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Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

7 Structure and Finances CHAPTER SUMMARY This chapter describes Quality Improvement Organizations (QIOs) and the organizations that held QIO contracts for the 7th scope of work, including their structure, governance, staffing, and finances. This is followed by discussions of the QIO Support Centers and the overall funding of the QIO program. This background material serves to give an overall general picture of the structure and financ- ing of the QIO program. STRUCTURE OF QIOS The Peer Review Improvement Act of 1982 (P.L. 97-248) modified and extended existing laws and regulations to create the current Quality Im- provement Organization (QIO) structure, replacing Professional Standards Review Organizations (PSROs) with Utilization and Quality Control Peer Review Organizations (PROs), later renamed QIOs (Bhatia et al., 2000; CMS, 2004b). The legislation defined the organizational basis for QIO con- tractors and restricted the kinds of organizations that qualify for QIO sta- tus. Although this 24-year-old statute included provisions not applicable to the current health care environment, it provided sufficient flexibility to al- low significant adaptation to modern practices and issues in terms of per- formance criteria, standards, and the requirements of the U.S. Department of Health and Human Services (Jost, 1989). This inherent flexibility per- mits the use of newer definitions of quality, the expression of new concerns for patients' rights, and a changed emphasis from identifying outliers to changing systems. These changes were made, in part, to encourage provid- ers to view QIOs as collaborative partners rather than regulatory bodies (CMS, 2004b). 160

STRUCTURE AND FINANCES 161 Physician-Sponsored and Physician-Access Designations To be eligible to compete for a QIO contract, an entity must meet certain criteria for designation as either a "physician-sponsored" or a "physician-access" organization (CMS, 2004b). For a physician-sponsored organization, either (1) at least 20 percent of the practicing physicians in the state are owners or members of the organization or (2) 10 percent of practicing physicians are owners or members and the organization can dem- onstrate that the organization represents an additional 10 percent of prac- ticing physicians in that state. For a physician-access organization, organi- zations must have arrangements with licensed and practicing physicians to conduct reviews and include "at least one physician, licensed in the state, from every generally recognized specialty and subspecialty who is in active practice in your review area" (CMS, 2004c:2). An organization may not qualify for either designation if it is a health care facility, an association of health care facilities, or a health care facility affiliate.1 These designations retain some qualities of the QIO predecessor orga- nizations that favored local peer review. In the past, providers objected to reviews by out-of-state providers, arguing that practice patterns differed by region. However, the evolving recognition of national standards challenges the perceived need for local review (personal communication, T. Jost, Wash- ington and Lee University School of Law, January 7, 2005). Repeal of the requirement for this designation might encourage other entities to compete for QIO contracts. Also, QIOs may be better served by geographically dis- persed reviewers, which would allow expanded representation by individu- als in clinical specialties and subspecialties and allow the identification of common local practice patterns that are inconsistent with generally accepted evidence-based knowledge. One exception may be the distinction in the practice patterns of rural providers. In these circumstances, patient care is influenced by confounding circumstances, such as geography, transportation, and the availability of medical technologies; but the practice patterns under these circumstances might be comparable among rural providers around the country (IOM, 2005). However, if the requirement for physician-sponsorship or physician- access designations were eliminated and other entities were allowed to par- 1The QIO manual defines a health care facility as "An institution that directly provides or supplies health care services for which payment may be made in whole or in part under title XVIII of the Social Security Act" (CMS, 2004c:c2p3). The QIO manual defines a health care facility affiliate as "An organization that has a board on which more than 20 percent of the members are also either a governing board member, officer, partner, five percent or more owner, or managing employee in a health care facility or association of health care facilities in the QIO area" (CMS, 2004c:c2p3).

162 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM ticipate as QIOs, there might be concerns about those organizations, which could have multiple agendas, having access to private health information of patients and providers. Currently, when a QIO contract is open for bid- ding, the Centers for Medicare and Medicaid Services (CMS) gives priority to physician-sponsored organizations (CMS, 2004b). The committee found, using its web-based data collection tool, that 27 of the 52 reporting QIOs identified themselves as physician sponsored and 19 said that they were physician access. (Note that four answered "both" and two said "neither," even though neither of these responses are technically acceptable for a QIO contractor.) Organizational Characteristics During the 7th scope of work (SOW), 41 organizations held QIO con- tracts for 53 individual QIO core contracts--one for each state, the District of Columbia, Puerto Rico, and the Virgin Islands. According to the web- based data collection tool, the majority of the organizations (22 of 41) were established before 1975. Thirty-five of the 41 organizations stated they were originally established for the purpose of holding a QIO contract. Only six claimed to be subsidiaries of other organizations. Seventeen organizations reported that they had their own subsidiaries. Nearly all of the organiza- tions (38 of 41) held a not-for-profit tax status. QIOs were asked whether or not they held specific accreditations. Data on the specific accreditations are presented in Table 7.1. Additionally, some organizations listed types of accreditations. Four reported that they were certified independent review organizations (either state or national), four said that they were licensed utilization review man- agers (generally by state), and three said that they were accredited providers of continuing medical education credits. Seven organizations listed other accreditations including state certifications (such as medical review or- ganization or patient safety organization) and National Committee for Quality Assurance licenses (Health Plan Employer Data and Information Set [HEDIS] auditor or HEDIS survey vendor). The web-based data collection tool also asked the individual QIOs about Baldrige National Quality­type awards. Although most states seem to have this type of award, most QIOs do not apply for them. Of the 52 reporting QIOs, 18 said that their state has no such award. Of the 34 QIOs in states with Baldrige­type awards, 23 have not applied for the state award, eight applied and received the award, and three applied but did not receive the award.

STRUCTURE AND FINANCES 163 TABLE 7.1 Accreditations Held by Organizations with QIO Contracts for the 7th SOW Accreditation Number of Organizations HEDISa 4 ISO 9000 0 ISO 9001:2001 4 Six Sigma 1 URACb case management 2 URAC claims processing 0 URAC consumer-directed health care 0 URAC corec 5 URAC credential verification 0 URAC disease management 1 URAC healthy call center 0 URAC health provider credentialing 0 URAC utilization management 11 URAC health website 0 URAC HIPAA privacy 0 URAC HIPAA security 0 URAC independent review 7 URAC worker's compensation utilization management 1 URAC vendor certification 0 NOTE: One organization anticipated achieving ISO 9001:2001 in March 2005 (shortly after data collection ended), and another had URAC core accreditation pending. HEDIS = Health Plan Employer Data and Information Set; HIPPA = Health Insurance Portability and Account- ability Act of 1996; ISO = International Standards Organization; URAC = Utilization Review Accreditation Commission. aHEDIS is a set of standardized measures used to compare performance of managed care plans. HEDIS also includes a consumer-perspective survey (NCQA, 2005). bThe Utilization Review Accreditation Commission was renamed to "URAC" in 1996 when it expanded its accreditation process. URAC sometimes does business as the American Ac- creditation HealthCare Commission, Inc. (URAC, 2005). cOne organization chose "prefer not to answer/information not available." SOURCE: IOM committee web-based data collection tool (n = 41 organizations). QIO Staff In the web-based data collection tool, all 52 reporting QIOs said that their employee with the shortest length of employment had been employed for 2 years or less, and almost all (50 of 52) said that the employee had been there less than 1 year. For the longest length of employment of a single employee, responses ranged from 5 years to more than 25 years. In fact, 22

