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Introduction This introduction provides background on the Institute of Medicine (IOM) study that produced this report on the Quality Improvement Organization (QIO) program, the congressional mandate for the study, and the overall study context. It includes a brief review of a predecessor report and its implications for the QIO program, as well as a summary of the methodology used for the present study and an overview of this re- port's organization. Section 109 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173) requested an evaluation of the QIO program by the IOM and added new responsibilities for the QIOs related to the Part D prescription drug benefit included in that legislation. This study was undertaken in response to that request. It was sponsored by the Department of Health and Human Services and funded through the Quality Improvement Group of the Centers for Medicare and Medicaid Services (CMS), which manages the QIO program. The IOM integrated this study into its Redesigning Health Insurance project, which was initi- ated in 2004 to perform in-depth analyses of the structural and finance mechanisms that can be used to promote health care quality and perfor- mance improvement. The Committee on Redesigning Health Insurance Per- formance Measures, Payment, and Performance Improvement Programs (referred to as the Committee on Redesigning Health Insurance) is the most recent IOM committee to study health care quality and to build on the findings and conclusions of two earlier IOM reports--To Err Is Human: Building a Safer Health System (IOM, 2000) and Crossing the Quality Chasm: A New Health System for the 21st Century (IOM, 2001). Those 19

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20 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM and the subsequent series of 10 reports, known as the Quality Chasm se- ries, concluded that the fragmentation of the health care system inhibited the delivery of high-quality care and that care was not being delivered in a patient-centered, effective manner. This new series of reports being produced under the Redesigning Health Insurance project--the Pathways to Quality Health Care series--builds on the vision of those previous re- ports by laying out the steps needed to drive fundamental change in the environmental factors affecting health care delivery to enhance quality and performance. The first report of the Committee on Redesigning Health Insurance, Performance Measurement: Accelerating Improvement, was published in 2005 in response to P.L. 108-173, section 238 (IOM, 2006). That report offers a set of performance measures that can be used to track improve- ments in health care quality. It also recommends the creation of a national system for measurement of and reporting on the quality of health care that would establish national health care goals, develop standardized measures, and formulate data collection and public reporting procedures designed to foster health care quality. This is the second report produced by the Committee on Redesigning Health Insurance. Focusing on performance improvement, it considers the history, role, and effectiveness of the QIO program and its potential to promote quality improvement within a changing environment that includes standardized performance measures and new data collection and reporting requirements. A third report, like the Performance Measurement report based on sec- tion 238 of P.L. 108-173, is planned as part of the Redesigning Health Insurance project. That report will focus on payment strategies that can be used to incentivize performance and quality improvement and will be pub- lished in 2006. BACKGROUND Health care spending in the United States is higher than that in any other industrialized country (Reinhardt et al., 2004). Yet the quality of health care in America is not what it should be, a gap well documented by the IOM and health policy researchers (IOM, 2000, 2001, 2006). For example: Adults, on average, receive just more than half of the clinical services known to be beneficial for their conditions and tend to receive many unnec- essary services (McGlynn et al., 2003). Wide disparities exist in the use of health care services and patterns of health care based on geographic location, the supply of health care ser-

