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Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
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14
Confronting Special Implementation Issues: Legal Concerns

Alice G. Gosfield

The Institute of Medicine (IOM, 1990) study presents a 10-year strategy for revamping Medicare's approach to quality assurance. To address in the very limited space available the myriad legal concerns it raises would be impossible. Given the restrictions imposed by the forum, format, and space, I will address three specific themes: (1) using the law as a means to motivate provider behavior in conformity with quality assurance goals; (2) how "due process" figures in a quality assurance strategy, particularly as implicated by a continuous improvement model; and (3) legal issues surrounding the data-based components of a quality assurance strategy. Even having selected these three discrete issues, however, there is no question that the overarching legal concern for all players in the quality assurance arena is the issue of malpractice liability exposure, not only for those who seek to adhere to quality assurance guidelines, but also among those who participate in peer review.

MALPRACTICE

Over the almost 20 years of my practice, to the extent it has addressed these issues as distinct from other health law concerns, I have worked with individual physicians, institutional providers, groups of physicians, and managed care entities across the country. I find that the single greatest source of anxiety for physicians—and therefore the primary barrier to aggressive, systematic, and pervasive quality assurance activities—arises from deeply ingrained fears of malpractice litigation.

A recent experience that I had in the heartland of America illustrates this phenomenon. I had just concluded a presentation on the Medicare Peer Review Organization (PRO) program in Indiana to a large medical staff. A

Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
×

young urologist approached me after the presentation and sought my counsel on the following dilemma: "I'm trying to decide which of two groups to affiliate with when I finish my fellowship. One consists of two physicians. The other is a group of six physicians. Do you think, from a malpractice perspective, that I would be better protected joining the larger group or the smaller group?" I was stunned. Rather than quality-of-life issues or working environment concerns, a major decision point for this physician, despite presumed insurance protection, was exposure to malpractice liability. Here was a physician just starting out in practice, about to make an absolutely critical determination in terms of his professional life, based on something that as far as I am concerned should have been tangential to his primary focus.

I believe that one of the reasons that malpractice looms as such an incredible presence to physicians is in part the nature of the activities in which they engage. Given imperfect data, as well as highly detailed and technical training, in which the limits of knowledge are decidedly finite but the expectations of the patient and society frequently are not, the consequences of their actions are life and death—often literally. To perform in this environment, many physicians must learn to believe that they can control what is imperfect, accept the limits of their knowledge, and nevertheless act with supreme confidence. Their patients expect that confidence and rely on it.

Out of this constellation of factors, for reasons others are surely better equipped than I to elucidate, I observe that physicians as a group completely self-identify in terms of their professional roles. Asked to complete the following statement, "I am a good_____________," the vast majority of physicians will instinctively respond, "I am a good doctor," and they will believe it. Given this complete self-identification with their profession and belief in their own competence, any question that is raised about how they have performed is received in a way that goes far beyond what those of us who work in the system would think is appropriate. I generally characterize this overreaction by saying that most practicing physicians would be happier to see an FBI agent standing on their front doorstep with a gun and a badge telling them they broke some rule unrelated to their professional practice than to get a letter from a PRO posing a routine question about a specific quality issue.

Within this frame of reference, medical technology, technique, and knowledge are improving. Societal expectations about performance are also increasing. Malpractice litigation crystallizes for physicians these inherent unresolved tensions and focuses on their own imperfections, with results that they perceive as personally threatening and singularly unfair. At the same time, health care policy development is at a moment in history of intense demands

Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
×

for self-scrutiny and peer review, external regulation of health care performance, and quantification and measurement of behavior with consequences such as data consortia, severity indices, and increased reporting and interagency data exchange. The creation of a National Practitioner Data Bank and the increased liability of institutions and organizations for the actions of their independent medical staffs are producing more probing, investigatory credentialing procedures (Shields and O'Kelly, 1989; Smith, 1990).

In this developing environment, a malpractice lawsuit against a physician is no longer a private experience. Its consequences can be career threatening. Physicians confronting these issues frequently ask me why lawyers are apparently exempt from similar treatment. My answer is that society does not value the services of lawyers as highly as it does those of physicians. The very fact of the IOM study, congressional attention, and even publicly financed health care amply underscore this value.

