U.S. Department of Health and Human Services.  HHS.gov  Secretary Mike Leavitt's Blog

Health Care Cost

Value-Driven Health Care Interoperability

I thought you might be interested in a brief report on our progress related to electronic health records (EHR). They are a critical element in making the health care system become value-based.

Just having electronic health records isn’t enough. The systems have to be interoperable. Interoperability means that different computer systems and devices can exchange information.

Three years ago, there were 200 vendors selling electronic health record systems but there was no assurance that the systems would ever be able to share privacy protected data in interoperable formats. Since then, we have made remarkable progress.

An EHR standards process is now in place, and we are marching steadily towards interoperability. We created the CCHIT process to certify products using the national standards and it is functioning well. More than 75% of the products being sold today carry the certification.

In addition, a National Health Information Network will start testing data exchange by the end of the year and go into production with real data transmission the year after.

The number of hospitals and larger physician practices employing electronic medical records has grown. However, we continue to have a serious challenge with small- to medium-sized practices where fewer than 10 percent of these practices currently have health IT systems.

The primary reasons for low adoption rates among small practices are predictable: economics and the burden of change.

We are experimenting with different methods of changing the macro economics of reimbursement so that small practice doctors share the financial benefits.

We are also beginning a pilot program that provides Medicare beneficiaries with personal health records.

Finally, HHS is signaling that in the near future, payers like Medicare cannot reimburse doctors at the highest level unless they can interact at the highest level of efficiency.

A good example of this is e-prescribing. The software exists in nearly all pharmacies and in many doctors’ offices. It saves money and lives. It’s time to fully implement e-prescribing.

I’m hoping Congress will give HHS the ability to establish e-prescribing requirements as part of Medicare legislation in June of this year.

Learn more about Value-Driven Health Care.

Value-Driven Health Care

Over the last three years, I have been visiting different communities where groups have formed to pursue the measurement of quality. Generally, it has been a few curious doctors, convinced if they had a way to measure quality they could improve the outcomes. Other times, it would be a group of large payers looking for metrics that would allow them to negotiate lower prices. The best of these organizations however, are the places where all the stakeholders are working together.

The collective result of all these groups working independently was a large number of measures but not much standardization. Our progress was highly fragmented.

Great effort has been made recently among medical organizations, insurers, government, employers and unions to develop what I will collectively refer to as the “quality enterprise.” I’m referring to organizations like the National Quality Forum, the AMA Physician Consortium, the Ambulatory Quality Alliance and Hospital Quality Alliance and others.

I am a big advocate of this kind of collaborative stakeholder process. I think it is the best way to arrive at national standards. I often restate the commitment of HHS to adopt endorsed measures when they are available and to adapt our activities as they are adopted.

While progress is being made, gaining agreement on a modest number of uniform measures has taken a fair amount of time. Frankly, the process remains complicated and slow. Hopefully, it will gain speed as experience is gained.

However, we need standardized methods for quality measurement and very soon.

As health care’s largest payer, I believe HHS has a duty to push the envelope and I want to tell you about a project we have initiated.

HHS is in the process of doing an inventory of all the quality measures we are currently using someplace in HHS. We intend to harmonize the measures we are using, and then we plan to publish our set so everyone can see our current and planned measurement thinking.

I hope this will have the effect of accelerating the velocity of the quality standards process.

With standardized quality measures laid beside standardized price measures like I wrote about earlier this week, consumers will be in a position to make value the most rewarded virtue in health care.

Learn more about Value Driven Health Care.

Single Price Health Care

I often talk about the need to make “value of care” rather than “volume of care” the best rewarded virtue in health care. I want to elaborate on what I mean in using the word value.

A couple of days ago, I listened to a consumer report on CNN evaluating hybrid cars. The reporter was discussing an independent evaluation someone had conducted to determine the relative merits of several models. They had created criteria to hold each car against as a means of measurement. Then the price of each one was compared. The car that scored the best quality at the lowest cost was determined to be the best buy, or best value.

Given the proper information, consumers should be able to make similar comparisons on health care. Until recently, little information has been available for use by consumers. That is changing. Great effort is now being made to evaluate the quality of services a patient gets in different settings.

It takes both quality and price information to determine value. The problem in determining price is that the billing system is simply insane.

I’ve tried to imagine using the way we bill health care in any other part of the economy. To continue the automobile analogy, let’s just speculate on what would happen if we transformed the automobile industry to adopt the health care pricing structure?

The dealer would say to a customer, “We don’t really know the price and we haven’t got a way for you to compare this car for quality but we know you need it, so come in and we'll give you the car.”

Then about three weeks later, the customer would start getting bills. There would be a bill from the people who made the car’s body. Another bill would arrive from the transmission people. Everyday more bills would arrive from seat makers, the paint people, and the folks making the sound system.

Then when the bill from the dealer comes, there would be a charge for time spent in the show room, a separate charge for the salesman’s office with a $27.90 cent item for the coffee you drank while there.

Gratefully, they don’t sell cars that way. All those costs are packaged and managed by a car company. Consumers get one price they can understand.

Some of my friends in the practice of Medicine will find my analogy troubling, pointing out that health care and a car purchase have significant differences. Okay, the analogy isn’t perfect, but let’s not miss the point.

The way we price health care cannot be understood by a human being of average intelligence and limited patience. And I think it’s also time we began to challenge the assumption that health care is all that different from other things consumers buy.

For many common procedures and conditions, consumers should be able to ask for and receive a firm, single price, and expect providers to stand behind it. Such a system would promote coordination and accountability and allow apples–to-apples comparison.

It can be done. Last year, Medicare paid for 255,000 knee operations. Incidentally, we paid for 95,000 heart bi-pass operations and 95,000 lung cancer treatments. Believe me. When you pay for 255,000 of anything, you know what medical supplies, services, procedures and facilities somebody getting a knee operation is going to use; and so do the medical providers who perform them.

I believe HHS has a responsibility to push the envelope on this. We will soon publish information on top Medicare procedures by cost and volume as part of an efficiency measurement roadmap for the department. Medicare is also developing a demonstration that would establish bundled payments for hospital-based episodes of care.

Participating hospitals would be able to competitively bid for episodes, then savings would be shared with beneficiaries who choose hospitals providing services at below the per episode rate.

This not only holds the potential to improve quality and reduce costs by encouraging physicians and hospitals to work together, but also encourages more informed consumer decision-making.

Hospital Compare

Over the past few months I have repeatedly said we need to make health care more value-driven. Of course, what I mean is that patients need information that helps them make better health care decisions. Specifically, comparative cost and quality of the care they purchase.

Friday (March 28) I unveiled a new Hospital Compare Web site. It will make it easier for consumers and their families to get accurate, practical information when they need to evaluate their local hospitals.

Take a look that it. I would appreciate getting your reaction. (Hospital Compare Web site)

The site assembles basic quality information collected from 2,500 hospitals and compares a series of quality measures, not only indicators of quality, but also price.

Look up hospitals in your area. Some of the data won’t surprise you much, other parts will. In your comments, I’d appreciate hearing if you were surprised in any way about the comparative quality of hospitals in your area.

This is a significant step forward, but my aspirations are higher in terms of the quantity, quality and accessibility of data. During the press conference announcing the release, I said if this were a video game it would resemble the first game I ever played, Pong, more than state-of-the art software like Nintendo’s Wii game. However, we’re making progress fast.

It is my expectation that hospitals all over America will be looking at how they compare and plotting strategies for improvement. People want to provide quality, but they need to know how they compare as a measure. The release of this data and its continual improvement will spur improvement.

So, tell me what you think.