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Performance Budget Submission for Congressional Justification

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Budget Estimates for Appropriations Committees, Fiscal Year 2007

Performance Budget Overview 2007

A. Statement of AHRQ Mission

The mission of the Agency for Healthcare Research and Quality (AHRQ) is to improve the quality, safety, efficiency, and effectiveness of health care for all Americans. AHRQ promotes health care quality improvement by conducting and supporting health services research that develops and presents scientific evidence regarding all aspects of health care. Health services research addresses issues of "organization, delivery, financing, utilization, patient and provider behavior, quality, outcomes, effectiveness and cost. It evaluates both clinical services and the system in which these services are provided. It provides information about the cost of care, as well as its effectiveness, outcomes, efficiency, and quality. It includes studies of the structure, process, and effects of health services for individuals and populations. It addresses both basic and applied research questions, including fundamental aspects of both individual and system behavior and the application of interventions in practice settings."1

The vision of the Agency is to improve health care through the production and use of evidence. As a result of AHRQ's efforts, American healthcare will provide services of the highest quality, with the best possible outcomes, at the lowest cost.

AHRQ fulfills its mission through establishing a broad base of scientific research and promoting improvements in clinical and health system practices, including the prevention of diseases and other health conditions.

Select for Organization Chart (PDF File, 45 KB; Text Version). PDF Help.

To Improve the Quality, Safety, Efficiency and Effectiveness of Healthcare for all Americans

1Eisenberg JM. Health Services Research in a Market-Oriented Health Care System. Health Affairs, Vol. 17, No. 1:98-108, 1998.

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B. Discussion of Strategic Plans and Goals

AHRQ is, of course, a research agency; however, research is only a beginning and not an end in itself. On a daily basis, this means ensuring that providers use evidence-based research to deliver high-quality health care and to work with their patients as partners. Evidence helps patients to become better informed consumers and to be partners in their own care. It also means working at the grassroots level to help local policymakers understand what they can do to improve the quality of health care for their constituents and ensuring that local public health officials have the latest information to help them be better prepared for a possible bioterrorism event. Accomplishing this goal requires a strategic approach to assure that research findings are ready to use, widely available, and actionable—e.g., bringing clinicians up-to-date findings via personal digital assistants (PDAs). This step is a critical component of the new vision for AHRQ.

To this end, we have made significant improvements in realigning the work we do with our strategic goals and those of the Department (Select for Table). We continue to examine the broad spectrum of our work and reorganize our activities into strategic plan goals and within 10 research portfolios that cut across our Offices and Centers. Our goal is to capitalize on the research strengths and expertise throughout the Agency, to communicate the focus of our research clearly, and to improve our ability to move research from idea generation to strategies that can be adopted into practice.

The FY 2007 budget is allocated by our three budget activities:

AHRQ's internal controls have been updated to track our research activities by strategic plan goal and portfolio. Our discussion of the research within these budget activities will be done by strategic plan goal.

AHRQ and HHS Strategic Goals

  AHRQ Strategic Goal Areas
Safety/Qualitya Efficiencyb Effectivenessc Organizational Excellenced
HHS Strategic Goals
1. Reduce Major Threats to the Health and Well-being of Americans X      
2. Enhance the Ability of the Nation's Public Health System to Effectively Respond to Bioterrorism and Other Public Health Challenges X   X  
3. Increase the Percentage of the Nation's Children and Adults who have Access to Regular Health Care and Expand Consumer Choices   X    
4. Enhance the Capacity and Productivity of the Nation's Health Science Research Enterprise   X X  
5. Improve the Quality of Health Care Services X      
6. Improve the Economic and Social Well-being of Individuals, Families, and Communities, especially Those Most in Need X      
7. Improve the Stability and Health Development of Our Nation's Children and Youth        
8. Achieve Excellence in Management Practices       X
AHRQ Portfolios of Work
System Capacity and Bioterrorism X X X  
Data Development X X X  
Care Management X X X  
Cost, Organization and Socio-Economics X X X  
Health Information Technology X X X  
Long-term Care X X X  
Pharmaceutical Outcomes X X X  
Prevention X X X  
Training X X X  
Quality/Safety of Patient Care X X X  
Organizational Support       X
a. Improve health care safety and quality for Americans through evidence-based research and translation.
b. Develop strategies to improve access, foster appropriate use, and reduce unnecessary expenditures.
c. Translate, disseminate, and implement research findings that improve health care outcomes.
d. Develop efficient and responsive business processes.

