Searching for a business case for quality in Medicaid managed care.

BACKGROUND: Despite the prevalence of evidence-based interventions to improve quality in health care systems, there is a paucity of documented evidence of a financial return on investment (ROI) for these interventions from the perspective of the investing entity. PURPOSES: To report on a demonstration project designed to measure the business case for selected quality interventions in high-risk high-cost patient populations in 10 Medicaid managed care organizations across the United States. METHODOLOGY/APPROACH: Using claims and enrollment data gathered over a 3-year period and data on the costs of designing, implementing, and operating the interventions, ROIs were computed for 11 discrete evidence-based quality-enhancing interventions. FINDINGS: A complex case management program to treat adults with multiple comorbidities achieved the largest ROI of 12.21:1. This was followed by an ROI of 6.35:1 for a program which treated children with asthma with a history of high emergency room (ER) use and/or inpatient admissions for their disease. An intervention for high-risk pregnant mothers produced a 1.26:1 ROI, and a program for adult patients with diabetes resulted in a 1.16:1 return. The remaining seven interventions failed to show positive returns, although four sites came close to realizing sufficient savings to offset investment costs. PRACTICE IMPLICATIONS: Evidence-based interventions designed to improve the quality of patient care may have the best opportunity to yield a positive financial return if it is focused on high-risk high-cost populations and conditions associated with avoidable emergency and inpatient utilization. Developing the necessary tracking systems for the claims and financial investments is critical to perform accurate financial ROI analyses.

Effects of Medicare payment changes on nursing home staffing and deficiencies.

OBJECTIVE: To investigate the effects of Medicare's Prospective Payment System (PPS) for skilled nursing facilities (SNFs) and associated rate changes on quality of care as represented by staffing ratios and regulatory deficiencies. DATA SOURCES: Online Survey, Certification and Reporting (OSCAR) data from 1996-2000 were linked with Area Resource File (ARF) and Medicare Cost Report data to form a panel dataset. STUDY DESIGN: A difference-in-differences model was used to assess effects of the PPS and the BBRA (Balanced Budget Refinement Act) on staffing and deficiencies, a design that allows the separation of the effects of the policies from general trends. Ordinary least squares and negative binomial models were used. DATA COLLECTION METHODS: The OSCAR and Medicare Cost Report data are self-reported by nursing facilities; ARF data are publicly available. Data were linked by provider ID and county. PRINCIPAL FINDINGS: We find that professional staffing decreased and regulatory deficiencies increased with PPS, and that both effects were mitigated with the BBRA rate increases. The effects appear to increase with the percent of Medicare residents in the facility except, in some cases, at the highest percentage of Medicare. The findings on staffing are statistically significant. The effects on deficiencies, though exhibiting consistent signs and magnitudes with the staffing results, are largely insignificant. CONCLUSIONS: Medicare's PPS system and associated rate cuts for SNFs have had a negative effect on staffing and regulatory compliance. Further research is necessary to determine whether these changes are associated with worse outcomes. Findings from this investigation could help guide policy modifications that support the provision of quality nursing home care.

Health insurance knowledge among Medicare beneficiaries.

OBJECTIVE: To assess the effect of new consumer information materials about the Medicare program on beneficiary knowledge of their health care coverage under the Medicare system. DATA SOURCE: A telephone survey of 2,107 Medicare beneficiaries in the 10-county Kansas City metropolitan statistical area. STUDY DESIGN: Beneficiaries were randomly assigned to a control group and three treatment groups each receiving a different set of Medicare informational materials. The "handbook-only" group received the Health Care Financing Administration's new Medicare & You 1999 handbook. The "bulletin" group received an abbreviated version of the handbook, and the "handbook + CAHPS" group received the Medicare & You handbook plus the Consumer Assessment of Health Plans (CAHPS) survey report comparing the quality of health care provided by Medicare HMOs. Beneficiaries interested in receiving information were oversampled. DATA COLLECTION METHODS: Data were collected during two separate telephone surveys of Medicare beneficiaries: one survey of new beneficiaries and another survey of experienced beneficiaries. The intervention materials were mailed to sample members in advance of the interviews. Knowledge for the treatment groups was measured shortly after beneficiaries received the intervention materials. PRINCIPAL FINDINGS: Respondents' knowledge was measured using a psychometrically valid and reliable 15-item measure. Beneficiaries who received the intervention materials answered significantly more questions correctly than control group members. The effect on beneficiary knowledge of providing the information was modest for all intervention groups but varied for experienced beneficiaries only, depending on the intervention they received. CONCLUSIONS: The findings suggest that all of the new materials had a positive effect on beneficiary knowledge about Medicare and the Medicare + Choice program. While the absolute gain in knowledge was modest, it was greater than increases in knowledge associated with traditional Medicare information sources.

The business case for a diabetes self-management intervention in a community general hospital.

There is a growing and increasingly compelling body of evidence that self-management interventions for persons with type 2 diabetes can be both effective and cost-effective from a societal perspective. Yet, the evidence is elusive that these interventions can produce a positive business case for a sponsoring provider organization in the short term. The lack of a business case limits the enthusiasm for provider organizations to implement these proven quality-enhancing interventions more widely. This article provides a case example of a self-management intervention in a community general hospital targeting an underserved population who have significant barriers to receiving regular health care. The 3-component program sought to improve meaningful access to care, increase health literacy related to type 2 diabetes, and partner with the enrollees to make long-term lifestyle changes. The intervention not only resulted in significant improvements in HbA1c levels (-0.77%) but saved the hospital an average of $551 per active patient per year, primarily by reducing hospital visits. With only 255 actively enrolled patients, the hospital can recover fully its total direct annual personnel and operating costs for the program. Because the program serves patients who would have been seen at other hospitals, it also enhanced care quality and reduced costs for the broader community in which the program is embedded.