164 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM TABLE 7.2 QIO Employee Turnover Rates, 2002 to 2004 Percentage of turnover among QIO employees 2002 2003 2004 Statistic TP SS TP SS TP SS Minimum 0 0 0 0 0 0 First quartile 2.56 0.03 6.12 0 5.69 0.06 Median 12.00 5.00 13.00 3.99 12.15 3.22 Mean 13.00 15.50 19.53 11.80 12.38 10.93 Third quartile 19.00 24.50 23.00 21.22 18.00 11.30 Maximum 50.00 86.00 114.00 50.00 39.00 167.00 NOTE: TP = technical or professional staff; SS = support staff. SOURCE: IOM committee web-based data collection tool (n = 52 QIOs). QIOs related that the longest length of employment of at least one em- ployee was 25 or more years, and 35 QIOs had had at least one employee for more than 20 years. The reported average length of employment among all employees ranged from 1.32 to 10.00 years, with a mean of 5.97 years. Examination of employee turnover within the QIO program is impor- tant, especially in light of the new priorities of transformational change in which the employee turnover rate is used as a measure of success. From 2002 to 2004, employee turnover rates varied greatly among both the tech- nical or professional staff and the support staff of the QIOs. The average turnover rate for both of these categories ranged from 10.93 to 19.53 per- cent. (Loss of a QIO contract can account for turnover rates of more than 100 percent, which can skew average turnover rates.) The individual turn- over rates reported by the QIOs are provided in Table 7.2. QIO Leadership In the web-based data collection tool, the chief executive officers (CEOs) of 52 QIOs rated the extent to which they believed that each of 14 "leadership competencies," derived from the National Center for Healthcare Leadership competency model (National Center for Healthcare Leadership, 2004), were represented. These competencies are collaboration, relation- ship building, team development, performance measurement, communica- tion skills, change leadership, process management and organizational de- sign, strategic orientation, innovative thinking, community orientation, achievement orientation, self-development, impact or influence, and talent

STRUCTURE AND FINANCES 165 development. A majority of the CEOs rated their leadership teams as dem- onstrating each of the leadership competencies to a "substantial" extent. This finding was particularly evident in the cluster of competencies that appear to be the most obviously related to the type of work required during the 7th SOW--collaboration, relationship building, team development, and performance measurement--with more than 88 percent of CEOs rating these competencies "substantial." For only one competence--talent devel- opment--did any CEO indicate that it was represented "not at all"; overall, this particular leadership competence is least well represented across leader- ship teams, with 19 of 52 QIOs rating it "modest" and only 32 of 52 QIOs rating it "substantial." Governing Board The governing board of a QIO is responsible for the "efficient and effective management" of its QIO (CMS, 2004c:4). When responding to the CMS requests for proposals (to bid on the QIO contract), the organiza- tion must specify how the board will oversee the management of the QIO. CMS sets minimum standards in the official request. The QIO has substan- tial discretion in selecting the members of its governing board and their term lengths and responsibilities. Hence, each QIO can adapt its board to the vision and requirements of its own organization. There is one notable exception to this flexibility: the board must have at least one consumer representative. The Omnibus Budget Reconciliation Act of 1986 (P.L. 99-509) added this requirement. The consumer represen- tative must be a Medicare beneficiary and live in the state represented by the board's organization. The consumer representative cannot be a practic- ing or retired physician, nor can the consumer representative be "a govern- ing board member, officer, partner, owner of more than five percent inter- est in a health care facility, or managing employee of a health care facility or association of health care facilities" (CMS, 2004c:6). Additionally, the consumer representative must meet at least four of the following five crite- ria (CMS, 2004b): · Experience with consumer advocacy, · Knowledge of state organizations working on senior issues, · Knowledge of the needs of beneficiaries and providers in their state or jurisdiction, · Basic understanding of the Medicare program, · Experience serving on or working with other boards or commissions. QIOs representing states with both fee-for-service and managed care Medi- care contracts must ensure the adequate representation of each. Therefore,

166 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM these QIOs must have an additional consumer member (for the population not represented on the governing board) "as a permanent member of at least one appropriate committee/group" (CMS, 2004c:6). In the case of organizations holding more than one QIO contract, the consumer rep- resentative may reside in any of the states served by those QIOs. The orga- nizations are not required to have a representative of the fee-for-service Medicare population for each state. However, a managed care consumer representative for each state (if managed care plans exist in the state) must sit either on the governing board or on a committee or group. Overall, the demographics of the board should represent the diversity of the Medicare population in the state(s) that it serves. Additionally, no more than 20 percent of board members may be "affiliated with a health care facility or association of health care facilities located in the area of any of the following capacities: a governing member; an officer; a partner; an owner of five percent or more; or a managing employee" (CMS, 2004c:4). QIO Board Size (7th SOW) Data supplied by the CEOs of the 41 organizations holding QIO con- tracts for the 7th SOW via the web-based data collection tool showed that the allowed and the actual board sizes varied widely. The maximum board sizes permitted by individual bylaws ranged from 6 to 52 members, with a mean of 21. The actual sizes ranged from 4 to 30 members, with a mean of 17. Most organizations (32 of 41 organizations) reported that 3 years was the typical term length for board members. Just over half of the organiza- tions (21 of 41) limit the number of board terms. Most of the boards (29 of 41) meet on a quarterly basis, with the frequencies of meetings varying for the remaining organizations. Figure 7.1 shows the distribution of the num- ber of organizations reporting the existence of specific standing committees. Twenty-six of the 41 organizations reported that they had one or more regular standing board committees other than those listed in Figure 7.1. In most cases, the additional committees did not have regularly scheduled meetings and were used on an ad hoc basis. QIO Board Expertise (7th SOW) According to the web-based data collection tool, most CEOs of organi- zations holding QIO contracts for the 7th SOW (30 of 37 respondents) did not anticipate the need for additional board expertise for the 8th SOW. Of the seven CEOs who foresaw such a need, three specified expertise in home health care in particular. Other responses related to more general areas of expertise, such as business or financial management.

STRUCTURE AND FINANCES 167 36 31 23 15 11 8 8 7 3 2 e w Audit vie ecutiv Finance Re Ex vernance Planning Outreach elopment Nominating v Go De ategic Compensation vider Str Pro Business FIGURE 7.1 Numbers of QIO boards with the indicated standing committees (7th SOW). SOURCE: IOM committee web-based data collection tool (n = 41 organizations). The web-based data collection tool also requested information on the primary professional background of each board member; the organizations could report on up to 30 board members. The respondents selected the backgrounds from among 15 options. Physicians were the only professional type represented on all boards. Just less than 60 percent of these organiza- tions included executives or managers from non-health-care-related busi- nesses, and 56 percent included hospital executives or managers. The only other profession represented on at least one-third of the boards was nursing (41 percent). Professionals with backgrounds relevant to the tasks required in the 7th SOW other than hospital quality improvement--executives or managers in nursing homes and home health care agencies--were included on relatively few boards (28 and 2.56 percent, respectively). Among all boards, physicians clearly dominated: 67 percent of all orga- nizations' board members were physicians (427 of 639 board members for whom data were reported). Nurses were the second largest group, at just under 8 percent of all board members, followed by executives in non-health- care-related businesses (about 7 percent) and hospital executives or manag- ers (about 6.5 percent). All other professional categories each accounted for less than 5 percent of board members. Examination of the board compositions revealed that three or fewer different professional backgrounds were represented on the boards of about

