The question remains

what is the most effective way to structure the quality oversight mechanism needed to sell health reform based on managed competition to the public and to provide it the best chances for success? It is axiomatic that any system designed to control health costs and expand access will create perverse incentives -- new ways to game the system and to maximize profits at the expense of quality. Fortunately, the methodologies of quality evaluation have advanced in recent years and provide the basis for a dedicated National Quality Management Program.

Health care is a service that is provided and purchased locally. Many regulatory structures
and professional associations are organized at the state level. At the same time, new clinical
knowledge, drug and technology approval, health professional education, services for the
elderly, and clinical consensus building take place on a national stage. The design of a
National Quality Management Program should complement existing and proposed
mechanisms for the purchasing and delivery of health services, the dissemination of clinical
knowledge, and existing regulatory and professional
organizations.

Figure 1 (see page 15) illustrates the following organizational model that effectively coordinates federal, state and local roles and responsibilities.

Federal Government

"Significant variations in clinical practice, based on nothing more than local tradition or geography are a national concern and should be aggressively addressed"

Clinical quality standards and practice guidelines should be established and disseminated nationally. The mobility of both consumers and health professionals demands that there be a high degree of consistency nationwide with regard to best practices, acceptable treatments and covered benefits. Significant variations in clinical practice, based on nothing more than local tradition or geography are a national concern and should be aggressively addressed. This goal can best be accomplished through the creation of a single organization with authority to mediate top clinical expertise and research into continuously evolving standards of care; to disseminate those standards to clinicians and to create the context by which those standards can be monitored for compliance.

It is to be expected that this national entity would draw heavily on existing clinical consensus mechanisms to arrive at its conclusions, including professional associations and academic medical centers. This role would fall to a National Quality Management Council organized within the National Health Board responsible for: establishment of a national health information database; support and conduct of outcome research and practice guideline, setting quality standards and performance expectations for health plans and providers; ongoing monitoring of quality to reenforce standards and performance expectations; overall assessment of the health status impact of the reformed health system.

It would be highly impractical to attempt to implement the huge task of disseminating and monitoring national quality standards from a single central location. Therefore, it is necessary to create state-based networks to carry out both the quality management functions and data collection/analysis activities that would be specified by the National Quality 14

Q

The most significant point of departure between this report's National Quality Management Program and that of the other managed competition proposals including Clinton's Health Security Act is its recommendation to create a state-based network of Health Quality Foundations under contract with the National Quality Management Council. These organizations would be independent private sector organizations funded through a direct draw on the premium dollar Their primary mission would be to provide ongoing system-wide quality monitoring and to act as a convener for community-based quality improvement initiatives. Health Quality Foundations would be governed by an alliance of consumers, purchasers and health care professionals and they would employ a highly skilled staff of biostatisticians, epidemiologists, quality improvement specialists, data analysts and medical professionals.

Given the incentives of managed competition towards undertreatment, this program would focus on such quality indicators as rates of appropriate screening, rates of referral to specialists, rates of compliance with federally approved practice guidelines, and other risk-adjusted outcomes and health status measurements The evolution of sampling. screening and focusing methodologies currently in use by the Medicare Peer Review Organization program make it feasible to project that meaningful surveillance of all provider-consumer interactions across all venues of care could be achieved in a highly cost-effective manner.

By making comparative performance information available to health plans, a Health Quality Foundation would support quality improvement -- not only by those plans whose rates of compliance or clinical adequacy is demonstrably at the low end, but by all providers and plans. It would support and preserve the necessary "safe" environment in which such quality improvement should optimally take place while providing an incentive for decisive and immediate action on problem areas. It would foster collaboration between plans and guide the conduct of community-based quality improvement programs. It would also facilitate ongoing professional learning pursuant to new practice guidelines and provide input to the research and development of future practice guidelines and performance measures. Although the sentinel effect in support of quality improvement activities should be expected to resolve the vast majority of variations, persistent failure to improve identified problems would ultimately result in consequences to plans and providers At a minimum, consistent quality concerns would be reported to Alliances for use in their contract negotiations Flagrant and continued violations would be referred to licensing or accrediting bodies for redress. The Health Quality Foundation would also serve as a resource for state regulatory bodies, including the ombudsman and the consumer complaint and appeals authorities to provide independent medical consultation regarding clinical appropriateness and technical quality

A Health Quality Foundation would be responsible for creating an independent community information and resource center for consumers regarding treatment alternatives. It would provide independent, unbiased "user friendly" information to consumers to help inform those choices.

