Summary

Good health is a highly valued attribute of life. It is also difficult to define; it means different things to different people. In general, however, Americans would cite similar goals for their health and principles for health care. The nation has long held a common concept of what constitutes desirable health services.

What is different today is a broad concern among the health professions about the quality of health care. This is coupled with rising dissatisfaction about the health care system on the part of the public and policymakers, unremitting pressures for cost containment, and uncertainty about the effect of future cost containment on quality of care.

Focusing these concerns on the elderly, the Congress of the United States, through the Omnibus Budget Reconciliation Act of 1986, called on the Secretary of the Department of Health and Human Services (DHHS) to request the National Academy of Sciences to conduct a study “to design a strategy for quality review and assurance in Medicare.” The Academy’s Institute of Medicine (IOM) appointed a 17-member committee to undertake the study. In response to the congressional mandate this committee report covers four main themes:

  • appropriate definitions of quality of care and quality assurance;

  • the range and adequacy of methods for measuring quality and for preventing, detecting, and correcting quality problems;

  • needed research and building of a professional cadre; and

  • a strategy for implementing a program to assure the quality of health care for Medicare beneficiaries.



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Medicare: A Strategy for Quality Assurance - Volume I Summary Good health is a highly valued attribute of life. It is also difficult to define; it means different things to different people. In general, however, Americans would cite similar goals for their health and principles for health care. The nation has long held a common concept of what constitutes desirable health services. What is different today is a broad concern among the health professions about the quality of health care. This is coupled with rising dissatisfaction about the health care system on the part of the public and policymakers, unremitting pressures for cost containment, and uncertainty about the effect of future cost containment on quality of care. Focusing these concerns on the elderly, the Congress of the United States, through the Omnibus Budget Reconciliation Act of 1986, called on the Secretary of the Department of Health and Human Services (DHHS) to request the National Academy of Sciences to conduct a study “to design a strategy for quality review and assurance in Medicare.” The Academy’s Institute of Medicine (IOM) appointed a 17-member committee to undertake the study. In response to the congressional mandate this committee report covers four main themes: appropriate definitions of quality of care and quality assurance; the range and adequacy of methods for measuring quality and for preventing, detecting, and correcting quality problems; needed research and building of a professional cadre; and a strategy for implementing a program to assure the quality of health care for Medicare beneficiaries.

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Medicare: A Strategy for Quality Assurance - Volume I The remainder of this summary first describes the methods of the study and summarizes the committee’s findings and conclusions. It then gives the committee’s 10 major recommendations and describes the main operational features of a Medicare Program to Assure Quality (MPAQ), as the committee denotes the new program it recommends be established. Finally, it outlines a three-phase, 10-year implementation strategy, during which time many details of the program will evolve. FINDINGS AND CONCLUSIONS The nation is generally perceived to have a solid, admirable base of good quality health care, and the elderly are usually satisfied with the quality of care they themselves receive. Contrasting with this positive perception of the overall quality of care in the nation is a large literature that documents areas of deficiencies in all parts of the health sector. Some of these relate to the overuse of unnecessary and inappropriate services, some to underuse of needed services, and some to poor technical skills, interpersonal care, or judgment in the delivery of appropriate services. Significant problems exist in quality of care and in the nation’s present approaches to quality assurance. These problems are sufficient to justify a major redirection for quality assurance in this country and, in particular, a more comprehensive strategy for quality assurance in Medicare. Our major findings and conclusions include the following: A quality assurance program should be guided by a clear definition of quality of care. No single approach or conceptual framework to quality assurance is likely to suit all purposes. Regarding the elderly, their population continues to grow, both in absolute numbers and as a proportion of the entire population, the average number of years lived after age 65 continues to increase, and an increasing number of the elderly live with chronic illness and disabling conditions. Regarding Medicare and the elderly, health care costs continue to rise, pressures for cost containment increase, and use of sites of care other than inpatient (i.e., outpatient, long-termcare, and home) continues to expand. Near universal coverage of the elderly population by the Medicare program gives them better access to health care than any other age group; nevertheless, gaps in coverage and financial barriers do exist and adversely affect quality.

