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© 2006, CareVariance
Information as Waste Treatment
Physician Practice Efficiency
Mark C. Rattray, MDPresident
CareVariance
Presentation to the Consumer-Purchaser Disclosure Project
September 29, 2006
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2© 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.”
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3© 2006, CareVariance
Inefficiency is Harmful
• Unneeded care carries risks• Unneeded care leads to more unneeded care• Unneeded care creates family and societal
distress• Waste impacts affordability
• Waste in health care resources – misuse and overuse
• Waste in health care administration resources – manual vs. automated
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4© 2006, CareVariance
Why now?
• 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)
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5© 2006, CareVariance
And the point is…
Information as Waste Treatment
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6© 2006, CareVariance
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
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)
Qu
alit
y In
dex
(h
igh
er i
s b
ette
r)
Each Point on This Graph Represents a Physician
Which Ones Would You Prefer to See?
Rattray MC, Andrianos J, Stam DT. Used with the permission of The Regence Group, Copyright 2006. All rights reserved.
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7© 2006, CareVariance
From Units of Care to Episodes of Care
• Unit Resource Management• Unit cost and frequency• Goal: reduce unit cost and frequency – “utilization
management”• Less care is better
• Episodic Resource Management• Recognizes that resource use mix unique to
condition• Goal: optimize mix of resources for most effective
care• The right amount of care is better
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8© 2006, CareVariance
How is the Episode Information Captured?
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9© 2006, CareVariance
Through the Data Required for Payment
NDC NumberEach 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.
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10© 2006, CareVariance
ICD-9 Codes for Diagnosis
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11© 2006, CareVariance
CPT® and Revenue Codes for Services
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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12© 2006, CareVariance
HCPCS for Injectables and Supplies
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13© 2006, CareVariance
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.
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14© 2006, CareVariance
Terabytes of Data Can Be Translated IntoLives Saved, Disease Reduced, and
Improved Affordability of Health Care!
NDC NumberEach 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.
Data Warehouse
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15© 2006, CareVariance
An Episode of Care
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16© 2006, CareVariance
An Episode of Care by Cost “Buckets”
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17© 2006, CareVariance
Physician Compared to Peers
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18© 2006, CareVariance
Actionable Information for Physicians
Family Practice Physician: Net Variation from Peers Over a Two-year Period
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19© 2006, CareVariance
Source: http://www.symmetry-health.com
An Example of Episode Analysis
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20© 2006, CareVariance
Episode Efficiency Measurement and Reporting
Data Warehouse
Data Extraction
Grouper Software and Data
Expert Physician
and Analyst
Review of Grouper Results
Physician Provided
with Performance
Reports
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21© 2006, CareVariance
Physician Engagement and Practice Improvement
Physician Engagement
and Improvement
Physician Report
Support and Continuous
Measurement
Improvement
Appeal to Professionalism “Primum non
nocere”
Required Participation
Required Collaboration
Better Informed Decisions
Care Improves
Consumer Transparen
cy
Incentives (P4P)
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22© 2006, CareVariance
All ETG Applications Are Unique
Data,Dataprep
ETG Processing
Customized settings
Post Processing
Reporting• Very, very complicated
• Easy to make calculation error
• Lack of deep clinical and analytical domain expertise
• 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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23© 2006, CareVariance
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
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24© 2006, CareVariance
Groupers are Worrisome
• 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
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25© 2006, CareVariance
What Consumers Should Do?
• 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
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26© 2006, CareVariance
Information as Waste Treatment
Thank you