In the context of proposing and developing an achievable quality assurance strategy, I raise this issue to focus on the need for a clearly articulated, credible policy effort devoted to this new and different malpractice crisis. Similarly, there must be an acknowledgment that physician acceptance of new initiatives and incentives may be hard won and realistically will need to be a long-term goal.

LEGAL INCENTIVES TO PERFORMANCE

Positive Inducements

Having elaborated these major concerns, I remain convinced that in any quality assurance strategy, significant energy needs to be devoted to the carrots that might be available in the system rather than to the sticks. Positive inducements can take a variety of forms in law. Federal law currently provides a malpractice exemption in the PRO program. It comes directly out of the Professional Standards Review Organization law, and provides that no practitioner and no provider can be held civilly liable on account of any action taken by him in compliance with, or reliance upon, PRO norms, criteria, and standards, provided that he or the institution exercises due care (Gosfield, 1975, 1989a). Contractually reduced malpractice premiums for those who participate in quality assurance on a good faith basis—in the same way that continuing medical education credits are applied in the medical licensure environment—is another inducement. Using focused review for those who really need attention can be incorporated into the law, thereby lightening the burdens of review on those who are performing appropriately.

The use of accreditation might also be an area to be explored as a posi-

Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
×

tive incentive. Some courts have taken judicial notice of the Joint Commission's1 standards as the standard of care for hospitals. Judicial notice is an approach to evidence in which the court on its own initiative takes as proven a fact that is so incontrovertible it can be accepted into evidence as true without the necessity for any arguments about its probative value. Although other courts have not been so persuaded by the Joint Commission's standards, the concept merits some evaluation. In the managed care environment, we currently see much more competition among accrediting organizations, and no single group's standards are likely to be acknowledged soon for judicial notice.

In contrast with my hopes for a strategy of positive inducement reflected in law, I tend to be very cynical about the prospects for dealing with this issue through tort reform. Combating defensive medicine through tort reform will take on vested interests whose power goes well beyond the ability of those concerned about health care quality assurance to be able to mount an appropriate and successful campaign. A strategy with more laserlike precision will be based in regulation and contracts using techniques such as malpractice exemption.

The absence of case law to date construing the PRO malpractice exemption ought not be seen as a strategic failure. Rather, one of the reasons the exemption has not been used is that most lawyers who engage in personal injury defense work have no knowledge of the Social Security Act in which the exemption appears. In developing a national quality assurance strategy expressed through the law, the failure of the personal injury bar to focus on these efforts may be an advantage. Policy can then develop without the spotlight focused on generalized tort reform and the inevitable, convulsive debate that the subject engenders.

To achieve the goals of a major new quality assurance strategy, policy must also confront one of the major complaints of practicing physicians in dealing with quality assurance systems and utilization management controls: the "paper chase" aspect of it all. Formalistic, nonvalidated, externally imposed, detailed requirements in the law will be met with cynicism and resistance. Physicians decry policymakers' lack of real-life understanding of what physicians have to deal with in the trenches, making imperfect decisions based on imperfect information, with not enough time to do everything demanded of them.

If the policy value on quality assurance and peer review is sufficient to merit the kind of attention we are devoting to it in this forum, then perhaps we should look at approaches requiring that practicing physicians participate in these activities—in much the same way some would impose on lawyers

1  

Joint Commission on Accreditation of Healthcare Organizations.

Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
×

a requirement to do pro bono work as a condition of their continued licensure as attorneys. To my knowledge, at this point we do not know whether broad-based participation would improve the quality of the review process or its outcomes. Yet, motivating broad-based participation might be an effective approach to the frequently asserted, yet rarely supported, position of some subjects of these processes that they are implemented by physicians who are out of touch, out of practice, or unaccountable to those who are the objects of their actions—whether patients or other physicians.

Protection for Peer Review

In confronting legal concerns in quality assurance by those who do accept their mandate to participate, another issue concerns the obligations and liabilities of those who participate not only in formal government sanctioned peer review but in self-regulation mechanisms as well, when they find egregious problems the review mechanism is not designed to address. When one of these quality failures is discovered, are the reviewers supposed to report this to someone? To whom are they supposed to report their findings? What will happen to them if they do make such a report?

Today, in my law practice, in the few instances in which well-motivated reviewers have raised these concerns with me, I have had very little I can give them by way of guidance. I am loath to recommend that they bring their concerns to a licensure board. I am not sure I think that is appropriate, given the level of evidence they may have at the point at which their concerns are raised. The risks to the reported physician in the current environment are substantial. Balancing these concerns is difficult and essentially unaddressed in current law. Appropriate interventions and sanctions frequently are not available.