Cost-effectiveness of diabetes self-management programs in community primary care settings.

PURPOSE: The purpose of this study is to estimate the cost-effectiveness of diabetes self-management programs in real-world community primary care settings. Estimates incorporated lifetime reductions in disease progression, costs of adverse events, and increases in quality of life. METHODS: Clinical results and costs were based on programs of the Diabetes Initiative of the Robert Wood Johnson Foundation, implemented in primary care and community settings in disadvantaged areas with notable health disparities. Program results were used as inputs to a Markov simulation model to estimate the long-term effects of self-management interventions. A health systems perspective was adopted. RESULTS: The simulation model estimates that the intervention does reduce discounted lifetime treatment and complication costs by $3385, but this is more than offset by the $15,031 cost of implementing the intervention and maintaining its effects in subsequent years. The intervention is estimated to reduce long-term complications, leading to an increase in remaining life-years and quality-adjusted life-years (QALYs). The incremental cost-effectiveness ratio is $39,563/QALY, well below a common benchmark of $50,000/QALY. Sensitivity analyses tested the robustness of the model's estimates under various alternative assumptions. The model generally predicts acceptable cost-effectiveness ratios. CONCLUSIONS: Self-management programs for type 2 diabetes are cost-effective from a health systems perspective when the cost savings due to reductions in long-term complications are recognized. These findings may justify increased reimbursement for effective self-management programs in diverse settings.

How to develop a business case for quality.

OBJECTIVE: To describe the steps in developing a business case for quality-enhancing interventions (QEIs) in health care. ANALYSIS: The development of a business case for QEIs in health care involves 11 steps. These steps include (1) describing the intervention, (2) determining perspective, (3) identifying the effects of the intervention on quality, (4) designing the study, (5) identifying and measuring cash flows, (6) considering the effects of capacity constraints, (7) selecting a measure of return on investment, (8) determining the time horizon for the analysis, (9) determining the discount rate, (10) adjusting costs and savings for inflation, and (11) determining organizational readiness for business case development. A checklist offers guidance on assessing readiness for the business case. CONCLUSION: The absence of a 'business case' for quality is frequently cited as the reason health care organizations do not implement QEIs, despite decades of careful research demonstrating their effectiveness. Our continuing commitment to advancing the discipline of business case analysis is based on a belief that delineating the cost and economic implications of investments in QEIs is a critical threshold issue to widespread adoption of evidence-based quality improvements. We believe it is appropriate and timely to consider how best to standardize approaches and move the field of business case analysis forward.

Medicare prospective payment and quality of care for long-stay nursing facility residents.

BACKGROUND: The Balanced Budget Act of 1997 dramatically changed the way that Medicare pays skilled nursing facilities and also cut per-diem rates. Previous studies have found effects on facility-wide staffing but not on quality for short-stay residents. Because facilities may combine revenue streams to be used where needed, spillover effects on quality of care for long-stay residents are possible. OBJECTIVE: We sought to investigate effects of financial pressures from Medicare payment changes on quality of care for long-stay residents. METHODS: We investigated the effect of Medicare's Prospective Payment System for skilled nursing facilities on incidence of urinary tract infections and pressure sores among long-stay residents while controlling for resident severity. We conducted panel data analysis of nursing home residents in Ohio, Kansas, Maine, Mississippi, and South Dakota using Minimum Data Set data from 1995 to 2000. Each facility's Medicare dependence was used to separate effects of the policy from underlying industry trends. RESULTS: The probability of developing a urinary tract infection or pressure sore increased significantly among long-stay residents after Medicare's prospective payment system was implemented. Effects were roughly proportional to the percent of residents in a facility covered by Medicare. CONCLUSIONS: Although Medicare prospective payment and rate cuts were directly applicable only to Medicare (largely short-stay) residents in skilled nursing facilities, the resulting financial pressures lowered the quality of care experienced by long-stay residents, as measured by the likelihood of adverse outcomes. The observed quality decreases were likely due to decreases in nurse staffing prompted by the payment reductions.

The insufficiency of evidence to establish the business case for quality.

PURPOSE: To determine whether a positive financial return on investment for quality-enhancing interventions is more likely for particular health conditions, in specific organizational settings, or with the use of particular interventions. DATA SOURCES: Electronic search of MEDLINE. DATA EXTRACTION: Search keywords included: business case, cost-effectiveness, cost-benefit, return on investment, costs, cost savings, quality, quality improvement, and program evaluation. RESULTS: Only 15 of 1968 articles identified contained sufficient information on both the costs of implementing quality-enhancing interventions and the resultant changes in costs of care or revenues to permit the calculation of a return on investment. CONCLUSIONS: Scant attention is currently paid in the quality-of-care literature to the cost of implementing quality-enhancing interventions. To understand which quality-enhancing interventions are likely to produce positive returns on investments, data collection and analysis must include tracking the investment and operating costs of implementing the intervention as well as the changes in revenues and costs that result from the intervention.