The head of the National Committee for Quality Assurance says health plans want to encourage physicians in the never-ending quest for quality.

Managed Care first interviewed Margaret E. O'Kane in 1997, her seventh year as president of the National Committee for Quality Assurance. Another seven years later, O'Kane, who holds a master's degree in health administration and planning from Johns Hopkins University, continues to lead NCQA in its efforts to measure and improve the quality — and value — of health care in the United States. She described NCQA's growing focus on value in the group's 2003 annual report:

We see information about value as the next generation of critical information about health plans and providers. Not just "How well does this intervention work?" but also "How much does it cost compared to other effective interventions?" We know that the notion of value is more complicated than answering these two questions, and is even threatening to some. The common commercial use of the term "value" as a euphemism for "cheap" threatens to distort the perception of what we are doing.

In a recent conversation with Contributing Editor Bob Carlson, O'Kane discussed NCQA's efforts to help clinicians sharpen their focus on value using incentives that include pay-for-performance initiatives. Senior Contributing Editor Patrick Mullen added the marginal notes (on terms in red type) that amplify O'Kane's remarks.

MC: Do you see any synergy between NCQA and the Leapfrog Group?

O'KANE: Yes, and we're working to create more. We're moving into what I would call stage 2 of managed care, where there's a lot of focus on the value providers contribute — hospitals, physician groups, even individual physicians. Employers are now focusing more on value at the provider level. We're working with Leapfrog on a measurement of how seriously plans provide incentives to move toward value networks. They could do it through either paying for quality à la Bridges to Excellence, or by providing incentives for health plan members to go to value providers, maybe by offering lower copayments at higher-value hospitals.

MC: How would that affect health plans?

O'KANE: They should focus more on achieving goals around disease management and prevention. These two factors and a plan's member-satisfaction rating drive 33 percent of the accreditation score now. This is an area where many plans could do better. We've gradually migrated the scoring towards things that are going to be part of a plan's value proposition to its customers.

MC: This sounds like pay-for-performance.

O'KANE: It is. What many people don't understand is that we're paying for bad quality now, and that bad quality often costs more. If health care isn't done right, a great deal of waste and even harm results.

MC: What levers is NCQA using to move to pay-for-performance?

O'KANE: We're doing a number of projects around the country, including one with the Integrated Health Care Association (IHA), an organization of medical groups and health plans in California. In that state, medical groups have been delegated a lot of responsibility for quality improvement, and medical groups actually created pressure for pay-for-performance. They said to payers, "If you're really serious about quality, why don't you pay us more if we achieve certain benchmarks?" We've been working with them under a grant from the California HealthCare Foundation and with the Pacific Business Group on Health for a couple of years now, and the pieces are falling into place. They're starting to collect HEDIS data at the medical group level and the IPO level, and they have a satisfaction survey. At Bridges to Excellence pilots in Louisville, Cincinnati, Albany-Schenectady, and Boston, we're working on a program called Physician Practice Connections. Participating plans and employers pay more money to physicians or medical groups that improve quality and achieve certain benchmarks in our programs for diabetes, heart, and stroke. At its core, the program is about whether a medical office makes sure that patients with diabetes get appropriate care, by doing such things as keeping registries and offering patient education.

MEDPAC, the Medicare Payment Advisory Commission, is very excited about the concept of the Medicare program paying for quality. Medicare uses the Resource-Based Relative Value Scale. Shouldn't others think about a value-added scale? I think that's where ultimately we need to go. We know the current reimbursement system doesn't make a business case for providers to improve quality. Absent incentives, we can't expect people to make needed changes — especially in hospitals, some of which, sadly, are run like medieval institutions. If all the metrics that define an organization's success are related to dollars, then let's get the dollars behind the quality agenda.

MC: What are the next steps in the evolution of pay-for-performance?

O'KANE: We're looking to evolve pay-for-performance so that we can better understand the actuarial value of an incremental increase in quality in a particular area. We can then try to figure out a way to share the savings with providers so that plans and providers both come out winners.

MC: How will NCQA accreditation reflect this new agenda?

O'KANE: We need to drive the quality agenda down to the provider level, and we want to recognize plan strategies for getting people to high-quality, high-value providers. That includes things like centers-of-excellence strategies, or driving people who need cancer care to blue-ribbon cancer centers — where the evidence shows that quality is often higher and costs less than at community hospitals. There's also some interest among a number of plans in shared decision-making. For example, before you have back surgery that may not do you much good and might expose you to some risk, a number of health plans have set up programs to walk members through the risks and benefits of particular procedures. They're moving into a patient advocate role, which is quite interesting and quite different.

MC: You're talking about something that goes beyond informed consent.

O'KANE: I am. It's a different construct. It recognizes that many patients don't have the ramifications of medical procedures fully explained to them. For example, there's an awful lot of screening for prostate cancer in this country despite the lack of conclusive evidence that it does anything to prolong life. Many men take antigen suppressor drugs or undergo surgery that may result in impotence and incontinence. Pilot applications of shared decision-making have shown that patients, once informed of the risks and benefits, are often more conservative in their treatment decisions than their physicians would be. We must provide full information to patients who want it, and we owe them a reasonable explanation about how they can imagine their lives will be after this procedure, or without this procedure.

MC: How does NCQA become involved in this?

O'KANE: We get involved by evaluating the effectiveness of these shared decision-making programs. This is new, and so I think our first evaluation efforts will be more looking for best practices.

MC: What other changes in NCQA accreditation are being contemplated?

O'KANE: We've just done extensive market research with employers, and discovered that they don't understand the full scope of what we review when we accredit an organization. So we're going to create more customized reports to make the whole process more transparent. A plan's HEDIS results for diabetes, coronary artery disease, and asthma are really the bottom line on how effective its disease management is for a particular condition.

MC: What types of information on network providers will plans make available to their members in the future?

O'KANE: Right now, a lot of plans are very interested in featuring our recognized physicians, as in the diabetes program or the heart/stroke program. Health plans have also encouraged us to consider other areas that are of great interest to them, like the Physician Practice Connections program. That's the one about physicians having patient-education programs and office systems to keep track of patients and plan their care.

MC: How do consumer-directed health plans fit into this picture?

O'KANE: Boundaries that once distinguished HMOs from PPOs from consumer-directed plans are blurring. We are embedding many features of consumer-directed plans --like having more incentives to go to particular providers and more transparency at the provider level — into our new evaluation model.

MC: Exactly what will NCQA's role be?

O'KANE: To make transparent what the value proposition of a particular product is, and how well a product delivers on that proposition. We're expanding our disease management program to include more catastrophic and complex case management. We'll look at how effectively plans take care of people with cancer or with a constellation of illnesses or with rare illnesses that need extra help through the system. We're already doing chronic care management, but not complex care management. It's well known that 1 percent of patients account for 10 percent of costs. So while the number of patients is small, the number of dollars is huge, and the amount of good that can be done by these programs is enormous. These are the very patients who get ping-ponged around the system with no particular medical home. These programs are impressive in terms of their demonstrated return on investment, in terms of dollars, and in terms of patient and family satisfaction.

MC: Thank you.

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