Health Care Costs, Quality, and Outcomes (HCQO)

HCQO: Safety/Quality

Safety/Quality Reduce the risk of harm from health care services by promoting the delivery of appropriate care that achieves the best quality outcome.

Increasing the safety and quality of health care for all Americans is a primary emphasis at AHRQ. Patient safety was quickly elevated to national importance in November 1999, when the Institute of Medicine's report, To Err is Human: Building a Safer Health System, estimated that between 44,000 and 98,000 Americans die each year as a result of medical errors. Almost immediately, the Senate Committee on Appropriations began hearings on patient safety issues that resulted in the Committee directing AHRQ to lead the national effort to combat medical errors and improve the quality and safety of patient care. One of AHRQ's leading long-term goals is to prevent, mitigate and decrease the number of errors, risks, hazards and quality gaps associated with health care and their harmful impact on patients.

Consequently, safety and quality are of the highest priorities within AHRQ. Leaders of our health care system have demonstrated a commitment to improve the quality and safety of care for all Americans, and with their help, AHRQ has successfully built the foundation for a national Patient Safety Initiative. The mission of this agency-wide strategic goal is to reduce the risk of harm from health care services by promoting the delivery of appropriate care that achieves the best quality outcome.

1. Performance Analysis—HCQO: Safety/Quality

The results and investments in patient safety and quality are now being incorporated into practice. Below are examples of how this work is being used.

• Through the first year of the Patient Safety Improvement Corps, AHRQ has trained more than 50 patient safety experts representing 15 States and 13 hospitals/major health care organizations in the use of tools and techniques to analyze health care related errors, risks, and hazards; identify and understand their root causes; and identify and implement effective, evidence-based interventions to make the delivery of health care safer.
• On behalf of the HHS Patient Safety Task Force (PSTF), AHRQ contracted with the Keveric Company, and they have developed a data repository and vocabulary server designed to enhance the functionality of reported medical error event data.
• Through 2004, AHRQ continued support of a monthly peer-reviewed, Web-based journal that showcases patient safety lessons drawn from near misses and actual cases of medical errors called the AHRQ WebM&M (Morbidity and Mortality Rounds on the Web, http://webmm.ahrq.gov).
• On December 22, 2003 AHRQ released the National Healthcare Quality Report (NHQR) and the National Healthcare Disparities Report (NHQR). These two reports represent the first national comprehensive effort to measure the quality of health care in America and differences in access to health care services for priority populations. AHRQ Quality Indicators (QIs) are being used by a variety of organizations in a number of ways, including for internal hospital quality improvement, public reporting by hospitals, and private and public national pay-for-performance initiatives and demonstrations. Following are some examples:
  • Many State and regional hospital associations across the nation have integrated the Inpatient Quality Indicators (IQIs) and the Patient Safety Indicators (PSIs) into their quality programs and performance measurement systems. Some of these associations include the Healthcare Association of New York State, the Missouri Hospital Association, the Georgia Hospital Association, and the Dallas-Fort Worth Hospital Council.
  • A private pay-for-performance initiative that uses the AHRQ QIs is the Anthem Blue Cross Blue Shield of Virginia Quality-In-Sights® Hospital Incentive Program. It is designed to align financial incentives with achievement of specific performance objectives, and includes a patient safety component that relies on the PSIs for monitoring.
  • A public pay-for-performance demonstration is the CMS-supported Premier Hospital Quality Incentive Demonstration, a 3-year project to recognize and provide financial rewards to hospitals that demonstrate a high quality performance. CMS seeks significant improvement in the quality of inpatient care by awarding bonus payments to hospitals with high quality as measured by multiple performance measures in the acute care area, including two of the AHRQ PSIs.
• The AHRQ health IT initiatives include a series of three solicitations issued in FY 2004. The solicitations form an integrated set of activities designed to explore strategies for successful planning and implementation of health IT solutions in communities and to demonstrate the value of health IT in patient safety, quality, and health care costs.
• Adoption of beneficial and timely clinical preventive recommendations is a measure of the Prevention Portfolio's effectiveness. This evidence-based knowledge is generated by the United States Preventive Services Task Force (USPSTF). The Task Force is an independent panel of experts in primary care and prevention that systematically reviews the evidence of effectiveness and develops recommendations for clinical preventive services. By identifying how these guidelines can improve the delivery of effective health care, the Prevention Portfolio can facilitate the adoption of the Task Force recommendations among partnership organizations. This process supports the FY 2006 prevention portfolio objective of "increasing the number of partnerships that will adopt and promote evidence-based clinical prevention."

