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Performance Plans for FY 2004 and 2005 and Performance Report for FY 2003

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Discussion and Program Performance. Budget Line 2.2. MEPS

MEPS Program Description and Context

FY 2003 Enacted FY 2004 Final Conference FY 2005 Request
$53,300,000 $55,300,000 $55,300,000
Full Costa
$53,800,000 $55,800,000 $55,800,000

a. Full cost funding includes a distribution of the program support budget activity.

MEPS Performance Analysis

Data Development Portfolio

Select for Figure 2, MEPS Full Year Expenditure Data (5 KB).

MEPS Background

MEPS is the only national source for annual data on how Americans use and pay for medical care. It supports all of AHRQ's research related strategic goal areas. The survey collects detailed information from families on access, use, expense, insurance coverage and quality. Data are disseminated to the public through printed and web-based tabulations, micro data files and research reports/journal articles.

MEPS data are vital to the Nation's economic models and facilitate timely projections of health care expenditures and utilization. The level of detail enables public and private sector economic models to develop national and regional estimates of the impact of changes in financing, coverage and reimbursement policy, as well as estimates of who benefits and who bears the cost of a change in policy.

The MEPS Insurance Component (IC) is the only source of national, regional and State data on the health insurance offerings available to Americans through their employers and the cost employers incur for providing that coverage. The survey collects detailed information from family's insurance offerings and take-up, on the cost of insurance to employers and the basic characteristics of the plans offered. Since 2000, data on premium costs from the MEPS IC have been used by the Bureau of Economic Analysis to produce estimates of the GDP for the nation.

Household Component (HC) of MEPS

The HC collects data on approximately 15,000 families and 39,000 individuals across the Nation, drawn from a nationally representative sub-sample of households that participated in the prior year's National Center for Health Statistic's National Health Interview Survey.

The objective is to produce annual estimates for a variety of measures of health status, health insurance coverage, health care use and expenditures, and sources of payment for health services. These data are particularly important because statisticians and researchers use them to generalize to people in the civilian non-institutionalized population of the United States as well as to conduct research in which the family is the unit of analysis.

The panel design of the survey, which features several rounds of interviewing covering 2 full calendar years, makes it possible to determine how changes in respondents' health status, income, employment, eligibility for public and private insurance coverage, use of services, and payment for care are related. Because the data are comparable to those from earlier medical expenditure surveys, it is possible to analyze long-term trends.

Medical Provider Component (MPC) of MEPS

The MPC covers approximately 4,000 hospitals, nearly 22,000 physicians, and 700 home health care providers, and 9,000 pharmacies. Its purpose is to supplement information received from respondents to the MEPS HC. The MPC also collects additional information that can be used to estimate the expenses of people enrolled in health maintenance organizations and other types of managed care plans.

Insurance Component (IC) of MEPS

The IC consists of two sub-components, the household sample and the list sample. The household sample collects detailed information on the health insurance held by and offered to respondents to the MEPS HC. The number of employers and union officials interviewed varies from year to year as the number of respondents in the previous year's HC varies. These data, when linked back to the original household respondent, allow for the analysis of individual behavior and choices made with respect to health care use and spending.

The list sample consists of a sample of approximately 40,000 business establishments and governments throughout the United States. From this survey, national, regional, and State-level estimates, for approximately 40 States each year, can be made of the amount, types, and costs of health insurance available to Americans through their workplace.

Select to access Table 15 for performance analysis of the Data Development (MEPS) Portfolio.

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Discussion and Program Performance. Budget Line 2.3. Program Support

Program Support Description and Context

FY 2003 Enacted FY 2004 Final Conference FY 2005 Request
$2,700,000 $2,700,000 $2,700,000
Full Costa
$0 $0 $0

a. Full cost funding is distributed to the full cost HCQO and MEPS budget activity totals.

Organizational Support Portfolio—Strategic Management of Human Capital
Administrative Consolidation/Delayering

AHRQ continues to work towards efficiencies in the areas of administrative consolidation, strategic workforce planning, as well as organizational delayering. Utilizing the experience of a national leader in the field of health services research, Dr. Clancy, AHRQ's Director, and senior AHRQ leadership crafted an organizational structure which will allow for a greater emphasis on translational activities related to the Agency's core business while also ensuring the Agency is responsive to the President's Management Agenda and Departmental goals and objectives. This paradigm shift in how the Agency does business will concentrate resources on mission critical activities and overall performance issues.

The principles which still guide the systematic evolution of the Agency include:

  • An organizational structure that stresses simplified, shared decisionmaking.
  • Avoidance of redundancies in administrative processes.
  • Ensuring clear lines of communication and authority.
  • A strong emphasis on employee involvement in all Agency matters.
  • Recognizing and rewarding employee accomplishments and contributions to the AHRQ's mission.