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C. Overview of AHRQ Performance

As a result of the increased emphasis on strategic planning, the Agency has shifted from a focus on output and process measurement to a focus on outcome measures. These outcome measures cascade down from our strategic goal areas of safety/quality, effectiveness, efficiency, and organizational excellence. Portfolios of work (combinations of activities that make up the bulk of our investments) support the achievement of our highest level outcomes.

The AHRQ strategic plan goals guide the overall management of the Agency. The annual performance contracts identify critical success factors that illustrate how each Office/Center (O/C) contributes to AHRQ achieving its strategic and annual performance goals, as well as internal O/C management goals. This nesting of plans allows the individual employee to see how her or his job and accomplishments further the respective unit's goals and the Agency's mission. At the end of each year, the Office and Center directors along with portfolio leads review accomplishments in relation to the annual goals and draft the next year's plan. The results of the reviews contribute significantly to the performance reports that are influential in revising the Agency performance goals.

In continuing AHRQ's commitment to budget and performance integration, we reorganized the management structure. This new structure aligns those who are responsible for budget formulation, execution, and providing services and guidance in all aspects of financial management with those who are responsible for planning, performance measurement, and evaluation. These functions are now within one office.

Finally, AHRQ completed comprehensive program assessments on five key programs within the Agency:

  • The Medical Expenditure Panel Survey (MEPS).
  • The Healthcare Cost and Utilization Project (HCUP).
  • The Consumer Assessment of Healthcare Plans Survey (CAHPS®).
  • The grant component of AHRQ's Translation of Research into Practice (TRIP) program.
  • The Quality/Safety of Patient Care program.

For the FY 2006 budget, the agency conducted a Program Assessment Rating Tool (PART) of the Pharmaceutical Outcomes Program. In FY 2007, AHRQ will continue to conduct program assessments and redirect investment activity based on our findings. Over the next few years, the Agency will focus on fully integrating financial management of these programs with their performance.

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D. Overview of AHRQ Budget Request

The FY 2007 Request of $318,695,000 maintains the FY 2006 Appropriation level. At this level AHRQ will support ongoing efforts to improve the quality, safety, outcomes, access to, cost of, and utilization of health care services.

AHRQ's FY 2007 Request is arrayed on the following table by AHRQ's budget activities:

  • Research on Health Care Costs, Quality and Outcomes (HCQO).
  • The Medical Expenditure Panel Survey (MEPS).
  • Program Support.

Select for details of the FY 2007 Request, by budget activity, with a discussion by strategic plan goal.

[LINK to Narrative by Activity]

Difference Between FY 2007 Request and FY 2006 Funding Levels for Selected Activities

Difference HCQO MEPS Program Support Total
Research and Training Grants

      (Noncompeting Grants)
      (Noncompeting Patient Safety)
      (Noncompeting Non-Patient Safety)

   (New Grants)
      (New Patient Safety Grants)
      (New Non-Patient Safety Grants)




$0 $0 -$11,990,000



Non-MEPS Research Contracts and IAAs

      (Patient Safety Contracts)
      (Non-Patient Safety Contracts)

$0 $0 +$9,525,000

MEPS $0 $0 $0 $0
Research Management +$2,465,000 $0 $0 +$2,465,000
Total Change +$0 +$0 +$0 +$0

The FY 2007 Request for the HCQO budget activity totals $260,695,000. It is within HCQO that AHRQ supports our patient safety programs, a total of $84,000,000 at the Request. MEPS continues to provide the only national source for annual data on how Americans use and pay for medical care. The FY 2007 Request will allow AHRQ to continue this successful and highly effective program. Finally, Program Support is maintained at the FY 2006 Appropriation level to cover mandatory costs related to the overall direction of the Agency.

Patient Safety

AHRQ's patient safety program is aimed at identifying risks and hazards that lead to medical errors and finding ways to prevent patient injury associated with delivery of health care. The FY 2007 Request maintains support for the patient safety program at $84,000,000.