In FY 2004, as a result of the PART review, AHRQ's pharmaceutical outcomes portfolio adopted a goal of reducing hospitalizations for upper gastrointestinal bleeding due to the adverse effects of medication or inappropriate treatment of peptic ulcer disease, in those between 65 and 85 years of age. Hospitalization rates for GI Bleeding should improve with upcoming portfolio involvement in the following areas:

• Enhancing strategies in effectively facilitating the adoption and implementation of evidence-based guidelines and educational programs related to osteoarthritis that recommend acetaminophen-based regimens, which are safer and often as effective as nonsteroidal anti-inflammatory drugs (NSAIDs).
• Second, anticoagulants are commonly used for the prevention of stroke. These products, although valuable, require close monitoring via frequent lab tests. In the absence of this monitoring, these patients also may experience bleeding episodes.
• Finally, the diagnosis and treatment of ulcer disease has improved with the discovery that ulcer disease is caused by infection due to the bacteria H. Pylori. Appropriate diagnosis and treatment of this organism should reduce the sequelae of ulcer disease and bleeding.

For details of Performance Analysis of the budget go to Exhibit U.

2. Rationale for FY 2006 Request—HCQO: Safety/Quality

The FY 2006 Request provides $167,180,000 for the Safety/Quality strategic plan goal, an increase of $226,000 over the FY 2005 Appropriation of $166,954,000. This strategic plan goal includes all of AHRQ's patient safety research agenda. Within this level of support, AHRQ's maintains the patient safety program at $84,000,000, the same level of support as the FY 2005 Appropriation.

In FY 2005 and FY 2006, AHRQ will continue to direct $49,886,000 of its patient safety resources to information technology investments designed to enhance patient safety, with an emphasis on small community and rural hospitals/health care systems. These investments will encourage uptake of technologies such as computerized physician order entry, computer monitoring for potential adverse drug events, automated medication dispensing, computerized reminder systems to improve compliance with guidelines, handheld devices for prescription information, computerized patient records, and patient-centered computerized support groups. The first awards for implementation of these technologies were made in summer 2004. AHRQ grants provided up to 50 percent of the total project costs, with a maximum of to $500,000 per year per project. Working with public and private partners, AHRQ will help use data from hospital IT investment demonstrations to make the business case for adoption of these tools, and help spread proven technology through the healthcare system.

Mechanism Discussion

HCQO's Safety/Quality portfolio, in terms of funding mechanisms, is as follows:

Research Grants: The FY 2006 Request provides $63,938,000 for research grants, a decrease of $11,766,000 from the FY 2005 Appropriation of $73,867,000.

This budget will provide $6,061,000 in new grant funds, of which $2,434,000 will be for the patient safety program. The new grants will be used to continue research in the areas of patient safety and quality of care. Research will be directed to all of AHRQ's portfolios of work, with a specific focus on increasing the adoption and delivery of evidence-based clinical prevention services to improve the health of all Americans; pharmaceutical outcomes research; and research training. Building on the CMS demonstrations outlined in the MMA, AHRQ investments in this area will identify the promising practices and extend them so all Americans can benefit.

Non-MEPS Research Contracts and Inter-Agency Agreements (IAAs): The FY 2006 Request provides an increase of $11,002,000 for non-MEPS research contracts and IAAs from the FY 2005 Appropriation of $66,820,000.