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INTRODUCTION 21 vices, and race and ethnicity (Fisher et al., 2003a,b). Ethnic disparities in the treatment of Medicare beneficiaries are evident, with minorities receiv- ing lower-quality mental health and preventive care services, on average, than whites and Asians (Leatherman and McCarthy, 2005). Adverse drug events for patients in hospitals and ambulatory care settings are a serious problem, and many such events are preventable (Leatherman and McCarthy, 2005). Reporting of serious quality problems in nursing homes varies widely, ranging from 6 percent of nursing homes cited in one state to 54 per- cent in another; serious deficiencies are generally understated (GAO, 2006). Sicker adults in the United States are more likely to report medical, medication, and laboratory errors than their counterparts in Australia, Canada, New Zealand, Germany, and the United Kingdom (Schoen et al., 2005). The United States is among the few industrialized countries that does not ensure access to health care services for its population; in 2004, 45.8 million people in the United States lacked health insurance (U.S. Census Bureau, 2005). Health information and communications technologies which could contribute to improved quality are available, but their adoption by provid- ers has been slow. Among physician practices generally, only 18 percent of physicians use electronic health records; for those in solo or small-group practices, the figure is just 13 percent (Miller and Sim, 2004). These examples illustrate the magnitude of the need to improve the quality of care offered by all types of providers and practitioners. Medicare can and should play an important role in meeting this need. The Medicare program provides coverage for health care services for an estimated 41.7 million people who are disabled, have end-stage renal disease, or are aged 65 and older; the program spent more than $295 billion on benefits in 2004 (CMS, 2004; KFF, 2005). Chronic conditions are com- mon among the noninstitutionalized Medicare population: 87 percent have at least one such condition, 36 percent have three or more, and 32 percent have limitations in activities of daily living (KFF, 2005). Care for patients with chronic conditions often should, but often does not, include coordina- tion among practitioners in different care settings and smooth transitions as patients move from one setting to another. Medicare, through CMS, currently manages 53 QIO contracts (one for each state, Puerto Rico, the District of Columbia, and the Virgin Islands; for simplicity, this report refers to "53 states"). The QIO program is aimed at improving the quality of Medicare through national oversight and moni- toring of Medicare services and billing, as well as through state-based ef- forts in which the QIOs work directly with health care providers (SSA,

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22 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM 1935a). The national and state levels of the program are charged with a variety of functions: Improving the quality of care provided to Medicare beneficiaries by ensuring that providers meet professionally recognized, evidence-based stan- dards and guidelines. Protecting beneficiaries' rights, responding to their complaints, and investigating evidence of poor-quality care. Protecting the Medicare Trust Funds by reviewing claims patterns and suspicious cases for the inappropriate use of services or incorrect bill- ing codes. More recently, improving prescription drug therapy under the Medi- care Part D prescription drug benefit (SSA, 1935b; CMS, 2002). QIOs offer technical assistance to health care providers--including home health care agencies, hospitals, nursing homes, and physician practices--to improve the quality of care they offer. QIOs also serve as conveners of and collaborators with the relevant organizations in their local communities to promote better-quality care. The Medicare program includes other quality-related functions, such as the Survey and Certification of providers to ensure that they meet CMS's Conditions of Participation. Separate End-Stage Renal Disease Networks, similar to the QIOs, have quality improvement responsibilities for the care of beneficiaries who qualify for Medicare because they have end-stage renal disease. CMS also supports the development, implementation, and report- ing of quality measures and the development of consumer satisfaction sur- veys. This report recognizes these other quality activities within CMS but focuses mainly on the QIO program. Congressional Mandate for This Study The legislative request for an IOM evaluation of the QIO program (see Box I.1) came at a time when the U.S. Congress was examining various strategies for the promotion of quality improvement within CMS. Congress mandated that the IOM provide an overview of the QIO program and as- sess and report on the following: The duties of the QIOs The extent to which other organizations could perform these duties at least as well as the QIOs The extent to which QIOs improve the quality of care under Medicare The effectiveness of QIO case reviews and other actions

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INTRODUCTION 23 Funding amounts and sources for the QIOs Oversight of the QIOs The congressional request to IOM did not include a fiscal integrity review. As noted above, the IOM charged the Committee on Redesigning Health Insurance with conducting the QIO study. The committee members BOX I.1 Mandate to the IOM Under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173) SEC. 109. EXPANDING THE WORK OF MEDICARE QUALITY IMPROVEMENT ORGANIZATIONS TO INCLUDE PARTS C AND D. (d) IOM STUDY OF QIOs-- (1) IN GENERAL--The Secretary shall request the Institute of Medi- cine of the National Academy of Sciences to conduct an evalu- ation of the program under Part B of Title XI of the Social Secu- rity Act. The study shall include a review of the following: (A) An overview of the program under such part. (B) The duties of organizations with contracts with the Secre- tary under such part. (C) The extent to which quality improvement organizations im- prove the quality of care for medicare beneficiaries. (D) The extent to which other entities could perform such qual- ity improvement functions as well as, or better than, quality improvement organizations. (E) The effectiveness of reviews and other actions conducted by such organizations in carrying out those duties. (F) The source and amount of funding for such organizations. (G) The conduct of oversight of such organizations. (2) REPORT TO CONGRESS--Not later than June 1, 2006, the Secretary shall submit to Congress a report on the results of the study described in paragraph (1), including any recommenda- tions for legislation. (3) INCREASED COMPETITION--If the Secretary finds based on the study conducted under paragraph (1) that other entities could improve quality in the Medicare program as well as, or better than, the current quality improvement organizations, then the Secretary shall provide for such increased competition through the addition of new types of entities which may perform quality improvement functions.