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Medicare: A Strategy for Quality Assurance - Volume I Regarding the burden of poor quality, evidence of overuse of health services is substantial, underuse is hard to detect under existing surveillance systems, but we suspect it is considerable, and numerous examples of poor performance have been documented. Different approaches to quality assurance may be necessary for different sites of care (e.g., hospital, home care, and ambulatory settings) and for different organizational structures such as health maintenance organizations (HMOs) and fee-for-service practices. Criteria by which quality of care can be reviewed or assured can be classified into three main groups—appropriateness (or clinical practice) guidelines, patient management and evaluation criteria, and case-finding screens, and vary considerably in internal and external validity. Those groups of quality-of-care criteria can be described in terms of substantive (or structural) attributes, such as scientific grounding, latitude for clinical and patient judgment, design, and efficiency and implementation (or process) attributes such as feasibility of use, ease of use, ability for special cases to be appealed, and dynamic aspects of review and updating. Currently available methods of quality assurance suggest that a small number of outliers account for a large number of serious quality problems, are inadequate in coping successfully with outlier providers, tend to focus on single events and single settings, may not identify underuse and overuse of services, are constrained (sometimes in counterproductive ways) by regulatory and legal systems, and are of questionable value in improving average provider behavior. Medicare Utilization and Quality Review Peer Review Organizations (PROs) constitute a potentially valuable infrastructure for quality assurance. Nevertheless, it is the perception of the committee that Medicare PROs give primary attention to utilization rather than quality, focus on outliers rather than the average provider, concentrate on inpatient care, impose excessive burdens on providers, do not use positive incentives to alter performance, are perceived as adversarial and punitive, use a sanctioning process that is largely ineffective, are rendered relatively inflexible by program funding arrangements, use methods that are redundant with other public and internal quality assurance programs, and have not been evaluated with respect to their effect on quality.

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Medicare: A Strategy for Quality Assurance - Volume I Mechanisms for ensuring that hospitals meet the Medicare Conditions of Participation are generally sound in terms of the concept of “deemed status” but warrant strengthening in several aspects, especially the survey and certification procedures for hospitals that are not accredited. The present structure does not have the capacity to achieve a comprehensive and maximally effective quality assurance system. Required research and capacity building include basic methodological research, applications research, research on methods of diffusion, training of professionals in research and quality assurance, and methods to improve patient decision making. A MODEL OF QUALITY ASSURANCE FOR MEDICARE On the basis of these findings and conclusions, the committee outlined its vision of a quality assurance system for Medicare. It focuses on health care decision making and health outcomes of Medicare beneficiaries, enhances professional responsibility and capacity for improving care, uses clinical practice as a source of information to improve quality of care, and can be shown to improve the health of the elderly population. This “ideal” system stands in sharp contrast to the existing quality assurance system; the latter relies too heavily on provider-oriented process measures, regulation, and external monitoring, contributes little new clinical knowledge to improve the quality of care, and has not been evaluated in terms of impact on the health of the elderly. We believe that any future quality assurance program requires a better balance than exists today between regulation and professionalism, provider orientation and patient orientation, and processes of care and desired health outcomes. DEFINING QUALITY OF CARE The committee identified critical dimensions of quality of care and adopted the following definition: Quality of care is the degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge. According to this definition, the health care services provided are expected to have a net benefit (to do more good than harm, given the known risk when compared to the next-best alternative care). That benefit is expected to reflect considerations of patient satisfaction and well-being, broad health status and quality-of-life outcomes, and the processes of patient-provider interaction and decision making. The values of both individuals

