What Happens When Physicians Know the Total Cost of Care

A physicians practice learns important lessons about its referral and patient care patterns from a project that measures cost and resource data—and lets physician leaders see the reports.

When Portland, OR-based Family Medical Group Northeast found out that it had a high rate of patients showing up in local emergency departments because of behavioral health issues in 2013, leaders at the practice were confounded.

The primary care clinic is a Tier 3 Primary Care Home, a state designation that is similar to but separate from the NCQA's patient-centered medical home initiative, and has worked hard to coordinate care for its patients across multiple settings.

"It took us a couple of times before we said, 'What's going on?' " says Lisa Kranz, practice administrator for Family Medical Group Northeast.

Kranz was able to look at the practice's referral patterns, not only to area emergency departments, but also to specialists, because of a cost and utilization report made available to them and other healthcare providers by the Oregon Health Care Quality Corporation, Q Corp. is a Regional Health Improvement Collaborative (RHIC) that is part of a pilot project headed up by the Network for Regional Healthcare Improvement (NRHI) that measures the total cost of care. Kranz is on the cost of care steering committee at Q Corp.

"One of our aims with this project was to not only measure total cost, but also resource utilization," says Elizabeth Mitchell, President and CEO of NRHI. "We wanted to make sure groups had information about cost, and that they can see what is being driven by price, [and] what is being driven by utilization."

The main driver of Family Medical Group Northeast's high rates of behavioral health visits to the ED, says Kranz, was ultimately two-pronged. Physicians were not comfortable treating depression or other behavioral health issues that came up during a primary care visit because they didn't have the resources to do so.

And, there were no appointments available for patients at area behavioral health providers. "We sent them to the ER, which is a bad way of triaging, but it was the only thing we had in place," says Kranz. "Now, we have an agreement with a behavioral health provider who has agreed to take our patients within a week, and they can assess emergencies over the phone."

Kranz says physicians are also now getting trained on using the PHQ-9, a depression screening tool. She credits the total cost of care report as helping the practice improve the way it treats patients with a behavioral health need.

"As a primary care provider, we refer patients [to other providers] all the time, and we have no idea what cost is like," says Kranz. "Now that we are finally getting numbers, conversations are starting among physicians. They're asking, 'Are we doing the right thing?' "

Measuring Total Cost of Care
NRHI embarked on its pilot project to report on the cost of care in 2013 with a $1.4 million grant from the Robert Wood Johnson Foundation and five RHICs. In addition to Q Corp., the other four RHICs are Maine Health Management Coalition, Midwest Health Initiative in St. Louis, Minnesota Community Measurement, and the Center for Improving Value in Health Care in Colorado.

Though the cost of care pilot program began prior to RWJF's ambitious initiative to build a culture of health, Tara Oakman, senior program officer at RWJF says giving healthcare providers better and more transparent access to the cost of the care they are providing fits into the framework of the organization's broader goal.

"We want information to be useful at multiple levels: for consumers, provides, payers, and communities," she says.

The pilot just received another $1.9 million from RWJF for an additional 18 months, and Mitchell says it will expand the project to include three additional RHICs that haven't yet been named.

The method NRHI uses to calculate the cost of care at sites that are part of the participating RHICS is called Total Cost of Care (TCOC). It was developed by HealthPartners, the integrated health system in Bloomington, Minnesota, that includes seven hospitals, dozens of primary care clinics and urgent care centers, and a health plan. The TCOC was endorsed by the National Quality Forum as a validated measure of healthcare affordability in 2012.

The TCOC methodology uses administrative claims data to calculate a cost index and resource usage index. It's a simplistic explanation of the complex algorithm HealthPartners made public for other organizations to use, but essentially, the two indices are used together to give practices a more complete view of the care their patients are receiving.

For example, at Family Medical Group Northeast, Kranz says that all services its patients used were attributed to a primary care physician at the practice. Any time a patient visited an outpatient site, or an emergency department or had a medication order, that claim data was rolled up into a cost index that showed individual physicians and practices how they compared to their peers, both on costs paid by the payer, and resources utilized.

Cost Transparency
"It's something we never had before," says Kranz. "We never saw what the costs were when a patient went to another provider."

Mitchell echoes Kranz's statement, and says it's a problem because physician groups can't make meaningful improvement toward costs in a vacuum.

"Physician groups rarely have this information," says Mitchell. "We hear from physicians that they want and need this information to be effective, especially as they take on risk, but it's not being made available by payers."

RHICs such as Q Corp. are in unique position because they are neutral third parties that bring together multiple stakeholders such as payers, providers, purchases, and consumers to start discussions about sharing claims data that can create pathways that will lead to improved cost, quality, and outcomes.

"All of the regions that participated had not only earned the trust and/or the authority to receive this data, but have demonstrated the ability to manage it responsibly," says Mitchell.

Adding Medicare Data
The next phase of the project is integrating Medicare data into claims databases. NRHI is made up of more than 30 RHICs, and 10 of them are qualified entities (QE), which means they are certified by CMS to receive Medicare claims data in order to aggregate it with commercial claims to get a more accurate view of cost. For some, that is the missing piece, says Mitchell.

"It's going to be difficult," says Mitchell. "But we have 10 of the 12 qualified entities, so they are already doing that as part of their day-to-day work."

Q Corp. is already one of the QEs, which was able to provide Medicare data in its reporting that helped Family Medical Group Northeast improve its referral pattern and cost of care for behavioral health. Kranz says 18% of its patients are on Medicare, and 2% are on Medicaid. The remainder rely on commercial health insurance.

"In the past, we were moving the quality measure up without looking at cost," says Kranz. "These reports have emphasized opportunities for us to look at our processes."