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FROM THE FIELDHas The Leapfrog Group Had An Impact On The Health Care Market?
A number of large employers and public purchasers founded the Leapfrog Group in 2000 in an attempt to consolidate the purchaser voice and engage consumers and clinicians in improving health care quality. Drawing on evidence-based medicine, Leapfrog publicly releases information about the extent to which hospitals are adopting three safety "leaps" with the theoretical capacity to prevent thousands of deaths. Although the group has grown rapidly and achieved national recognition, employer-based initiatives historically have struggled to create changes in health care. This paper examines the impact of the Leapfrog Group and its efforts to address the challenges of employer initiatives.
Large employers can play a unique role in the U.S. health care system, using private-sector purchasing approaches to procure health benefits for their employees. Most employers believe that the appropriate use of market forces, such as public disclosure of physician and hospital performance measures, incentives to create price- and quality-sensitive consumers, and rewards for better care, is the optimal way to control costs and improve quality.1 In their view, managed care in the 1990s failed because it engaged neither consumers nor clinicians constructively. Providers were alienated because of uniformly lowered fees, and very low copayments created consumers who were insensitive to price. Performance information was developed at the health plan level, even though consumers prefer information about providers, and it is at the provider level that quality improvement occurs. In 2000 a small group of large employers formed the Leapfrog Group to address these shortcomings in the market. They developed purchasing principles to deliver a new message to health plans and providers about the imperative of swift action to "leapfrog" over the current state of poor value. They called for a market based on the free flow of information about providers, consisting of consumers engaged in choices about quality and a payment system that rewarded physicians and hospitals for superior quality and efficiency based on evidence-based measures.2 Employer initiatives historically have struggled to make a meaningful impact on the health care system, no matter how auspiciously they begin.3 This paper reviews Leapfrog’s experience, assesses its impact on the health care market, and discusses the challenges employers face in trying to increase the quality and efficiency of health care services.
One of the Leapfrog Group’s core principles is the consolidation of the purchaser voice; it developed this approach in partnership with public purchasers, such as the Centers for Medicare and Medicaid Services (CMS) and the U.S. Office of Personnel Management (OPM). The Leapfrog Group includes more than 160 private- and public-sector purchasers, who together buy benefits for more than thirty-four million Americans. In addition to large employers, business coalitions representing small and medium-size firms, Taft-Hartley trusts, and government purchasers are Leapfrog members. Hospital quality and safety survey. Leapfrog’s major activity is its ongoing, voluntary, Web-based hospital quality and safety survey. The group relied on reviews of the evidence and expert panels of evaluation methodologists and clinicians to select evidence-based leaps that hospitals could make in quality and safety, such as computerized physician order entry (CPOE), intensive care unit (ICU) physician staffing, and evidence-based hospital referral.4 This survey targets general acute care facilities and asks them to share information about their progress toward each of the leaps. The survey initially focused on urban areas where consumers typically have a choice of where to seek care. Leapfrog also relied on scientific experts in health care decision making, who advised that consumers respond more strongly to messages about potential personal harm than they do to data about adherence to quality guidelines.5 Health services researchers estimate that implementation of Leapfrog’s three initial leaps by all nonrural hospitals would prevent roughly 60,000 deaths annually, primarily in ICUs.6 Leapfrog does not audit the self-reported survey data but instead requires each participating hospital’s chief executive officer (CEO) to affirm the accuracy of the responses. Leapfrog also advises its members, in conjunction with their contracted health plans, to play an informal "watchdog" role with hospitals reporting in their markets. However, developing pay-for-performance (P4P) programs based on implementation of the leaps may necessitate an auditing strategy in the future. Recognizing that health care is delivered locally, Leapfrog adopted a "regional roll-out" strategy, in which health care purchasers in a region work together to encourage hospital survey responses and improvement. Leapfrog’s twenty-three regions encompass close to half of the U.S. population. The voluntary survey has attained an average of 60 percent participation across its regions, with 100 percent participation in some and far less in others. The survey