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Testimony on Health Care Quality Initiatives

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Carolyn M. Clancy, M.D., Director, AHRQ

Before the Subcommittee on Health of the House Committee on Ways and Means


The Department's Quality Initiatives
   AHRQ Quality of Care Initiatives
   CMS Quality of Care Initiatives
Quality Provisions Under the MMA
   Medicare Health Care Quality Demonstration Programs
   Medicare Care Management Performance Demonstration
   Voluntary Chronic Care Improvement under Traditional FFS
   Incentives for Reporting
   Electronic Prescribing
   Medicare Therapy Management
   Research on Health Care Items and Services
Quality Initiatives in the Private Sector


Chairman Johnson, Congressman Stark, distinguished Subcommittee members, thank you for inviting me to this important hearing on initiatives to improve the quality of health care in America. Quality health care for all people is a high priority for President Bush and the Department of Health and Human Services (HHS). Quality health care is a statutory responsibility for my agency, the Agency for Healthcare Research and Quality (AHRQ), and it is a key area of emphasis for the Centers for Medicare & Medicaid Services (CMS).

My testimony today will address three areas:

  1. Current activities of the Department to improve the quality of care, including the use of health information technology.
  2. The significant provisions of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) that both build upon and advance our efforts to improve the quality of health care.
  3. A brief overview of private sector quality initiatives.

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The Department's Quality Initiatives

Under HHS Secretary Thompson's leadership, the Department has developed a variety of quality initiatives involving hospitals, doctors, skilled nursing facilities, and other providers. The Secretary has also placed great emphasis on our different agencies functioning as "one Department." As my testimony will outline, this has meant that AHRQ is increasingly serving as a science partner to CMS in its many quality initiatives.

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AHRQ Quality of Care Initiatives

AHRQ's specific mission is to improve the quality, safety, and effectiveness of health care for all Americans. To fulfill our role as a science partner for CMS and State initiatives to improve quality, I believe that AHRQ must become a true "problem solver." We must marshall existing and develop new scientific evidence that targets the critical challenges these programs face in improving the quality of health care they provide and the efficiency with which they operate. My goal as Director is to ensure that AHRQ's work is useful to those who manage these programs so that the taxpayers receive true value for their tax dollars and to those who rely upon these programs so that they receive appropriate, high quality care. There are four aspects of AHRQ's work that I will discuss:

  • Research to support evidence-based decisionmaking.
  • Using data to drive quality.
  • Accelerating the pace of quality improvement.
  • Improving the infrastructure for quality health care.

Research to Support Evidence-based Decisionmaking

AHRQ's research seeks to improve quality by developing and synthesizing scientific evidence regarding two aspects of health care:

  • The effectiveness and quality of clinical services.
  • The effectiveness and efficiency of the ways in which we organize, manage, deliver and finance health care.

With respect to clinical services, we assess the effectiveness of health care interventions; for example, do Medicare beneficiaries with multiple chronic illnesses benefit as much in daily practice from a new intervention or drug as those in the clinical trial who usually have only one problem? We also look at comparative effectiveness: how effective is a given intervention versus the alternatives and what are the comparative risks and side effects? These are critical issues for physicians making treatment recommendations and for patients who are in the best position to assess the risks they are willing to take. For example, cholesterol lowering drugs—commonly called "statins"—have different safety and effectiveness profiles. Comparative studies with statins could have revealed that some are more likely to cause a serious life threatening adverse event instead of relying upon adverse event reports that eventually caused one of them to be taken off the market.

In addition, every aspect of the financing and delivery systems for health care can matter. Our research asks similar questions in those areas: what is effective, how does it compare with other strategies, what is most efficient and what are the risks of unintended consequences. Currently, we are completing two research syntheses that focus on what research tells us needs to be taken into account in implementing an insurance drug benefit and how employers have responded and could respond to increases in health insurance costs.