The new Agency structure reduces the number of organizational components from 10 to 8 and has created a flattened organizational structure which will allow us to achieve a 1:15 supervisor/employee ratio encouraged by the Department. This modification allows for Office synergy in the areas of performance, budgeting, and accountability; review, education and priority populations; as well as knowledge transfer and communications. The elimination of one research component will focus the remaining Centers on improving information for policymakers and legislators on health care access, economic trends and system financing; devising strategies to improve the efficiency of the health care system; improving the effectiveness and outcomes of care through the use of evidence based clinical information by patients and providers; improving the quality and safety of healthcare; and increasing consumer and patient use of healthcare information, as well as a strategic focus on primary care.

Based on the new structure, senior leadership is working collaboratively to evaluate the current and future needs of the Agency with a focus on redeploying current AHRQ staff to support critical flagship programs while also becoming more "citizen centered" in its approach on how business is conducted.

The Agency is also proactive in its efforts with regard to A-76 (Competitive Sourcing) and has a renewed focus on business process reviews of administrative functions which will assist us to streamline and eliminate redundancies where possible while also working towards the Department's goal of a 15-percent reduction in administrative management.

In addition to the changes to the overall organizational structure, AHRQ is also in the process of implementing a matrix management model of program development that focuses on outcomes rather than outputs. This approach will allow for collaboration across Agency programs without the need for establishing unnecessary formal structures and management layers to support AHRQ research and dissemination activities.

There are several tangible benefits to this reorganization:

  • First and foremost, it allows the Agency to emphasize its priority on transforming the health care system by effectively translating research findings and tools into practice for use by health care practitioners, the general public, and other users of AHRQ research.
  • Second, the Agency will be able to integrate and align activities which typically functioned independently from one another (e.g., the budget and planning process) as well as consolidate administrative management functions.
  • The Agency's new structure will also result in "horizontal delayering" and will allow decisions to be made more quickly and efficiently within AHRQ.
  • Lastly, AHRQ's retooling of the organizational structure will allow us to eliminate at least two supervisory positions and continue the process of redeploying staff, when possible, from administrative management positions to positions deemed as mission-critical in nature.

The Agency's reorganization plan recently received approval from the Assistant Secretary for Administration and Management, and aggressive measures are being taken to administratively implement this innovative model.

AHRQ continues to partner with the Department on HHS-wide initiatives including the Emerging Leaders Program. The Agency was successful in hiring two junior level staff to help support mission-critical functions in the areas of clinical informatics and bioterrorism. This effort, combined with other internal strategies for succession planning, will help to ensure a vital AHRQ workforce in successive years.

Select to access Table 16 for performance analysis of the Organizational Support Portfolio—Strategic Management of Human Capital.

Organizational Support Portfolio—Competitive Sourcing

The President's Management Agenda, competitive sourcing activities, and Departmental management reforms have driven AHRQ to improve the quality of its FAIR Act inventory and to adopt a more aggressive strategy to achieve its competitive sourcing goals.

Sustained Efforts in FY 2003 and Beyond

AHRQ has made significant inroads towards developing a plan that identifies the positions to be evaluated for competitive sourcing. In FY 2003, AHRQ began subjecting positions to competition to the private sector. The Agency expects to meet its cumulative goal of subjecting at least 15 percent of the FTEs performing commercial functions to competition by August 30, 2003.

The Agency has established an internal Commercial Activity Advisory Group (CAAG) tasked with coordinating the achievement of AHRQ's FAIR Act and competitive sourcing goals. The CAAG is responsible for:

  • Review of the methodology used to develop AHRQ's FAIR Act Inventory, to ensure that it accurately reflects the distribution of inherently governmental- and commercial activity- FTE across the Agency and implementation of any corrections needed.
  • Identification of FTE's at AHRQ to be subject to public/private competition.
  • Identification of appropriate training on the FAIR Act and the requirements of the OMB Circular A-76 (revised) for AHRQ staff, including CAAG members, agency management, contracting specialists, and human resources staff.
  • Ensuring that public/private competitions are conducted in accordance with accepted employee and labor relations practices and applicable personnel regulations. The Agency's Human Resources Consultant has been assigned to assist the CAAG in this effort.
  • Identification and implementation of best practices for public/private competitions.

In FY 2004, AHRQ's CAAG will reorient its activities toward coordination and oversight of public/private competitions within the Agency, including assessing resources that are available in-house for completing the required cost analyses, and identifying appropriate contract providers where additional technical expertise will be needed.

