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Part I
INTRODUCTION
The committee's recommendations for the Quality Improvement Orga-
nization (QIO) program, presented in Chapters 4 and 5, are built on a dual
foundation. First is an extensive study of the QIO program conducted for
this project. It included a review of the history and various aspects of the
program, based on data gathered from the Centers for Medicare and Med-
icaid Services (CMS), data gathered directly from the QIOs, information
from representatives of the QIO community and stakeholders, a literature
review, and original data analyses. The second foundation for the recom-
mendations in this report is the recommendations presented in the com-
mittee's first report in the Pathways to Quality Health Care series, Perfor-
mance Measurement: Accelerating Improvement (IOM, 2006). That report
presents a view of the future of health care delivery that includes a national
system for coordinating the measurement and reporting of a broad set of
quality measures, some of which will be used to implement provider pay-
ment systems designed to reward quality and performance improvement.
Provider payment systems are the focus of the committee's next report,
which will be published in 2006.
As noted in the introduction to the present report, Part I is policy ori-
ented and includes the committee's judgments, while Part II provides the
detailed evidence base on the QIO program, including data collected spe-
cifically for this study, that helped inform those judgments. Part I consists
of five chapters:
33
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34 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM
· Chapter 1 presents a historical overview of the QIO program and its
predecessor organizations. Because this is the third time the Institute of
Medicine has been asked to examine Medicare's quality assurance program,
this chapter also includes some details from the previous two reviews.
· Chapter 2 provides a summary of the key findings discussed in detail
in Part II and the conclusions the committee drew from those findings.
· Chapter 3 gives a summary of Performance Measurement: Acceler-
ating Improvement (IOM, 2006). The first part of the chapter presents that
report's key recommendations concerning measure sets and the system
needed to promote their use. The second part provides a discussion of what
is required to implement a national system for performance measurement
and of how QIOs and other entities might carry out some of those tasks.
· Chapter 4 provides recommendations regarding future directions for
the QIO program. Included is the rationale for those recommendations,
which is based on the findings and conclusions presented in Chapter 2 and
the committee's prior recommendations as summarized in Chapter 3, as
well as additional information.
· Chapter 5 presents the committee's recommendations on the over-
sight of the QIO program by CMS. This is a critical topic given that CMS
will play a significant role in implementing a national system for perfor-
mance measurement and payment incentives and has responsibility for the
QIO program.
The committee encourages those readers who would like a more in-depth
description of the QIO program and its management to turn to Part II for
the data used to support the findings, conclusions, and recommendations
presented in Part I.
REFERENCE
IOM (Institute of Medicine). 2006. Performance Measurement: Accelerating Improvement.
Washington, DC: The National Academies Press.
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1
A Historical Perspective and
the Current QIO Program
CHAPTER SUMMARY
This chapter presents an overview of the health care quality assess-
ment activities of Medicare from the early days of quality assurance
through the evolution to quality improvement and the current
Quality Improvement Organization (QIO) program. It focuses
particularly on the QIO program from 2002 to 2005, the period
evaluated in this report, and the next contract period, which is in-
tended to achieve quality improvements through activities that will
transform systems, processes, and outcomes of care.
The federal government's interest in ensuring the quality of health care
for Medicare beneficiaries in the United States originated with an emphasis
on detecting the overuse and inappropriate use of Medicare benefits (pri-
marily for cost-containment purposes). Over time, this interest expanded to
include the measurement of improvements in the quality of care because
such measurements are more reliable for monitoring the performance of
health care providers. The Centers for Medicare and Medicaid Services
(CMS) is now in the early stages of promoting transformational changes in
the way providers deliver care.1 Over the course of more than 35 years and
these shifts in emphasis, the priorities of the federal quality assurance pro-
gram changed from utilization reviews of individual case records to col-
laboration with providers for the improvement of overall patterns and pro-
cesses of care. Such collaboration allows the federal quality assurance
1CMS views this transformation as taking place through the adoption of certain strategies
(measurement and reporting, implementation of health information technology, process rede-
sign, and changes in organizational culture). CMS believes the QIO program, along with other
efforts, can lead to measurable changes in the health care delivery system to align with the six
aims set forth by the Institute of Medicine (IOM, 2001) and CMS's vision of "the right care for
every patient every time" (Pugh, 2005:2).
35
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36 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM
program to play a more systemic role in improving the quality of health
care and ultimately in yielding better health outcomes for beneficiaries.
The history of the Medicare program for quality improvement offers
several key insights that reflect this evolutionary process and are relevant to
consideration of how the Quality Improvement Organization (QIO) pro-
gram might be used most effectively in the future:
· Many QIOs emerged from the antecedent organizations and retain
staff, boards, and executive leaders with long histories of involvement in
the Medicare quality improvement program (see Chapter 7 for a discussion
of the current structure and staffing of QIOs). This continuity represents a
strength for most organizations, although in some cases it could lead to a
lack of creativity that can accompany low turnover among leaders.
· Although the views of many providers have changed, some hospital
executives still perceive QIOs as "regulatory agencies." This perception re-
flects the previous activities of the organizations (Bradley et al., 2005;
NORC, 2004; data from site visits).
· Frequently changing priorities required the QIO program and its
contractors to demonstrate a flexibility and an ability to adapt to new
priorities, expand activities, shift functions, and acquire new skills in re-
sponse to tasks and priorities specified in CMS's statements of work. The
flexibility and adaptability of the program bode well for its ability to carry
out new functions in the future, but its constant changes have also created
program discontinuities, stress for staff, and challenges to evaluation of
the program (see Chapter 13).
