Panel on Measuring Quality and Value Carolyn M. Clancy, MD Director Agency for Healthcare Research and Quality IOM Committee Meeting on Geographic Variation in Healthcare Spending and Promotion of High Value Care Washington, DC – November 10, 2010

Not Just for Policy Wonks Up to 30 percent of health care spending goes toward useless treatments that we don’t need Up to 30 percent of health care spending goes toward useless treatments that we don’t need Overtreatment costs the U.S. system $700 billion a year Overtreatment costs the U.S. system $700 billion a year “Unnecessary treatment and tests aren’t just expensive; they also can harm patients.” “Unnecessary treatment and tests aren’t just expensive; they also can harm patients.”

What the Measures Tell Us Today What the Measures Tell Us Today Variation: Variation: –In care delivery –In spending –Across populations –Across geographic regions Need to Document, Rigorously Need to Document, Rigorously Recent Legislation Recent Legislation Measuring Quality and Value

Improving Value: Three Necessary Ingredients Good measures and data Good measures and data Evidence-based payment and incentives Evidence-based payment and incentives Evidence-based strategies for improvement Evidence-based strategies for improvement Leading to three paths: Transparency and public reporting Transparency and public reporting Pay-for-performance and payment reform Pay-for-performance and payment reform Provider-based redesign and quality improvement Provider-based redesign and quality improvement

Good Measures, Good Data Will Bridge the Gap Healthcare Cost and Utilization Project (HCUP) Healthcare Cost and Utilization Project (HCUP) Quality Indicators Quality Indicators Medical Expenditure Panel Survey (MEPS) Medical Expenditure Panel Survey (MEPS) CAHPS CAHPS National Healthcare Quality & Disparities Reports National Healthcare Quality & Disparities Reports AHRQ’s Role: Supplying the Data

AHRQ Prevention Quality Indicators (PQIs): Potentially Avoidable Hospitalizations National hospital costs for potentially avoidable hospitalizations (adjusted for inflation) National hospital costs for potentially avoidable hospitalizations (adjusted for inflation) decreased from $31.9 billion in 2003 to $30.1 billion in 2006 Changes are largely attributable to avoidable hospitalizations involving chronic conditions decreased from $31.9 billion in 2003 to $30.1 billion in 2006 Changes are largely attributable to avoidable hospitalizations involving chronic conditions These hospitalizations can be the result of inadequate self- management as well as inefficiency in the health care system These hospitalizations can be the result of inadequate self- management as well as inefficiency in the health care system AHRQ 2009 National Healthcare Quality Report

Geographic Variation While there is wide variation in care quality across states: While there is wide variation in care quality across states: – Those in the upper Midwest and New England tend to achieve the highest overall quality – States in the southwest and south central tend to have the lowest care quality

Disparities Report: Key Findings Disparities are common Disparities are common Lack of insurance is an important contributor Lack of insurance is an important contributor Many disparities are not decreasing Many disparities are not decreasing These variations indicate that a basic IOM tenet of quality care—that care should be equitable—is not being met These variations indicate that a basic IOM tenet of quality care—that care should be equitable—is not being met

How Do They Do That? Lowest region in state (actual-expected)  La Crosse, WI  Portland, ME (one of only two HRRs in Maine)  Asheville, NC Actual cost < expected  Temple, TX (second lowest after Lubbock)  Everett, WA (second lowest after Spokane) Four are problematic  Richmond, VA (highest actual-expected in state)  Sacramento, CA (actual > expected)  Cedar Rapids, IA (actual > expected, but in a low-cost state)  Tallahassee, FL (actual > expected) Source: Calculations from HCUP data using Dartmouth Atlas regions Multi-stakeholder effort examining high-performing regions

Important Provisions National Strategy to Improve Health Care Quality National Strategy to Improve Health Care Quality Interagency Working Group on Health Care Quality Interagency Working Group on Health Care Quality Quality Measure Development Quality Measure Development Data, Collection, Analysis and Public Reporting Data, Collection, Analysis and Public Reporting Health Care Quality Improvement (CQuIPS) Health Care Quality Improvement (CQuIPS) Patient-Centered Outcomes Research Institute Patient-Centered Outcomes Research Institute

Payment Based on Quality, Safety and Value National Pilot Program on Payment Bundling National Pilot Program on Payment Bundling – HHS to work with AHRQ and a contract entity to develop episode of care and post-acute quality measures Health Care Quality Improvement Health Care Quality Improvement – AHRQ’s Center for Quality Improvement and Patient Safety (CQuIPS) will identify, evaluate, disseminate, and provide training on best practices on quality, safety and value – CQuIPS will award grants or contacts to provide technical support or implements models and practices identified in research – Technical grants also provided for organizations without infrastructure or resources

What’s Next? National Health Care Quality Strategy Part of Affordable Care Act Part of Affordable Care Act Builds on work of federal, state, local and private initiatives; identifies what works and what needs improvement Builds on work of federal, state, local and private initiatives; identifies what works and what needs improvement Move from provider-level transparency to a patient- focused approach Move from provider-level transparency to a patient- focused approach

Evidence Still Weak on Critical Design Components What to reward? What to reward? – structure, process, or outcomes – Improvement or achievement How structure reward? How structure reward? Market factors affecting rewards Market factors affecting rewards – How much market share do you need? How much of what kind of a payment scheme is needed to correct perverse incentives? How much of what kind of a payment scheme is needed to correct perverse incentives?

Coming Soon: The Evidence We Need? Payment Reform: Evidence on How Payment Can Improve Quality and Value (December) Payment Reform: Evidence on How Payment Can Improve Quality and Value (December) AHRQ-sponsored Health Services Research issue on payment reform: follow-on to 2009 special issue, “Improving Efficiency and Value in Health Care”: AHRQ-sponsored Health Services Research issue on payment reform: follow-on to 2009 special issue, “Improving Efficiency and Value in Health Care”: – Analyses assessing impact of efforts to improve care by changing the way it’s paid for – Value-Based Insurance Design – Models/simulations related to payment models for the future

Thank You AHRQ Mission To improve the quality, safety, efficiency, and effectiveness of health care for all Americans AHRQ Vision As a result of AHRQ's efforts, American health care will provide services of the highest quality, with the best possible outcomes, at the lowest cost