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Medicare: A Strategy for Quality Assurance - Volume I and society are explicitly to be considered. How care is provided should reflect appropriate use of the most current knowledge about scientific, clinical, technical, interpersonal, manual, cognitive, and organizational and management elements of health care. RECOMMENDATIONS In responding to the congressional charge to design a strategy for quality review and assurance in Medicare, the committee has three aims. The first is to have in place a fully functioning program by the year 2000. The second is to have many of its parts operating well before that time. The third is to create a system that itself can grow and mature well into the next century, when health care needs, health care delivery systems and financing mechanisms, and social realities may be vastly different from those we encounter today. In furtherance of these aims, the committee agreed on 10 recommendations, which are based on its findings and conclusions and its vision for a new quality assurance program for Medicare. Medicare Mission and Quality Assurance RECOMMENDATION NO. 1. Congress should expand the mission of Medicare to include an explicit responsibility for assuring the quality of care for Medicare enrollees, where quality of care is defined as the degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge. A critical requirement of a quality assurance program is that it respond conceptually to an accepted definition of quality of care. For this report we have adopted the definition offered above, which implies a markedly stronger and broader mission statement for the Medicare quality assurance than appears in the legislation that presently guides the Medicare peer review program. A more explicit commitment to quality is needed to counter the perception that monitoring efforts in Medicare are primarily concerned with cost containment. By focusing on health services, desired health outcomes, and levels of professional knowledge, our definition of quality calls for broad action by provider organizations and by the Medicare program in the collection, analysis, feedback, and dissemination of data and in the initiation of creative quality interventions. This definition implies a considerably expanded and richer conceptualization of the outcomes about which data will be acquired than has been evident heretofore in any (external or internal) quality assurance efforts. It also implies greater attention to the scientific knowledge base, to health care technology assessment, and to the actual processes of

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Medicare: A Strategy for Quality Assurance - Volume I everyday practice. It requires that better use be made of what is known about the effectiveness of health care services and about the links between process and outcome. Finally, by highlighting the need for attention to both individuals and populations, this definition underscores the importance of requiring the Medicare program to take responsibility for understanding the health outcomes of the populations for which they are accountable, not just for the persons actually served. Quality Assurance Goals of the Medicare Program RECOMMENDATION NO. 2. Congress should adopt the following three goals for the quality assurance activities of the Medicare program: Continuously improve the quality of health care for Medicare enrollees, where quality is as defined in our first recommendation; Strengthen the ability of health care organizations and practitioners to assess and improve their performance; and Identify system and policy barriers to achieving quality of care and generate options to overcome such barriers. We recommend below an ongoing evaluation of the quality assurance program and its impact. The goals for which that program should be held accountable are improved health, enhanced capabilities of providers in quality assurance, and better understanding of broad system obstacles to high quality of care. These goals are at once more explicit and more comprehensive than the status quo. Medicare Program to Assure Quality (MPAQ) RECOMMENDATION NO. 3. Congress should restructure the PRO program, rename it the Medicare Program to Assure Quality (MPAQ), and redefine its functions. To discharge the responsibilities implied by earlier recommendations, Medicare will need a revised and expanded quality assurance program at the federal level. To underscore this point, Congress should deliberately shift the focus and responsibility of this new program—the MPAQ—to functions more explicitly oriented to quality of care. In addition, Congress should authorize the Secretary of DHHS to support new local entities—Medicare Quality Review Organizations (MQROs)—in the performance of the MPAQ activities. To build on the personnel and skills already available, these local entities would in many instances be (or be similar to) the organizations with which the Health Care Financing Administration (HCFA) presently contracts through the PRO program. Responsibilities and functions of these organizations are discussed below.

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Medicare: A Strategy for Quality Assurance - Volume I Public Accountability and Evaluation RECOMMENDATION NO. 4. Congress should establish a Quality Program Advisory Commission (QualPAC) to oversee activities of the MPAQ and to report to Congress on these activities. RECOMMENDATION NO. 5. Congress should establish within DHHS a National Council on Medicare Quality Assurance to assist in the implementation, operation, and evaluation of the MPAQ. RECOMMENDATION NO. 6. Congress should direct the Secretary of DHHS to report to Congress, no less frequently than every two years, on the quality of care for Medicare beneficiaries and on the effectiveness of MPAQ in meeting the goals outlined in recommendation no. 2. In addition to the MPAQ and its MQROs, we have recommended that two other entities be created to form a comprehensive structure to promote, coordinate, and supervise quality review and assurance activities at the national level. Because of the importance of these public accountability and oversight activities, we also suggest that the Secretary of DHHS establish a Technical Advisory Panel to assist in the evaluation efforts. These bodies will have four major purposes, namely to bring a greater degree of public and scientific oversight and input into the quality assurance program, provide a way for both the MPAQ and the MQROs to avail themselves of the most advanced techniques available through the private sector, provide a basis by which the program itself can be more effectively evaluated, and assist the program in management and operations. Hospital Conditions of Participation RECOMMENDATION NO. 7. Congress should direct the Secretary of DHHS to initiate a program to make the Medicare Conditions of Participation consistent with and supportive of the overall federal quality assurance effort. This report emphasizes the use of process-of-care information and especially patient outcomes data in evaluating quality of care. Nevertheless, all conceptual frameworks of quality assurance emphasize the importance of the capacity of an organization to render high quality care—essentially a structural measure. Indirectly, such capacity is measured through mechanisms such as accreditation. For the hospital sector and Medicare, this translates into “deemed status” for those facilities accredited mainly through the Joint Commission for Accreditation of Healthcare Organizations and certification through state survey and certification agencies for those not so accredited.

