By Jane Hyatt Thorpe and Chris Weiser

Background

Health care quality represents a constantly recurring theme in U.S. health policy. What is it? How do we measure it? How do we encourage and reward it? How does the nation reconcile explosive growth in health care costs with evidence from leading researchers and experts such as Elliott Fisher,^[1] Elizabeth McGlynn,^[2] John Wennberg and colleagues,^[3] and Francois de Brantes and colleagues^[4] that collectively points to serious deficiencies in health care quality and the disconnect between high spending and health care quality?

These concerns are particularly acute in the Medicare program. Traditionally, the Medicare program has paid for health care services on a fee-for-service basis with the exception of inpatient hospital services, which are paid based on Diagnosis Related Groups (DRGs) under the prospective payment system (PPS), and the Medicare Advantage and Prescription Drug plans, which are paid on a capitated basis. All payment systems tend to incentivize something; in the case of fee-for-service, it is indiscriminant increases in volume of services provided, while in case-based or capitation systems it is indiscriminant reductions in volume. The challenge is to promote both quality and value while also apportioning financial risk appropriately. Because Medicare has relied principally on a fee-for-service approach to payment for physician and other services (and even while hospital payments are case-based under the PPS, it does not discourage multiple admissions and readmissions), the program has experienced incredible growth in the volume of services. At the same time, Medicare lacks a program-wide and deliberate approach to promoting quality and value.

Over the years, Congress has passed a series of laws designed to move the Medicare program from a passive purchaser of volume-based health care to an active purchaser of high quality, high value health care based in large part on successful Medicare demonstrations. For example, as authorized under the Medicare Prescription Drug and Modernization Act of 2003 (MMA)^[5] and extended by the Deficit Reduction Act of 2005 (DRA),^[6] hospitals that report on specific quality measures receive the full annual payment update; failure to participate results in a two percent decrease in the annual payment update. Similarly, as authorized by the Tax Relief and Health Care Act of 2006 (TRHCA)^[7] and extended by the Medicare Medicaid and SCHIP Extension Act of 2007 (MMSEA)^[8] and the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA),^[9] physicians that report on specific quality measures are eligible for a bonus payment. More recently, the American Recovery and Reinvestment Act of 2009 (ARRA)^[10] provided significant financial incentives to Medicare (and Medicaid) providers that “meaningfully use” electronic health records (EHRs) to improve the quality of care delivery.^[11] The Centers for Medicare and Medicaid Services (CMS) has and continues to develop and implement these and other quality measurement and reporting systems to improve the quality and value of health care delivery in the Medicare program. The Patient Protection and Affordable Care Act (ACA) builds upon these efforts.

Changes Made by the Health Reform Law (Pub. L. 111-148 §§ 3001-02, 3004-07, 3013-14, 10301, 10303 – 304, 10322, 10331, as modified by P.L. 111-152)

The ACA sets forth a broad vision for quality measurement and reporting in the Medicare program. Components of this vision include 1) Quality Measure Development; 2) Quality Measurement (including payment incentives); and 3) Public Reporting. In short, the ACA greatly expands existing efforts noted above while introducing new tools for the Medicare program to identify, measure, and pay for quality care.

Quality Measure Development

• Quality Measure Development (Section 3013):^[12] The ACA defines a “quality measure” as a “standard for measuring the performance and improvement of population health or of health plans, providers of services, and other clinicians in the delivery of health care services.”^[13] The U.S. Department of Health and Human Services (HHS) Secretary, acting through CMS, is required to identify gaps where no quality measures exist and to identify existing quality measures that need improvement, updating, or expansion for use in federal healthcare programs (including Medicare, Medicaid, and CHIP). Identified gaps must be reported on a publicly available website and the Secretary must make awards to develop, update, or expand quality measures. In developing new measures, priorities must include measures that assess outcomes, functional status, coordination of care across episodes, shared decision-making, use of health information technology, efficiency, safety, timeliness, equity, and patient experience. The Secretary also is required to develop (and update) outcomes measures for acute and chronic diseases and primary and preventative care for hospitals and physicians.
• Development of Outcome Measures (Section 10303):^[14] Section 10303 builds on the requirements in Section 3013 by requiring the Secretary to develop and update provider-level outcome measures for hospitals and physicians, as well as other providers as appropriate. The measures should address the five most prevalent and resource-intensive acute and chronic medical conditions and care for distinct patient populations such as healthy children, chronically ill adults, or infirm elderly individuals.
• Quality Measure Selection (Section 3014):^[15] The ACA requires the entity selected by the Secretary to develop quality measures (currently the National Quality Forum [NQF] as authorized under MIPAA) to convene multi-stakeholder groups to provide input on the selection of quality measures and national priorities through an open and transparent process. Section 10304 adds the development of efficiency measures to the process.^[16] Selected measures will be used for existing and new Medicare (as well as Medicaid and CHIP) quality reporting and payment programs described below.

