"One Cannot Measure What One Does Not Manage": Managed Care 101 in 2010 (Part XIII)

March 17, 2009

"Managed care is not a panacea for two reasons: (1) it lacks a proven method of achieving results, and (2) it lacks a firm foundation of information about customers and service"

Harken to "Managed Health Care Plans: Sheep in Wolves’ Clothing,” a piece written by Jeffrey S. Sneider, MD and me in 1994:

“Managed care is not a panacea for two reasons: (1) it lacks a proven method of achieving results, and (2) it lacks a firm foundation of information about customers and service…It tells little about the continuity of care, less about clinical efficacy, and nothing about the prediction of illness…Furthermore, when managed care reviews illness management, it does so without paying much attention to severity of illness or the quality of life… [Also,] variation in medical practice remains unexplainable.”

“Managed care’s critical analytic technique involves, in a word, ‘outliers.’ Can management be effective when it focuses on the tails of a quality/cost population distribution curve, instead of shifting the entire curve toward better outcomes?"

This Series is about how to be successful at 'managed care' and after 21 posts on the subject, I am asking you to consider the managed care method to be rather straightforward and fundamental to good health care: Always remember it's about the patient, first, foremost and finally; To improve the quality of care, one must reduce unwarranted variation; To learn about that variation, it is essential to define what is of value and to identify the best practices, which requires having a longitudinal picture of the care and being able to acuity-adjust the data. Technically, normative and comparative statistics requires all that, but simply put, all I am taking about is being able to make 'apples to apples' comparisons and to learn what works and what does not (and pay better when we are doing well by the patient, by the way); Finally, the schwerpunkt of all of this is to measure and manage/manage and measure. As Dr. Sneider and I said in our 1994 paper: "To accomplish these objectives, proper data must be collected from the beginning. If not, in the end we will not know if we had done well, except by measurement of costs against budget. This, however, is precisely the trap managed care programs, government planners, and regulators should assiduously avoid.”

Kaplan JG, Sneider JS. “Managed health care plans: sheep in wolves’ clothing.” Med Interface.(Pub. Medicom Intn’l) 1994 Feb:7(2):61-4, 66,84.

* It should be noted that a “'high-value' provider is one who delivers the same or better-quality services at lower charge than their peers."

In order to shift the current payment system from procedure volume to rewarding quality, “Consumers should have choices about which health care provider to use, but they should be required to pay significantly more if they choose lower-value providers when higher-value providers are available.”*

I highly recommend the reader visit the “NRHI Payment Reform Series,” published by the Network for Regional Healthcare Improvement and the Robert Wood Johnson Foundation; their “Proposals for Improved Payment Systems” contains rather lofty but critically important objectives. For instance,

• “To ensure optimal allocation of resources and the rewarding of desired outcomes, the comprehensive payment is needs/risk adjusted and performance-based.” That is, if you have sicker patients, you need to be paid more.

• And, “Income to primary physicians is increased commensurate with the high level of responsibility expected.”

“Fundamental reform of Payment for Adult Primary Care: Comprehensive Payment for Comprehensive Care,” by Allan H.Goroll, Robert A. Berenson, Stephen C. Schoenbauns, and Laurence H. Gardner, Journal of General Internal Medicine, 2007.

We've also have begun seeing early evidence of a new accountability: hospitals are now having to absorb the cost of complications. On the same tact, a proposal from a group at 3M (DRGs, CRGs, APGs, etc), suggests the draconian measure of reducing payments to doctors and hospitals when complications occur, be they caused by the natural history of a disease, bad luck or ineptitude.

“Redesigning Medicare Inpatient PPS to Adjust Payment for Post-Admission Complications,” by Richard F. Averill, James C. Vertrees, Elizabeth C.McCullough, John S. Hughes, and Norbert J.Goldfield, Heath Care Financing Review. Spring 2006, pp: 83-93.

A final example of a classic managed care strategy, resurrected, is case rate payment. Prometheus calls their version, an “Evidence-informed Case Rate,” which is a “global fee, encompassing all the appropriate* levels of services needed to care for a patient’s condition." *

*“'Appropriate' [herein] is defined by guidelines, expert consensus and empirical evidence of the total cost of care incurred when patients are cared for by ‘good’ providers."

In order to promote clinical integration and accountability, Prometheus suggests rewarding 'better quality.' To fund that effort, they withhold 10-20% of the allowed payment and deposit that in a performance contingency fund, which is "tied to provider performance on process and outcomes of care, patient experience of care, and cost-efficiency. Providers are encouraged to be clinically integrated, even virtually, with 30% of their score dependent on the performance of downstream providers.”

It is noteworthy that the above strategy requires a longitudinal perspective, and a case-mix sensitive 'episode of care'—all care over time, regardless of setting. Nevertheless, such proposals have to rely on the only available data set—the claims trail and it is unfortunate, as anyone in practice knows, that one often adjusts how and what they bill for according to how they are paid (or penalized)—it's human nature.

Clearly, there is a need for more than claims or encounter data; we need medical record data, sociologic, epidemiologic and genetic risk data, patient satisfaction data, and then we also need comparative and normative statistics. And, what of the art of medicine—the ‘squeaky wheel, gets the grease,’ so to speak?

In the end, proposals for health care reform such as mentioned above are a step in the right direction, but beware the pushback—‘This smacks of cookbook medicine,’–‘My patients are sicker.’ ‘The health plan does not practice medicine.’ Etc.

Readers: Which of the following ingredients of a health care solution are required?

1. Single payer

2. Pervasive information technology

3. Cost-sharing (eg, out of pocket costs for consumers

4. Cost-shifting (putting practitioners at risk; aligned incentives)

5. Case management, utilization review and efforts to reduce unwarranted variation (ie, quality improvement)

6. No substantive financial barriers to access

7. A Medical Home

8. Report cards

9. Longer queues for discretionary care

10. Not paying for illness or complications caused by adverse lifestyle choices*

* Should society pay for a smoker's emphysema? An alcoholic's failed liver? A preventable childhood disease when the parent refuses to give immunizations? How about a series of trisomy 21 children born to a mom over 40 years of age? How about 10 kids, 3 fathers and no steady income?