of Use and Outcomes. Circulation 1995; 92(10): 2841-2847.
Lantner R, Ros S. Emergency management of asthma in children: impact of NIH guidelines. Annals of Allergy, Asthma and Immunology 1995; 74: 188-191.
Leape L. Error in medicine. Journal of the American Medical Association 1994; 272: 1851-1857.
Leape L, Kabcenell A, Berwick D, and Roessner J. Breakthrough Series Guide: Reducing Adverse Drug Events. Boston: Institute for Healthcare Improvement. 1998.
Longo DR, Garland L, Schramm W, Fraas J, Hoskins B, Howell V. Consumer reports in
health care: do they make a difference in patient care? Journal of the American Medical
Association 1997; 278: 1579-1584.
Marciniak T, Ellerbeck E, Radford M, et al. Improving the quality of care for Medicare patients with acute myocardial infarction: Results from the Cooperative Cardiovascular Project. Journal of the American Medical Association 1998; 279: 1351-1357.
McKenzie L, et al. Variation in cesarean section rates among hospitals in Washington State. American Journal of Public Health. 1993 Aug; 83(8): 1109-1112.
Meyer J, Rybowski L, Eichler R. Theory and Reality of Value-based Purchasing: Lessons from Pioneers. AHCPR Publication No. 98-0004, November 1997.
National Asthma Education and Prevention Program (NAEPP). Guidelines for the Diagnosis and Management of Asthma. Bethesda, MD: United States Department of Health and Human Services, National Institutes of Health. NIH Publication No. 91-3042, 1991.
National Asthma Education and Prevention Program (NAEPP). AsthmaMemo. 1996.
National Asthma Education and Prevention Program (NAEPP). Expert Panel Report 2: Guidelines for the Diagnosis and Management of Asthma. Bethesda, MD: United States Department of Health and Human Services, National Institutes of Health. NIH Publication No. 97-4051,
National Asthma Education and Prevention Program (NAEPP). Practical Guide for the Diagnosis and Management of Asthma. Bethesda, MD: US Department of Health and Human Services, National Institutes of Health. NIH Publication No. 97-4053, 1997.
National Asthma Education and Prevention Program (NAEPP). Program Description. 1998. http://www.nhlbi.nih.gov/about/naepp/
National Center for Health Statistics. Births, Marriages, Divorces, and Deaths for 1996. 1997; 45(12.20): 97-1120.
National Committee for Quality Assurance. The State of Managed Care Quality. 1997. http://www.ncqa.org/communications/news/somcqrel.html
National Committee for Quality Assurance. 1998. www.ncqa.org
National Institutes of Health. National Diabetes Education Program. 1998. http://www.ndep.nih.gov/
National Institutes of Health Consensus Development Conference on the Effect of
Corticosteroids for Fetal Maturation on Perinatal Outcomes. The effect of antenatal steroids for fetal maturation on perinatal outcomes. NIH Consensus Statement, 1994 Feb 28-Mar 2; 12(2).
National Patient Safety Foundation. 1998. http://www.npsf.org/
O'Connor G, Plume SK, Olmstead EM, et al. A regional intervention to improve the hospital mortality associated with coronary artery bypass graft surgery. Journal of the American
Medical Association 1996; 275(11): 841-846.
Phelps C. Bug/drug resistance: sometimes less is more. Medical Care. 1989; 27: 194-203.
President's Advisory Commission on Consumer Protection and Quality in the Health Care Industry. Quality First: Better Health Care for All Americans—Final Report to the President of the United States. March 1998.
Sheffler S. What do we know about the information that people need or use? Lessons from employed populations? Presentation before the Henry J. Kaiser Family Foundation/Agency for Health Care Policy and Research Conference—Value and Choice: Providing Consumers with Information on the Quality of Health Care. Arlington, VA. October 29-30, 1996.
Soumerai SB, McLaughlin TJ, Spiegelman D, et al. Adverse outcomes of underuse of beta-blockers in elderly survivors of acute myocardial infarction. Journal of the American Medical Association 1997; 277(2): 115-121.
Soumerai SB, McLaughlin TJ, Gurwitz JH, et al. Effect of local medical opinion leaders on quality of care for acute myocardial infarction: a randomized controlled trial. Journal of the American Medical Association 1998; 279(17): 1358-1363.
Strickland D. Asthma—a prominent target for disease management programs. 1997 Disease State Management Sourcebook: A Resource Guide to Chronic Care Programs. Faulkner & Gray. 1996.
Suntken G, Starr B, Ermer Seltun J, et al. Implementation of a comprehensive skin care program across care settings using the AHCPR pressure ulcer prevention and treatment guidelines. Ostomy/Wound Management. 1996 Mar; 42(2): 20-22.
Weiss K, Mendoza G, Schall M, et al. Breakthrough Series Guide: Improving Asthma Care in Children and Adults. Boston: Institute for Healthcare Improvement, 1997.
Wiener J, Parente S, Garnick D, et al. Variation in office-based quality: a claims-based profile of care provided to Medicare patients with diabetes. Journal of the American Medical Association 1995; 273: 1503-1508.
Wilbur D. False negatives in focused rescreening of Papanicolaou smears: how frequently are 'abnormal' cells detected in retrospective review of smears preceding cancer or high-grade intraepithelial neoplasia. Archives of Pathology and Laboratory Medicine 1997; 121(3): 273-276.
Wright L, Merenstein G, and Goldenberg R, et al. The NIH Consensus Development
Conference on corticosteroids for fetal maturation: change in obstetric attitudes. Paper presented to the Society of Perinatal Obstetricians. Spring 1996.
Publication No. OM 98-0009
Current as of July 1998
The Challenge and Potential for Assuring Quality Health Care for the 21st Century. Publication No. OM 98-0009. Prepared by the Department of Health and Human Services for the Domestic Policy Council, Washington, DC, June 17, 1998. http://www.ahrq.gov/qual/21stcena.htm