Physicians in California are about to reap the benefits of a new law making the data-collecting process for health plans' quality report cards a lot less expensive.
Numerous private-sector pilot projects and information exchange efforts meant to streamline reporting progressed fitfully for the past several years. However, physicians following the issue believe the law will bring real savings by reducing the number of audits now conducted to a single audit using standardized data collection and reporting requirements and conducted by a single, state-approved entity.
The anticipated savings would be welcomed by physician groups who recognize that over time they'll need to improve their ability to report patient data, but who in the short-term face the dilemma of either deferring important information technology investments or going elsewhere for funding.
Ron Bangasser, M.D., medical director at Redlands-based Beaver Medical Group, says the law probably will save his group $100,000 a year. Currently, Bangasser obtains grants from pharmaceutical companies to beef up groupwide reporting protocols.
"It's not fun having to go other places to ask for money, but right now, it's the only way I can do this job," he says. "If I went to my CEO and told him I need $100,000 to start a diabetes management project, he'd say, 'That's real nice, but I don't have it.' "
Former Gov. Pete Wilson's 1997 managed care reform task force unanimously approved a directive asking the Legislature to streamline the audit procedures that cost medical groups staff time and disrupt practice routines. Passed by a wide margin in both houses in 1998, the law called for a working group including members from the insurance, provider and consumer communities to recommend a standardized audit proposal to the current governor, Gray Davis, by Jan. 1, 2000. Working group members estimate physician groups will see benefits in about two years.
The law's passage gives proponents of the single-audit system hope that prescribed data collection and reporting standards, understandable to purchasers and consumers alike, soon will be in place. The law will be administered by the new Department of Managed Care, which is assuming HMO oversight from the state Department of Corporations. Because the new department started operating on Jan. 1, observers say it could take up to six months before initial decisions are made.
As the state's healthcare industry moves from paper to electronic records, incompatible computer systems and differing methodologies waste time and money.
Many fear the hodgepodge of audits probably delivers inaccurate or misleading results.
The cost of meeting multiple health plan requirements, which often overlap, is just one of the increased financial pressures medical groups have faced recently. Beaver lost $1.6 million in pharmacy risk alone in 1998, and Bangasser says such unexpected losses make financing quality measurement efforts much more difficult.
"A dollar spent on other areas we didn't expect is a dollar we can't spend on any other projects," he says.
Without the law, the balkanization of quality assurance efforts and attendant rising costs probably would have continued unabated. Private initiatives alone never led to a consensus view of how quality should be measured, beyond using the National Committee for Quality Assurance's benchmark Health plan Employer Data and Information Set (HEDIS) data as a central component.
While health plans have been using the same data for report cards and measuring services such as cervical cancer screening, diabetes care, and prenatal care to gauge physician group performance, they also have measured and released the data in proprietary report cards that physicians say do not accurately measure the quality they provide.
Tomas Moran, director of quality and planning for the Palo Alto Medical Foundation, says plans use different-sized sample batches of charts to calculate quality scores, which can skew the results.
Bangasser says quality assurance costs for the 130-physician group may rise a staggering 33 percent before the single-audit system takes effect: HMOs' HEDIS audits cost Beaver an estimated $300,000 annually and could go up another $100,000.
Dan Temianka, M.D., medical director of quality management at HealthCare Partners Medical Group in Torrance, says plans' quality audit demands grew onerous enough that the group finally limited access to a twice-yearly "audit fair" and has saved a six-figure sum annually. But even measures such as this were perceived by physicians and purchasing groups as inadequate.
"We would like to see a lot more standardization of what is reported," says David Hopkins, director of health information at the Pacific Business Group on Health, a coalition of large employer-purchasers. "It doesn't really serve purchasers or insurers to have plan-specific measures. But plan response to standardization varies."
Plans want unique measurements for that most basic of reasons, brand recognition in a competitive market, says Bruce Spurlock, M.D., executive vice president of the California Healthcare Association, which represents more than 600 hospitals, health systems and physician groups.