Interventions and Sanctions

The IOM report offers a remarkable compilation of a plethora of material dealing with relatively obvious ways of confronting quality assurance concerns to date. The study addresses the range of regulatory efforts that exist and some self-regulatory approaches. One area that has not been addressed, however (because it is rarely discussed in this frame of reference), is other laws that Congress enacts for other purposes that relate directly to quality assurance concerns. In particular, I am talking about fraud and abuse laws.

Many civil money penalties are based on efforts to assure administrative control. Examples include a provision that a failure to put ICD-9-CM2

2  

International Classification of Diseases, ninth revision, clinical modification.

Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
×

codes on a claim form may result in a $2,000 civil money penalty to the physician for each such instance. A physician who fails to issue to the patient undergoing elective surgery that entails a fee of more than $500, a written disclosure statement providing the anticipated charge, the Medicare allowance, and the deductible and co-insurance, incurs potentially a $2,000 civil money penalty. Although these two examples may not appear to have much to do with quality, other provisions in the law state that if a physician renders services to patients substantially in excess of the patients' needs, or not in accord with professionally recognized standards of quality, or provides information to a patient that might lead to a premature discharge, that physician may be excluded from the Medicare program (Teplitzky et al., 1989).

Legitimate efforts at quality impacts are lost in a sea of detail and requirements that reduce these ministerial and major policy concerns to the same plane for physicians. At the same time, physicians are acutely aware of significantly increased enforcement in this area. The proposed regulations issued by the Inspector General of the Department of Health and Human Services on April 2, 1990 are a remarkable policy statement about the perceptions and approaches of government enforcers regarding fraud and abuse by health care practitioners and providers. These regulations address exclusionary activities by the Inspector General based on new authorities under the Medicare and Medicaid Patient and Protection Act of 1987. Some exclusions are mandatory under the law based on a criminal conviction elsewhere. Some exclusions are "permissive" and may be overcome by the potentially excluded party providing a sufficient basis to reject exclusion. Still further exclusions are referred to as "derivative permissive exclusions."

The current regulatory environment in which all health care providers, whether institutions, practitioners, or suppliers, must operate is replete with these punitive rules, and all believe that they are at risk. If you examine the bases for these actions closely, you see that they are frequently based on quality concerns, but rarely do they provide any standards at all to inform those affected by the rules what the rules are. This approach creates substantial uncertainty and in the long run undermines the ability of providers to respond to other more well-intentioned activities aimed at improved quality performance.

DUE PROCESS

Within the legal environment of sanctions and interventions is the issue of due process. Many people complain about how long it takes and how difficult it is to impose penalties or other corrective action for poor quality performance. My standard retort to this complaint is, "Where you stand depends on where you sit." When I work with physicians who are on

Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
×

hospital medical staff committees, trying to implement good quality assurance programs and corrective action, their primary question to me is, "We all know where the problem is, why do we have to go through all this clue process?" In contrast, however, whenever a question is raised about an individual physician's behavior, the first thing he asks me is, "Where is my due process?"

I believe that in the context of the legal issues raised by a quality assurance strategy, we need to devote more attention to the role of clue process in all of these systems. I have recently begun to describe due process to physicians as the lawyer's version of the scientific method. When someone comes forward with evidence, there must be some kind of testing and validation of that evidence in order for it to be viewed as credible. Nonlawyers frequently forget that under the constitution, "due process" is that process which is clue. It is not a uniform standard of behavior. It varies in terms of what is due, depending on the nature of the judgment at issue. Due process tries, in the crucible of cross-examination, expert testimony, questioning, and struggling to identify the truth, to produce an ultimate reality that can be supported. This procedure takes time in the same way that the scientific method and double-blind studies take time.

Within the context of a quality assurance strategy, a significant amount of attention ought to be devoted to the current socialization of physicians, which cuts at cross-purposes with the legal environment within which they operate. Physicians—and peer reviewers—are socialized to the consensual intellectual considerations of grand rounds. This is not a good model for due process. Physicians are uncomfortable with adversarial process. Peer reviewers need training about how to develop and present evidence supporting findings of poor quality. Early PRO efforts at sanctions were frequently rejected by the Inspector General for these and other technical and procedural failures.