Our work in patient safety is an excellent example of how improving the quality and safety of health care involves both health care services and the systems through which care is received. Our research is addressing key unanswered questions about when and how medical errors occur and how science-based information can make the health care system safer. We know, for example, that medication errors are a major issue and have made research on the safe and appropriate use of pharmaceuticals a significant focus of our research agenda. For example, a recent research finding has identified a disturbingly large number of pregnant patients receiving prescriptions for drugs that are contraindicated during pregnancy. We are working with the Food and Drug Administration (FDA) and other HHS agencies to develop collaborative strategies for addressing this problem. At the same time, medication errors also result from faulty work flow procedures or unnecessarily complicated equipment. Once again, we are working closely with the FDA on research on the processes related to medication prescribing and delivery, the use of information technology, development of an effective bar coding system, and "human factors research." This is a field of science that can inform the design of health care equipment, like infusion pumps, to ensure that busy, distracted, and tired health care workers are less likely to make an error in entering the information for delivery of an intravenous drug.

Health care decisionmakers need a synthesis of the best evidence that is understandable, objective, and places the ever-increasing number of scientific studies in context. AHRQ is committed to accelerating the adoption of science into practice so that all Americans benefit from advances in biomedical science. An example in the patient safety area is our evidence report, titled Making Health Care Safer, A Critical Analysis of Patient Safety Practices. This report highlighted 73 proven patient safety practices which would help health care administrators, medical directors, clinicians, and others improve quality by reducing medical errors. Specifically, the report identified 11 practices that are proven to work but not used routinely in the Nation's hospitals and nursing homes.

It is also critical that we foster ongoing learning from experts in the field to expedite quality improvement. For example, a critical challenge in making health care safer is that providers do not share lessons learned from errors and near misses due to fear of liability. To help health care professionals benefit from insights beyond their home institutions, AHRQ is sponsoring a monthly, Web-based medical journal that showcases patient safety lessons drawn from actual cases of near-errors. This unique online journal allows health care professionals to learn about avoidable errors made in other institutions, as well as effective strategies for preventing their recurrence. One case each month is expanded into a "Spotlight Case" that includes an interactive learning module that features readers' polls, quizzes, and other multimedia elements. Practicing physicians may obtain continuing medical education credit by successfully completing the spotlight case and its questions, and trainees can receive certification credits for doing so. (Select to access AHRQ WebM&M.)

Using Data to Drive Quality

To improve quality, you need strong measures, good data, and somebody with strong reason to use them. Responding to user needs, AHRQ has played a fundamental role in creating the measures and the data. I'll give you two examples.

The first focuses on hospital care. In response to requests by State hospital associations, State data organizations and others, AHRQ developed a set of Quality Indicators that can be used in conjunction with any hospital discharge data to let a hospital know how it is doing in terms of safety and quality. A subset of these indicators also lets us use information about hospital admissions to assess the performance of the health system of the community. At the same time, employers, CMS and others who wish to reward good-quality hospitals can use these measures with data from particular hospitals or regions. Or they can use the module on preventable admissions to target and launch major health improvement efforts on a community-wide scale. These indicators have been used by a number of States and communities to improve care and to determine how their own hospital or health system's performance compares to other hospitals in key areas. We have a support contract to make this easy for all users.

A second example has to do with improving the patient experience of care, a widely recognized component of overall quality. Several years ago, AHRQ created a survey, CAHPS®, which health plans could use to question patients about their care experience. CAHPS® is now 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 and other health facilities. The first CAHPS® surveys, which assessed consumers' perceptions of the quality of health plans, are used by more than 100 million Americans, including those in Medicare managed care plans, enrollees in the Federal Employees Health Benefits Program, and participants in health programs of the Department of Defense (DOD).

An HCAHPS survey built on AHRQ's earlier work in establishing surveys and will measure the hospital care of those patients' involved in the pilot. The survey is being considered by CMS as part of the National Voluntary Hospital Reporting Initiative. CMS has received comments and has lessons learned from the pilots, which could be helpful in working with AHRQ to develop a standardized HCAHPS.