168 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM half of the organizations. Ten of 41 boards contained individuals with only two different types of professional backgrounds, although there was con- siderable variety in the second of the two backgrounds represented across the organizations (the common one being physicians). One organization's board included individuals with 11 different types of professional back- grounds, the boards of three organizations included individuals with seven different types of professional backgrounds, and the boards of four organi- zations included individuals with six different types of professional back- grounds. It is noteworthy, however, that the respondents were limited to choosing one background, and some board members may have had mul- tiple relevant experiences in their professional careers. QIO Board Members' Affiliations (7th SOW) The web-based data collection tool requested information on the pri- mary affiliation of each board member and showed a predominant repre- sentation of individuals from office-based practices and hospitals. The re- spondents selected from among 11 choices on a drop-down menu. Clinicians in office-based practice settings represented the only affiliation seen on the board of every organization holding a QIO contract for the 7th SOW. Al- most 85 percent of these organizations' boards included members affiliated with hospitals. Among all boards, members affiliated with office-based prac- tices dominated (294 of 636 board members [46 percent] for whom this information was reported). The second largest group was board members affiliated with hospitals (121 members [19 percent]). Boards tended to have more variety in primary affiliations than in pro- fessional backgrounds. Five or six different affiliations were represented on a typical board; two boards had as many as nine different affiliations, and one board had eight. Each board had individuals with at least two different primary affiliations. Despite the potential that organizations with larger boards might demonstrate more diversity in professional backgrounds or primary affiliations, statistical analyses revealed no such relationship for the boards of these organizations. As was mentioned above in the discus- sion of primary backgrounds, it is noteworthy that the respondents were limited in their choices, so members may represent more than one profes- sion or affiliation. This is notable because the QIO contract requires at least one consumer representative on each board, yet not all organizations re- ported a member with "Medicare beneficiary" or "consumer" as his or her primary affiliation. This indicates that some organizations have consumer representatives with other significant affiliations that they consider to be dominant over their role as a consumer representative.

STRUCTURE AND FINANCES 169 QIO Board Selection, Compensation, and Evaluation (7th SOW) Overall, at least 34 of the 41 boards for organizations holding QIO contracts for the 7th SOW had some form of involvement in either the selection or the approval of their own new board members. About half of the organizations (21 of 41) reported via the web-based data collection tool that board members are selected by or with the approval of the organiza- tion's current board. An additional 10 organizations' boards were at least partially involved in the nomination or selection process. The data also revealed that the vast majority of board members are generally compensated in some way. Thirty-four of 37 reporting organiza- tions provide compensation (not including travel expenses) to board mem- bers. A 2005 article in the Washington Post reported on the salaries and compensation for QIO board members (Gaul, 2005). The author outlined specific examples of compensation to board members of up to $45,000 each, or $250 per hour, for QIO-related activities, including one board in which 19 of the 21 board members received some form of compensation. In comparison, the article cites an estimate that nationally, only 2 percent of nonprofit groups provide financial compensation to their board members. The web-based tool collected data on the evaluation of board perfor- mance. Those data revealed that most organizations do not regularly evalu- ate their boards individually or as a whole. Only 10 of 38 reporting organi- zations had formal mechanisms in place for the evaluation of individual board member performance. Ten of 38 organizations stated that they had mechanisms in place to evaluate the overall board performance. Consumer Advisory Council The QIO contract for the 7th SOW required each QIO to establish a Consumer Advisory Council (CAC) to meet at least quarterly to advise the organization on policy directions for consumer-related issues. "CAC mem- bership must include representatives from community and business organi- zations. . . . More than half of the CAC members must be from organiza- tions whose primary responsibility is protecting the interest of Medicare beneficiaries" (CMS, 2002:35). Members are chosen at the discretion of the QIO contractor. The example in Box 7.1 shows the membership of the CAC for the Health Services Advisory Group (Arizona's QIO). Ability to Perform Case Review Activities Organizations bidding for QIO contracts must demonstrate the ability to perform required review activities by documenting past or current experience or providing a detailed performance plan (CMS, 2004b). The

170 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM BOX 7.1 Health Services Advisory Group's CAC Member Organizations AARP Arizona ABC Coalition Aging and Adult Administration Alzheimer's Association Area Agency on Aging Arizona Academy of Family Physicians The Arizona Center for Disability Law Arizona College of Public health Arizona Health Care Cost Containment System Arizona Latin-American Medical Association Arizona Medical Association Arizona Rural Health Association Consumers/Senior Community Activists Foundation for Senior Living Gold & Associates Governor's Advisory Council on Aging HSAG Board of Directors Inter-Tribal Council Agency State Health Insurance Assistance Program University of Arizona College of Medicine SOURCE: Health Services Advisory Group (2005). organization must submit a document outlining its policies and procedures, including sections on rules of confidentiality, methods of information col- lection, the criteria used in the review process, and a mechanism for manag- ing complaints and appeals. Additionally, the organization must provide a list of its staff and an organizational chart showing physician management of the process as well as the process for the collection of information by clinical staff. Finally, the organization must be able to demonstrate experi- ence or an ability to analyze the medical review data (CMS, 2004b). Spe- cific case review requirements, activities, and goals are discussed in Chap- ter 12. Several QIOs hold special accreditations related to case review activities (as discussed above). Subcontracting Data from the web-based data collection tool revealed substantial ex- perience with the use of subcontractors for work both for CMS and for

STRUCTURE AND FINANCES 171 other clients among the organizations holding QIO contracts for the 7th SOW. A little more than half of the organizations (26 of 41) used subcon- tractors on their core QIO contract tasks or planned to use them. Addition- ally, 28 of 41 organizations used subcontractors (or planned to use subcon- tractors) for other CMS work, such as QIO Support Centers (QIOSCs) or special studies. Twenty-six reported that they used subcontractors for work for non-CMS clients. CMS requires QIOs to meet performance planning requirements (as defined by CMS in the contract for the 8th SOW) for the tasks of the 8th SOW. Most of these requirements are based on QIO performance in the 7th SOW. If the QIO does not meet any of these requirements, the QIO must submit a written statement (a Capability Enhancement Plan) on how it plans to meet those requirements (CMS, 2005b). In the 8th SOW, CMS may require a QIO to subcontract for Task 1d1 duties (assistance with informa- tion technology implementation in the physician practice setting) if CMS determines that the QIO does not have expertise in this area. Conflict of Interest Rules To ensure the impartiality of case reviews and third-party independence, certain organizations cannot bid for QIO contracts (CMS, 2004b). Those excluded from bidding are health care facilities, associations of health care facilities, and health care facility affiliates. The statute also does not allow payers or their affiliates to be QIOs if other entities are available, and regu- lations discourage state governments from being QIOs. In most cases, CMS will exclude an organization from bidding if a member of its governing board has been sanctioned by Medicare. These conflict-of-interest rules are important because, during the site visits, the QIOs praised their indepen- dent, impartial nature, which they found to be one of their major strengths. QIOs express concern about their ability to work outside of the QIO contract because of limitations that do not allow them to augment their QIO contracts (personal communication, D. Schulke and T. Ketch, Ameri- can Health Quality Association, June 30, 2005). These restrictions prevent organizations with QIO contracts from providing services similar to those provided under the QIO contract under separate contracts with providers in the Medicare program. This restriction intends to avoid conflicts of inter- est that might arise if a QIO was receiving compensation for a separate contract from a provider who came under review for cases of questionable quality or other concerns. Confidentiality Restrictions A complex set of laws and regulations delineate the confidentiality and disclosure requirements of government-sponsored agencies, mostly imposed

