and adherence to practice guidelines will work to minimize variations in practice that have been documented to currently exist between geographic regions. As such, health reform can be seen as making a concrete contribution to improving standards of care across the board.

As the IOM has pointed out, the most significant quality concern that a managed competition
model must address is the incentives for undertreatment. Managed competition purists
claim that by simulating conditions for a free market in health care services, quality will
emerge as a natural byproduct of informed consumer choice and competition between plans
for consumer favor as in other service industries. The flaw in this reasoning, however, is
that much of the health services enterprise remains a "black box" for consumers who must
trust that at any given time for a particular disease or condition, physicians and other health
professionals are using commonly accepted best practices and professional standards in their
treatment decisions. It is extremely difficult for a consumer to identify a treatment,
screening, or referral that may have been medically
indicated but withheld, or even to identify when a
treatment has been poorly performed.

"Consumer empowerment, however, in no way relieves the system of its responsibility to implement an ongoing monitoring mechanism capable of identifying patterns of undertreatment and poor technical care.

Clearly, the issue of patient perception of quality
must be separated by not divorced from the issue of
quality standards for medical practice. Certainly the
Administration and other health reform architects are
to be commended for their emphasis on an informed
consumer. Patients must be educated to the understanding that when it comes to health
services "more" is not synonymous with "better." The proposed consumer "report cards"
in health reform plans will flag some important indicators of quality and differences among
providers. Consumers should also be provided with direct user-friendly access to resource
information to guide their decision-making about the pros and cons of various elective
procedures.

Consumer empowerment, however, in no way relieves the system of its responsibility to implement an ongoing monitoring mechanism capable of identifying patterns of undertreatment and poor technical care. Using existing population-based data analysis capabilities, broad patterns of care must be analyzed to monitor risk-adjusted rates of practice utilization and health outcome. Particular attention must be focused on low utilization rates for specific diagnostic and treatment interventions as potential markers for undertreatment. High rates of unexpected poor outcomes must be monitored as potential markers for plan deficiencies in the technical provision of care.

Additionally, capability is emerging to monitor rates of adherence to practice guidelines for treating specific conditions. Not only does practice guideline monitoring have potential to improve technical quality and malpractice driven overtreatment, it is a powerful tool against undertreatment. Subtle deviations from acceptable procedures that may be undetectable at the level of the individual case can become apparent when large amounts of data are examined. Aberrant plans or providers thus identified can be provided with appropriate feedback on which to change behavior.

"

It is critical, however, that monitoring and oversight activities be designed to facilitate and not impede the momentum that has finally started to build around the continuous quality improvement movement. Plans need access to quality standards and comparative performance and compliance data so as to appropriately target their own internal quality improvement activities. Such data can also foster collaboration among competing plans and the conduct of community-based quality improvement initiatives. Penalties or sanctions should only be imposed after the information has been provided and ample opportunity for improvement has been extended. The encouragement of a "safe" environment for quality improvement also suggests that enforcement authority be separated from the data analysis and monitoring function.

Ultimately, the quality of a health system and the performance of a health plan should be

"This report recommends that a comprehensive, National Quality Management Program be established for the purpose of preserving and improving the quality of health care for all Americans under health reform."

outcome

measured largely on the degree to which it improves the health status of its population. Sensitive, risk-adjusted, population-based measurements will allow us to give credit to health system efforts at prevention, education, and early diagnosis in addition to its capabilities in treating illness. Unfortunately, these outcome measurement instruments are still their infancy. Until that time, a national system of quality assurance and improvement must take advantage of existing process measurements, and must encourage the continuous evolution of consensus regarding practice guidelines so that consumers can be assured that they are receiving the right treatment, performed the right way, leading to the right outcome.

A NATIONAL QUALITY MANAGEMENT PROGRAM

This report recommends that a comprehensive, National Quality Management Program be established for the purpose of preserving and improving the quality of health care for all Americans under health reform.

The program must be fashioned after the model of continuous quality improvement, that is, it must ensure that its "customers" i.e. consumers, providers, and health professionals, will in fact be able to help shape it to suit their needs. Local providers and consumers must provide essential input about such issues as variations in patterns of care and the monitoring and evaluation of local and regional epidemiologies. Quality review and monitoring data should be used to support medical professionals in refining and improving clinical practice based upon emerging new standards of care.

Accomplishing these objectives requires a program of national design with flexible, strong local applications; one that can take health care information from all sources and use it to empower health professionals and consumers to define the outcomes they would like to achieve, while assisting them in working toward those goals. The program would assure all purchasers and consumers that health care services are being monitored for quality and

would coordinate principles of epidemiologic surveillance, quality improvement, health services research and interactive education directed at both the medical community and the public.

Such a plan would stand in dramatic contrast to present oversight activities, which are perceived as evaluating individual clinical decisions rather than patterns of care; relying on subjective reviewer judgments; lacking statistical and clinical probability measures; and, employing punitive measures to enforce compliance with undefined standards. A nationally coordinated public/private enterprise of this kind would supersede the multitude of external review activities presently financed by purchasers of care and reduce and redirect the high level of expenditures that existing efforts require.

