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Performance Budget Submission for Congressional Justification

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Research on Health Care Costs, Quality, and Outcomes (HCQO)

HCQO: Safety/Quality

Authorizing Legislation: Federal funds pursuant to Title IX and Section 927(c) of the Public Health Service Act.

Funding FY 2005 Enacted FY 2006
FY 2007
FY 2007 Request
± FY 2006
—Budget Authority
—PHS Evaluation
Full-Time Equivalents 264 273 277 4

A. Statement of Budget

AHRQ requests $260,695,000 for Research on Health Costs, Quality and Outcomes (HCQO) to maintain the FY 2006 Appropriation level. These funds are being financed using PHS Evaluation Funds.

B. Program Description

The purpose of the activities funded under the HCQO budget line is to support, conduct, and disseminate research to improve the outcomes, quality, cost, use, and accessibility of health care. Accordingly, the Agency has recently developed four main strategic goal areas:

  • Goal 1: Safety/Quality.
  • Goal 2: Efficiency.
  • Goal 3: Effectiveness.
  • Goal 4: Organizational Excellence.

Select for the performance analysis and rationale for the HCQO budget request. For a more detailed performance analysis (tabular format), select Detail of Performance Analysis.

Mechanisms of Support

Through the HCQO budget activity, AHRQ provides financial support to public and private nonprofit entities and individuals through the award of grants, cooperative agreements, and contracts.

Program Announcements (PAs) are used to invite research grant applications for new or ongoing activities of a general nature, and Requests for Applications (RFAs) are used to invite applications for a targeted area of research. Grant applications are reviewed for scientific and technical merit by a peer review group with appropriate expertise. Funding decisions are based on the quality of the proposed project, availability of funds, and portfolio needs and performance goals.

In addition to large research project grants that have an average duration of 3 to 4 years, AHRQ also supports one-year small research and conference grants that facilitate the initiation of studies for preliminary short-term projects, as well as training grants, such as dissertations, career development awards, and National Research Service Awards (NRSAs).

AHRQ also awards contracts to carry out a wide variety of directed health services research and administrative activities. The availability of Requests for Proposals (RFPs) for AHRQ contracts is announced in the Commerce Business Daily (CBD), published by the U.S. Department of Commerce. Like research project grants, proposals received in response to these RFPs are peer reviewed for scientific and technical merit by a panel of experts in accordance with the evaluation criteria specified in the RFP.

5-Year Table Reflecting Dollars and FTEs

Funding for the HCQO program during the last 5 years has been as follows:

Year Dollars FTEs
2002 $247,645,000 256
2003 $252,663,000 265
2004 $245,695,000 268
2005 $260,695,000 264
2006 $260,695,000 273
2007 $260,695,000 277

C. Performance Analysis by Strategic Goal Plan: HCQO

HCQO: 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 outcomes.

Safety/Quality Strategic Plan Goal

Performance Goal Results Context
Complete evidence reports on interventions to improve outcomes for chronic diseases AHRQ has competed reports on improving care for diabetes and hypertension. In the coming year will complete reports on asthma and a series of reports on comparative effectiveness of interventions for priority conditions under Section 1013 of the MMA. This goal refers to completion of systematic evidence-based reviews of the most effective interventions to improve quality of care for diabetes and high blood pressure. Topics for these reviews were identified from the IOM report on priorities of national Action. The 1013 topics were identified by a systematic prioritization process developed by an interagency advisory group including AHRQ, FDA, and CMS, and selection of future reports will involve wide stakeholder input.

