High Performance Health Care

The current health care reform effort is now encountering the great challenge of controlling costs. Although media attention has focused on insurance issues (e.g. a public plan), those of us inside the delivery system know that significant opportunities exist for lower costs and higher quality care. The key policy change is to develop a payment system that will reward providers who provide high quality, efficient care. Fortunately this system exists today, is stable and widely used – but not currently for payment.

Episode Treatment Groups
Episode Treatment Groups®(ETG) are means to classify illnesses. ETGs were introduced to the market in the mid-1990s and are now widely used for building episodes of care. Such measurements rely on accurate and valid definitions of a disease and the services related to a clinical condition. By combining related services into clinically homogenous units that describe complete episodes of care, ETGs may be utilized to provide the basis of valid comparisons. ETGs create episodes by collecting all inpatient, outpatient and ancillary services into mutually exclusive and exhaustive categories. Here are two example ETGs: # 27: Type I diabetes, with complications; #744-01 Major trauma, other than fracture or dislocation with surgery- foot and ankle

The medical consistency within ETGs contributes to treatment decisions, as the groupings are meaningful to all care providers. At the patient level, ETGs recognize co-morbidities, complications and treatments that dramatically change the patient’s clinical profile, health care utilization and costs. ETGs enable powerful and accurate case mix adjustment. ETGs cover the breadth of clinical medicine; they measure and compile both acute and chronic conditions.

ETGs currently are used as:
• Analytic units for measuring and comparing health care providers based on the cost of treating patient episodes;
• Clinically useful units for measuring health care demand, including the prevalence of clinical conditions and the services and costs involved in their treatment;
• A basis for establishing disease management strategies, including tracking organizational performance and trends around specific diseases and episodes; and
• A basis for understanding how medical treatments compare with treatment guidelines and protocols (1).

A key reason that ETGs could be easily adapted for payment is that they are now licensed by more than 300 health care organizations in the U.S., serving more than three-quarters of the insured population. ETGs extend the concept of “bundled payments” to the entire acute care system. They are also easily understood by providers, and management strategies can be employed for each ETG to reduce cost and improve patient outcomes – much as has happened with inpatient hospital care being paid through Diagnosis Related Groups.

Providers
Yes - providers may have to form new structures to respond to this payment policy. However this is not black magic. IPAs and various versions of physician–hospital organizations have existed for many years.

With a new payment policy, creative delivery structures will emerge throughout the country that will work. These new “Accountable Care Organizations” will be uniquely designed based on the culture and practice style of each community.

The Policy
A policy to implement ETG payment is both simple and very hard. It is simple because ETGs are very stable, are widely used and nicely calibrated. It is hard because some entity will have to calculate the payment levels and decide whether to accommodate geographic cost variation and how to pay for quality. However, if ETG payment methods are widespread, cost growth will moderate and creative new methods to care for patients will emerge. Here is possible vision for the future:

• ETGs are adopted as the payment mechanism for Medicare and CMS determines the rates.
• CMS also certifies “Accountable Care Organizations” to receive these payments - these could be large integrated systems, hospitals, IPAs, Medical Groups or entirely new entities.
• CMS freezes payment rates in the traditional Fee for Service system and provides inflation in rates only for ETGs – providing an incentive for providers to form Accountable Health Care Organizations.
• CMS provides incentives for states to use ETGs to make Medicaid payments.
• The private health plans agree to use ETGs to make payments in exchange for the removal of a public plan option as part of health care reform.

I was the CEO of Hennepin County Medical Center in 1984, which was the first year for the DRG system. We shaved two days off the average length of stay and improved quality substantially within one year. Payment policy matters! The national use of ETGs could be the “magic bullet” to finally control costs in the American health care system.

Reference:
1. What are ETGs? http://www.ingenix.com/content/File/What_are_ETG.pdf

Picture: Hubert H. Humphrey Building on the National Mall – Home of CMS

Posted by Dan McLaughlin at 09:44 AM | Permalink | Comments (1)

The challenge of controlling health care costs was brought to life in a recent article – The Cost Conundrum by Atul Gawande – in the New Yorker. Dr Gawande has a gift for making complex issues easily understood and compelling.

