NATIONAL DRG VALIDATION STUDY

QUALITY OF PATIENT CARE IN HOSPITALS

'+ SI"V'CE$. 
CI" 
"0 
"ia 
OFFICE OF INSPECTOR GENERAL 
OFFTC14. OF ANALYSIS AND INSPECTIONS 
JULY 1989
 OFFICE OF INSPECTOR GENERAL

The mission of the Offce of Inspetor Genera (OIG) is to promote the effciency, effective
progr 
ness and integrty of  in the United States Deparent of Health and Human Servces 
(HS). It does this by developing method to detect and prevent 
frud, waste and abuse. Cre
Secta 
ated by statute in 1976, the Insptor Genera keeps both the  and the Congrss fully 
progrs 
and cUlently informed about  or management problems and recommnds corrtive 
action. The OIG perform its mission by conducting audits, investigations and inspetions
with approxiately 1,200 sta strtegicaly locate arund the countt. 
OFFICE OF ANALYSIS AND INSPECTIONS 
This report is prouced by. the Offce of Analysis and Insptions (OAI), one of the thee 
with 
major offces  the OIG. The other two ar the Offce of Audit and the Offce ofInvesti
gations. The OAI conducts insptions which are, tyicay, short-term studies designed to de
terme progr 
effectiveness, effciency and vulnerabilty to frud or abuse. 
th 
Entitled "National DRG Valdation Study, Qualty of Patient Cae in Hospitas,  study 
was conducte to analyze and profie the charteristics of patients who reeived 
por qualty
car in hospitas. 
The report was prepar under the dition of Kaye D. Kidwell Regional Inspor Genera, 
and Paul A. Gottober, Deputy Regional Inspetor Genera, Region IX, Offce of Analysis and
th 
Insptions. Parcipatig in  project were the followig peple: 
Kathy L. Adm  Project Dirtor 
Lenar Czjka  Semor Analyst

Prgr 
Ruth E. Carlson  Assistat 
Wm. Mak Krshat  HeadU/rters 
Mathematical Statistici, 
David Hsia  Headuaers
Medcal Offcer, 
 NATIONAL DRG VALIDATION STUDY

IN HOSPITALS 
QUALITY OF PATIENT CARE 
RICHARD P. KUSSEROW 
INSPECTOR GENERAL 
JULY 1989

OAI-09-8-00870  EXECUTIVE SUMMARY

PURPOSE 
Th insption analyzed the qualty of patient car in hospitas under the prospective payment 
poo qualty car occured  radom 
system (PPS) based upon the (a) extent to which  in a 
samle of hospita, (b) extent to which poo qualty car vared in dierent tyes of hospitas 
The report is one of a series 
and (c) chartestics of patients who reeived poor qualty car. 
underten by the Offce of' 
in the National Diagnosis Related Group Valdation Study 
(010). 
Inecor Oener 
BACKGROUND 
frm 
Effective Octobe 1983, Congrss madated a change in Medcar payments to hospitas 
a cost-bas retrsptive reimburement system to a prospective payment system. Under 
curntly receive a fied paymnt basd upon 1 of 475 diagnosis related grups 
PPS, hospitas 
lengt 
Medicar patient dicharge, regaress of the servces provided or the 
(DROs) for each  ca 
of stay. Hospitas reta a profit when patient  costs less than the DRG payment, but must 
escalatig 
absorb losses when costs exced the DRG. The intent of PPS was to curb rapidly 
incrases in Medicar costs for acute inp tient car by givig hospitas an incentive to reduce 
seces  quaty of 
without compromising the 
lengts of stay and eliate unecessar 
detere 
patient car. Ths issue was include in the Natonal DRO Valdation Study to  the 
prevalence of por quaty .car unde PPS. Since ther ar no comparble data on the qualty 
canot iner a causal effect 
to the implementation of PPS, we 
of car in hospitas prior 
betWeen PPS and por qualty car. 
Unde contrt to the 010, boar-crted physicans with extensive experience in peer 
review identid cass of por qualty car bas on an analysis of a radom sample of 7,050 
Medcar patients discharged frm 239 hospitas betWeen Octobe 1984 and Marh 1985. 
failing to meet 
Reviewer defied poor qualty car as substada medcal car  clearly
professionaly reognd stada under any ciumstaces in any locale. 
(PROs) and the SuperPRO 
Both the utition and qualty contrl peer review organzations 
Ca 
(the contrtor which assists the Health  Financig Admnistrtion (HCFA) in monitoring 
PROs) review patient hospita stays for poor qualty car. Durg the tie of our review, 
quaty car in 0.8 percent of the cases reviewed, 
PROs nationally found evidence of poor 
reuird the PROs and SuperPRO to 
whie the SuperPRO' s rate was 3.0 percent. Since HCFA 
scens these rates have incrased substatially. 
review cases using six uniform quality 
Recent data indicate PROs identified qualty problems in 3.6 percent of the cases reviewed, 
while the SuperPRO' s rate was 9. 1 percent.  g., 
MAJOR FINDINGS 
The 010 found that 6.6 percent of the sampled patients received poor qualty car. 
hospita approxiately $1.2 billon under PPS in 
Prjected nationaly, HCFA paid 
Fis 
Year 1985 for patients with qualty of car problems. 
car 
Medcar reimburement for substadad medical 
PROs lacked authority to deny 
durg our review peod Congrss subseuently grted ths authority in the 
Ombus  (COBRA) of 1985, but regulations to 
Consolidated  Budget Reconciation Act 
ben issued 
provision have not 
imlement ths 
Even though PROs nationaly ar identing more cases of poor qualty car since they 
began using generic quaty scns, rates reportd by both the OIG and the SuperPRO 
rema  the PROs. There contiues to be wide varation among 
substatialy higher than 
PROs in the identicaton of po qualty car cases. 
Eighty peent of the reasns for por qualty car involved the omission of necessar 
adster 
faiur to  appropriate tests for proper diagnosis, 
medcal servces (e. 
drgs or therpy); other reasons included errrs leading to 
omission of necessar 
unecssar .complications or placg patients at incrased risk by providing 
unecssar serces or inadquately documentig medical records. 
Patients reeivig por qualty car wer 3 ties more liely to die, 4 ties more likely 
adtted 
to develop nosoomial inecons, twce as liely to have been unecessarly 
hospitas and 76 ties mo lily to have ben prematuly discharged from hospitas. 
Patents reeivig por quaty car wer, on the averge, 3 year olde than patients 
car. 
reivig apprprat 
had multiple quaty problems. Patients with 
reivig substada car 
Most patints 
apxitely the same numbe of prblems as those with 
shor hospita stays averged 
long hospita stays. 
ru  po 
Sma  and nonteachig hospita had higher rates of  qualty car. 
May hospitas with the highest rates of po quaty patient car also had high rates of 
unecssar adsions and prmatu discharges. 
po  car 
Six.DROs ar fruently assocated with  quality 
DRO 14 
(strkes, except trsient ischemic attcks)

DRO 15  attks) 
(trsient ischemic 
DRO 87 (pulmonar edema and respirtory failur) 
DRO 89 
(simple pneumonia and pleursy, patients over age 69) 
DRO 141 (faitig, patients over age 69) 
DRO 320 (kidney and urnar trct infections patients over age 69)  RECOMMENDATIONS 
by: 
incras its effor to identi and address poor quality car in hospitas 
The HCFA should 
givig PROs authority to 
issuig reguations to implement the COBRA 1985 provision 
deny Medcar reimburement for patients receivig substadad medical car, 
rate of poor qualty car cases than 
determg why PROs identi a substatialy lower 
010, 
either the SuperPRO or the 
diagrment rates betWeen PROs and the SuperPRO for 
developing acceptable 
identid cass of por qualty car, 
incortig reonciation of high disagrement rates into PRO performance 
contrcts, 
evaluaons for consideration in renewal of PRO 
anyzig qualty. review prtices of PROs with low disagrement rates to identiy 
be use to assist other PROs and 
exemplar modls and best prtices which could 
reuig tht PROs contiue to improve their identification and follow-up of cases 
involvig por qualty patient car in o  to better taget problem hospita and
physicians. 
COMMENTS 
dr 
HCFA disagres with our methodology for 
Tdhee HtCeFgA c ommentea on our  report Whilea grs 
po quaty car, it  that PRO performance should be 
the incidence of 
imved and has taen severt hiem repoomtm aenctdioantiso nto  stheatito enf feocf tt. h.It sr ewprotrtt na ncdo imnm denettas  ianr  
prsente in gener followig 
presente in the comments 
nmm;JT) of HCFA's subseuent actions also is 
appendi O. A s
setion of ths report  ............... .............................
;..