172 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM through 42 U.S.C. § 1320c-9, 42 U.S.C. §§ 1320c-3 and 1320c-5, and 42 C.F.R. Part 48042 U.S.C. (personal communication, T. Jost, Washington and Lee University School of Law, January 7, 2005). The Freedom of Infor- mation Act applies to federal agencies but not to QIOs. Current QIO confi- dentiality and disclosure rules are partially based on information presented in a 1981 Institute of Medicine (IOM) study, Access to Medical Review Data (IOM, 1981), which examined the policies of the Professional Stan- dards Review Organizations, the predecessors of the QIOs. That study out- lined general principles, including freedom of information, rights to privacy (for both the provider and the patient), and minimization of interference in the peer review process. The committee that wrote that report recognized the potential for harm from either erroneously damaged professional repu- tations or the misinterpretation of information. It also acknowledged the strong public interest in the availability of information on matters pertain- ing to public health and publicly funded programs, as well as the need for access to information for accountability and for consumers to purchase health care services. At that time, the committee recommended the disclo- sure of institution-specific information (aggregate performance data) but did not recommend that physician-specific information be revealed. The disclosure of specific information was thought to be in opposition to the philosophy of peer review--the use of root-cause analysis and improvement methodologies without penalty. With a few exceptions, all information held by QIOs is considered confidential, thereby sustaining the confidence of consumers and providers. However, many nonidentified QIO data are available. Since publication of that 1981 IOM report, even greater efforts have been made to disclose quality data to allow consumers to make better- informed decisions about their health care, including public reporting by Medicare and some private purchasers. The U.S. Department of Health and Human Services can alter confidentiality policies without legislative action (personal communications, T. Jost, Washington and Lee University School of Law, December 21, 2004, and January 7, 2005) (IOM, 1981; CMS, 2004b). Patients have the right to request and receive their personal informa- tion, but other specific patient or practitioner references must be omitted (personal communication, T. Jost, Washington and Lee University School of Law, January 7, 2005; CMS, 2004b). The distinction between "CMS information" and "QIO information" is noteworthy: "CMS data is the data and/or information that CMS provides to the QIO to enable it to carry out its function under this contract. QIO data is the data and/or informa- tion the QIO gathers or develops through analysis in the course of carrying out its functions under their contract" (CMS, 2004a:5). For example, CMS data include provider-level claims data that QIOs can access to identify

STRUCTURE AND FINANCES 173 areas in need of quality improvement or to monitor payment error rates. Examples of QIO data include information gathered through special stud- ies or beneficiary complaint reviews. During the site visits, one QIO ex- pressed concern that confidentiality restrictions impede its ability to assist individual providers, precluding QIO access to data that could help it better understand the individual patterns of providers. QIOs may not release any CMS information that they hold without express approval from CMS. QIO information can be released only according to general confidentiality re- strictions (personal communication, T. Jost, Washington and Lee Univer- sity School of Law, January 7, 2005; CMS, 2002, 2004a,b, 2005a). QIO SUPPORT CENTERS QIOSCs act as central resources for all QIOs on specific topic areas or for the general needs of the QIO community (CMS, 2002, 2004a). A QIOSC may provide technical information and reports, QIO staff training, and implementation materials. A QIOSC can help QIOs decide how to recruit identified participants, serve a convening function for QIOs to communi- cate among themselves through monthly calls and listserves, and provide other technical support as needed. By also acting as a central clearinghouse of information, the QIOSC gathers information on the experiences of indi- vidual QIOs, including best practices, change concepts, clinical techniques, and guidelines that QIOs can apply to their own interventions. However, some QIOs complain that guidance or materials from QIOSCs become available too slowly. 7th SOW Detailed descriptions of the activities of QIOSCs will be presented throughout later chapters. Table 7.3 shows all QIOSCs in place during the 7th SOW. 8th SOW The QIOSC system has been redesigned in the 8th SOW. During the strategic planning process in 2004, the QIO and End-Stage Renal Disease Steering Committee (see Chapter 13) decided that the QIOSC system needed to be updated because of variation in activities and performance among QIOSCs, the new missions of the QIO program, and the need to address cross issues across settings (personal communication, J. Taylor, April 29, 2005). The two main types of QIOSCs are crosscutting QIOSCs and task/ topic-specific QIOSCs. The five crosscutting QIOSCs that handle issues re- lated to provider settings or specific tasks are:

174 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM · MedQIC--the Medicare Quality Improvement Community (see Chapter 13), which maintains a public website for the quality improvement community; · Communications--supports all QIO communication activities; · Performance Improvement--provides training and support for vari- ous quality improvement methodologies; · Data Reports--maintains data systems to support QIO reporting activities; and · Measures Management--assists with the development and imple- mentation of measures. The topic or provider setting QIOSCs focus more specifically on certain tasks or provider settings and will use their expertise to customize the tem- TABLE 7.3 QIOSCs in the 7th SOW Topic Area Name or Acronym State Nursing home NH QIOSC RI (CO is subcontractor) Home health HH QIOSC MD Hospital--heart care (acute myocardial Heart Failure QIOSC CO infarction and heart failure) Hospital--infectious disease (surgical Infectious Disease QIOSC OK infection prevention and pneumonia) Physician office Physician Office QIOSC VA Underserved and rural UQIOSC TN Medicare Advantage (Medicare+Choice) M+C QIOSC CA Communications CommQIOSC WA and MO (MO subcontracts to WA) Process improvement PI QIOSC WA Beneficiary complaint response program MBP QIOSC CA (Medicare beneficiary protection) Outpatient data Outpatient Data QIOSC IA Hospital data collection Hospital Data Collection IA Standard Data Processing System QIOSC Standard Data Processing IA System QIOSC Quality improvement interventions and Interventions QIOSC "Virtual MedQIC.org QIOSC" led by IA Hospital Payment Monitoring HPMP QIOSC TX Program (HPMP) SOURCE: CMS (2002, 2004a).

STRUCTURE AND FINANCES 175 plates, data, tools, etc., provided by the crosscutting QIOSCs. The 10 topic or provider setting QIOSCs are: · Nursing home, · Home health care, · Hospital interventions (which includes rural hospitals; combines heart failure and infectious diseases), · Hospital data reporting, · Physician office (which has a coordinating role for office setting, Doctor's Office Quality­Information Technology, and the underserved population), · Underserved, · Outpatient data, · Pharmacy (Task 1d3, which is related to the Medicare Part D pre- scription drug benefit), · Beneficiary protection, and · Hospital Payment Monitoring Program. In the 8th SOW, QIOSCs support QIOs by providing tools and informa- tion, as described above for the 7th SOW. QIOSCs are expected to perform these tasks as well as interact with other QIOSCs. Additionally, satisfaction surveys will be administered to all QIOs to determine their satisfaction with the products and services of each QIOSC. In September 2005, CMS devel- oped a draft guidebook for the QIOs on how to best use QIOSC services, including a list of the available products and contact information (personal communication, D. Chromik-Ralston, September 10, 2005). The QIOSC contractors for the 8th SOW (as of September 2005) are listed in Table 7.4. Telephone Interviews with QIO CEOs The following sections reflect the opinions of 20 QIO CEOs who were interviewed about their interactions with QIOSCs. The CEOs indicated that they regularly use QIOSCs and consider them valuable mechanisms for knowledge transfer, but their use can depend on a QIO's particular needs. A couple of CEOs indicated that a QIOSC is not necessarily their first stop when they are starting on a specific task, as they may have their own inter- nal expertise. Important Functions Performed by QIOSCs The CEOs were asked to identify the most important functions that QIOSCs perform. Eighteen of the 20 CEOs identified specific functions and mentioned the following major categories of QIOSC activities:

176 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM · being a communications link among the QIOs (nine CEOs), · providing a communications link to CMS on task areas (six CEOs), · being a repository of best practices and the most current literature (eight CEOs), · disseminating information on what is working in the field (eight CEOs), · taking state-level experiences and standardizing models with options for local needs (four CEOs), · developing educational and training materials and providing resource personnel (seven CEOs), and · working on behalf of CMS and QIOs with external stakeholders (two CEOs). TABLE 7.4 QIOSCs in the 8th SOW Topic Area Name or Acronym State Nursing home NH QIOSC RI Home health HH QIOSC WV Hospital--interventions Hospital Interventions QIOSC OK Hospital--data reporting Hospital Reporting QIOSC IA Physician office Physician Office QIOSC VA Underserved UQIOSC TN Outpatient data Outpatient Data QIOSC IA Pharmacy (Task 1d3) TBD TBD Beneficiary protection MBP QIOSC TX Hospital Payment Monitoring HPMP QIOSC TX Program (HPMP) Communications CommQIOSC WA and MO Measures management Measures Management QIOSC AZ MedQIC MedQIC QIOSC IA Performance improvement PI QIOSC WA Data reports Reports QIOSC IA SOURCE: Personal communication, D. Chromik-Ralston, September 10, 2005. Communications Links Among QIOs and with CMS According to the QIO CEOs, QIOSCs open communications channels by convening QIOs using a variety of formats (e.g., monthly conference calls, listserves, web-based training), send new information to QIOs, and coordinate the efforts of the QIO so that repetitive work is not performed. The CEOs said that it is important for QIOSCs to be visible to the QIO community, have an open dialogue with all QIOs, listen to QIO needs, and be responsive in a timely manner. QIOSCs also help interpret the requests of Government Task Leaders and act as problem solvers on contract issues.