This chapter first provides a brief overview of the history of the QIO
program and then describes the evolution of the program from the early
days of Medicare. The discussion is most detailed for the two most recent
contract periods (the 7th and 8th scopes of work [SOWs]).2
HISTORY OF THE QIO PROGRAM
Certain challenges must be addressed when one is evaluating a complex
public program with a lengthy history that has evolved in response to shift-
2CMS contracts with private organizations for QIO services in each state for 3-year periods.
CMS 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 by 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 refers
to the contract itself. For example, the 7th SOW was 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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A HISTORICAL PERSPECTIVE AND THE CURRENT QIO PROGRAM 37
ing health care priorities. One must choose certain time periods and pro-
gram features on which to focus and develop criteria for assessment of the
program's performance and impact. The evaluation must also be useful to
various audiences: policy makers, those managing the program, those work-
ing in the program both at the federal level and in contractor organizations,
and those providers and practitioners who do and do not participate in the
program.
The QIO program has existed in various forms for more than 35 years.
As noted earlier, beginning a few years after the creation of Medicare in
1965 and continuing through its first 20 years of existence, the Medicare
quality assurance program placed a strong emphasis on utilization control
and focused attention on hospital and physician outliers that provided sub-
standard or unnecessary care. In 1990, in response to a congressional man-
date, the Institute of Medicine (IOM) completed a major review of quality
assurance activities and the Medicare program's contractors for local qual-
ity services, called Peer Review Organizations (IOM, 1990). The IOM re-
port recommended a shift away from utilization review and the traditional
regulatory approach used to control aberrant providers and toward a focus
on health care decision making, health outcomes, and the development of a
professional capacity to improve care (IOM, 1990). The adoption of many
of that report's recommendations contributed to further changes in the QIO
program. One recommendation that was not adopted, however, called for
the creation of a technical advisory panel that would assist with the evalua-
tion of the recommended quality assurance program and with program
management and operations.
The program also evolved in response to changing definitions of "qual-
ity." In a literature review conducted for its 1990 study, the IOM found
over 100 definitions of quality of care. In 1974, the IOM had defined qual-
ity only in the context of specifying the purpose of a quality assurance
system ("to make health care more effective in bettering the health status
and satisfaction of a population, within the resources which society and
individuals have chosen to spend for that care" [IOM, 1974:12]). Defini-
tions of quality were numerous and incongruent. In its 1990 report, the
IOM expanded previous definitions to include both individuals and popu-
lations, adopted outcome measures that linked processes to outcomes, and
recognized the importance of patient and provider satisfaction. The IOM
defined quality of care as "the degree to which health services for individu-
als and populations increase the likelihood of desired health outcomes and
are consistent with current professional knowledge" (IOM, 1990:21). Later,
in its Quality Chasm series, the IOM developed a vision for the future of
health care, which was based on six aims for the delivery of quality care:
health care should be safe, effective, patient-centered, timely, efficient, and
equitable. In addition to these six aims, the Quality Chasm report suggested
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38 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM
ten rules for how care should be delivered, focusing on the point that health
care should be viewed as a relationship between patients and providers
aimed at yielding the best health outcomes, and specified various properties
of the health care system itself that would help foster that relationship
(IOM, 2001).
The Committee on Redesigning Health Insurance considered looking
back to 1990 to assess the QIO program's impact, to consider how the
program evolved in response to the 1990 IOM report, and to examine the
impacts of those changes on the health care system with respect to the vi-
sion of high-quality health care set forth in the Quality Chasm series. Even
if the QIO program had implemented all of the prior IOM report's recom-
mendations, however, it would still be necessary to assess whether the pro-
gram is now well positioned to foster quality improvement in the present
and future health care environments. Fundamental changes in the Medicare
program and the practice of medicine, as well as in the broader health care
system, have occurred since 1990; these changes have contributed to new
expectations and new needs for guidance and assistance in the adaptation
of earlier practices and processes to new standards of care.
For example, when the earlier IOM committee began its study nearly
20 years ago, it did not anticipate that Medicare would now be reporting
national performance measures publicly by provider name for nearly
all hospitals, nursing homes, and home health care agencies. It could not
have known that some private purchasers would be implementing pay-for-
performance systems or that the Medicare Payment Advisory Commission
(MedPAC), created to support Congress with data and advice related to
the operation of the Medicare program, would recommend that Medicare
consider paying for performance as well. Also, the fact that the QIO pro-
gram or an individual organization in a particular state did or did not do
well during the 4th SOW might have little bearing on its performance dur-
ing the 7th SOW because the nature of the work and the methods used to
measure it have changed substantially.
Rather than comparing the present performance of the QIO program
against earlier recommendations and current expectations, the committee
decided to supplement its evaluation with an assessment of how the pro-
gram might contribute to future quality improvement efforts. A key factor
in this assessment was the above-noted adaptable nature of the Medicare
quality assurance and improvement program and the ability of QIOs to
respond to new demands and changes in each CMS contract.
Other, practical reasons influenced the committee's decision to limit its
detailed review to a fairly recent period. The QIO program's management
shifted direction during previous SOWs from requiring evaluations of local,
specific projects to requiring statewide evaluations, which allowed the ag-
gregation of data to show national effects. National measures, however,
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A HISTORICAL PERSPECTIVE AND THE CURRENT QIO PROGRAM 39
were not broadly used until the 7th SOW contract period (2002 to 2005).