. .. . . . . . . . .. .  . .. .  . ... .   . ... .   . ... .   . .... .    . .... .  .  . .. .. .  .  . .. ...   .   ... ...  .    .. ....  .    .. ....  .    .. ....  .    .. ....  .    .. ....  .    .. ....  .    .. ....  .    .. ....  .    .. .....
. . ..  ..  ..  ..  ..  .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .  . .. .  . ...    ....    ....  .  .. ..  .  .. ..  .  .. ..  .  .. ..  .  .. ..  .  .. ..  .  .. ..  .  .. ..  .  .. .  . .. .  . .. .  . . . . . . . . . . . . . . . . .  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  .
TABLE OF CONTENTS 
Page 
EXECUTIVE SUMMARY 
INTRODUCTION 
FINDINGS 
car 
Mor than 6 percent of the patients reeived poor qualty 
bilon for fiscal year 
UDde PPS at a national cost of 1.2 
(F 
1985 ..................................... 

. . . . . . . . . . . . . . . . . . . . .4 
hospitas. . . 
Rates of por qualty car cass var among 
receivig substada car had multiple qualty of 
Most patients 
car prblems regaress of their lengt of stay in a hospita. . 
the 
Most of the reasons contrbutig to poor qualty car involved 
omision of necessar medcal seces 
Patents reivig por qualty car were at higher rik of death, 
contrtig 
nosocomial inections and being unnecessary
adtt 
or prematuly discharged from hospita 
po qualty car 
wer at incrased rik of receivig 
Olde patients 
durg 
their hospita stays. . . . . . 
po 
qualty car . 
Taretig DROs identied cass of 
RECOMMENDATION. 
COMMENTS. 
APPENDICES 
Appendi A:  Comparson of hospitas by number of poor qualty 
car 
cases: bed size effect 
Appendi B:  Comparson of hospitas by number of poor quality 
car cases: ruurban location status  Comparson of hospitals by number of poor quality 
Appendi C:

car cases: profit/nonprofit status 
qualty 
Comparson of hospitals by number of poor 
Appendi D:

car cases: teachig/nonteaching status 
Samplig and methodology 
Appendi E: 
poor qualty

Appendi F:  Distrbution of hospitas by number of 

car cases

with 6+ poor quality care 
Appendi 0:  Charteristics of hospitas 
cases 
car 
numbers of qualty 
Distrbution of patients by 
Appendi H:

prblems 
lengts of 
Appendi I:  Comparson. by tye of hospita: Average 
goo quality car 
stay for patients receivig poor and 
of car problems 
Appendi J:  Reasons for qualty 
Dischae diposition for patients reeiving poor and 
Appendi K: 
goo qualty 
ty  age of 
of hospita: Average 
Appendi L:  Comparson by 
goo qualty car 
patients reeivig por and 
ty  age of 
of hospita: Average 
Comparson by 
goo qualty car 
deceased patients reeiving poor and 
Appendi M:  Overrpresentatio  of por quality car cases in most 
fruent DROs 
diagnostic category 
Appendi N:
 Poor qualty car cass by major 
drt 
Appendi 0:  HCFA co  ents on the  report  INTRODUCTION

frm 
to hospitas 
madated a change in Medicar payments 
Effective Octobe 1983, Congrss 
bas retrsptive reimburement system to a prospective payment system (PPS). 
a cost-
1 of 475 diagnosis related 
Unde PPS, hospitas curntly reeive a fied payment based upon 
provide or 
for each Medcar patient discharge, regardless of the servces 
grups (DROs)
 less than the DRG payment 
lengt of stay. Hospita reta a preoxfcite we htehne  pDaRtieOn.t  Tcahre  cinostetns t of PPS was to cur the rapidly 
but must absorb losses when costs 
incentive 
Medcar costs for acute inpatient car by givig hospitas an 
escalatig incrases in 
servces without compromising the qualty 
to reuce lengts of stay and eliate unecessar 
of patent car. 
(010) ha underten a number of intiatives to evaluate the 
The Ofcc of Inspto Gener 
010 has completed 
effects of PPS on hospta behavior and medcal practices. To date, the 
neoplasms) and DRG 88 
(strkes), DRG 82 (respirtory 
valdation studies ofDRO 14 
(chrnic obstrctive pulnar disease), as well as inspections on beneficiar notices under 
(PROs) in 
PPS and activity by the utition and qualty contrl peer review organiztions 
identig  handlg  transfers. The OIG also has conducted 
and  inapprpriate dicharges and 
conttcts. 
pre-awar audits of the PRO and SuperPRO 
hour 
Cunt effor undeay include an audit on patient hospita stays of less than 24 
(excludig deths), an ongoingi anusdipt oofn M  edcar ppreorffitosr imQ. hcoes hpaista psr uonuecre dPP tSh ean df iaa ls trtedpyo orft  
(caac arst). An  of PRO 
DRO 129 
on quaty review, sanctions activities and PRO effectiveness. 
pattrns of 
the National DRO Valdation Study, which analyzes 
Another major intitive is 
PPS. The stdy is bas on an analysis of extensive data compiled by 
hospta behavior unde  contrt to the 010. Ths 
trhee H eth Dat Institute (H!) of Lexigton, Masachustt, unde 
sees generate frm the National 
one in a 
on thc quaty of patcnt car in hospita is  prematu 
repo in  such as 
DRO Valdation Study. Other  ths series focus on issues  adsions 
hospita  and 
dischares frm hospita, the accur ofDRO codg, unnecessar 
shor hoSpita stays. 
BACKGROUND 
car providers, Congrss, and public interest grups have 
Since. the inception of PPS, heath 
expsse conce that patients ar at incrased risk of reeiving por qualty car. The 
car. The 
enacted legislation designed to improve quality of 
Congrss has held heargs and 
symposium and 
Ca 
Heath  Financig Admstttion (HCFA) has conducted researh, held a 
pape adssing a rage of quality of car issues in its 1987 annual 
compiled a summar of 
Health Car Finacing  Since December 1987, HCFA has released
seg  Review. 
supplement to 
 Medcar patients. Severa organizations, including the 
death rates in hospitas 
Prspective Payment 
Technology Assessment, the 
Genera Accountig Offce, the Offce of 
Rad Corporation (under contrt to HCFA) and the National 
Assessment Commssion, the 
Acadmy of Science s Institute of Medicie have initiated studies addssing varous quality 
of car issues.
 car in hospitas is not new to PPS. Pror to PPS, the 
Concern over qualty of patient 
stada  requied 
professional  review organzations (PSROs)  hospitals to 
fedray madated 
conduct speci studies focusing on specic qualty of car issupersi. aSrh orty after the 
responsibilties is to 
implementation of PPS, PROs replaced PSROs. One of their 
identi and 
assess the qualty of patient car in hospitas. The extent to which PROs  tie 
follow-up on po qlialty car caes vares widely. BetWeen July 1984 and June 1986, a 
fre 
PROs reviewed 46 percent of the 15 
which encompasses the period of ths study, 
detered  qualty 
mion PPS dischares and  that 0. 8 percent of the patients received poor 
PROs repo that 36 percent of the 54 PRO-designated aras had no patients with 
car. The 
Medicar reimburement for poor 
qualty of car problems. PROs lacked authority to deny 
qualty car.