Functions

The model proposed is built upon four interlocking sets of functions that can be broadly characterized as: consumer protection, quality improvement, informed consumer choice, and national database development. Each of these elements is essential to the overall performance of the system and to continued consumer confidence that their interests are being protected.

Consumer Protection

"A nationally coordinated public/private enterprise of this kind would supersede the multitude of external review activities presently financed by purchasers of care and reduce and redirect the high level of expenditures that existing efforts require."

As discussed, consumer protection under managed competition must include effective safeguards against undertreatment, must empower the consumer with rights of redress, and must ensure the fiscal and professional integrity of the system's components. Federal legislation enacting health reform must require:

Ongoing monitoring and feedback of clinical behavior and practice patterns with the goal of holding competing health plans and providers accountable for improved clinical performance;

Authority by which regulatory bodies can monetarily penalize, sanction or terminate health plans and providers for consistently poor care;

An independent patient complaint and appeals mechanism capable of swiftly addressing consumer concerns regarding access or denial by a plan of specific treatments;

Independent ombudsman that can operate as an unrestricted consumer advocate;

Accreditation and licensure of health plans, institutional providers, and health professionals. Plan certification must be based on detailed information concerning

fiscal solvency, governance, internal quality management and overall organizational adequacy, at both a plan and facilities level;

Conduct of surveys for individuals who have chosen to disenroll from a plan. Such surveys will yield valuable information on perceived plan weaknesses leading to opportunities for quality improvement and/or disciplinary action.

Quality Improvement

To ensure the diffusion and transfer of new medical knowledge among competing health care plans and medical professionals, a community-based infrastructure for quality improvement must be established that creates a safe environment for plan and provider self-examination. Such an infrastructure must include an interactive program of feedback and education to support and complement internal quality improvement initiatives while creating a context for collaborative community-wide efforts.

"Organizations responsible for quality
monitoring must walk a fine line between
encouragement of these laudable
self-improvement exercises and
insistence on agreed upon standards of
care."

While it can be persuasively argued that specific external controls are still needed in a capitated system, it is also critically important to encourage and facilitate the enthusiasm that is already building regarding the organized self-examination and self-improvement activities represented by the adoption of continuous quality improvement management practices by health care organizations. Organizations responsible for quality monitoring must walk a fine line between encouragement of these laudable self-improvement exercises and insistence on agreed upon standards of care.

Classic quality improvement is a data driven organizational exercise that has typically focused on improvements in cycle times, process efficiency and productivity both in hospitals and other industries. Currently, the dearth of comparative data emerging from capitated systems limits the overall systemic improvement that might be possible if such data were routinely captured, analyzed and then reported back to plans by an independent quality monitoring system. Health plans can clearly benefit from access to the comparative performance information that will be produced from the uniform data reporting system that will be mandated under all of the legislative options currently being considered. Benchmarking strategies that identify industry best methods can be used as models for quality and productivity improvement for all plans. In addition, the disseminated results of targeted peer review can identify opportunities for improvements in the processes of care leading to better outcomes.

External quality organizations should actively support health plans in their pursuit of clinical (as opposed to operational) quality improvement by encouraging their participation in practice guideline development, and by facilitating an ongoing learning process to continuously update professionals regarding evolving medical consensus that integrates new research developments.

Q

To ensure that internal quality improvement initiatives are both facilitated and validated, federal legislation enacting health reform must require:

Organized feedback and education to competing health plans and participating providers of the comparative clinical performance information made possible by population based data analysis, risk-adjusted outcome measurement and monitoring rates of adherence to practice guidelines;

Organized feedback and technical assistance to competing health plans and participating providers regarding dissemination and applied use of new research and development in the field of practice guidelines and outcome measurement;

Community based quality improvement initiatives that foster collaboration among health plans and participating providers.

Informed Consumer Choice

"Informed consumer choice is the engine that drives the managed competition model."

Informed consumer choice is the engine that drives the
managed competition model. The ability of a consumer to
choose between two or more competing health plans based on
objective measures of plan value is at the heart of the
incentive-based market reforms envisioned by the Jackson Hole Group.

To ensure that consumer selection of competing health plans is guided by objective and scientifically-based measures, comparative performance reports on price, quality, service, and consumer satisfaction must be generated and disseminated to the public. The quality components of that "consumer report card" must be developed and validated according to rigorous standards. These quality components should change from year to year, serving an educational as well as a consumer choice function.

In addition, consumers should be provided with a community-based resource for information on treatment alternatives to help guide consumer choice of medical treatment. No matter how refined practice guidelines become, there will always be conditions for which there are a number of treatment alternatives. In these instances, patient preference based on the value and expectations of the individual must direct treatment decisions. User-friendly patient information systems have been proven to greatly facilitate patient choice in these commonly occurring medical situations.

To ensure that informed consumer choice is encouraged, health reform legislation must require:

Generation of performance reports on competing health plans to be distributed to all consumers during each open-enrollment period. These reports must contain information comparing health plan price, quality, service and consumer satisfaction and will help guide plan selection. These reports must also outline an enrollee's rights and responsibilities in joining each health plan;