September 21, 2005

Is Better Health Care Less Expensive? NCQA Tool Shows Costs Fall, Productivity Rises As Quality of Care Improves

Quality Dividend Calculator lets employers compare health plans, judge value

A new version of NCQA’s free, online Quality Dividend Calculator (QDC) demonstrates that improving health care quality frequently results in lower costs for preventable hospitalizations and other waste in health care. For diabetes and cardiovascular disease, the calculator demonstrates that there is an inverse relationship between quality and waste—and that better care may actually be less expensive in the long run. 

The Quality Dividend Calculator also allows users to model how various health plans in their area can be expected to affect employee productivity at their company.  The calculator makes projections of sick days and productivity based on information about the company supplied by the user and data showing how effectively various plans treat illnesses such as diabetes, asthma, cardiac issues and so on. The tool offers users a clear picture of which plan represents the best value.

For example, for a manufacturing firm with 20,000 employees that contracts with a very good (as opposed to average) health plan would likely save the firm $2.8 million in worker replacement and lost productivity costs over the course of a year.

“It’s counterintuitive to think that ‘better’ and ‘less expensive’ go together, but sometimes that’s true in health care and the implications are significant,” said NCQA President Margaret E. O’Kane. “To health plans it means that you can save money by improving quality. To employers it means that you’ve got to look at more than premiums to decide which plan is the best value. The Quality Dividend Calculator is a tool that shows users the ‘real’ bottom line.”

The latest version of the QDC looks at the costs of alcoholism for the first time; alcoholism is among the most common and most under-treated chronic illnesses in the nation and the human and financial costs are staggering.  By some estimates, alcoholism costs the nation more than $185 billion annually in medical and indirect expenses. NCQA worked with Eric Goplerud, Ph.D., Alcohol Treatment Project Director, George Washington University Medical College, to develop the cost projections related to alcoholism.

“Alcohol has a tremendous impact on employers. In comparison to workers who drink moderately or abstain, employees with alcohol problems miss more days of work, are less productive and have higher health care costs,” said Goplerud.  “The Quality Dividend Calculator can help employers find health plans that are doing the right things to address alcohol problems.”

NCQA expects the QDC to be of special interest to employers, many of whom are again facing double digit premium increases. 

“Employers need to measure the cost of any given health plan two different ways: premiums and productivity,” said Helen Darling, President, National Business Group on Health. “Premiums are simple but until the Quality Dividend Calculator, nobody gave you a number showing you how Plan X was going to affect employee productivity.  But employers need to know that number in order to determine which plan really represents the best value. The ‘productivity cost’ of a bad health plan can be very, very high.”

The direct and indirect cost projections generated by the QDC are based on plans’ Health Plan Employer Data and Information Set (HEDIS) scores. HEDIS is a set of standardized performance measures used by most health plans to see how effectively they treat various clinical issues such as controlling heart attack patients’ blood pressure and cholesterol. Users who have access to two or more plans’ HEDIS scores can make side-by-side comparisons, or use pre-loaded data to compare an “average” health plan to a high-performing health plan. 

Purchasers of NCQA’s Quality Compass (a database of HEDIS information) also receive access to a customized copy of the QDC that allows them to run comparisons between any two plans for which NCQA has data.

The Quality Dividend Calculator considers the following health conditions, each of which has a substantial "indirect cost" when poorly treated:

• Alcohol dependency/substance abuse (new)
• Asthma
• Chicken pox (varicella)
• Depression
• Diabetes
• Heart disease
• Hypertension
• Pregnancy
• Smoking

NCQA worked with The HSM Group, a health care consulting firm with extensive experience in medical cost and quality research, to refine the QDC. Development of the Quality Dividend Calculator was supported in part by generous contributions from GlaxoSmithKline, Merck & Co. Inc., the National Pharmaceutical Council, and Pfizer.

The Quality Dividend Calculator is available at www.ncqacalculator.com.

NCQA is a private, non-profit organization dedicated to improving health care quality. NCQA accredits and certifies a wide range of health care organizations and manages the evolution of HEDIS, the tool the nation’s health plans use to measure and report on their performance. NCQA is committed to providing health care quality information through the Web, media and data licensing agreements in order to help consumers, employers and others make more informed health care choices.