tag 
ar  strngten PRO identication, follow-up and use 
Both Congrss and HCFA  steps to 
of penalties for cas of por qualty car: 
Reconciation Act of 1985 (COBRA) gave the 
The Consolidated Omnbus Budget 
substada car. 
PROs statutor authorty to deny Medcar reimburment for 
The HCFA reuid PROs to use si unbifeogrmi gsc rens, commonly referr to as generic 
qualty scns, for every case review  with their second contrct period 
fuer 
(1986-1988). The scns wer  refied in November 1987. 
the 
The HCF A is reuig PROs to assign one of  specified severity levels to 
identied cass of po quaty car durg their third contr period (1988-1991). 
Cove  tan with  tie fres to improve follow-up. 
acon must be  specied 
meaur  Apr 
PROs must implement these  by  1989. 
Curntly, PROs review a 3 percnt radom sample of Medca discharges frm  acn hospita
with  to meet other monitorig responsibilties. 
their jurdictions, plus adtional cases 
car. 
Usig the generc scns, PROs review al cass for apprprite qualty of 
SysteMetrcs, a contrtor bett known as the SupeRO, is respnsible for assistig HCFA 
in monitog PRO perorce. The SuperPRO selects a.rdom sample of cass reviewed 
scnig 
by eah PRO and, usig the sam  crteria, conducts its own quality reviews. 
OBJECTIVES 
The purse of th study was to exame the qualty of patient car under PPS, includig the 
ca occur among Medicar patients, (b) extent to which 
(a) extent to which por qualty 
po qualty ca vared in dierent tys of hospitas and (c) charteristics of patients who 
reived po qualty car. Since there ar no comparble data on the quality of car in 
hospita pror to the implementation of PPS, we cannot infer a causal effect between PPS and 
poo quality car.  METODOLOGY 
010 sampled 7,050 Medicare patient records from 239 
Using a tWo-stage cluster design, the  hospita which 
stred 
hospitas  by size. The sample included roughly equal numberbs eodf ). Patient 
be),  beds) and large (300+ 
wer sma  medum (100299 
(under 100 
dischares occur between Octobe1984 and March 1985. 
car. Poor 
assess the quality of patient 
contrte 
The OIG  with physicians and nures to  faig to meet professionaly 
qualty. car was defied as substada medcal car  clearly 
reogn stada  ciumtaces in any locale. 
under any 
nurs 
When 
medcal reord for evidence of poor qualty car. 
Regite nurs scned  refer  reord to boar-certed physicias 
the medcal 
identied quaty problems, they  ignore 
pe review for a fial determation. Physicians 
wmith eaxt ensive exprience in  about 
dierences in medcal judgmnt 
prblems or cases involvig honest  was so por that 
ca 
apprate  management. If doumentation in the medcal record 
reviewer could not determe whether there were quality problems, the patiesnutm wmasares 
conside to have received approprte car. Physicians prepared nartive  once, 
s qualty problems. A parcular problem was counted only 
outlg eah patient  ties it occu durg a patient s hospita stay. A patient with 
regaress of the numbe of  durg the hospita 
therefore, expenced eight diecreontn pfrogbl ems 
eight quaty prblems,  nmmar,  the conclusions of medical 
case s
stay. An 010 physician evaluate each 
substada car. 
reviewer on cass of 
be 
st  ca by  size, 
reeived poor qualty 
The 010  analyze hospita whesr tpaat entst eachig/nontehig statu. We also analyze 
uranlocaton,  and 
prfit/nonprfit  ocurg 
po qualty cass  in its patient sample: 
numbe of 
each hospita by the 
ummar of the data appear in appendices A 
(a) none, (b) 1-2, (c) 3-5 and (d) 6 or more. A s goo car. We use 
thugh D. In adtion, we compar patients receivig poor and 
weighte to adjust for differnces in the si of hospita or patient 
averges and peentages  wer bas on (a) the rate and averge cos(t Fof  cases with poor 
grupings. Fisal pijectio 1985. Appendi 
PPS discharges in Fiscal Year 
qualty ca by hospita siz and (b) tota 
fuer inormtion on the study methodology. 
E prvides  FINDINGS

QUALIT CARE
PERCENT OF THE PATIENTS RECEIVED POOR 
MORE THAN  BILlON FOR FISCAL YEAR (FY) 1985
$1.2 
UNDER PPS AT A NATIONAL COST OF 

46  substada medcal 
The OIG found that  patients (6.6 percent) in 159 hospitas received 
identied 
010 fmdig is substatialy higher than the rate of poor qtuial ity car cases 
car. The 
period
by the PROs (0.  peent) or SuperPRO (3.0 percent) for the same 
by the PROs and SuperPRO has 
Although the number of por qualty car cass identied 
HCFA data comparg 
incrased substatialy sice they began using generc qualty screns, 
nationaly 
the fidigs of the PROs and SupePRO (October 1987) indicate that PROs 
durg  four 
hal as may por qualty car cass (i.e., 3.6 percnt)  the 
identied only about 
reviw  contiues to be wide varation in the 
cycle as the OIG found in FY 1985. There 
identication of por qualty car cases among PROs and high discpancy betWeen the 
fidigs of the PROs and SupePRO. The SupePRO, using the same crteria as a PRO when 
car problems in 9. 
of that PRO' s qualty reviews, reported quality of 
reviewig a sample 
peent of the cass reviewed. 
Prjecte nationaly, HCFA paid hospitas approxiately $1.2 bilion under PPS in FY 1985 
for patients with qualty of car problems. Although the PROs lacked authority to deny 
payment for substada car at that tie, Congrss subsequently grted ths authority. The 
HCFA has not issued regutions to imlement ths legislation. 
RAES OF POOR QUAl CAR CASES VARY AMONG HOSPITAL 
As the fonowig char indicates, the 010 identied a wide varation in the rates of por 
quaty car cass in hospita. Although medcal reviewer found no instaces of por qualty 
5 peent), 21 hospita (8.8 peent) had at least 6 cases of poor 
car in 80 hospita (33.
hospita, more than 
quaty car (20 peent or more of their sampled patient records). In one 
detaed breakout of these 
sampled patients reived substada car. A mor 
hal the 
hospitas appear in appendi F. 
DISTRIBUTION OF HOSPITALS BY NUMBER OF 
POOR QUALITY CARE (QC) CASES (N=239) 
Cas  # Hospitals  Percent 
# QC 
33. 
1- 2  40.
3 - 5  17. 
6  . ........ ............ ............ ..........................................."... .............. ....... .........................".
Types of Hospitals 
in term of hospita bed size, urbanrual 
cases of por qualty car 
The 010 sta analyzed 
location, profit/nonprofit status and teaching/nonteaching status. 
Bed Size. Sma hospitas had the highest overal rates of por qualty patient car (11.4 
peent, compar with 5.  peent in medum hospitas and 3.5 percent in large hospitacsa).r  
Th trnd  comparg hospitas by frquency of poor quality 
is more pronounced when  lare 
medum and 
fonowig table indicates, more than 40 percent of the 
cass. As the 
7 percent of smal hospitas. In 
of car prblems, compard with 12.
hospita had no qualty 
lae 
1.3 perent of the  hospitas and 5 percent of the medium hospitas had 6 or 
contrt, only 
compar with 20. 
mor po quaty car cases (at least 20 percent of their patient sample), 
sm 
the  hospitas. 
pe cent of 
COMPARISON by BED SIZE: 
FREQUENCIES of POOR QUAUTY CARE (QC) CASES
N=239 
Hoit 
Peren of 
-............ 24i.".."....

2QC 
3-SQC 6+ QC
OQC 
C Sm (Na79 EJ Medium (N=8O IS Lage (N=80) 
car 
overa rates of poor qualty patient 
Urbailural Loction. Rur hospitas had higher 
hospitas). Agai, this trnd is more 
7 peent, compar with 4. peent in uran 
(10.
comparg hosita by fruency of poor qualty car cass. As the 
prnounced when 
fonowig table indicate , 42.2 peernot o f the uran hospitas had no qualty of car problems, 
of the urban hospitas had 6 
compar  6 peent of the  hospitas. Only 2 percent  ru 
with 19.
hospitas. 
or mor poor qualty car cass, compar with 19.6 percent of the  .. ........... ..........  ... .......................... .... ..........................................................................................................:...:.:...: ....... :?....:.; .. : ....... :.':...:.:..... ...........................................................
COMPARISON by RURAUURBAN STATUS: 
QC) CASES 
FREQUENCIES of POOR QUALITY (.
N=239 
Hopit 
Percent of 
2 QC 
6+ QC
OQC  3-5
Urb 
a Rur (N=92 IS  (N=147) 
sim 
Over  were  for profit 
rates of poor qualty car cases 
Prtit/onprofit Hospitas. 
comparg 
(5.7 peent) and nonprfit (6.7 percent) hospitas. Ths was also tre when 
ca 
cases In both tyes of hospitas. 
fruencies of poor qualty 
COMPARISON by PROFIT/NONPROFIT STATUS: 
FREQUENCIES of POOR QUAUTY CARE (QC) CASES
Per  Hoit  N=239 
of 
................4.