Thus, comparable national data aggregated from each state were limited or
nonexistent before the 7th SOW. Also, older data on program operations
would have been more difficult to obtain.
The committee determined that it would be most useful to focus atten-
tion on describing the history of the QIO program as it existed during the
7th SOW, and, as noted above, the descriptive data and analyses of the
program in Part II of this report relate primarily to the 7th and 8th SOWs.
Nonetheless, the next section of this chapter describes selected elements of
Medicare's quality programs from their beginning to the present contract
period. An understanding of the QIO program's evolution can provide
guidance for assessing the program's potential value in strengthening the
quality improvement efforts of CMS and the role CMS could play in imple-
menting the recommendations formulated in the recent IOM report Perfor-
mance Measurement: Accelerating Improvement (IOM, 2006). Such an un-
derstanding can also illuminate reasons for the need to restructure and
strengthen the program.
EVOLUTION OF MEDICARE'S
QUALITY IMPROVEMENT PROGRAM
Early Quality Review Programs
Experimental Medical Care Review Organizations
Soon after the enactment of the Medicare program in 1965, concerns
developed about the quality and cost of health care services provided to
beneficiaries (Bhatia et al., 2000). In addition to creating health benefits,
the initial Medicare law (P.L. 89-97) focused on patient safety and access to
care from competent health care providers. It required hospital-based utili-
zation review, state licensure of physicians, and voluntary hospital accredi-
tation by the Joint Commission on Accreditation of Hospitals (now called
the Joint Commission on Accreditation of Healthcare Organizations) or
state certification (Jost, 1989). In 1971, the U.S. Congress authorized Ex-
perimental Medical Care Review Organizations (EMCROs) to evaluate the
use of services provided to Medicare beneficiaries. EMCROs examined in-
dividual Medicare cases and sought to reduce the unnecessary utilization of
services in inpatient and ambulatory care settings through the education
of physicians and research (IOM, 1990). EMCROs were voluntary groups
of physicians who received grants from the National Center for Health
Services Research (the predecessor agency to the current Agency for
Healthcare Research and Quality) to review the services provided through
the Medicare and Medicaid programs (Sprague, 2002). The EMCRO pro-
gram itself existed from 1970 to 1975.
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40 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM
Professional Standards Review Organizations
In 1972, amendments to Title XI of the Social Security Act (P.L. 92-603)
authorized the establishment of Professional Standards Review Organiza-
tions (PSROs), new locally based organizations, to replace the EMCROs.
PSROs were sponsored by physicians, and only local physicians could evalu-
ate cases. Like the EMCROs, they used implicit review (decision making
based on individual professional judgment) to determine the medical neces-
sity of the services provided (Sprague, 2002). They targeted egregious cases
by comparing the care given by the provider with local standards of care
and practice patterns. Physicians regarded the PSROs primarily as adver-
saries and as enforcers of cost containment that punished individual provid-
ers by recommending sanctions (Bhatia et al., 2000; Sprague, 2002).
Although the focus of the PSROs was still on retrospective utilization
review of hospital admissions and lengths of stay, PSROs also participated
in Medical Care Evaluation Studies (later called Quality Review Studies)
to address concerns regarding quality of care (Jost, 1989). PSROs were
not viewed as motivators for systemwide quality improvement, however
(Sprague, 2002). Moreover, studies conducted in the late 1970s and early
1980s demonstrated that PSROs had little if any impact on the quality of
care or the containment of expenditures (IOM, 1990).
Utilization and Quality Control Peer Review Organizations
In 1982, the Peer Review Improvement Act (P.L. 97-248) replaced
PSROs with Utilization and Quality Control Peer Review Organizations
(PROs). There was a total of 54 PROs, one for each state and territory.3
The PROs continued the focus on medical necessity and standards of care
in the provision of Medicare services. Congress retained elements of local
peer review by requiring the PROs to be physician-sponsored (which re-
quired at least 10 percent of locally practicing physicians to participate as
reviewers) or to be physician-access (which required at least one physician
of each specialty in the area to be available to conduct reviews of medical
records) (CMS, 2004b). New requirements were that physicians could not
review their own close colleagues and that the PROs had to include at least
one consumer representative on their governing board. Unlike PSROs, PROs
could have for-profit status (Jost, 1989). Funding of the overall program
shifted to an apportionment drawn directly from the Medicare Trust Funds
instead of annual appropriations (IOM, 1990; Sprague, 2002).
3PROs were managed for each of the 50 states; the District of Columbia; Puerto Rico; the
U.S. Virgin Islands; and the combined area of Guam, American Samoa, and the Northern
Marianas.
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A HISTORICAL PERSPECTIVE AND THE CURRENT QIO PROGRAM 41
Although PROs continued to target inappropriate or unnecessary ser-
vices and cost containment during the 1980s, implementation of the hospi-
tal prospective payment system in 1983 drew attention to premature dis-
charges (Rogers et al., 1990) and the potential underuse of necessary
services. By the late 1990s, the development of Medicare managed care
(Medicare+Choice, now Medicare Advantage) had added a further popula-
tion of patients whose providers were subject to financial incentives to
underuse services and who thus required the attention of the PROs (IOM,
1990; Sprague, 2002).