Quality Measurement

• Improvements to Physician Quality Reporting System (Section 3002):^[17] The ACA re-authorizes incentive payments under the Physician Quality Reporting Program through 2014 (maximum one percent of estimated allowed charges) and institutes a penalty for failure to report beginning in 2015 (maximum two percent). The ACA also authorizes an additional incentive payment (one-half percent) for eligible professionals who satisfactorily submit data on quality measures through a Maintenance of Certification Program (such as a qualified American Board of Specialties Maintenance of Certification Program). Finally, Section 3002 requires the Secretary to provide feedback to eligible professionals on their performance on reported quality measures and to develop a plan to integrate reporting on quality measures with reporting on the meaningful use of EHRs.
• Quality Reporting for Long-Term Care Hospitals, Inpatient Rehabilitation Hospitals, and Hospice Programs (Section 3004);^[18] Quality Reporting for Psychiatric Hospitals (Section 10322):^[19] The ACA establishes new quality measurement and reporting programs for these providers. Once operational, if a facility does not report selected quality measures, the facility’s annual update will be reduced by two percentage points.
• Quality Reporting for PPS-Exempt Cancer Hospitals (Section 3005):^[20] The ACA establishes a new quality measurement and reporting program for cancer hospitals that are exempt from the PPS. Once operational, if a cancer hospital does not report selected quality measures, the hospital’s annual Medicare market basket update will be reduced (specific penalty not prescribed). Selected quality measures must include measures related to process, structure, outcome, patient’s perspective on care, efficiency, and costs of care that relate to services furnished by a cancer hospital.
• Value-based Purchasing Programs (Sections 3001, 3007, 3006(a), 3006(b), and 3006(f) added by Section 10301):^[21] The ACA moves beyond quality measurement and reporting and requires implementation of (or plans to implement) value-based purchasing programs for several providers. Value-based purchasing programs link payment rates to performance (not just reporting) on specific quality measures and/or improvements in performance. Specifically, the ACA requires the implementation of value-based purchasing programs (which will be addressed in a separate Implementation Brief) for hospitals (other than psychiatric hospitals, rehabilitation hospitals, children’s hospitals, long-term care hospitals, and certain cancer treatment and research facilities) and for physicians (through the use of a payment modifier). In addition, ACA requires the Secretary to develop plans to implement value-based purchasing programs for ambulatory surgery centers, skilled nursing facilities, and home health services.
• Meaningful Use of EHRs (ARRA): Existing and newly developed quality measures also will be used to determine whether participating providers are “meaningfully using” EHRs to improve the quality of care delivered and qualify for incentive payments. (See Health Information Technology – Adoption Incentives posted on May 3, 2010 for more information on the EHR incentive program authorized by ARRA.)

Public Reporting

• Public Reporting of Performance Information (Physician Compare Website) (Section 10331):^[22] The ACA requires CMS to establish a “Physician Compare” website that will publicly report information on physicians and other eligible professionals who participate in the Physician Quality Reporting Program. Information reported must include the quality measures collected under the Physician Quality Reporting System as well as assessments of patient health outcomes, risk-adjusted resource use, efficiency, patient experience, and other relevant information deemed appropriate by the HHS Secretary. Physicians must have a reasonable opportunity to review their results before the information is made public.
• Public Reporting of Quality Information for Other Providers (Sections 3004, 3005, and 10322): The newly authorized quality reporting programs for long term care hospitals, inpatient rehabilitation hospitals, psychiatric hospitals, hospice programs, and non-PPS cancer hospitals also require the Secretary to make reported quality information available to the public after the providers have had an opportunity to review.

Implementation

Agency

CMS is responsible for expanding existing and developing new Medicare quality measurement and reporting programs. 

Key Dates

• The Physician Quality Reporting Program is extended through 2014 with penalties for non-participants beginning in 2015.
• The Physician Compare Website was made available as required by January 1, 2011 with quality and patient experience measures to be added by January 1, 2013. See http://www.medicare.gov/find-a-doctor/provider-search.aspx. 
• The quality reporting programs for long-term care hospitals, inpatient rehabilitation hospitals, hospice programs, psych hospitals, and PPS-exempt cancer hospitals will be effective beginning with fiscal year 2014. Selected measures and reporting procedures must be published by October 1, 2012.
• The value-based purchasing program for hospitals will be effective beginning with fiscal year 2013.
• The value-based purchasing program for physicians (payment modifier) will be effective beginning with calendar year 2015.
• The plans to implement value-based purchasing programs must be completed by January 1, 2011 for ambulatory surgery centers and October 1, 2011 for skilled nursing facilities and home health services.

Process

CMS is and will continue to address expanded and new quality measurement and reporting programs through the notice and comment process for the proposed and final provider payment rules that are released annually.

