1. © 2006, CareVariance "Quality-based Purchasing in Public and Private Employer Health Insurance Programs" Health Plan Quality Transparency Efforts Mark C. Rattray, MD President CareVariance Washington State Conference on Quality-Based Health Care Purchasing December 4-5, 2006 Seattle, Washington

2. © 2006, CareVariance 2 Health plan quality transparency motivators Purchasers Differentiation in the marketplace Accrediting bodies (NCQA) Presidential transparency mandate Consumer Directed Health Plans

3. © 2006, CareVariance 3 Health plan quality data collection methods Internal claims-based algorithms Limited augmentation by external data feeds – lab results, pharmacy, mental health Physician or physician group self- reported data External certifying or recognizing entities Mix of the above

4. © 2006, CareVariance 4 Internal claims-based algorithms Like HEDIS, a numerator/denominator approach: Numerator: number of patients where compliant care was rendered Denominator: number of patient candidates for recommended care Generates raw and sometimes weighted, risk adjusted compliance rates

5. © 2006, CareVariance 5 Specialty Quality Measures Specialties are creating quality measures through AQA, Physician Consortium for Performance Improvement – often rely on review of clinical record Some quality measure vendors and plans have created procedural claims-based quality indicators through expert panels / specialist advisory boards / existing specialty guidelines

6. © 2006, CareVariance 6 Vendor / plan specialty measures example q. Orthopedic (total joint, disorders of upper and lower extremities, spine) Total cases: This is listed on the right most column of the scorecard and reflects the total number of physician cases for a procedure category. The scorecard measures only complete episodes of care and uses claims data for 2002-2003, where patients have enrollment with UnitedHealthcare for a minimum of 180 days prior and 400 days post procedure. % of Total physician cases: This is listed on the left most column of the scorecard and is the number of UnitedHealthcare cases the physician has performed of a particular procedure type divided by the total number of UnitedHealthcare cases for that physician. Procedure less than 30 days: Measures the % of a physician’s UnitedHealthcare patients who receive a surgical procedure fewer than 30 days after the initial diagnosis is made. This diagnosis does not have to be originally made by the treating surgeon. Pre-Surgery injection or physical therapy (PT) rate: Measures the % of a physician’s UnitedHealthcare patients who have had at least one PT session OR injection within 1-180 days prior to a surgical procedure. (excerpt from UnitedHealth Premium SM Program Methodology, June 2005)

7. © 2006, CareVariance 7 Physician or physician group self-reported data Used by IHA in California IPA’s paying their own claims (capitated) and or groups with robust EHR / registries Used as backup method to claims data Physicians may augment claims data Plans must report at individual patient / indicator basis and allow augmentation Medical record based indicators require this Employers may be reluctant unless audit processes in place

8. © 2006, CareVariance 8 External certifying or recognizing entities Board Certification historically used as quality indicator Maintenance of Certification programs increasingly are requiring compliance self-assessment NCQA Practice Recognition Programs Health plans may display certification / recognition in directories Plans may give “extra credit” in internal programs

9. © 2006, CareVariance 9 Public transparency of plan measurement From www.unitedhealthcare.com

10. © 2006, CareVariance 10 Employer / plan challenges Speed to (often national) market of quality and episodic cost measures Specialty measurement Desire for “High Performing Networks” “Performance Differentiated Network” – all providers included, differentiated by performance and resulting employee benefits “Narrowed Network” – subset of existing network comprised of “higher performing” providers

11. © 2006, CareVariance 11 Employer / plan challenges, cont. Plan / employer intermediaries limiting direct, open, fully informed dialogue Potential dominance of sales/marketing in development and deployment of high performance networks Inadequate investment (money and time) in stakeholder preparation Lack of “line of sight” benefit alignment for each stakeholder group

12. © 2006, CareVariance 12 Thank you! www.carevariance.com