As the notion of “value-based payment” has taken hold in thehealth care market—the concept that health care providers should bepaid according to the quality of care they offer, as opposed totoday's “fee-for-service” payment method—insurers, from the Centersfor Medicare & Medicaid Services to commercial payers, have hadto define and measure quality and value in health care.

And how those quality metrics are defined and collected, and howthe payment measures are structured, vary from payer to payer—andeven within different insurance organizations—as they experimentwith various models to test what's most effective.

“Every payer has different metrics and different methods ofpayment,” says David Nace, vice president of clinical developmentand medical director at McKesson. “That's the wild cowboy marketeconomy we're in, and we need to move toward alignment.”

Nace is not the only health care expert to use wild west imageryto describe the current state of the quality-metrics landscape.There is an incredibly vast range of health care acreage to coverin terms of chronic-disease population management and ways tomeasure provider quality.

Who's setting the bar–and where is it?

“What's going to happen, ultimately, is that Medicare is goingto set the quality metrics,” predicts Minda Wilson, founder ofAffordable Healthcare Review, “and providers will have to followthem. The problem is that Medicare hasn't figured out what theright metrics are. Worse, they might not figure them out until longafter new quality standards have been adopted.”

And some commercial payers are developing proprietary qualitymetrics that ultimately could challenge Medicare's authority in theindustry.

“There are three ways insurers are determining what qualitymeasures to focus on,” says Ray Desrochers, executive vicepresident at HealthEdge. “One is following what CMS is doing.Another is following other groups, like [America's Health InsurancePlans], that have been making a number of recommendations. Andthird—and this is most important—is that payers are doing researchon their own and figuring out the right ways for value-basedpayment to work for their own organizations. Most payers are notgoing to freely share this information with others, as they believethat their specific approaches could provide a competitiveadvantage.”

In fact, exactly how these quality metrics are determined hasbecome an area of much interest in the health care arena becausealignment and standardization—the buzzwords that represent solid,evidence-based benchmarking information and the ability to collectand share associated real-life data without corruption—are vitalfor creating effective quality metrics, which in turn are crucialfor value-based payment methods.

“Payers might develop quality metrics based on, for instance,performance levels determined nationally by top-tier providers, sothey're setting the benchmark very high,” explains Matt Amodeo, abenefits attorney at Drinker, Biddle & Reath. “A commercialpayer could look at the highest-scoring, highest-quality cardiologygroup in the country and use that to set their benchmark for thecardiology providers participating in that commercial payer's[accountable care organization]—and those metrics might looknothing like Medicare's metric.”

Some of the issues go beyond metric development to touch onlarger problems of technological infrastructure and dataanalysis.

“If you're going to have a deal between a health plan and aprovider and it's partially or wholly based on outcomes and qualitymeasures, someone needs to keep track of those measures,” says JoeKuehn, a partner in the health care practice at KPMG.

“So one of the issues for all is not just the availability ofthe data, with definitions and measurements that everyone agreeson, but having the technology in place and the processes in placeto capture it and translate it into real-time information you canuse to manage performance over the long haul. If you don't havethat data and analytic capability upfront, entering into at-riskcontracts could prove disastrous.”

Additionally, all of these assorted metrics to track for eachpayer has resulted in understandable frustration from the healthcare provider community, which argues that the administrativeburden generated from tracking and analyzing so many differentquality metrics is unreasonable.

“Most hospitals over the past five years have had to createalmost entire departments with nurses who would collect thisquality metric data,” says Dereesa Reid, chief executive officer ofthe Hoag Orthopedic Institute. “As we get deeper into theelectronic age, we begin to be able to mine this dataelectronically. But it is an onerous task.”

Standard is as standard does

“Individual physicians, group practice managers and hospitalshave a legitimate complaint about the proliferation of measures andthe lack of standardization,” says Bill Kramer, executive directorfor national health policy at the Pacific Business Group on Health,who's also on the board of the National Quality Forum, an groupcreated to generate standardized measures for performance, quality,appropriateness of care and other areas of health care, whichsolicits input from physicians, purchasers, employer groups,consumers and other health care stakeholders.

