December 2006

HHS Secretary Mike Leavitt released details of the President's FY 2008 budget request to Congress for the department. The budget proposes total outlays of nearly $700 billion for Health and Human Services, an increase of more than $28 billion from 2007. This figure includes $67.6 billion in discretionary program spending, which is an increase of $95 million over the FY 2007 full year continuing resolution.

"For the past six years, this Administration has worked to make America a healthier, safer and more compassionate nation," Secretary Leavitt said. "I am proud of the strides we have made in health care through HHS initiatives. More than 39 million people with Medicare now have prescription drug coverage; our nation has been mobilized to prepare for potential pandemic flu; standards are being put in place to make health information technology interoperable; and we are bringing cost and quality transparency to the American health care system."

The HHS budget proposal reflects fiscally responsible steps to reform and modernize the Medicare program. Funding for Medicare benefits, which will help 44.6 million Americans, is expected to be nearly $454 billion in FY 2008, an increase of $28 billion over the previous year.

The FY 2008 budget includes a comprehensive package of Medicare legislative and administrative proposals that will help strengthen the program's long-term viability. These proposals will encourage efficient payment for services, foster competition and promote beneficiary involvement in health care decisions.

The President's budget continues the successful transformation of the Medicaid program. The unprecedented decline of $200 billion in Medicaid spending over 10 years since the last President's budget is due to the significant reforms implemented by the Deficit Reduction Act and greater collaboration between the states and federal government. Building on this success, the FY 2008 proposal outlines a series of proposed legislative and administrative changes estimated to save $25.7 billion over the next five years, keeping Medicaid up to date and sustainable in the years to come.

The President's budget proposes to reauthorize State Children's Health Insurance Program (SCHIP) for five more years, to increase the program's allotments by $5 billion over that time, and to target SCHIP funds more efficiently to those most in need.

Rising health care costs are also making insurance too expensive for millions of our citizens -- and the President's budget addresses that need. The goal is to ensure that all our citizens have access to a basic health insurance policy -- at an affordable rate. In his State of the Union Address, the President proposed new tools to help reach this goal.

Additional highlights from the FY 2008 request include:

• $15 million for the Agency for Healthcare research and Quality to accelerate the movement toward personalized medicine, in order to provide the best treatment and prevention for each patient, based on highly-individualized information. This initiative undertakes pioneering work in the utilization of health IT for linking clinical care with research to improve health care quality while lowering costs.
• $4.3 billion for bioterrorism spending, a $141 million increase over FY 2007. This includes a $135 million increase to accelerate the development of medical countermeasures for the Strategic National Stockpile and $154 million in funding to expand, train, exercise and coordinate medical emergency teams to respond to a real or potential threat.
• Funding 340 new or expanded community health centers, surpassing the President's goal of 1,200 new sites. The request includes up to 120 new health centers in high poverty counties. In FY 2008, these new or expanded centers will serve 16.3 million people, an increase of 1.3 million from last year.

More information about the President's FY 2008 Budget Proposal for HHS is available at www.hhs.gov/budget.

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The Department of Health and Human Services Jan. 25 awarded $103 million in Medicaid "transformation grants" to programs in 27 states to fund more widespread use of electronic health care records, as well other efforts to improve efficiency, economy, and quality of care.

Congress approved a total of $150 million in these Medicaid transformation grants as part of the Deficit Reduction Act of 2005 to be distributed over fiscal years 2007 and 2008. Some states submitted more than one grant proposal and will receive funds for each project, CMS said. For instance, West Virginia will receive five grants totaling nearly $14 million. No state matching funds are required for these special grants, CMS said.

Later in 2007, HHS will award the remaining $47 million, and states will receive the funds over the next two years, according to a statement from CMS.

"These transformation grants express the core goal of this administration to give states the kind of flexibility they need to deliver high quality care in an efficient and economical way," said HHS Secretary Michael Leavitt. "With these grants states can streamline and modernize their systems, stabilize the exponential growth of the program and protect it into the future."

The grants can be used to cut patient error rates through technology implementation; improve collection of owed amounts from estates; reduce waste, fraud, and abuse; boost utilization of generic drugs; improve access to doctors for the uninsured; and implement medication risk management.

A detailed list of the grants is available on the Web at http://www.hhs.gov/news/press/2007pres/20070125.html.

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There has been "substantial and verified" improvement in quality of care at the 260-plus hospitals participating in a Medicare incentive demonstration that rewards facilities for following recommended care procedures, said a CMS official.

Participants in the Premier Hospital Quality Incentive Demonstration (HQID) reported improved quality of care in all five clinical areas measured by the program: acute myocardial infarction (heart attack), heart failure, coronary artery bypass graft, pneumonia, and hip and knee replacement.

