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ABA Health eSource
 September 2005 Volume 2 Number 1

Current Trends in Health Care Quality Improvement
by Eric J. Weatherford, Brown McCarroll LLP, Dallas, Texas

Eric J. WeatherfordIn recent months, the United States Congress and the United States Department of Health and Human Services (HHS) have focused on improving access to information regarding patient treatment errors and changing the methodology used to reimburse providers. Specifically, President Bush recently signed the Patient Safety and Quality Improvement Act of 2005 (PSQIA). Also, Senators Chuck Grassley (R-Iowa) and Max Baucus (D-Mont.) introduced the Medicare Value Purchasing Act (MVP), which provides for pay-for-performance under the Medicare program. These initiatives are designed to improve the quality of care provided to patients and decrease the cost of both providing and receiving medical treatment.

The PSQIA created a system through which providers can anonymously report information regarding treatment errors, which will educate other providers by increasing their knowledge about treatment issues and minimize bad outcomes. The PSQIA received support from many healthcare industry groups, including the American Medical Association and the American Hospital Association. President Bush hailed the PSQIA as a “critical step towards our goal of ensuring top-quality, patient-driven healthcare for all Americans.” 1

The PSQIA empowers HHS to establish a network of databases with patient outcome information. Providers may report data to HHS-certified Patient Safety Organizations (PSOs), which will maintain the data and provide a resource for the analysis of healthcare error trends on both a regional and national level. The information reported to the PSOs, Patient Safety Work Products (PSWPs), will not include physician or patient identifying information but will describe patient treatment errors. The PSQIA provides for the confidentiality of reporting PSWPs and, except under certain narrow circumstances, excludes PSWPs from disclosure under the Freedom of Information Act.

The PSQIA does not compel physicians to report errors. Rather, the government hopes to motivate physicians to participate by maintaining the anonymity of the provider and patient. Further, the PSQIA protects providers from adverse employment or accreditation action as a result of reporting errors. However, the PSQIA does not contain a corollary provision protecting a provider who fails to participate. Consequently, it appears that an accrediting organization or employer could require a provider to participate in the reporting program to maintain accreditation or employment. The supporters of the PSQIA assert that the legislation will provide for a single reporting scheme, which will reduce the number of preventable errors.

Additionally, a movement towards a pay-for-performance system in the healthcare industry is currently underway. On June 30, 2005, Senators Grassley and Baucus, the chairman of the Senate Finance Committee, introduced the MVP, which attempts to ensure quality medical treatment by basing provider reimbursement under Medicare, in part, on quality of care.

Currently, Medicare generally reimburses providers a specific amount for specific covered services, without reference to the quality of such services. Under the MVP, HHS would implement pay-for-performance in two steps. First, it would update the Medicare payment rates of those providers that report quality data. Second, Medicare will base one percent of Medicare payments (which would increase to two percent over five years) on a quality of care system, which it would develop in conjunction with patients, payers, providers, and others. As with the PSQIA, the MVP does not mandate participation. However, under the bill, physicians who fail to participate after 2007 will receive reduced Medicare reimbursement.

The MVP also enables HHS to facilitate the exchange of information by establishing a national network of health information through which providers can exchange clinical, claims, and outcome data for Medicare and Medicaid beneficiaries. This network would include clinical trial results and practice guidelines. The MVP also establishes "provision or permitted support" exceptions to the Federal anti-kickback and Stark laws for entities that provide support for allowable health information technology products, systems, and services to providers for the purposes of improving healthcare quality.

In April 2005, HHS Centers for Medicare and Medicaid Services (CMS) implemented a demonstration physician pay-for-performance program, which provides performance-based payments based on various quality results if they achieve savings in comparison to a control group. Additionally, in July 2005, CMS issued a Quality Improvement Roadmap of which a centerpiece is pay-for-performance.

The PSQIA and the pay-for-performance movement signal a policy initiative intended to improve the quality of healthcare provided in the United States. The database established by the PSQIA will allow providers to share patient error information in an anonymous medium, serving important educational needs and improving the delivery of healthcare. Because the MVP would require a database of patient treatment information, one could infer that CMS may use the PSQIA database to implement pay-for-performance. At this point, however, the PSQIA system remains a purely passive, educational tool. Further, while it appears that some form of pay-for-performance will emerge soon, neither the MVP nor any other pay-for-performance bill has yet passed.


1 President George W. Bush, Remarks at the Signing of the Patient Safety and Quality Improvement Act (July 29, 2005).