"Plans want to differentiate themselves in the marketplace on the basis of quality," Spurlock says. After initially opposing the single audit bill, the California Association of Health Plans did endorse the final version passed by the Legislature.
Spurlock served on the working group charged with submitting the preliminary quality audit recommendations to Gov. Davis. Those recommendations, he says, will be based on seven HEDIS measurements that can be measured via administrative claims data.
"We'd all like to have a full electronic medical record available tomorrow," he says. "But we are a long, long way from that."
Perhaps the greatest irony in the industry's emphasis on report cards and evaluations is that purchasers and patients pay much more attention to word-of-mouth appraisals than to the results derived from expensive collection of data. A recent study funded by the Society of Actuaries reported that only 11 percent of 1,502 employers thought NCQA accreditation was very important in choosing a health plan, and only 5 percent thought HEDIS measures were very important in choosing a plan. But these tools are the industry's best yardsticks thus far, and doctors welcome the prospect of a level playing field.
"It's all over the board right now," Bangasser says. "There's not a standardized anything."
The imminent release of the audit law recommendations is a stepping stone in establishing standardized data collection methods, and is expected to improve quality reporting dramatically. But just as the plans will need to acquiesce to a single state-approved not-for-profit entity performing a baseline quality audit, medical groups will face new reporting requirements. At a minimum, this means they must spend time and money upgrading their their electronic claims systems, although investing in a full electronic medical record will be most cost-effective over the long run.
Glaring inconsistencies in reporting accuracy were discovered by those working in pilot projects to build the state's electronic health information system, the California Information Exchange (CALINX).
Richard Dixon, M.D., formerly the medical director of the National IPA Coalition, and now a vice president at consulting firm The Lewin Group, served on the CALINX steering committee. Several pilot projects demonstrated just how inadequate some groups' reporting measures are.
"We followed codes from the individual physician's office to the health plan and found very few made it to the plans accurately," Dixon says. "A lot of the data was just thrown away. We found organizations that were still using rules designed for a fee-for-service environment in a managed-care world."
For example, he said numerous provider groups had rules calling for the rejection of a claim if it was submitted late, no matter how accurate the data was. Such a rule may have provided incentive to submit claims quickly in a fee-for-service environment, but under a capitated contract it served no purpose except to obscure the true amount and nature of services provided.
Several of the state's most tech-savvy groups think the best way to ensure accurate reporting is through fully integrated computer records. However, physician groups say there is not enough money in the healthcare system overall to upgrade their IT assets without taking out large capital loans or obtaining grants or other means of funding.
HealthCare Partners has deployed electronic medical records in one of its four regions and is currently beta testing the system in the other three. Temianka estimated the initial cost of the system at $30,000 per provider. "And, at 230 primary-care physicians, that's a lot of money," he says.
While the cost was steep, HCP chief financial officer Matthew Mazdyasni says the rapid growth of the Internet and the way it will alter the exchange of information means executives need to think three to five years ahead despite other financial pressures. Given rapid technological change, trying to predict beyond that is difficult.
Buying a system based on proprietary software, which may have been a sufficient seven- to 10-year plan in the early '90s, will be a disadvantage as more and more applications and services move to Web-based protocols and new data storage models are offered.
San Francisco's Brown & Toland Medical Group, which counts 2,000 physicians in its network, is a pioneer in this strategy.
The physician group forged a deal in 1997 with health information company Healtheon (now Healtheon/WebMD) to implement its referrals, authorization, claims, eligibility and reports (RACER) administrative system, which is expected to deliver cost savings this year.
Thomas McAfee, M.D., Brown & Toland's chief medical officer, says the company would have to find a strategic partner to invest in a comprehensive electronic medical records system.
For the near future, most of those involved in trying to set up a standard reporting infrastructure say administrative data and HEDIS measurement will suffice as report card benchmarks, making investment in systems such as RACER central to improving encounter data.
"We know how to come up with more robust data sets," Dixon says, "but is the juice worth the squeeze?"
Greg Goth is a Redondo Beach, Calif.-based healthcare writer.