AHRQ is stepping up its efforts to provide assistance, often Web-based, for those who are seeking to improve the quality of patient care. For example:

  • AHRQ recently launched a Web-based clearinghouse ( providing practical tools for assessing, measuring, promoting and improving the quality Americans' health care. The site's purpose is to provide health care providers, policymakers, purchasers, patients, and consumers an accessible mechanism to implement quality improvement recommendations and easily educate individuals regarding their own health care needs.
  • In addition, AHRQ is helping patients and their families improve the quality of the health care they receive and play an important role in preventing medical errors. AHRQ and CMS collaborated on a campaign to promote new "5 Steps to Safer Health Care" posters. In addition, campaigns with the American Hospital Association, the American Academy of Pediatrics, American Medical Association, and AARP are working to implement evidence-based information that help patients know how talk to clinicians about safe health care.
  • While the text of AHRQ's recent reports, National Healthcare Quality Report and the National Healthcare Disparities Report, are currently available on the Web, AHRQ is developing a more sophisticated search engine that will enable those seeking to improve the quality of care at the local or State level to link to the myriad of charts and data that are summarized in the report. Over time we expect this to be an indispensable tool for those seeking to develop a "road map" for their own quality improvement efforts.

Accelerating the Pace of Quality Improvement

To accelerate the pace of quality improvement, AHRQ has launched a program called Partnerships for Quality. The purpose of the Partnerships program is to support models or prototypes of change led by organizations or groups with the immediate capacity to influence the organization and delivery of health care as well as measure and evaluate the impact of their improvement efforts. For example, AHRQ has awarded a grant to The Leapfrog Group, which is a consortium of more than 135 large private and public health care purchasers buying health benefits for more than 33 million Americans. Leapfrog has devised a plan for conducting and rigorously evaluating financial incentive or reward pilots in up to six U.S. healthcare markets in two waves over the next 3 years.

Another approach to accelerating quality improvement is to involve health care system leaders in the research enterprise itself from the outset. AHRQ currently has three delivery-based networks that follow this approach. The Primary Care-Based Research Network is a group of 38 primary care networks across the country that do research collaboratively on ways to improve preventive care and other issues of interest to primary care providers. The HIV Research Network is a network of 22 large and sophisticated HIV care providers around the country who share information and data so that they can learn from each other what can work to improve quality. They also provide timely aggregate information to policy-makers and other providers interested in improving quality and answering other questions about access and cost of care for people with HIV. Through the work of this network and other large HIV care providers, for example, AHRQ is looking to identify and remedy major causes of prescribing errors for patients with HIV.

A third network, the Integrated Delivery System Research Network (IDSRN), is a field-based research network that tests ways to improve quality within some of the most sophisticated health plans, systems, hospitals, nursing homes, and other provider sites in the country. In the past year for example, provider-researcher teams have been working on ways to reduce falls in nursing homes, and ways to limit medication errors. Often we partner with others in the Department on these efforts. For example, CMS asked us for a handbook on ways to improve cultural competency of health care providers, and is now using this handbook as the key part of their training for Medicare and Medicaid providers. One of our contractors developed a tool to help hospitals prepare for bioterrorist events and other emergencies, and the American Hospital Association has since shared this tool with all of their members and in fact provide technical assistance on how to use it.

Improving the Infrastructure for Quality Health Care

Two critical elements for improving the quality and safety of patient care are expanding the use of information technology (IT) and investing in human capital. The most recent report from the Institute of Medicine's quality chasm series emphasizes the need for improved information at the point of care and the deployment of the still developing National Health Information Infrastructure (NHII) to improve patient safety and quality of care, for which HHS has the lead Federal role working with the private sector. Both AHRQ and the Assistant Secretary for Planning and Evaluation (ASPE) have several initiatives underway to advance the adoption and appropriate use of IT tools and enable the secure and private exchange of information within and across communities.

In FY 2004, AHRQ has launched a new initiative to improve health care quality and reduce medical errors through the use of information technology. AHRQ will award $50 million to help hospitals and other health care providers invest in information technology designed to improve patient safety, with an emphasis on small communities and rural hospitals and systems, which don't often have the resources or information needed to implement cutting-edge technology. An important aspect of this program is that it will foster the implementation of proven technology through the health care system and establish important building blocks for the NHII.

As the NHII is developed, it will enable appropriate access to important patient information and evidence to assist clinicians in making diagnostic and treatment decisions that are based on the best available science. If a Medicare beneficiary typically receives care from an internist and specialist in Connecticut for 6 months of the year but has different physicians in Florida during the winter, their medications, labs, x-rays and other important health information would be available to all their physicians at any point in time. This will allow clinicians to provide continuous high quality of care regardless of where a beneficiary accesses the health care system. While the intention of HHS is to facilitate the development of the NHII, we recognize that the most realistic strategy is to foster and support community-based health information exchanges with the ability to share information within and across communities nationally over time. In addition, the FY 2005 budget requests a new $50 million within the Office of the Secretary to support communities with the development of these health information exchanges in FY 2005 and disseminating lessons learned to ensure the success and long-term viability of these local efforts across the country.