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24 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM have a broad range of expertise in and experience with many aspects of the health care system and the Medicare program (see the biographical sketches of the committee members in Appendix E). A subcommittee comprising individuals with particular expertise in quality improvement issues con- ducted the data collection and analysis for this study. In addition to the mandated evaluation of the accomplishments and limitations of the QIO program, the committee assessed the future of the program to determine how it can strengthen its role in the new environment of quality improvement, performance measurement, and payment incen- tives. The report therefore considers how the QIO program can best con- tribute to and support growing interest among health plans, purchasers, providers, and consumers in achieving higher levels of performance and health care quality as envisioned by the Quality Chasm reports. The IOM Redesigning Health Insurance Project Recognizing the deficiencies of the health care system discussed above, earlier IOM studies proposed six quality aims for U.S. health care: it should be safe, effective, patient-centered, timely, efficient, and equitable (IOM, 2001). These aims were subsequently incorporated into the CMS Quality Improvement Roadmap (CMS, 2005). Inconsistencies in the quality of health care services occur at all levels in the health care system and among the various types of providers and clini- cians; the problem is not due simply to a few outliers or the bottom quartile of providers. Achievement of the six quality aims will require fundamental reforms within the health care environment that transform relationships at many levels, including those between patients and clinicians, within health care organizations, and within the settings in which practitioners function. The goal of the IOM Redesigning Health Insurance project is to de- velop structural and financial reforms for public and private health insur- ance and other health care systems that will result in a greater emphasis on performance and quality. The committee's reports focus on operational and finance mechanisms that will speed the elimination of current inconsisten- cies in health care quality, accomplish the six quality aims cited above, and promote and reward performance improvement. The changes needed to achieve these goals encompass performance measurement, the QIO pro- gram, and payment incentives. An earlier IOM report on health care quality highlighted the need for government agencies to pave the way in introducing quality improvements in the public and private sectors of the health care system (IOM, 2002). Medicare, as the largest single purchaser of health care and a national leader in health quality assessment, now has an opportunity to align incentives within CMS to improve the quality of care throughout the health care sys-

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INTRODUCTION 25 tem by establishing a comprehensive performance measurement and report- ing system and rewarding selected providers of high-quality care. Not only could Medicare align these programs now, but it could also promote the spread of best-care practices through Conditions of Participation, Survey and Certification requirements, and other regulatory and research authori- ties, as well as through the QIO program. In addition, Medicare would greatly magnify its impact by coordinating its policies with those of other major government programs, such as Medicaid, the State Children's Health Insurance Program, and the program of the Veterans Health Administra- tion, as recommended in earlier IOM studies (IOM, 2002, 2006). Significant opportunities therefore exist for Medicare to create and lead a coordinated approach to quality improvement that encourages private- sector participation. Medicare's policies and practices can influence some private insurers (CMS, 2004). To the extent that private insurers share Medicare's interest in improving quality and adopt Medicare policies, re- porting burdens on providers will be reduced, and the potential impact on quality should be amplified. Private insurers could create comparable and consistent programs requiring providers to report their performance mea- sures and could reward quality providers who met certain standards, based on scientific evidence and the recommendations of this committee. A con- sistent approach to quality among insurers and purchasers of health care could hasten the adoption of improvements by providers. Performance Measurement Report and Its Implications for the QIO Program The future of the QIO program is closely intertwined with performance measurement and reporting and with payment incentives for providers. It is therefore useful to review the key conclusions and recommendations of the committee's first report, on performance measurement, as background for an assessment of the history and the future of the QIO program. Performance Measurement: Accelerating Improvement was produced under a separate congressional mandate (section 238) in P.L. 108-173. That report examined performance measures that could ultimately be used for a Medicare payment system that would reward providers for quality care. The study demonstrated that a multitude of measurement sets currently in use measure the same clinical conditions. However, the specific details of the measures are frequently inconsistent, creating variations that present barriers to effective data collection and reporting and unnecessary burdens on providers. In addition, important areas of care are not yet being mea- sured, nor do accepted measures yet exist for these areas. The Performance Measurement report therefore offers a comprehensive strategy that can be used to overcome these barriers to the use of quality measures in health