At the FY 2007 Request, AHRQ proposes a $35,202,000 Ambulatory Patient Safety Program, comprised of $29,388,000 in patient safety Health Information Technology (HIT) funds and $5,814,000 in general patient safety funds. These two portfolios are joining together to reach overarching long-term goals. This program continues AHRQ's overall patient safety vision to reduce the risk of harm from health care services by promoting the delivery of appropriate care that achieves the best quality outcome. The Ambulatory Patient Safety Initiative will both complement and contribute to the overall goals and objectives of the President's Health Information Technology Initiative, the American Health Information Community (AHIC), and those of the Office of the National Coordinator for Health Information Technology (ONC) in several important ways.

The initiative will both support and inform the AHIC's work with the certification commission and efforts to accelerate HIT adoption by increasing our understanding of the tools and processes needed to optimize the intersection between improved care and HIT implementation.Of equal importance is the role of the program in speeding the adoption of HIT in ambulatory settings, a critical sector of the health system, further realizing the President's goal of personal health records for most Americans by 2014. Furthermore, the initiative takes advantage of AHRQ's important role "on the ground" to ensure that HIT is implemented in a manner that appropriately recognizes the need for concurrent examination of workflow and system redesign.

The Ambulatory Patient Safety Initiative will build on AHRQ's role as an effective HIT implementation and science partner with other parts of the Department, including the community health center program at the Health Resources and Services Administration (HRSA) and the Medicare Modernization Act (MMA) electronic prescribing demonstrations at the Centers for Medicare & Medicaid Services (CMS).

Finally, the combined effect of the Ambulatory Patient Safety program and AHRQ's other current and future investments will assure the efforts of ONC to establish a nationwide health information network will result in measurable and important gains in safety and quality for all Americans, including an explicit focus on those residing in rural and underserved areas.

Adverse Drug Events Increase Health Care Costs for Elderly Patients in Ambulatory Care Settings

Complications due to preventable adverse drug events increased treatment costs by nearly $2,000 for elderly patients in a group practice setting in the 6 weeks after the event occurred, according to a study co-funded by AHRQ and the National Institute on Aging.

For preventable adverse drug events, hospital stays accounted for 62 percent of the increase, emergency department visits accounted for 6 percent, outpatient care and physician fees accounted for 29 percent, and prescribed medications accounted for 4 percent. Researchers studied 1,210 Medicare enrollees who had experienced an adverse drug event; 323 of the events were preventable.

"The Costs Associated with Adverse Drug Events Among Older Adults in the Ambulatory Setting," was published in the December 2005 issue of Medical Care.

Patient Safety and Quality Improvement Act of 2005

Beginning in FY 2006, AHRQ has allocated $3,000,000 in contract funds within the patient safety budget for the implementation of the Patient Safety and Quality Improvement Act of 2005 (Public Law No. 109-41). The Patient Safety Act is intended to help health care providers study and improve patient safety and the quality of health care delivery by encouraging the voluntary creation of confidential patient safety evaluation systems.

The Patient Safety Act requires the Secretary to establish a process for certification, periodic recertification, and revocation (for cause) of Patient Safety Organizations (PSOs). The legislation envisions that PSOs will enter into contracts with providers to assist providers with the identification, analysis, and correction of threats to patient safety. The Act provides Federal privilege and confidentiality protections against disclosure of information that is assembled or developed and reported to a PSO or developed by a PSO for the conduct of required patient safety activities. Within this protected framework, the Act encourages health care providers (the term includes health care practitioners and health care institutions) to contract with one or more PSOs to:

  • Collect and analyze data on patient safety events (a term that encompasses "near misses," "close calls," and "no-harm" events, and all types of medical and other health care adverse events).
  • Develop and disseminate information to improve patient safety and provide feedback and assistance to effectively minimize patient risk.

The Act also requires that the Secretary facilitate the creation and maintenance of a network of patient safety databases that provides an interactive evidence-based management resource for providers, PSOs, and other entities. The Act further states that the network of databases shall have the capacity to accept, aggregate across the network, and analyze non-identifiable patient safety work products voluntarily reported by PSOs, providers, or other entities. In addition, the Act provides that information reported to and among the network of patient safety databases shall be used to analyze national and regional statistics, including trends and patterns of health care errors. Information from these analyses of statistics and trends is to be made publicly available and included in annual reports by the Secretary to Congress on the quality of American health care.

