Majority Of Employers Do Not Consider Reports On HMO Quality When Choosing Employee Health Plans

Even as Congress is considering several managed care patient protection proposals, two new Commonwealth Fund studies indicate that reports on the quality of care provided by plans are widely underutilized by employers. In When Employers Choose Health Plans: Do NCQA Accreditation and HEDIS Data Count?, Jon R. Gabel, Kelly A. Hunt, and Kimberly M. Hurst of KPMG Peat Marwick find that managed care plan accreditation and data on plans' quality of care play a growing but still minor role in employers' selection of health plans. The study, which is based on KPMG's 1997 survey of 1,502 firms with 200 or more employees and their 1996 survey of 1,151 firms, also finds that only 1 percent of employers provide data on health plan quality to their employees.

"If HMOs knew that quality counts to those making health care purchasing decisions, they would be more likely to focus on improving quality of care, rather than emphasizing reduced utilization of services and lower premiums," noted Karen Davis, president of The Commonwealth Fund. "As major buyers, employers have a great deal of influence in the health care marketplace and are in a position to demand higher standards of plans. Unfortunately, they don't seem to be taking full advantage of their bargaining power when it comes to health care." Employers have access to Quality Compass, a database developed by the National Committee for Quality Assurance (NCQA) with partial Fund support to provide information on the quality of care provided by managed care plans. The database includes 71 Health Plan Employer Data and Information Set (HEDIS) measures, such as the proportion of adult women receiving a Pap smear, the proportion of children who have up-to-date immunizations, patient satisfaction with the experience of care, disenrollment rates, and physician turnover rates. Only 11 percent of employers that offer HMOs to their employees said NCQA's accreditation quality measurements—the leading standards by which HMO quality is ascertained¾ were important to them when making decisions about which health plans to offer their employees. An even smaller proportion (5%) said that HEDIS performance measures were important in selecting plans. "NCQA is working hard to make employers understand that sound, objective information is available to help them select quality health plans for employees and their families," said Margaret O'Kane, president of NCQA. "Fortunately, a majority of the largest and most influential employers are already using accreditation and HEDIS to guide their selections. Hopefully, this important study will encourage more to do so." Gabel, Hunt, and Hurst also compared premium costs for accredited plans and non-accredited plans, finding that costs are actually slightly lower for accredited plans. Therefore, employers do not need to sacrifice price for quality, since accreditation is an indicator of good value as well as good quality of care. Many plans unfamiliar with quality compass
Another Fund-supported study, Assessing Quality in Managed Care: Health Plan Reporting of HEDIS Performance Measures, by Donna O. Farley, Elizabeth A. McGlynn, and David Klein of The RAND Corporation, finds that in 1997 nearly 65 percent of plans did not participate in Quality Compass at all. This study extends the findings of the KPMG authors, who found that employers are often unaware of NCQA's HMO accreditation process and quality reports. The KPMG authors found that while employers' awareness of NCQA data increased from 29 percent in 1996, it remains low: just 35 percent of firms in 1997 reported familiarity with accreditation and HEDIS plan performance data. Should the monitoring system be changed?
Farley and colleagues conclude that the performance standards contained in HEDIS 3.0 reflect considerable consensus among the key stakeholders in the system as to what information should be included and which methods for collecting data should be used to ensure that results are comparable. With new and better measures replacing old ones each year, the system is designed for continuous improvement. They also point out that health plans currently participating in Quality Compass have invested significant resources in developing information systems, software programs, and a pool of experienced individuals to collect, analyze, and report the data. The KMPG authors conclude that federal, state, and local governments could help reform the market by acting as prudent purchasers. By contracting exclusively with accredited plans, the public sector could dramatically increase the economic benefits of accreditation to health plans, and thereby improve the quality of health care throughout the United States.