Development of Quality Peer Groups and Refinement of Financial Peer Groups
The purpose of this project is to identify peer groups of CAHs for analyzing quality performance and to review CAH financial peer groups to ensure that they are still appropriate.
The Flex Monitoring Team has used peer groups for financial reporting for approximately ten years, allowing CAHs to compare their performance to similar CAHs. These peer groups are defined by four indicators: whether the CAH provides long term care; whether the CAH operates a provider-based Rural Health Clinic; whether the CAH is owned by a government entity; and the size of net patient revenue. These have been refined over the years by using slightly different definitions or rescaling net patient revenue to recognize CAH revenue growth. Since the financial peer groups were first developed, the number of CAHs has doubled, the eligible bed size increased from 15 to 25, the prevalence of CAHs providing long term care has decreased, as well as many other changes in Medicare policy, reimbursement rates, cost inflation, market share, and ownership. These changes suggest that it is time to revisit the original financial peer groups to assess whether they are still the best method of identifying “similar” hospitals.
MBQIP and the growing use of quality data for payment reform are increasing interest in CAH quality peer group comparisons. The Flex Monitoring Team has compared CAH quality performance at the state and regional levels; while state and regional quality analyses are useful for planning State Flex Program activities, the wide range in the number of CAHs per state suggests that it is important to examine alternative peer groups for quality comparisons.
The Flex Monitoring Team will identify factors to consider in constructing quality peer groups, analyze the relationships between quality performance and potential peer groups, and consult with relevant stakeholders and experts. The financial indicators review will include a multivariate analysis of hospital characteristics that are important to control for when assessing financial performance of CAHs.