STRUCTURE AND FINANCES 177 Repository of Evidence Base for Best Practices and Dissemination of Information The CEOs agreed that the QIOSCs must be up to date in their area of expertise and should have knowledge of the evidence base for clinical medicine and performance measures as well as the application of the tech- niques that can be used to improve quality. The QIOSCs provide the QIOs with shortcuts to detect the techniques used in the field that have been successful and those that have not when the QIOs want to have ac- cess to such findings early on in the implementation of their tasks. An ad- ditional asset that the QIOSCs provide is to show the QIOs how to assess changes within each task. Standardizing Models and Developing Materials The QIOSCs operationalize the CMS vision and standardize a national model by developing consensus, helping to set priorities, and translating multiple studies and experiences into workable approaches for use by the QIOs. These approaches, however, should be able to be tailored to local circumstances. For example, an intervention in one state may require the development of bilingual materials for distribution to beneficiaries if the demographics of the beneficiary population reflects this need. Ideally, the QIOSCs develop educational and training materials and data collection tools so that each QIO does not have to perform these tasks on its own. The range of materials should be suitable for dissemination to health care pro- fessionals, quality improvement specialists, consumers, and other key groups (e.g., employers and insurers). QIOSCs also provide learning sessions on different methods for performance of the assigned tasks (e.g., breakthrough collaborative activities). The QIOSCs have resource staff who are available for consultation by telephone or who travel to the states to speak with provider audiences. Working with External Stakeholders QIOSCs are able to work with external stakeholders (e.g., national pro- fessional associations) and other players in the quality improvement field (e.g., the Joint Commission on Accreditation of Healthcare Organizations) in moving toward transformational change. This interaction is important because many organizations other than QIOs are also working on quality measures, and thus, the QIOs and other organizations are walking parallel paths. QIOSCs can access experts in the health care field to work on perti- nent issues and to present that information to QIOs; as one CEO stated, "that degree of access would be impossible on a QIO-by-QIO basis." (source: Telephone interviews with QIO CEOs.)

178 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM Recommendations for Improvement The QIO CEOs made specific recommendations for improving the QIOSCs, including: · Improve the timeliness of the QIOSC response to QIOs and deal with underlying problems with CMS responsiveness and coterminous con- tracting of QIOSCs and QIOs on tasks (15 CEOs). · Encourage innovation at the local QIO level with special project grants (three CEOs). · Recruit as Government Task Leaders knowledgeable staff who have expertise in their task assignment and who are confident enough to make timely decisions in a high-profile job (11 CEOs). · Ensure adequate QIOSC staff (two CEOs). Need to Improve Timeliness Fifteen of 20 CEOs specifically mentioned the need for improvement in the timeliness of the response of all QIOSCs. However, most of the reasons cited for that lack of timeliness were not due to the QIOSC itself; instead, they attribute problems to Government Task Leader control and delay (11 CEOs) and coterminous contracting with QIOSCs and QIOs (seven CEOs). Eleven of 15 CEOs who were concerned with timeliness issues made a connection to the lack of expertise or practical experience of the Govern- ment Task Leader or the degree of control or tone set by a Government Task Leader. One CEO said, "Sometimes it is hard to know where the fault lies when a QIOSC doesn't perform well, especially when the problem is the timeliness of materials. CMS tends to delay things." Delays due to the con- tracting cycle relate to the difficulties that arise because the QIO and QIOSC contracts both start at the same time. This does not allow the QIOSCs to develop tools and other materials that the QIOs can use right away. These issues are discussed in further detail in Chapter 13. Encouraging Innovation Three CEOs raised issues related to innovation or the lack of it. One CEO said that although the QIOSCs were expected to produce greater efficiency, one of the unintended consequences was that it has reduced local creativity. Two others suggested that CMS should have special funding to implement the good ideas that the QIOs propose themselves and that the QIOSC contracts should be awarded to QIOs that have demonstrated the most innovation and creativity. Adequacy of QIOSC Staff One CEO asserted that QIOSCs tend to have two staffing models: one with staff dedicated solely to the QIOSC function and another with staff who do the QIOSC function part-time in conjunc-

STRUCTURE AND FINANCES 179 tion with other QIO jobs. Another CEO commented that "the QIOs that are QIOSCs should be the strongest QIOs in the field, but in reality some of them are ones that have struggled to meet their own QIO goals." Interviews with QIOSCs Of the seven QIOSCs interviewed (represented by five organizations), four stated that they originally got their QIOSC contract because of previ- ous experience (including three that were special studies or pilot programs). All saw their main focus as being the provision of support to the QIOs in their work, but they stated that the level of interaction varied according to the individual needs of the QIOs. Five of the seven QIOSCs were topic or provider setting specific, and all of these stated that the QIOs should be QIOSCs (as opposed to an outside entity) because of their intimate under- standing of the QIO contract as well as their immediate acceptance and connections in the community. FINANCES OF QIOS QIO Program Funding2 For the 5th and the 6th SOWs, total apportionments (core contract, special studies, and support contracts) were $728.3 million and $1,051.0 million, respectively, for each contract period (personal communications, C. Lazarus, March 17, 2005; D. Rimel, March 3, 2006). For the 7th SOW, the estimated total obligations at the end of calendar year 2004 for the entire QIO program were $1,154.3 million. QIOs were responsible for de- ciding their distribution of funds across tasks and accounting for this allo- cation, which is subject to CMS review. During the course of the 3-year contract, the QIO had flexibility to shift funds from task to task as needed, as the contract was performance based. As of May 31, 2005, the total apportionment for the 8th SOW is slated at $1.265 billion, a 9 percent increase over that for the 7th SOW (personal communication, D. Adler, American Health Quality Association, May 23, 2005). The estimated budgets for the 7th and the 8th SOWs are presented in Table 7.5. However, the funds designated in the core contract for the newly re- quired reviews under the Benefits Improvement and Protection Act (P.L. 106-554), as further discussed in Chapter 12, may not be used for any other 2Funding data are from CMS and are based on actual expenditures plus estimated obliga- tions as of the end of calendar year 2004.