Another infrastructure issue is the ability to share health information in ways that enable us to make significant strides towards improving patient safety, reducing error rates, lowering administrative costs, and strengthening national public health and disaster preparedness. To share health data, agencies need to adopt the same clinical vocabularies and the same ways of transmitting that information. This sharing information within and between agencies establishes "interoperability." Public and private groups have emphasized how interoperability through standards will enable us to share a common electronic patient medical record and in turn greatly improve the quality of health care.

The Consolidated Health Informatics (CHI) initiative will establish a portfolio of existing clinical vocabularies and messaging standards enabling federal agencies to build interoperable federal health data systems. This commonality will enable all federal agencies to "speak the same language" and share that information without the high cost of translation or data re-entry. Federal agencies could then pursue projects meeting their individual business needs aimed at initiatives such as sharing electronic medical records and electronic patient identification. CHI standards will work in conjunction with the Health Insurance Portability and Accountability Act (HIPAA) transaction records and code sets and HIPAA security and privacy provisions. Many departments and agencies are active in the CHI governance process, including HHS, the Veterans Administration (VA), DOD, Social Security Administration (SSA), the General Services Administration (GSA), and the National Institute of Standards and Technology (NIST).

Even when the best tools available are used appropriately, achieving consistent high quality care requires a solid understanding of the delivery process and inherent risks in the system that will never be mitigated through automation. In recognizing the importance of intellectual component of quality improvement, AHRQ recently established the AHRQ-VA Patient Safety Improvement Corps, a training program for State health officials and their selected hospital partners. During the first annual program, 50 participants will complete coursework in three 1-week sessions at AHRQ's offices in Rockville, MD. Participants will analyze adverse medical events and close calls—sometimes known as "near misses"—to identify the root causes of these events and correct and prevent them. Anticipating that the growing demand for patient safety expertise will exceed the capacity of this intensive program, one aspect of this initiative will be to develop Web-based training modules. These will be in the public domain and could be used independently or by private sector training programs that would provide additional "hands on" experiences.

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CMS Quality of Care Initiatives

In November 2001, HHS Secretary Thompson announced the Quality Initiative, a commitment to assure quality health care for all Americans through published consumer information coupled with health care quality improvement support through Medicare's Quality Improvement Organizations (QIOs). The Quality Initiative was launched nationally in 2002 as the Nursing Home Quality Initiative and expanded in 2003 with the Home Health Quality Initiative and the National Voluntary Hospital Quality Reporting Initiative. The CMS Physician Focused Quality Initiative (PFQI) began its implementation this year. Most leaders in health care recognize that achieving the safest and highest quality of care will require significant enhancements in the use of health information technology and strategies to permit sharing of patient data within communities. In FY 2004 and FY 2005 the Department will invest $150 million. In addition, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) includes a variety of provisions designed to encourage the delivery of quality care, including demonstrations to focus effort on improving chronic illness care and identifying effective approaches for rewarding superlative performance.

Nursing Homes

About 3 million elderly and disabled Americans received care in our nation's nearly 17,000 Medicare and Medicaid-certified nursing homes in 2001. Slightly more than half of these were long-term nursing home residents, but nearly as many had shorter stays for rehabilitation care after an acute hospitalization. About 75 percent were age 75 or older. As part of an effort to improve nursing home quality nationwide, the Administration has taken a number of steps, including the Nursing Home Quality Initiative. Working with measurement experts, the National Quality Forum, and a broad group of nursing home industry stakeholders—consumer groups, unions, patient groups and nursing homes—CMS adopted a set of nursing home quality measures and launched a six-State pilot. Encouraged by the success of the pilot, CMS expanded the Nursing Home Quality Initiative to all 50 States in November 2002. This quality initiative is a four-pronged effort including, regulation and enforcement efforts conducted by CMS and State survey agencies; continual, community-based quality improvement programs; collaboration and partnership with stakeholders to leverage knowledge and resources; and improved consumer information on the quality of care in nursing homes.