Of this increase, a total of $5,245,000 is allocated for new non-patient safety research contracts and IAAs within the safety/quality strategic plan goal. These new contracts will allow AHRQ to provide additional research and dissemination activities in prevention, pharmaceutical outcomes, training, informatics, and other areas to support the quality and cost-effectiveness of health care. As in the research grant mechanism, new contract funds will be used to complement and extend the impact of CMS demonstrations in MMA so that all Americans benefit in terms of improved quality and value. A total of $2,571,000 is provided to continue research contracts and IAAs funded by our portfolios of work within this strategic plan goal.

In terms of patient safety, the increase in contracts will be primarily directed to transition from Phase II to Phase III of the National Patient Safety Data Network. This network will increase patient safety and reduce medical errors via improving on existing reporting systems, greatly enabling the medical community to learn from and reduce adverse medical events and medical errors of all types—latent and active, slips and mistakes, near misses and close calls, and preventable and unpreventable adverse events.

Research Management: The FY 2006 budget provides an increase of $990,000 for research management costs. These funds will provide for mandatory increases, including funds for the Unified Financial Management System (UFMS). Select for additional information on UFMS costs.

Mechanism Table—HCQO: Safety/Quality—Total (Dollars in Thousands)

		FY 2004 Actuals		FY 2005 Enacted		FY 2006 Congressional Justification
		Number	Dollars	Number	Dollars	Number	Dollars
Research Grants	Non-Competing	123	42,656	138	57,196	160	57,621
	New & Competing	149	41,038	88	18,252	27	6,061
	Supplemental	0	47	0	256	0	256
	Total, Research Grants	272	83,741	226	75,704	187	63,938
Contracts and IAAs			54,545		64,797		75,799
MEPS			0		0		0
Total Contracts/IAAs			54,545		64,797		75,799
Research Management			24,654		26,453		27,443
Total			162,941		166,954		167,180

The following is the mechanism table for the Patient Safety Earmark. This is a non-add to the mechanism table above.

HCQO—Patient Safety Safety/Quality (Dollars in Thousands)

		FY 2004 Actuals		FY 2005 Enacted		FY 2006 Congressional Justification
		Number	Dollars	Number	Dollars	Number	Dollars
Research Grants	Non-Competing	24	10,428	80	36,493	116	41,871
	New & Competing	105	38,000	23	10,998	5	2,434
	Supplemental		0		0		0
	Total, Research Grants	129	48,428	103	47,491	121	644,305
Contracts and IAAs			31,072		36,509		39,695
MEPS			0		0		0
Total Contracts/IAAs			31,072		36,509		39,695
Research Management			0		0		0
Total			79,500		84,000		84,000

HCQO: Efficiency

Efficiency Achieve wider access to effective health care services and reduce health care costs.

American health care should provide services of the highest quality, with the best possible outcomes, at the lowest possible cost. Striving to reach this ideal is a primary emphasis of AHRQ's mission with many of its activities directed at improving efficiency through the design of systems that assure safe and effective treatment and reduce waste and cost. The driving force of this agency-wide strategic goal is to promote the best possible medical outcomes for every patient at the lowest possible cost.

A significant factor that reduces the efficiency of our modern-day health care system is waste caused by systems that do things that don't improve care, processes that could be designed to do things better and systems that fail to do things that would assure more effective treatment. AHRQ's investments include efforts to develop ways to:

1. Measure and report on the efficiency of systems, procedures, and processes.
2. Assess the scope, nature, and impact of waste in health care systems.
3. Design techniques, methods, and technology to improve treatment outcomes and reduce associated costs.

1. Performance Analysis—HCQO: Efficiency

Our Prevention Portfolio is seeking to support the goal of efficiency by creating the ability to provide timely knowledge of clinical prevention that can promote wider access to effective health care services and thus reduce health care costs. The United States Preventive Services Task Force (USPSTF) generates evidence-based recommendations on clinical preventive services based on the benefits and harms to the patient. These recommendations can guide others in prioritizing resources for clinical prevention that could lead to increased access and decreased cots. By "increasing the timeliness and responsiveness of the USPSTF to emerging needs in clinical prevention," the Prevention Portfolio can support the Agency's overall goal of efficiency.

