Better Provider Profiling:
Adding Patient Risk
Adjustment to Episodes
Rong Yi, Senior Research Associate, DxCG Inc.
Academy Health Conference
June 6, 2004
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Questions Keeping
Us Up at Night:
The credibility of a provider profiling initiative
depends largely on how well we can respond to
the ‘my patients are sicker” objection.
• How much do patient comorbidities affect episode costs?
• Could we use the DCG Relative Risk Score that measures
patient risk along with Medstat’s Episode Group method
to more accurately determine expected costs?
• How do severity and risk-adjusted episodes change our
provider profiling results?
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Presentation Outline
• Project objectives
• Proposed methodology
• Application to BCBS of South
Carolina’s provider profiles
• Conclusions
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MEGs
Medstat’s Episodes Grouper
Look-back
Lab
Episode
Office
Visit
Prescription
Clean Period
Hospital
Office
Office
Admission
Visit
Visit
• Links together a patient’s claims into a clinically meaningful episode
across care settings
• Calculates summary episode cost and utilization metrics
• Assigns a managing physician to the episode to support profiling
• Determines the disease stage of the episode (highest)
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DxCG’s DCG/HCC Models
Diagnosis
Information
DCG Model
Age/Sex
Clinical
Categories
Patient Risk
Scores
• Developed using regression methods on Medstat’s MarketScan database
(commercial model)
• Model input includes demographic information and all diagnosis
information (and/or drug information) for a patient for a period
(typically a year)
• Assigns a set of risk scores to the patient that measures current and
future risk (used for adjustment in profiling and predictive modeling).
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DCG – Calculating a Patient’s
Risk Score
0.45
Member ID: 00001
Name: John Smith
Age: 54
Sex: M
Rel Risk Score: 29.34
5.71
1.84
0.90
0.89
0
18.09
…
0.46
54 year old male
Condition Categories
Diabetes with renal manifestation
Congestive heart failure
Acute myocardial infarction
Vascular disease with complication
Vascular disease hierarchy
Dialysis status
……
Diabetes & congestive heart failure
interaction
______
29.34 Relative Risk Score
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How Much Should an Episode Cost?
- Depends on the patient!
Average
Episode
Cost
DCG Risk Score
(Health Burden,
1.0 = Avg)
Whole Patient
Cost Next Year
Risk-Adjusted
Episode Cost
45 year old
female
Healthy
$300
0.80
$1,500
??
55 year old
male
Early Chronic
$300
2.40
$4,500
??
64 year old
female
Chronic with
Complications
$300
7.20
$12,500
??
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Cost of Pneumonia and Patient
Risk (DCGs)
Stage
# of
Episodes
1
2
3
Overall
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3,918
82
69
4,069
Episode
Cost
$286
$350
$310
$296
Avg
DCG
Risk
Score
2.88
DCG Risk Score
Healthier..……………… Sicker
0
1
2
5
10
1,345
841
904
389
439
$171
$246
$335
$378
$807
34
14
14
9
11
$56
$166
$623
$368
$2,308
43
9
8
4
5
$37
$118
$44
$89
$4,371
2.66
2.60
2.87
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Cost of Chronic Diabetes Patient
Risk (DCGs)
DCG Risk Score
Stage
# of
Episodes
1
7,972
2
2,707
3
Overall
44
10,723
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Episode
Cost
$354
$1,133
$1,604
$556
DCG
Risk
Score
3.01
5.32
Healthier..……………… Sicker
0
1
2
5
10
2,856
1,900
1,969
962
485
$132
$308
$389
$536
$527
587
599
776
371
374
$248
$562
$862
$1,815
$2,224
15
10
5
1
13
$28
$113
$171
$1,726
$5,111
9.62
3.62
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Overall Relationship between
Episode Disease Stage and Patient
Illness Burden
Ordinal Stage
# of Episodes
Mean Patient
Risk Score
Risk Score
Range
0
409,317
1.3
(0.1, 56.4)
1
962,946
2.1
(0.1, 52.5)
2
73,866
3.2
(0.1, 52.5)
3
10,491
5.1
(0.1, 52.5)
Stages are not comparable across MEGs, but broadly higher
stages go with higher risk scores.
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Risk-Adjusted Episodes in
Provider Profiling
Problem: While episodes can be severity-adjusted, without
adjusting for patient risk, there is the potential to unfairly reward
physicians who care for patients with few co-morbid diseases and
penalize those who effectively care for patients with significant
disease burden.
Proposed solution: Marry the patient-level risk scores from
DxCG with the severity score within Medstat’s Episodes Grouper
to fairly evaluate physicians and pay for the best performance.
