The development of performance measures for Medicare managed care plans, coupled with internal steps to develop similar measures for the traditional program, have been critical to HCFA's effort in transforming from a payer to a value-based purchaser. HCFA's performance measurement system can support policy development, monitor and enforce contract standards, inform beneficiaries about their choices, and guide targeted quality improvement efforts. Still, there remains substantial work to be done in making performance data optimally useful to both purchasers and consumers.
Comparing organizations in terms of performance or quality is a daunting task, and we have substantial limitations in our ability to do so at present. It is more difficult to compare the quality of health plans than it is to measure the quality of one plan (Schneider et al., 1999). Davies (1998) points out the ambiguity of most health outcomes and their often misleading nature "... there are real concerns that the act of measurement itself has taken on a symbolic significance over and above the power of such information to promote beneficial and worthwhile change. We do not yet know how to make such systems deliver on the promises made for them". Jencks (2000) indicates that performance data do not automatically improve clinical performance suggesting that health plans, with their substantial purchasing power, can create a market force for better performance in health plans. The literature has generally done a better job defining quality than it has performance, although, at times, these terms appear to be used interchangeably. The Institute of Medicine defines quality as "... the degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current knowledge" (Lohr, 1990). The lack of definition of performance prevents the development of models that have a solid mathematical basis and can be operationalized.
Lied and Kazandjian (1999) contend that the scientific study of performance requires a model or paradigm. They propose a performance model consisting of a combination of four primary elements: (1) quality of care, (2) cost of care, (3) access to care, and (4) satisfaction. Satisfaction is defined as a function of perceived and expected outcomes of care and perceived an expected input. The higher the ratio of perceived to expected outcomes and the lower the ratio of perceived to expected input, the greater the satisfaction with the health care provider or plan. Performance is viewed as a multiplicative function of value (quality/cost), access, and satisfaction. This model is synergistic in the sense that increases or decreases in two or more of these elements lead to exponential changes in performance. The authors view their model as a starting point for developing rigorous approaches to performance measurement that take into account the patient's expectations as well as more typical components of performance such as quality, access, and cost of care. This model is well defined, has explicit assumptions, and has an underlying mathematical basis; however, it has not yet been empirically tested.
Although HCFA has not formally used a comprehensive, mathematically-based performance model that systematically combines components of performance, it has been active in the development and testing of individual performance measurement sets over the past few years. For example, HEDIS[R], CAHPS[R], and HOS have been developed or adapted for Medicare managed care plans. HCFA has begun to analyze the initial years of these data in order to determine how useful they will be to the program's objectives. An essential part of this systematic approach to performance measurement involves an indepth examination of the relationship among existing performance indicators.
Such an approach is especially important to HCFA in determining how to use its extensive performance measurement database for formulating and implementing purchasing policies. …