Within the pharmaceutical outcomes portfolio, trend analysis and baseline measures have been developed through the use of MEPS and HCUP and in consultation with the AHRQ research community. As a result of this planning and evaluation activity, all relevant AHRQ-funded activities have been compiled and summarized and ten-year goals for improvement have been established. Work with partners is planned to support the achievement of these targets. Work is ongoing for the development of an efficiency goal related to improved prevention of rehospitalization for congestive heart failure.

2. Rationale for FY 2006 Request—HCQO: Efficiency

The FY 2006 Request provides $16,500,000 for the Efficiency strategic plan goal, an increase of $150,000 over the FY 2005 Appropriation of $16,350,000.

Mechanism Discussion

HCQO's Efficiency portfolio, in terms of funding mechanisms, is as follows:

Research Grants: The FY 2006 Request provides $7,603,000 for research grants, an increase of $442,000 from the FY 2005 Appropriation of $7,304,000. An increase in non-competing research grant commitments accounts for $37,000 of this overall increase.

This Request will provide $1,970,000 in new grant funds, an increase of $405,000 from the FY 2005 Appropriation. Research will be directed to all of AHRQ's portfolios of work related to the efficiency strategic goal with a specific focus on increasing the adoption and delivery of evidence-based clinical prevention services to improve the health of all Americans; pharmaceutical outcomes research; and research training.

Non-MEPS Research Contracts and Inter-Agency Agreements (IAAs): The FY 2006 Request provides $3,483,000 for non-MEPS research contracts and IAAs for research related to the efficiency strategic goal, a decrease of $498,000 from the FY 2005 Appropriation. This decrease reflects a drop of $998,000 in efficiency contracts, and an increase of $500,000 for new contracts related to the efficiency strategic plan goal. The new contract will be directed to all of AHRQ's portfolios of work related to efficiency.

Research Management: The FY 2006 Request provides an increase of $206,000 for research management costs. These funds will provide for mandatory increases, including funds for the Unified Financial Management System (UFMS). Select for additional information on UFMS costs.

Mechanism Table—HCQO: Efficiency (Dollars in Thousands)

		FY 2004 Actual		FY 2005 Enacted		FY 2006 Congressional Justification
		Number	Dollars	Number	Dollars	Number	Dollars
Research Grants	Non-Competing	38	11,626	19	5,545	16	5,582
	New & Competing	21	2,518	13	1,565	12	1,970
	Supplemental		269		51		51
	Total, Research Grants	59	14,413	32	7,161	28	7,603
Contracts and IAAs			6,832		3,981		3,483
MEPS			0		0		0
Total Contracts/IAAs			6,832		3,981		3,483
Research Management			7,525		5,208		5,414
Total			28,770		16,350		16,500

HCQO: Effectiveness

Effectiveness Assure that providers and consumers/patients use beneficial and timely health care information to make informed decisions/choices.

To assure the effectiveness of health care research and information is to assure that it leads to the intended and expected desirable outcomes. Supporting activities that improve the effectiveness of American health care is one of AHRQ's strategic goals. Assuring that providers and consumers get appropriate and timely health care information and treatment choices are key activities supporting that goal.

One significant AHRQ investment focuses on how best to define and measure the effectiveness of health care services. Other areas of work focus on disease prevention and assuring that health care providers and consumers have the information they need to adopt healthy life styles. Additional AHRQ efforts include providing reliable information when health care providers and patients must consider the relative effectiveness of various treatment protocols and the appropriateness of alternative pharmaceutical choices.

1. Performance Analysis—HCQO: Effectiveness

The effectiveness strategic plan goal includes two large data development portfolio programs: CAHPS® and the Healthcare Cost and Utilization Project (HCUP).

CAHPS® initially stood for the Consumer Assessment of Health Plans. However, in the current CAHPS® program—known as CAHPS® II—the products have evolved beyond health plans. CAHPS® is an easy-to-use kit of survey and reporting tools that provide reliable information to help consumers and purchasers assess and choose among health plans, providers, hospitals and other health care facilities. Data are provided from CAHPS® surveys that measure the consumers' perspective on their health care. The CAHPS® team and AHRQ work closely with the health care industry and consumers to ensure that the CAHPS® tools are useful to both individual consumers and to employers and other institutional purchasers of health plans.

