David S. P. Hopkins, Ph.D.

Director of Health Information Improvement
Pacific Business Group on Health

What is the Pacific Business Group on Health?

The Pacific Business Group on Health (PBGH) is the preeminent large business coalition in California, and one of the most active employer coalitions in the country. It was founded in 1989 to improve the quality of health care and moderate costs. Its membership consists of 32 large private and public purchasers based in California, representing approximately 2.5 million employees, dependents, and retirees and $3 billion in annual health care expenditures. Most member companies employ workers throughout California and many are in multiple states. On average, two-thirds of California employees are enrolled in HMOs.

In 1994, PBGH employers formed a Negotiating Alliance to collectively negotiate with California HMOs for a standardized benefits package, emphasizing both price and quality. As part of the negotiating process, all participating HMOs have agreed to set aside 2% of the total premium paid by PBGH employers to improve customer service and quality according to a set of specific performance measures.

Over the years, PBGH has undertaken or collaborated on a variety of quality studies. Examples include the collection and analysis of patient satisfaction rates, HEDIS preventive care rates, and risk-adjusted post-surgical mortality rates for coronary artery bypass graft surgery. The cost of acquiring accurate data for clinical outcomes studies has been very high, since the data rarely can be found in electronic form. Thus, every quality project inevitably becomes a data project. To cite an example of the high cost of acquiring data in the current largely nonautomated environment, last year California health plans spent over $1 million to collect data on 6 HEDIS preventive care rates. Recognizing the severity of the problem and that it exists at all levels of the healthcare system, PBGH is using market forces to advance needed improvements in healthcare information systems.

PBGH's "Data" Initiative

Initially, PBGH focused on creating a "data vision" and identifying problems for which employers themselves are responsible. The vision, developed to guide the purchasers' evaluation of providers and plans and to influence their contract decisions, is comprised of the following three components:

• Computer-based patient records to record key "encounter" data at the point of care
• Open-architecture systems using standardized electronic data interchange to exchange data between trading partners
• Built-in real-time feedback mechanisms to allow for continuous process improvement by providers.

Not only are these systems elements necessary to enable more informed value-based purchasing decisions, but they are critically important for streamlining administration and improving care.

Last winter, PBGH took the initiative to convene a core group of California managed care industry stakeholders – purchasers, plans, and providers – to urge a collaborative approach to building the necessary data infrastructure, obtain commitments from interested organizations, and develop an action plan. Over the past six months, a consensus document has been produced, and written commitments have been obtained from 12 large purchasers, 12 major health plans, and 16 provider associations and large provider groups in California. A long-run vision similar to the one that PBGH developed has been adopted. In addition, several impediments have been identified for which immediate action is needed; these include adoption of unique patient and provider identifiers and uniform data standards for EDI. Work groups are now being established to tackle each of these issues. They will look to nationally recognized bodies for the standards to be used and only where national standards do not exist will they develop standards of their own.

Key organizations that have joined PBGH in these efforts include the California Association of Health Plans, the American Medical Group Association, the California Medical Association, and the National IPA Coalition. We have adopted an aggressive time frame for implementation of standards and EDI. We intend to make improvements that will have a lasting impact on health care services delivery in California. Yet we are dependent on the federal government to make key decisions about the unique patient, provider, and provider group identifiers before we can implement our systems changes.

Recommendations

PBGH offers the following recommendations to the National Committee on Vital and Health Statistics in its review of the Administrative Simplification provisions of HIPAA:

1. Adopt the Social Security Number (SSN) as the core element of the unique individual health identifier.

• The SSN already exists and has been issued to most individuals in the United States.
• It is already collected by employers and incorporated accurately in their payroll systems. Since employers (including federal and state governments) are the source of health plan enrollment information for their employees, the transmission of the SSN as identifier can be done without introducing new errors.
• It is widely used today as an identifier at all levels of the health care system. Thus, replacement with another identifier would require undoing many of the identification systems that are already in place.
• Concerns over patient confidentiality can be met through encryption and adoption of other security measures. It is much easier to gain unauthorized access to an individual's confidential medical information in today's paper-based environment than it would be in a properly controlled electronic environment.

2.Do not establish confidentiality provisions that will inhibit the construction of integrated data bases from individual patient encounter records for legitimate research and evaluation purposes.

• Purchasers and consumers alike need aggregated "quality" data with which to judge the performance of health plans and providers in managing the health of their assigned populations.
• Plans and providers need integrated data bases for clinical practice improvement.
• Such data bases will also serve as a valuable national resource in advancing the science of medicine through outcomes research.
• Although the unique individual health identifier will need to be used for data linkage, none of these uses requires information generated from the data bases to be identified with the individual; hence, the data bases should be designed and administered to protect patient confidentiality.

3.Ensure that provider group identifiers fit the realities of today's marketplace.

• Individual providers may belong to a group practice. In addition, they may have business relationships, either individually or as a group, with multiple IPAs and integrated medical groups.
• Provider group identifiers should be assigned so they can be used to indicate each provider's contractual relationship to the patient for each encounter. In other words, the identifier should connect the provider to a particular medical group or IPA that contracts with the health plan to which the patient belongs.

4. Time is of the essence.

• The California stakeholders are poised to implement needed systems infrastructure throughout the state. Yet they cannot act until the Secretary of HHS has determined the standards that will be used.
• Thus, we urge you to complete your work in a timely manner and to recommend rapid decisionmaking within HHS once those recommendations have been made. Great efforts should be made to meet the deadlines mandated by law.

5. Once the standards are developed publicize them widely.

To the widest extent possible, standards and the intention to standardize should be publicized so as to discourage further development or adoption of proprietary data sets and formats.

Thank you for the opportunity to present this information to you today. We appreciate the work you are performing. Please let us know how we can help.