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26 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM care. This strategy includes the creation of a National Quality Coordina- tion Board (NQCB) to facilitate the coordination of functions currently carried out by various separate organizations, and to take on certain activi- ties necessary at the national level to enhance performance measurement and reporting (IOM, 2006). For further detail, see Chapter 3 of the present report. The development of a national system for performance measurement and reporting will require strong national- and community-level infrastruc- tures to support the efforts of health care institutions and individual provid- ers to participate in new performance measurement, data collection, and reporting processes. The committee expects that many providers, particu- larly physicians in small and solo practices, will need assistance both with the collection and use of the new measures and with the adoption and imple- mentation of electronic systems to facilitate record keeping and processes for the improvement of health care. Translation of the recommendations offered in the Performance Measurement report into operational procedures represents a unique opportunity for the QIO program as a whole and its core contractors to contribute to the development and implementation of the necessary infrastructure and to help improve the quality of the health care delivery system. If an infrastructure such as that provided by the QIO program were not in place nationally, it would be necessary to create one, because the private market has not met providers' widespread need for as- sistance in improving quality. This perspective served as a foundation for the committee's review of the assets and capabilities of the QIO program and assessment of the program's potential role in contributing to the future of health care quality improvement. The committee concluded that the new requirements for health care performance measurement and reporting may help stimulate the adoption of electronic health records by many providers; likewise, realignment of the financial incentives in the health insurance system to reward higher levels of quality and performance improvement will likely stimulate behavioral and institutional reforms that will improve the quality of health care delivery. Yet these strategies are insufficient to create the fundamental transforma- tion necessary to achieve the six aims of the IOM quality initiative. Many providers will need technical assistance to help achieve the aims. As envisioned in the Performance Measurement report, the NQCB will have seven key functions, most of which could benefit from both the sup- port of the QIO program and the involvement of QIOs: Specify the purposes and aims of the U.S. health care system. Establish short- and long-term national goals for improving the nation's health care system.

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INTRODUCTION 27 Designate or, if necessary, develop standardized performance mea- sures for evaluating the performance of current providers and monitoring the nation's progress toward these goals. Ensure the creation of data collection, validation, and aggregation processes. Establish public reporting methods responsive to the needs of all stakeholders. Identify and fund an agenda for research on new measures that can be used to address existing gaps. Evaluate the impact of performance measurement on pay-for- performance, quality improvement, public reporting, and other policies. CMS will need to redeploy its resources in the QIO program and be- yond to support the implementation of a national system for measurement and reporting and to sustain other performance improvement programs that are rapidly moving forward for Medicare. In the face of these transfor- mational changes, the role and the capacity of the QIO program deserve a critical examination. AUDIENCES FOR THIS REPORT This report is intended for multiple audiences, including members of Congress, the federal executive branch, the QIOs, health care providers and clinicians, Medicare beneficiaries, and stakeholder groups. Some audiences will be interested in extensive detail on the QIO program, while others will want only a brief overview of the program and the committee's findings, conclusions, and recommendations. Part II of this report was prepared for those in the former category; in addition, the appendixes to the report in- clude some of the program details reviewed by the committee, including previously unpublished data collected specifically for this study. Part I is intended for those desiring an overview prior to or in lieu of reading the more detailed treatment in Part II. STUDY APPROACH The Committee on Redesigning Health Insurance and the Subcommit- tee on Quality Improvement Organization Program Evaluation gathered data on the highly complex QIO program from a wide variety of sources and compared the conclusions drawn in those sources. The following data collection methods were used: A focused review of the literature on the impact of quality improve- ment and the QIO program's improvement efforts