Early Quality Improvement Contract Cycles
In 1984, the Medicare program established contract cycles for the PROs
and eventually lengthened those cycles to 3 years--the period often referred
to as the SOW. Once the contracts had been awarded, they could be re-
newed after 3 years for the next SOW or opened to competitive bidding on
the basis of the performance of the PRO. The discussion in this and the next
section highlights key features of each SOW.
Each QIO contract is numbered. The 1st SOW, which began in 1984,
lasted for 2 years (see Table 1.1). Subsequent SOWs lasted for 3 years each
(except for the 3rd SOW, which had a 1-year extension).
1st Scope of Work
The 1st SOW (1984 to 1986) for PROs emphasized reducing inappro-
priate hospital admissions. PROs compared data from individual retrospec-
tive case reviews with implicit, professionally accepted standards and made
recommendations for financial sanctions on individual providers (Bhatia
et al., 2000). In addition, an offending physician or hospital could be re-
quired to create and follow a corrective action plan for improving the qual-
ity of care in the future. Providers perceived this as a form of punitive over-
sight, and it contributed to a hostile relationship between the PROs and
providers (Bhatia et al., 2000). Also, some providers perceived this type of
quality work as "cookbook" medicine and an affront to their profession
(Sprague, 2002).
2nd and 3rd Scopes of Work
The 2nd SOW (1986 to 1989) added more quality-monitoring and re-
view responsibilities. Although most case review activities remained focused
on hospital inpatient care, the Omnibus Budget Reconciliation Act (OBRA)
of 1986 (P.L. 99-509) extended some review activities to cover other set-
tings, including skilled nursing facilities, home health care agencies, hospi-
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42 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM
TABLE 1.1 QIO Contract Cycles
Cycle Name of Quality Name of Responsible
or SOW Dates Improvement Entities Federal Agency
1st SOW 19841986 Peer Review Organizations Health Care Financing
(1983) Administration
2nd SOW 19861989 Peer Review Organizations Health Care Financing
Administration
3rd SOW 19891993 Peer Review Organizations Health Care Financing
Administration
4th SOW 19931996 Peer Review Organizations Health Care Financing
Administration
5th SOW 19961999 Peer Review Organizations Health Care Financing
Administration
6th SOW 19992002 Quality Improvement Health Care Financing
Organizations Administration/Centers for
Medicare and Medicaid Servicesa
7th SOW 20022005 Quality Improvement Centers for Medicare and Medicaid
Organizations Services
8th SOW 20052008 Quality Improvement Centers for Medicare and Medicaid
Organizations Services
aThe Health Care Financing Administration changed its name in 2001 to become the Cen-
ters for Medicare and Medicaid Services.
tal outpatient care settings, and eventually the physician's office setting
(Jost, 1989).
OBRA also mandated an IOM study of the current state of quality in
Medicare (IOM, 1990). Among other things, the IOM report recommended
that the PROs become more proactive in their data collection activities to
examine patterns of care and offer feedback to providers. The study con-
cluded that PROs "constitute a potentially valuable infrastructure for qual-
ity assurance" that should "be improved and built on, not dismantled"
(IOM, 1990:3). The report noted in particular that the PROs had estab-
lished valuable organizational relationships and provided professional staff
expertise. However, the report concluded that certain priorities needed to
be revised: quality review and assurance should be emphasized over utiliza-
tion and cost control; PROs should pay more attention to average practice
patterns than to outliers; and PROs should be more involved in health care
settings beyond inpatient hospital care. Additionally, the IOM report noted
the burdens on providers imposed by the PRO program, its lack of positive
incentives and punitive attitude toward providers, the hostile perceptions of
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A HISTORICAL PERSPECTIVE AND THE CURRENT QIO PROGRAM 43
the program among many physicians, and its redundancy with other qual-
ity assurance programs.
The IOM recognized that the PRO program had a vast and varied list
of responsibilities and a budget amounting to less than 0.5 percent of an-
nual Medicare expenditures on services, roughly the same proportion allot-
ted to the PSRO program 10 years earlier. The IOM report concluded that
this investment was unlikely to be sufficient to accomplish the tasks as-
signed to the PROs. The report recommended a reassessment of certain
functions, such as some case reviews, appeals, and beneficiary outreach, to
determine whether they might be performed nationally or regionally and by
other agents (e.g., intermediaries and carriers).
The 1990 IOM report also noted that neither the PSRO nor the PRO
program had conducted a comprehensive self-examination or been able to
demonstrate its impact on the quality of care for Medicare beneficiaries.
The report called for the creation of a technical advisory panel that would,
among other things, advise the secretary of the U.S. Department of Health
and Human Services on program evaluation. It stressed that the emphasis
of the evaluation should be on documenting the impacts of the state organi-
zations on the quality of care and their successes in working with providers
on internal quality assurance efforts. Also emphasized was the importance
of both the availability of objective evaluation criteria that could be used to
assess each state's performance and the use of various methods, such as site
visits by a panel of peer experts; however, no specific methods were recom-
mended. Although the intent of the IOM recommendations to increase at-
tention to quality assurance in more care settings was met, and objective
criteria for the evaluation of each state's performance were eventually imple-
mented, the impact of the PRO program was not evaluated. In addition,
some of the new organizational structures recommended in the IOM re-
port, including a technical advisory panel, were not created.
