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Lower Rates of Avoidable Hospitalizations Seen as Key to Ensuring Quality, Controlling Costs in Health Care Reform

In a new analysis comparing Security Health Plan of Wisconsin, Inc., and a group of similar health plans to traditional fee-for-service Medicare, Security Health Plan was found to have significantly lower rates of avoidable hospital readmissions, as well as preventable admissions and emergency department visits, than traditional Medicare.

The report documents that it is possible to improve quality and lower costs in the Medicare program if the delivery system is structured to support coordinated care.

The analysis of Security Health Plan is part of a larger report, authored by Johns Hopkins University researcher Gerard Anderson, Ph.D., and commissioned by the Alliance of Community Health Plans (ACHP), a Washington-based membership organization of 19 non-profit, community-based and regional health plans and provider organizations from across the country. These plans are similar to Security Health Plan because they all focus on improving the health of the communities they serve through integrated and coordinated care delivery.

“This study confirms that the practices we’ve had in place for years are working - and can be put to work across the country as we continue to discuss health care reform,” said Security Health Plan Chief Administrative Officer Steve Youso.

“We now have data to share with legislators that demonstrate how we can control costs while continuing to provide the highest quality care our citizens deserve and expect,” Youso said. “Our members who face the daily challenges of living with a chronic condition would prefer to receive good preventive care that keeps them healthy and out of the hospital. This report shows that members of Security Health Plan and similar plans are getting the care they need to live long and healthy lives.”

Lower Hospital Readmissions

• The analysis showed that Security Health Plan’s readmission rate was 29 percent lower than traditional Medicare’s national average.
• According to the Director of the Office of Management and Budget for the Obama Administration, Peter R. Orszag, “We could significantly reduce costs and improve quality by moving towards the medical practices adopted in the more efficient parts of the country.” In comments made in an April 2009 blog posting, Orszag went on to say, “A key objective of health care reform must therefore be to align incentives toward better care…”
• Results of this new report from researchers at Johns Hopkins University and the Alliance of Community Health Plans demonstrate that Security Health Plan’s high degree of coordination and integration of care can serve as a blueprint for achieving better delivery, improved outcomes and lower costs in the Medicare program.

Security Health Plan Chief Medical Officer Russ Kuzel, M.D., said, “Everyone wins when we can ensure our members receive high quality care and lower costs at the same time. We have a number of mechanisms in place that help our members get the care they need when and where they need it, including a 24-hour Nurse Line to direct people to the right place for care when they need it and benefit designs that encourage the use of urgent care centers rather than emergency rooms.”

He added, “All of our positive results are contingent on our providers practicing good medicine. We pay for and actively engage our members in Marshfield Clinic’s anticoagulation clinic, which provides lab tests and personal consultation with a nurse to ensure patients are receiving the right dose of a highly variable and sensitive medication.”

Preventable Hospital Admissions and Emergency Department (ED) Visits.

• Preventable hospital admissions and ED visits were about 93 percent lower in Security Health Plan when compared to the national average of traditional Medicare.
• Preventable or so-called “Ambulatory Care Sensitive Conditions” are those which could have been prevented had the patient received good primary care and related services. These include conditions such as pneumonia, coronary artery disease, asthma, and diabetes.

The report documented that it is possible to improve quality and lower costs in the Medicare program if the delivery system is structured differently. Like Security Health Plan, the regional, community-based health plans that are ACHP members are able to keep more of their Medicare patients out of the hospital and avoid unnecessary costs because they invest in delivering the kind of coordinated, patient-centered medical care that traditional fee-for-service Medicare – in its current state – cannot consistently provide.

“ACHP commissioned this report in response to issues raised by Congress, the Administration and the Medicare Payment Advisory Commission (MedPAC),” said Patricia Smith, President and CEO of ACHP. “There is a broadly shared concern that hospitalization rates are too high and that a lack of coordination is the cause. Our goal for this report is provide guideposts for Congress as they write health reform legislation, and to work in partnership to establish sensible market incentives that will lead to coordinated, integrated care as well as continuous patient engagement.”

Study Highlights

• Medicare fee-for-service’s average hospital readmission rate (30 days post-discharge) for the country in 2007 was 18.6 percent. The average readmission rate across ACHP plans was 13.6 percent – 27 percent less than traditional Medicare’s national average. Hospital readmissions cost Medicare $17.4 billion in 2004.
• The Medicare fee-for-service rate of preventable emergency department visits was 15.5 visits per 100 beneficiary months in 2007. The average rate across ACHP plans was 2.2 visits per 100 beneficiary months – 86 percent lower than Medicare’s national average.
• The Medicare fee-for-service rate of inpatient admissions per 100 beneficiary months was 19.0 in 2007. The average rate across ACHP plans was 2.5 per 100 beneficiary months – 87 percent lower than Medicare’s national fee-for-service average.