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28 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM The collection of data from all 53 QIOs through the SurveyMonkey website Quantitative analyses of QIOs' relative performance on various tasks of the 7th scope of work (SOW),1 based on CMS contract performance evaluation scores Site visits by 18 committee members and IOM staff to 11 different QIOs and one Department of Health and Human Services regional office Telephone interviews with the chief executive officers of 20 randomly selected QIOs An in-person focus group discussion with the chief executive officers of 11 QIOs A 3-day briefing by CMS staff, supplemented by specific data re- quested from CMS A half-day public workshop involving members of the committee and subcommittee, academic researchers, experts on quality improvement who are working in the field, and other stakeholders Access to QIOnet, a CMS internal website for the QIO program that includes performance data by state Face-to-face interviews with representatives of four selected QIOs, four randomly selected QIO Support Center staff, and the respective chief executive officers Formal and informal discussions with staff and members of the American Health Quality Association, the national organization that repre- sents all QIOs Informal discussions with representatives of consumer and benefi- ciary organizations and various providers The collection of data at national conferences and meetings related to QIOs Soliciting of suggestions from businesses and other entities providing QIO-like services Each of these methods is described in detail in Chapter 6. Various constraints, such as the timing of the 7th and 8th SOWs and the budget for this study, made it impossible to build data collection into 1CMS uses the acronym SOW for both "scope of work" and "statement of work." In this report, the committee uses SOW only for "scope of work" and adopts the general usage of SOW accepted within the QIO community, in which the term denotes either tasks required in general or the time period of a contract. When discussing specific details of QIO work, the committee is referring to the contract itself. For example, the 7th SOW covered the period from 2002 to 2005. It required all QIOs to provide technical assistance to nursing homes, and the contract for this SOW stipulated that QIOs must recruit 30 percent of nursing homes to develop a plan of action.

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INTRODUCTION 29 the QIO contracts: the 7th SOW was under way before the start of the IOM contract, and the 8th would not be able to produce data in time for the present study. Timing and budget also precluded travel to all the QIOs. For the same reasons, the committee was unable to meet federal requirements to conduct formal surveys of consumers and providers, although it recog- nized the importance of collecting such data. Furthermore, recent changes in the operations of the QIO program that occurred after the preparation of the present report cannot be reflected here. Another constraint was the need for the IOM to agree to maintain confidentiality to gain access to certain data from CMS and individual QIO sources; hence, most of the data are reported in aggregate form and contain no identifiers that could be linked to a particular QIO or state. Despite the above limitations, the committee's various data collection methods as a whole provided a substantial amount of data and informa- tion. The committee was able to use triangulation to check the consistency of the findings derived from various sources and methods, and more than one committee member or IOM staff member was involved with most of the data collection and analysis. The committee gave greatest weight to the data collected uniformly from all the QIOs through the web-based tool, to the telephone interviews used to collect data from a random sample of QIOs, and to the data for each QIO from the Dashboard section of CMS's internal website. ORGANIZATION OF THIS REPORT As alluded to above, this report consists of two major sections. Part I consists of five policy-oriented chapters that describe the evolution of the QIO program (Chapter 1), the main findings and conclusions emerging from the committee's evaluation of the program (Chapter 2), a summary of Per- formance Measurement: Accelerating Improvement and its relation to the QIO program and other entities (Chapter 3), and recommendations con- cerning QIO program activities and oversight of the QIO program by CMS (Chapters 4 and 5, respectively). Part II of this report, Chapters 6 through 13, provides more detail on the committee's analysis of the QIO program that fulfills the congressional mandate for this study. It begins by further describing the methods used for this study (Chapter 6). Focusing on the 7th and 8th SOWs, from 2002 to the present, Part II then provides an in-depth discussion of the QIO program and its funding, as well as the structure of the state-level organi- zations (Chapter 7); current program activities and their impacts (Chap- ters 8 to 12); and CMS oversight of the program (Chapter 13). Collec- tively, Part II serves as part of the basis for the conclusions and recommendations presented in Part I. The specific tasks of QIOs in the 7th