Another variable in the character of a sanction hearing or discussion at the PRO level is the type of attorney representing the PRO. A corporate attorney advising a PRO will run one kind of meeting. A technical health lawyer, to the extent we exist as a breed, will take a different approach. Still further, a personal injury defense lawyer will create a different environment. These issues have not been addressed in terms of evaluating what types of procedures the law will impose. The guidance given a group of physicians trying to exercise control over their peers will influence the nature of the process that emerges and therefore will also influence the outcome of that process.

Arbitration techniques, contractual approaches, and intermediate interventions are examples of more creative uses of the legal system. Some energy from the legal community in this direction would probably advance the state of the art if not ameliorate the fundamental mistrust of the legal

Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
×

system and lawyers, which is the outcome of the new malpractice crisis addressed above.

Shifting Standards of Behavior

As part of the issue of due process, it must be stated that the continuous improvement model proposed in the IOM study is one that necessarily entails, as part of its conceptual underpinnings, the notion that standards for performance will constantly shift. Once identified outlier problems have been solved, new outliers will be identified as we continuously improve the environment. This will create an inherent uncertainty in the system.

If a continuous improvement model is adopted, there will always be physicians who complain that the rules are in flux, the standards always shifting, and measures of proper performance unclear. This tension is acceptable provided it is clearly understood by all players. The continuous improvement model will have legal consequences: there will forever be a temporal parallax in the system, because the standard of performance at the time the care was rendered will not necessarily be the standard that has most recently been articulated or the standard applied at the time the behavior is judged.

DATA PROTECTION AND RELEASE

Another significant legal concern arising from the quality assurance strategy proposed in the IOM study emanates from the tensions between the protection of and the availability of data pertaining to performance. All of the quality assurance methodologies addressed in the study—whether pre-admission or concurrent, whether focused on quality assurance or utilization management—are data driven. Data—whether profiles of provider behavior, outcome statistics, quantitative definitions of outliers, or even just the medical record—are at the core of all quality assurance and utilization management activities. The necessity for accurate data on which to base judgments is so critical in the PRO system that federal law provides an explicit legal obligation for proper documentation by providers and practitioners. Failure to conform to this obligation can result in fines or even exclusion from Medicare. At the same time, the law, both state and federal, protects the confidentiality of patient-identified data.

On the other hand, laws protecting the confidentiality of data considered and produced by review processes and reviewers have not evolved as rapidly as the proliferating systems and requirements to conduct review. Most of the peer review protection laws in existence today were enacted in the mid-1970s during the last malpractice crisis. They tend to be hospital-focused and sometimes extend to insurance claims review, but they reflect the quality

Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
×

assurance and utilization management world as it existed 15 years ago. Many of these laws are ill equipped to deal with the scope of activities in existence today (McCann, 1989), let alone as contemplated over the 10-year strategy in the IOM study.

Many HMOs today permit fundamental decisions regarding quality, medical necessity, and coverage of services to be made by a single individual functioning as the medical director. Some case law has found that judgments made by an individual as distinct from a committee do not obtain the confidentiality protections of the law. Some case law has said that an infection control committee is not a peer review committee under state law.

To address the legal concerns in implementing a comprehensive quality assurance strategy, attention needs to be devoted to these problem areas as well. With regard to a continuous improvement model, many practitioners and providers are vitally concerned about the conclusions that can be drawn from the data necessary to the conduct of such a quality assurance program. Some will argue that the continuous improvement model inherently creates the ammunition that will feed the malpractice fire. Even the Joint Commission's required quality assurance monitors have been critized by some on the same basis: the point of the Joint Commission's requirements is that an institution must be unearthing and documenting problems. The failure to identify problems in and of itself will result in a Joint Commission deficiency because the requirement assumes that every institution can be better (Gosfield, 1987).

The early motivation of peer review protection acts, to encourage and foster aggressive self-criticism, has by no means diminished. If anything, the pressure for these activities has increased. The law should be addressed to keep pace with these requirements.

Although this need for protection is essential to foster careful review, it exists in the middle of a trend toward vastly increased access to previously protected information. The government's continuing release of hospital morbidity and mortality data, as well as nursing home data, and the appropriateness and effectiveness initiative (Gosfield, 1989b) are responses to society's firm acceptance of the public's right to know.

