Medicare final rule calls for increased reporting of quality data

Preprinted order sets, electronic systems used to meet new data demands

Quality professionals at many organizations soon will be collecting additional data, as a result of the Centers for Medicare & Medicaid Services' (CMS) final rule on the inpatient prospective payment system. The final rule aligns payment for Medicare beneficiary inpatient hospital stays more closely with the actual hospital costs but also requires increased reporting of quality data.

Hospitals will be required to report on the full set of Hospital Quality Alliance measures to get full payment updates. The rule is effective for discharges on or after October 1, 2006. (A fact sheet on the final rule is available at the CMS web site,

Originally, CMS proposed to require hospitals to submit data beginning with the first quarter of 2006, but this was changed to making submissions due February 15, 2007, relating to discharges occurring in the third calendar quarter of 2006. "This was done to reduce the amount of retroactive data retrieval hospitals felt would be required, time to obtain and train new abstracting staff if necessary, and to potentially renegotiate their contracts with their vendors," says Rhonda F. Walker, RN, BA, MBA, CHC, senior consultant at Courtemanche & Associates in Charlotte, NC.

Although CMS agreed to push back the collection period and reporting date of the additional quality indicators, many hospitals say that the February 15, 2007, submission deadline does not allow for sufficient time to train and financially support new abstracting staff, says Walker.

Regardless of size, hospitals will be required to acquire the expanded quality data beginning the third quarter of 2006. "This may prove to be a difficult hardship for hospitals that are already short on resources," says Walker. "Many will need to decide if they are prepared to spend money to make money."

Do a cost-benefit analysis

Some organizations will need more abstracting personnel to meet the new requirements, especially those who have not been voluntarily submitting data for the 21 quality measures already, says Walker. "For those hospitals who are required to retroactively gather data from July 2006, this will represent a potentially large addition of resources," she says.

As a result of the new requirements, smaller hospitals will now need to perform their own cost-benefit analysis for data abstraction and real time data collection, says Walker.

Comments contained in the final rule indicated that some hospitals believed that the increase from a 0.4% reduction in the annual payment update to the proposed 2% payment reduction was too great and would cause some small hospitals to close. "The two percentage point reduction is mandated by the Medicare Modernization Act," says Walker.

Therefore hospitals' cost benefit analysis must determine the difference between losing a 2% payment and the costs necessary to gather and submit the required data.

"CMS admitted to the challenges it faces in minimizing the length of time between the receipt of and the ability to provide feedback to hospitals, on the data they submit. Hospitals also face the same issue on the data they collect," says Walker. "At some juncture, health care organizations will be required to have electronic medical records. It is clear that CMS supports this initiative."

Major IT upgrades needed

Despite the additional costs, it is clearly in the best interests of organizations to position themselves to collect data as quickly and efficiently as possible. This may require investment in their information technology (IT) infrastructure and personnel, says Walker.

"Hospitals who may have hoped to delay major IT upgrades may wish to accelerate those timelines," says Walker. "Hopefully these expenditures will not only allow for the collection of additional federal health care program revenue, but will accomplish its primary task — to improve the quality and safety of health care."

If hospitals are to maintain the 2% payment, they must be capable of collecting and submitting the CMS-required data. Manual abstraction is time- and labor-intensive; however, significant IT updates also may prove too expensive for hospitals, especially smaller hospitals or those with limited resources.

"This presents a financial dilemma," says Walker. "Many hospitals are now in the throes of some form of IT upgrades. My personal experience is that I have yet to be in a hospital for the past year that has not been involved in some IT project."

CMS apparently believes the cost to hospitals is offset by the tremendous benefit brought to the consumer, says Walker. "Case in point is the 127,000 Medicare beneficiaries that develop surgical-site infections annually — one-half of which CMS contends could be prevented," she says.

Since much of the data has to be collected manually, the challenge for the quality professional is the timely completion of data collection, says Paula Heinz, quality assurance manager at Jewish Hospital in Louisville, KY. As hospitals are switching over to electronic medical records, they are looking for designated fields where quality data could be collected electronically instead of manually, she says.

"Pay-for-performance is the emphasis. As more and more of these quality measures are developed and accepted by JCAHO and CMS, they will be included into the pay-for-performance arena," says Heinz. Organizations will then have to develop mechanisms to monitor compliance.