2 QC 
3- QC 6+ QC
OQC 
Pr  Nopr 
tJ  (N=23 m1  (N=216) 
overal rate of poor 
TeachingIonteaching Hospitals. Nonteaching hospitas had a higher 
Again, this 
qualty  CI.  peent compard with 3.0 percent in teaching hospitas). 
trnd is cma caossr e pronounced when comparg hospitas by fruency of por qualty car cases. 
car 
quality of 
followig table indicates, 49.2 perent of the teachig hospita had no 
. the 
Only 1.6 percent of the 
peent of the nonteaching hospitas. 
prblems, compard with 28. 
tehig  por quality car cass, compar with 11.2 percent of the 
hospitas had 6 or more 
nonteachig hospitas.  .......... ...... .... ........ . ... ......... .... ............. ............ ........... ..............................................
COMPARISON by TEACHING/NONTEACHING STATUS: 
(ac) CASES 
FREQUENCIES of POOR QUALITY CARE 
N=239 
Percent of Hospital 
49. 
Ut. 
40 ... 
10 ... 
2 QC 
3- QC
OQC 
a Teaing (N=61) 1m Nonteaing (N=178) 
Other Prblems in Hospita With High Rates of Poor Quality Care Cases. The 
mor por qualty car cases treate only 8.8 percent of the patients in the 
hospitas with 6 or 
adssions, 
050 cases), but they accounted for 15.3 percent of the unnecessar 
fu samle  (J  prematu  2 percent of the poor quality car cases. 
46.0 percent of the  discharges and 38.
Addtiona inormtion on these hospitas can be found in appendi O. 
QUAL 
MOST PATIENTS RECEIVING SUBSTANDAR CAR HAD MULTIPLE. 
OF  CAR PROBLEMS REGARLESS  OF  THEIR LENGTH  OF STAY IN A HOSPITAL 
contrbutig to the substada car received by the 
Reviewer found 1,331 prblems 
patients in the sample. As the following table indicates, only one-four of the patients had a 
sigle qualty of car problem. The rage ra as high as 16 dierent problems for 1 patient. A 
more detaed breakout of the number of qualty car problems per patient appear in appendi 
DISTRIBUTION OF PATIENTS BY NUMBERS OF 
aUALITY CARE (aC) PROBLEMS 
(1331 Problems in 464 Patients) 
# Patients  Percent 
# QC Problems 
115  24. 
225  48. 
2- 3 
19. 
4- 5 
10 - 16  1.3
 was higher for 
Over, patients averaged 2.9 problems. The average number of problems 
patients in sma hospitas (3. 1) than patients in large hospitas (2.4). Patients in 
mor problems (3.2) than patients in uran hospitas (2.6). 
hospitas also averged 
profit/nonprofit and teachig/nonteaching hospitas were negligible. 
Diferences betWeen 
reeivig po qualty car who had short hospita stays averaged approximately the 
Patients 
num  patients who 
same  of problems as those who had long hospita stays. For example, 
hospita 
6 problems, while patients with 
spnt less than 4 days in the hospita averaged 2.
9 problems. 
staysof 14 to 77 days averaged 2.
or teachig facilties, the average lengt of stay (ALOS) 
In hospitas clasifed as lare, urban 
for patients reeivig substadrau m edcal car was 2.5 to 3 days longer than patients 
reivig  tre where por qualty ALOS 
approprte car. In  hospitas, the opposite was  siar 
was 2.3 days shorer. The ALOS fosr ppatcie nts reeivig goo and poor car was 
appendi I. 
other tys of hospitas. For more  deta, see 
QUALIT CARE INVOLVED 
MOST OF THE REASONS CONTRIBUTING TO POOR 
THE OMISSION OF NECESSARY MEDICAL SERVICES 
po  fell into four classifcations:
Reasons for  qualty car, ilustrted with tyical examples, 
A patent with a histor of epilepsy, well contrlled by 
Necessar care omaitted. dtt  attk. Whe under car for 
medccaaon , was  otor th e hospita suferig a hear 
for contiuation of hi medcation to contrl the epilepsy 
his  condietiron.,  an  af  seiz, 
adssion,  the patient fell 
was omitt in  The day  as a result of a 
be an 
out of  broke his leg. 
A patient underwent successfu surgery 
E"ors contbutng. to 
complicatons in care.  faiur. A 
for an aoc aneursm. Faiur to propely monitor fluid levels led to kidney 
prur  a bloo clot on the inside 
necessar to diagnose the kidney faiur dislodged 
of th ao wher the surger had ben performed The clot blocked an arery, and the 
patien  s right leg had to be amputated.  adtt 
A patient was  to the 
Unncessar care placing patient at increased rik. 
weakess. The only tratment for 
hospita with jaun  ce, excess abdominal fluid and 
morhie injections, which would not have relieved
the patient s condition consisted of 
frm the 
any of the symptoms. The patient was placed at potential risk of side effects 
drg. 
plaing patient at 
Inaquate daocdumtntt atin o/the medical record  increased risk. 
patient was  to the.hospita after faling and breakng both hips. The physician 
resulte frm faiting due to poor bloo cirulation to the bran. 
diagnose that the fal 
ordred tests to 
documentation in the medical record that the physician 
Ther was no 
Failur to document the patient 
rue out other possible explanations for the fall. 
inaccurte medcal diagnosis and tratment. 
problem properly could have resulted in an  omision of 
As the followig char indicates, most of the 1,331 quality problems involvqeuda tlhtye  car appear 
detaed breakout of reasons for poor 
necssar mecal servces. A more 
in appendi 
REASONS CONTRIBUTING to POOR QUALITY CARE 
N=1331 
always the predomiant reason for 
Among hospita, the omision of necssa seces was 
approxitely 8 out of 10 qualty prob
po quaty ca. As the followig tale indicates,  th  tre regaress
nontehig  into  category. Ths was 
lem in  and  hospita feU 
sm 
hospita wer prfit or nonprfit. 
of whether 
REASONS CONTRIBUTING TO POOR QUALITY CARE 
BY TYPE OF HOSPITAL (PERCENT) (N=1331) 
Necy
Unnecesry Inade
Car  quate 
Cae  Compli
Varble  Omitted  cation  Provided  Doc 
4.4  100 
Small  803  83. 
Medium  330  77.  10.  9.4  100 
100 
Large  198  67.  22. 
100 
Rura  871  83. 
100 
Urban  460  72.  15. 
100 
Teaching  148  67.  18. 
100 
Nonteach.  183  81.  10. 
100 
Profit  110  80. 
100 
Nonprofit  221  79.  11.  WERE AT HIGHER RISK OF DEATH, 
PATIENTS RECEIVING POOR QUALIT CARE 
BEING UNNECESSARILY AD
CONTRACTING NOSOCOMIA INFECTIONS AND 
Ml7ED OR PREMATURELY DISCHARGED FROM HOSPITALS 
Overa, 16.4 percent 
Patent receiving poor quality care were three times 17re likly to die. 
compar with 5. 
died durng their hospita stays, 
of the panents reeivig por quaty car 
pent  reeivig approprite car. For a breakout of patient discharge 
of the patients 
dispsitions, includig deth, see appendi 
receivig poor qualty car 
As the followig table indicates, the death rate amongr upa,ti ents 
ty  in smal,  profit and nonteachig hospitas. 
vared by  of hospita with higher rates 
COMPARISON BY TYPE OF HOSPITAL 
aUAUTY CARE (aC) WHO DIED 
PATIENTS RECEIVING POOR 
TOTAL  #QC 
DEATHS  DEATHS 
CHARCTRITIC  (N::22)  (N=76)  PERCENT 
25. 
Sma  127 
18. 
Medum  148 
Lae  167  10. 
Rur  157  28. 
11.2 
285 
Urban 
25. 
Prfit 
Nonprfit  418  16. 
Teachig  125 
20. 
Nonteachig  317 
Patent receiving poor quaity care were four tis as likely to deelopc nao socomial 
Over, 21.3 percent of the patients reeiving por qualty  contrcted 
innfeoctiosnso. comial inecons (i.e., infections acquir durg a hospita stay), compar with 4. 
pent  the followig table indicates, there was 
of the patents reeivig apprprate car. As 
infections, regaress of 
a strng relationship betWeen poor quality car and nosocomial 
hospita charcteristic.  COMPARISON BY TYPE OF HOSPITAL 
PATIENTS RECEIVING GOOD AND POOR QUALITY CARE 
CONTRACTING NOSOCOMIAL INFECTIONS 
CAR 
GOOD 
POOR CARE 
% NOSOC
% NOSOC.
INC. 
INC. 
CHARCfRlTICS  (N=464)  (N=6,586) 
Sma  259  13.  017 
Medum  122  21.4  2,266 
Lae  32.  303 
Rur  285  14.4  391 
179  27.  195 
Urban 
650 
Prfit 
Nonprfit  425  22.  936 
37.  770 
Teachig 
17.  816 
Nonteachig 
adtted to hospital 
Patent receiving poor quait care were tWice as likly to be 
wer unecessar 
Of those patients reivig por quaty car, 19 percent 
uancedssarlsy. ions, compar with 9.9 peent of the patients reeivig appropriate car. Twelve 
pent of the 740 unecessar adssions in the study sample received por qualty car. 
prematUely
Patent receiving poor quaity care were more tha  76  times as likely to be 
4 pecent also 
Of those patients receivig poor qualty car, 13.
dichagedfrm hospita. 
 frm hospitas, compar with only 0. 18 percent of the patients 
wer dischared prematoly 
prematu discharges in the study 
four percent of the 74 
reivig apprprte car. Eighty-
sample ha quaty of car problems. 
QUAL 
OLDER PATIENTS WERE AT INCREASED RISK OF RECEIVING POOR 
CAR DURING THEIR HOSPITAL STAYS

