Promising, and delivering health care value.

During the '80s, RAND studies declared that a large percentage of procedures were equivocally appropriate or inappropriate according to their clinical indications. [2] Wennberg, Caper, and others have shown by small area analysis that there are wide variations in practice patterns in the same or similar communities and populations. [3] Multiple organizations have taken the lead to develop practice guidelines. There are even those who believe the government should control quality in interpreting mammograms.

Northwest Physicians, Toledo, Ohio, is a PPO-sponsoring IPA established in 1984. Its utilization review arm, Northwest Review, which provides utilization management to 12,000 PPO members, takes a different approach. Out interpretation is that managed care involves the close evaluation of costs and quality, which is health care value. This is what the employer-payer is really concerned about. These are the issues discussed in our quarterly report to payers.

Recognizing that in the past the employer-payer has generally only been informed by the insurer about health care costs vs. premiums paid, we carefully stress the need to understand that health care management goes beyond this. It requires pursuing and understanding the details of costs and quality. It involves the use of health care indices, comparative frequency of diagnoses studies, and techniques to modify all elements that adversely effect cost and quality. Rather than stifle individual physician ingenuity by cookbook medicine, we feel that physicians can cooperate to improve quality and decrease cost while serving as the ultimate administrators of health care. We contend that clinical practice guidelines will only serve to promote mediocrity.

Every system needs indicators to measure performance. In this case, the health care system's standard measurements for hospital utilization performance are hospital days per 1,000 members, the number of admissions per 1,000 members, and the average length of stay (ALOS) of hospitalized members (see table 1, below). The fact that these parameters may be too high or too low only shows the degree of abnormal usage of hospitalization. So the first step in the analysis of hospital utilization is comparing these indices to current regional standards. For our region, those statistics are fewer than 400 hospital days/1,000 population, fewer than 100 admissions/1,000 population, and ALOS of 4.2 days or less. One must then use the other techniques to find where and what the problems are.

Northwest Review uses a "management by exception" technique in comparing the frequency of diagnoses of the group under study to that of the total membership of the PPO. Professional Activity Study (PAS) diagnoses

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are paragraphed into 23 sets of diagnoses, which is a reasonable number to compare (table 2, page 20). These diagnoses are collected by the utilization review team rather than taken from paid claims data. We feel this is a more accurate source for obtaining the data.

Table 2 also demonstrates the percentage of total admissions for each PAS diagnostic group for the employer group under study and for the entire PPO. The percentage difference between these groups shows the diagnostic groups that need management attention. In table 2, the problem diagnoses have been asterisked for ease of demonstration.

Individual cases are then reviewed in these more frequently occurring PAS groups, and commonality or trends are identified for appropriate action. When all problems and proposed solutions are identified, we select the combined recommendations to be submitted to the employer and utilization review service.

Paid claims data are translated to a per member per month (pmpm) basis and sorted by hospital, physician, x-ray and laboratory, emergency, major medical, and other medical costs. The subtopics in these categories are studied closely for areas of excess costs. Thus, by a focused clinical review approach to the paid claims data, problem areas are identified and specific measures may be taken to correct the causes of high costs or deficient quality.

The corrective approaches, suited for each problem, are chosen from utilization review techniques; IPA peer review methods, and/or benefit incentive/disincentives. Other techniques may be used as needed, but the nine below are exemplary of some we've used successfully.

U.R. Techniques

* Case management--for repeated readmissions, chronic severe illness (oncologic, arthritic, cardiac, etc.).

* Home care visits--for chronic depressions, repeated neonatal admissions, increasing prenatal compliance.

* Preauthorization--for possible overuse of outpatient clinics, MRI, or outpatient surgical procedures, etc.

Peer Review Methods

* Multiple physician coordination--where excess length of stay is the result of nonleadership among the physician team, the patient is "working" one physician against another in obtaining medication or readmission, etc.