McAllen, Texas
He compared two Texas towns that were nearly identical – having about the same number of people, similar public health statistics and similar quality of care levels. Medicare spends nearly $15,000 per enrollee in McAllen, TX, the focus of Gawande's investigation, even though its income per capita is only $12,000, while Medicare spending down the road in El Paso is half that. His analysis found the excess uses of health care services in McAllen were based on the “entrepreneurial” attitude of the medical community. This was in contrast to other health care systems such as the Mayo Clinic, where costs were $6,688 per year in 2006 with much higher clinical outcomes. Without reform in payment systems Dr. Gawande fears the whole nation could become McAllen.

In the same week, by contrast, President Obama received a lengthy letter from six major health care associations that outlined their plan to reduce national health care spending by $2 trillion over the next ten years. This was based on an earlier pledge made by these associations and was in response to his request for “details.” These organizations estimate that these initiatives could save between $500 billion and $1.3 trillion over 10 years.

Here is what the two major provider associations presented as initiatives.

Cost reduction from The American Hospital Association:

• Improve Care Coordination – Focus in particular on the discharge process and care transitions.
• Implement Health Information Technology (HIT) – Focus on leadership and clinical strategies to effectively implement HIT.
• Promote Efficient Resource Utilization – Promote palliative and hospice care through the use of advanced directives and best practices.
• Prevent Patient Falls – Further the implementation of effective fall prevention programs and use of fall risk assessment tools.
• Improve Perinatal Care – Promote best practices to improve perinatal care and reduce birth trauma and complications.
• Reduce Supply Costs – Create a more efficient and transparent purchasing environment, including greater alignment of hospital and physician incentives, greater product standardization and other measures.

Cost Reduction from the AMA
The American Medical Association has a special committee looking at a number of topics for development of overuse measures this year and will implement initiatives to publicize their findings:

• Surgical and non-surgical management of back pain
A major health plan reported that nearly 20 percent of plan members’ spine surgery occurred within the first six weeks of symptoms, which is not consistent with guidelines. The volume of spinal fusion surgery has increased significantly. Eliminating unwarranted variations in treatment will produce substantial savings.
• Percutaneous Coronary Intervention (PCI) (encompasses a variety of procedures) for Chronic Stable Coronary Artery Disease Studies project large potential savings from adhering to evidence-based guidelines for coronary artery disease.
• Maternity Care: Induction of labor/Caesarean Sections
There has been a substantial increase in the rate of elective induction of labor. Practice patterns are not always consistent with well understood guidelines. Expenses related to c-section births account for 45 percent of the more than $79 billion in annual hospital charges attributed to childbirth in the U.S. annually.
• Sinusitis: Antibiotic prescriptions and sinus radiography
• Imaging - develop measures for diagnostic imaging. Examples include: CT angiography for pulmonary embolism, MRI of the knee, MRI of the shoulder, CT or MRI of the head, Stress Echocardiography, SPECT MPI.
• Medication Reconciliation
The AMA has initiated a multi-pronged effort to reconcile multiple prescriptions for individual patients treated by different physicians. This program of medication reconciliation is designed to avoid potential adverse events and inappropriate prescriptions. A prototype electronic version of the medication reconciliation card is undergoing beta testing. A second version will be tested in early July. The AMA is completing a strategy to make the electronic version available to employers, health systems and physicians by the end of 2010.

Health Care Reform and Costs
The challenge of restraining the growth in health care costs remains daunting. However, the good faith efforts of these major players in the health care system are encouraging. Look for many of these ideas to be part of the final legislation that emerges from Congress this fall. Hopefully, this new federal policy will facilitate more health care being delivered like Rochester, Minnesota, and less like McAllen, Texas.

Posted by Dan McLaughlin at 01:37 PM | Permalink | Comments (0)