180 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM TABLE 7.5 Comparison of Estimated Budgets for the 7th and 8th SOWs 7th SOW Percentage 8th SOW Percentage Budget Item Budget (millions) of Total Budget (millions) of Total Total apportionment $1,154.3 $1,265 Core contract $796.7 69.0 $860 68.0 Support contracts and special studies $357.6 31.0 $405 32.0 SOURCES: Personal communication, D. Adler, May 23, 2005; personal communication, C. Lazarus, March 17, 2005. area of the contract, and unused funds must be returned. Additionally, it is difficult to make a direct comparison of spending on specific areas between the 7th and the 8th SOWs because of a shift of the categories in which the spending is attributed. Although the overall funding for the QIO program has increased with each successive SOW, Table 7.6 shows that program funding has become a smaller percentage of the overall Medicare budget since the 6th SOW. TABLE 7.6 Comparison of Total Outlays for Mandatory Spending (Medicare) to QIO Budget Medicare Total Medicare Percentage Outlays Outlay (per SOW) QIO Budget of Medicare SOW Year (billions) (billions) (millions) Outlaysa 5th 1997 $207.9 $628.2 $728.3 0.12 1998 $211.0 1999 $209.3 6th 2000 $216.0 $707.6 $1,051.0 0.15 2001 $237.9 2002 $253.7 7th 2003 $274.2 $899.1 $1,154.3 0.13 2004 $297.4 2005 $327.5b 8th 2006 $378.6b $1,262.8 $1,265.0 0.10 2007 $428.0b 2008 $456.2b aCalculations were done by the IOM committee on the basis of data from CMS and the Congressional Budget Office (CBO). bEstimated outlays. SOURCES: CBO (2005a,b); personal communication, C. Lazarus, March 17, 2005; personal communication, D. Rimel, March 3, 2006.

STRUCTURE AND FINANCES 181 Core Contract As of December 2004, estimated obligations for the core contract of the 7th SOW (Tasks 1 to 3 plus information and contractual costs) were $790.1 million, which represents approximately 68 percent of the entire QIO pro- gram budget (personal communication, C. Lazarus, March 17, 2005). (Note that the totals differ from those presented in Table 7.6 because of slight differences in the breakdowns of estimated budgets and estimated obliga- tions prepared at different times during the 7th SOW.) The core contract funds distributed to the QIOs are indicated in Table 7.7. For Task 1 of the 7th SOW, QIO expenditures for statewide work accounted for approximately two-thirds of the total expenditures for each of the subtasks related to the nursing home (69 percent), home health (67 percent), and hospital (67 percent) settings (CMS Dashboard, 12/19/ 05). In the hospital setting during the 7th SOW, QIOs only worked at the statewide level. While the majority of the total expenditures went toward these statewide-level activities, work with the identified participants was more intense with fewer providers. For example, as shown in Table 7.8, QIO work with nursing homes in the 7th SOW had a monthly cost of $170.97 for each provider in the state or jurisdiction. (This includes both TABLE 7.7 Core Contract Obligations During the 7th SOW (as of December 2004) Estimated Obligations Percentage of Task (millions) Core Contract Task 1 (quality improvement activities) $449.0 56.8 Task 2 (communications) $104.2 13.2 Task 3 (case review) $161.7 20.5 Task 3a (beneficiary complaints) $45.5 5.8 Task 3b (Hospital Payment Monitoring Program) $41.2 5.2 Task 3c (other case review) $75.0 9.5 Information services $50.4 6.4 Contractual requirements $24.8 3.1 7th SOW total core contract $790.1 100.0 NOTE: Calculations are approximate and were done by the IOM committee on the basis of CMS data. SOURCE: Personal communication, C. Lazarus, March 17, 2005.

182 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM TABLE 7.8 QIO Expenditures on Tasks 1a­1d for the 7th SOW Average Average Actual Monthly Monthly Cumulative Total Cost per Total Cost per Cost (in Number of Provider Number of Identified millions of Providers (nationwide)a,c Identified Participant Task dollars)a (nationwide)b (in dollars) Participantsb (in dollars)a,d 1a 89.2 16,560 170.97 2,479 350.35 1b 56.7 2,595 211.40 1,405 132.07 1c 87.3 N/A 581.48 NA NA 1d 105.9 209,349 15.89 10,463 71.18 NOTE: NA = not applicable; N/A = not available. aData current as of August 2, 2005, calculated from cumulative QIO invoices. bData current as of October 9, 2003. cCalculated as cumulative cost divided by total number of providers (nationally) divided by number of invoices. dCalculated as costs associated with work with identified participants divided by the num- ber of identified participants divided by the number of invoices. SOURCE: CMS Dashboard (accessed December 19, 2005). state-level and identified participant activities, and is calculated per pro- vider for the total number of providers in the state or jurisdiction.) How- ever, the QIOs' focused work with a subset of nursing homes cost $350.35 per identified participant, even though this work only accounted for 31 per- cent of total expenditures for this subtask. These data are significant since statewide work accounted for the majority of the total expenditures, but work with identified participants for nursing homes and physicians' offices had higher expenditures per provider. In contrast, in the home health set- ting, the cost per provider was higher for all providers statewide overall than for identified participants. In the 7th SOW, QIOs did not work with identified participants in the hospital setting. In the web-based data collection tool, the core contract accounted for a highly variable percentage of the total revenues for each organization hold- ing a QIO contract for the 7th SOW and ranged from 16 to 100 percent. However, as shown in Table 7.9, 17 of 39 reporting organizations related that the core contract accounted for at least 70 percent of their total revenues. As of May 2005, the core contract budget for the 8th SOW was $860 million (personal communication, D. Adler, May 23, 2005). However, as discussed in Chapter 12, the Medicare, Medicaid, and SCHIP Benefits Im-

STRUCTURE AND FINANCES 183 TABLE 7.9 Percentage of Total Revenue from the Core Contract of the 7th SOW Total Proportion of Revenue Number of Organizations, from Core Contract Holding QIO Contracts for the 7th SOW <10 percent 0 10­19 percent 1 20­29 percent 4 30­39 percent 6 40­49 percent 4 50­59 percent 4 60­69 percent 3 70­79 percent 6 80­89 percent 5 90­99 percent 4 100 percent 2 SOURCE: IOM committee web-based data collection tool (n = 39 organiza- tions). provement and Protection Act (P.L. 106-554) (BIPA) of 2000 requires QIOs to perform a new type of review (BIPA reviews) in the 8th SOW. Funding for these reviews is estimated to be $125 million for the budget for the 8th SOW (personal communication, D. Rimel, March 3, 2006). As opposed to other core contract activities, funding designated for BIPA reviews may not be reallocated to other activities. Therefore, when $125 million is subtracted from the $860 million allocation, there is, in essence, a reduction in funding for core activities during the 8th SOW. Special Studies3 At CMS, the Office of Clinical Standards and Quality's Science Council formulates developmental study priorities and criteria for consideration of special study proposals (personal communication, C. Lazarus, March 17, 2005). CMS solicits proposals with a "call letter" to Central and Regional Office staff. Project Officers also send the letter to individual QIOs. Indi- vidual QIOs may propose unsolicited special studies on the basis of individual interests or state needs, but most special studies arise as a result of solicitation by CMS. When multiple QIOs submit proposals for a CMS- 3The information in this section was provided by CMS. Costs are estimated as of April 29, 2004.

184 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM solicited special study, the council sets the criteria for evaluation of the proposals. Final project approvals are based on priorities and review crite- ria, budget analysis, and an assessment of the QIO's capability. All propos- als are considered and voted upon by the Special Studies Review Panel. In the 7th SOW, as of March 2005, estimated obligations for special studies totaled $63.8 million, which represents approximately 5.5 percent of total program costs (personal communication, C. Lazarus, March 17, 2005). At that time 72 special projects were under way, and more than one state was involved in 11 of those studies (see Table A.4 in Appen- dix A). Twenty-seven QIOs participated in at least one special study. Of the states with special studies, seven states were involved in only one study and nine states participated in four or more special studies. Two states (Colorado and Maryland) were involved in nine studies each. The amount of funding for individual studies ranged from $10,491 for a con- tinuing medical education project to $11.0 million for the Doctor's Office Quality-Information Technology pilot project (personal communication, C. Lazarus, March 17, 2005). Historically, QIOs have shared the results of these studies by routine information-sharing methods (such as e-mail lists), as well as through pre- sentations at national and regional conferences. CMS is currently develop- ing a specific area on its internal website, QIONet (see Chapter 13), on which it will list current studies, including the topic, contact information, and periodic updates (personal communication, R. W. Nelson, June 10, 2005). In the long term, CMS is exploring options to make this information even more accessible and will provide the information at various levels of accessibility. This would allow Project Officers to monitor projects online and would also allow the public access to basic information. CMS also hopes to test other ways in which QIOs doing studies can share their infor- mation with other QIOs. Support Contracts Support contracts contribute to the operations of the QIO program but are not directly a part of the core contract (Tasks 1 to 4). These contracts are usually awarded to organizations not holding QIO contracts. Estimated obligations for support contracts in the 7th SOW (as of April 2004) were $243.5 million, or approximately 21.1 percent of the total QIO program budget (personal communication, C. Lazarus, March 17, 2005). In the 7th SOW, 52 support contracts (see Table A.4a in Appendix A) ranged in cost from $20,000 for a collaboration with the American Medical Association for the Doctor's Office Quality­Information Technology project to $50.2 million for the Clinical Data Abstraction Centers (personal communica- tion, C. Lazarus, March 17, 2005). Other large contracts included $31.0