The 2nd and 3rd SOWs (1986 to 1993) continued to focus on retro-
spective case reviews and the detection of inappropriate use of services.
During that period, however, PROs also shifted toward collaboration with
providers to improve the overall delivery of care instead of focusing solely
on punishing outliers (IOM, 1990; Bhatia et al., 2000). Prior methods rely-
ing on retrospective case data and peer review appeared to be increasingly
inadequate for achieving the goal of quality improvement (Rubin et al.,
1992). Finally, it became apparent that the standards of care themselves
needed attention. In 1992, the Health Care Financing Administration
(HCFA), the predecessor of CMS, implemented the Health Care Quality
Improvement Initiative to move from targeting individual provider errors
toward focusing on practice patterns and care outcomes at the institutional
and national levels (Bhatia et al., 2000).
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44 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM
4th and 5th Scopes of Work
PROs continued to evolve by undertaking nationwide quality improve-
ment projects on heart failure, diabetes, and other clinical conditions;
improving data collection methods; emphasizing collaboration among gov-
ernments, providers, and consumers; and dropping some case review activi-
ties. PROs did not explicitly promote collaboration with private plans and
vendors. The first project under the Health Care Quality Initiative was the
Cooperative Cardiovascular Project, which was pilot tested in four states.
This project focused on care for acute myocardial infarction in the hospital
setting (Sprague, 2002). Pilot efforts were designed to improve care pro-
cesses through the PROs' development of epidemiological and computer
capabilities and the use of new data analysis methods. The PROs worked
cooperatively with hospital staff on the development and use of practice
guidelines to create quality indicators for patient care (Jencks and Wilensky,
1992). Data abstracted from hospital medical records were used to measure
the impact of the quality improvement pilots. The guidelines and the risk-
adjusted patterns of care that were obtained were compared, and it was
found that the results of the Cooperative Cardiovascular Project had gener-
ally been positive. The project became a national effort at the beginning of
the 5th SOW (Ellerbeck et al., 1995; Marciniak et al., 1998).
The Health Care Quality Improvement Initiative expanded to include
other diseases and incorporated continuous quality improvement and total
quality management concepts. Beginning in 1994, HCFA introduced these
concepts to its staff and those of the QIOs through special training sessions.
The staffs learned how to use the PDSA (Plan, Do, Study, Act) Cycle method
to produce more rapid results during interventions with providers. The ac-
tivities in the 5th SOW were based on accountability through consistent
performance measurement. HCFA promoted the development of measures,
data collection tools, and reporting systems for uniform tracking of the
progress of each state on a few selected clinical conditions (personal com-
munication, J. Kelly, June 29, 2005). HCFA had previously developed two
Clinical Data Abstraction Centers to improve the efficiency of data collec-
tion efforts and the quality of the data collected (Bhatia et al., 2000).
Recognizing that the PRO program had not been thoroughly evaluated,
HCFA planned to conduct such an evaluation internally. To enhance out-
side acceptance of the evaluation and its credibility, in 1994 HCFA com-
missioned the IOM to assess HCFA's evaluation strategy. HCFA asked the
IOM to review and critique within a very brief time period its preliminary
evaluation strategy and then its final, revised evaluation plan. Given the
time constraints on this study, the IOM Committee on the Medicare Peer
Review Organization Evaluation Plan issued two letter reports, in January
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A HISTORICAL PERSPECTIVE AND THE CURRENT QIO PROGRAM 45
and June 1994 (IOM, 1994). The reports welcomed HCFA's plan to mea-
sure the quality of care instead of merely obtaining cost savings from the
reduced use of services. The committee did note, however, that the "lack of
a strong, clear vision of where the agency would like to go with the PRO
program over the coming decade or so is a major drawback to the proposed
evaluation strategy" (IOM, 1994:5). The committee questioned the pro-
grammatic purpose of the evaluation, its criteria for judging the success of
PRO projects, and how and to whom the results would be disseminated.
The committee encouraged attention to failures as well as successes, be-
cause failures could also serve as useful learning experiences. In addition,
the committee raised the question of how HCFA would implement the rec-
ommendations resulting from the agency's own evaluation. The committee
concluded that the effectiveness of the PRO program could not be fully
reflected in a simple aggregation of the impacts of the various cooperative
improvement projects.
The IOM letter reports advocated the use of a phased approach with a
"formative evaluation" as the initial focus. The formative evaluation
would include pilot or demonstration projects to provide an iterative learn-
ing experience whereby HCFA would use information to modify and im-
prove ongoing projects. The use of a "summative evaluation" of long-term
goals was also recommended to evaluate the effectiveness of the completed
program in achieving its objectives. The committee observed that the pro-
gram would benefit from more involvement of informed consumers. It also
recommended that HCFA involve people with experience and skills in for-
mal program evaluation and continuous quality improvement as soon as
possible.
HCFA used these letter reports as the basis for focusing on formative
evaluations, and each PRO conducted evaluations of its individual projects.
Because the quality improvement projects varied from state to state and
neither uniform data nor consistent methods were used, however, the evalu-
ations were of limited use in assessing the national program or in guiding
policy. No summative evaluation was ever conducted.