The AHRQ Director, in cooperation with the Acting Deputy Director and the Commercial Activity Advisory Group, will continue to ensure strong leadership from the top. Ownership by senior management, the establishment of clear lines of accountability, and coordination with the AHRQ and HHS workforce planning and restructuring activities is vital in successfully implementing this initiative.

Organizational Support Portfolio—Improved Financial Management

Federal Managers are experiencing growing pressures from their executive leaders, Congress, the public, and their customers to achieve more under the programs they manage. AHRQ continues to strive to provide sound financial information by concentrating on how our financial data can be more easily accessible and of use to our program managers and customers. The following highlights AHRQ's progress on the "Improved Financial Performance" goal of the President's Management Agency Scorecard.

Erroneous Payments

Not applicable.

Financial Management Improvement

AHRQ has entered into a task order through an OIG contract with Clifton Gunderson for technical support, consultation, and analysis of certain financial management practices within the Agency. Clifton Gunderson has completed the examination and development of flowcharts for budget execution processes including Interagency Agreements (IAAs), contracts, other types of procurement, and grants processes. The final report, which will be completed by May 31, will identify efficiencies and develop options and recommendations for operational improvements. It is likely that any improvements in efficiency or changes to procedures that are identified would be pilot tested starting in the first quarter of FY 2004. AHRQ staff continues to participate in all Departmental CFO/FMO meetings to prepare for the Accelerated Audit in FY 2003, and will continue to work with HHS to identify, develop, and implement practical solutions to meet the new timelines of the accelerated schedule. To that end, AHRQ budget staff recently met with ASBTF/Finance staff to discuss the challenges and issues associated with the accelerated audit schedule, and also participated in the Department's Entrance Conference for the new accelerated audit contract.

Financial Systems

AHRQ continues to work with the Department and fully takes part in the development and implementation of UFMS. AHRQ has members on the Steering Committee and the Planning and Development Committee, and participates in ad hoc meetings for the PSC-services agencies. AHRQ is providing contractual assistant to the UFMS Change Management team, AHRQ representatives participated in UFMS workshops including: Funds Management Functional Requirements, Reporting Requirements, BACS/CAN Crosswalk, Budget Execution, Accounting for Commitments and Obligations, and Projects. AHRQ staff also participated in the UFMS fit/gap analysis workshop, which focused on reconciling the gaps where the Oracle software did not meet the technical and functional requirements. Most recently, AHRQ staff attended the Budget Execution, Accounts Payable, and Account Receivable Working Sessions. We also plan to take part in the Oracle Overview Workshop, and UFMS Conference Room Pilot 1 Orientation and Demonstrations scheduled for this summer.


As part of AHRQ's task order with Clifton Gunderson, a working group was convened on March 17 to discuss the standards applicable to AHRQ as an agency participating in HHS' "top down" audit approach. The meeting was facilitated by Clifton Gunderson, and included representatives from the Office of Finance, the Office of the Inspector General, the PSC, and AHRQ's Office of Management. Presentations by Clifton Gunderson included topics on the financial audit process and what auditors might look for at AHRQ:

  • HHS internal control findings as they may apply to AHRQ.
  • Internal controls and substantive testing.
  • Compliance with laws and regulations.

The outcome of the meeting was a better understanding of what the top-down accelerated audit process could mean for AHRQ and the areas that we should concentrate on such as internal controls. As a followup, AHRQ acquired sample letters that under the current audit process were developed by the audited Agency and sent to AHRQ's General Counsel and/or the auditors. The letters address obtaining reasonable assurance as to whether AHRQ's financial statements:

  • Are free of misstatement.
  • Are in compliance with the laws and regulations that impact the financial statements.
  • Reflect any contingent liabilities for litigation, claims, and assessments against the Agency.

The final phase of the Clifton Gunderson contract, which will start in June, will focus on providing guidance on Federal requirements for financial statements and the relationship between financial (proprietary) and budgetary accounting so that staff can better analyze the Agency's financial statements.

Integrate Financial and Performance Management Systems

An electronic reporting module for reviewing, tracking, and verifying expenditures at the Office/Center level is fully operational. AHRQ is proceeding with the next step of this project, which is targeted integration of our budget and planning systems. The ultimate goal is to relate outcomes by GPRA program goals, allowing Agency leadership to easily identify and flag for action those program areas that are not meeting their GPRA goals.

