[Federal Register Volume 62, Number 127 (Wednesday, July 2, 1997)]
[Notices]
[Pages 35824-35826]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17234]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration
[HSQ-207-NC]
RIN 0938-AG32


Medicare Program; Description of the Health Care Financing 
Administration's Evaluation Methodology for the Peer Review 
Organization 5th Scope of Work Contracts

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: General notice with comment period.

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SUMMARY: This notice describes how HCFA intends to evaluate the Peer 
Review Organizations (PROs) for quality improvement activities, under 
their 5th Scope of Work (SOW) contracts, for efficiency and 
effectiveness in accordance with the Social Security Act. In accordance 
with the provisions of the Government Performance and Results Act of 
1993, the 5th SOW contracts with the PROs are performance-based 
contracts.

DATES: This notice is effective on July 2, 1997. Written comments will 
be considered if we receive them at the appropriate address, as 
provided below, no later than 5 p.m. on September 2, 1997.

ADDRESSES: Mail written comments (an original and 3 copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: HSQ-207-NC, P.O. Box 26676, 
Baltimore, MD 21207-0476.
    If you prefer, you may deliver your written comments (an original 
and 3 copies) to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, S.W., 
Washington, DC 20201-0001.
    or
Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850.

    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code HSQ-207-NC. Comments received timely will be available for 
public inspection as they are received, generally beginning 
approximately 3 weeks after publication of a document, in Room 309-G of 
the Department's offices at 200 Independence Avenue, S.W., Washington 
DC 20201-0001, on Monday through Friday of each week from 8:30 a.m. to 
5 p.m. (phone: (202) 690-7890).
    Comments may also be submitted electronically to the following e-
mail address: [email protected]. E-mail comments must include the full 
name and address of the sender and must be submitted to the referenced 
address in order to be considered. All comments must be incorporated in 
the e-mail message because we may not be able to access attachments. 
Electronically submitted comments will also be available for public 
inspection at the Independence Avenue address shown above.

FOR FURTHER INFORMATION CONTACT: Henry Koehler, (410) 786-6850.

SUPPLEMENTARY INFORMATION:

I. Background

A. Program Description

    The Peer Review Improvement Act of 1982 (title I, subtitle C of the 
Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Pub. L. 97-
248) amended part B of title XI of the Social Security Act (the Act), 
establishing the PRO program. The PRO program was established in order 
to redirect, simplify, and enhance the cost-effectiveness and 
efficiency of the medical peer review process. Sections 1153 (b) and 
(c) of the Act define the types of organizations eligible to become 
PROs and establish certain limitations and priorities regarding PRO 
contracting. In 42 CFR part 462, subpart C, of our regulations, we 
describe the types of organizations eligible to become PROs. In 
Sec. 462.101, we require they: (a) Be either a physician-sponsored 
organization as described in Sec. 462.102, or a physician-access 
organization as described in Sec. 462.103; and (b) demonstrate their 
ability to perform the review requirements set forth in Sec. 462.104.
    Under section 1153(h)(2) of the Act, the Secretary is required to 
publish in the Federal Register the general criteria and standards that 
will be used to evaluate the efficient and effective performance of 
contract obligations by PROs, and provide the opportunity for public 
comment. This notice sets forth the criteria that will be used to 
monitor PRO performance of quality improvement activities.
    Section 1154 of the Act requires that PROs review those services 
furnished by physicians, other health care practitioners, and 
institutional and non-institutional providers of health care services, 
including health maintenance organizations and competitive medical 
plans, as specified in their contract with the Secretary. The Secretary 
enters into

[[Page 35825]]

contracts with PROs to perform the following two broad functions:
     To promote quality health care services for Medicare 
beneficiaries; and
     To determine whether those services are reasonable, 
medically necessary, furnished in the appropriate setting, and of a 
quality that meets professionally recognized standards of health care.
    These functions, which include quality improvement projects, are 
central elements of the Health Care Quality Improvement Program 
(HCQIP). PRO contracts are awarded for three years with starting dates 
staggered into three approximately equal groups starting on April 1, 
July 1, and October 1.

