Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


Medicare Diverting Quality Improvement Funds, QIOs Say

By John Reichard, CQ HealthBeat Editor

June 20, 2008 -- Medicare officials are circumventing the will of Congress by diverting funds from quality improvement organizations (QIO), industry officials said.

The Centers for Medicare and Medicaid Services has been using money meant to administer its contracts with QIOs for other purposes, QIO officials said.

CMS is shutting down projects to help seniors take prescription drugs more safely and effectively and scrapping plans to help hundreds of hospitals and nursing homes prevent sometimes fatal bedsores and reduce the use of belts, vests, and wrist devices to keep patients from wandering, they said.

QIOs have long been the mainstay of efforts to improve the quality of care in the Medicare program, but officials say their budgets are increasingly being misused by federal officials for projects that may be worthwhile but are not authorized for funding using QIO money.

The QIO budget, funded through the Medicare Trust Fund, "isn't a piggy bank for anything that has to do with 'quality,'" said David G. Schulke, executive vice president of the American Health Quality Association, the lobby representing the nation's QIOs.

QIO officials suggest that the budget squeeze may be a tactic to achieve administratively what the agency earlier this year proposed, but failed to do legislatively—streamline the program by having regional QIOs rather one QIO in each state.

Only weeks away from having to sign new three-year contracts with Medicare, QIOs hope Congress will intervene with Centers for Medicare and Medicaid Services officials to keep more money for core QIO activities. They note that a June 6 letter to CMS signed by a bipartisan majority of the Senate Finance Committee faults the agency for changing the QIO program "without congressional authorization or consultation."

The letter also seeks a briefing of congressional aides by CMS officials on the changes before any contract negotiations. The senators signing the letter did not include Finance Committee Chairman Max Baucus, D-Mont., or the panel's top Republican, Sen. Charles E. Grassley of Iowa.

CMS declined to comment on the letter, saying it was precluded from doing so by rules pertaining to pending contract negotiations. The agency didn't immediately respond to a request for comment Friday on the various assertions by QIOs.

The Bush administration has proposed a budget of $1.1 billion to QIOs for the three-year contract cycle that starts Aug. 1, 2008. That's a cut of $130 million for QIOs, or 10.6 percent, according to CMS, which says the budget for three-year cycle now ending was $1.23 billion.

But QIO officials say that the cut is really deeper, because last year CMS "deobligated"—transferred to another use—$40 million of the $60 million it said it would spend on QIO projects to improve pharmaceutical drug use. And in the new contract cycle, CMS is making much sharper cuts in funding for basic quality improvement functions, QIO officials add.

Schulke said in an interview that while deobligation is legal, the funds taken away from one QIO function can't be used for non-QIO purposes.

The money went to fund an initiative ordered by President Bush to increase "transparency"—to publicize the quality and price of health care services to boost the value of health care spending through competition. That isn't a QIO function, Schulke said, asserting that under section 1159 of the Social Security Act, funds for QIOs taken from the Part A and Part B Medicare trust funds can only be used for costs incurred in administering QIO contracts.

Schulke noted further that under the 2003 Medicare overhaul law (PL 108-173), QIOs were assigned to work with Medicare health plans and Medicare prescription drug plans to improve the quality of prescription drug therapy. Subtracting the $40 million undermined that effort, leading to the shutdown of various projects, Schulke said. And the upcoming three-year contract provides little or no funding for the work Congress wanted QIOs to do on prescription drugs, he said.

CMS is really substituting its own agenda for that of Congress, Schulke said.

Among the projects in the works before the funding cut were those in 11 states to promote safer alternatives to the use of drugs likely to produce adverse effects in the elderly; in eight states to improve medication use by diabetics; in seven states to educate Medicare enrollees about "Medication Therapy Management" services offered by Medicare drug plans to promote safer and more effective drug use by the chronically ill; and programs by several other QIOs to use pharmacy data to spur competition over quality performance.

Many of those programs have now been suspended, Schulke said.

QIOs also say that between February and May of this year, CMS made cuts that slashed the number of providers they could work with to improve care. According to AHQA, CMS published figures saying QIOs should assist 2,889 hospitals in reducing bed sores, yet in May funded them to assist only 607, a reduction of 79 percent. The agency said QIOs should help 900 hospitals in reducing surgical complications, but in May it funded them to help 801, a reduction of 11 percent. Similarly, hospitals to receive help fighting MRSA infections were whittled from 693 to 644.

The number of nursing homes to get help reducing bed sores dropped from 1,942 to 1,476, a 24 percent decline. Those to receive help lessening the use of physical restraints to keep patients from wandering was reduced from 2,475 to 1,930, a 22 percent decline, according to AHQA.

Meanwhile, CMS is increasingly shifting funds into administrative and overhead spending—and away from quality improvement work with providers and beneficiary protection work to review quality of care complaints and appeals of coverage decisions, according to the association.

Almost half of the QIO spending—44 percent—in the upcoming contract cycle will go for "overhead and support" costs, compared with 30 percent in the current contract, according to AHQA. The percentage for quality improvement work with providers will drop from 38 percent to 30 percent, while that for beneficiary protection will fall from 27 percent to 18 percent.

Schulke said it's unclear how money shifted into the overhead and support category will actually be used.

The pattern of using QIO money for non-QIO purposes goes back several years, Schulke added. He noted for example that a 2006 study by the Institute of Medicine found that $55 million in Medicare trust fund money allocated for QIO contracts in 2002 through 2005 was actually used for non-QIO activities.

It's unclear, however, to what extent if any Congress will intervene with these funding shifts.

Grassley may be a tough ally for QIOs to attract on the funding issue; he has fiercely criticized the management of QIOs and appears to be working successfully behind the scenes with CMS to tighten QIO management in the upcoming contract cycle. Baucus, meanwhile, has been busy negotiating the terms of Medicare physician payment legislation and has fish to fry with Grassley on non-QIO issues, even if he is inclined to oppose the funding shifts.

Aides to Baucus and Grassley offered only limited comments Friday on QIO issues, citing the intensity of negotiations on other Medicare matters.

A Baucus aide said the Finance Committee chairman "believes that QIOs should be able to focus more on improving quality of care, not less." It was unclear, however, whether Baucus plans to intervene in CMS funding allocations. Meanwhile, a Grassley aide said, "We do not have information about CMS using trust fund money from the QIO budget for non-QIO purposes." The aide noted that a report by the Government Accountability Office on QIOs has found "shortcomings with their work in many areas."

Publication Details