Provider Peer Grouping
Monthly Updates
April 11, 2011
Katie Burns
What is Provider Peer Grouping?
• A system for publicly comparing provider
performance on cost and quality
– …a uniform method of calculating providers' relative
cost of care, defined as a measure of health care
spending including resource use and unit prices, and
relative quality of care… (M.S.§62U.04, Subd. 2)
– a combined measure that incorporates both provider
risk-adjusted cost of care and quality of care…
(M.S.§62U.04, Subd. 3)
What Types of Provider Peer
Grouping Needs to be Developed?
1. Total Care
2. Care for Specific Conditions
The commissioner shall develop a peer grouping system
for providers based on a combined measure that
incorporates both provider risk-adjusted cost of care and
quality of care, and for specific conditions…
(M.S.§62U.04, Subd. 3)
Methodological Update:
Risk Adjustment
of Cost Measures
What is Risk Adjustment?
• Risk adjustment is a tool to account for
variation in cost that can be expected from
treating patient populations with different
levels of severity of illness or other factors
beyond the provider’s control.
• Risk adjustment is essential for making fair
comparisons between providers.
PPG Approach
to Risk Adjustment
• PPG risk adjustment includes adjusting
for:
– Severity of illness
– Socioeconomic characteristics
– Service mix adjustment
Risk Adjusting Cost Measures
• Two cost measures will be calculated and
risk adjusted for physician clinics and
hospitals:
– Standardized total costs based on
standardized prices that reflect resource use
independent of payment rates to providers
– Aggregated total costs based on actual
payments to providers
Standardized Costs
• Standardized costs reduce each
expenditure to a common measure of
resource use and express costs as units of
resources utilized times the average price
of a unit
Composite Cost Measure
• Composite cost measure will reflect both
resource utilization by and different unit
prices paid to providers
• Information on each of these
subcomponents will also be available in
both provider and public reporting
PPG Risk Adjustment Method
• PPG analysis will use Johns Hopkins
Adjusted Clinical Groups (ACGs) to
perform risk adjustment for physician
clinics and hospitals
• Patients will be classified according to the
ACG’s more granular Adjusted Diagnosis
Groups according to the diagnoses the
patient exhibits during a standard time
period
Comparing Expected & Actual Costs
• PPG will use an “indirect standardization”
approach to risk adjustment.
– We will calculate a provider’s expected cost
through a regression
– The result is what we would expect the
average cost to be if the provider’s patients
were treated by an average provider
– Adjustment will be based on the ratio of the
provider’s actual costs to expected results
Physician Clinic Risk Adjustment
• Physician clinic risk adjustment will be based on
a concurrent approach
• This means that clinical information for a
patient’s current health status – rather than
gleaned from a prior year – is used to inform risk
adjustment
• We will use a minimum of 2-3 months of
enrollment history for a patient to be included in
the PPG analysis and for risk adjustment
purposes
Variations in Amount
of Diagnostic Information
• All-payer claims database permits a
maximum of 15 ICD-9 codes to be entered
for each claim
• The average number of codes submitted
across all payers is 10
• We will use all available information in
adjusting for severity of illness
Hospital Risk Adjustment
• Hospital risk adjustment will also be based
on concurrent approach
– Model will include all diagnoses for which a
patient is being treated and for a designated
time preceding it
– Model will not include information following a
hospital stay
Socioeconomic Factors
• Nonclinical patient characteristics, such as
socioeconomic status, may influence
patient outcomes
• A patient’s primary source of health
insurance (commercial, Medicare, or state
public program) serves as a proxy for
socioeconomic characteristics
Socioeconomic Adjustments
• Provider reports will include results by primary
payer type
• Public reports will include a primary payer type
adjustment
• We will review impact of additional
socioeconomic variables for which data is
available and evaluate whether they should be
included in the model
Service Mix Adjustment
• Physician clinics:
– For total care, analysis will include clinics above a certain level
on the primary care index – specialty only clinics will not be
included
– Total care costs will be adjusted by the primary care index that
we discussed last month
– Truncation of outlier cases generally, prior to attribution
• Hospitals:
- Separate peer groups for Critical Access and other hospitals
- Elimination of certain services from the analysis such as trauma
and transplants
- Truncation of outlier cases
Progress Update
Provider Report Design
• Mathematica will begin testing design of
hospital provider reports in May
• Testing of physician clinic hospital reports
will occur in the summer
Stakeholder Involvement
Stakeholder Involvement:
Rapid Response Team
• MDH convened this group to provide input on
critical issues
–
–
–
–
–
Approach for specific condition analysis
Methodology for attributing patients to providers
Benchmarking and determination of peer groups
Risk adjustment
Design and weighting of individual quality measures
into composite quality score
Stakeholder Involvement:
Reliability Workgroup
• MDH convened first meeting of this group
in December
– Explored characteristics of reliable data
– Discussed ways of assessing reliability
• Next meeting will focus on data and options
related to hospital analysis this spring
For more information, see
www.health.state.mn.us/
healthreform/peer/index.html
Next call
Monday, May 9, 2011
7:30 am