B. Development of Evaluation Standards

    Using the conceptual groundwork of a 1990 Institute of Medicine 
report (``Medicare: A strategy for quality assurance,'' Volumes 1 & 2, 
Committee to Design a Strategy for Quality Review and Assurance in 
Medicare, Division of Health Care Services, Institute of Medicine, KN 
Lohr, editor, National Academy Press, Washington, DC, 1990), we 
reinvented and modernized our quality assurance and improvement 
activities under the HCQIP. We launched the HCQIP in April 1993, 
reorienting the PRO program from a random sample case-by-case review to 
a system designed to encourage providers to maintain and strengthen 
their own internal quality management systems. The PROs monitor the 
quality of care provided in both fee-for-service and managed care 
settings using both a data-driven approach to monitor care and outcomes 
and a cooperative approach of working with the health care community to 
improve care.
    The agency changed the focus of the PRO contracts in recognition 
that the case review approach as the principal means of monitoring did 
not give providers adequate information on systemic health care 
delivery problems and methods for improving service delivery systems 
and health outcomes. The HCQIP approach addresses these weaknesses, 
combining providers' internal quality management systems, driven by 
clinically-reliable data, with external monitoring and educational 
support from the PROs. Central to the monitoring system is the 
identification of patterns of care. The goal of these data analyses is 
to identify treatment patterns for individuals and populations that are 
consistent with current professional knowledge and that are likely to 
improve outcomes. The PROs educate physicians about best practices and 
assist hospitals and other institutional and noninstitutional providers 
in developing internal quality monitoring systems that will lead to 
quality improvement.
    In our recently modified 5th Scope of Work contracts with the PROs, 
we specified four objectives that PROs should maximize as they design 
and implement quality improvement projects. The PROs are directed to 
implement quality improvement projects that--
    1. Result in measurable improvements;
    2. Involve as many beneficiaries, providers and provider types as 
possible;
    3. Focus on important clinical topics; and
    4. Build internal and external capacity to improve care.

C. Measuring PRO Performance

    The most important activity for the PROs in their 5th Scope of Work 
contracts is implementing quality improvement projects that lead to 
measurable improvements in quality of care and health status. The 
second objective, involving as many beneficiaries, providers, and 
provider types as possible, will be accomplished as a result of PROs 
implementing a broad portfolio of successful improvement projects. The 
measurements for evaluating progress towards achieving objectives 3 and 
4 will not be part of the evaluation strategy at this time. Due to the 
complexity involved in developing measures for those objectives, we 
will pilot test them before we make implementation decisions.
    We define below the first two objectives concretely and 
unambiguously and we will assess each PRO's progress in achieving the 
objectives using explicit and quantifiable measures. We will feed back 
to the PROs information about their success in achieving the contract 
objectives. We will use this process to identify the successfully 
performing PROs, to learn what characteristics are associated with 
success, and to disseminate this information to the PRO community. We 
will also use this feedback process to encourage average and poorly 
performing PROs and to give them a mechanism by which they can gauge 
the success of any remedial actions they might initiate.
    We will use the data reported via the Standard Data Processing 
System quality improvement project reporting system to evaluate each 
PRO's progress in achieving objectives 1 and 2 of the 5th Scope of Work 
contract. We reserve the right to ask for additional information and to 
use alternate reporting channels should the data we require not be 
present in the quality improvement project reporting system.
    Specifically, to assess the PRO's ability to implement quality 
improvement projects that result in measurable improvements, we will:
     Monitor the achievement of key project steps for all 
projects undertaken by the PRO. (These project steps include: 
documenting the baseline opportunity to improve care, intervening 
directly or in conjunction with appropriate health care providers to 
improve care, and measuring the effect of these interventions.)
     Monitor the number of projects the PRO reports as having 
achieved some measurable improvement.
     Assess the amount of improvement each project has 
achieved.
    With respect to objective 2, to assess the PRO's ability to 
``implement quality improvement projects that involve as many 
beneficiaries, providers and provider types as possible'', we will:
     Determine the percentage of beneficiaries who might be 
impacted by the project by measuring the number of beneficiaries in the 
State who have the targeted clinical condition and measuring the number 
of eligible beneficiaries who might be affected by the project.
     Determine the percentage of acute care hospitals in each 
State that actively collaborate with the PRO in one or more projects.
     Measure the number of other providers and practitioners 
who participate in the PROs' projects.
    In addition to these performance measures, we may choose to use 
other data sources, such as surveys or focus groups, in order to assess 
and improve the validity of the evaluation process.
    We will design a standard content and format for our evaluation 
reports and will issue the reports at regularly scheduled intervals. In 
addition, we will periodically issue special evaluation reports as new 
issues become pertinent.
    We plan to use this evaluation system as a basis for decisions 
regarding future special PRO projects, awards, and competitive and 
noncompetitive contract renewals. At the time that each of these 
decisions is to be made, we will identify the pertinent criteria and 
use the evaluation system to determine which PROs are eligible. In 
addition, we will use the evaluation system to assure that the PROs' 
5th Scope of Work performance does not deteriorate as their special 
project activities are implemented.
    As the end of the 5th Scope of Work contracts approaches, we will 
use the