the average, 3 year older (76.8 year) than 
Patents reiving poor qualty car were, on 
strng relationship betWeen age 
patients reeivig approprte car (73.8 year). There was a 
and por qualty car, regardless of hospita varable (see appendi L). 
hospita revealed a simlar trnd. The average 
Aagne a ogfe d ceoemapsadr spoant ioenf tpsa wtiehnot sr ewehivo eddie pdo ino  ca was 80.  yea; the average age of deceased
was 
patients who reeived goo car was 77.6 year (a difference of 2.5 year). This trnd 
also tre acss most hospita varables (see appendi L).  POOR QUALIT CAR
OF 
TARGETING DRGS IDENTIFIED CASES 

2 percent) occurdt aht  least 
At the tie of our review, there were 468 possible DRoGcs;c 3u5r2  (75.
of po qualty car  in approximately one-
once in the study sample. Caes  occur 
which  in the 10 most 
these DROs. The 010 sta analyze poor qualty car cases 
as well as DRGs which had (a) the highest numbers 
fruent DRGs in the fu patent saple,  occur 
po quaty car cass (at least 10 cases) and (b) high rates (poor qualty car 
of  intermedar. 
on DRGs assigned by the fiscal 
nt of the tie). Analysis was based 
leat 10 

the 
Poor QuaDty Car Among the Most Common DRGs in the Patient Sample. Among 
occur most fruently in the sample, poor qualty car cases were 
10 DROs which  reeivig 
overprsente Collectively, these 10 DRGs represent 41.6 percent of patients 
reeivig goo 
po quaty car, compar with 31.3 percent of patients  qualty car. 
frquent 
goo qualty car cases among the most 
Appndi M lits a breakout of por and 
DROs. 
followig table lists 
DRGs. With the Highest Numbers of Poor Quality Care Cases. The 
car 
cases. These 
the 12 DROS which ha4 the highest absolute numbers of poor quality 
mir  were among the 20 DRGs which 
DRGs closely  the most common DRGs (al 12 
occu  the samle). For example, DRG 89 (simple pneumonia and 
most fruently in 
was the 
car cases and 
pleursy, patients over age 69) had the highest number of poor quality 
DROto occur in the study sample. 
second most common 
(MCs). MDCs ar classifcations of 
Al DROs fal into 1 of 24 major dignostic categories 
meca  system. Ther was at least 1 cas of po qualty car in 21 of the 
MDCs, bpurtb hleam so fb tyh eo praon  quaty car cas fell into 3 categores: (a) ciultory system, 
respir  breout of por qualty car cases by 
system and (c) digestive system. A 
(b) 
MDC classication appear in appendi N.  DRGS wr mGHE NUERS OF POR QUALIT CARE (QC CAES 
TOTAL 
DESClON  CAES  SAMLE  CAES 
DRG 
SILE PNONI AN PLEY, PATI 
351  10. 
OVE AGE 
HEFAIUR AN SHOC  388 
127 
STOKE, EXCEPT'IISCHC ATIACK  217  12.4 
PAT 
182  TDIGRES  DISRDER.  OVE AGE 245 
ISC 
ATIACK  146  11. 
CHPAI  261  6.1
140 
MIOUS 
NUONALAN  MEABOUC 
DISORDER, PATI OVE AGE  173
ICNEYAN URARY1RcrINcrONS,
PAT
107  11.2 
OVEAGE 
AS 
BRONCH AN  PATI OVE 
179 
AGE 
141  FAIG, PATI OVE AGE 69  12.
PULONARY EDEM AN REToRY FAIUR  11.
GASOINAL HEORRGE. PATI 
174 
113
OVEAGE 
Cas. 
The followig table descrbes 
DRGs with the Highest Rates of Poor Quaity Care 
15 DROS wher at least 10 percent of the catsis sre flecte por qualty car. (Te table 
occm  may of 
excludes DRGs which  less than 30  in the fu sample.) Although 
these DROs had lower number of por quality car cases than the DRGs listed in the 
predg 
table  of receivig poor quality
patients with these DRGs had the highest
 likelihood 
DRG 416 (bacterial bloo infections) had the highest rate of poor quality 
car. For example, 
car cass (17.7 perent).  ., 
- , 

:::: :::::::::: :.::::::;:::::: : ::::;.::::::::::::: ::::::::::::::.::::::: :::::: :: :::::::::: ::::: :::: ::::::;::::::: :::::::.::::::::::::::::::::::::::::: :::: ::;;::;::;:;::;::::::::;: :::: :::::::::: ::::: :::: ::::::: :::::::;:::::: :::: :::::: :::: ::::::::: ::::::::: ::::: :;:::; :::::::: :: ::::::::: :::;:: :::::; ::::::::::::::::::::::::::::::: :::::::::::; ::::::.:; ::,:;:;:::::::::::::::::::::;::::::::::::;:::::::;::::::::::::::::; ::;:::;;::;: :::::::::::;:::;:;:::::::;:::::;:::::::.
wmTH mGHE 
DRGS  RATE OF POR QUALIT CARE (QC CASES 
(N=46 
# OfQC Tot 
DRG  DESCRON  MDC  Cas  Sample 
416  BACIBLOOD INCIONS. PATI OVE AGE 17  17. 
DEA BYHE 
123  ATrACK  16. 
SEI.I 
HEACH PATI OVE AGE 69  15. 
DIGB 
172  MAGNANC1 PATI OVE AGE 69  13.5 
KINBFAI 
316  wrOUTDIAYSI  13.3 
PAT 
FAIG,  12. 
141  OVE AGE 
EXCBTRSIJSC 
S'OKE,  ATICK  217  12.4 
wr 
144  HBDISRDBR  COMPUCA110NS  12.1 
AIOSOS. PAT 
132  OVE AGE  11. 
TRISCHC 
ATCK 
146  11. 
KINEY.I URARY1RCrINCIONS, PATI OVE AGE 69  107  11.2 
180  GASOINAL OBSUCION, PATI OVE AGE  11.1 
PUONARYBDBM.I RETORY FAIUR  11. 
134  1n1"iRICrSlON  PI.  10.3 
SILE PNONI.I  PATI OVE 
AGE  351  10. 
Sixt DeR Os appe in both tables, indicatig they occur fruently as poor qualty car cass 
in  of absolute numbe and also had high rates of por qualty car. These DRGs, 
po 
reprsentig 23.9 percent of the  qualty car cases, include: 
DRO 14  (strkes, except trsient ischemic attcks) 
DRO 15  (trsient ischemic attacks) 
DRG 87  (pulmnar edma and respirtory failur) 
DRO 89  (simple pneumonia and pleury, patients over age 69) 
(faitig, 
DRO 141  patients over age 69) 
DRO 320  (kidney and urnar trct infections, patients over age 69)  RECOMMENDATIONS