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Medicare: A Strategy for Quality Assurance - Volume I Our recommendation is intended to prompt HCFA to strengthen its current program for survey and certification of hospitals and for delegating certification of unaccredited hospitals to state agencies. Four aspects of this program deserve attention. First, HCFA should update the Conditions of Participation, and their related standards and elements, within the next two years and continually thereafter (no more infrequently, say, than every three years). Second, HCFA should continue to support the concept of deemed status for hospitals. The agency should encourage the Joint Commission in its efforts to develop a state-of-the-art quality assurance program and in its program to disclose information to the agency about conditionally accredited and nonaccredited hospitals in a timely fashion. Third, HCFA should increase the capacity of the survey and certification system to encourage and enforce compliance with the conditions (i.e., for those hospitals not meeting them by virtue of deemed status). Finally, HCFA should improve the coordination of federal quality assurance efforts by developing criteria and procedures for referring cases involving serious quality problems from the MQROs to the Office of Survey and Certification (and vice versa). Research and Capacity Building RECOMMENDATION NO. 8. Congress should direct the Secretary of DHHS to support, expand, and improve research in and the knowldge base on efficacy, effectiveness, and outcomes of care and to support a systematic effort to develop clinical practice guidelines and standards of care. RECOMMENDATION NO. 9. Congress should direct the Secretary of DHHS to establish and fund educational activities designed to enhance the nation’s capacity to improve quality of care. We applaud recent developments in the attention and support that Congress and DHHS have given to effectiveness and outcomes research and to efforts to stimulate the development of clinical practice guidelines. We endorse expanded funding for all of these efforts. DHHS should also undertake broad efforts to improve coordination of data systems and data collection efforts within the Department. Long-term financial and other support for research and special projects is needed in many areas: variations, effectiveness, and appropriateness of medical care interventions; practice guidelines and the mechanisms by which they can be developed, refined, disseminated, and updated; better measures of the technical and interpersonal aspects of the process of care;

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Medicare: A Strategy for Quality Assurance - Volume I more and improved measures of health status and health-related quality of life; effectiveness of methods for changing provider and practitioner habits, behaviors, and performance; data and information management systems (computer hardware and software); and improved methods of program evaluation. Capacity building is that set of activities that will enhance the ability of professionals and patients to assess and improve quality of care. If quality assurance is to move forward aggressively, it will require a corps of professionals prepared to provide both technical skills and leadership. At present we lack such a group in anything like adequate numbers to staff a national set of organizations for this purpose. An early priority must be, therefore, to establish training programs to prepare these health professionals, taking account of the following circumstances and needs: Educational programs would likely require an extended period of study (e.g., a year); They can be built on existing programs in epidemiology, health services research, and biostatistics; Education for the existing staffs of facilities and those senior professionals already in, or just about to enter, this work will have to use techniques of intensive continuing education and technical assistance; More organized programs of training with field experience will be needed to prepare a new cadre of health workers with the tools needed to collect and apply information based on outcomes in quality assurance; Resources will be needed to underwrite the curriculum development and to support the education of these professionals; and Ways to make quality assurance more of a profession with a clear career path should be developed. In addition, it will be important to educate patients and consumers about how best they can contribute to evaluating and improving the care they receive and participate in informed decision making about their health care. FUNDING RECOMMENDATION NO. 10. Congress should authorize and appropriate such funds as are needed to implement these recommendations. The MPAQ must be adequately funded from the start, if it is to be successfully implemented and operated. We propose a considerably expanded data collection and evaluation effort in the new MPAQ and assume