As part of the effort, consumers may compare quality data, deficiency survey results and staffing information about the nation's Medicare and Medicaid-certified nursing homes through the Nursing Home Compare Web site, which is updated quarterly. The quality measures included on the site help consumers make informed decisions involving nursing homes. The Nursing Home Compare tool received 9.3 million page views in 2003 and was the most popular tool on

Home Health

In 2001, about 3.5 million Americans received care from nearly 7,000 Medicare certified home health agencies. These agencies offer health care and personal care to patients in their own home, often teaching them to care for themselves. Launched nationwide in November 2003, the Home Health Quality Initiative aims to further improve the quality of care given to the millions of Americans who use home health care services. The initiative combines new information for consumers about the quality of care provided by home health agencies with important resources available to improve the quality of home health care. Like the Nursing Home Quality Initiative, the Home Health Quality Initiative uses the same "four-pronged" approach to regulate the industry, ensure consumers have improved access to information, utilize community-based quality improvement programs, and collaborate with the relevant stakeholders to access resources and knowledge for home health agencies. CMS' regulation and enforcement activities will assure that home health agencies comply with Federal standards for patient health, safety, and quality of care. In March 2004, CMS updated the eleven home health quality measures on every Medicare-certified home health agency to give consumers the ability to compare the quality of care provided by the agencies. To access the information, consumers can call 1-800-Medicare or use the Home Health Compare tool at Over the past 6 months, the tool has been viewed about 780,000 times.


The Hospital Quality Initiative consists of the National Voluntary Hospital Reporting Initiative (NVHRI), a public-private collaboration that reports hospital quality performance information, a three-State pilot of the Hospital Patient Perspectives on Care Survey (HCAHPS®), and the Premier Hospital Quality Incentive Demonstration. The Hospital Quality Initiative, is more complex, and consists of more developmental parts than the nursing home and home heath quality initiatives. The initiative uses a variety of tools to stimulate and support a significant improvement in the quality of hospital care. The initiative aims to refine and standardize hospital data, data transmission, and performance measures in order to construct a single robust, prioritized and standard quality measure set for hospitals. The ultimate goal is that all private and public purchasers, oversight and accrediting entities, and payers and providers of hospital care would use the same measures in their public reporting activities. The initiative is intended to make critical information about hospital performance accessible to the public and to inform and invigorate efforts to improve quality. Among the tools used to achieve this objective are collaborations with providers, purchasers and consumers, technical support from Quality Improvement Organizations, research and development of standardized measures, and commitment to assuring compliance with our conditions of participation.

National Voluntary Hospital Reporting Initiative

The National Voluntary Hospital Reporting Initiative (NVRI) was launched in 2003 in conjunction with the American Hospital Association, Federation of American Hospitals, American Association of Medical Colleges, and other stakeholders (AARP, AFL-CIO). The NVRI was established to provide useful and valid information about hospital quality to the public, standardize data and data collection, and foster hospital quality improvement. For the previous initiatives, CMS had well-studied and validated clinical data sets and standardized data transmission infrastructure from which to draw a number of pertinent quality measures for public reporting.

Hospitals do not have a similar comprehensive data set from which to develop the pertinent quality measures. Thus, the American Hospital Association, the Federation of American Hospitals and the Association of American Medical Colleges approached the Joint Commission on Accreditation of Healthcare Organizations, AHRQ, the National Quality Forum, and CMS to explore voluntary public reporting of hospital performance measures. CMS contracted with the National Quality Forum (NQF) to develop such a consensus-derived set of hospital quality measures appropriate for public reporting. We selected 10 measures from the NQF consensus-derived set as a starter set for public reporting and quality improvement efforts and an additional 24 measures from the set for the hospital quality incentive demonstration. CMS has worked with the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) and the QIOs to align their hospital quality measures to ease the data transmission process for hospitals. This information is currently displayed on the CMS Web site and updated quarterly.

Hospital Patient Perspectives on Care Survey (HCAHPS)

Although many hospitals already collect information on their patients' satisfaction with care, there currently is no national standard for measuring and collecting such information that would allow consumers to compare patient perspectives at different hospitals. CMS worked with AHRQ to pilot test Hospital Patient Perspectives on Care Survey, known as HCAHPS. The HCAHPS survey built on AHRQ's success in establishing surveys measuring patient perspectives on care in the United States health care system through the development of CAHPS® for health plans. CMS has received comments and has lessons learned from the pilots, which could be helpful in working with AHRQ to develop a standardized HCAHPS.