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 and second years of the Patient Safety Improvement Corps, AHRQ has trained more than 130 patient safety experts representing 34 States and the District of Columbia as well as 46 hospitals and 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.
  • In May of 2005, AHRQ and the U.S. Department of Defense released the Federal Government's first compendium of studies on the successes and challenges of efforts to improve patient safety and reduce medical errors. Advances in Patient Safety: From Research to Implementation is a four-volume set of 140 peer-reviewed articles that represents an overview of patient safety studies by AHRQ-funded researchers and other government-sponsored research. The four volumes contain information on virtually every dimension of the patient safety field, including new research findings on medication safety, technology, investigative approaches to better treatment, process analyses, human factors, and practical tools for preventing medical errors and harm. The compendium features emerging lessons from clinical studies, presents cutting-edge technologies such as simulation tools for surgery training, the effects of change on dynamic systems of care, and national and regulatory issues.
  • In April of 2005, AHRQ unveiled the Patient Safety Network, or PSNet, a new Web site that is a national "one-stop" portal of resources for improving patient safety and preventing medical errors. PSNet is the first comprehensive effort to help health care providers, administrators, and consumers learn about all aspects of patient safety. The site provides a wide variety of information on patient safety resources, tools, conferences, and more. PSNet users can customize the site around their unique interests and needs by creating a "My PSNet" page. For instance, a pharmacist interested in how bar coding can help prevent medication errors will be able to set up the site to automatically collect the latest articles, news, and conferences on this topic. Similarly, anesthesiologists and other physicians, nurses, hospital administrators, and others can customize and search the site to best meet their needs. The site can be found at
  • Through 2004 and 2005, 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,
  • On January 9, 2006 AHRQ released the 2005 National Healthcare Quality Report and its companion document, the 2005 National Healthcare Disparities Report. These reports measure quality and disparities in four key areas of health care: effectiveness, patient safety, timeliness, and patient centeredness. Overall, quality of health care for Americans has continued to improve at a modest pace (2.8 percent), and health care disparities are narrowing overall for many minority Americans. But for Hispanics, disparities have widened in both quality of care and access to care.
    • Rates of late-stage breast cancer decreased more rapidly from 1992 to 2002 among black women (169 to 161 per 100,000 women) than among white women (152 to 151 per 100,000), resulting in a narrowing disparity.
    • Treatment of heart failure improved more rapidly from 2002 to 2003 among American Indian Medicare beneficiaries (69 percent to 74 percent) than among white Medicare beneficiaries (73 percent to 74 percent), resulting in an elimination of this disparity.
    • The quality of diabetes care declined from 2000 to 2002 among Hispanic adults (44 percent to 38 percent) as it improved among white adults (50 percent to 55 percent).
    • The quality of patient-provider communication (as reported by patients themselves) declined from 2000 to 2002 among Hispanic adults (87 percent to 84 percent) as it improved among white adults (93 percent to 94 percent).
    • Access to a usual source of care increased slightly from 1999 to 2003 for Hispanics (77 percent to 78 percent) and whites (88 percent to 90 percent), with Hispanics less likely to have access to a usual source of care.
  • 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 HIT solutions in communities and to demonstrate the value of HIT in patient safety, quality, and health care costs.
  • Adoption of beneficial and timely clinical preventive services recommendations is a measure of the Prevention Portfolio's effectiveness. This evidence-based knowledge is generated by the U.S. 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 of, and develops recommendations for, clinical preventive services. By identifying how these recommendations 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 (GI) 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 non-steroidal anti-inflammatory drugs (NSAID)s.
    • 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 Helicobacter pylori (H. Pylori). Appropriate diagnosis and treatment of this organism should reduce the sequelae of ulcer disease and bleeding.

Select for an example of AHRQ research results on the quality of health care.

HCQO: 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:

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


Performance Goal Results Context
Decrease health care system costs as the number of readmissions for upper gastrointestinal bleeding decreases. On a long term scale, there is a relationship between a reduction in the number of hospital readmissions for upper gastrointestinal bleeding and a decrease in health care system costs. One of AHRQ's pharmaceutical outcome goals is to gradually reduce hospitalization for upper gastrointestinal bleeding in those between 65 and 85 year of age. There are a number of studies and projects underway within the portfolio that relate to appropriate use of products that can cause abnormal bleeding. These include interventions to improve laboratory surveillance of the use of anticoagulants and ongoing studies of the use of non-steroidal anti-inflammatory drug products that cause drug-induced gastrointestinal bleeding. Studies on the use of drugs, such as VioxxR, a cox-2 inhibitor were completed this year. Work in this area, and the associated result in a decrease in the number of hospital readmissions, has the potential for future health care system cost efficiencies.

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 could reduce health care costs. The U.S. Preventive Services Task Force 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 costs. 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.

Pharmaceutical Outcomes

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 10-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 re-hospitalization for congestive heart failure.

Economic Impact of Beta-blocker Therapy for Heart Failure

The Duke CERT evaluated the economic impact of using beta-blockers to treat heart failure. The impact was considered from the perspectives of society, physicians, hospitals, and Medicare. From the perspectives of society and Medicare, the use of these drugs would reduce costs, primarily as a result of fewer hospital admissions.

Researchers estimated that treatment for heart failure without beta blocker drugs would cost Medicare an estimated $39,739 per patient over a 5-year period; however, treatment with beta blockers would cost an estimated $33,675—a per-patient savings of $6,064. In contrast, beta blocker therapy would increase expenses to Medicare patients by an estimated $2,113 over 5 years.

Based on the predictions, even if Medicare completely reimbursed the cost of beta-blockers, their use would still reduce costs. The Duke center has proposed the same type of cost study for several other cardiovascular medications. Similar cost analyses could be applied to other medications proven to save lives.

HCQO: 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 lifestyles. 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.


