Better Provider Profiling:
Adding Patient Risk
Adjustment to Episodes
Rong Yi, Senior Research Associate, DxCG Inc.
Academy Health Conference
June 6, 2004
©2004 DxCG® , Inc.
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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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©2004 DxCG® , Inc.
MEGs
Presentation Outline
Medstat’s Episodes Grouper
Look-back
• Project objectives
• Proposed methodology
• Application to BCBS of South
Carolina’s provider profiles
• Conclusions
©2004 DxCG® , Inc.
Lab
Age/Sex
Clinical
Categories
Patient Risk
Scores
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Hospital
Office
Office
Admission
Visit
Visit
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©2004 DxCG® , Inc.
DCG – Calculating a Patient’s
Risk Score
0.45
Member ID: 00001
Name: John Smith
Age: 54
Sex: M
Rel Risk Score: 29.34
• 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).
©2004 DxCG® , Inc.
Prescription
Clean Period
• 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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DCG Model
Office
Visit
DxCG’s DCG/HCC Models
Diagnosis
Information
Episode
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
©2004 DxCG® , Inc.
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1
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
Cost of Pneumonia and Patient
Risk (DCGs)
Risk-Adjusted
Episode Cost
Stage
45 year old
female
Healthy
$300
55 year old
male
Early Chronic
$300
64 year old
female
Chronic with
Complications
$300
0.80
$1,500
2.40
$4,500
7.20
$12,500
1
3,918
$286
2.88
??
2
82
$350
2.66
??
DCG Risk Score
Episode
Cost
7,972
2
2,707
3
44
Overall
10,723
©2004 DxCG® , Inc.
$354
$1,133
$1,604
$556
DCG
Risk
Score
3.01
2
5
10
904
389
439
$171
$246
$335
$378
$807
34
14
14
9
11
$56
$166
$623
$368
$2,308
2.60
43
9
8
4
5
$37
$118
$44
$89
$4,371
2.87
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# of Episodes
Mean Patient
Risk Score
Risk Score
Range
(0.1, 56.4)
1
2
5
10
0
409,317
1.3
1,900
1,969
962
485
1
962,946
2.1
(0.1, 52.5)
$132
$308
$389
$536
$527
2
73,866
3.2
(0.1, 52.5)
3
10,491
5.1
(0.1, 52.5)
5.32
587
599
776
371
374
$248
$562
$862
$1,815
$2,224
9.62
15
10
5
1
13
$28
$113
$171
$1,726
$5,111
Stages are not comparable across MEGs, but broadly higher
stages go with higher risk scores.
3.62
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©2004 DxCG® , Inc.
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.
, Inc.
1
841
0
physicians who care for patients with few co-morbid diseases and
©2004
0
1,345
2,856
adjusting for patient risk, there is the potential to unfairly reward
Severity-adjustment
within Episode
$296
DCG Risk Score
Healthier..……………… Sicker
Overall Relationship between
Episode Disease Stage and Patient
Illness Burden
Ordinal Stage
Problem: While episodes can be severity-adjusted, without
Medstat’s
Episodes Grouper
4,069
$310
Healthier..……………… Sicker
RiskRisk-Adjusted Episodes in
Provider Profiling
DxCG®
69
©2004 DxCG® , Inc.
Cost of Chronic Diabetes Patient
Risk (DCGs)
1
3
Overall
# of
Episodes
Avg
DCG
Risk
Score
Episode
Cost
??
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©2004 DxCG® , Inc.
Stage
# of
Episodes
DxCG’s HCC Model
Whole-patient
Relative Risk Score
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Risk
- adjusted
Episodes
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Developing the RiskRisk-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
©2004 DxCG® , Inc.
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2
Improvements in Predictive
Power (R2)
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
8.6
MEGs
10.9
MEGs + Stage (BASE)
2.3
DCG Risk Score
63% improvement
BASE + DCG Risk
Score
17.8
0
2
4
6
8
10
12
14
16
18
20
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©2004 DxCG® , Inc.
RiskRisk-Adjusted Episode Profile
for Internal Medicine / General Practice
Performance Ratios by Physician
•
BASE
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©2004 DxCG® , Inc.
BASE + DCG
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
Managing
Phys
Episodes
A
1,199
B
1,131
C
1,065
D
633
E
704
F
919
G
835
H
356
I
616
©2004 DxCG® , Inc.
Perf
Perf Ratio
Mean
Change
Actual Mean Exp Perf Ratio Mean Exp Ratio
$413
$458
0.90
$439
0.94
- 3.90%
$433
$500
0.87
$507
0.86
- 1.10%
- 0.30%
$451
$502
0.90
$504
0.90
$746
$608
1.23
$566
1.32
9.10%
2.70%
$665
$486
1.37
$477
1.40
$495
$528
0.94
$487
1.02
7.80%
1.70%
$514
$478
1.08
$471
1.09
$1,091
$757
1.44
$974
1.12 - 32.10%
$629
$600
1.05
$632
1.00
5.30%
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Physician D – Drill Down
Exp
Exp
Expected
Payments (BASE+DC Actual Average
Actual
G)
RRS
RRS
Episode Description
Episodes Payments (BASE)
Other Nutritional and Metabolic
Disorders
91
$373
$260
$264 1.58
2.13
Essential Hypertension, Chronic
Maintenance
88
$640
$640
$614 2.00
2.45
Other General Signs, Symptoms,
and Conditions
47
$343
$366
$322 1.64
2.55
Other Ear, Nose, and Throat
Infections
27
$158
$148
$141 1.46
1.97
Osteoarthritis
25
$2,443
$1,462
$1,139 1.78
2.82
Other Spinal and Back Disorders
21
$398
$505
$430 1.47
2.52
Other Respiratory Symptoms
19
$608
$776
$717 1.79
2.90
This physician’s patients have consistently lower illness burden than
expected.
©2004 DxCG® , Inc.
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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
Physician D is even
more of an outlier
0.75
A
B
C
D
E
F
G
H
I
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©2004 DxCG® , Inc.
Physician H Drill Down
Episode Description
Exp
Allowed
Exp
Allowed Payments
Actual
per
Allowed Payments
Episode
per
Payments
Exp
Episode (MEG & Actual Average
per
DCG)
(MEG)
RRS
RRS
Episodes Episode
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.
©2004 DxCG® , Inc.
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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.
©2004 DxCG® , Inc.
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