Key Issues

• Provider Participation: The success of the expanded and new quality measurement and reporting programs will depend on whether or not providers participate. This will depend in large part on whether providers view the incentive payments as sufficient to cover the expenses of the technology and workflow changes the programs may require, or whether they view the penalty as too steep to bear.
• Use of consensus-based measures: One of the controversial elements of current quality measurement and reporting programs is whether all selected measures must be approved through a consensus-based process prior to selection and use by the Medicare program. For example, for both the current physician and hospital quality reporting programs, selected measures must be endorsed through a consensus-based process (currently NQF endorsement). While this process ensures provider and stakeholder engagement and determinations of feasibility, useability, and importance, it can be a lengthy process for an immediate need. The ACA gives the Secretary greater flexibility to select measures outside of a consensus-based process to expedite use, but this may cause significant concern for providers and other stakeholders supportive of the consensus-based process.
• Risk-adjustment: Researchers and policymakers have yet to agree on risk-adjustment methodologies that equitably capture differences in patient populations. It is important to take into account the level of illness or other factors of a particular provider’s population to ensure that any performance measurement results reflect the level of difficulty associated with the patient population. It is also important not to create a quality measurement system that encourages or incentivizes providers to only care for the most healthy in the population to ensure better outcomes and therefore better performance measurement results. Appropriate risk-adjustment is particularly important when information is publicly reported and/or payments are adjusted based on the results (as required by ACA).
• Attribution or assignment of accountability: Critical to the success of any performance measurement program is ensuring that the results are attributed to the actual provider(s) who delivered the services. This may not be as difficult where the provider is an institutional provider such as a hospital or a nursing home. However, where the provider is an individual practitioner or a group of practitioners (e.g., participating in an accountable care organization), it is often difficult to ensure that the correct individual(s) has been identified unless that provider has self-reported the information. Furthermore, as measurement programs move towards episode-based outcomes measurements and more coordinated care, it is likely that multiple practitioners or institutional providers may be involved in a patient’s care. In these situations, it will be important that the measurement program recognize the contributions of each provider. Accurate attribution is particularly important when information is publicly reported and/or payments are adjusted based on results (as required by ACA).
• Available data sources: The comprehensiveness of a quality measurement program is directly related to the availability of underlying data to generate the measures. Underlying data may come from claims, paper-based clinical data, electronically generated clinical data, and in the future data generated from EHR meaningful use determinations. Claims data are often the most easily accessible data, but only support a limited set of quality measures. Clinical information expands the number of quality measures that can be calculated, but requires additional effort to generate the necessary underlying information. As the health care industry moves towards electronification, ideally EHRs will enable providers to capture and report both claims and clinical information sufficient to generate a robust set of quality measures. However, each of these data sources are protected by HIPAA privacy and security laws which may limit (or impose requirements on) the availability of these data to generate quality measurements.
• Implementation Challenges: Moving beyond selection of measures, there are also significant challenges associated with implementing quality measurement programs. While the incentives are intended to defray costs associated with collection and reporting of information (including meaningful use of EHRs), the ACA does little to address the challenges associated with incorporating the measures into practice, including constructing them using actual data, verifying their accuracy, and reporting the results either confidentially or publicly. Regional initiatives such as the Aligning Forces for Quality program^[23] are working to overcome these challenges in their communities and promote the use and reporting of a robust set of provider performance measurements.
• Cost of care information: A final issue that continues to be the subject of great interest and concern is how to appropriately incorporate cost of care information into quality measurement and reporting programs. Efforts are underway to develop cost measures that would complement existing quality measures and ACA requires the inclusion of cost measures (e.g., PPS-exempt cancer hospitals), but defining and measuring cost has proven to be a significant challenge. 

Recent Agency Action

• Physician Quality Reporting Initiatives: On November 2, 2010, CMS released the CY 2011 Physician Fee Schedule Final Rule.^[24] The final rule addressed various provisions related to the physician quality reporting program including extension of the program, payment adjustments, and new quality measures.
• Physician Compare Website: On December 30, 2010, CMS launched the first phase of the Physician Compare Website that builds on the current physician directory as well as plans to add additional information to the site.
• Other Quality Reporting Programs: CMS is currently accepting feedback on the quality reporting programs for Long-Term Care Hospitals, Inpatient Rehabilitation Hospitals, and Hospice Programs via the following email address: LTCH-IRF-Hospice-Quality-ReportingComments@cms.hhs.gov
• Hospital Value-Based Purchasing Program: On January 7, 2011, CMS released a proposed rule to implement the hospital value-based purchasing program.^[25]
• ASC Value-Based Purchasing Program: On October 14, 2010, CMS held an open door forum to solicit feedback on value-based purchasing program for ambulatory surgery centers.
• Other: CMS will address issues related to the expanded and new quality measurement and reporting programs in the relevant provider payment rules that are released annually for comment in proposed and final form.

Authorized Funding Levels

• Quality Measurement Development (Section 3013): $75 million authorized for fiscal years 2010 through 2014; however, unless amounts are actually appropriated this money will not materialize.
• Quality Measurement and Selection of Efficiency Measures (Sections 3014 and 10304): $20 million appropriated (as a direct draw on the Medicare Trust Fund) for CMS for each of the fiscal years 2010 through 2014.