Performance Goal Results Context
Increase the number of consumers who use CAHPS® information to make health care choices by 20% from 2002 baselines. As of 2005, CAHPS® has added surveys to assess patient experience of care in hospitals, nursing homes, and dialysis facilities, and in 2006 will have a survey available for patients to assess their individual physicians/group practices. In 2005, 1,000 hospitals will have implemented the CAHPS® hospital survey. Plans are underway for implementation of the nursing home and dialysis facility surveys in 2006. CAHPS® supplies data to populate several measures on patient-centeredness in the congressionally mandated NHQR and NHDR. By creating surveys that measure patients experience beyond health plans to include hospitals, nursing homes, dialysis facilities, and individual physicians, CAHPS® expands the capacity of the reports to provide data on a wider range of patient experience. This is in accordance with the aim of patient-centeredness, one of six aims put forth by the IOM in the influential Crossing the Quality Chasm.
Data Development

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, and CAHPS now stands for Consumer Assessment of Health Systems and Providers. CAHPS® is an easy-to-use kit of survey and reporting tools that provides 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 the quality of 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 individual consumers, employers, and other institutional purchasers of health plans.

The Health Care Utilization Project 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.

A research synthesis published in February, 2005 using HCUP data estimates that the Nation could save nearly $2.5 billion a year by preventing hospitalizations due to severe diabetes complications. Diabetes, an increasingly common chronic disease, currently affects 18 million Americans, or about 6 percent of the population. Complications from the disease that may require hospitalization include heart disease, stroke, kidney failure, blindness, as well as nerve and blood circulation problems that can lead to lower limb amputations. Complications can often be prevented or delayed with good primary care and compliance with the advice from providers. According to the research synthesis:

  • Reducing hospital admissions for diabetes complications could save the Medicare program $1.3 billion annually and Medicaid $386 million a year.
  • Nearly one-third of patients with diabetes were hospitalized two or more times in 2001 for diabetes or related conditions, and their costs averaged three times higher than those for patients with single hospital stays—$23,100 versus $8,500.
  • The risk of hospitalization for cardiovascular disease was two to four times higher in women with diabetes than in those who did not have diabetes.
  • African-American, other minority, and poor patients regardless of race or ethnicity were more likely to be hospitalized multiple times for diabetes complications than non-Hispanic white and higher income patients.

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 (USPSTF), 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 clinical preventive services to include screening tests, counseling activities, and preventive medications. A recent recommendation concerned use of estrogen:

  • The USPSTF issued a new recommendation against the routine use of estrogen to prevent chronic conditions such as heart disease, stroke and osteoporosis in postmenopausal women who have undergone a hysterectomy. The Task Force noted that, although estrogen can have positive effects such as reducing the risk for fractures, hormone therapy should not be used routinely because it appears to increase women's risk for potentially life-threatening clots that block blood vessels (venous thromboembolism), stroke, dementia and mild cognitive impairment. The Task Force noted that while the use of estrogen reduces the risk for fracture, drugs such as bisphosphonates and calcitonin are available and effective in helping prevent fractures in women diagnosed with osteoporosis. The Task Force concluded that for most women, the harmful effects of estrogen therapy outweigh any benefits for fracture and other chronic conditions.

Pharmaceutical Outcomes

In 2005, AHRQ received $15,000,000 to begin the implementation of Section 1013 of the MMA. Section 1013 of MMA authorizes AHRQ to conduct research, demonstrations, and evaluations designed to improve the quality, effectiveness, and efficiency of Medicare, Medicaid, and the State Children's Health Insurance Program (SCHIP). The essential goals of the Section 1013 mandate are to develop valid evidence, and make it easily accessible to decisionmakers, about the comparative effectiveness of different treatments and appropriate clinical approaches to difficult health problems. Achieving these key goals will encompass reviewing, synthesizing, and translating published and unpublished scientific evidence as well as identifying important issues for which existing scientific evidence is insufficient to inform decisions about health care. AHRQ will establish a new effectiveness program as part of its work to implement Section 1013. The foundation for the new effectiveness program is three-pronged.

  • First, systematic appraisal of existing scientific evidence on key questions related to 10 priority conditions identified through an HHS Steering Committee. The effectiveness reviews will not only highlight what we know about the effectiveness and comparative effectiveness of different health care interventions, but they will also highlight gaps in the scientific evidence. The effectiveness reviews will focus on the nature of the gaps, their importance in the evaluation of effectiveness, and the optimal approaches for filling the gaps.
  • Second, a network of research centers capable of performing accelerated research will conduct a variety of studies designed to answer those questions that do not require large randomized clinical trials. The research centers will access patient level data sources, perform prospective observational studies, analyze registry data, and perform research on methodologies supporting accelerated research. Administrative data sources are linked with other data sources such as electronic medical records and pharmaceutical data systems. All these data sources will provide new opportunities for exploring different ways to evaluate what works, at what benefit, and at what risk.
  • Third, a systematic approach to translating findings into understandable, actionable language for all decisionmakers is critical to making complex scientific findings understandable—for everyone. The three prongs of the effectiveness program—evidence synthesis, evidence generation, and evidence translation—are transparent resources that can well serve the need for better information.

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