As insurers, employers, and employees, we tend to focus on the cost of healthcare. But given the data on the quality of care delivered in the United States, should we also be giving at least equal time to the quality side of the equation? What is quality healthcare and is your insurer providing you, your employees, and their families high-quality care? Quality healthcare is defined by the Institute of Medicine (IOM) as the degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge.

Figures from Centers for Medicare and Medicaid Services (CMS) show that in 2005, the United States spent 16% of its GNP on healthcare—the highest percentage among all advanced industrialized countries. However, the United States ranks lower than other countries on many healthcare quality measures. The IOM has estimated that nearly 100,000 patients die annually in hospitals due to medical errors. Donald Berwick, M.D., CEO for the Institute for Healthcare Improvement, says that quality problems exist in all forms of healthcare delivery, with 90% of the errors being systemic in nature.

Redesigning care processes based on best practices and using evidence-based guidelines are two of the most cited actions that will improve healthcare in the United States. We have a long way to go: currently, only 20% of medical practices follow evidence-based guidelines. More people die from medical errors per year than breast cancer, AIDS, or motor vehicle accidents, and there is considerable lag between the discovery of more effective forms of treatment and their incorporation into routine patient care. Two recent articles in the New England Journal of Medicine demonstrate that only 55% of adult patients receive the recommended care. This level of performance is equally dismal for all disease types whether for screening, diagnosis, or therapy.

How do health insurers measure the quality of the care delivered by their physician and institutional network providers? Some seek and gain accreditation of independent organizations such as the National Committee for Quality Assurance (NCQA) or the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). NCQA produces reports using the Health Plan Employer Data and Information Set (HEDIS) to document the level of health plan performance quality. HEDIS is a set of standardized performance measures designed to ensure that purchasers and consumers have the information they need to reliably compare performance of managed healthcare plans. The performance measures in HEDIS are related to many significant public health issues, such as cancer, heart disease, smoking, asthma, and diabetes. HEDIS also includes a standardized survey of consumers’ experiences that evaluates plan performance in areas such as customer service, access to care, and claims processing.

Why should all of this matter to health insurers and employers? Health insurance premiums continue to increase, and as documented by the Kaiser Family Foundation survey, health insurance premiums rose 86% between 2000 and 2006, with no similar documented improvement in the quality of healthcare. During the same period, the Consumer Price Index rose 18% and workers’ earnings by 20%.

Quality does have value, and high-quality healthcare is both more efficient and less costly. The cost of low-quality healthcare to employers, besides premium increases, include increased absenteeism, lower productivity, higher disability, and in some instances, loss of an employee due to a catastrophic illness. The employee may experience lost income, lost household functioning, and temporary or permanent physical and emotional disability due to preventable adverse events. For health insurers, it can mean either reducing plan benefits to maintain a competitive premium or loss of market share due to higher premiums.

What steps can employers take to improve the quality of care received by employees and their families? Do you have benchmarks in your health insurer agreements that specify the expected level of quality your employees will receive, or do you trust to luck?

During the benefit design phase, emphasis should be placed on preventive health and screening programs. When evaluating a health insurer, it is important to review any accreditations (such as NCQA or JCAHO) along with any performance scores (such as HEDIS). Negotiate a financial incentive/penalty for your employee group based on quality performance measures, and in the same way you would implement a business process, develop a tool to audit the insurer’s performance against the agreed-upon measures.

What steps can health insurers take to improve the quality and cost of care delivered by their physician and institutional providers? They can be more stringent in the credentialing and ongoing oversight of their providers while striving to provide consistent, high-quality care through the use of evidence-based guidelines and plans of care. They should seek and obtain accreditation from a recognized sanctioning organization and produce measurable quality performance scores that knowledgeable employers and employees will be seeking.

As always, the Nolan Company wishes you success and is ready to support you as you evaluate your healthcare programs and think through any healthcare issues.