Home Perspectives & Insights Solving the Healthcare Value Equation – Part 3

Solving the Healthcare Value Equation – Part 3

Perspectives & Insights · March 3, 2022 · Comments off

June 6, 2022
© 2022 – Don Gerdts. All rights reserved.

Part 3:  Quality mandates (e.g., HEDIS/Stars) increase the effectiveness of care but do not improve healthcare value

To combat rising healthcare costs, the Institute for Health Improvement (IHI) introduced the concept of the Triple Aim, a framework that the Centers for Medicare and Medicaid Services (CMS) has taken on to help lower healthcare costs and improve health outcomes:

  • Improve patient care.
  • Reduce healthcare costs.
  • Improve population health.

The framework I’ve established in this series to evaluate healthcare value is really a mathematical perspective of the Triple Aim, where:

Value = E[Q+S] / [∑(P*U)] or,

Value = Effectiveness [Quality + Satisfaction] / Total Cost

So, to accomplish the value-based care objective (i.e., increase healthcare value) requires a net increase in the difference between the numerator (Effectiveness of Care) and the denominator (Total Cost).

I want to be clear that this evaluation is not criticizing quality mandates like HEDIS, and Star Ratings.  Indeed, the effect of the policymakers’ mandates has been to increase the effectiveness of care (e.g., Improving quantified quality) but also to significantly increase costs, resulting in only a marginal impact on healthcare value.

Let’s use HEDIS® and CMS Stars Rating Program to demonstrate how improving quantified quality doesn’t increase healthcare value.  For anyone who would like a brief explanation of measuring health plan quality, here is a link to a previous post: https://www.linkedin.com/posts/dongerdts_hedis-ncqa-cms-activity-6933455664413372416-hqRN?utm_source=linkedin_share&utm_medium=member_desktop_web.

How have the HEDIS and Stars Rating mandates impacted the healthcare value equation?

  1. Quality has increased over time, and quality is about as good as it can practically get. IMPACT:  Increase numerator. 
  2. In 2022, 90% of all Medicare Advantage membership is enrolled in a 4.0+ rated plan, representing 68% of MA contracts.
  3. In 2022, Medicare Advantage outperformed traditional Medicare on all 16 clinical quality measures.
  • Quality measurement and quality improvement require significant ongoing expenditures.  IMPACT:  Increase denominator.
  • According to NCQA, 1,722 HEDIS submissions were made by health plans in 2021, resulting in over $1B in health plan expenditures in 2021 for the administration of HEDIS reporting alone.
  • In addition, the 4.0+ rated plans are eligible for a 5% Quality Bonus Payment (QBP) on top of their benchmark, and QBPs accounted for over $11.6B in Medicare expenditures in 2021.
  • Changes in mandates (ending healthcare emergency measures and 4x weight of CAHPS measures) will lower measured quality and increase costs.  IMPACT:  Decrease numerator and increase denominator.

Conclusion?

Mandating the measurement of the quality of healthcare has provided a means to “comparison shop” health plans, and the average measured quality of care has increased over time, especially in government sponsored programs run by private health plans, like Medicare Advantage and Managed Medicaid).  However, this desirable ability adds billions of dollars of cost annually to the healthcare system with much more required investment on the horizon.

In my opinion, quality mandates are needed to accomplish important national healthcare goals, but quality mandates do not help accomplish the triple-aim of CMS.

Next Steps

We’d love to hear your thoughts on this topic!  Are quality mandates worth the ongoing investment and cost in the healthcare system?

TripleAim Strategy Advisors can help stakeholders in the healthcare ecosystem as a consultant or advisor to provide insights and develop strategies to advance equitable, value-based care.

Contact us to discuss this important topic or see additional ways we can help!

Don

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