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30 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM and the 8th SOWs, described in Chapters 8 to 12, encompass technical assistance for quality improvement, beneficiary education and communi- cations, and the protection of beneficiaries and program integrity. In Part II, the committee's evaluation of the program (summarized in Chapter 2) is woven into the detailed descriptions of the program, which reflect a litera- ture review, as well as analyses conducted specifically for this study. The report concludes with several appendixes that present tables with support- ing data (Appendix A), describe private-sector organizations offering ser- vices related to quality improvement (Appendix B), review various ap- proaches to program evaluation (Appendix C), provide a glossary and listing of acronyms used in the report (Appendix D), and present biographi- cal sketches of committee members (Appendix E). REFERENCES CMS (Centers for Medicare and Medicaid Services). 2002. 7th Statement of Work (SOW). [Online]. Available: http://www.cms.hhs.gov/qio [accessed April, 9, 2005]. CMS. 2004. 2004 CMS Statistics. Washington, DC: U.S. Department of Health and Human Services. CMS. July 2005. Quality Improvement Roadmap. [Online]. Available: http://www. medicaldevices.org/public/issues/documents/CMSMedicareroadmap.pdf [accessed De- cember 26, 2005]. Fisher ES, Wennberg DE, Stukel TA, Gottlieb DJ, Lucas FL, Pinder EL. 2003a. The implica- tions of regional variations in Medicare spending. Part 1. The content, quality, and acces- sibility of care. Annals of Internal Medicine 138(4):273287. Fisher ES, Wennberg DE, Stukel TA, Gottlieb DJ, Lucas FL, Pinder EL. 2003b. The implica- tions of regional variations in Medicare spending. Part 2. Health outcomes and satisfac- tion with care. Annals of Internal Medicine 138(4):288298. GAO (U.S. Government Accountability Office). 2006. Despite Increased Oversight, Chal- lenges Remain in Ensuring High-Quality Care and Resident Safety. Washington, DC: U.S. Government Printing Office. IOM (Institute of Medicine). 2000. To Err Is Human: Building a Safer Health System. Kohn LT, Corrigan JM, Donaldson MS, eds. Washington, DC: National Academy Press. IOM. 2001. Crossing the Quality Chasm: A New Health System for the 21st Century. Wash- ington, DC: National Academy Press. IOM. 2002. Leadership by Example: Coordinating Government Roles in Improving Health Care Quality. Corrigan JM, Eden J, Smith BM, eds. Washington, DC: National Academy Press. IOM. 2006. Performance Measurement: Accelerating Improvement. Washington, DC: The National Academies Press. KFF (The Henry J. Kaiser Family Foundation). 2005. Medicare Chart Book 2005. Washing- ton, DC: The Henry J. Kaiser Family Foundation. Leatherman S, McCarthy D. May 2005. Quality of Health Care for Medicare Beneficiaries: A Chartbook. New York: The Commonwealth Fund. McGlynn EA, Asch SM, Adams J, Keesey J, Hicks J, DeCristofaro A, Kerr EA. 2003. The quality of health care delivered to adults in the United States. New England Journal of Medicine 348(26):26352645.

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INTRODUCTION 31 Medicare Prescription Drug, Improvement, and Modernization Act. 2003. Medicare Prescrip- tion Drug, Improvement, and Modernization Act of 2003 (Enrolled as Agreed to or Passed by Both House and Senate). Section 109: Expanding the Work of Medicare Qual- ity Improvement Organizations to Include Parts C and D. Washington, DC: U.S. Con- gress. Miller RH, Sim I. 2004. Physicians' use of electronic medical records: Barriers and solutions. Health Affairs 23(2):116126. Reinhardt UE, Hussey PS, Anderson GF. 2004. U.S. health care spending in an international context. Health Affairs 23(3):1025. Schoen C, Osborn R, Huynh PT, Doty M, Zapert K, Peugh J, Davis K. 2005. Taking the pulse of health care systems: Experiences of patients with health problems in six countries. Health Affairs. Web Exclusive: w5.509. SSA (Social Security Act). 1935a. U.S. Code 42. H.R. 7260, Section 1862g. SSA. 1935b. U.S. Code 42. H.R. 7260, Sections 11511165. U.S. Census Bureau. 2005. Health Insurance Coverage: 2004. [Online]. Available: http:// www.census.gov/hhes/www/hlthins/hlthin04/hlth04asc.html [accessed August 30, 2005].

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