Efficiently Measuring Efficiency: Is Judgment the Correct Path Howard Beckman, MD Medical Director RIPA Rochester, NY

Cost Efficiency: Competition and Judgment Urgent need for Cost Efficiency Current in vogue models involve public reporting, tiering, limiting panels Inherent in these models are competition and judgment

Cost Efficiency: Competition and Judgment The core measurement for cost efficiency is the efficiency index – a comparison of one practitioner’s case-mix adjusted costs to peers Based on responsible or total costs Can be age and sex adjusted Cost variables such as facility or pharmacy costs can be flattened to focus attention on what can be changed

Efficiency Indexes – Pros and Cons + Based on comparisons with peers or benchmarked group + Comparisons encourage a response + Case mix adjusted through episode grouping software – Judgmental - evaluates doctor, not behaviors – Reductionistic – assumes generally + or - – Limited actionability – costly to get to action - Not adequately severity adjusted

Internal Medicine and Family Practice Number of Measures A Doctor is 25% Above or 25% Below Peers In Specialty +5 +4 +3 +2 +1 -1 -2 -3 -4 -5 ripa reported Feb 2006

Methodological Problems with Efficiency Indexes Practitioners are generally efficient at some things but not others (82% in the middle) Few distinctly better (11%) and worse (8%) overall physicians Focusing on the practitioner creates defensiveness, humiliation and the creation of committed enemies

Methodological Problems with Efficiency Indexes Setting targets incents selecting most easily treated patients/discharging recalcitrant ones Hitting target may involve incremental treatment that causes more harm than good Those who do the best were doing the best BEFORE incentives put in place

Conclusions For cost efficiency, the physician is not the most effective unit of analysis Efficiency indexes are too indirect and personal to be actionable Fear as the motivational tool does not promote collaboration Focusing on appropriately selected behaviors is a more logical strategy

The Next Generation: Adding Overuse and Underuse Measures to the Quality Paradigm

What Is Needed By condition, find the local-regional variation in specific services Understand if the variation represents overuse or misuse – have the quality conversation Find overuse-misuse reduction opportunities for a whole specialty = find best practices Create a series of measures based on reducing overuse or underuse offering interventions based on best practices Reduce costs while improving quality – not by chance, but by DESIGN The challenge was to find a general, systematic way of finding specific overuse/misuse issues from our data. In underuse there is one way to do things right (e.g. in diabetes). For overuse, there are lots of different ways to spend money. So we realized we had to find what was happening locally. We expect this might vary from region to region, and we are undertaking a study with RAND to see to what extent that is true.

MPPT™ Analysis of Hypertension MPPT™ Analysis of Hypertension* (ETG 0281, Benign HTN w/o comorbidity, among 260 internists) We would like to present analyses of three conditions (based on Episode Treatment Groups®) for a hypothetical HMO with 500,000 members. The analyses are modified versions of actual results obtained by FMA. In the first analysis, hypertension care among internists, each quintile of physicians consists over 50 internists in a hypothetical network and would represent over 2000 episodes of care. An entire quintile’s data is aggregated to discern the differences in practice pattern between lower and higher cost physicians. After removing services that are special cases, the only significant cost drivers are lab test, office visits and pharmacy. The underlying tables enable drilldown to specific services. Now imagine we took an average line for each of these three cost centers and found out how much each quintile was above or below that line. (Out actual process is more complex and works at the individual service level.) Episode Treatment Groups® and ETG® are trademarks of Symmetry Health Data Systems, an Ingenix company. * Provided by FMA Hypothetical Costs for Illustration Only

Cost Variation – All in Pharmacy Comparing each cost to the average, service by service, gives the variation in practice patterns. Note that for this group of internists and this condition, lab tests and office visits make almost no difference at all. If everyone prescribed like Quintile 1, the savings opportunity would be over $2,000,000 per year for our hypothetical 500,000 member plan. Opportunity: Over $2,000,000 per year Provided by FMA Hypothetical Costs for Illustration Only

Pharmacy Analysis: Best Practice is Quintile 1 All five quintiles have about the same total utilization. Quintile 1 uses the recommended medications (thiazides, ACE-I, and beta-blockers) at the highest rate. ACE-Is are better proven than ARBs and tolerated by > 85% of patients, but ARB use increases by quintile. CCB/ACE-I combinations are much more costly than a CCB plus an ACE-I. Two simple rules – use ACE-Is and ARBs in a ratio of 85% to 15%, and use CCB separately from ACE-I – would save over $900,000 per year in this hypothetical population.

Removing Benign Skin Growths Office visits and procedures drive costs Only office visits and procedures make a difference. The highest group had more pathology costs. Opportunity: $1.5 Million for a 500,000 member HMO Provided by FMA Hypothetical Costs for Illustration Only

Drilling Down on Procedures Drilling down on procedures, we see the highest group uses more excisions (@ $130 - $150) while lowest uses lower cost procedures (@ $50-80). In the fourth group there is a question about over coding certain auxiliary procedures (closure in layers). There would be about 50,000 episodes of benign skin lesion removal per year in this system. Estimated savings opportunity: $1.5 million. Provided by FMA Hypothetical Costs for Illustration Only

Creating a Blueprint for Change Provided by Focused Medical Analytics

Conclusions Focus on reducing overuse instead of relying on efficiency indexes Find specific action items to improve value Direct attention to meaningful action items to engage practitioners as partners Change physician behavior through incentives, avoid “punishing bad docs” as primary motivational strategy