CMS will award nearly $8.7 million in incentive payments to 115 top-performing hospitals, acting CMS Deputy Administrator Herb Kuhn said. Incentive bonuses in year one totaled about $8.85 million to 123 hospitals, according to a CMS fact sheet. Overall, the average improvement over the first two years of the three-year program was 11.8 percentage points, Kuhn said.

CMS has been considering ways to integrate performance measurements and payment systems as a way to maximize the value of Medicare payments, Kuhn said. The meaning of the first- and second-year results are clear: with the prospect of incentive payments, hospitals provide more reliable, improved care, he said.

'Attractive Incentives.'

Under the pay-for-performance program, bonuses are awarded to hospitals scoring in the top 20 percent in any of the five clinical areas, as measured by more than 30 standardized quality indicators. Examples of the HQID process measures used include giving aspirin at arrival for heart attack patients or providing prophylactic antibiotics at least one hour prior to surgery for hip and knee replacement patients.

Hackensack University Medical Center, Hackensack, N.J., was a top performer in all five clinical areas for the second year in a row, garnering approximately $744,000 in bonus payments.

The balance of measures in the program "really looked at both performance and quality outcomes," said Regina Berman, HUMC's director of performance improvement, who spoke at a separate conference sponsored by Premier Inc.

Berman also said incentives in the program helped to overcome the relatively low costs required to participate in the demonstration. The incentive to achieve high results and then have them visible is "very attractive," she said.

In year three of the demonstration, hospitals that do not achieve performance improvements above a demonstration baseline level will face financial penalties.

Speaking at the CMS press announcement, CMS official Mark Wynn said the number of hospitals that fell below the baseline level decreased in year two. In addition, he said, "We expect all hospitals to exceed [the baseline level] in each of the five categories in year three."

Report to Congress by Summer

Under the Deficit Reduction Act of 2005, CMS is required to present a plan to Congress regarding the use of pay for performance for Medicare hospital payments, for possible implementation in fiscal year 2009, according to Kuhn. He said CMS hopes to have the report ready by summer.

"This demonstration will greatly help us in the development of that report," Kuhn said.

A sound health care system should support prevention and reward providers for providing appropriate and timely care, Kuhn continued. It also should ensure that providers and patients have the information they need to provide high-quality care, he said.

The HQID program "proved one way of improving performance," he said. "The results look very promising."

More information on the CMS/Premier HQID is available at http://www.cms.hhs.gov/HospitalQualityInits/35_HospitalPremier.asp on the Web.

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Physicians and other practitioners will not have to enroll in a new Medicare reporting program in order to receive their bonus payment, a CMS representative said.

The goal of the voluntary Physician Quality Reporting Initiative (PQRI) is to improve quality and efficiency, and CMS will seek to avoid adding to providers' burdens, Susan Nedza, a medical officer in CMS's Chicago Regional Office, said.

The reporting of measures of quality of care will take place through G-code and Current Procedural Terminology Category II codes, as part of the claim submission process. Covered services are those under the Medicare physician fee schedule, and include anesthesia services and the technical component for diagnostic services, Nedza said during a CMS Open Door forum. Claims for clinical laboratory services and Part B drugs are among those that are excluded, she added.

Congress set aside $1.35 billion in the Tax Relief and Health Care Act of 2006 for the PQRI, intended for those who submit Part B claims for reimbursement. The program covers a wide variety of professionals--including midwives, nurse practitioners, chiropractors, and social workers. As discussed in the law, which was signed by President Bush in December 2006, the program offers an additional 1.5 percent in payments to those practitioners who report quality information for services furnished from July 1-Dec. 31. The money will be paid out in 2008.

No Registries

The reported information will be submitted through the claims process and, although the law mentions the use of reporting through registries, "there are no registries being utilized" in the 2007 program, Nedza said.

The 1.5 percent will be calculated on total allowed charges submitted during the reporting period, not just the 80 percent paid by Medicare, and not just the claims associated with quality measures, she said. However, the bonus is subject to a cap, she added.

She reminded listeners that, to be eligible, claims must be sent to CMS by February 2008.

The program will use the 66 measures under the current Physician Voluntary Reporting Program (PVRP), with more measures expected to be developed and added through a physician consensus process by April, Nedza said. The PVRP will transition to the PQRI.

Physicians are to report measures through their taxpayer identification numbers and other individual identifiers but the agency is also considering methods for group practice reporting, Nedza said.

The reports will not be made public, she told callers to the forum.