Medstat’s
Episodes Grouper
Severity-adjustment
within Episode
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DxCG’s HCC Model
Whole-patient
Relative Risk Score
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Risk-adjusted
Episodes
Developing the Risk-Adjusted
Episode Model
• MarketScan database
– Only complete episodes with enough time for
claim run-out
– 20 million episodes in 2002
• Regression models incorporating
– MEG
– Disease Stage
– DCG/HCC Prospective Relative Risk Score
• Predict episode cost within each MEG
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Improvements in Predictive
Power (R2)
8.6
MEGs
MEGs + Stage (BASE)
10.9
2.3
DCG Risk Score
63% improvement
BASE + DCG Risk
Score
17.8
0
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4
6
8
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10
12
14
16
18
20
Overview of BCBS of South
Carolina’s Profiling Efforts
• 1+ million enrolled members
• Provider Contracting deals with over 1600
physicians
• Profiling effort began in 1998, using the
MEGs.
• Profile specialists with more than 100
members on episode cost and use information
and compare to specialist norms
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Risk-Adjusted Episode Profile
for Internal Medicine / General Practice
BASE
Managing
Phys Episodes
A
1,199
B
1,131
C
1,065
D
633
E
704
F
919
G
835
H
356
I
616
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BASE + DCG
Mean
Actual Mean Exp Perf Ratio Mean Exp
$413
$458
0.90
$439
$433
$500
0.87
$507
$451
$502
0.90
$504
$746
$608
1.23
$566
$665
$486
1.37
$477
$495
$528
0.94
$487
$514
$478
1.08
$471
$1,091
$757
1.44
$974
$629
$600
1.05
$632
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Perf
Perf Ratio
Ratio
Change
0.94
-3.90%
0.86
-1.10%
0.90
-0.30%
1.32
9.10%
1.40
2.70%
1.02
7.80%
1.09
1.70%
1.12 -32.10%
1.00
5.30%
Performance Ratios by Physician
•
•
Performance ratios for most physicians (the ratio of actual $ / expected $)
are similar between the two methods.
Some physicians performance ratio changes significantly when we add
patient risk to the adjustment.
Adjusted using
episode group and stage
Adjusted using episode
group, stage and
patient risk
1.45
1.35
1.25
Physician H moved from
an outlier to practicing
within expected range
1.15
1.05
0.95
0.85
0.75
A
B
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D
E
F
G
H
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I
Physician D is even
more of an outlier
Physician D – Drill Down
Episode Description
Other Nutritional and Metabolic
Disorders
Essential Hypertension, Chronic
Maintenance
Other General Signs, Symptoms,
and Conditions
Other Ear, Nose, and Throat
Infections
Osteoarthritis
Other Spinal and Back Disorders
Other Respiratory Symptoms
Exp
Exp
Expected
Actual
Payments (BASE+DC Actual Average
Episodes Payments (BASE)
G)
RRS
RRS
91
$373
$260
$264
1.58
2.13
88
$640
$640
$614
2.00
2.45
47
$343
$366
$322
1.64
2.55
27
25
21
19
$158
$2,443
$398
$608
$148
$1,462
$505
$776
$141
$1,139
$430
$717
1.46
1.78
1.47
1.79
1.97
2.82
2.52
2.90
This physician’s patients have consistently lower illness burden than
expected.
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Physician H Drill Down
Episode Description
Exp
Exp
Allowed
Actual
Allowed Payments
Allowed Payments
per
Payments
per
Episode
Exp
per
Episode (MEG & Actual Average
Episodes Episode
(MEG)
DCG)
RRS
RRS
Essential Hypertension, Chronic
Maintenance
40
$729
$620
$698
4.12
2.42
Other Nutritional and Metabolic
Disorders
29
$485
$260
$264
2.04
2.13
Diabetes Mellitus Type 2 and
Hyperglycemic States Maint
26
$1,656
$1,360
$1,478
6.1
3.7
Hernia, Hiatal or Reflux
Esophagitis
Renal Failure
Angina Pectoris
12
9
9
$880
$13,110
$1,180
$501
$2,992
$5,189
$497
2.34
$10,585 15.97
$4,622
3.4
2.39
7.01
4.78
Physician H moves from an outlier to within the norm due to
treating more severely ill patients.
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Conclusions
• Episode costs increase with the severity of the disease (MEG)
and disease burden of the patient (RRS)
• Considerable variation in episode costs leaves room for risk
adjustment
• Organizations can improve the accuracy of provider
performance assessments using risk-adjusted episodes. This
is important for ensuring equitable pay-for-performance.
• Plans are underway to incorporate risk-adjusted episodes
into the Medstat’s standalone episode grouper and
Advantage Suite.
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