responses have become the basis for public reporting and education of employees. With the expertise of the Foundation for Accountability (FACCT), Leapfrog conducted focus groups with employees and retirees of a geographically diverse group of member companies to create effective messages and data displays for employee communications materials. These materials explain how health care quality and safety varies and what the leaps are and why they matter, and they stress the importance of making informed health care choices. A recent internal survey of Leapfrog members suggests that approximately 80 percent communicate to enrollees about variations in quality and 64 percent, about Leapfrog’s leaps.7 Incentive and reward programs. The hospital data form the basis for incentive and reward programs designed either to affect consumers’ selection of hospitals or to pay providers according to their performance. Leapfrog members commit to using some combination of these two approaches or public recognition to reward providers. To support members in fulfilling this commitment, Leapfrog created model language for employers to include in their requests for proposals to health plans. Initially this language spurred plans to encourage hospitals to participate in the Leapfrog survey and, more recently, urges plans to create new products that build in transparency and pay for performance. Leapfrog also created an incentive and reward toolkit and actuarial model to assist members in developing and implementing incentive and reward programs that are economically defensible for employers, employees, insurers, and providers. Empire Blue Cross and Blue Shield developed the first such program for the self-insured health benefit plans of IBM, PepsiCo, Verizon Communications, and Xerox. It provides quarterly bonus payments to hospitals that have fully implemented CPOE and ICU physician staffing. A second program was developed by the Boeing Company in partnership with two of its largest unions. In the Seattle market, employees who choose hospitals that meet Leapfrog’s standards have a sizable coinsurance payment waived. A grant from the U.S. Agency for Healthcare Research and Quality (AHRQ) is supporting evaluation of the Boeing program and a handful of others.
Direct effects. The Leapfrog Group has had both direct and indirect effects on the health care market. Participation in the survey in and outside of the regional rollouts continues to increase. Although there are no definitive data, some quality experts believe that the act of publicly releasing information itself improves quality.8 The dissemination of performance information by more than ninety Leapfrog members to their enrollees may reinforce hospitals’ efforts to improve quality. There is evidence that increasing numbers of hospitals are implementing the leaps. For example, in 2001 the survey found that about 12 percent of responding hospitals with ICUs had enlisted intensivists to manage patient care; by 2003, 24 percent had done so. Physicians’ use of CPOE systems for most medication orders has risen less rapidly, from 2 percent in 2001 to 5 percent in 2003. Another 17 percent reported that they will have it in place by 2005. Although the survey is voluntary and not designed to be representative, recent analyses suggest that participating hospitals are similar to nonparticipating hospitals in terms of bed size, teaching status, and mission.9 Indirect market effects. Leapfrog has also had indirect effects on the market, which may be meaningful even though they are difficult to measure. Private-sector purchasing initiatives can be a source of ideas for the public sector and provide support for controversial decisions. Purchasers’ commitment to the public release of performance information at the provider level buttressed Medicare’s efforts in this regard. The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 makes a full market-basket update to hospitals contingent on submitting performance measures for public release, marking the first time that the CMS has linked performance transparency to reimbursement. The importance of the public release of performance measures, highly debated in 2000, is now nearly universally accepted. The dialogue has shifted from whether measures should be released to what those measures should be.10 Information infrastructure. Leapfrog’s standard for CPOE has been one of several catalysts for the recent national policy focus on improving the health information infrastructure.11 Leapfrog was clear from the beginning that CPOE was an initial leap in the larger revolution in health information technology (HIT) necessary to achieve improved quality and efficiency. Despite the minority of hospitals committing to implement CPOE, industry experts are reporting a sizable increase in the amount of capital that hospitals are spending on HIT in general.12 Several Leapfrog members developed P4P initiatives such as Bridges to Excellence, which reward physicians for the use of computerized records in their offices.13 MMA includes as one of its demonstration projects an office-based reward program modeled on Bridges to Excellence. Employee sensitivity to costs. A growing health benefit trend is the attempt to