Measurement is commonly linked with good management. You may be familiar with the old saw in carpentry measure twice, cut once. Measurement can help to avoid costly mistakes. But measurement has limits, and even perfect measures do not ensure success. Mistakes still can be made, whether it is when cutting a piece of wood or managing care.
Measuring management
The burden of measurement on payers is significant. As businesses that need to stay competitive, there is internal motivation to measure the utilization and cost of services. They measure provider and member satisfaction and churn, as well as their market share. And like any organization, payers measure their operational performance (e.g., medical-loss ratio) and financial performance (e.g., revenue and profit). But external requirements from purchasers and regulators force payers to measure much more than what ultimately feeds a profit-and-loss statement. In fact, payers have to measure nearly everything they manage.
In response to demand from employer and government purchasers, payers devote considerable resources to reporting on the quality of care delivered to members. In its 2017 Medicare Star Ratings program, which assesses the quality and performance of Medicare Advantage plans and Part D prescription drug plans, the Centers for Medicare & Medicaid Services (CMS) requires plans to furnish data across five broad categories of measures. Employers rely on the National Committee for Quality Assurance’s Healthcare Effectiveness Data and Information Set (HEDIS) tool, whose 81 measures across five domains of care evaluate the performance and service of commercial plans. Medicaid agencies use measures similar to those in HEDIS to assess Medicaid plans. In addition, state agencies typically impose additional reporting requirements on payers. The labyrinth of reporting requirements is multiplied for payers covering lives in multiple states.
Some payers are integrated delivery networks (IDNs) with hospitals that face different reporting requirements, such as those of the Agency for Healthcare Research and Quality (Quality Indicators), the Joint Commission (ORYX), or CMS (the Hospital Consumer Assessment of Healthcare Providers and Systems [HCAHPS]). In addition, CMS has developed the Overall Hospital Quality Star Rating, based on measures collected through the Hospital Inpatient and Outpatient Quality Reporting programs. And if the IDN includes one or more nursing homes, CMS has a separate Five-Star Quality Rating System that distills data from health inspections, staffing ratios, and quality measures to facilitate comparisons of nursing homes.
Managing measurement
It’s not a stretch to see how measurement can get in the way rather than helping to improve payer management of healthcare. Just as there can be too many cooks in the kitchen, there can be too many measures. With all the internal and external demands for measurement, what’s a payer to do? To cope, payers manage their measurement.
First, payers discard measures that are not relevant to their organizations. For example, HEDIS measures for children are not relevant to Medicare plans, measures for seniors are not relevant to commercial plans, and measures for hospitals or nursing homes are not relevant to non-IDN payers. Second, as businesses, payers focus on measures that result in financial benefits to them. For example, measures that help to reduce costs (e.g., by preventing emergency visits, admissions, and readmissions for members with diabetes, cardiovascular disease, hypertension, COPD, or asthma) align with their organizational goals, making them a win-win in that they score points with both internal stakeholders tasked with managing care and external stakeholders responsible for purchasing care. What remains are measures that are of lesser importance to payers, and understandably, payers will spend far fewer resources to maximize performance in low-spend and trend areas, areas with little to no opportunity to achieve savings or areas not aligned with their strategic interests. Some drug, device, and diagnostic manufacturers hold an overly simplistic belief payers will care about their product simply because there is a related measure, without factoring in payers’ perceived importance of the measure.
Cut twice, measure once
Producing a masterpiece or achieving a desired outcome depends upon a series of solutions as new problems arise. Missing are measures that adequately capture the art of medicine — the additional test done on a hunch that corrects a diagnosis or refines a treatment plan, the add-on therapy tried that slows progression or reduces side effects, the device replaced that improves quality of life or boosts productivity. Perhaps payers and purchasers need to embrace an approach that runs counter to conventional wisdom to measure twice, cut once — one where we cut twice, measure once. Given the healthcare context, cut twice unfortunately sounds like two incisions, and that’s not the intended message. Instead, try twice (or thrice or more) is sometimes necessary to achieve a measurable superior outcome. Measurement can help reduce unexplained variability, reduce errors, cut waste, and even inform what is tried, but some trial-and-error is both desirable and necessary. Manufacturers are looking for ways to partner with payers, and the co-development of measures that capture the iterative nature of medicine and use of innovative products to yield better outcomes may be a ripe opportunity benefiting all.
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