During the 5th SOW, in addition to case reviews and beneficiary educa-
tion, PROs worked on both nationally defined and locally selected quality
improvement projects in the areas of acute myocardial infarction, diabetes,
and preventive care for breast cancer (see Table 1.2). Standardized mea-
sures were used to demonstrate statewide improvement in each clinical area
(Sprague, 2002). HCFA chose these clinical priority areas because they ac-
counted for a significant amount of morbidity and mortality in the Medi-
care population, there was strong scientific evidence that specific interven-
tions in these areas would likely lead to improved outcomes, and providers
agreed on the recommended care processes (Bhatia et al., 2000).
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46 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM
TABLE 1.2 Evolution of QIO Core Contract
Task Fifth SOW (19961999) Sixth SOW (19992002)
Task 1 National HCQIP National HCQIP
Projects in specific topic areas with standardized
HCFA-directed projects indicators for each setting:
· Statewide impact · AMI
expected · Heart failure
· Proportional · Pneumonia
involvement of M+C · Stroke
beneficiaries · Diabetes
· Projects for: · Breast cancer
AMI
Diabetes
Preventive care
PRO-initiated
cooperative projects
Task 2 · PRO designs projects Three required local QI projects:
based on local needs · Choose one indicator from Task 1 and show
· Statewide impact reduction in a disparity in a disadvantaged group
expected · Develop project in a setting other than acute care
· Proportional hospital or M+C
involvement of M+C · Develop a project for local needs
beneficiaries
Task 3 · Project must include QI projects with M+C plans
measurable indicators · Each plan must annually implement two performance
improvement projects:
Beneficiary protection One on a topic of national interest, as selected by
and information HCFA
activities One selected by the plan on the basis of the needs
· Education and of its enrollees
outreach · Projects started each year continue as new projects
· Hotline are added
Task 4 Mandatory case review Payment Error Prevention Program
Multiple categories Two projects required:
including: · Unnecessary admissions
· Beneficiary complaints · Miscoded DRG assignments
· HINNs
Task 5 · EMTALA review Other mandated activities
· Cataract surgery · All mandatory case reviews
assistants · Beneficiary outreach and education
· Gross violations
Task 6 · Hospital-requested Special studies
higher-weighted
DRG adjustments
NOTE: AMI = acute myocardial infarction; DRG = diagnosis-related group; EMTALA =
Emergency Medical Treatment and Labor Act; HCQIP = Health Care Quality Improvement
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A HISTORICAL PERSPECTIVE AND THE CURRENT QIO PROGRAM 47
Seventh SOW (20022005) Eighth SOW (20052008)
National HCQIP Assisting providers with developing capacity for
Projects in specific topic areas with and achieving excellence
standardized indicators for each setting: Projects in specific topic areas with standardized
· Nursing home indicators for each setting:
· Home health · Nursing home
· Hospital (AMI, heart failure, · Home health
pneumonia, surgical infection) · Hospital (heart failure, pneumonia, AMI,
· Physician office (diabetes, cancer, surgical infection)
immunization) · Rural and critical access hospitals
· Underserved or rural populations · Physician office (immunization, diabetes,
· M+C (also included in all settings) cancer, underserved, Part D, information
technology)
· Medicare Advantage may be included in all
tasks
Information and communication Reserved for possible future use
· Promote use of performance data
· Transition to hospital-generated data
· Other mandated communications
activities
Medicare beneficiary protection activities Protect beneficiaries and the Medicare program
· Beneficiary complaint resolution · Beneficiary complaint resolution program
program (includes mediation) (including mediation)
· Hospital Payment Monitoring Program · Hospital Payment Monitoring Program
· Other beneficiary protection activities · Other beneficiary protection activities
HINN and NODMAR review HINN and NODMAR review
M+C appeals and grievances M+C appeals and grievances
EMTALA review EMTALA review
Other mandatory review as needed Other mandatory review as needed
Developmental activities (special studies) Developmental activities (special studies)
Project; HINN = Hospital-Issued Notice of Non-Coverage; M+C = Medicare+Choice;
NODMAR = Notice of Discharge and Medicare Appeal Rights; QI = quality improvement.
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48 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM
6th Scope of Work
In the 6th SOW (1999 to 2002), PROs were renamed QIOs, and they
continued their individual statewide projects as well as the implementation
of national programs. Standardized measures were increasingly introduced
to determine the frequencies of either the services provided or the outcomes
achieved. QIOs formed national partnerships with the Joint Commission
on Accreditation of Healthcare Organizations, the American Hospital As-
sociation, and other groups to align quality improvement efforts (CMS,
1999; Bhatia et al., 2000; personal communication, J. Kelly, June 29, 2005).
These efforts focused on six national priority areas: acute myocardial in-
farction, breast cancer, stroke, diabetes, heart failure, and pneumonia.
HCFA also promoted a shift from the previous PRO methods of beneficiary
and provider education to interventions focused on systemic changes. In
addition, the 6th SOW required QIOs to perform certain projects at the
local level, including projects in settings other than acute care hospitals.
QIOs initiated some quality improvement projects for nursing homes, home
health agencies, and organizations participating in Medicare+Choice
(Table 1.2).
In addition, a new task, the Payment Error Prevention Program, was
aimed at protecting the Medicare Part A Trust Fund from unnecessary ad-
missions and miscoded diagnosis-related group assignments. On the basis
of retrospective reviews of medical records, QIOs examined inpatient cod-
ing to ascertain both the overpayment and underpayment of claims. The
6th SOW also allowed selected QIOs to conduct special studies (CMS,
1999). During this period, QIOs claimed improvements resulting from two-
thirds of more than 2,000 separate projects. However, HCFA failed to dem-
onstrate any overall quantifiable impact of the projects on the quality of
care (HCFA, 1998).