STRUCTURE AND FINANCES 185 million for the Standard Data Processing System and $33.4 million for the Consumer Assessment of Health Plans Survey. The CMS Financial Management Investment Board (FMIB) oversees certain types of spending for CMS, including the funding of the support contracts of the QIO program, and consists of one member from each of- fice of CMS's Central Office and one member from each Regional Office. A QIO Support Small Group assists with the review and prioritization of support activities and projects at the beginning of each budget cycle (per- sonal communication, C. Lazarus, March 17, 2005). This group consists of FMIB members along with representatives from the Central Office and the Regional Offices. Support projects are funded every 3 years, in con- cert with the SOW cycle. Once the priorities of the support activities are set, CMS uses the same process used in special studies to solicit proposals with call letters. This letter goes out at the beginning of each SOW and seeks projects to help meet the predetermined priorities and goals. When reviewing individual project proposals, FMIB considers how the project supports the QIO program and whether the proposed resources are ap- propriate. Information technology investments are considered separately under the Information Technology Investment Review Process. All pro- posed projects are then categorized and prioritized according to the need for funding. After a 3-year budget target is developed, the QIO Support Small Group considers the requests and proposes a plan to FMIB. The group aims to meet most of the priority needs. After FMIB approval, the FMIB chair presents the planned budget to the CMS Executive Council for final approval. Most funded projects have existed in previous SOWs and continue to support the QIO program as a whole (personal communi- cation, C. Lazarus, March 17, 2005). QIO Program Activities and Revenues Not Related to Core Contract QIOs can receive funding from CMS to finance non-core contract ac- tivities, such as QIOSCs and special studies (as described above). For the 7th SOW, the estimated obligations for these activities (as of April 2004) totaled about $130.8 million, or approximately 11.3 percent of the total program budget. Of this, about $67.0 million (5.8 percent) was for activi- ties that supported the core contract (such as QIOSCs), not including spe- cial studies or support contracts (personal communication, C. Lazarus, March 17, 2005). Non-CMS Activities and Revenues QIOs may serve both CMS and non-CMS clients. This section presents the results from the web-based data collection tool, which asked all 53

186 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM individual QIOs about their non-CMS work activities and all organizations holding QIO contracts for the 7th SOW about their revenues from non- CMS federal sources and nonfederal sources. Non-CMS Activities Aside from work on the QIO core contract and other CMS work (such as special studies or QIOSCs), many QIOs perform duties for non-CMS clients. When the 53 QIOs responded to questions on the web-based data collection tool about their work for non-CMS clients, they reported strong experience with data collection, management, and analysis; project man- agement; and record abstraction and review. Their activities included the services indicated in Table 7.10 within and outside of their home states. Forty-nine QIOs reported on their 3-year strategic plans for services to non-CMS clients. Of the 20 types of specific services that the QIOs were asked about (Table 7.11), all were included in the strategic plans of six or more organizations. The planned activities again showed a predominance of data-related activities, record reviews, and project implementation. Other Federal Sources of Revenue In the web-based data collection tool, 26 of 40 reporting organizations holding QIO contracts for the 7th SOW related that they had received no revenue from federal grants or contracts other than from CMS during the 7th SOW. Ten reported that non-CMS federal grants or contracts accounted for less than 20 percent of their total revenues, two reported that it totaled 20 to 30 percent of their total revenues, and one stated it accounted for just under 40 percent of its total revenue. During this period, only one organiza- tion indicated that it had received more than half (55 percent) of its total revenue from non-CMS federal grants and contracts. Nonfederal Sources of Revenue Table 7.12 details the nonfederal revenue sources for the organizations holding QIO contracts for the 7th SOW, as reported via the web-based data collection tool. State agencies, including Medicaid, were the sources of funds for many QIOs. Total Revenue (All Lines of Work) Table 7.13 illustrates the range of total revenues (from all sources) for organizations holding QIO contracts for the 7th SOW. The total amounts

STRUCTURE AND FINANCES 187 TABLE 7.10 Services by QIOs for Non-CMS Clients During the 7th SOW Number Percentage Number Percentage of QIOs of QIOs of QIOs of QIOs Doing This Doing This Doing This Doing This Work in Work in Work in Work in Another Another Type of Work Own State Own State State(s) State(s) Data analysis 43 81.13 25 47.17 Quality improvement projects or 40 75.47 22 41.51 consulting Medical necessity reviews 39 73.58 29 54.72 Medical record abstraction 37 69.81 24 45.28 Independent external review 34 64.15 25 47.17 Utilization management 32 60.38 23 43.40 Data management 31 58.49 19a 35.85 Diagnosis-related group coding and 29 54.72 18 33.96 validation Project management 27 50.94 16 30.19 Continuing education 26 49.06 12 22.64 Health or clinical services research 25 47.17 1b 1.89 HEDIS-related activities 21 39.62 13a 24.53 Software development 21 39.62 12a 22.64 Claims validation 20 37.74 10 18.87 Service to public reporting efforts 17a 32.08 6a 11.32 Consumer and patient surveys 17 32.08 7 13.21 Fraud and abuse investigation 15 28.20 6 11.32 Other 14a 26.42 13a 24.53 Case management 11 20.75 10 18.87 Disease management 11 20.75 13 24.53 Health information exchange networks 10 18.87 5 9.43 Facility accreditation 8 15.09 3 5.66 Credentialing 7 13.21 4 7.55 Discharge planning 7 13.21 6 11.32 NOTE: HEDIS = Health Plan Employer Data and Information Set. aOne respondent selected "prefer not to answer/information not available." bEight respondents selected "prefer not to answer/information not available." SOURCE: IOM committee web-based data collection tool (n = 53 QIOs). ranged from less than $10 million to more than $200 million. However, the majority of reporting organizations (35 of 39) declared that their total rev- enues were less than $70 million, and most (28 of 39) had total revenues of less than $40 million.

188 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM TABLE 7.11 Planned Services by QIOs for Non-CMS Clients Number Percentage Reporting Reporting Planned Service Plans Plans Quality improvement projects and consulting 45 91.84 Medical necessity reviews 43 87.76 Data analysis 42 85.71 Independent external review 41 83.67 Medical record abstraction 39 79.59 Data management 35 71.43 Diagnosis-related group coding and validationa 35 71.43 Utilization management 34 69.39 Project management 33 67.35 Health and clinical services research 30 61.22 Continuing educationa 29 59.18 Health information exchange network services 27 55.10 Claims validation 24 48.98 Surveys (of providers and consumers) 24 48.98 Software development 23 46.94 Disease management 22 44.90 HEDIS-related servicesa 19 38.78 Fraud and abuse investigationa 13 26.53 Professional credentialing servicesa 10 20.41 Facility accreditation servicesa 6 12.24 NOTE: HEDIS = Health Plan Employer Data and Information Set. aFor a few service types, one reporting organization indicated that its subsidiary would provide the indicated service(s) in its own state. SOURCE: IOM committee web-based data collection tool (n = 49 QIOs). SUMMARY This chapter has discussed issues related to the overall structure and financing of the QIO program. The following are some of the main themes of this chapter, which are reflected in the finding and conclusions presented in Chapter 2: · Some of the structural requirements are based on outdated priorities (such as the physician-access and physician-sponsored designations and con- fidentiality requirements) or are tied to their current case review activities (as is the case for the conflict-of-interest rules). Confidentiality restrictions prohibit sharing of data and current regulations are antagonistic to the qual- ity improvement process.

