After focusing almost entirely on healthcare costs in recent years, some employers are showing a new interest in the quality of services provided by physicians, hospitals and health plans.
Business and consumer groups representing millions of individuals are conceding that the rise in premiums of 10% to 20% a year may be inevitable. But these groups want something in return for agreeing to higher premiums--a quality guarantee, or at the very least, quality indicators that measure the level of care they are receiving for those extra dollars.
The Central Florida Health Care Coalition, which represents 120 of Florida's largest self-insured employers (such as the Walt Disney Co.) is moving the quality debate up a notch. The group helps negotiate healthcare for nearly a million people, and that gives it a voice that will be heard.
The group wants to divide doctors into three groups--platinum, gold and silver--based on physician performance data they have collected. This three-tiered ystem essentially is pay-for-performance. Platinum doctors would receive higher eimbursements, and their patients would have lower co-pays. At the lower tiers, physician reimbursements drop and co-pays rise.
The group says the system is designed to encourage physicians to use the most effective treatment methods. It is also a way to force managed care companies to improve a system that nearly half the group's enrollees believe provides inadequate healthcare. The coalition's president, Becky Cherney, says managed care companies should use the data they collect to improve healthcare and not the bottom line.
Cherney knows this initiative may not make it past state regulatory and legal barriers, but she also knows health insurance companies will respond to the coalition's loud voice. Humana Health Plans, one of Florida's largest managed care companies, has listened and is working on possible solutions.
"Humana has discussed the concept with the coalition," says spokesperson Pam Gadinsky. "We are considering products and making changes that are similar to the coalition's concept that we believe could be both easily administered and provide value to our members and physicians. Our goals are similar; how we get there may be somewhat different."
None of this pleases the Florida Medical Association.
"We are not in favor of any financial incentives tied to patient care," says John Ridge, FMA's director of managed care and medical economics. "Physicians shouldn't be put in a position of making medical decisions based on dollars. I don't think anyone really wants that."
That is certainly true in Texas. The state recently reached a settlement with AetnaUSHealthcare to ensure that Aetna's financial incentives to doctors will not affect the quality of care received by their patients.
Ridge says the FMA is not opposed to quality indicators, but "the measurements and the data they use is a big issue." He points out that each health plan may collect data differently and then may measure it differently. HEDIS data may ultimately be the compromise, but he says he is not sure there is a compromise on measuring or comparing the medical outcomes of individual physicians.
"The outcomes of a physician's practice may be based on any number of factors that measurements don't take into account," Ridge says.
The measurement of quality is gaining focus in light of growing premiums. In California, the California Public Employees' Retirement System (CalPERS), which represents 1 million current and former state employees, announced it would accept higher premiums and patient co-pays in exchange for better quality care.
Future negotiations will be based only partially on cost. The other element will be quality indicators. No one is quite sure what those indicators will be, but CalPERS made it clear that the health plans must provide them, monitor them and guarantee improvement, or else.
The Pacific Business Group on Health (PBGH), based in San Francisco, is in a similar position. Spokesperson Jared Haller says purchasing groups already are "channeling" patients to hospitals with lower mortality rates, and the next logical step is to decide on quality indicators for medical groups and push patients to the ones that score best.
"In future negotiations, something will be put at risk, maybe a couple of percentage points tied to performance measures," Haller says. "We will have some increases, but they will only get the increases if they meet the quality measures."
PBGH is part of a larger effort, known as the Leapfrog Group, that is pushing healthcare plans toward quality outcomes. The Leapfrog Group took shape several years ago as an initiative by General Electric and General Motors. The Business Roundtable, a Washington-based group of high-powered CEOs, provided start-up funding and staff. Subsequently, the group was joined by other business groups and companies, including PBGH, the Minnesota Buyers Health Care Action Group, GTE, U S West and the U.S. Office of Personnel Management, which represents 9 million people.
Suzanne Delbanco, the Leapfrog Group's executive director, says the group still is in the early stages of defining itself. However, the primary efforts of the fledgling group, which got its name because its focus was to "leapfrog the current healthcare system," will focus on patient safety, Delbanco says.
The group has started out with three informal principles:
- Establishing common purchasing principles, such as using competitive ratings when choosing health plans;
- Committing to informing employees about quality and patient safety issues;
- Seeking to force action through the use of substantial incentives, such as public recognition, awards recognizing quality or financial incentives to hospitals for better care based on outcomes data.
The group also is pushing initiatives that will put more doctors specifically trained in critical care medicine in hospital intensive care units.
"When they are in ICUs," Delbanco says, "it makes a big difference in mortality and morbidity."
Finally, the Leapfrog Group is trying to make sure that health plans and physicians refer patients to hospitals with favorable outcomes for particular procedures. "In this case, volume has a relationship with positive outcomes," she says.
Eventually, Delbanco says, the group hopes to expand to other areas where it can make a difference in quality.
Hughes Electronics in El Segundo, Calif., has a system that allows employees to pay less for higher quality health plans. The company judges quality based on health plan data covering customer service, medical policies and effectiveness of treatment and care for Hughes employees. Hughes requires standardized quality indicators from each health plan with which it contracts.
Rich Ostaw, global practice director for Health Care Consulting for Watson Wyatt Worldwide, says the move toward quality indicators and performance standards is inevitable.
"The dilemma," he says, "is what measures and what standards to use. As for the methods of health plans, they vary from region to region. It might be practical in limited locations with large aggregations of covered employees to measure physician performance, but I don't see it as practical overall. Measuring hospital performance is more practical because there is much more data.
"Obviously, there is more of a push in the direction of requiring quality measurements. How fast we get there will be restrained by how practical it is to find true measurements of care."
The essence of the current trend is business groups, employers and consumers may be willing to accept higher premiums if they can be shown they are receiving quality care. The question that remains unanswered is what to show them. Will physicians be put under the microscope more as efforts to obtain data grow?
"I think they are looking in the wrong place," Ridge says. "The premium increases aren't going to the physicians; they are going to the health plans. And you can't measure a physician's performance without some input from the physicians, and I don't see anyone doing that."
Quality questGroups nationwide pursue higher standards
Business Round Table (Leapfrog Group)
Based in: Washington, D.C.
Members: Initiative started by GE and GM. Represents 25 million employees and dependents in more than 40 states
Goal: "Leapfrog" the current healthcare system using 3 tactics: establish common purchasing principles, inform employees on quality and safety and force quality action using high-profile incentives.
Central Florida Health Care Coalition
Based in: Orlando
Members: 120 of Florida's largest self-insured employers
Goal: Divide doctors into three groups--platinum, gold and silver--based on physician performance data they have collected. This three-tiered system essentially is pay-for-performance.
California Public Employees' Retirement System (CalPERS)
Based in: Sacramento
Members: Represents 1 million current and former state employees
Goal: Will accept higher premiums and patient co-pays in exchange for better quality. Negotiations based partially on cost, partially on quality indicators.
Pacific Business Group on Health (PBGH)
Based in: San Francisco
Members: Coalition of more than 1 million workers and covered dependents
Goal: Standardize quality indicators and steer patients toward groups that score high in those indicators.
W.A. Weronka is a Los Angeles-based business writer.