The Healthcare Cost and Utilization Project (HCUP) is a family of health care databases and related software tools and products developed through a Federal-State-Industry partnership. HCUP databases bring together the data collection efforts of State data organizations, hospital associations, private data organizations, and the Federal government to create a national information resource of patient-level health care data. HCUP includes the largest collection of longitudinal hospital care data in the United States, with all-payer, encounter-level information beginning in 1988. These databases enable research on a broad range of health policy issues, including cost and quality of health services, medical practice patterns, access to health care programs, and outcomes of treatments at the national, State, and local market levels.

Americans die prematurely every year as a result of diseases that often are preventable, such as heart disease, diabetes, some cancers, and HIV/AIDS. To address these issues, AHRQ convenes the U.S. Preventive Services Task Force, an independent panel of experts in primary health care and prevention. The mission of the task force is to conduct comprehensive assessments of a wide range of preventive services to include screening tests, counseling activities, immunizations, and preventive therapies. Recommendations about which services should be provided routinely as part of primary health care are made based on these assessments. The evidence-based recommendations developed by the Task Force are then used by a diverse audience interested in clinical prevention.

The appropriate use of pharmaceutical agents is critical to effective, high quality, affordable health care. Understanding which agents work, for which patients, and at what cost, can inform programs to manage the selection, utilization, and cost of pharmaceutical therapies and services within a changing health care environment. Since 1992, AHRQ has funded pharmaceutical research. Our studies focused on patient outcomes related to medications, medication safety, strategies intended to improve the efficiency of drug use, and ways to control medication costs. Findings from AHRQ pharmaceutical research projects have yielded important insights for the health care system. Some key issues and recent findings from our research include:

• ACE inhibitors and beta-blockers reduce deaths in a broad range of patients with heart disease.
• Antibiotic use by U.S. children fell by almost 25 percent from 1996 to 2000, and more than half of the decrease came from decreased use of antibiotics for ear infections.

2. Rationale for FY 2006 Request—HCQO: Effectiveness

The FY 2006 Request provides $77,015,000 for the Effectiveness strategic plan goal, a decrease of $370,000 over the FY 2005 Appropriation of $77,391,000.

Mechanism Discussion

HCQO's Effectiveness portfolio, in terms of funding mechanisms, is as follows:

Research Grants: The FY 2006 Request provides $17,468,000 for research grants, a decrease of $1,970,000 from the FY 2005 Appropriation of $17,744,000. The FY 2006 Request will support $2,646,000 in new grant funds, a decrease of $3,897,000 from the FY 2005 Appropriation. Research will be directed to all of AHRQ's portfolios of work related to the effectiveness strategic goal, with a special focus on increasing the adoption and delivery of evidence-based clinical prevention services to improve the health of all Americans; pharmaceutical outcomes research; and research training.

Non-MEPS Research Contracts and Inter-Agency Agreements (IAAs): The FY 2006 Request provides $38,804,000 for non-MEPS research contracts and IAAs for research related to the effectiveness strategic goal, an increase of $755,000. These new contract funds will be related to all of AHRQ's portfolios of work related to effectiveness.

In FY 2006, AHRQ will continue a $15,000,000 research initiative to develop state-of-the-art information about the effectiveness of interventions, including prescription drugs, for ten top conditions affecting Medicare beneficiaries. This work, authorized by section 1013 of the MMA, is being initiated in FY 2005. While it builds upon AHRQ's existing pharmaceutical outcomes portfolio of approximately $12,000,000, this new initiative is focused solely on conditions that are common and costly among those whose health care is funded by Medicare, Medicaid, and the State Children's Health Insurance Program. The list of priority conditions was developed with substantial input from the public and stakeholders; HHS used both public listening sessions and systems for receipt of written comment similar to that used to solicit public comment on regulatory changes under consideration. This research will take the form of systematic reviews and syntheses of the scientific literature. Researchers will focus on the evidence of outcomes, comparative clinical effectiveness and the appropriateness of use of pharmaceuticals, health care services, and other health care items.