PATIENTS RECEIVING 
IMPROVE PRO IDENTIFICATION OF CASES INVOLVING 
POOR QUAUT CAR IN HOSPITALS 
FIING: 
The 010 found that 6.6 percent of the patients sampled in the National DRG 
Valdaon Study reeived  Although the number of poor qualty car cases 
pionr cquradlt y car. 
identied by the PROs has  substatialy since they began using generic qualty 
scns, reent data indicates that nationaly they identied only about hal as many cases (3. 
pent) as wer found in the 010 study. The SuperPRO alo found a much higher rate of 
po quaty car cass (9. 1 percent). There contiues to be wide varation in the 
po 
identication of  quaty car cases among PROs and high discrpancy betWeen the 
fidigs of the PROs and SupePRO. 
Dug 
the peod of our revi w, PROs laked authorty to deny payment for poor qualty car. 
They wer grte th authorty with the enactment of a COBRA 1985 provision. 
th 
meaur 
Reguations to implement  have not been issued 
car 
Hospita and patient charterstics assoated with poor quality  include: 
ru 
Sma,  and nonteachig hospitas had higher rates of por qualty car cases. 
Hospita with the highest rates of por qualty patient car (20 percent or more of their 
reor) 
led patent  accounte for only 9 percent of the patients in the sample, but
ha 
15 peent of al unecessar admsions, 46 peent of prematu discharges and 
38 pent of the por quaty car cases. 
Patients reivig po quaty ca wer 3 ties. mar likely toa ddie,t 4t t ies more likely 
to develop nosoomial inecons, twce as liely to have been  unnecessary to 
hospita and 76 ties mo liely to have ben dischared prmatuly frm hospitas. 
Most patients reeivig substada car had multiple qualty prblems. Patients with 
apprxitely 
shor hospita stays averged  the same number of problems as patients 
with long hospita stays. Eighty percent of the reasons contrbutig to po qualty car 
involved the omission of necessar medical servces. 
Patients reeivig poor quality car were, on the average, 3 year older than patients 
reeivig appropriate car. 
Six DRGs were assocated  por qualty car. 
fruently with  adss 
RECOMMNDATION: The HCFA should incras its effort to identify and  poor 
qualty car in hospitas by: 
implement the COBRA 1985 provision givig PROs authority 
issuig the reguations to 
substadad 
to deny Medcar reimburment for patients receiving  medical car, 
deteg 
why the PROs identi a substatially lower rate of poor qualty car cases 
010, 
than either the SuperPRO or the 
developing acceptable diagrment rates between the PROs and SuperPRO for 
identied cass of poo qualty car, 
incortig reonciation of high disagrment rates into PRO performance 
contrts, 
evaluaons for consideration in renewal of PRO 
anyzg  praties of PROs with low disagrement rates to identiy 
qualty review 
exemplar modls and best  be use to assist other PROs and 
prtices which could 
cass 
reuig that PROs contiue to improve their identication and follow-up of 
assote 
with por qualty patient car to better taget problem hospitas and 
rates
include focusing on (a) 
physicis. Appraches might  tyes of hospita with high 
of patients reeivig por qualty car, (b) DRGs which ar fruently assocated with 
po quaty car and (c) patients at highest risk of receiving poor qualty car. 
I1ACT:  approxitely $1.2 bilon in 
The 010 estites that HCFA paid hospitas 
maum 
savigs 
1985 for patents with quaty of car problems. Th amunt represents the 
th could be achieved thugh imlementation of reguations alowig PROs to deny the 
enti  substada  the reguations would 
DRO payment for  patent car. Implementation of 
stada 
plac the burn of enforcg goo qualty car  upon hospitas. and physicians. We 
stada 
exp th the inCidence of por quaty patient car would decras as qualty 
incrase.  COMMENTS

drt report Whe HCFA agred with, and has taen 
The HCFA provided comments on our 
prary 
action on, most of our reommndations, it took issue  with the methodoloy we used 
to evaluate qualty car, Le., medical record review absent personalzed dtihcu ssion with 
attndig physicians. We wer awar of these concerns when we began  inspection and 
instcte  where there was 
the medcal reviewers not to count as poor qualty car any cas 
whatsver. Thus, we tred to weight the review to factor in what would have 
any doubt 
occm had we emulate a localze PRO review. (Appendi 0 contas HCFA's detaled 
wrttn comments.

The HCFA ha taen the followig actions which respond to our recommendations: 
The HCFA issued a Notice of Prposed Rulemakng (NRM to give PROs the 
Medar reimburement for patients who reeived substada 
authorty to deny 
medal car. Ths reguaton is scheduled to beome final in August 1989. The NPRM 
incortes  resultig in savigs of $550 
an estite PRO denial rate of 1 percent, 
mion over a 5-year period 
The HCF A has implemente a positive proedur change to determe why the PROs 
identi a  por qualty car cass than either the SuperPRO or 
substatialy lower rate of 
the 010. Specaly, HCFA has expande its regional sta expere and has 
imlemente a re-review press to analyze and act upon the dierences betWeen the 
fidigs. 
PRO and Super PRO 
detee 
The HCF A has incorped crteria into the PRO review protocol to 
aceptale disagrment rates betWeen the PROs and SuperPRO for identied cases of 
ca. 
po quaty 
The HCFA now conside PROISuperPRO disagrement rates as documentation when 
dedig whether to renew PRO contrcts. 
The 010 contiues to believe that the rates of por quality car ar unacceptably high and 
hopes that HCFA's new PRO review prtool wi result in the undipute identication and 
remey of po qualty cass. As par of our contiuing concern about the qualty of patient 
car, we recently issued a fial report entitled "National DRO Validation Study: Short 
Hospitations" and curntly ar studying sureries as a prector of por qualty car.  e 
VerAtt erag 73.  38.  12.  10.  39.
O v
A
e 
erag 72.  55.  38. 
v
A
 
9  =80)  6 - 17 Cases  67.  11.  100.  33. 
1 N
1 (ed   - 5  ases  72_  28.  14.  12.  51. 
B 3 e
FfECTE  300  1 - 2  Cases  12_  52.  '8.  38. 
Z
I
E  ases  72.  63.  37. 
B C
CAS:  erage  73.  30.  17 . 18.  10.  39. 
v
A
05   (Ns8)
 6 - 17
 Cases  74.  15.  44. 
U 7. 9 Beds 3 - 5  Cases  73.  26.  26.  13.  15.  42. 
s of  100-2 1 - 2  Cases  73.  25.  14.  22.  34. 
Anl  Cases  73.  29.  17.  20.  41. 
e 
BY S II  Averag 75.  79.  12.  40. 
HOITAl =79)  6 - 17  Cases  76.  93.  19.  45. 
N
SO Of   Beds ( 3 - 5  Cases  76.  84.  10.  38. 
DARI c100 1 - 2  Cases  75.  73.  14.  11.  39. 
C
s 
Case 75.  70.  37. 
Hospi tals
wi th ac Cases  Av. Pt. Age
 Stay Lngth.Av. " Rural  ofi t
 " Teaching
 " Cases
Nosoc. Infec.  " Cases
Umec. Admi ts  " Cases
lnapp. Doc.  e 
Vr- erag 16.  46.  10. 19.  21. 17. 42.
O v
A
e 
erag 74.  12.  47.  32.  19.  53. 
v
A
 
159  =44)  6 - 17 Cases  73.  100.  12.  50. 
1 M
1FfECJ ZE  SOOt Beds ( 3 - 5 1 - 2  Ca... Cases  73. 74.  13.  28.  14. 52.  18. 36.  31. 18. 06  64. 51. 
I
lE  Cases  MIA  MIA  MIA  MIA  MIA  MIA  MIA  N/A  MIA 
S Ont e 
CACa  erag 76.  30.  17.  17.  21.  14.  32. 
v
A
 
Lln CUACA itv oo aut 
 100-29 Bed (M=46)  6 - 113 - 5 1 - 2  Cases Cases Cases  73. 75. 76.  75. 26. 25.  26. 14.  13.22.  15. 14. 25.  18. 18. 11.  38. 36. 29. 
ases  MIA  MIA  MIA  MIA  N/A  MIA  MIA  MIA  N/A 
C
8I  erage  78.  81.  10.  13.  17.  41. 
v
A
LS 
ITA N=69)
6.  Cases  76.  93.  24.  48. 
 Beds ( 3. 5  Cases  79.  84.  15.  12.  46. 
CDARISO Of  c100 1 - 2  Cases  79.  73.  14.  16.  17.  35. 
ases  N/A  N/A  MIA  MIA  N/A  MIA  MIA  N/A  N/A 
C
Hospi tals
wi th QC
Cases  N"'  Av. Pt. Age  Stav Lngth. Av.  X Rural  X Proft t  X Teaching  X Cases
Nosoc. Infec.  X Cases
Umec. Achi t&  X Cases
lnaw. Doc.
 e 
ver-Allerag 73.  38.  12.  10.  39. 
O v
A
e 
erag 11.  55.  38. 
v
A
 