Premier Hospital Quality Incentive

The Premier Hospital Quality Incentive demonstration project also is part of the Hospital Quality Initiative. This 3-year demonstration project recognizes and provides financial rewards to hospitals that demonstrate high quality performance in a number of areas of acute care. The demonstration involves a CMS partnership with Premier Inc., a nationwide purchasing alliance of not-for-profit hospitals, and rewards the hospitals with the best performance by increasing their payment for Medicare patients. There are approximately 280 hospitals participating in the project. Under the demonstration, top performing hospitals will receive bonuses based on their performance on evidence-based quality measures for inpatients with heart attacks, heart failure, pneumonia, coronary artery bypass graft, and hip and knee replacements. The 34 quality measures used in the demonstration have an extensive record of validation through research.

Using these measures, CMS will identify hospitals in the demonstration with the highest clinical quality performance for each of the five clinical areas. Hospitals in the top 20 percent of quality for those clinical areas will be given a financial payment as a reward for the quality of their care. Hospitals in the top decile of hospitals for a given diagnosis will be provided a 2 percent bonus for the measured condition, while hospitals in the second decile will be paid a 1 percent bonus. In year 3, hospitals that do not achieve performance improvements above the demonstration baseline will have their payment reduced. The demonstration baseline is set during the first year of the demonstration. Hospitals will receive a 1 percent reduction in their Diagnosis Related Group (DRG) payment for clinical conditions that score below the ninth decile baseline level and 2 percent less if they score below the tenth decile baseline level.

Physician Focused Quality Initiative

Similar to the Hospital Quality Initiative, the CMS Physician Focused Quality Initiative (PFQI) has several components with multiple approaches to stimulating the adoption of quality strategies and potentially reporting quality measures for physician services. The Initiative builds upon ongoing CMS strategies and programs in other health care settings in order to:

  • Assess the quality of care for key illnesses and clinical conditions that affect many Medicare beneficiaries.
  • Support clinicians in providing appropriate treatment of the conditions identified.
  • Prevent health problems that are avoidable.
  • Investigate the concept of payment for performance.
Doctors' Office Quality (DOQ) Project

The DOQ Project is designed to develop and test a comprehensive, integrated approach to measuring and improving the quality of care for chronic diseases and preventive services in the outpatient setting. CMS is working closely with key stakeholders such as nationally recognized physicians associations, consumer advocacy groups, philanthropic foundations, purchasers, and quality accreditation or quality assessment organizations to develop and test the DOQ measurement set. The DOQ measurement set has three components including a clinical performance measurement set, a practice system assessment survey, and a patient experience of care survey.

Doctors' Office Quality-Information Technology (DOQ-IT) Project

CMS recognizes the potential for information technology to improve the quality, safety and efficiency of health care services. Through the DOQ-IT project, CMS is working to support the adoption and effective use of information technology by physicians' offices to improve the quality and safety for Medicare beneficiaries. DOQ-IT seeks to accomplish this by promoting greater availability of high quality affordable health information technology and by providing assistance to physician offices in adopting and using such technology.

Payment Demonstration Projects

CMS continues to examine financial incentives for physicians that demonstrate higher quality performance. This approach includes the Physician Group Practice demonstration that tests a hybrid methodology for paying physician-driven organizations that combine Medicare fee-for-service payments with a bonus pool derived from savings achieved through improvements in the management of care and services.

End Stage Renal Disease (ESRD) Quality Activities

The Balanced Budget Act of 1997 required CMS to develop and implement, by January 1, 2000, a method to measure and report the quality of renal dialysis services provided under the Medicare program. To implement this legislation, CMS funded the development of clinical performance measures (CPMs) based on the National Kidney Foundation's Dialysis Outcome Quality Initiative Clinical Practice Guidelines. Sixteen ESRD CPMs (five for hemodialysis adequacy, three for peritoneal dialysis adequacy, and four for anemia management) were developed and are used for quality improvement purposes through the ESRD Networks.

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