"Hospitals are going to have to search for less expensive ways to collect this data," says Heinz. "Additional resources will have to focus on ways to electronically collect the data and store the data. This is a consideration when we look at electronic medical records." Additional staff or upgrade of computer systems to electronically collect some of the data may be needed, she reports.

"As quality improvement professionals, our role will now be focused on improving these specific indicators," says Tom Knoebber, director of quality and performance improvement for Mission Hospitals in Asheville, NC. "I'm sure some will see it as intrusive, while others will applaud the prioritization and support for improvement science such as Six Sigma and Lean concepts."

One concern that could be raised among low-volume hospitals or hospitals that already excel in these diagnoses is that resources may be diverted from other internally identified priorities to react to public reporting, says Knoebber. "Overall, quality of care will improve through the promotion of evidence-based practice and consistency of care."

Although the only official measures to report are the 21 indicators, a great deal of additional screening and analysis is performed to get to those specific indicators, notes Knoebber.

Organizations that already have been collecting the data are in a better position because they have resources and systems in place. "Within the Baylor Health Care System, the additional reporting requirements will not impact our work load," says Pat Cooper, director of health care improvement at Baylor Regional Medical Center at Plano (TX). "Since opening our facility in December 2004, we have been collecting data on these measures for quality improvement purposes."

As the organization moves toward an electronic medical record, the plan is to hardwire queries relevant to the core measure elements into the system. "Currently, we scan all of our records into the computer," says Cooper. "We anticipate having an on-line documentation system in late 2007."

However, for most hospitals, the collection and coordination of these data will require additional resources since it is a new activity, says Knoebber. In some institutions, it will require a shift of personnel from other areas of focus to collect, analyze, and then improve the care reflective in the public indicators, he adds.

"Our institution has been fortunate relative to the CMS ruling's impact, since we have been an active participant in the Hospital Quality Incentive demonstration project for the past three years," he says. "We have been refining our processes and systems to collect and report data."

For example, there has been a shift from retrospective to concurrent data collection, since many of the measures being evaluated need to be identified, provided, and documented before the patient leaves the hospital.

At Baylor Regional, care coordinators concurrently collect data relevant to "impact measures" which can affect the delivery of care in real time, as follows:

  • Pneumonia: Vaccination; blood cultures prior to initiation of antibiotics; and antibiotics initiated within four hours of admission.
  • Acute Myocardial Infarction: Assessment of left ventricular systolic dysfunction and documentation of contraindications to medications.
  • Congestive Heart Failure: Assessment of left ventricular function, documentation of contraindications to medications, and discharge instructions.

"Retrospectively, additional data are collected by the health care improvement department," says Cooper.

At Mission Hospitals, there is broader use of concurrent case management to monitor the selected patient populations through the system. As patients are identified, essential documentation points are monitored to ensure compliance. "Following discharge, timely abstraction identifies any variances that can quickly be communicated with case managers to validate the discrepancy or educate staff as needed," says Knoebber. "We also have created preprinted order sets with the default being our expected behavior and process."

At Baylor Regional, a discharge instruction sheet for congestive heart failure is used by the nursing department, which contains the required discharge instructions for core measures. Additionally, a cardiology progress note was created for congestive heart failure and myocardial infarction. "This becomes a part of the attending physician's permanent record, which prompts physicians to document the required core measure indicators," says Cooper.

For other indicators related to JCAHO or more general compliance issues, scan forms may be created for documentation that can be quickly summarized for reporting. "We are also looking at a software package that will link the patient with an independent data collection tool that will allow us to document at the bedside and create task lists for staff to flag or follow up on," says Knoebber.

[For more information, contact:

Pat Cooper, Director, Health Care Improvement, Baylor Regional Medical Center, 4700 Alliance Boulevard, Plano, TX 75093. Telephone: (469) 814-6671. E-mail:

Paula Heinz, Quality Assurance Manager, Jewish Hospital, 410 South First St., Louisville, KY 40202. Telephone: (502) 587-4935. E-mail:

Tom Knoebber, Director of Quality and Performance Improvement, Mission Hospitals, 509 Biltmore Avenue, Asheville, NC 28801. Telephone: (828) 213-9194. E-mail:

Rhonda F. Walker, RN, BA, MBA, CHC, CLNC, Senior consultant, Courtemanche & Associates, PO Box 17127, Charlotte, NC 28227. Telephone: (704) 573-4535. Fax: (704) 573-4538. E-mail:]