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Medicare: A Strategy for Quality Assurance - Volume I that Congress and HCFA will continue to expect the MPAQ to do much, although not all, of what the PRO program now does. For those reasons, we concluded that an increase in the MPAQ budget over present PRO levels is necessary. In addition, we advised that the MPAQ shift from a purely competitive contracting mechanism for MQROs to a funding mechanism that relies more heavily, if not exclusively, on grants or cooperative agreements. This recommendation is potentially costly, but an underfunded quality assurance program cannot discharge its responsibilities effectively and thus wastes the funds it is provided. It earns little respect from providers, and it cannot demonstrate any meaningful impact on either quality of care or health of the beneficiary population. The program we are proposing is intended to avoid some of those pitfalls. It is also intended to provide a considerably enhanced body of knowledge about the health and well-being of the elderly and to improve the mechanics of quality review and assurance in all major settings of care. Furthermore, we have built into our proposals a rigorous evaluation component, so that society can know what it is getting for its investment. In our view, the MPAQ simply will not be able to accomplish its objectives with funding that remains at customary levels, and we thus advocate an appreciable increase in support. We have not specified a target amount, however. Implementation of this proposed program will take time, and many details will emerge only with time. Moreover, internal and external quality assurance efforts have an element of joint production, and not all the activities envisioned in this plan may involve new federal costs. Nevertheless, a reasonable estimate of the costs of this program might be that it would eventually double the investment in the present PRO program, but it should be recognized that this is an order-of-magnitude estimate, not a detailed point estimate. ORGANIZATIONAL AND OPERATIONAL FEATURES OF THE MEDICARE PROGRAM TO ASSURE QUALITY Starting Points The conceptual foundation of the MPAQ approach is the classic triad of structure, process, and outcome. We also draw on five constructs of the continuous improvement model: (1) differentiate external quality monitoring from internal quality improvement and assurance efforts; (2) emphasize increased use by internal programs of data on outcomes, systems, and processes of care; (3) reward providers that implement successful internal quality improvement programs; (4) focus on a broad range of “customer” outcomes that include those of patients, practitioners, and the broader community; and (5) foster cooperative communication and negotiation between many different pairs of actors in the health care delivery setting.

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Medicare: A Strategy for Quality Assurance - Volume I The practical starting point for the MPAQ is the existing Medicare program and the private, local, peer review organizations that presently do (or could) carry out the current PRO agenda. We emphasize transition, not starting over, and we believe that many elements of the PRO program can and should be retained. At the same time, we have renamed the program to emphasize the substantial changes in concept and function that we have recommended. Structure The Federal and Local Levels MPAQ. The first level of our model of quality assurance is that of the federal program, the MPAQ. It might also embrace other organizations that operate nationally and that might be considered complementary to this effort, such as the accreditation programs of the Joint Commission. Briefly, the MPAQ would be responsible for the planning and administration of the quality assurance program for Medicare. It would have three major responsibilities: (1) to engage in long- and short-term program planning for MQROs (e.g., to define the program guidelines for the MQROs, to review applications and make awards to MQROs, and to provide or arrange for technical assistance to MQROs); (2) to monitor and evaluate MQRO operations and performance; and (3) to aggregate, analyze, and report data. MQROs. The middle level is that of local or regional entities, the MQROs. They would have several primary responsibilities: (1) to obtain information on patient and population-based outcomes and practitioner and provider processes of care; (2) to analyze these data, making appropriate adjustments for case mix, patient characteristics, and other pertinent information by various types of providers; (3) to use these data to make judgments about practitioner or provider performance; (4) to feed such information back to the internal quality assurance programs of practitioners and providers (as well as report it to the MPAQ); and (5) to carry out quality interventions and technical assistance to internal organization-based quality assurance programs. The Internal Organization-Based Level We have given considerable recognition to the emerging concepts of continuous quality improvement and organization-based, internal quality assurance efforts. Self-review and self-regulation remain the hallmark of the healing professions. Therefore, our third level is one based on internal, organization-based quality assurance. We do not prescribe the approach to quality assurance that such institutions, agencies, or practices might take. Some internal programs may pur-

