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Information as Waste Treatment
Physician Practice Efficiency
Presentation to the Consumer-Purchaser
Disclosure Project
September 29, 2006
Mark C. Rattray, MD
President
CareVariance
© 2006, CareVariance
A Chilling but Accurate Quote
“There are some patients that we
cannot help; there are none
that we cannot harm.”
Attributed to Arthur L. Bloomfield, MD, ca 1933 by Michael Millenson, in
“Demanding Medical Excellence; Doctors and Accountability in the Information Age.”
© 2006, CareVariance
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Inefficiency is Harmful
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Unneeded care carries risks
Unneeded care leads to more unneeded
care
Unneeded care creates family and societal
distress
Waste impacts affordability
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Waste in health care resources – misuse and
overuse
Waste in health care administration resources –
manual vs. automated
© 2006, CareVariance
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Why now?
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Terabytes are much cheaper
Processor speed increased
Analytical tools improved
The outcry over high costs, errors and lackluster
quality is getting louder and broader in
representation
Other industries routinely measure performance
in order to improve
Our industry, with direct impact on human lives,
is late to the party (although proposed in 1914)
© 2006, CareVariance
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Information as Waste Treatment
And the point is…
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Each Point on This Graph Represents a Physician
Which Ones Would You Prefer to See?
2.00
1.80
Quality Index (higher is better)
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
Efficiency Index (higher is better)
Rattray MC, Andrianos J, Stam DT. Used with the permission of The Regence Group, Copyright 2006. All rights reserved.
© 2006, CareVariance
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From Units of Care to Episodes of Care
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Unit Resource Management
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Unit cost and frequency
Goal: reduce unit cost and frequency – “utilization
management”
Less care is better
Episodic Resource Management
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Recognizes that resource use mix unique to condition
Goal: optimize mix of resources for most effective care
The right amount of care is better
© 2006, CareVariance
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How is the Episode Information Captured?
© 2006, CareVariance
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Through the Data Required for Payment
NDC Number
Each listed drug product listed is assigned
a unique 10-digit, 3-segment
number. This number, known as the
NDC, identifies the labeler, product, and
trade package size. The first segment, the
labeler code, is assigned by the FDA. A
labeler is any firm that manufactures
(including repackers or relabelers), or
distributes (under its own name) the drug.
The second segment, the product code,
identifies a specific strength, dosage form,
and formulation for a particular firm. The
third segment, the package code, identifies
package sizes and types. Both the product
and package codes are assigned by the
firm. The NDC will be in one of the
following configurations: 4-4-2, 5-3-2, or
5-4-1.
© 2006, CareVariance
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ICD-9 Codes for Diagnosis
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CPT® and Revenue Codes for Services
© 2006, CareVariance
Revenue
Code
Description
111
Room and Board – Private, Medical/Surgical/Gynecological
112
Room and Board – Private, OB
113
Room and Board – Private, Pediatric
114 *
Room and Board – Private, Psychiatric
117
Room and Board – Private, Oncology
118
Room and Board – Private, Rehabilitation
119
Room and Board – Private, Other
121
Room and Board – Semiprivate 2 Bed, Medical/Surgical/Gynecological
122
Room and Board – Semiprivate 2 Bed, Obstetric
123
Room and Board – Semiprivate 2 Bed, Pediatric
124 *
Room and Board – Semiprivate 2 Bed, Psychiatric
127
Room and Board – Semiprivate 2 Bed, Oncology
128
Room and Board – Semiprivate 2 Bed, Rehabilitation
129
Room and Board – Semiprivate, 2 Beds, Other
131
Room and Board – Semiprivate 3 or 4 Bed, Medical/Surgical/Gynecological
CPT is a trademark of the American Medical Association
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HCPCS for Injectables and Supplies
© 2006, CareVariance
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NDC Codes for Medications
What are the NDC Number and the National Drug Code Directory?
