A primer on managed care metrics for practicing physicians.

In this article ...

Bed days, length of stay and goal length of stay are among the most critical metrics considered by managed care.

"I don't know why I have to call you guys to defend my treatment."

"Since you're not at the bedside, don't you tell me how to handle my patient."

"No wonder you're working for the dark side, you don't know how to practice medicine."

I am sure that these are familiar comments from attending physicians during phone calls between an attending and an insurance medical director. No doubt that the above are more frequent exchanges when a utilization management doctor initially begins reviewing hospital patient census for the first few months in a particular market. As time goes on, however, such conversations tend to be more gracious and more clinical.

Once community physicians become more aware of how utilization management decisions are made, many tend to change the behavior that actually places them in line with evidence-based practice patterns favored by hospitals and insurance plans.

Here's a look at the primary metrics used by insurance companies to measure quality and cost efficiency. Although managed care has been in the health care marketplace for the last 25 years or so, a significant number of physicians are unaware of the metrics that the insurance industry finds important.

These metrics mirror utilization patterns and are increasingly being considered synonymous with one aspect of outcome-based results. Both over-utilization and under-utilization are felt to represent a departure from quality medicine since utilization is the consumption of precious resources, and therefore simply another component of quality.

In order for a medical service provided to the patient to be covered by any health insurance plan, the service must first be a covered benefit included in the contract and then the service must be considered "medically necessary."

Medical necessity may mean different things to different people but to the insurance world it is defined as services and supplies determined by the health plan to be the following:

* Required to meet essential health care needs

* Consistent with the diagnosis of the condition for which they are required

* Consistent in type, frequency and duration of treatment with scientifically based guidelines as determined by medical research

* Required for purposes other than for the convenience of the provider or the comfort or convenience of the patient

* Rendered in the least intensive setting that is appropriate for the delivery of health care

Another way of saying it is to provide the right care at the right time, in the right place.

Determining medical necessity

How an insurance company determines medical necessity is no mystery. Milliman Care Guidelines are used by medical directors to ascertain whether the pre-determined criteria for medical necessity stated in the guidelines match the clinical material gathered on the patient by the hospital case manager and given to the insurance case managers. They then pass on the material to the insurance medical director for a decision regarding medical necessity.

The stated purpose of the guidelines, according to Milliman, is to identify benchmark patient care and recovery that result in the best outcomes with the presumption of optimal recovery, patient care and decision making, so as to enhance the delivery of health care services and to conserve resources.

Optimal recovery is said to occur in patients who have no complications or severe co-morbidities, and in patients who have no barriers to recovery such as non-compliance.

These guidelines are not inflexible, however. They are simply guides to quality of care that can be obtained in most cases. They are based on so-called evidence-based literature, the hierarchy of which falls into the following three grades:

1. Evidence Grade I: Randomized control trials

2. Evidence Grade 2: Other published sources

3. Evidence Grade 3: Unpublished data

So, let's discuss the goal of the Milliman guidelines: To assist physicians in making informed decisions regarding intensity of service in various settings including a hospital, skilled nursing facility (SNF) and home care.

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The highest level intensity of care is provided in the acute hospital setting for patients who cannot be safely managed at less intensive levels of care. Guidelines apply to most patients in most situations, but never to every patient in every situation.

Best practices contained in Milliman may not be achievable immediately. They can, however, become a road map for improving care processes.

In Milliman we have the so-called ORG. ORG stands for "optimal recovery guideline." There is an ORG for many diseased states and for several surgical procedures. The ORG identifies the goal length of stay (GLOS) that can be met by those patients with optimal recovery and decision making in an efficient health care environment. Patients can be discharged to less intensive levels of care such as home, or a skilled nursing facility, either sooner or later than the GLOS in the ORG.

In the ORG, the following are listed:

1. GLOS

2. Level of care such as ICU, telemetry, and med-surge floor

3. Clinical status of the patient

4. Activity of the patient

5. Medications the patient is taking

6. Interventions

7. Diet and intravenous fluids

Using the so-called goal length of stay outside the content of the guidelines is not appropriate. The GLOS is considered one outcome benchmark of an episode of care in the hospital.