STRUCTURE AND FINANCES 189 TABLE 7.12 Sources of Nonfederal Revenue in the 7th SOW Number Total Number of Reporting Organizations Responding Source "Yes" to This Questiona Medicaid program, own state 26 37 Other state agencies, own state 20 34 Medicaid programs, other states 14 32 Managed care organizations 12 32 Other private-sector health care organizations 12 30 Other private-sector non-health care organizations 8 34 Universities or colleges 7 28 Hospitals 7 30 State or local foundations 4 27 Local governments, own state 3 27 National foundations 3 28 Nursing homes 1 26 Physicians or physicians' groups 1 27 aDepending on the source, 4 to 15 organizations chose not to report on the source(s) of their nonfederal revenues. SOURCE: IOM committee web-based data collection tool. TABLE 7.13 Range of Total Revenues for Organizations Holding QIO Contracts for the 7th SOW Total Revenue (millions) Number of Organizations < $10 4 $10­20 10 $20­30 9 $30­40 5 $40­50 1 $50­60 4 $60­70 2 $70­80 0 $80­90 1 $90­100 0 $100­200 2 >$200 1 SOURCE: IOM committee web-based data collection tool (n = 39 organizations).

190 MEDICARE'S QUALITY IMPROVEMENT ORGANIZATION PROGRAM · The governing boards of QIOs, in general, lack a broad representa- tion by individuals with different areas of expertise and are especially defi- cient in their consumer representation. Also, the boards lack key commit- tees likely to enhance their guidance and lack transparency about their compensation. · Most organizations holding QIO contracts for the 7th SOW have acted as QIOs (or their predecessor organizations) for many years, with few contracts changing hands across the country with each new SOW. Al- most all organizations were created to serve in this role, and almost all hold not-for-profit status. Almost every QIO had at least one staff person with a long length of employment, representing institutional and histori- cal knowledge of the program. QIOs demonstrate substantial experience with subcontracting. · QIOSCs serve the QIOs as central sources of information on core contract tasks, acting as a communications link to disseminate information and develop universal task materials. Overall, however, the QIOs believe that the assistance provided by the QIOSCs was not timely enough and that the QIOSCs were hindered from being innovative. · The QIO program's budget is small relative to total Medicare spend- ing on services (0.10 percent), and it is distributed to cover a large variety of tasks. About two-thirds of the total budget goes toward core contract activities. · In the past, information about special studies has been relatively in- accessible to all QIOs, but CMS plans to share this information more widely in the future. CMS proposes most of the special studies; few of the special studies arise from unsolicited proposals by QIOs. · Many QIOs perform a wide variety of services for multiple clients; these are mostly concentrated on data-related activities, record reviews, and quality improvement project implementation. However, the majority of or- ganizations holding QIO contracts for the 7th SOW (24 of 39) said that the core contract accounted for more than half of their total revenues. REFERENCES Bhatia AJ, Blackstock S, Nelson R, Ng TS. 2000. Evolution of quality review programs for Medicare: Quality assurance to quality improvement. Health Care Financing Review 22(1):69­74. CBO (Congressional Budget Office). 2005a. Fact Sheet for CBO's March 2005 Baseline: MEDICARE. [Online]. Available: http://www.cbo.gov/factsheets/2005/Medicare.pdf [ac- cessed July 19, 2005]. CBO. 2005b. Historical Budget Data, Table 9: Outlays for Mandatory Spending, 1962 to 2004. [Online]. Available: http://www.cbo.gov/showdoc.cfm?index=1821&sequence =0#table9 [accessed July 13, 2005]. CMS (Centers for Medicare and Medicaid Services). 2002. 7th Statement of Work (SOW). [Online]. Available: http://www.cms.hhs.gov/qio [accessed April 9, 2005].

STRUCTURE AND FINANCES 191 CMS. 2004a. The Quality Improvement Organization Program: CMS Briefing for IOM Staff. [Online]. Available: http://www.medqic.org/dcs/ContentServer?cid=1105558772835& pagename=Medqic%2FMQGeneralPage%2FGeneralPageTemplate&c=MQGeneralPage [accessed December 26, 2005]. CMS. 2004b. Quality Improvement Organization Manual. [Online]. Available: http://www. cms.hhs.gov/manuals/110_qio/qio110index.asp [accessed May 11, 2005]. CMS. 2004c. Quality Improvement Organization Manual, Chapter 2 (Eligibility). [Online]. Available: http://www.cms.hhs.gov/manuals/110_qio/qio110c02.pdf [accessed May 11, 2005]. CMS. 2005a. 8th Statement of Work (SOW). [Online]. Available: http://www.cms.hhs.gov/ qio [accessed April 9, 2005]. CMS. 2005b. 8th Statement of Work (SOW)--Version #080105-1. [Online]. Available: http:/ /www.cms.hhs.gov/qio [accessed November 4, 2005]. Gaul GM. 2005, July 26. Once health regulators, now partners. Washington Post. A1. Health Services Advisory Group. 2005. HSAG Medicare Consumer Advisory Council Mem- ber Organizations. [Online]. Available: www.hsag.com/cac/members.asp [accessed April 29, 2005]. IOM (Institute of Medicine). 1981. Access to Medical Review Data: Disclosure Policy for Professional Standards Review Organizations. Washington, DC: National Academy Press. IOM. 2005. Quality Through Collaboration: The Future of Rural Health. Washington, DC: The National Academies Press. Jost TS. 1989. Administrative law issues involving the Medicare utilization and quality control Peer Review Organization (PRO) program: Analysis and recommendations. Ohio State Law Journal 50: 1­71. National Center for Healthcare Leadership. 2004. National Center for Healthcare Leadership Competency Model. [Online]. Available: http://www.nchl.org/ns/documents/Competency Model-short.pdf [accessed July 14, 2005]. NCQA (National Committee for Quality Assurance). 2005, June 13. NCQA Programs: HEDIS®. [Online]. Available: http://www.ncqa.org/programs/HEDIS/ [accessed Decem- ber 29, 2005]. URAC (Utilization Review Accreditation Commission ). 2005. URAC.org. [Online]. Avail- able: http://www.urac.org/ [accessed December 29, 2005].

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Medicare’s Quality Improvement Organization Program is the second book in the new Pathways to Quality Health Care series. Focusing on performance improvement, it considers the history, role, and effectiveness of the Quality Improvement Organization (QIO) program and its potential to promote quality improvement within a changing health care delivery environment that includes standardized performance measures and new data collection and reporting requirements. This book carefully examines the QIOs that serve every state as well as the national program that guides and supports them. In addition, it highlights the important roles that a national program with private organizations in each state can play in promoting higher quality care. Medicare’s Quality Improvement Organization Program looks closely at the technical assistance role of the QIO program and the need to encourage and support providers to improve their performance. By providing an in-depth assessment of the federal experience with quality improvement and recommendations for program improvement, this book helps point the way for those who strive to create higher quality and better value in health care. Intended for multiple audiences, Medicare’s Quality Improvement Organization Program is essential reading for members of Congress, the federal executive branch, the QIOs, health care providers and clinicians, and stakeholder groups.

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