1. MDH Overview & Update of Provider Peer Grouping Health & Human Services Reform Committee January 24, 2012 Diane Rydrych, Director Division of Health Policy Stefan Gildemeister, Director Health Economics Program

2. What We Plan To Cover What is Provider Peer Grouping (PPG)? Why is MDH performing PPG analysis? Initial Hospital Total Care release – Identified issues – Solutions Additional modifications to Hospital Total Care analysis Public reporting: hospitals Revised timeline for hospital analysis Physician clinic analysis 2012 activities Questions 2

3. Role of the Health Economics Program Monitor health care market and provides unbiased analysis – Study trends and characteristics of the uninsured – Perform empirical research on health care cost, quality, coverage, and access – Assist in the development and analysis of health policy and health reform Implement aspects of the 2008 Minnesota health reform law 3

4. What is Provider Peer Grouping? A system for providing comparative information to consumers on variation in health care cost and quality across providers: – …a uniform method of calculating providers' relative cost of care, defined as a measure of health care spending including resource use and unit prices, and relative quality of care… (M.S. § 62U.04, Subd. 2) – a combined measure that incorporates both provider risk- adjusted cost of care and quality of care… (M.S. § 62U.04, Subd. 3) 4

5. Why is MN Performing PPG Analysis? PPG grew out of Minnesota health reform discussions and research across multiple years Governor’s 2007 Transformation Task Force: develop a set of tools that can help ensure that Minnesotans have: – Access to high quality of care – At a sustainable cost 2008 Legislature directed MDH to develop systems to support: – Improvements in cost & quality – Evidence-based, high-value care 5

6. Health Care Growth Exceeds Growth in Income & Wages Source: HEP analysis of annual health plan reports, preliminary 6

7. Quality Variation: Diabetes Optimal Care Source: Statewide Quality Reporting System, Health Economics Program MHCP are Minnesota Health Care Programs, which include Medicaid and MinnesotaCare 7

8. What Types of Provider Peer Grouping Need to be Developed? 1. Total Care 2. Care for Specific Conditions The commissioner shall develop a peer grouping system for providers based on a combined measure that incorporates both provider risk-adjusted cost of care and quality of care, and for specific conditions… (M.S.§62U.04, Subd. 3) Both types of analysis are to be done annually for hospitals and for physician clinics 8

9. Provider Peer Grouping Process 1.Extensive stakeholder consultation to develop principles for PPG methodology and recommendations for methods 2.Confidential release of data to hospitals/clinics 3.30-day review/appeal process 4.Public release of facility-specific results 90 days after confidential release 5.12 months after public release, health plans (including SEGIP) required to develop products based on PPG results 9

10. Stakeholder Involvement This transformational and innovative work has been guided by these principles: – Use existing measures of performance – Involve stakeholders at every step in the process – Follow established methodologies to assign scores Ongoing stakeholder involvement – 2009 Advisory Group and Technical Panel – Reliability Team & Rapid Response Group – Review & vetting of report design/public reporting prototypes – Monthly update calls 10

11. Hospital Total Care Analysis

12. Initial Release of Hospital Total Care Results: 9/27/11 Email pre-announcement to hospital executives Confidential release of reports to hospital executives and select staff Webinar and three regional meetings to discuss results Hospitals raised important methodological points Hospital input and internal review also revealed issues related to completeness, accuracy of data. 12

13. Initial Release of Hospital Total Care Results: 9/27/11 During the initial 30-day review period, hospitals noted that the PPG analysis appeared to be: – Based on too few admissions – Exhibited a skewed distribution of admissions by payer – Seemed to lack surgical procedures Hospitals also raised concerns about methodological decisions – The assignment of points on some quality measures – How well our models adjusted for differences in patient populations, or for certain high-cost cases 13

14. Hospital Total Care Reports October, 2011: Letter to all hospitals describing identified issues, MDH’s plan to address Conversations with hospitals and health systems Monthly updates on progress January 10, 2012: Public meeting to discuss next steps: – Modifications to the analysis and methodological progress – Availability of additional data for hospitals’ verification process – Plan to delay hospital-specific reports 14

15. Modification to the Analysis and Methodological Progress Cost Composite – More complete dataset – Corrected grouping software – Revised managed care claims allocation – Risk adjustment modifications – Reconvening the Rapid Response Team Quality Composite – Topped-out measures handled differently – Considering alternative ways to handle situations where hospitals lack data for some measures 15

16. Data for Hospital Verification Hospitals need to be able to compare their own data with PPG results State and federal privacy provisions limit ability to provide hospitals w/individual-level data But MDH will provide data on: – Reasons why some cases were excluded from analysis – # of discharges by payer, service type, patient demographics – Distributions of costs by diagnostic category – Number of re-admissions and related costs 16

17. Public Reporting Goal of PPG is to increase transparency about cost and quality so that: – Consumers make informed decisions about where to get high- value care – Payers reward value – Providers identify areas to improve quality and lower costs To meet these goals, data must be actionable. MDH will publicly release only summary results using the current 2008-2009 dataset. MDH will publicly release hospital-specific information in late 2012 using 2010 data 17

18. Summary Report of PPG v.1 Results A narrative discussion of the results for the state overall: – General trends – Regional trends – Trends by hospital characteristics, such as size – Patterns of performance on cost and quality No individual hospitals will be identified Opportunity to start public discussion about value in health care 18

19. Estimated Timeline for Hospital PPG Analysis, 2012 19

20. Estimated Timeline for Physician Clinic PPG Analysis, 2012 20

21. Provider Peer Grouping, Next Steps In 2012, MDH is committed to: – Working to develop educational materials for consumers and providers, in collaboration with MHA, MMA, providers, others – Discussing with providers and payers how to make PPG results as actionable as possible – Developing a public platform for the release of PPG and quality data in a user-friendly, searchable format for consumers – Bringing together technical experts to think through any potential methodological refinements – Releasing accurate, actionable data on total cost of care 21

22. Additional information on PPG is available online: www.health.state.mn.us/healthreform/peer/ Information on Minnesota’s health care market can also be found online : www.health.state.mn.us/healtheconomics Contact information: Stefan.Gildemeister@state.mn.us or 651-201-3554 Diane.Rydrych@state.mn.us or 651-201-3564 www.health.state.mn.us/ www.health.state.mn.us/healtheconomics Stefan.Gildemeister@state.mn.us Diane.Rydrych@state.mn.us 22