Medicare:

CMS Needs to Collect Consistent Information from Quality Improvement Organizations to Strengthen Its Establishment of Budgets for Quality of Care Reviews

GAO-11-116R: Published: Dec 6, 2010. Publicly Released: Dec 22, 2010.

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Medicare funds health care services for more than 46 million beneficiaries. The Centers for Medicare & Medicaid Services (CMS)--the agency that administers Medicare--contracts with private organizations known as Quality Improvement Organizations (QIO) to, among other core functions, improve the quality of care for Medicare beneficiaries. CMS contracts with one QIO for each of the 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. One of the QIOs' many responsibilities is to review quality of care concerns, raised by Medicare beneficiaries or others, to determine whether Medicare-financed medical services meet professionally recognized standards of health care. Quality of care reviews may address a range of issues, such as inappropriate treatment or hospital staff not administering medications on time; may involve a variety of health care services and settings; and may include a range of Medicare providers or practitioners. CMS enters into 3-year contracts with QIOs for a range of activities and reviews, including quality of care reviews. For each QIO contract, CMS establishes a budget reflecting the estimated costs of these activities and reviews. For the most recent contracts, which cover August 1, 2008, through July 31, 2011, CMS's budgets for the QIOs totaled about $1.1 billion, with approximately $208 million for all types of reviews, including QIOs' quality of care reviews, as well as some other activities. Questions have been raised about CMS's ability to set budgets appropriately for QIOs' quality of care reviews. A 2006 report by the Institute of Medicine (IOM) and a 2008 internal report commissioned by CMS identified weaknesses in CMS's ability to accurately compare costs across QIOs. Based on reports of wide variation in the costs that QIOs report for conducting these reviews, Congress raised questions about how CMS establishes QIOs' budgets. Ensuring that QIOs' budgets are based on accurate information is particularly important because CMS's contracts with the QIOs are funded from the Medicare Trust Funds, which are primarily used to support inpatient and outpatient health care services for Medicare beneficiaries. QIO contracts are funded from the Medicare Trust Funds in proportions from each that CMS determines to be fair and equitable, and the QIO program is not subject to the same kind of congressional oversight as other CMS programs, which are funded through the annual appropriations process. Policymakers are concerned about the long-term solvency of these Trust Funds and thus their ability to fund health care services for Medicare beneficiaries in the future. Congress raised questions about the information QIOs report to CMS for budgeting purposes and how CMS uses this information. To assist congressional consideration of this matter, this report describes and assesses the information CMS uses to establish the portion of QIOs' budgets for quality of care reviews.

To help establish QIOs' budgets for quality of care reviews for the current contract, the 9th Statement of Work, CMS used information that QIOs are required to provide to the agency about the volume of QIOs' quality of care reviews and the costs associated with conducting these reviews. CMS requires the QIOs to record information about the volume of their quality of care reviews in CMS's Case Review Information System (CRIS) and to record information about their labor costs in CMS's Financial Information and Vouchering System (FIVS). However, CMS has not established clear instructions for how QIOs should record volume and cost information in these systems. We found inconsistencies among some QIOs in the ways they record certain volume and cost information in CRIS and FIVS. As a result, the historical quality of care review volume and cost information CMS obtains is inconsistent across QIOs and CMS cannot be assured that the budgets it establishes for QIOs' quality of care reviews are appropriate.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendation for Executive Action

    Recommendation: To ensure that QIOs consistently record volume and cost information for their quality of care reviews and to help ensure that the budgets CMS establishes for these reviews are appropriate, the Administrator of CMS should develop clear instructions specifying how QIOs should record information about the volume and costs of their quality of care reviews in CRIS and FIVS.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Open

    Comments: CMS released guidance to Quality Improvement Organizations (QIOs) on recorded information about the volume and costs on three separate occasions through official CMS memorandum (8/30/2011, general instructions, SDPS memo 12-161-FI, released 5/21/2012, and SDPS Memo 12-253-CO, released 8/7/2012). CMS finally released a new chapter of the QIO quality of care review process effective in April 2012. However, CMS is continuing to refine and develop the case review system in which plans record the volume of quality of care reviews. (CMS implemented a version of the new case review management information system (CRISM) in 2012 but went back to the old system (CRIS) when the new system was overwhelmed.) The new system will be entitled QMARS and implemented under the 11th SOW (effective July 2014). CMS has begun the development and testing process of QMARS.

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