Health care purchasers have been interested in adding efficiency measures to their reporting on the quality of doctors and hospitals, but attempts to do that have been stymied by resistance from providers and criticism of the methods used to measure efficiency. When efficiency measures are used in pay-for-performance programs, providers have said that bonuses often do not adequately compensate them for the savings they give to payers.
As a nationwide coalition of health care purchasers, the Leapfrog Group is confronting these objections by adding a credible efficiency measure to its Hospital and Quality Survey. Leapfrog has used an efficiency measure for several years, but the 2008 version, released in April, dramatically revamps it.
The resource utilization measure, as Leapfrog prefers to call it, is the average length of stay (LOS), adjusted for severity. Readmissions within 14 days are also required to be included in adjusting the length of stay for an admission. “We did not want to appear to be [encouraging] hospitals to discharge patients early, so we included readmissions in the formula for calculating the length of stay,” says Leapfrog’s director of measures, Barbara Rudolph.
The LOS measure applies to four categories of admissions: coronary artery bypass graft, percutaneous coronary intervention, acute myocardial infarction, and pneumonia. It will be used to rank hospitals in the public reports that Leapfrog issues to help purchasers and consumers choose providers. The measure will also be used in the Leapfrog Hospital Rewards Program, a pay-for-performance initiative.
Leapfrog’s efforts signal new challenges to hospital chief medical officers to improve care and new opportunities for health plans to work with hospitals on cost and quality.
The revised measure was developed by researchers at the University of Wisconsin, using data from the National Hospital Discharge Survey. Jim Robinson, PhD, deputy director of the Center for Health Systems Research and Analysis, says the challenge was identifying the statistically significant risk factors or comorbidities that extend the LOS and recommending an approach for handling outlier cases — admissions with extremely long stays.
For the outlier cases, Robinson found that the length of stay can easily be two or three times the average length of stay, and when the number of cases is small, outliers can skew the average stay for all cases. As a result, instead of reporting the simple arithmetic LOS, hospitals will use a statistical measure called the log LOS or geometric mean LOS. The geometric mean LOS is used by Medicare in its reports of DRG (diagnosis-related groups) lengths of stay, and it benefits hospitals by minimizing the effect of uncontrollable and unusual admissions that have very long lengths of stay.
Robinson says the Leapfrog measure has some limitations. In small hospitals or when a hospital has a limited number of admissions for a particular category, the average length of stay remains susceptible to the influence of unusual observations even after the dampening effect of using the log length of stay. In addition, hospitals must report all admissions within a category, even when the condition, such as pneumonia, is secondary to another primary diagnosis. The percentage of stays with such a secondary diagnosis status affects the expected length of stay. Robinson advised Leapfrog to consider these issues in future refinements.
At present, Leapfrog does not require hospitals with fewer than 10 cases to report on this measure.
The Leapfrog Group has submitted the LOS measure to the National Quality Forum for approval as a voluntary standard. That approval will boost the credibility of the measure and help overcome potential criticism. “We want this measure to be totally transparent to hospitals. That is why we contracted with the university to develop it and issue a white paper, and why we submitted it to NQF,” says Karen Linscott, a Leapfrog executive.
More than 1,350 hospitals across the country already participate voluntarily in Leapfrog’s survey, so the measure will be widely used and tested this year. The participating hospitals make up over 25 percent of the acute care hospitals in the country. Based on this wide participation, Leapfrog has touted its LOS measure as the first resource usage measure to be included in a national hospital quality survey. The Centers for Medicare & Medicaid Services and Joint Commission measures still focus only on quality.
The LOS measure has been added to existing quality and safety measures in the Leapfrog hospital survey. Those measures include medication safety, high-risk treatments such as aneurysm repair and bariatric surgery, intensivist staffing in ICUs, and safety practices such as preventing infections.
“Hospitals will now be evaluated simultaneously on two sets of measures, quality and resource utilization, which together we define as efficiency.”
To be ranked high and to be considered efficient, hospitals must be in the upper-right quartile of a scattergram with quality on one axis and efficiency on the other.