QIOs Today4
7th Scope of Work
The 7th SOW (2002 to 2005) continued to focus on quality improve-
ment based on the measurement of changes in national performance indi-
cators and the production of incremental changes. At the beginning of the
7th SOW, CMS released the results of performance on a limited set
of national measures for the 50 states, Puerto Rico, and the District of
4This section is a summary of the detailed description of the technical assistance for quality
improvement tasks of the 7th and 8th SOWs in Chapter 8, the beneficiary education and
communications tasks in Chapter 11, and the protection of beneficiaries and program integ-
rity tasks in Chapter 12.
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A HISTORICAL PERSPECTIVE AND THE CURRENT QIO PROGRAM 49
Columbia.5 The aggregate national performance results showed improved
quality between 19981999 and 20002001 on 20 of 22 indicators for
Medicare fee-for-service inpatient and outpatient care, and all states
showed improvement on a majority of the indicators (Jencks et al., 2003).
However, the study identified considerable room for improvement and
noted that cross-sectional data could not show conclusively that the im-
provements had resulted specifically from QIO quality improvement
efforts.
The 7th SOW was a performance-based contract that used evaluation
criteria more detailed and specific than those used in the 6th SOW. In addi-
tion, evaluation of the performance of each QIO was based on its achieve-
ment of specific targets and was unrelated to the performance of the other
QIOs (see Chapter 10 and Table A.3 in Appendix A).
Throughout the 7th SOW, the QIOs continued to provide technical
assistance for quality improvement through collaborations with providers
(see Chapter 8 for definitions and discussion of technical assistance). The
SOW expanded to include required projects in different health care settings:
home health agencies and nursing homes, as well as managed care plans
and physician offices, in addition to hospitals (CMS, 2002). QIOs contin-
ued to improve their data collection and dissemination activities related to
the use of performance data. The QIO program set national goals for each
indicator, and each state's QIO had to comply with every task of the SOW,
using a nationally consistent set of indicators and measures. Each QIO had
discretion in determining how to carry out the required projects, but all had
to meet the formal national targets, regardless of local demographics and
provider differences. The QIOs were no longer required to perform projects
to serve local needs, and they did not receive funds in their core budget for
projects initiated locally. Home health carerelated tasks addressed mea-
sures of health status improvement. Hospital-related tasks focused on acute
myocardial infarction, heart failure, pneumonia, and the prevention of post-
surgical infections. Nursing homerelated tasks addressed chronic care and
postacute care concerns, such as pain management and improvement in
mobility. Physician officerelated tasks encompassed diabetes care, mam-
mography screening, and adult immunizations (CMS, 2002). Many of the
quality improvement tasks from the 6th SOW were sustained. The QIOs
were also expected to pay special attention to rural and underserved popu-
lations as well as Medicare+Choice beneficiaries (CMS, 2002). Participa-
tion in QIO quality improvement projects by providers and practitioners
continued to be voluntary (Sprague, 2002).
5The total number of QIOs is 53; data for this study were not available for the U.S. Virgin
Islands.
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50 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM
Public reporting was a major driver of the activities performed under
the 7th SOW (see Chapter 11). In November 2002, CMS launched the Nurs-
ing Home Quality Initiative, which included making nursing home perfor-
mance measures available to the public. This effort sought to help benefi-
ciaries and their families make informed choices, as well as to encourage
nursing homes to improve upon the quality of care they delivered. CMS
also initiated public reporting in home health care and hospital settings
(CMS, 2004a). The public's increased awareness of and access to informa-
tion about a provider's performance motivated providers to pay attention
to performance measurement. Particularly for hospitals, CMS worked with
the National Quality Forum, the Joint Commission on Accreditation of
Healthcare Organizations, the National Committee for Quality Assurance,
and other organizations to ensure that the performance indicators used by
CMS and the QIOs were consistent with other commonly used measures.
This collaborative effort was first attempted in the hospital setting and was
then expanded to other settings so providers could collect and report the
same data to Medicare and the QIOs in addition to other agencies (CMS,
2004a) (see the discussion of the Hospital Quality Alliance in Chapter 11).
Another important QIO function under the 7th SOW was the educa-
tion of beneficiaries on the publicly reported performance measures. As
part of this function, beneficiaries had greater involvement as QIO advi-
sors. Consumer representatives were added to advisory panels, and QIO
hotlines were made available for beneficiaries. Other tasks aimed at im-
proving the information provision and communications activities of QIOs
continued, as did specific beneficiary protection functions, such as the me-
diation of complaints.
All QIOs participated in Medicare beneficiary protection activities
(CMS, 2002, 2004a). A new beneficiary complaint resolution program was
aimed at resolving quality concerns raised by Medicare beneficiaries through
alternative means (see Chapter 12). The complainant could choose media-
tion instead of the normal administrative case review process if the case
involved no serious safety concerns. With mediation, beneficiary and pro-
vider were brought together voluntarily to resolve the issues, which often
involved communication problems.
The Hospital Payment Monitoring Program (HPMP) was designed to
protect the Medicare Part A Trust Fund as well as Medicare beneficiaries
(CMS, 2004a) (see Chapter 12). Under this program, QIOs reviewed a ran-
dom sampling of cases to estimate statewide payment error rates. The re-
view focused on coding validity, the medical necessity of the services pro-
vided, and the appropriateness of the setting used for the provision of those
services. Finally, all QIOs were still bound to traditional case review func-
tions for a growing range of case categories (CMS, 2002) (see Chapter 12).