• The Drug Listing Act of 1972 requires registered drug establishments to
provide the Food and Drug Administration (FDA) with a current list of all
drugs manufactured, prepared, propagated, compounded, or processed by
it for commercial distribution. (See Section 510 of the Federal Food, Drug,
and Cosmetic Act (Act) (21 U.S.C. § 360)).
• Drug products are identified and reported using a unique, three-segment
number, called the National Drug Code (NDC), which is a universal product
identifier for human drugs. FDA inputs the full NDC number and the
information submitted as part of the listing process into a database known
as the Drug Registration and Listing System (DRL).
• Several times a year, FDA extracts some of the information from the DRLS
data base (currently, properly listed marketed prescription drug products
and insulin) and publishes that information in the NDC Directory.
© 2006, CareVariance
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Terabytes of Data Can Be Translated Into
Lives Saved, Disease Reduced, and Improved
Affordability of Health Care!
Data Warehouse
NDC Number
Each listed drug product listed is assigned
a unique 10-digit, 3-segment
number. This number, known as the
NDC, identifies the labeler, product, and
trade package size. The first segment, the
labeler code, is assigned by the FDA. A
labeler is any firm that manufactures
(including repackers or relabelers), or
distributes (under its own name) the drug.
The second segment, the product code,
identifies a specific strength, dosage form,
and formulation for a particular firm. The
third segment, the package code, identifies
package sizes and types. Both the product
and package codes are assigned by the
firm. The NDC will be in one of the
following configurations: 4-4-2, 5-3-2, or
5-4-1.
© 2006, CareVariance
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An Episode of Care
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An Episode of Care by Cost “Buckets”
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Physician Compared to Peers
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Actionable Information for Physicians
Family Practice Physician: Net Variation from Peers Over a Two-year Period
© 2006, CareVariance
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An Example of Episode Analysis
Source: http://www.symmetry-health.com
© 2006, CareVariance
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Episode Efficiency Measurement and Reporting
Data
Extraction
Data
Warehouse
© 2006, CareVariance
Grouper
Software
and Data
Expert
Physician
and Analyst
Review of
Grouper
Results
Physician
Provided with
Performance
Reports
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Physician Engagement and Practice Improvement
Appeal to
Professionalism
Consumer
Transparency
“Primum non nocere”
Better Informed
Decisions
Care
Improves
Required
Participation
Required
Collaboration
© 2006, CareVariance
Physician
Engagement
and
Improvement
Physician
Report Support
and Continuous
Measurement
Improvement
Incentives
(P4P)
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All ETG Applications Are Unique
Data,
Data
prep
ETG
Processing
Customized
settings
• Very, very complicated
• Easy to make calculation error
• Lack of deep clinical and analytical
domain expertise
© 2006, CareVariance
Post Processing
Reporting
• Not a black box; more like an
elaborate maze, each one different
• Not originally designed for the
rigorous demands of transparency
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Groupers are Promising
• Episodic measurement makes sense
• Massive time and monetary investments
have gotten us where we are
• Groupers aren’t going to go away
• Excellent tool for engaging physicians in
practice variation discussions; learning
from peers
© 2006, CareVariance
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Groupers are Worrisome
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Are patient and disease variables adjusted for
adequately so the output reflects performance?
Are physician practices homogenous enough to
create an acceptable peer group?
Tendency to overreach the science to “tier” more
physicians – inadequate sample size an example
Most measuring entities under invest in provider
education, collaboration, and clinical review of
results before transparency occurs
© 2006, CareVariance
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What Consumers Should Do?
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Support and advocate credible, sound, standardized,
independently validated measurement
Insist on “upward transparency” from the measurers
– a full depiction of how measurement occurs and
extent of third party validation
Beware of glitzy health plan marketing, it’s the
science that counts here
Support electronic data initiatives. Measurement
improves when the available amount of relevant
electronic data increases
© 2006, CareVariance
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Information as Waste Treatment
Thank you
© 2006, CareVariance
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