How quality in medical care is defined and measured has challenged medical professionals, researchers, economists, regulators, and policymakers for decades.
In a June 2007 article, “Regulating Health Care Quality in an Information Age, Professor Kristin Madison described the problem of “imperfect knowledge:” “In efficient health care markets, patients would purchase services based on both their quality and their price, prompting provider competition along these dimensions. A patient with perfect information can choose to receive services only from providers who consistently deliver high quality care …”. “But health care markets do not much resemble this portrait of efficiently functioning markets. Patients often cannot assess the quality of care they receive, either before or after it is delivered.” “Without some form of outside assistance, uninformed patients cannot choose their providers based on quality, pay their providers based on quality or meaningfully contract based on quality (emphasis added).” [ 1 ]
In 2022, National Health Expenditures (NHE) in the U.S. grew to $4.5 trillion or $13,493 per person. [ 2 ] Only about 11 percent of expenditures were made directly by patients through out-of-pocket spending. If we were to substitute “purchaser” for “patient” in Professor Madison’s article, we find that public and private purchasers also seek to improve their knowledge about “quality” in their quest to raise the value of their direct payments to providers under their fee-for-service delivery system and their health plan contractors under their managed care delivery system.
Medicaid and the Children’s Health Insurance Program now spend approximately $800 billion (federal and state) on behalf of 85 million people and account for 18 percent of NHE. With limitations on funding and internal expertise, States need to procure “outside assistance” to measure quality. One tool used by states to improve their knowledge as purchasers is by contracting with External Quality Review Organizations (EQROs) to independently assess their performance and that of their managed care plans.
In the Balanced Budget Act of 1997 (BBA), Congress created a new state plan option to allow states to mandate enrollment of certain populations into managed care.
States were also required to provide for an annual, external, independent review of the quality outcomes, timeliness of, and access to the services included in the contract between the state agency and the managed care organization. The final rule to implement the External Quality Review of Medicaid Managed Care Organizations was published in the Federal Register on January 24, 2003. With this authority, states were required to “…develop and implement a quality assessment and improvement strategy that includes—”
- Standards for access to care;
- Examination of other aspects of care and services related to improving quality; and
- Monitoring procedures for regular and periodic review of the strategy. [ 3 ]
Of course, there are multiple methods and standards for measuring quality. For example, the National Committee for Quality Assurance (NCQA) provides accreditation for more than 1,200 health plans. Over 235 million people are enrolled in health plans that report on 90 Healthcare Effectiveness Data and Information Set (HEDIS) Measures. [ 5 ] With the tremendous investment in managed care, states and CMS have enhanced their focus on performance and outcomes. EQRO annual reviews have a key role in assessing the quest for quality and measuring quality improvement.
HORNE is a professional services firm founded on the cornerstone of public accounting. As a top 30 accounting firm with a history of serving the healthcare industry since our inception in 1962, our CPA heritage brings trust and discipline to our brand. With a dedicated team of government and healthcare professionals comprised of certified public accountants, attorneys, certified fraud examiners, certified valuation analysis, certified internal auditors, healthcare reimbursement, compliance, and clinical quality professionals, HORNE is well positioned to serve as an EQRO and opine on the quality metrics, compliance and oversight both which is required and is critical to ensure integrity, independence and quality in today’s healthcare environment.
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