make employees more sensitive to costs.14 Cost shifting, the growth in consumer-driven plan designs, and the development of tiered provider networks are all examples of building consumers’ sensitivity to price. Quality measurements were not a part of any of the initial products, so Leapfrog Group members have pressured health insurers to include quality in the factors that influence employee cost sharing. Blue Shield of California, Aetna, CIGNA, United Health Group (UHG), and others have developed or are developing products that differentiate providers on both affordability and quality. As an example, UHG has developed a "Premium Network" for heart disease containing only hospitals that meet specific quality standards, including the Leapfrog "leaps." Rewarding performance. One of Leapfrog’s core purchasing principles, that the payment system reward performance, has gained considerable momentum. Leapfrog supports six purchaser- and health plan–led incentive and reward pilot projects through a grant from AHRQ. Recently, the Leapfrog Group created and posted on its Web site a compendium of incentive and reward programs that identifies more than eighty such programs around the country, twenty-one of which support Leapfrog’s leaps.15 Demonstrating the growing coordination between private and public sectors, the Medicare Payment Advisory Commission (MedPAC) highlighted Leapfrog and members’ efforts in a 2003 report recommending that Medicare adopt performance-based payment.16 To ease the burden of measurement and reporting that results from participating in a number of different P4P programs, Leapfrog has collaborated with other purchasing organizations to standardize the measures on which public reporting and rewards are based. Although performance-based payment still faces considerable challenges, Leapfrog has been a leader in driving such reform in the reimbursement system.17
Too few hospitals participating. Balancing these favorable effects is the small number of hospitals that have implemented the leaps and the lack of documentation of resulting clinical and financial improvements. A paper from the Center for Studying Health System Change indicated that in many communities, although hospitals were aware of the Leapfrog Group, little change in their operating decisions had resulted.18 In addition, surveys have indicated that despite a small increase in the number of consumers using performance data to guide their health care selections, the majority have not changed the way they make health care decisions.19 Reasons for slow diffusion. Why, despite its large membership, clear goals, and national recognition, has the Leapfrog Group not had a larger impact? There are several possible explanations. Expectations of rapid change. In the attempt to make bold progress, Leapfrog developed standards that could dramatically reduce the number of preventable hospital deaths. These leaps are difficult to attain, require capital investment as well as culture change, and have been controversial with hospitals and physicians. The Leapfrog Group has tried to balance its insistence on "leaps" with refinements based on recommendations by providers and has modified its measures in coordination with specialty societies and measurement experts. However, changes in complex systems do not occur rapidly. Adopting CPOE, for example, demands major change in physicians’ behavior. It is known from the literature on diffusion of innovations that changes of this complexity are better measured in decades than in years.20 Absence of business case. Although performance transparency creates some motivation for change, providers have insisted on a robust business case for quality both to fund implementation of the leaps and to reward them for improvements. The Empire Blue Cross Blue Shield project is an example of the difficulty in developing a business case for quality. Although the initiative took considerable resources to develop, the rewards paid out to the participating hospitals that met the Leapfrog standards were on the order of a couple hundred thousand dollars a year. This prompted one of the hospital CEOs to say that while his institution appreciated the reward, the amount of money fell far short of what was needed to influence decisions about capital investment. Actuarial analyses suggest the need to expand beyond the initial leaps so that performance is based on measures that apply to greater numbers of hospital admissions and pertain to the areas of care on which employers spend the most. Reluctance of purchasers. Ultimately, Leapfrog’s success may be as limited by the reluctance of its purchaser-members as by that of providers. The amount of rewards paid, or patient volume redirected, is a function of the number of participating purchasers and the vigor of their participation. It has been surprisingly difficult to get purchasers’ attention. Even the most progressive purchasers are reluctant to change their purchasing behavior sufficiently to send clear market signals about quality to providers. Employers’ hesitation to restrict employees’ choice of providers makes it hard to convince providers that high quality will increase their market share. Why is it so difficult to engage