MINNEAPOLIS, March 11, 2010 – Doug Wood, M.D., testified before the Health Care and Human Services Policy and Oversight Committee Wednesday and urged lawmakers to change the state’s provider peer grouping effort by adopting H.F. 3056.

Wood, who was representing the MMA, provided the committee with an overview of the bill that calls for three significant changes in the state’s approach to provider peer grouping, which is an effort to compare quality and cost among hospitals and clinics.

The changes include adding a quality-improvement program that would help physicians and clinics improve their performance; extending by one year the public release of the data; and repealing language that precludes providers who score in the bottom 10 percent on the quality and cost measures from treating patients covered by state subsidized health insurance.

Under the current timeline, hospital and clinics would get their first look at their scores in June; the state would publicly report cost and quality scores in September.

The MMA worked with lawmakers to introduce the bill in February. The committee passed the bill and referred it to the Health Care and Human Services Finance Division.

To read the complete testimony, click here.

What is peer grouping?
Peer grouping is designed to strengthen incentives for consumers to choose high-quality, low-cost health care providers by allowing them to compare the cost and quality of the care provided by hospitals and clinics. Clinics and hospitals will be ranked on performance measures related to total care for six conditions or procedures: diabetes, coronary artery disease, pneumonia, asthma, congestive heart failure, and total knee replacement.

The data will be drawn primarily from insurance claims, which the Minnesota Department of Health is collecting from all Minnesota payers—both public and private. Physicians will also report some quality data.

In rating hospitals and clinics on the total cost of care, the system will use a metric that includes both the actual cost of care and resource use. The resource use analysis will allow for comparison of providers that’s independent of the contract prices paid for various services, which can vary. In the case where a provider recommends that a patient obtain an MRI, for example, the resource use measurement attempts to capture the fact that an MRI was ordered and performed, not whether there are differences in the cost of the test.

In addition to rating hospitals and clinics on the total cost of care they deliver, the peer-grouping system will look at condition-specific costs and resource use. This will require parsing millions of claims that relate to the conditions being studied and aggregating the costs and resource use associated with each condition.