Yet these tensions have not been well examined to date. A good recent example is the proposed PRO substandard quality denial notice. Since 1986, federal law has provided for Medicare payment denial for poor quality. When proposed regulations were issued they provided for notice to the patient of the basis for the denial—poor quality—before any appeal rights had been exercised. Significant fears regarding malpractice exposure from the notice were expressed by the provider community. To date no final regulations have been issued, but in 1989 Congress passed an amendment to specify what language must be included in the notice. Reference was made to care not being "acceptable" rather than to care of poor quality. Although the new language was intended to remove some of the sting from

Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
×

the notice, consternation continues regarding the implications of the statement in an individual case. Many practitioners and providers believe that the procedures that produce the substandard determination are themselves vulnerable to significant criticism. Similarly, the quality intervention plan imposed by the federal government through the PRO Third Scope of Work mandates that when a PRO identifies a quality problem of sufficient severity to garner a score of 25, the PRO must consider reporting the findings to the appropriate licensure boards. Yet, at that point there will have been no external validation or objective review of the underlying judgments prior to reporting the finding (Gosfield, 1989b).

CONCLUSIONS

From the multiplicity of legal concerns raised by a comprehensive quality assurance strategy, I have selected those that might not be obvious. Other concerns abound; they range from highly technical legal concerns such as enforcement problems in utilizing a ''deeming'' mechanism in the Medicare program based upon Joint Commission accreditation, to issues of the implications of antitrust exposure in quality assurance activities based on a peer-conducted approach. As the programmatic requirements for quality assurance are refined and expressed in the law, the law can either impede or advance more rapid progression toward a better system. To ignore these issues can only retard the ultimate goal of improvement.

REFERENCES

Gosfield, A.G. PSROs: The Law and the Health Consumer. Cambridge, Mass. : Ballinger Publishing Co., 1975.

Gosfield, A.G. Navigating Through JCAH's New Quality Assurance and Medical Staff Standards. Health Span, February 1987.

Gosfield, A.G. Physicians and the PROs' Third Scope of Work. Medical Staff Counselor 1-10, Summer 1989a.

Gosfield, A.G. PROs: A Case Study in Utilization Management and Quality Assurance. Pp. 361-397 in 1989 Health Law Handbook. Gosfield, A., ed. New York, N.Y.: Clark Boardman Co., 1989b.

Institute of Medicine. Medicare: A Strategy for Quality Assurance. Volumes I and II. Lohr, K.N., ed. Washington, D.C.: National Academy Press, 1990.

McCann, R.W. Protection and Disclosure of Medical Review Information. Pp. 423-446 in 1989 Health Law Handbook. Gosfield, A., ed. New York, N.Y.: Clark Boardman Co., 1989.

Shields, T.C. and O'Kelly, E.S. Legal Trends and Developments in Procedures for Medical Staff Appointment and Credentialing. Pp. 399-422 in 1989 Health Law Handbook. Gosfield, A., ed. New York, N.Y.: Clark Boardman Co., 1989.

Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
×

Smith, D.E. Managing the Risk of Quality Assessment. Pp. 25-40 in 1990 Health Law Handbook. Gosfield, A., ed. New York, N.Y.: Clark Boardman Co., 1990.

Teplitzky, S.V., Holden, S.C., and Sollins, H. Medicare and Medicaid Fraud and Abuse. Pp. 507-544 in 1989 Health Law Handbook. Gosfield, A., ed. New York, N.Y.: Clark Boardman Co., 1989.

Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
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Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
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Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
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Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
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Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
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Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
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Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
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Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
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Suggested Citation:"14. Legal Concerns." Institute of Medicine. 1991. Medicare: New Directions in Quality Assurance Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/1768.
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Medicare: New Directions in Quality Assurance Proceedings Get This Book
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This book contains chapters and commentaries by members of the Institute of Medicine (IOM) committee and by outstanding practitioners, researchers, legislators, and policymakers about the IOM's proposals for new directions in quality assurance as specified in Medicare: A Strategy for Quality Assurance, Volumes 1 and 2.

Sections of this new book address ideas about how to move toward increasing professionalism, implementing orgranization and system-focused quality improvement, better decision making by patients and clinicians, patient outcomes orientation, and public accountability and program evaluation. Other sections explore research questions and capacity building in the field of quality assessment and improvement, the epidemiology and quality problems, and legal issues in quality assessment.

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