employers? First, employers are tremendously diverse. Among large employers, the purchasing is generally done by benefits professionals, a majority of whom were trained in retirement benefits and feel that they lack the expertise to deal with the complexities of health care.21 Organizationally, they work in the human resource department, whose goals within the organization generally do not include having the operating skills necessary to effect change in the health care system. The majority of these large employers outsource their health care management to consultants, who have little financial interest in cooperating with competitors. With respect to rewarding performance, the challenge is compounded by difficulty in demonstrating the business case for paying more to any provider in an era when health care costs are increasing rapidly, even when these increases are attributable in part to poor quality. This is especially true when employers face pressure to make quarterly numbers, which makes long-term investment in quality improvement especially challenging. In the absence of widely available off-the-shelf products from health plans, major change is unlikely. Leapfrog’s response. The Leapfrog Group is addressing the lack of purchaser engagement in two ways: (1) by returning to employers’ focus on health plans as the agent to effect change, and (2) by expanding their focus to broader measures of quality and efficiency. This represents an important shift from Leapfrog’s original strategy, in which plans’ role was secondary and the focus was solely on hospital safety. A small number of large employers can have a great impact on health plan activity, and because of the consolidation in the health insurance market, these plans have the capacity to deliver sizable rewards for quality.22 Leapfrog will be encouraging employers to look to health plans to be their supply chain managers, helping drive increased value from the providers in their networks. UHG has licensed the Bridges to Excellence program for use in multiple markets. A physician-reward program, spawned in part by Leapfrog California members, will pay more than $100 million from six health plans this year. Leapfrog is preparing to launch a national hospital reward program focusing on five conditions that present a major opportunity for increased quality and efficiency in the commercial population: coronary artery bypass graft, percutaneous coronary intervention, acute myocardial infarction, community-acquired pneumonia, and deliveries/neonatal care. Delivered through participating health plans, this initiative is essentially a commercial version of the CMS-Premier P4P project, with the important exception that measures of efficiency are included in the criteria for rewards. More efficient care is less costly care, which helps develop for purchasers the business case for quality. Leapfrog members will be encouraged to ask their health plans to use the reward program or an alternative program with similar features as a means to fulfill their commitment to Leapfrog’s purchasing principles. The impact of the Leapfrog Group is difficult to assess. Many of the actions that the group set out to catalyze, including the public release of performance measurement, use of information systems in clinical care, and reimbursement reforms to reward quality, have increased in prevalence. However, the number of hospitals that have adopted the three "leaps" remains small. The length of time it takes for major changes to occur and the inability of the group to generate a substantial business case for quality have limited its impact. Now the group’s biggest challenge is the choice of motivating employers to increase their commitment to value-based purchasing or adopting a strategy that addresses this shortcoming. Leapfrog’s new focus on health plans as the leveraging agent, as well as on the expansion of measures to include efficiency, is a promising strategy, but it is far too early to judge success. Leapfrog is a direct actor, but its most important impact has been as a powerful market catalyst. A unified large-employer sector would accelerate improvements in quality and efficiency, but whether the employer community can change its historical inability to act uniformly, or develop an alternate strategy to consolidate purchaser activity, remains to be seen.
Bob Galvin (robert.galvin{at}corporate.ge.com) is director, corporate health care, at the General Electric Company in Fairfield, Connecticut, and an associate professor (adjunct) of medicine, Yale University School of Medicine, in New Haven, Connecticut. Suzanne Delbanco is chief executive officer of the Leapfrog Group, located in Washington, D.C. Arnie Milstein is medical director of the Pacific Business Group on Health, National Healthcare Thought Leader at Mercer Human Resource Consulting, and an associate clinical professor at the University of California, San Francisco. Greg Belden is a senior program associate with the Leapfrog Group. Bob Galvin works for the General Electric Company; a division of one of its eleven businesses sells health care information technology products.
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Leapfrog Group Activities
Progress To Date