* Meaningful directed second opinion--where unusually high numbers of surgeries are being done (e.g., hysterectomies, thoracic outlet syndrome, etc.) even with apparent record adequacy.

* Peer review action--inappropriate practice patterns or inappropriate physician treatment approaches are taken to the appropriate committee (and ultimately to the IPA board) for peer review action and final disposition.

Benefit Incentive/Disincentive

* Increase emergency service copayment--if emergency service costs are higher than $2 pmpm and if admissions through emergency departments are higher than 20 percent of all hospital admissions and admissions/1,000 members are greater than 100.

* Drug benefit changes--use generic emphasis, mandate, or copayment if drug costs exceed 9 percent of all health care costs. Preauthorization may be applied to more expensive drugs following the establishment of appropriate criteria.

* Other incentives/disincentives for decreasing hospital LOS for maternity (home nurse visits in the early postnatal period, diaper bonus program for compliance with new goals, subject to physician approval) or for increasing in-network compliance (increase employee cost share from 20 percent to 30 percent.

Employers have welcomed this approach and have been astounded to have a physician explain costs and quality to them. Data are reassessed quarterly and further refinement of corrective measures is taken as appropriate.

Besides its emphasis on cost containment, managed care is concerned with quality. Quality can be viewed from five perspectives: structure, process, outcome, patient perception, and resource appropriateness. Structure is

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served by ensuring a board-eligible or -certified physician panel, with annually reviewed licensure, DEA certification, professional liability insurance coverage, and physician evaluation. Process is addressed by on-site office reviews, with criteria selected by the ambulatory care committee. Selective focus reviews by diagnosis are conducted by specialty committees. Outcome is considered through mortality and morbidity reviews by the medical-surgical committee. Additionally, adverse outcomes of ambulatory care are studied through 20 separate conditions (tables 3, above and 4, page 22). Perception of enrollees is gained annually through enrollee surveys. Further, enrollee attitude is seen in enrollment/disenrollment figures. Finally, resource appropriateness is reviewed through data review by the Peer Data Committee, and individual physician practice style is seen through the individual practice pattern analysis.

Readmission rates and readmission reviews are presented to the employer quarterly. C-section and VBAC rates, likewise, are reviewed and compared to the regional practice pattern. Adverse outcomes of ambulatory care are also a part of the comparative approach (table 4). From these ongoing statistics, recommendations are added to the report as noted above.

More time is needed to fully assess this form of management, but after two years, the results look promosing. The most dramatic change occurred in a group of hospital employees with several documented years of overutilization. For the year 1989, they experienced hospitalization indices of 573 days/1,000, 125 admissions/1,000 and a ALOS of 4.6 days. By the end of 1990, they are at 353 days/1,000, 84 admissions/1,000, and 4.2 ALOS, reductions achieved through close overutilization review and the above methods. This change has assisted us in marketing our PPO in a fairly tight health care market. We believe this managed care technique merits appraisal by other health care managers. As Duva has stated, "real managed care does work... [It must have] discipline and control, providers must feel some pressure on them and employees must realize there are limitations on them." [4]

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References

[1] Geehr, E., and Salluzzo, R. "Clinical Practice Guidelines: Promise or Illusion?" Physician Executive 16(4):13-5, July-Aug. 1990.

[2] Brook, R. "Practice Guidelines and Practicing Medicine. Are They Compatible?" JAMA 262(21):3027-30, Dec. 1, 1989.

[3] Wennberg, J. and Gittelsohn, A. "Variations in Medical Care among Small Areas." Scientific American 245(4):120-9, April 1982.

[4] Curry, W. "Status Quo Won't Work." Physician Executive 16(4):2-5, July-Aug., 1990.

James G. Diller, MD, FACPE, is President and Medical Director, Northwest Physicians, Inc., Toledo, Ohio. He is a membr of the American College of Physician Executives' Society on Managed Health Care Organizations and Forum on International Medicine and Health Care.