Common Utilization Measures That Impact Value-Based Care Efforts

July 20, 2023 - Quality and quantity have a nuanced relationship in the healthcare system: put simply, payers want to reduce members’ quantity of low-value services while increasing the number of services that produce better quality care. As a result, utilization measures that track the use of high- and low-value care are critical to a value-based structure.

The triple aims of value-based care—improving member experience, population health, and cost per capita in healthcare—all draw on utilization measurement data.

When utilization of unnecessary services is low, member experience may improve. Also, by tracking how often certain populations use healthcare services and which services are most utilized, healthcare leaders and policymakers can gain insight into healthcare trends across a community.

And, of course, utilization is closely tied to healthcare spending. This was evident in 2020 when the annual percent change in utilization per person dropped 7.5 percent, and spending per person followed, declining from 4.1 percent growth in 2019 to a 3.6 percent decrease in spending per person in 2020. However, the connection between utilization and spending is not always aligned.

The goal of value-based care is not to drastically reduce healthcare utilization to control healthcare spending. Instead, payers aim to identify and reduce utilization of low-value services while incentivizing the utilization of high-quality care.

Five utilization measures that payers can track to achieve this goal are emergency department use, prescription drug utilization, hospital readmissions and preventable complications, average length of stay, and preventive care use.

Emergency department use

What is it?

This measure represents how often members visit the emergency department, National Committee for Quality Assurance (NCQA) explains on its website. For NCQA’s Healthcare Effectiveness Data and Information Set (HEDIS), payers assess both the projected EDU and actual measures and then multiply this by the health plans’ total emergency department visit rate to produce a risk-standardized rate.

What does it tell payers?

High volumes of emergency department utilization (EDU) can be interpreted in various ways, NCQA noted.

Such a trend can highlight a pattern of low-value care services that lead to poor patient outcomes, driving visits to the emergency room. It might also mean that members do not have sufficient access to care and, as a result, are resorting to emergency care centers. Lastly, it could indicate a need for better patient education about low-cost, high-quality care options.

Emergency department visits are expensive. When a member takes an unnecessary trip to the emergency department or when a low-quality service results in an emergency department admission, this contributes to financial strain on the healthcare system.

The Centers for Disease Control and Prevention (CDC) tracks several data points related to emergency department utilization. In 2020, emergency department visits totaled 131.3 million. Of these, 18.6 million resulted in hospital admission, and 3.1 million cases went to the critical care unit. Half of the cases lasted 15 minutes (50.5 percent).

What can payers do about it?

Some payers have leveraged value-based contracts with accountable care organizations to improve their members’ emergency department utilization, with one major payer reporting a 16 percent decline in emergency department visits due to this strategy.

Payers can use EDU rates to assess chronic disease management gaps. For example, NCQA implemented a quality measure that tracks EDU rates for hypoglycemia among members with diabetes to assess diabetes care management plans.

Hospital readmission, preventable complications

What is it?

Hospital utilization measures are important indicators of care quality that show up in a couple of major quality measures assessments. HEDIS collects data on hospitalization for potentially preventable complications (HPC) and plan all-cause readmissions (PCR).

NCQA tracks HPC by collecting data on inpatient admissions and observation stays due to ambulatory care-sensitive condition (ACSC) complications, specifically among Medicare beneficiaries ages 67 or older.

The PCR rate examines adult acute inpatient and observation stays that resulted in unplanned acute readmission within 30 days post-discharge. NCQA applies this measure to commercial, Medicaid, and Medicare plans.

What does it tell payers?

ACSCs can be acute or chronic conditions. In either case, when they result in hospitalization, they result in expensive care, according to NCQA. Moreover, ACSCs are preventable, so if a member repeatedly goes to the hospital for this condition, the measure may indicate low-quality care.

In Medicare, ACSC incidences have decreased over time. In 2021, there were 32.4 and 26.3 incidences out of 1,000 patients in health maintenance organizations (HMOs) and Medicare preferred provider organizations (PPOs), respectively. In 2018, these rates were 38.2 incidences and 37.9 incidences, respectively.

High readmission volume can signal poor care coordination, improper discharge practices, or low quality of care. Unexpected readmissions are tied to higher spending and mortality rates.

NCQA reported a decline in readmissions between 2015 and 2021. Commercial rates for adults ages 18 to 64 dropped from 10.9 incidents per 1,000 patients in 2015 to 4.9 incidents in 2021. Readmission in Medicare HMOs and PPOs dropped from a high of 22.4 and 22.1 incidents per 1,000 patients in 2014 to 11.9 and 11.2 incidents in 2021, respectively.

What can payers do about it?

Studies show that preventable hospital admissions and readmissions can correlate to socioeconomic status. Beneficiaries with low socioeconomic status may have lower healthcare utilization overall due to financial barriers, but they are 7.5 percent more likely to make trips to the hospital that were preventable, according to a report from 3M Health Information Systems.

When payers address socioeconomic circumstances and social determinants of health, they might positively influence unnecessary hospitalization measures, the report indicated.

Promoting home healthcare is another way to reduce hospital readmissions. After CMS implemented its post-acute care transfer (PACT) policy, the agency reported that patients who received home healthcare after discharge were less likely to be readmitted to the hospital after 30 days, 60 days, and 90 days.

