HD47 - Assessment of the Cost, Quality and Accessibility of Health Plans


Executive Summary:
Published measurements of health care provider performance, frequently referred to as "report cards," are increasingly common. Prompted in part by the prospect of federal or state health care reform and in part by consumer demand and provider efforts to improve and market their services, report cards are being prepared and released at the individual provider (e.g., physicians), health care institution (e.g., hospitals), and health plan levels.

In keeping with this objective of enhanced assessment and accountability, the 1994 Virginia General Assembly passed House Joint Resolution (HJR) 267, attached as Appendix A, "Requesting the Virginia Health Services Cost Review Council, in cooperation with appropriate public and private entities, to examine data being compiled in the development of the patient level database and by other appropriate health-related state agencies and to propose additional elements and reporting formats to facilitate the evaluation and assessment of the cost, quality, and accessibility of health plans."

In compliance with the legislation, several objectives were set. The first was to identify key cost, quality, and access indicators that can be used to measure plan performance. Another objective was to inventory existing databases, determine their relevance to constructing the identified indicators, and propose additional reporting elements. A third objective was to assess the feasibility and expense to health plans and to the Commonwealth of collecting and analyzing data. The fourth objective was to analyze issues related to housing and disseminating data.
The final objective was to determine an appropriate role for the state in a health plan performance measurement system.

In order to identify key cost, quality, and access indicators of health plan performance, relevant literature was reviewed. Based upon the review, the Health Plan Employer Data and Information Set (HEDIS) Version 2.0, developed by the National Committee for Quality Assurance (NCQA), was identified as the most logical standardized format presently available for measuring health plan performance in Virginia.

Prominent among the HEDIS indicators are measures of quality and access. There are relatively few cost indicators, an area NCQA has identified for improvement in the forthcoming HEDIS 3.0 release. While not without limitations, HEDIS enjoys broad acceptance by business and the insurance industry. It is probably most suitable for use by businesses making purchasing decisions for employees. It is probably less useful for individual consumers. With HEDIS as a basic standardized format, other indicators could be added, if any are found to be needed. Exhibit 2, page 18, describes the HEDIS 2.0 indicators.

The feasibility of using these indicators as a basis for health plan report cards was further illuminated by notifying potentially affected health insurers, as well as business health trade organizations, of the findings from the literature review and soliciting their opinions. Their responses are summarized in Appendix B. From comments received, it appears feasible for plans to collect HEDIS 2.0 performance data, although plans' initial costs for development of their data collection systems appear substantial.

Nevertheless, many plans responding to the inquiry report they currently collect HEDIS-type information or are developing a system to do so. While designed specifically for use with HMOs, HEDIS-type quality measures have been used with other types of health plans, including managed indemnity plans.

To determine the usefulness of existing databases in constructing the identified indicators, a review of health-related databases collected under the authority of the Commonwealth was conducted. From this review, it does not appear possible to form HEDIS 2.0 indicators of health plan quality, access, and cost from data already collected by the Commonwealth. Most data now available to the Commonwealth relate to quality, access, and cost at the level of the provider. Where information is available or can be aggregated at the level of the health plan, it is quite limited in scope and applicability.

In order to learn about the roles other states have assumed in measuring health plan performance and associated costs, a survey of states was conducted. Responses revealed that eight states have already placed health plan performance measurement systems in regular operation, are actively preparing to do so, or are engaged in a demonstration or pilot test of a health plan performance measurement system. The experience and progress of these eight states are described in Appendix C.

The survey of states (summarized in Appendix C) revealed little information about the costs associated with health plan performance measurement systems. This is due to the fact that most of the measurement systems are still in planning, design, pilot-testing, or initial implementation stages. The most enlightening information came from Maryland and California.

In Maryland, a pilot project is being conducted through a contract with the developers of the HEDIS data set, NCQA. Seventeen HEDIS measures are being gathered by five participating health maintenance organizations. The total cost to the state for the project, which was begun in June of 1994 and is expected to be completed by January of 1995, is $218,870.

Information from California is more enlightening with respect to specific cost items. Twenty-two plans are participating in a project that will produce a report card with nine measures of performance. Plans that do not have data collection systems in place or administrative databases from which to draw information are incurring a cost of approximately $51,000 per plan to draw information from medical records to produce the performance measures. The cost of auditing and verifying performance measures supplied by health plans that have the appropriate data collection systems in place is approximately $7,000 per plan in the first year. The project directors expect this to decline by 15 to 20 percent in the second year. Exhibit 4, page 25, is a table describing the principal activities and cost elements in measuring the performance of health plans.

Health plan data can be housed in a health data organization within the state system or in the private sector. The Institute of Medicine has outlined crucial characteristics which can be used to select candidate organizations. Additional measures for assuring accountability, security, protection, and control over access to the data have been outlined as well.

Work by NCQA suggests that report cards should be designed specifically for various user groups. In particular, NCQA recommends that report cards for consumers include educational materials about health services, while presenting comparative information on available health plans. Those for practitioners should have additional statistical detail beyond that contained in the consumer report card. Report cards targeted to employers and policy makers should include statistical detail and information about plan characteristics.

Health plans contacted by letter, as described above, were also given the opportunity to comment about the appropriate role of the state. Appendix B summarizes the responses from 30 health plans, while Appendix C summarizes the activities of eight states that have initiated or are actively exploring a performance measurement and reporting system for health plans. From this research, several potential roles for the Commonwealth were identified.

In the order of increasing magnitude, potential roles of the state are: (1) encourage, but not mandate, health plans to produce report cards; (2) mandate health plan report cards but leave the choice of measures and definitions to the discretion of the health plans; (3) mandate submission of a standardized set of indicators that are verified by an independent organization; and (4) mandate submission of claims data that will enable the state to calculate the performance measures.

Health care consumers and purchasers, as well as the health plans, will gain the most benefit from performance measurement and reporting if all health plans measure performance in a standard way and report in a standard format. Standardized measurements, auditing procedures and reporting formats are essential for valid interplan comparisons. All parties are likely to benefit more from some plans voluntarily producing report cards that allow valid comparisons across plans than from all plans being required to produce an unspecified type of report card that may not be comparable. Therefore, a voluntary approach to health plan performance measurement and reporting should pursue development and consensus on a standard set of core measures that can be meaningfully compared across health plans.

Accordingly, option 1 is an opportunity for the state to provide stimulus and leadership toward greater health system accountability, better information for consumers and purchasers of health care, and a more competitive health care marketplace. A role for the Commonwealth could be to undertake some specific activities to encourage health plans to develop standardized performance measurement and reporting systems. A first step could be establishing an advisory group of representatives from health plans, employers, health care providers, consumers, and government. This group could consider modifications, additions, and deletions to the HEDIS measures and consider the design of a standardized reporting format and the manner of its distribution to the public.

Technical expertise can also be secured to guide the efforts of this group in developing any technical specifications that may be needed beyond those provided by NCQA for the existing HEDIS indicators. The role of the Commonwealth would be that of educating the affected parties regarding the value of standardized measurement and reporting of health plan performance. This voluntary, market-driven approach needs to be evaluated for its effectiveness over time.

In summary, there is a constructive role for the state, which would not constitute a new regulatory burden, but would still provide stimulus and leadership toward desirable goals of greater health system accountability, better information for consumers and purchasers of health care, and a more competitive health care marketplace. Such a role would be for the Commonwealth to undertake some specific activities to encourage health plans to develop performance measurement and reporting systems, using standardized measures. In fact, this report, with its discussion and support of HEDIS 2.0, is a first step in that direction.