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A HISTORICAL PERSPECTIVE AND THE CURRENT QIO PROGRAM 51
During the 7th SOW, CMS formally designated a separate QIO to serve
as a national resource on each specific task and for each provider setting.
Often, the QIO had conducted a special study or other work related to the
task during the previous SOW. The QIO was funded as a QIO Support
Center (QIOSC), in addition to its core contract, to provide background
educational materials, tools, and scientific evidence; facilitate communica-
tions among practice communities; and train all QIOs to help them perform
the given task (see Chapter 8).
8th Scope of Work
When the 8th SOW was developed, the prior rates of improvement
were viewed as neither fast enough nor deep enough to achieve the pro-
gram's goal of "the right care for every person every time" before the year
2024 (Jencks and Rollow, 2004). Under the 8th SOW (2005 to 2008), there-
fore, the QIOs are required to create an environment in which quality im-
provement will occur more quickly and with a greater impact (see Part II
for a more detailed discussion of the tasks in the 8th SOW). This approach
is aimed at creating "transformational change" (Rollow, 2004), and CMS
considers it to be the next program phase necessary to achieve "results,
processes, and care outcomes that are both person centered and reliable"
(Pugh, 2005:3). The QIO apportionment of $1.265 billion for the 3-year
contract includes approximately 68 percent for the 53 core QIO contracts.
The remaining 32 percent of the total apportionment funds the QIOSCs;
special studies conducted by selected QIOs; and support contracts to other
entities for program operations, such as the data system for the whole QIO
program. Many of the support contracts relate to broad issues of quality
improvement in the Medicare program, such as the development of a series
of consumer surveys of patient experiences.
The QIOs are directed to work intensively with a subset of individual
providers. Statewide quality improvement measures are given less empha-
sis. During the 8th SOW, the program aims to initiate changes with the
identified participants that will close the recognized gap between current
and ideal standards of care. The main change for the QIOs is working with
providers and practitioners to help them redesign care delivery systems
and care processes and to implement organizational changes that will pro-
mote more rapid quality improvement. Provider assistance is focused on
areas that represent both a discrepancy between known best and actual
practices and a great potential for improved performance. Some of the
clinical areas of focus include adult immunization, breast cancer screening,
prevention of pressure ulcers, elimination of restraints and surgical com-
plications, promotion of vascular access for hemodialysis, and workforce
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52 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM
retention (CMS, 2005). Additional clinical areas receive attention in each
provider setting. The physician office setting is the focal point for major
changes, with a particular emphasis on small practices and on those caring
for underserved populations. Also, QIOs are initiating the Doctor's Office
QualityInformation Technology program nationally to promote the use
of health information technology. Finally, with physician office projects,
QIOs are also to pay special attention to Medicare Advantage beneficiaries
and the new Medicare Part D prescription drug benefit (CMS, 2005).
The 8th SOW, like the 7th SOW, uses performance-based contracting,
includes tasks in a variety of inpatient and outpatient provider settings, and
addresses issues related to protecting beneficiaries and the Medicare Trust
Funds. CMS recognizes the increased complexity of the 8th SOW, and there-
fore includes options for subcontracting those tasks for which the QIOs
have been unable to demonstrate competency (competency is demonstrated
through successful evaluation of performance under a previous SOW or
other CMS-approved means). In the 8th SOW, the distribution of the fed-
eral apportionment among the QIO core contracts, QIOSCs, special stud-
ies, and the support contract is roughly similar to that in the 7th SOW.
Overall, the 8th SOW is aimed at achieving transformational change rather
than sustaining the current rate of incremental change (CMS, 2005).
SUMMARY
The evolution of the quality assurance program into a quality improve-
ment program and the functions of the QIO in each state reflect the shifting
priorities and changing approaches to quality care among health care man-
agers and policy makers. Over the last 35 years, the overall philosophy of
the QIO program has shifted from quality assurance (which focuses on
individual cases) to quality improvement (which aims to improve overall
patterns of care). A 2002 MedPAC report describes the difference as fol-
lows: "Quality assurance standards are designed to ensure a minimum level
of quality and to identify and potentially punish individuals within the sys-
tem who may be providing sub-standard care. In contrast, quality improve-
ment standards are designed to ensure that the entities have an effective
process for continually measuring and improving the care delivered by all
providers" (MedPAC, 2002:5).
In the 8th SOW, the QIO program's philosophy has changed, as the
term "quality of care" has evolved to include the transformation of systems
and processes, as well as the development of tools for improving care
(Rollow, 2004). These changes are propelled by the increasing interest in
public reports of quality and related performance measures and programs
that reward providers financially for offering better-quality care. More pub-
lic reporting requirements and rewards for performance will likely encour-
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A HISTORICAL PERSPECTIVE AND THE CURRENT QIO PROGRAM 53
age greater provider participation in quality improvement projects. They
will also create an increased need for beneficiaries to understand how the
use of publicly reported quality information can improve their health. In
this new phase, CMS and its QIO program aim to achieve transformational
change, focusing on the overarching processes and systems of health care
delivery instead of individual episodes of care to create a new culture and
environment in which the ideals of quality of care can thrive.
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Representative terms from entire chapter:
qio program