Average length of stay (LOS)

What is it?

As the name suggests, this metric averages the length of time a patient remains in a facility. The average LOS is determined by dividing the number of inpatient days by the number of inpatient admissions, according to CDC.

What does it tell payers?

Longer stays lead to higher expenses. Delays in transferring patients to facilities better suited to their health needs can lead to poor health outcomes.

The average LOS increased between 2019 and 2022, the American Hospital Association (AHA) discovered.

Overall, the average LOS grew 19.2 percent over the three-year period. Patients who were being released into post-acute care settings experienced the longest delays. Discharge to a psychiatric hospital took 28.9 percent longer in 2022 than in 2019, and discharge to a skilled nursing facility took 20.2 percent longer.

These numbers reflect workforce shortages in both clinical and non-clinical roles at acute care hospitals, rehabilitation facilities, and long-term care sites, AHA stated.

What can payers do about it?

Health plans have tried to address the workforce shortages that can influence LOS by offering funding to safety net providers to attract more providers.

For example, Medicaid programs struggling to attract and retain behavioral healthcare workers have increased reimbursement rates. They also extended the behavioral healthcare workforce, incentivized participation in Medicaid, and reduced administrative burden.

Prescription drug utilization

What is it?

Prescription drug utilization can take many forms. One popular method of tracking prescription drug utilization is a drug utilization review (DUR).

A DUR offers an overview of the drug utilization process, including prescribing, dispensing, and member use. It can be prospective, concurrent, or retrospective. First, the process evaluates the results of the current review against a set of existing criteria. Then, it offers corrective action.

What does it tell payers?

Tracking prescription drug utilization is important because this measure can indicate trends across a few aspects of healthcare, including healthcare spending growth, patient outcomes, chronic disease prevalence, potential misconduct among physicians, and substance abuse among members.

Prescription utilization growth has been fueled by the expanding population of members with chronic diseases and the rising number of new drugs available, according to a report from the Congressional Budget Office (CBO), which used Medicare Part D and Medicaid data.

Additionally, when insurers cover a higher share of drug costs, utilization increases.

Commercial plans have impacted utilization by increasing their prescription drug coverage. In 2018, the share of prescription drug costs that commercial insurers covered was 44 percent, compared to 26 percent in 1990. Such actions reduced members’ out-of-pocket prescription drug spending, decreasing financial barriers to prescriptions.

Additionally, the number of generics available on the market can influence utilization. Between 2009 and 2018, the number of generics doubled in Medicare Part D and tripled in Medicaid, CBO found. Generics made up almost three-quarters of all Medicare Part D prescriptions in 2009 (72 percent), but by 2018 this share had grown to 90 percent.

What can payers do about it?

Medicaid programs have implemented DURs to combat the opioid epidemic. CMS issued guidance on how states can comply with DUR requirements, including but not limited to automated claims review processes and safety edits for opioid refills and concurrent prescribing of certain drugs with opioids. Managed care organizations also must report on these areas.

Commercial payers may conduct DURs for dose consolidation to ensure that prescribed dosing practices are optimal or monthly dosing level checks to ensure that the prescribed monthly dosage aligns with the Food and Drug Administration (FDA) and pharmaceutical manufacturer guidelines.

Preventive care

What is it?

Preventive care utilization covers a variety of services. There are a number of services that payers can track to assess members’ preventive care utilization. The NCQA HEDIS measures highlight screenings, counseling, and immunizations.

Payers that comply with the Affordable Care Act must cover a similar range of services based on the US Preventive Services Task Force (USPSTF) recommendations.

What does it tell payers?

Preventive care utilization presents an opportunity to reduce downstream costs.

Tracking utilization for services such as breast cancer screenings can help healthcare stakeholders catch aggressive conditions early and prevent the higher costs associated with more invasive treatment.

Across private payer markets, 60 percent of members received preventive care that aligns with USPSTF recommendations, according to a Peterson-KFF Health System Tracker brief. This includes 61 percent of large employer-sponsored health plan enrollees, 57 percent of small employer health plan enrollees, and 55 percent of individual health insurance market enrollees.

Women were more likely to leverage preventive care services than men. There are more preventive care services designed and recommended for women, which might contribute to this imbalance. Regardless, only three out of ten young men in 2018 accessed preventive care services, compared to seven out of ten of their female counterparts.

What can payers do about it?

The good news is that members want to use preventive care services. Over 50 percent of employer-sponsored health plan members find that having preventive care coverage is one of their top priorities in coverage, according to AHIP. Half the battle in member engagement is helping members see why they should want to invest in their health, so payers are at an advantage in preventive care.

But when utilizing those benefits, a gap has formed between payers and members.

Only 35 percent of employees agreed that their employer-sponsored health plans’ design covered holistic treatment, including preventive care, a Manatt Health survey found. Eight out of ten employees would like to see better chronic disease prevention.

Payers can use benefit design to decrease costs for preventive care services. They may waive or reduce deductibles and copays or use other levers to cut down on out-of-pocket healthcare spending for these services to minimize the financial barriers.

They can also employ omnichannel communication to ensure that members have access to accurate information about their benefits.

As payers track utilization measures in their health plans, more opportunities for innovation in value-based care may arise.