AHRQ is committed to continue funding these activities in FY 2007.

Effective Health Care Program

The $15 million in continued support related to Section 1013 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 has evolved into the Effective Health Care Program. AHRQ's Effective Health Care Program helps policymakers, clinicians, and patients determine which drugs and other medical treatments work best for certain health conditions. Thirteen new research centers, as well as an innovative center for communicating findings, were named as part of the three-part program.

The $15 million program supports the development of new scientific information through research on the outcomes of health care services and therapies, including drugs and by comparing different therapies for the same condition. By reviewing and synthesizing published and unpublished scientific studies, as well as identifying important issues where existing evidence is insufficient, the program helps provide policymakers, clinicians, and patients with better information for making coverage and treatment decisions. Initial reports from the new program were issued this fall, with particular focus on effectiveness information relevant to Medicare beneficiaries. A new Web site for the program,, also has been developed and provides a venue for stakeholders to comment on draft reports and suggest new topics for research.

The new program includes three components:

  • Comparative Effectiveness Reviews—The program builds on existing network of 13 Evidence-based Practice Centers (EPCs). The EPCs focus especially on comparing the relative effectiveness of different treatments, including drugs, as well as identifying gaps in knowledge where new research is needed. Ten studies for the new program were initiated by EPCs in FY 2005, and the reports will be issued over the coming months.
  • Network of Research Centers—A new network of 13 research centers, called Developing Evidence to Inform Decisions about Effectiveness (referred to as DEcIDE), carry out accelerated studies, including research aimed at filling knowledge gaps about treatment effectiveness. Operating under strict procedures to guarantee privacy and security, DEcIDE centers use de-identified data available through insurers, health plans and other partner organizations to answer questions about the use, benefits, and risks of medications and other therapies. Collectively, the DEcIDE centers have access to de-identified medical data for over 50 million patients, including Medicare's 42 million beneficiaries. DEcIDE centers began work on 15 research projects in the fall of 2005.
  • Making Findings Clear and Actionable for Different Audiences—A new Clinical Decisions and Communications Science Center was also established in the fall of 2005, called the Eisenberg Center in honor of the late AHRQ director, John M. Eisenberg, M.D. This innovative effort is aimed at improving communication of complex scientific findings to a variety of audiences, including consumers, clinicians, payers, and health care policymakers. The center translates findings in ways appropriate for the needs of the different stakeholders. It also conducts its own program of research into the effective communication of research findings to improve the usability and rapid incorporation of findings into medical practice.

AHRQ is partnering in this program with the Centers for Medicare & Medicaid Services (CMS). As the Medicare program implements its new drug benefit this year, it will be increasingly important to have sound information about which drugs and other treatments are proven to be effective for the conditions that are most important for our beneficiaries.

Additional priority areas for the program will be identified by the Secretary this year to include the needs of CMS' Medicaid and State Children's Health Insurance Programs, as well as Medicare. Public comments are already being solicited for the additional set of priority conditions. An open door listening session was held on January 11 and comments could have been submitted to A hallmark of the program is the transparency of the data: the public is made aware of processes used to arrive at findings and has the opportunity to provide input at several stages.

First Comparative Effectiveness Review: GERD

AHRQ's first review showed that drugs can be as effective as surgery for management of gastroesophageal reflux disease (GERD). GERD, one of the most common health conditions among older Americans, results in $10 billion annually in direct health care costs. It occurs when stomach acid enters the esophagus, causing heartburn and potential damage to the esophagus.

The report finds that for the majority of patients with uncomplicated GERD, a class of drugs called proton pump inhibitors (PPIs) can be as effective as surgery in relieving the symptoms and improving quality of life.

Nine more comparative effectiveness reviews are currently underway to examine alternative treatments for significant health conditions. The report is available at

Mechanism Discussion of the FY 2007 Request

AHRQ's research, in terms of funding mechanisms, follows:

Research Grants

In total, the FY 2007 Request provides $77,462,000 for research grants, a decrease of $11,990,000 from the FY 2006 Appropriation level of $89,452,000. This decrease is directly related to $32,957,000 in non-competing grants that end in FY 2007.

