HD11 - Study of Virginia's Health Care Cost and Quality Data Initiatives Pursuant to HJR 513 of 1995

Executive Summary:

House Joint Resolution (HJR) 513 of the 1995 Session requested the Joint Commission on Health Care to: (i) evaluate the value and utility of the methodology developed by the Virginia Health Services Cost Review Council (VHSCRC) to measure the efficiency and productivity of hospitals and nursing homes; (ii) evaluate the value and utility of the Patient Level Data Base administered by Virginia Health Information, Inc. (VHI); (iii) review the organizational structure and location of the VHSCRC and VHI; and (iv) evaluate the appropriate role of the Commonwealth versus the private sector in collecting, analyzing and publishing information on the cost and quality of health care providers and services.

Across the nation, both the public and private sectors have looked to health care cost and quality data reporting as a means of controlling costs and improving the quality of health care. In addition to the data initiatives instituted by federal and state governments to enhance the efficiency and quality of public benefit programs, providers, employers and insurers all have sought to collect and analyze data to improve their respective positions in the health care marketplace.

The objectives of these health data initiatives are to: (i) control costs by increasing competition; (ii) educate patients about the cost and quality of care so that they become more cost-conscious consumers and can select the highest quality providers and insurers; (iii) educate providers about the most cost-effective and highest quality services and procedures; and (iv) improve the quality of health care.

The public and private sectors continue to institute new data initiatives to refine health care cost and quality information. However, in recent years, some key questions regarding these initiatives have surfaced. What are the most appropriate types of health care data to be collected and what reports add the most value in the marketplace? What segment of the health care marketplace (i.e. the public or private sector) should develop and administer these initiatives? Who should finance the development and ongoing administration of these initiatives? What are the appropriate roles of the public and private sectors? The focus of the HJR 513 study was to address these questions as they relate to Virginia's current health care cost and quality data initiatives.

With respect to identifying the types of data and reports that add the most value in the marketplace, we found that most of the reports currently issued by the VHSCRC i.e. Surveys of Hospital and Nursing Home Charges, Commercial Diversification Survey, Annual Health Care Trends, Budget Filings, and the IRS Form 990 Report) have limited value in the marketplace, and are used very little by insurers, providers, employers and consumers. These reports do not appear to be meeting the aforementioned objectives of health care cost and quality data initiatives.

The VHSCRC report which measures the efficiency and productivity of hospitals and nursing homes is viewed by several sectors of the marketplace as having significant potential value. Currently, the methodology measures only the efficiency and productivity of hospitals and nursing homes. There is substantial agreement in the marketplace that if "quality of care" measurements are added to the methodology, its value will be enhanced.

The Patient Level Data Base, which collects information on patient demographics, clinical information such as procedures and diagnoses, outcomes of treatment, and financial data, is administered by VHI through a contract with the VHSCRC. Although relatively new, the Patient Level Data Base generally is viewed as having the greatest potential value in the marketplace. Its ability to perform customized data analyses of patient treatments and outcomes is seen as having significant value for employers and others. The Patient Level Data Base reflects more of the current direction in health data analysis.

Regarding the organizational structure and location of the VHSCRC and VHI, each entity has similar data functions. Moreover, the duties and responsibilities of the 17-member VHSCRC and the 17-member VHI Board are very similar. Consequently, there appears to be some overlap and duplication in the activities of the VHSCRC and VHI. Given the limited value and utility of most of the VHSCRC reports, and the more positive assessment of the potential value of the Patient Level Data Base, a more appropriate structure may be to merge the functions of the VHSCRC into VHI. Should VHI become the only entity administering state health data initiatives, a key organizational issue that would need to be addressed is how VHI would be "linked" to state government for the purpose of promulgating regulations and receiving state funding.

The appropriate role of the Commonwealth in collecting, analyzing and disseminating health care data must be evaluated in the context of the private sector's involvement in these health data initiatives. The private sector has expanded its efforts in this area as evidenced by the work of health care organizations such as the National Committee on Quality Assurance, the Joint Commission on the Accreditation of Health Care Organizations, business/employer groups, insurers and providers.

The most significant aspect of the Commonwealths current role in health care data analysis (i.e. the production and dissemination of several reports on the costs of hospitals and nursing homes) appears to be having little impact in the marketplace. A more appropriate role may be to reduce the current number of reports, produce only those reports identified as adding value to the marketplace, and allow the private sector to play the primary role in health data initiatives. In this scenario, the Commonwealth would: (i) play a lesser role in collecting data and producing analytical reports on the health care marketplace; (ii) concentrate its efforts on assessing the cost and quality of its two major health programs, the state employee benefits program and the Medicaid program; and (iii) support the private sector by providing a statutory framework within which it could collect, analyze, and distribute the information it deems useful in controlling costs and improving quality.

The study offers seven policy options for restructuring the Commonwealth's health care cost and quality data initiatives. These options are not mutually exclusive.

* Option I would maintain the status quo.

* Option II would eliminate all current VHSCRC reports except the efficiency and productivity methodology; eliminate the VHSCRC and merge the efficiency and productivity methodology into VHI's functions. If VHSCRC were eliminated, VHI would have to be "linked" to another state agency. Options for "linking" VHI to state government include the Department of Medical Assistance Services, the Department of Health, the Secretary of Health and Human Resources, and the State Corporation Commission.

* Option III is the same as Option II, except that hospitals would be required to submit additional data on patient outcomes to VHI in order to compare hospitals on "quality of care" measures.

* Option IV would direct the Departments of Medical Assistance Services, and Personnel and Training to consider requiring health plans which participate in their respective programs to achieve national accreditation and to submit plan assessments or "report cards."

* Should VHSCRC be eliminated, Option V would assign explicit responsibility to the Department of Medical Assistance Services for monitoring the financial trends, profitability and level of community support of hospitals.

* Option VI would request VHI to publish HEDIS health plan assessments voluntarily submitted by HMOs and other plans.

* Option VII would direct VHI to review the feasibility of collecting additional types of outpatient and physician data.

Our review process on this topic included an initial staff briefing which you will find in the body of this report followed by a public comment period during which time interested parties forwarded written comments to us on the report. In many cases, the public comments, which are provided at the end of this report, provided additional insight into the various topics covered in this study.

/s/ Jane N. Kusiak
Executive Director