Additionally, a Health Quality Foundation would be responsible for compiling, validating, and providing to the Alliance the quality components of its annual Consumer Report Card. Each Health Quality Foundation would also publish an annual "State of the Quality Report" to include state aggregated health status measures and a summary of quality improvement initiatives.

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Management Council. State-based, independent, Health Quality Foundations (see page 16) would provide the Council with the arms and legs to carry out critical functions such as ongoing quality monitoring, feedback and interaction with plans and providers; interactive educational programs for professionals and consumers; support of state regulatory and enforcement mechanisms; communication with state professional organizations; and, annual reports to the National Quality Management Council on state-aggregated health status indicators.

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Data Networks, responsible for data collection and aggregation, should also take place as a nationally managed, state based program in order to take advantage of existing data collection and analysis mechanisms that currently exist in most states, and to facilitate the data organization's close interaction with the Health Quality Foundation.

State Government

"These state regulatory mechanisms are expected to be heavily dependent on the Health Quality Foundation for information and expertise regarding medical quality and clinical effectiveness."

There is an important role for state government in the overall design of a National Quality Management Program. Building on existing structures wherever feasible, states should be directly responsible for administrative/regulatory control of the delivery system. This would include continued reliance in most states on the state Insurance Commissioner's Office, various state Licensing Boards, an expanded state Ombudsman Program, and a new state Office of Consumer Complaints and Appeals.

The
apparatus for licensing health plans, providers and professionals already exists at a state
level. Health departments issue professional licenses; insurance commissioners oversee the
rules regarding the formation of health maintenance organizations and other health insurance
plans. These programs are already well-disseminated statewide and could be re-engineered
to work within existing state authorities. Likewise, a patient complaint and appeals process
could be administered through the state judicial system with relative ease. States currently
are required to oversee an ombudsman program for long term care; this could easily be
expanded to include health plans.

These state regulatory mechanisms are expected to be heavily dependent on the Health Quality Foundation for information and expertise regarding medical quality and clinical effectiveness. Likewise, Health Quality Foundations will be dependent on these state regulatory and enforcement mechanisms to impose penalties on plans and providers in the event of persistent non-compliance with standards and failure/refusal to self-correct.

Local Marketplace

Health care delivery and purchasing takes place at a local level so to a significant degree, quality can be affected by local markets and conditions. The Health and Corporate Alliances have an important role to play in the overall design of the National Quality Management Program. They are responsible for purchasing and negotiating with plans on 17

quality and for organizing the consumer choice function, including the preparation and distribution of consumer report cards. The Alliance should expect to rely on the Health Quality Foundation for the quality information to be published in these consumer reports and for additional quality findings that may assist it in its negotiations with plans. Likewise, Health Quality Foundations will depend on the Alliances to contractually reward or punish plans based on quality determinations.

It must not be forgotten that the primary responsibility for quality rests with Health Plans and Providers themselves. Through their own internal management, communication and quality improvement mechanisms, they must be active participants in all aspects of quality. Participation in community-based quality activities of the Health Quality Foundation should be contractually mandated.

CRITIQUE OF

LEGISLATIVE PROPOSALS

"The theory is that, given proper incentives,
health care plans will compete on the basis of
quality and that individual health care
consumers, armed with meaningful quality
data, will be discerning in their choice of
plan, provider and treatment."

How do the quality provisions of the managed
competition bills compare with the principles and
structure outlined above? All of the proposals
currently under consideration place too much
reliance on market mechanisms to achieve and
maintain the consistently high standards of quality
Americans should and do expect. The theory is that,
given proper incentives, health care plans will
compete on the basis of quality and that individual health care consumers, armed with
meaningful quality data, will be discerning in their choice of plan, provider and treatment.

While it can be expected that health plans (in regions capable of supporting multiple alternatives) will compete on visible measures of consumer satisfaction, e.g., service quality, there is little reason to think that plans or providers will compete on technical and difficult to extract measures of clinical quality. Even assuming that some comparative quality indicators are made available to the consumer through the consumer report card, consumers are much more likely to be influenced by price, or to choose the plan their own doctor joined than to "vote with their feet" based on that information. Once having chosen, a consumer is extremely unlikely to be able to detect or adequately document clinical deficiencies especially care that should have been but was not provided.

All the current legislative proposals are to be commended, however, for their political courage in mandating a national database that includes reporting on all patient encounters as well as comprehensive data that correlates with performance measures for specific conditions or disease categories. No meaningful evaluation of system quality or performance would be possible without such data. It is anticipated that the rapid movement to computerized medical records keeping will greatly reduce the administrative burden associated with this requirement in addition to enhancing internal quality improvement activities.