This level will provide $44,941,000 in new grant funds, an increase of $22,747,000 from the FY 2006 Appropriation level. The new grants will be used to continue research into our three strategic plan goal areas and to focus research on our 10 research portfolios of work, with an increased focus on knowledge translation. In terms of patient safety research, AHRQ will provide $27,814,000 for new research related to patient safety and HIT called the Ambulatory Patient Safety program.

Non-MEPS Research Contracts and Inter-Agency Agreements (IAAs)

In total, the FY 2007 Request level provides an increase of $9,525,000 for non-MEPS research contracts and IAAs from the FY 2006 Appropriation level of $115,733,000. These funds will be used to provide new and continuing support for research contracts and IAAs funded by our 10 portfolios of work. Funds also are provided to continue $15,000,000 in non-MEPS contracts and IAAs to carry out components of Section 1013 of the Medicare Modernization Act. In terms of patient safety research, AHRQ will provide $45,709,000 in contracts and IAAs related to our patient safety and health care information technology program, of which $7,388,000 are new contracts for the Ambulatory Patient Safety program.

Included in this increase is $1,940,000 in technical support for the MEPS program. These funds will support a portion of the incremental funding needed to transition MEPS to a Windows®-based computer assisted personal interview (CAPI) system ($1,100,000) and to facilitate linkages between the MEPS Insurance Component and the MEPS Household Component ($840,000) that enhance analytical capacity.

MEPS Contracts

The FY 2007 Request for the MEPS totals $55,300,000, maintaining the same level of support as the FY 2006 Appropriation level. Although the cost of the survey does not increase in FY 2007, an additional $1,940,000 in technical support is provided within the HCQO budget activity for the MEPS program.

Research Management

In FY 2007, AHRQ's Request provides an increase of $2,465,000 for research management costs. These funds will provide for mandatory increases and four additional full-time equivalents (FTEs).

Unified Financial Management System

The unified financial management system is being implemented to replace five legacy accounting systems currently used across the Operating Divisions (Agencies). The unified financial management system will integrate the Department's financial management structure and provide HHS leaders with a more timely and coordinated view of critical financial management information. The system will also facilitate shared services among the Agencies and thereby help management reduce substantially the cost of providing accounting service throughout HHS. Similarly, the unified financial management system, by generating timely, reliable, and consistent financial information, will enable the component agencies and program administrators to make more timely and informed decisions regarding their operations. The unified financial management system has reached a major milestone in April 2005 with the move to production for the Centers for Disease Control and Prevention (CDC) and the Food and Drug Administration (FDA). AHRQ's FY 2007 budget includes $403,000 for this purpose.

Accounting Operations

Operations and Maintenance (O&M) activities for the unified financial management system commenced in FY 2005. The Program Support Center (PSC) will provide the O&M activities needed to support the unified financial management system. The scope of O&M services includes post-deployment support and ongoing business and technical operations services. Post-deployment services include supplemental functional support, training, change management, and technical help-desk services. Ongoing business operation services involve core functional support, training and communications, and help desk services. Ongoing technical services include the operations and maintenance of the unified financial management system production and development environments, ongoing development support, and backup and disaster recovery services. AHRQ's FY 2007 budget includes $440,718 for this purpose.

Automating Administrative Activities

HHS Agencies have been working to implement automated solutions for a wide range of administrative activities. As unified financial management system development and implementation move toward completion, there are added opportunities to improve efficiency through automating the transfer of information from administrative systems to the accounting system. AHRQ's FY 2007 budget includes $70,349 to support coordinated development of these improved automated linkages and administrative systems.

Enterprise Information Technology Fund

AHRQ's request includes funding to support the President's Management Agenda Expanding E-Government and Departmental enterprise information technology initiatives. Operating Division funds will be combined to create an Enterprise Information Technology (EIT) Fund to finance specific information technology initiatives identified through the HHS strategic planning process and approved by the HHS IT Investment Review Board. These enterprise information technology initiatives promote collaboration in planning and project management and achieve common HHS-wide goals. Examples of HHS enterprise initiatives funded by the EIT Fund are Enterprise Architecture, Capital Planning and Investment Control, Enterprise E-mail, Grants Management Consolidation, and Public Key Infrastructure.

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