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Health Plan Quality Improvement Strategy Reporting Under the Affordable Care Act: Implementation Considerations

A provision of the Patient Protection and Affordable Care Act (Affordable Care Act) requires health plans to submit reports each year demonstrating how they reward health care quality through market-based incentives in benefit design and provider reimbursement structures. By spring 2012, the U.S. Secretary of Health and Human Services (HHS) is expected to develop requirements for health plans to report on their efforts to: improve health outcomes, prevent hospital readmissions, ensure patient safety and reduce medical errors, and implement wellness and health promotion activities. Both employer group health plans, including self-insured plans, individual market plans, and qualified health plans sold through the insurance exchanges are required to submit such reports (Appendix B).

This report outlines key considerations for implementing these provisions of the health reform law. After reviewing health plan strategies that may positively affect health and health care quality, we propose a framework that can be used to identify and develop measures and reporting requirements. Next, we review current health plan assessment methods that may inform specifications to be developed by the HHS secretary. Finally, we offer a set of recommendations for the design of health plan reporting requirements.

Many health plans implement benefit designs that aim to improve health care outcomes, quality, and value. By benefit design, we mean the use of cost-sharing and incentives across a range of product options; these are distinct from coverage rules, which are determined by federal guidance on the definition of essential health benefits. Examples of innovative benefit practices include the selection of high-performing physicians, physician groups, and hospitals based on various quality and efficiency metrics; the use of decision support to guide preference-sensitive treatment choices; and the use of patient reminders and incentives to encourage enrollees to receive preventive screenings.

In addition, some health plans use their contracts with providers to encourage high-quality, high-value care. Such payment models include performance-based contracts that link payment to the achievement of certain quality and/or efficiency thresholds. A limited number of purchasers attempt to bundle payments for episodes of care. Some primary care medical home or accountable care contracts augment a primary care case management fee with prospective gain-sharing for achieving reductions in the total cost of health care or achieving other performance targets. Among hospitals, the Premier program, Medicare Advantage STARS program, and the Centers for Medicare and Medicaid Services’ (CMS) hospital value-based purchasing program have accelerated adoption of quality- and outcomes-based contracts with payments linked to performance, public reporting, or participation in regional and multistate collaboratives.

Framework for Quality Improvement Reporting Requirements
In considering a framework to meet reporting requirements outlined in the Affordable Care Act, there are significant opportunities to align with the National Quality Strategy (NQS) in pursuit of improving population health, improving care experiences, and controlling per capita costs. Common domains across these initiatives and the NQS priorities reflect a broad view of quality improvement:

  • making care safer by reducing harm; 
  • engaging patients and family as partners in their care; 
  • promoting effective communication and care coordination; 
  • promoting the most effective prevention and treatment practices; 
  • working with communities to enable healthy living; and 
  • making care more affordable through new health care delivery models.

As illustrated below, there are relevant benefit design and provider reimbursement features that could be grouped under each priority area as a way to reinforce and implement a health plan’s quality improvement strategies. To guide the selection of quality improvement reporting requirements for health plans’ benefit design and provider reimbursement strategies, the following criteria should be considered:

  1. conforms to statutory requirements;
  2. consistent with the National Quality Strategy and other federal programs; 
  3. likelihood that measured activities and/or reporting will contribute to improvement of health outcomes;
  4. builds upon existing documentation and reporting systems where possible in order to limit additional burden on plan reporting or provider data collection; 
  5. has face validity to consumers, plans, providers, and policymakers; and
  6. submitted information can be verified. !!!PAGE BREAK!!!

Measuring Health Plan Efforts to Improve Quality

Health plan performance is measured through an increasing array of standardized performance measures assessing preventive care, clinical processes, and intermediate outcomes (e.g., blood pressure or cholesterol levels) as well as care experiences and outcomes (e.g., functional status). CMS requires health plans participating in Medicare Advantage to report many such performance measures. In addition, many of these measures are required by states for Medicaid managed care programs or under regulatory requirements promulgated through states’ health departments or insurance commissioners.

Many health plans attempt to improve performance by rewarding and reimbursing providers for a range of activities including care coordination, care and case management, medication reconciliation and compliance, or development of primary care medical homes. In addition, health plans may seek to improve value through benefit designs that provide incentives for members to choose evidence-based treatments (e.g., by waiving copayments) or select providers with higher performance ratings. Health plans may also offer decision-support tools to help members make informed treatment choices.

There are a variety of approaches to assessing health plan performance. An employer-sponsored tool developed and maintained by the National Business Coalition on Health (NBCH), eValue8 gathers information through a standard, annual, request-for-information survey. It gathers information about health plan performance in critical areas such as prevention and health promotion, adoption of health information technology, member and provider support, disease management, provider performance measurement and rewards, patient safety, pharmaceutical management, and behavioral health.

