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Senators Question CMS Handling of Quality Improvement Funds

By John Reichard, CQ HealthBeat Editor

June 11, 2008 -- Eleven members of the Senate Finance Committee have written a letter to federal officials faulting their handling of money to improve the quality of care in the Medicare program.

The senators complain that the Centers for Medicare and Medicaid Services (CMS) is "dramatically" reducing the number of hospitals, nursing homes, and doctor's offices it will assist through quality improvement organizations, known as "QIOs." They also express concern about "a pattern of diversion of monies" and an absence of funding to educate Medicare beneficiaries about their rights to file complaints about quality of care.

CMS issued a statement saying it could not comment on specific questions raised by the letter because it is in the middle of procuring contracts with QIOs.

"QIOs" contract with Medicare to improve care in a variety of ways, including by working with providers to spur their use of treatment techniques that reduce bed sores and surgical complications, for example. QIOs also handle individual complaints by Medicare beneficiaries about coverage decisions and about quality of care.

QIOs have enjoyed a reputation of doing solid work but have been buffeted by criticism in recent years. Iowa Sen. Charles E. Grassley in particular, the top Republican on the Finance Committee, has questioned their management and spending practices. In 2006, the Institute of Medicine released a study saying QIOs should devote more effort to working with providers on processes of care that promote quality and less time on handling beneficiary complaints.

In February, CMS proposed a new set of duties for QIOs that involve tightening their management and focusing their efforts on the worst performers on specific quality measures. Known as the "9th Statement of Work," the duties pertain to three-year contracts QIOs will sign for the period starting Aug. 1.

In their letter June 9 to CMS, the senators questioned an agency directive that QIOs not include costs in their contract proposals for educating beneficiaries about their rights to file complaints about quality of care. In that category, the directive says QIOs should only include costs relating to producing an annual report. "In our view, CMS has failed to fund outreach to beneficiaries, and, as a result, Medicare beneficiaries are not aware of their right to complain about the quality of care they have received," the letter said.

The letter was signed by Democrats John D. Rockefeller IV of West Virginia, Kent Conrad of North Dakota, Ron Wyden of Oregon, Maria Cantwell of Washington, Ken Salazar of Colorado, and Debbie Stabenow of Michigan, along with Republicans Orrin G. Hatch of Utah, Pat Roberts of Kansas, Michael D. Crapo of Idaho, Jim Bunning of Kentucky, and Gordon H. Smith of Oregon.

CMS also "appears to be imposing dramatic funding cuts of as much as 70 percent on the core work of QIOs aimed at protecting Medicare beneficiaries, improving patient safety, and preventing illness," the letter added. "We cannot understand the justification for funding cuts of this magnitude, particularly when the fiscal year 2009 Health and Human Services Budget in Brief lists funding for the 9th Statement or Work at a level similar to the 8th Statement of Work.

"The unprecedented reduction in funding levels that CMS is now implementing through the contracting process will dramatically reduce the number of hospitals, nursing homes, and physician offices that QIOs may assist. It also will decimate the critical, local infrastructure in many states that has been developed through this important program over the last two decades," the letter continued. "Finally, we have been troubled by a pattern of diversion of monies, which were allocated from the Medicare Trust Fund for QIO contract administration, to other initiatives unrelated to the QIO program."

A CMS spokesman declined to answer a series of questions about the allegedly diverted money, the size of the cuts involved, and the reasons for them, except to say that "the President's fiscal year 2009 budget shows the budget for the QIO Program as $1.099 billion over the 3-year contract cycle. During our last contract cycle the Program's budget was $1.23 billion. This constitutes a $130 million or 10.67 percent funding reduction.

"Because we are in an active procurement state with the QIOs in securing their next statement of work contracts with us, CMS cannot comment publicly any more than that. It's the procurement process rules," the spokesman said.

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