What constitutes a “cost” measure varies depending on who you ask— community health centers and providers, payers and health plans, or patients. Community health centers and providers consider costs as the dollar amounts to provide care for patients. From the payer and health plan perspective, costs are the actual amounts paid to providers for caring for patients, which often differ from the amounts providers charge. For patients, costs typically refer to out-of-pocket spending at the point of care.
Although challenging, it is important to include cost in your measurement strategy. Cost is an essential part of the Triple Aim, and cost is critical in understanding value. By including a cost measure now, even an imperfect one, you will be able to improve your cost data over time.
The Robert Wood Johnson Foundation’s Counting Change-Measuring Health Care Prices, Costs, and Spending and the Agency for Healthcare Research and Quality’s (AHRQ) Selecting Quality and Resource Use Measures: A Decision Guide for Community Health Collaboratives provide you with background, rationale, and short lists of cost measures.
Use total cost of care as your cost measure
Total cost of care accounts for the costs of all services provided to patients, including professional, inpatient and outpatient, pharmacy, lab, radiology, ancillary, behavioral health, and other services. Total cost of care is risk-adjusted and reported as a per member, per month amount. Total cost of care data typically rely on health plan administrative claims.
In this video, Dr. Boutwell explains why to measure the total cost of care as part of the Triple Aim.
Challenges with total cost of care include:
- Getting timely data from health plans. Available health plan data may be several months or even years old.
- Requesting and processing data. You may need to build in considerable time to link health plan and community health center data as patient identifiers are often different.
- Compiling data from multiple health plans. You likely work with multiple health plans or participate in different payment incentive programs. Total cost of care data from a given health plan only represents costs for a subset of patients you see.
- Analyzing cost for specific patient groups. Total cost of care data for all members of a health plan may not apply just to a specific set of patients—for example, only patients in your hypertension quality improvement program.
Despite these challenges, total cost of care is a complete measure that is standardized, relatively stable, and measurable over time. As a result, even if you currently don’t have access to total cost of care data, moving toward a total cost of care measure is critical, especially in the shift from fee-for-service to value-based payment.
See AHRQ’s Measure Summary for more detailed explanations of total cost of care.
Fill gaps in cost data by using proxy measures
When total cost of care data is unavailable—for example, you can’t access payer claims data—you can include a proxy measure in your Triple Aim measurement strategy. Proxy cost indicators typically measure resource utilization, such as 30-day readmissions, ambulatory sensitive inpatient hospital admissions, and non-emergent use of the emergency department. The rationale is that reducing unnecessary resource use will lead to reduced costs.
Even if your cost measure or data are imperfect, any progress toward measuring cost will get you on the path of demonstrating value.