“I will say that the NQF has accomplished much,” he says, “butthere's still much to be done to bring greater standardization tohealth care measures. Before NQF, it was totally the Wild West. Thefederal government also should receive credit for standardizing themeasures it uses through CMS. Many commercial insurers are usingtheir own measures that are going to be similar to but not the sameas the government's standardized measures. And so far, we haven'tbeen able to find a way to align all of the payers and make a dentin this proliferation of non-standardized measures.”

“One of the things we don't have yet in the United States thatwe hope someday will be more standardized is proceduralregistries,” Reid notes. “Some different states…have registriesthat collect clinical outcomes data about, for example, jointreplacement patients. But in other countries, they have nationwideregistries, and that data is being collected through standardizedquality metrics and outcomes measures. What's advantageous aboutthat is your data isn't in a silo, and you're able to look at amuch bigger population.”

The International Consortium of Health Outcomes Measurement is anonprofit organization that collects health outcomes informationthat's contributed by patients and physicians across the globe;there are about 40 disease types in the ICHOM registry, and careproviders in the United States can participate—in fact, the ICHOMannual conference will be held at Harvard for the second yearrunning—but there are no national quality metrics or healthoutcomes data registries for U.S. health care providers.

The missing links

The lack of standardization in quality metrics is clearly oneproblem, but there are others associated with these new datacollection and analysis initiatives. And the issues with qualitymeasures aren't always standardization—sometimes, there's a greaterproblem of omission or inability to quantify return oninvestment.

“We've made progress, but there are still many things thataren't measured well—or, in some cases, aren't measured at all,”Kramer says. “For example, we don't have a good standardizedmeasure for medication errors. We know it's a problem, but we don'thave a good measure to track it.”

Kramer also mentions the lack of patient-reported outcomes:There's no systematic way to gather data that indicates, forexample, whether a patient who underwent a surgery to repair an ACLtorn on the basketball courts was still able to shoot hoops sixmonths after the surgery.

“Patient-reported outcomes are the next frontier,” he says.“We've made some progress on traditional clinical outcome measures,but we don't have a systematic way of capturing patient-reportedoutcomes.”

“Around here we talk a lot about the Institute for HealthcareImprovement's 'Triple Aim' initiative—to reduce cost, to improvequality and to improve the patient experience,” says MollyMcCarthy, associate vice president of the provider performancenetwork at Priority Health. “And sometimes those activities willresult in an ROI, but sometimes those are long-term investments.One example is screening young women for cervical cancer. Thatbenefit is not being realized for 30 years, but it's anevidence-based treatment standard that has great value. However, itmight not be value that Priority Health realizes—that patient mightnot still be with us in 30 years. So some of the ROI iselusive.”

And although many experts agree that initial steps taken by CMSand many commercial payers, such as penalizing hospitals forpost-procedural readmissions, some point out a need for moregranular analysis of those circumstances.

“If a health system is readmitting a patient right after apatient has been discharged because the care providers didn'tperform medication reconciliation, didn't give good instructions ordischarged the patient into a situation where they can't managetheir health, that's one kind of problem,” notes Scott Wallace,visiting professor of family and community medicine at Dartmouth'sGeisl School of Medicine. “But the question is, why are patientsbeing readmitted? If we can differentiate between readmissions thatresult from mistakes, from failure to discharge the patient as wellas we should, and readmissions when something else unrelated to thequality of the care happens, then we've got a better tool toexamine health care costs. A more constructive way to structurethese metrics is to provide incentives to keep people healthyrather than imposing penalties when people get sick.

“In health care, we tend to roll out big programs out and thentweak them,” he adds. “And it's a lot harder to tweak atscale.”

Tweaking at scale

But payers and providers have been attempting to do thatnonetheless, from primary care providers to specialty practices.Reid's organization, Hoag Orthopedic Institute, has beenparticipating in CMS's value-based purchasing program and says themetrics have stayed fairly consistent during the institute'sparticipation.