=80)  6- 17 Cases  64.  12.  100.  21. 
N
Cf ( (Bed  3 - 5  Cases  12_  28.  14.  10.  50. 
E  
FfZE E 300 1 - 2  Cases  12.  52.  31. 
I
SE  ases  12.  63.  31. 
Bnl  C
S O e 
CAaes  erag 13.  30.  11.  18.  39. 
C Av
e   
pR ( ITY lity Car (N=80) 99 Bed .  6 - 173 - 5  Cases Cases  14. 13.  .5.  15. 26.  26.  13.  14. 14.  41. 43. 
58  100-2 1 - 2  Cases s  13.  25.  14.  22.  34. 
I Of  Case 13.  29.  11.  20_  41. 
I e 
erag 15.  79.  11.  39. 
v
A
 
HO alS a79)  6 - 17 Cases  76.  93.  16.  43. 
O OF  Beds (N: 3 - 5  Cases  76.  84.  10.  36. 
DARIS c100  1 - 2  Cases  15.  73.  14.  10.  40. 
I s 
Case 15.  70.  37. 
y  .
 s 
Hospi tals wi th ac Cases  Av. Pt. Age  StaLngth.Av. Rural  " Profi t
 " Teaching
 " Cases
No!.o). Infec " Cases
Umec. Achi t " Cases lnapp. Doc.
 APPENDIX 8

II 
aJARlsa Of IIITALS BY  Of PO c:Lln CA  CAS:
11-29 
;sl DoCTlfC Ma SUTAr o7  05 
iYs
Urba (N=147)
Rural (Na92)

1. 2  3. 5  6. 11
 1 - 2  3 - 5  6 - 17  Over
Hospi tals
 All 
wiC ltShe sa t  Case Case  Cases  Case  Average  Case Cases  Cases  Cases  Average  Average
34. 
Av. Pt. Age  75.  75.  75.  16.  75.  72.  72.  73.  72.  72.  73. 
Av. Lnth. Stay 
12.  15.  33.  12. 
X Profit

48.  42.  15.  33.  41.  25 .
X Teacing 
X c100  38.  75.  72.  83.  68.  14.  15.  33.  10.  33. 
X 100.29 
Bed  55.  20.  18.  16.  26.  38.  31.  57.  33.  38.  33.
X 300  56.  53.  26.  33.  51.  33.
X ClSes

Nosoc. Infec. 
X caes
Um. Aci ts  10.  17.  11.  15.  17.  10. 
Xln Caapspe.s  Do.  31.  39.  36.  44.  39.  39.  36.  48.  46.  39.  39. IU 
aJAl SC Of HOITALS BY  Of fI ClITT CA  CASES: 
BA LOCTlaI STATU  Ca1 =C15a9  
ANt  t i  Q,t
i. of 46 Po 
Rural ( -74)  Urban (M=85) 
Hosi tals  1 - 2  3 - 5  6 - 17  1 - 2  3 - 5  6 - 17  OVer
with QC  All 
Caes  Case Cas  caes  Case  Average  Case Caes  Cases  Cases  Average  Average 
MIA  MIA 
Av. Pt. Age  MIA  79.  78.  75.  79.  MIA  75.  74.  76.  75.  76. 
Ln.
Av. Stay  MIA  MIA  12.  10.
S Proftt  MIA  MIA  12.  15.  33.  14.  10. 
S Teaing  MIA  MIA  42.  15.  33.  36.  19. 
% c100  MIA  75.  72.  83.  75.  MIA  14.  15.  33.  15.  43. 
S 100-29 
Bed  MIA  20.  18.  16.  18.  MIA  31.  57.  33.  37.  28. 
30 Be  MIA  MIA  53.  26.  - 33.  47.  27. 
S Cas
Mos. 
Infec.  MIA  14.  14.  MIA  32.  12.  26.  21. 
S Caes
Um. Acits  MIA  13.  11.  24.  15.  MIA  17.  24.  26.  19.  17. 
S Caes
lna. 
Doc.  MIA  36.  39.  48.  40.  KIA  41.  53.  51.  44.  45.  II 
aMARISC OF HOITALS BT  OF fI ClLln CAE  CAS: 
BA LOCTUJI STAnJ 
 Ca 
Anl  is of 6 58 Go Qul  Care  Onl 
Urba (N-147) 
Rural (N-92) 
6. 
Hospitals  1 - 2  3 - 5  6 - 17  1. 2 3 - 5  Over-
All
wi th QC

Caes  Case  Caes  Case  Average  Case Case  Cases  Cases  Average  Average
Av. . Pt. Age  75.  75.  75 .  76.  75.  72.  72.  73.  70.  72.  73. 
Av.Lnth.Stay 
12.  15.  33.  12.
X Profit

48.  42.  15.  33.  41.  25. 
X Teaching 
X c100 Bed  38.  75.  72.  83.  68.  14.  15.  33.  10.  33 .
X 100-29 
Bed  55.  20.  18.  16.  26.  38.  31.  57.  33.  38.  33. 
X 300  56.  53.  26.  33.  51.  33.
Nosoc. Infee. 
X Cases

Um. Adi ts  10.  15.  10.  13.  16.  10. 
X Cases

InaFI. Do.  37.  39.  36.  43.  39.33  . 39.  36.  47.  45.  39.  39.  APPENDIX C 
IU 
aJARISI Of HOITAlS BY  OF PO C1III9n  CA  CAS:
PRIT 
is-P RoITf  SaTAUTU
 7 05 
CAn 
Non-Profi t (N-216)  Profit (N=23)

Hospitals  1 - 2  3. 5  6 - 11  1 - 2  3 - 5  6 - 17  OAvelrl-
wi th ac 
Cas  Cases Case  Caes  Average  Cases Case  Cases  Cases  Average  Average
Av. Pt. Age  13.  13.  14.  75 . 7'  14.  13.  72.  13.  72.  72.  73 .
Av.Lnth.Stay 
X Rural  24.  36.  55.  90.  40.  27.  40.  21.  38.
X Teaing  40.  30.  21.  25 .
100 Bed  13.  33.  50.  75.  33.  45.  20.  100.  30.  33. 
X 100-29 
Bed  31.  26.  30.  20.  30.  100.  36.  SO.  60.  33. 
X 300  48.  39.  19.  36.  18.  33.
Nosoc. Infec.  10. 
um. Acits  11.  17.  16.  18.  30.  15.  10.
X Cases

lnapp. Doc.  38.  36.  41.  44.  39.  42.  44.  45.  53.  44.  39. IU 
PO  CAS:
CCARlsa OF HOITALS IT  OF  ClLlTY CAE 
PRIT  11159 
-PRIT STATU 
(An  is of 46 Po 
 l i  Care Ca
Non-Profit (N-142)  Profit (N=11)

Hasi tals  1 - 2  3 - 5  6 - 17  1 - 2  3 - 5  6 - 17  Over-
All
wi th ac 
eaes  ease  Caes  ease. Average  ease Case  Caes  Cases  Average  Average 
MIA  MIA 
Av. Pt- Age  MIA  76.  71.  76.  76.  MIA  18.  76.  77.  77.  76.
Av.Lnh.Stay  MIA  MIA
X Rural  N/A  36.  55.  90.  48.  MIA  27.  40.  29.  46.
19. 
X Teaching  MIA  30.  21. 13 MIA
X c100  MIA  33.  50.  15.  43.  N/A  45. 105  20.  100.  41.  43.100 
" 100-29

Bed  MIA  26.  30 .  20.  MIA  36.  47.  28. 
30 Be  MIA  39.  19.  29.  MIA  18.  11.  Zl.
" ea.. 
Mosoc. Infec.  MIA  28.  14.  22.  MIA  26.  21. 
" Caes 
Ume. Ac ts  MIA  15.  20.  22. 107  17.  MIA  22.  66.  18.  17.
1J1. Do.  MIA  37.  47.  48.  41.  MIA  54.  33.  66.  49.  42. IU 
(DAiISC OF HOITALS BY  OF fI ClITT CA  CAS: 
Ca 
Anl  PRIT  -PRGIT oST ACTU Uli  Care  O'l 
Profit (N=23)

Non-Profi t (N-216)

6.  Ovr. 
1. 2 3. 5  6 - 17 
Hospitals  1 - 2  3. 5  All 
wiC tahe s  Case  Caes  Cases  Avenge  Case  Cases  Case  Average  Average
73.  73.  74.  75.  73.  73.  71.  73.  71.  72.  73. 
Av. Pt. Age 
AV.Lnth.St8Y 
X Rural  24.  36.  55.  90.  40.  27.  40.  21.  38. 
25. 
X Teacing  40.  30.  27. 
X c100  13.  33.  50.  75.  33.  45.  20.  100.  30.  33. 
XB e1d0 0-29  37 .  26.  30.  20.  30.  100.  36.  80.  60.  33. 
X 300  48.  39.  19.  36.  18.  33. 
X Caes 
Nosoc. Infec. 
Xu Cmae.s  Acits  10.  15.  16.  21.  20.  15.  10. 
X Caes  38.  36.  40.  43.  38.  42.  44.  47.  50.  44.  39. 
lnapp. Doc.  APPENDIX D