CMS is still working on details on issues such as which provider must submit claims for the same beneficiary--for example, services from an emergency department doctor and a specialist in the hospital. She asked for feedback about the impact of the measures on providers.

The agency will send further information through the normal communication channels, "outreach teams," and will post a "frequently asked questions" document on its Web site, she said. Regulations are not required to implement the program.

More information on the program is available at http://www.cms.hhs.gov/pvrp.

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A communications gap exists between patients and caregivers because important health care information is communicated by practitioners using medical jargon and confusing language that typically exceeds the literacy level of some patients, according to a public policy white paper released Feb. 7 by JCAHO.

The white paper, titled, "What Did the Doctor Say?: Improving Health Literacy to Protect Patient Safety," contends that this communication gap involves myriad challenges of literacy, language, and culture and will require multiple steps be undertaken to narrow or close the gap.

The white paper contains 35 specific recommendations covering a wide range of improvement opportunities developed by a special JCAHO expert roundtable, including making effective communications a priority in protecting the safety of patients, addressing patient communications needs across the spectrum of care, and pursuing public policy changes that promote better communications between health care practitioners and patients.

Failure to address those issues will continue to undermine other efforts to improve patient safety, according to the 13-page paper posted on JCAHO's Web site.

Cornerstone of Public Safety

JCAHO President Dennis S. O'Leary told a Feb. 7 news conference that effective communication is a key cornerstone of patient safety.

"If patients lack basic understanding of their conditions and the whats and whys of the treatments prescribed, therapeutic goals can never be realized, and patients may instead be placed in harm's way," O'Leary said.

JCAHO already promotes the involvement of patients in their care through its ongoing SpeakUp educational campaigns, and through expectations regarding patient engagement and involvement in care decisions that are stipulated in JCAHO accreditation standards as well as its National Patient Safety Goals, O'Leary noted.

Health literacy problems, however undermine the ability of health care organizations to comply with the intents of the accreditation standards and safety goals that seek to protect the safety of patients, partly because they often go unrecognized and unaddressed by health care practitioners, physician Ronald M. Davis, chair of the Joint Commission Expert Roundtable on Health Literacy and director of the Center for Health Promotion and Disease Prevention at Henry Ford Health System in Detroit, said Feb. 7.

"Breakdowns in communication between patients and caregivers can significantly impair the ability of physicians to diagnose and treat medical problems," Davis said. "Everyone who has a role in health care must work together to pursue strategies for improving communications with patients that will result in safer, more effective care."

Specific Recommendations

Among the 35 specific recommendations in the white paper are:

• sensitization, education, and training of clinicians and health care organization leaders and staff regarding health literacy issues and patient-centered communications;
• development of patient-friendly navigational aids in health care facilities;
• enhanced training and use of interpreters for patients;
• redesign of informed consent forms and the informed consent process;
• development of insurance enrollment forms and benefits explanations that are "client-centered";
• use of established patient communication methods;
• expanded adaptation and use of adult learning centers to meet patient health literacy needs;
• development of patient self-management skills;
• health care organization assessment of the literacy levels and language needs of the communities they serve;
• design of public health interventions that are audience-centered and can be communicated in the context of the lives of the target population;
• integration of the patient communication priority into emerging physician pay-for-performance programs; and
• provision of medical liability insurance discounts for physicians who apply patient-centered communication techniques.

The white paper is available on the Web at http://www.jointcommission.org.

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Quality Assurance Committee Seeks Comment on Measures of Physician Practice

NCQA on Feb. 5 released for public comment an expanded set of measures, guidelines, and technical specifications to facilitate what it called the "standardized, equitable assessment" of physician practice quality.

NCQA said the new specifications were based on HEDIS, the Health Plan Employer Data and Information Set, the group's tool for health quality measurement. The deadline for comment is March 5.

The expanded volume of HEDIS Physician Measurement includes 25 new measures, nearly 50 new indicators, and a set of new guidelines for data collection for both quality and cost of care measures.

"Many of the measures developed by NCQA have been adopted by other leading quality organizations' physician measurement initiatives, including the National Voluntary Consensus Standards for Physician-Focused Ambulatory Care endorsed by the National Quality Forum," NCQA said.

HEDIS consists of a set of performance measures that compare performance in certain key areas, such as quality of care, access to care, and patient satisfaction.

The guidelines "spell out a standardized means of collecting cost data from episode-grouping or population risk adjustment software," according to NCQA. "Many health plans and employers use those programs to measure the cost and appropriateness of care delivered by physicians after adjusting for risk, disease severity or both."

The draft guidelines and specifications are available at NCQA's Web site, http://www.ncqa.org.

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