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Medicare: A Strategy for Quality Assurance - Volume I sue traditional efforts; others may implement advanced continuous quality improvement models; still others may experiment with novel review and assurance efforts tailored to their particular needs and circumstances. The MQROs should encourage and assist in the development of all such internal efforts. Internal programs will no doubt use outcome data for their own purposes, but they will also need to emphasize the actual systems and processes of care as a means of knowing where to act when problems arise or to improve care more generally. Finally, these internal programs will have to document that their surveillance systems identify and attempt to solve important quality problems. If internal programs cannot document their quality assurance procedures and impact, or if the results of the external MQRO monitoring suggest that these activities are not being done well, then the MQRO will have to become more actively involved. Such MQRO interventions might involve abstracting process-of-care information on-site, consulting in the planning of quality assurance activities, imposing corrective actions of the sort now available to PROs, and pursuing new intervention strategies developed during the implementation of the MPAQ. Operational Overview of the Proposed Model An Emphasis on Outcomes A central theme of our recommendations and the proposed MPAQ is a greater emphasis on the outcomes of care. Attention to outcomes offers several advantages. It allows monitoring of the system while leaving providers able to undertake their own quality improvement efforts. It collects systematic data that can be used to inform the field about how process components are related to outcomes. It provides a means to look across time and to appreciate the temporal and service linkages within episodes of care. It emphasizes aspects of care that are most relevant to patients and to society. The MPAQ and MQROs must choose outcomes that are easily and reproducibly defined, can be practically obtained, and are important to Medicare beneficiaries. These outcomes should include mortality and medical complications; relevant physiologic measures; functional outcomes such as patients’ mental and emotional status, physical functioning (for instance, ability to walk), and social interaction; activities of daily living; placement of the patient at home or in a long-term-care facility; and the patients’ and their families’ satisfaction with care. A difficult aspect of outcome-directed quality assurance efforts will be to adjust outcomes for the risk factors present in the population being studied (e.g., case mix, severity of illness, and demographic factors). The choice of conditions to be monitored in this new program must reflect the availability

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Medicare: A Strategy for Quality Assurance - Volume I of information about known risk factors. Furthermore, the size of this undertaking means that not all discharges could be monitored for outcomes. At least some conditions would be studied nationally for periods of time to acquire adequate comparative data. In other cases, local or regional topics (perhaps based in part on variations in performance) might be used as the basis for selecting conditions. Adjusted, comparative information would be returned to the appropriate providers. In addition, providers in a region can be evaluated according to the relative outcomes of their patients. Those whose performance was significantly poorer than the mean would be asked to examine their activities carefully—to identify the specific systems or processes of care that contributed to these results and to make appropriate corrections. Follow-up studies should be performed to assess the impact of these corrections. Failure to improve would result in closer monitoring and potentially more stringent actions, including public disclosure of their status. Aggregate information would be shared with provider groups to serve as a basis for better understanding of the processes of care. This information would form part of a national data base to be used to improve clinical decision making. The Importance of the Process of Care This attention to outcomes is not intended to slight the importance of process-of-care measurement. Process measures have strengths missing in an outcome focus, including the lack of sensitivity of outcome measures for detecting certain rare but catastrophic events. Process measures may need to be used as proxies for outcomes for patients with complex medical conditions, when the many variables that influence outcomes of care cannot be controlled. Further, the long lead time required for some adverse outcomes is such that process surrogates are needed. Identifying key processes of care and responding to them are best done by internal quality assurance programs of these institutions, organizations, or provider groups. Related activities, such as the development of clinical practice standards and appropriateness criteria, will be best done by national groups drawing on data generated by this quality assurance program as well as the increased interest and research in effectiveness and outcomes of care. The MPAQ and MQROs should encourage, stimulate, and participate in this work as much as possible. Continuity of Quality Assessment The emphasis on care beyond a single setting is a new direction in quality assurance. It is essential if ultimate outcomes are to be understood and affected. Superb inpatient care followed by poor post-hospital care, for