Organizational Support Portfolio—Information Technology & E-Government
Government Paperwork Elimination Act (GPEA)

GPEA requires Federal agencies, by October 21, 2003, to provide individuals or entities that conduct business with agencies the option to submit information or transact business with the agency electronically, and to maintain records electronically, when practicable. AHRQ has identified its programs and services subject to GPEA and developed an implementation plan to make them compliant. The Agency's GPEA program is actively addressing the following:

  • Developing Agency-wide GPEA policies and associated practices.
  • Establishing a GPEA awareness training program for agency personnel.
  • Conversion of publicly available agency records and health care data studies (e.g. evidence-based information on health care outcomes; quality; and cost, use, and access) from paper format to a WEB-based environment.
  • Develop and deploy an Internet access point for the public to conduct electronic commerce with AHRQ.
  • AHRQ is working to re-engineer all of the systems supporting our information dissemination through the Agency publications clearinghouse, with plans to incorporate fully online electronic ordering within a year.
AHRQ Security Vision

Information security and critical infrastructure protection are recognized priorities for government agencies. Increasing focus on security stems from new statutory requirements (e.g. GISRA, HIPAA, GPEA, GPRA, Clinger-Cohen Act), and policy directives (e.g., OMB A-130, and PDD-63), oversight and audit reports, Congressional interest, adverse events (e.g., Web site defacements, and virus introductions), public concern over privacy, and the ever growing criticality of IT services to enable mission and program operations. AHRQ's security program is focusing on the following critical activities which directly map to the HHS information Technology 5-Year Strategic Plan. The AHRQ Office of the Chief Information Officer (OCIO) has initiated an agency-wide effort to strengthen AHRQ's information technology (IT) security posture and computing environment.

AHRQ is developing a comprehensive set of Baseline Security Requirements (BLSRs) that will apply across the entire enterprise. These requirements form the basis for all future activities and assessments and cover the following major components:

  • Computer.
  • Communications.
  • Personnel.
  • Training.
  • Physical.
  • Procedural.

Considering these areas ensures that security controls, services, and mechanisms exist throughout the Agency and are continuously embedded into existing and newly created processes and systems. This approach supports the HHS Strategic Plan to IT Security.

PMA e-Government Activities

AHRQ is quite active in several PMA programs—the Consolidated Health Informatics and the e-Grants programs. AHRQ has several staff members serving on the Consolidated Health Informatics (CHI) program team, and is the lead agency on another related activity—the Patient Safety Task Force. These programs, taken together can be used to form the basis for another emerging program in HHS that may rise to the level of one of the President's Management Agenda programs, the Public Health Architecture. Although the Public Health Architecture concepts are still in the planning stages, it is clear that the type of multi-Agency effort that AHRQ is leading with the Patient Safety network would be a model for such an effort.

AHRQ is leading a multi-Agency effort to redefine how adverse medical events are reported, with the ultimate goal of reducing medical errors and improving patient safety. The initial work on the Patient Safety Network program is to develop a Web-based interface that will integrate error reporting systems across Agencies. Phase two of this effort will extend beyond HHS, which is exactly what is being envisioned for the public health architecture program.

AHRQ was an early adopter of the shared approach when using information technology, and has long partnered with the National Institutes of Health (NIH) by making use of the NIH grants management system. In support of the e-Grants initiative, AHRQ is working closely with NIH to move the e-Grants initiative.

Select to access Table 17 for performance analysis of the Organizational Support Portfolio—Information Technology & E-Government.

Organizational Support Portfolio—Budget & Performance Integration

General program direction and budget and performance integration is accomplished through the collaboration of the Office of the Director and the offices and centers that have programmatic responsibility for portions of the Agency's research portfolio. The Agency links budget and performance management through its focus on the Annual Performance Plan.

The Agency's strategic plan guides the overall management of the Agency. Each Office and Center (O/C) has individual strategic and operations plans. The annual operations plans identify critical success factors that illustrate how each O/C contributes to AHRQ achieving its strategic and annual performance plan goals, as well as internal O/C management goals. In turn, these critical success factors serve as the basis for each employee's annual performance plan. 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 and their staffs review their accomplishments in relation to the annual operations plans and draft the next year's plans. The results of the reviews contribute significantly to the performance reports that are influential in revising the operations plans and in turn the Agency strategic plan.

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.

In continuing AHRQ's commitment to budget and performance integration, we recently 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 four key programs within the Agency:

  • MEPS.
  • HCUP.
  • CAHPS®.
  • The grant component of the Agency's Translation of Research into Practice (TRIP) program.

For the FY 2003 budget, the Agency conducted a review of Patient Safety. These reviews provide the basis for the Agency to move forward in more closely linking high quality outcomes with associated costs of programs. Over the next few years, the Agency will focus on fully integrating financial management of these programs with their performance.

Select to access Table 18 for performance analysis of the Organizational Support Portfolio—Budget & Performance Integration.

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