Bill threatens Medicare quality contractors

The private firms that contract with Medicare to handle beneficiary complaints and recommend quality improvements to hospitals and other providers could see their industry fundamentally shaken up by new Senate legislation.

The legislation would deprive the contractors of their current authority to conduct investigations of complaints about medical providers while acting as consultants to those same providers. Some lawmakers, consumer advocates and regulators view these dual roles as conflicts of interest, although the industry maintains they should go hand in hand.

{mosads}Such a change would require a realignment of the quality improvement organization (QIO) industry, which would have to overhaul its business model and face new competition for the $400 million set aside from the Medicare trust fund each year for the program.

“There will be a financial impact on these organizations and jobs would be lost to some other organization somewhere,” said David Schulke, the executive vice president of the QIOs’ trade group, the American Health Quality Association (AHQA).

Senate Finance Committee ranking member Chuck Grassley (R-Iowa), along with Chairman Max Baucus (D-Mont.), last week introduced the bill after several years of increased federal scrutiny of the contractors. Grassley has said that QIOs should not function as both quasi-regulatory entities and consultants to the providers they are supposed to be overseeing.

Speaking on the floor on Aug. 2, Grassley said his bill would “separate the beneficiary complaint process from QIOs and give this responsibility to the Medicare Provider Review Organizations [MPROs], which will be required to report to the complainant and refer the provider to a QIO for technical assistance and/or the appropriate regulatory body for sanctions.”

There are 53 QIOs under contract with Medicare, all but four of which are not-for-profit entities. Most operate in a single state. The Centers for Medicare and Medicaid Services have oversight authority for the program, but it is limited.

The QIO program was created to provide physicians, hospitals, nursing homes and other medical providers with recommendations about how to improve the quality of the care they provide to patients.

QIOs also are tasked with following up on complaints made by beneficiaries. They sometimes refer those complaints to enforcement agencies, such as the Department of Justice and the Office of Inspector General (OIG) at the Department of Health and Human Services.

Investigations by Finance Committee staff and studies conducted by the Institute of Medicine (IoM), the Government Accountability Office, and the OIG, however, concluded that QIOs are more focused on their work as advisers to healthcare providers and not sufficiently zealous in representing aggrieved beneficiaries.

Grassley’s bill would create the MPROs and grant them the authority to handle beneficiary complaints. Although an existing QIO could win a contract to act as an MPRO, it would not be permitted to provide complaint services and consulting services in the same state.

The AHQA maintains that concerns about conflicts of interest are unwarranted, but that they could be allayed with smaller-scale reforms.

Permitting QIOs to disclose the results of their studies to beneficiaries without having to get the medical providers’ permission would adequately boost the transparency of the process, the AHQA said in an Aug. 3 statement.

“It’s both costly and unnecessary to create a new national infrastructure of contractors to solve that problem,” Schulke said in the statement. In a telephone interview, Schulke emphasized, “These things need to be done together.”

Schulke credited Grassley and Baucus for reevaluating the QIO program’s mission. “It’s mostly updating the law to reflect present reality,” he said, adding that the senators have “done a lot of homework.”

He denied, however, that the current system involves any conflicts of interest. A QIO’s recommendations do not vary based on whether it finds out about a potential problem with a provider’s medical practices because of a beneficiary complaint or through proactive case reviews, Schulke said.

“The quality problems are the quality problems,” Schulke said. “The things you need to do to fix them are the same things.”