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Medicare: A Strategy for Quality Assurance - Volume I instance, cannot be acceptable. Each care provider and institution is part of a system of care. Each must recognize a responsibility to ensure that the continuum of the process of care results in a good outcome for the patient. Potential Problems It is appropriate here to acknowledge real or potential drawbacks with this model. This ambitious design will be more difficult to develop in the ambulatory and home care setting than in the institutional one. The data and methods to implement such a system today are inadequate or not easily transferable from other research applications; furthermore, assessment techniques to identify problems are more advanced than techniques to intervene successfully once problems are identified. It is this dearth of off-the-shelf methods that necessitates the research agenda and the proposed 10-year implementation strategy. Any system has the potential for “gaming” by providers; a program as invested in promoting internal quality improvement efforts as this one is more at risk for such gaming. There is little experience to draw on to evaluate a program as complex and ambitious as this one, and it therefore may run a considerable risk of seeming to be ineffective, inefficient, and wasteful of the public’s dollars. Relying on self-review, delegated review, and self-regulation are problematic approaches, and they deserve careful study. IMPLEMENTATION STRATEGY AND PHASES Our 10-year implementation strategy is divided into three phases from 1991 to 2000. The major activities that should be undertaken are outlined below. Activities beginning in one phase need not end in that phase; for instance, special studies begun in Phase II may well continue into Phase III, and certain efforts to be started in Phase I (such as public oversight or capacity building) are expressly intended to continue throughout implementation and beyond. Phase I: Years 1 and 2 Congress or DHHS, or both, should take the basic steps to establish the MPAQ. These include establishing the program and the entities in the first five committee recommendations and providing the appropriate authorizations and appropriations, and beginning operations of QualPAC and the National Council. PRO program activities, financing instruments, survey and certification procedures for Conditions of Participation for hospitals, and other aspects of existing programs should be reviewed and revamped as necessary to meet MPAQ goals. MPAQ public oversight and evaluation activities (e.g., articulating specific goals for the MPAQ, appointing the

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Medicare: A Strategy for Quality Assurance - Volume I TAP) should be begun and the first program evaluation report should be submitted. Research and capacity building efforts should be started. Phase II: Years 2 through 8 The middle phase of implementation entails data collection, data analysis, information dissemination, and four areas of special projects. These activities focus on the design, testing, and implementation of major components of the MPAQ model. We assume that these activities would be started in the second or third year of the MPAQ and generally would take anywhere from three to six years to complete. We assume further that the best of the approaches would then be incorporated into the full MPAQ in Phase III, taking into explicit account the advice and consent of QualPAC, the National Council, or both. Data Collection We have consistently emphasized the importance to this Medicare quality assurance program (and to the Medicare program more broadly) of a greatly enhanced data base on use of services, patient outcomes, and the process of care. To create and maintain such an information base—only the foundations of which are in place—and to make it useful for assuring the quality of health care for the elderly over the long run is a massive undertaking. We expect that getting this data collection effort underway will take the middle part of this 10-year strategy because the development and testing of such a system is necessarily evolutionary and must be responsive to environmental and technical factors. Data Analysis Capabilities The data analysis capabilities that would be needed in a program with the level of information gathering just described exceed those available in contemporary quality assurance programs, both public and private. Thus, HCFA will need to begin early in implementation to expand and improve its internal data analysis capacity and, more importantly, the data analysis capacity of the MQROs. Specific attention should be given to strengthening several key elements, especially analytic personnel and computer capability, and initiating a technical assistance effort (use of outside expert consultants on an advisory or contracting basis). Information Dissemination Our proposed program calls for a sophisticated approach to feeding useful clinical-practice and quality-related information back to practitioners