There is another section to the ORG called "extended stay." It is divided into three categories:

1. Less than three days,

2. "Moderate" for four to seven days,

3. "Prolonged" for greater than seven days.

This extended stay is added to the goal length of stay. However, when multiple conditions are involved, then adding only the longest extension is valid since care for all the conditions would be simultaneous.

If an ORG is stated as "ambulatory" for the goal length of stay, the extended stay would identify conditions that result in a prolonged inpatient stay.

Metrics at work

Now, let's look at of some of the metrics that managed care organizations and hospitals observe almost on a daily basis.

Bed days

This is one of the classic parameters monitored by payers. It has been a so-called bedrock of determining that certain preset targets have been met by both hospitals and payers. Briefly, it is defined for the payer as:

* The number of patients in a particular hospital x 365 x 1,000 members

* The total membership in the health plan region

Bed days are determined as preset targets at the beginning of each year and take into consideration what the figure was the previous year. If, at the end of one year, the actual bed day count declines from the previous year, most likely that will translate into a lower predetermined bed day target for the following year.

Bed days are usually more important to the hospital at a time of contract renewal with insurance companies. However, hospitals will be concerned with those few physicians who contribute to a higher-than-average bed day count.

Twenty-three hour observation

The 23-hour observation was originally introduced by Medicare in the 1980s when the DRG concept was mandated for hospital re-imbursement. Some insurance contracts define observation as exactly 23 hours in the hospital.

Other contracts define it more loosely to include one overnight stay even if it is somewhat longer than 23 hours. This 23-hour observation is also known as ambulatory stay or short-stay surgery. Some insurance companies reserve observation as a term applied to non-surgical patients and utilize the term short-stay surgery for the observation status of a surgical patient.

Observation status is considered a positive, especially for patients with a diagnosis of unknown chest pain or abdominal pain. After an initial workup to rule out cardiac disease or surgical abdomen, the remaining workup can be done in the outpatient setting, thereby avoiding an inpatient stay.

Length of stay (LOS)

Length of stay is a favorite among practicing physicians because they are called to task on this metric more than any other. This is another classic figure used by the insurance industry to determine utilization and in the end, quality. Length of stay is the number of days that the patient remains in the hospital for a given stay.

One of the best methods to reduce length of stay is to transition the patient along the continuum of care to a less intensive level of care when the patient's condition is no longer acute.

A couple of years ago, the talk in the hospital was that the length of stay was an archaic way of monitoring efficiency in utilization. However, length of stay and bed days remain the two most commonly watched metrics in the health care industry.

GLOS

So, what exactly is the goal length of stay? Goal length of stay for the patient, while in the hospital, is considered to be a target for a particular procedure or illness.

It should be noted that it is not an average, or a model for length of stay, and it is not a median or mean. How often the goal length of stay is reached varies among the different ORGS in Milliman because of co-morbidities, severity of illnesses, particular practices in different communities and because of certain evidence-based medicine treatments. Using the GLOS by itself without the guideline is not advisable.

Everybody is aware of the popular equation to determine value and that is the following:

Value = [Quality/Cost] that is: V = [Q/C]

So, the lower the quality, the higher cost, the lower the value. Conversely, the higher the quality, the lower the cost, the greater the value. Inefficiency contributes to the greatest part of cost. If a process can be carried out more efficiently, it follows that it will consume fewer resources and therefore cost less.

Therefore, one could replace the denominator in the value equation with cost efficiency rather than simply cost. So, we can all see how efficiency is related to value in health care.

It's interesting that hospitals saw the link between cost-efficiency and quality years ago, and therefore disbanded the utilization review committee only to refer the responsibilities to quality committees that originally were called quality assurance then quality improvement, and finally performance improvement committees.

Transparency, P4P, report cards, special insurance panels! What's next? The metrics discussed above should assist practicing physicians in taking charge of areas under their control that are measured by insurance companies and hospitals.

Hopefully, the practicing physician, after having read these relatively simplistic explanations of the various metrics will be more comfortable with understanding what numbers the insurance companies and hospitals find important of the individual physician.

By Michael Raybeck, MD, FACS, CPE

Michael Raybeck, MD, FACS, CPE

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Medical Director,

CIGNA Health Care,

Chattanooga, Tenn.

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