10 Priority Conditions Identified for Comparative Effectiveness Research: Ischemic heart disease Cancer Chronic obstructive pulmonary disease/asthma Stroke, including control of hypertension Arthritis and non-traumatic joint disorders Diabetes mellitus Dementia, including Alzheimer's disease Pneumonia Peptic ulcer/dyspepsia Depression and other mood disorders

Research Management: The FY 2006 Request provides an increase of $839,000 for research management costs. These funds will provide for mandatory increases.

Mechanism Table—HCQO: Effectiveness (Dollars in Thousands)

		FY 2004 Actuals		FY 2005 Enacted		FY 2006 Congressional Justification
		Number	Dollars	Number	Dollars	Number	Dollars
Research Grants	Non-Competing	52	14,254	40	12,702	40	14,629
	New & Competing	28	2,562	53	6,543	16	2,646
	Supplemental		335		193		193
	Total, Research Grants	0	17,150	93	19,438	56	17,468
Contracts and IAAs			21,924		38,049		38,804
MEPS			0		0		0
Total Contracts/IAAs			21,924		38,049		38,804
Research Management			14,902		19,904		20,743
Total			53,976		77,391		77,015

Exhibit N-1. Reflecting Planned Re-allocations and Transfers Related to Influenza, Health Information Technology and Anthrax Antibiotics

In FY 2005, the effect of internal reprogrammings ($11,518,000) and a transfer from the Secretary's authority ($2,520,000) will allow AHRQ to fund a $14,038,000 expansion of our Health Information Technology initiative within our patient safety budget. In total, the patient safety budget would increase from $84,000,000 to $98,038,000. This transfer requires an additional 3 FTEs to provide technical assistance and program direction for this program expansion.

AHRQ's FY 2004 plan laid the groundwork for the challenge the President has issued to the health care system to enable the majority of Americans to be able to benefit from secure electronic health records within ten years. Outside AHRQ, the FY 2006 request includes a new $75 million account in the Office of the National Coordinator for Health Information Technology (ONCHIT) to finance targeted activities needed to bring together the health care providers in each region to adopt standards based interoperable Electronic Health Records systems. Reaching the President's ten-year goal requires initiating regional collaborations to assist health care providers in the deployment of interoperable applications in FY 2005. To meet this goal, AHRQ will direct $14 million in FY 2005 to jump-start these regional collaborations, with funds derived from a combination of an internal reallocation of $11.5 million into patient safety and an additional $2.5 million provided by the Secretary's authority to transfer limited amounts between agencies. FY 2006 continuation funding will be provided by the new ONCHIT account.

Specifically, AHRQ will expand both the reach and scope of the FY 2004 State and Regional Health IT Demonstration program. The proposed expansion is based on the widespread desire by public and private entities to explore regional exchanges, the emergence of robust multistakeholder collaborations and the recognition of the powerful influence regional health information organizations could have on patient safety and quality of care. Specifically AHRQ will support a series of planning and implementation contracts that emphasize the following:

• Efforts that create, utilize and/or extend public-private partnerships.
• Address specific state and/or regional needs.
• Build on existing programs.
• Support patient safety reporting efforts.
• Strengthen Medicaid, Medicare and other publicly financed healthcare programs.

To accomplish this goal, AHRQ has revised the FY 2005 Enacted level to delay starts of the following grant programs by 6 months:

• Research Career Awards ($2,500,000).
• Building Research Infrastructure & Capacity Program ($1,000,000).
• Minority Research Infrastructure Support Program ($1,000,000).
• Centers for Education & Research on Therapeutics ($3,400,000).
• Primary Care practice-based Research Networks ($2,000,000).
• Research Empowering America's Changing Healthcare System ($1,618,000).

These grant programs will be funded in their entirety in the FY 2006 Revised Request.

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Internet Citation:

Research on Health Care Costs, Quality and Outcomes (HCQO). From: Justification for Budget Estimates for Appropriations Committees, Fiscal Year 2006, February 2005. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/about/cj2006/hcqo06.htm

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