That presents a challenge to hospital chief medical officers. Robinson found that many risk factors drive up the LOS. The statistically significant risk factors he identified for each category of admissions explain longer-than-average stays less than 30 percent of the time. That means 70 percent of the time, a long stay is because of complications other than the major risk factors. Some of these factors are not controllable; others are.
James Schibanoff, MD, editor of Milliman’s inpatient care guidelines, which specify a goal length of stay for most inpatient conditions, says, “For community-acquired pneumonia [a subset of Leapfrog’s pneumonia measure], the target length of stay is two days. Only 19 percent that reported met the target. Among the states reporting, Washington does the best with 28 percent of the admissions meeting the target; and for the best group of hospitals, 43 percent of the admissions [have a two day length of stay].” Milliman’s goal lengths of stay are based on a combination of reported cases and evidence-based medicine. In the Leapfrog survey, the expected length of stay is based on actual hospital admissions.
Rudolph says Leapfrog’s measure is not initially intended to drive down the LOS and costs for routine admissions. “There is only so much you can shave off of length of stay without negatively affecting quality. The cost savings on inpatient care comes from decreasing readmissions and reducing the length of stay for outliers. Some of the really long lengths of stay are not preventable, but others are. We’re trying to get at the excess stay that is due to lower quality care.”
Gary Kaplan, MD, chairman and chief executive officer of Seattle’s Virginia Mason Medical Center, says that in hospitals, “Quality and efficiency go hand in hand because complications often are the results of inefficient care. The longer a patient stays in the hospital, the greater the chance that there will be a defect in care.” Virginia Mason participates in the Leapfrog hospital survey and is recognized as being one of the top performing hospitals nationally.
Kaplan and Schibanoff identify waste and inefficiency as problems that increase length of stay. “Eliminate waste and cost goes down and quality goes up,” says Schibanoff.
Horizon Blue Cross Blue Shield of New Jersey implemented the Leapfrog hospital survey in 2006 and built a hospital recognition program around it, as an alternative that hospitals could select in lieu of an internally developed program. “The first year, eight hospitals chose it; in 2007, 13 hospitals participated, and we expect more than 20 hospitals for 2008,” says William Finck, director of network initiatives.
At the outset, Horizon’s recognition program followed Leapfrog’s model, and hospitals that performed in the top quartile on both measures could receive a $225,000 bonus. However, most hospitals came in at lower levels, and Horizon awarded smaller bonuses based on improvements in either measure. Finck says that in many ways, hospitals are in the very first stages of reporting on quality and efficiency, and therefore Horizon’s recognition program does not have the longitudinal data to determine the effect on outcomes or cost. He adds that basic information about performance is starting to be used in contract negotiations. “We’re creating a template of the survey results, and the contracting staff can use it in rate negotiations to tie payment increases to quality improvements,” says Finck.
Finck says that several improvements in the Leapfrog survey make it increasingly attractive, and that his company is placing more emphasis on using the Leapfrog survey over its own program. He cites the advantage of using nationally recognized measures that reduce criticism from hospitals about invalid or unfair measures and make reporting easier for hospitals.
Earlier this year Aetna announced that it will pilot-test the Leapfrog Hospital Rewards Program (LHRP) in Puget Sound and Spokane. “Most hospitals in the area already complete the Leapfrog survey, which serves as the basis for the LHRP, and the program employs nationally accepted measures, so it offered advantages over developing our own program,” says Drew Oliveira, MD, Aetna’s medical director for its northwest markets. “One of the major reasons we chose the LHRP is that for 2008, the survey tool has been greatly simplified.”
Aetna’s move is called a pilot because no financial incentives will be awarded in the first year. “We will be interested to see the first year’s data and whether the data will help improve performance, and we also need to draw a performance baseline.”
The Leapfrog Hospital Rewards Program is a pay-for-performance program separate from the hospital survey, but based on survey data. Leapfrog contracted with Discern Consulting to convene a panel of providers, employers, health plans, and technical experts to develop, among other things, new incentives that fit with current hospital per-diem or case-rate payment methodologies and address provider concerns about the need for a multi-year reward that reflects ongoing cost savings.
While the development of a credible efficiency measure is a significant step forward to achieving greater value, the actual payoff for hospitals and purchasers still depends upon incentive arrangements that meet the needs of both parties.