“Each year they change the metrics a little bit,” she says, “butfor us as an orthopedic surgery specialty hospital, the metrics arerelatively straightforward because there are two things in mostsurgeries that you're really monitoring: infection rate andreadmission rate. CMS is very straightforward about how you collectthe information.

“Now that we have more sophisticated claims information, we knowthat there is a real cost to an infection,” she continues. “Inorthopedics, an infection is a very serious thing, because if apatient gets an infection after a joint replacement, that couldpotentially result in the whole surgery having to be redone.”

Dr. Allen Nissenson, chief medical officer at DaVita, says thatCMS and the dialysis community developed a portfolio over manyyears of basic quality metrics that apply to kidney patients.

“Most of the commercial insurers have looked to what CMS hasdeveloped and are pretty comfortable with those metrics,” heexplains. “But we have some challenges with the more genericquality metrics that insurers are used to applying to generalpopulation management, because many of those are not comparablewith our quality metrics—or are even contraindicated. And thosediscussions are harder because the health plans typically don'thave content experts, and they don't always understand why providernetworks are arguing with them about these metrics.”

The setting of standardized quality metrics is very much a workin progress, and many payers are offering resources for providers,as well as a soundboard for feedback.

“We developed our Patient-Centered Medical Home Program in closecollaboration with primary care leaders throughout New Jersey,”explains Carl Rathjen, manager of network strategy and programdevelopment at Horizon Blue Cross Blue Shield of New Jersey. “Inworking with them, we also put together a physician advisory panel.So when we want to propose changes to the program, or whenproviders want to recommend changes to the program, we have aprocess in place to get physician feedback and have a dialogueabout whether we're using the right quality metrics, among otherthings.”

“Most commercial payers have developed their own proprietarypopulation management programs, and by programs, I mean hardware,software and personnel,” Amodeo says. “They have all the data forthe attributed population, and they can more easily distill thisdata and provide it in reports that are easily digested andunderstood by their network providers. Sometimes the provider canrequest certain data elements organized in a specific way, andsometimes the payer can accommodate that and provide ad-hoc reportsthat are customized. Payers are providing resources.”

“We do offer additional support for our providers,” McCarthysays. “We provided funding to support the development ofpatient-centered medical homes. We are now providing support fororganizations that are building their own care-managementcapabilities. We also set metrics that are common across otherpayers so that we're not asking providers to do something that isunique to Priority Health.”

And other organizations, such as the nonprofit FAIR Health, havejumped into the national discussion, too.

“FAIR Health has data in connection with 151 million privatelyinsured lives,” explains Robin Gelburd, president of FAIR Health.“Our data helps inform value-based payment programs and the shapingof quality measures, and one way we do that is to licensede-identified utilization data to help stakeholders see what typesof wellness programs might be appropriate for differentpopulations. Employers and payers can then use that data to framewellness programs that emphasize the needs of their targetedpopulations, and they can see whether the data starts to change inany meaningful way. And payers and third-party administrators canalso use the data to design appropriate provider networks.Likewise, they collect charge information, which helps them frameincentive payments so they can shape models that reward providersfor meeting certain quality indices.”

The bottom line

Quality metrics are the cornerstone of any value-based paymentmodel, and as the health care industry moves toward value-basedpayment, it's increasingly vital for benefits professionals tounderstand the intricacies of these models.

“It would be helpful for brokers to know if there are qualitymeasures inherent in the plans they sell, and what those measuresare,” Gelburd says. “For example, are there special features ofthese health care programs that really facilitate sound caremanagement? What kinds of plan elements are built into thesebenefit designs to achieve cost savings and bring quality andvalue?”

“Driving higher quality does save money,” Nissenson says. “So ifyou focus on the holistic needs of the patient and can findorganizations delivering patient-centered care, you're going tofind better clinical outcomes and you're going to find lowercosts—and that's the sweet spot.”