essential if health plans are to compete on the basis of value. Information on the quality of care provided in managed care plans is sometimes made available to employers, consumers, and other purchasers in the form of report cards, using a standardized format to make comparisons possible across health plans.

Most employers currently make health care purchasing decisions on the basis of price, not quality (Darby, 1998). When quality enters the decision-making process, some evidence suggests that employers are more likely to consider consumer satisfaction and accreditation status than clinical performance measures (Hibbard et al., 1997a). Some very large employers (e.g., Digital, Xerox) have been addressing quality of care concerns for years, and employers are increasingly banding together increasingly to form large coalitions to gain purchasing clout and to push for uniform quality assessment among health plans. Purchasers may use quality information to identify high-value plans with which to contract, to steer employees into higher-performing plans, or as leverage when establishing rates for premiums (Darby, 1998).

The Pacific Business Group on Health (PBGH), for example, is a nonprofit coalition of large health care purchasers in California and Arizona representing, as of 1996, 2.5 million insured individuals employed by 33 private-and public-sector organizations. PBGH collects and analyzes health plan performance data to produce report cards for consumers; promotes shared treatment decision making between providers and consumers; and collects, analyzes, and reports plan-level consumer satisfaction ratings (Castles et al., 1999; President's Advisory Commission, 1998). PBGH is also developing several disease-specific quality assessment programs, including one for breast cancer. PBGH was the first purchasing coalition to impose a condition on contracting plans whereby it would withhold 2 percent of the premium until the plans achieved specific goals for improving customer satisfaction and quality of care. The Alliance, a health insurance purchasing cooperative in Denver, subsequently adopted a similar approach (Darby, 1998).

An informal group of large employer organizations including PBGH, called the Leapfrog group, is promoting "evidence-based hospital referral," the channeling of patients to certain hospitals for selected conditions and procedures (e.g., coronary angioplasty, bypass surgery) for which clear evidence exists that a higher volume of procedures or teaching status is associated with better outcomes. The PBGH is asking California HMOs with whom it has contracts to use new performance standards for physician groups, hospital precertification, and enrollee education to advance "evidence-based hospital referral" (Bodenheimer, 1999).

Quality Assurance: the Public-Sector Approach

Oversight through accreditation and licensing is one of the oldest systems of quality assurance employed by the federal government (e.g., accrediting hospitals providing care for Medicare beneficiaries) and states (e.g., licensing physicians). Although traditionally focused on regulation and oversight to ensure at least a minimal level of acceptable quality, government bodies are increasingly turning to market-based approaches. State-sponsored initiatives in Minnesota, Maryland, and Pennsylvania, for example, publish reports that allow consumers to compare health plans on various aspects of quality (Darby, 1998).

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