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Medicare: A Strategy for Quality Assurance - Volume I and provider institutions of all types. Few good models of such feedback loops exist, so a considerable effort will be needed to design, test, and refine such models. Also, formal, external studies of issues relating to public release of information and data sharing might be undertaken, with a focus on their legal, regulatory, and policy ramifications. Special Projects Distinguishing providers on the basis of quality and outcomes. If the MQROs are to be able to respond differently to providers according to their capacity to render superior, acceptable, or only poor care, they have to be able to create “quality distributions” of providers, so that performance along that distribution can be acknowledged and acted upon. To overcome the enormous conceptual, practical, and political difficulties of this, we recommend studies to test different methods for creating such quality distributions for the major types of Medicare providers. Improving the average level of performance. Improving average performance (“shifting the curve”) is, in our view, a critical aspect of the MPAQ; so is fostering better internal, organization-based quality assurance programs. Because this is such a new area, various research and demonstration studies (including current PRO pilot projects as appropriate) will be needed during this phase. These projects might be done through joint efforts of the MQROs and individual providers, focus on geriatric-specific quality concerns, be community-wide, and/or involve several providers in either similar or different care settings. Incentives for good and exemplary performance. Early in Phase II, the MPAQ should study ways to identify and reward both good and exemplary (or superior) providers. These might include lowering the amount of intrusive external review to which they might be subjected, publishing superior rankings, giving special recognition for performance and innovation, selective contracting, and sharing information on exemplary providers with private third-party purchasers. Dealing with outliers. Providers not meeting the criteria of satisfactory performance on the quality indicators will be subjected to more intensive review and other quality interventions; we have noted in the report that more innovative approaches to these quality interventions will need to be developed. Better mechanisms also need to be devised for real-time intervention in the event of catastrophic malfeasance or poor performance.

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Medicare: A Strategy for Quality Assurance - Volume I Phase III: Years 9 and 10 Our aim is a functioning quality assurance program at the end of a 10-year period, one that can respond creatively to changing environmental circumstances. Some of these circumstances can be foreseen (even if their particulars cannot be specified), such as a larger and older elderly population and different Medicare payment systems. Others are a matter of speculation, such as the strength of the nation’s economy. Most of the reforms suggested for the first two phases of this implementation strategy are intended to provide a firm foundation for this program, and we expect them to continue into Phase III. Thus, in Phase III, we expect to see a shift from demonstrations to full-scale implementation, continued improvement in quality of care and in the conduct of quality assurance, and a major reassessment to determine if the MPAQ is on target. The report highlights four other sets of activities in this third phase because of their very broad and long-range public policy implications: research, capacity building (both discussed earlier), public oversight of the Medicare quality assurance effort, and program evaluation. A consistent theme of the report is engagement of patients and consumers in quality assurance. A corollary is that the public is entitled to know and have some voice about public monies spent on quality assurance programs. The public also needs a way to bring quality-related problems to the policymaker’s attention. The report suggests that efforts be coordinated among all the Medicare commissions (especially ProPAC, PPRC, and QualPAC), so as to avoid duplication of effort and forestall major policy difficulties. Among the issues that might be monitored is the likelihood and severity of quality problems confronting the MPAQ as reimbursement mechanisms and Medicare benefits change over the 1990s, but other issues may well arise. We clearly put very strong emphasis on rigorous evaluation (of the program itself, not only its agents). We have suggested that HCFA devise and test various program evaluation techniques, including ways to assess the cost-effectiveness of a quality assurance program. We suggest that a formal, operational program evaluation effort (outside the MPAQ) be in place by the time the MPAQ itself is fully operational. CONCLUDING REMARKS This report presents a strategy for a quality review and assurance program for Medicare. It envisions an evolution from the present Medicare PRO program but

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Medicare: A Strategy for Quality Assurance - Volume I with several different emphases that present extraordinary challenges. It looks more to professionalism and internal quality improvement than to regulation and external inspection. It gives more attention to patient and consumer concerns and decision making, and it adopts an aggressive regard for outcomes. It seeks to generate new knowledge from clinical practice and to return that information to providers in a timely way that improves clinical decision making. It places stronger emphasis on systems of care, the joint production of services by many different providers, and continuity and episodes of care. Related to this, it moves more forcefully into settings not traditionally subjected to formal quality assurance, such as physician office-based care and home health care. It becomes far more publicly accountable through an extensive program oversight and evaluation effort. It intends to be responsive to a changing environment, with principles that will stand the tests of time and change. Finally, it is grounded in a clear definition of quality of care. The Medicare program has a large responsibility to assure the quality of care for the elderly population. By no means does it have the sole responsibility. Patients, providers, and societal agents must work together if we are to meet the challenges inherent in this strategy for quality review and assurance.