The National Committee for Quality Assurance (NCQA) and URAC accredit health plans, with NCQA accreditation more commonly required by large employers. NCQA-accredited health plans are reviewed against more than 60 standards and must report on their performance in more than 40 areas in order to earn accreditation. NCQA uses a unified set of standards for health maintenance organizations (HMOs), managed care organizations (MCOs), preferred provider organizations (PPOs), and point of service (POS) plans, relies extensively on performance measures in accreditation decisions, and publishes a health plan report card on its Web site.

Medicaid managed care’s external quality review is another health plan assessment approach, although it does not directly report on benefit and provider reimbursement strategies. Furthermore, the structure and content of this assessment may vary considerably, depending on the review organization. While reporting standardized performance measures is common and routine for most HMO and POS plans, and for many PPO plans, detailed assessment and reporting of health plan activities related to provider payment and benefit design strategies are not.

Uses of Reported Information from Health Plans
The various audiences for health plan quality information have unique needs, which should be taken into account in the design and implementation of reporting requirements. These requirements should also address various applications of the information, such as
oversight and monitoring, quality improvement, public reporting, and decision support. The audiences for health plan quality information include:

  1. state oversight and health information exchange boards, as well as governance and operational entities; 
  2. health plans; 
  3. consumers; 
  4. employers; and 
  5. physicians, hospitals, and provider organizations.

Purchasers rely on both NCQA accreditation and eValue8 to collect program and service operations data and, to varying degrees, to assess the effectiveness of a health plan’s quality improvement programs. Consumers might use quality information to make decisions about choice of provider, choice of treatment, and potential out-of-pocket costs. The quality reporting system should assess whether health plans make information about the performance of individual physicians and hospital service lines available to their members; such information is becoming more widely available, and research has shown that consumers prefer it to performance information aggregated at physician group or hospitalwide levels.

Key Considerations
At a roundtable meeting supported by The Commonwealth Fund and convened by AcademyHealth, experts, stakeholders, and government officials discussed current approaches to health plan quality improvement reporting and generated recommendations
for implementing reporting requirements under the Affordable Care Act (Appendix A).

  • Recommendation 1. Move ahead strategically, balancing parsimony, standardization, and innovation by emphasizing dimensions of care delivery and payment reform that align with the National Quality Strategy and hold the greatest promise for delivering significant improvements in health outcomes and value. Use standardized outcome measures to set performance expectations, but do not
    overly prescribe interventions that could have the unintended consequence of  stifling innovation. Support the development and use of metrics that may fill NQS measurement gaps, such as those assessing care coordination, patient-reported outcomes, and affordability.
  • Recommendation 2. Focus on outcomes, when they are available; report on improvement strategies only when outcomes reporting is not yet feasible. Consider the evidence base for health plans’ improvement strategies as well as the current state of performance measurement. Balance consistency and reporting burden with opportunities to refine the underlying measures for broad domains that are delineated in the statute, such as wellness and prevention. Use process measures and indicators of improvement programs’ results, effectiveness, and reach when outcomes are not available and in cases where they may be helpful in illuminating issues such as incentive design, disparities in care, or risk segmentation.
  • Recommendation 3. Recognize and address the information needs of diverse users of quality reporting, including state oversight and exchange boards, governance and operational entities, health plans, consumers, employers, and providers. The information and detail required for oversight and quality improvement are different than those for public reporting and accountability. Likewise, consumers want actionable information and tools to support decisions about their choice of health plans, doctors, hospitals, and treatment. In addition, consumers may have different expectations about transparency than do other users.
  • Recommendation 4. Support consistent implementation across health plans and health insurance exchanges to foster administrative efficiency and ensure benchmarking capabilities across states. Offer templates and reporting formats to promote standardization across states as well as across the public and private sectors. Promote consistency in the information available to consumers and the requirements for multistate health plans.
  • Recommendation 5. Balance value against the resources required to implement quality reporting by aligning efforts with other federal programs and leveraging existing accreditation and reporting tools. Align with other measurement and reporting requirements of the Affordable Care Act and other federal initiatives such as the incentives for “meaningful use” of electronic medical records and the Medicare Shared Savings Program.
  • Recommendation 6. Invest in initial testing and develop a learning infrastructure for evaluation and improvement of reporting over time, while keeping an eye on unintended consequences. Align public and private value-based purchasing initiatives to facilitate knowledge transfer and adoption of best practices. Integrate qualitative feedback from regulators, health plans, providers, and consumers; in particular, elicit feedback from consumers on how they are using the available information and what other information they want. Monitor the potential for unintended consequences and the implications for future policy.
  • Recommendation 7. Review and update quality reporting requirements on a regular basis to ensure their relevance and alignment with emerging federal requirements. Provide criteria for the frequency and scope of such reviews to capture new evidence and spread innovative practices. Over time, more robust measures of health care outcomes may emerge from electronic health records, new coding requirements, and health information exchange.


Publication Details



E. Hoo, D. Lansky, J. Roski et al., Health Plan Quality Improvement Strategy Reporting Under the Affordable Care Act: Implementation Considerations, The Commonwealth Fund, April 2012.