Study: Hospital Spends $5M Per Year on Quality Reporting

June 13, 2023 - Quality reporting is now a core function in healthcare, enabling value-based payment, transparency and accountability, and provider comparisons, to name a few benefits. However, quality data preparation and reporting comes with a hefty price tag, according to a new study published in JAMA.

The retrospective time-driven, activity-based costing study at Johns Hopkins Hospital in Baltimore, Maryland, found, in 2018, quality reporting for 162 metrics cost over $5 million and took nearly 108,500 personnel hours.

The hospital also spent an additional $602,730 in vendor fees to send quality data to external organizations.

Of the quality metrics, claims-based and chart-abstracted metrics used the most resources per metric, at 836 person-hours and $37,553 and 691 person-hours $33,871 per year, respectively. Electronic metrics consumed far fewer resources at $1,901 per metric per year, although there were only four of them. In comparison, the hospital reported quality data on 96 claims-based metrics and 26 chart-abstracted metrics.

Researchers from Johns Hopkins acknowledged that $5 million on quality reporting is a small portion of the hospital’s $2.4 billion in annual expenses. Quality reporting costs may also be proportionately higher there versus smaller hospitals. However, the findings suggest, when extrapolated to the more than 4,100 acute care, non-governmental hospitals in the US, that quality reporting costs billions of dollars annually.

The study also notably excludes time spent on quality improvement activities.

Another finding that bears emphasis, researchers said, is that claims-based metrics expend more resources compared to other types of metrics, like chart-abstracted ones.

“Although chart-abstracted metrics might be expected to be resource intensive given the manual chart review, claims-based metrics surprisingly represented the most time-consuming type of metric, despite being generated from administrative data ‘collected anyway’ for billing,” they explained. “It is possible that this stems from the challenge in accurately representing patient health status in International Classification of Diseases-coded data.”

The presence or order of comorbidity codes or the “present on admission” indicators can alter quality performance on risk-adjusted claims-based metrics, they continued. Therefore, hospitals have invested in the infrastructure, including clinical documentation and quality specialists, to review documentation and improve coding specificity and accuracy.

“As pay-for-performance systems continue to grow in US health care, we must consider quality measurement’s cost-effectiveness,” researchers said. “Although this study does not broach this nuanced issue, fundamental and revealing work on quality metric cost-effectiveness is underway, primarily in outpatient settings.”

Potential opportunities to reduce the burden of quality reporting include developing “electronic metrics that may be immediately representative of patient illness and care provided without requiring multiple reviews of diagnosis code sets or extensive chart reviews.”

A lack of health IT interoperability has impeded the adoption of electronic quality reporting for accountable care organizations (ACOs), according to the National Association of ACOs (NAACOS). The Medicare Shared Savings Program has mandated the inclusion of electronic measures as soon as 2022, but the implementation of electronic reporting has been postponed.

Data sharing continues to be one of the biggest challenges of value-based adoption and success.