Dueling Data Games: Demographics vs. Provider Patterns?

---John Campo, Vice President, Business Development, Valiant Health  (see also http://www.valianthealth.com/blog/dueling-data-games-demographics-vs-provider-patterns1/)

Various forums like Health IT, academia, and the health care bloggers are abuzz with a fascinating, but controversial study released on May 28, 2013 that addresses the long held belief that some regions have wasteful medical practice patterns. The new paper concludes that individuals’ health differences around the country explain between 75 percent and 85 percent of the cost variations.  When the primary author, Dr. Patrick Romano, noted that “People really are sicker in some parts of the country,” he set in motion a debate with the conventional wisdom against the work of the Dartmouth Institute for Health Policy & Clinical Practice.  Dartmouth’s three decades of research has propagated a theory that regional differences in Medicare spending is mostly due to the aggressiveness of the medical community (and attributing it mostly to individual profit incentives).

The answer to this question is critical because it is driving CMS strategies to reduce Medicare spending.  The Institute of Medicine, at the request of Congress, is continuing to investigate the question.  

Regardless of whether the new study turns out to be correct or if the IOM substantiates the findings of the Dartmouth group, it makes for an interesting debate with high stakes in terms of CMS payment strategies.  Plans, ACOs, and all types of providers will be involved in looking at data in various ways like local/provider specific analyses to regional/national benchmarks.  Providers should expect to conduct patient and population level analyses and measure results, comparing them to expected norms and explaining the variances.

 This will be particularly important as providers and plans engage in any kind of pay-for-performance or risk sharing arrangements, such as those expected under Accountable Care Organizations.  They must have systems in place to offer point-counter-point perspectives that establish quality results and justify the occasional outlier.  Link for different perspectives:   

• http://www.healthcareitnews.com/news/pop-health-explains-medicare-disparities?topic=04,28,19
• http://www.kaiserhealthnews.org/Stories/2013/May/28/medicare-state-geographic-variation-costs.aspx

John Campo is responsible for Valiant Health’s growth, including client engagement and satisfaction. He brings over 15 years of diversified healthcare experience to Valiant Health. Prior to joining our leadership team, John founded and owned the CAMPO Group: Strategic Managed Care Consultants where he engaged leading pharmaceutical, biotechnology, specialty pharmacy, and health insurance clients. John’s background includes healthcare contracting, trade relations, reimbursement, specialty pharmacy distribution, quality improvement and Medicare. His leadership background includes working for a Fortune 500 PBM, HMO, and Specialty Pharmacy organization in leadership roles as well as being responsible for Managed Markets National Account Management for a large ethical US Pharmaceutical firm. He holds a BS in Business from Brescia University.