[[Page 35826]]

evaluation system to set a threshold for eligibility for noncompetitive 
renewal of the PRO contract. We are issuing the following standards for 
minimum performance to inform the PROs about what we consider to be a 
minimum level of PRO performance during the 5th Scope of Work.

II. Standards For Minimum Performance

    To be eligible for a noncompetitive renewal of its 6th round 
contract, a PRO must meet, at a minimum, the performance standards 
listed below by the end of its 18th contract month. However, meeting 
these minimum performance standards does not guarantee a noncompetitive 
renewal of its contract. We will make a final decision on renewal/
nonrenewal by the end of the 28th month of the 5th Scope of Work 
contract.
    We will issue a ``Notice of Intent to Non-renew the PRO Contract'' 
letter to all PROs that do not meet the minimum performance standards 
by the end of their 18th contract month. A PRO will be considered to 
have met the minimum performance standards if:
    A. The PRO initiated quality improvement projects in at least the 
five clinical topic areas to include acute myocardial infarction, 
diabetes, prevention (flu vaccination, pneumonia vaccination, or 
mammography), and two topic areas of a PRO's choice.
    B. Each PRO quality improvement project is sufficiently broad 
enough in scope to involve a specified percentage of beneficiaries in 
the PRO's geographic area (a percentage of beneficiaries with the 
condition or percentage for whom the prevention service is indicated) 
as follows:

------------------------------------------------------------------------
                                                       Scope (Percentage
                     Topic Area                        of beneficiaries 
                                                           involved)    
------------------------------------------------------------------------
Acute Myocardial Infarction.........................                 10 
Diabetes............................................                  5 
Prevention (flu vaccination, pneumonia vaccination,                     
 or mammography)....................................                 10 
Topic of PRO's choice...............................                 10 
Topic of PRO's choice...............................                 10 
------------------------------------------------------------------------

    C. The PRO demonstrates that a sufficient number of providers in 
its contractually specified geographic area have actively attempted to 
improve care through participation in the PRO's quality improvement 
projects. Specifically, the PRO must have enlisted the participation 
of:
     At least 25 percent of all acute care hospitals; and
     One of the following:
    * In States with a high managed care penetration (defined to 
include California, Florida, Oregon, Washington, Arizona, 
Massachusetts, New York and Pennsylvania), at least one managed care 
plan; or
    * In all remaining states, at least 10 community-based 
practitioners.
    D. A PRO will demonstrate that at least one of the five prescribed 
projects has achieved a measured improvement on one or more of the 
targeted project indicators. In other words, the PRO must demonstrate 
that the gap between the ``expected'' indicator level (for example, the 
YEAR 2000 goal, practice guideline, clinical control trials 
recommendation) and the ``actual'' level, as documented in the baseline 
measurement, will have been lessened, as shown in the project's 
evaluation (for example, remeasurement step).
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

III. Response to Comments

    Although we are not able to acknowledge or respond to all items of 
correspondence individually, we will consider all written comments that 
we receive by the date and time specified in the DATES section of this 
preamble.

    Authority: Sections 1102 and 1881 of the Social Security Act (42 
U.S.C. 1302 and 1395rr).

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: May 29, 1997.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 97-17234 Filed 7-1-97; 8:45 am]
BILLING CODE 4120-03-P