Nl 
CAS:
CDARISO OF HTOEITIA lS BY  Of PO QUITT CA N=29 
-TEACHIIiG STAlU 
Arl  050 
is of All 7 
Teaching (N=61)

Non-Teaching (N=178) 
Hospi tals  1 - 2  3 - 5  6 - 17
 1 - 2  3 - 5  6 - 17  OAvellr -
..i th 
Cases  Case Case  Caes  Case  Average  Cases Cases  Cases  Cases  Average  Average
Av. Pt. Age  14.  14.  14.  16.  14.  11.  11.  14.  61.  11.  73. 
11. 
Av.Lnth.Stay 
38. 
X Rural  36.  48.  51.  90.  51. 
X Profit  12.  14.  13.  12.
100  20.  45.  50.  SO.  43.  33 . 
XB e1d0 0-29
 54.  30.  34.  20.  36.  23.  22.  66.  24.  33. 
X 300+  26.  24.  15.  20.  16.  70.  33.  100.  12.  33. 
X Caes 
Nosoc. Infec. 
XU Cmae.s Adi ts  10.  13.  18.  11.  10. 
Xln Caae.s Doc.  41.  39.  42.  45.  41.  34.  33.  66.  33.  34.  39. IU 
aMMJSD Of HOITALS BY  Of p( Clun CA  CAS:
TEI  -PToEJ NG STAlU  1C115a9 
awl i  Care  OnL 
'28)  Teaching (M=3') 
Mon-Teaching (M 
Hospi tals  1 - 2  3 - 5  6 - 17  1 - 2  3 - 5  6 - 17  OAvellr -
wic athe s
   Case Case  Cases  Case  Average  Case Cases  Cases  Cases  Average  Average
MIA
MIA 
Av. Pt. Age
 MIA  71.  71.  76.  71.  MIA  75.  69.  73.  74.  76. 
Av.Lnh.Stay  MIA  MIA  14.  13. 
46. 
X Rural  MIA  48.  57.  90.  57.  MIA 
10.
X Profit
 MIA  14.  13. 12.  MIA
43. 
. c100  MIA.  45.  "50.  80.  52.  MIA 
"B e1d0 0-29
 MIA  30.  34.  20.  29.  MIA  22.  66.  25.  28. 
" 300 Be  MIA  24.  15.  17.  MIA  70.  33.  100.  67.  27. 
" Caes 
Mosoc. Infec.  MIA  20.  16.  17.  MIA  42.  12.  37.  21 . 
"U CMase.s 
Adfts  19.  18.  23.  19.  MIA.  11.  15. 
MIA. 
"l nCaapspe.s 
Doc.
 MIA  40.  46.  46.  42.  MIA.  38.  44.  50.  39.  42.  UI 
pa ClITT  CAS:
aJARISO Of HOITALS BY  Of  CA 
TEI  ID-TEING  c1--a29  
STAro 
Anl  Go Quli  Care  O1l 
Non.Teacing (N-178)  Teaching (N=61) 
6. 
Hospitals  1. 2  3. 5  6. 17  1. 2 3. 5  OAvellr . 
wiC tahe sQ C  Caes case  Cases  Average  Cases Cases  Cases  Cases  Average  Average
74.  14.  14.  16.  14.  71.  11.  14.  64.  11.  13 . 
Av. Pt. Age 
12. 
Av.Lnth.Stay 
38. 
X Rural  36.  48.  57.  90.  51. 
X profit  12.  14.  13.  12.
33. 
X c100  20.  45.  50.  80.  43. 
X 100-29  54.  30.  34.  20.  36.  23.  22.  66.  24.  33. 
X 300  26.  24.  15.  20.  76.  10.  33.33 100.  12.  33. 
X Caes 
NOS. Infec. 
Xu Cmae.s  Acits  12.  16.  10.  10. 
Xln Caae.s Doc.  41.  39.  42.  44.  41.  34.  33.  36.  27.  34.  39. APPENDIX E

SAMPLING AND METHODOLOGY 
strtied 
The National DRO Valdation Study used a  two-stage sampling design based on 
hospitas. The sample dividet thhe  population of hospitas meeting the study s eligibilty 
crteri (outled below) into  grups based on bed size: less than 100 bed, 100 to 299 
be, 300 or more bed. 
The fit stage use simle radom sampling without replacement to select 80 hospitas within 
each grup for a tota samle siz of 240 hospitas. First, it included only acute care, 
short-stay facties. Ths test also exclude specialty institutions such as chidrn s hospitas. 
Second, as of October 1, 1983, a waiver proviion exempted New York, New Jersy, 
Masachusett and Marland frm PPS. Therefore, the sample excluded facities in these 
States. Thd, each facty had to have contrbute data to the constrction of the initial 
relave weights assigned to DRG categories at the sta of PPS. These initial relative weights 
deved frm a 20 percent sample of Medcare discharges from facilties parcipating in the 
prgr 
in 1981. To be include in the samplig fre, a facilty had to both (a) contrbute 
discharges to the constrction of the initial relative weights and (b) parcipate as a provider at 
begig 
the  of PPS, October 1, 1983. 
The effective unverse of hospitas avaiable for study numbered 4,913. Of the intial sample 
terate  fre 
of 240 hospitas,l facty  its Medcar eligibilty betWeen the samplig tie 
and the actual collection of medcal reord. The fit-stage sample therefore include 239 
(4.9 percent) radomly selected short term acute car facties eligible unde the Medcar 
prgr 
since at least 1981 and not located in a waiver State. 
The seond stage of the design employed systematic radom sampling to select 30 Medicar 
discharges from each of the 239 hospitas. The HCFA's Burau of Data Management and 
Strtegy supplied a list of al fial bils they received frm the fiscal intermediares though 
Apri 30, 1985. Each bil represente one Par A Medicar discharge for the time period 
October 1, 1984 to Marh 31, 1985. If a facility had fewer than 30 discharges durng the 
applicable period all available Medicar discharges were selected 
Record Collection 
In mid-1986, the OIG sent registered lettrs to the selected hospitas requesting copies of the 
complete medcal record for each of the sample 
dischares. Admnistrtive subpoenas 
compelled the parcipation of a few institutions. Of the 222,
396 record avaiable from the 
239 hospitas, the sample design reuested 7,076 (3.2 percent). The study ultiately received 
and reviewed 7,050 (99.6 percent) medical records. The hospitas could not locate the 
remaning 26 records.  Medical Review 
Registere nures initialy screned the medical records for incidents relating to poor qualty 
car. If problems were found, the medcal record was referrd to boar-certfied physicians 
with extensive experience in per review. Upon confmnng a case where a patient received 
por quaty car, the physici dictated a nartive summar descrbing the natu of the 
prblems and citig supportg evidence frm the patient char This methodology pareled 
the press used in local  the PROs. Reviewers were insnucted to ignore 
per review and by 
maral prblems or cases involvig honest dierences in medical judgment about 
appropriate case management. 
Medcal exprt reviewed reord presentig specialty car issues. Physician panels convened 
to dede dicult cases. Most of the reviewig physicians had recent experience with patient 
confing 
car. An 010 physician reviewed each case,  the conclusions of the medical 
reviewers. 
Analysis 
We compar charteristics of 46 patients who received poor quality car with 6,586 
patients reivig approprite car. Varbles selected for analysis were descrptive (e.g., age), 
fushed insight into fianci considerations (e.g., average lengt of stay) or indicative of the 
quaty of patient car. Comparsons used averages and percentages weighted to adjust for 
diernt sis of grupings (e.g., patients receiving poor and goo car). 
ca 
Analysi of por qualty  in dierent tyes of hospita folrlouwe d HCFA's pratices for 
classig hospita by demogrphic charcteristics-uran  location, teachig status, 
and be si. The adtional classifcation category, profit/nonprofit status, was derived frm 
the American Hospita Assocation  Guie to the Health Care Field. 
A hospita was considere to be: 
urban if it was located within a stada metrpolita area as defined by the Burau of 
the Census, 
teaching if it had an accrted residency progrm, 
for-profit as designated by the American Hospita Association, 
sma if the HCFA-certed bed size was less than 100 beds, 
medum if the HCFA-cered bed size was between 100 and 299 beds, 
large if the HCFA-cerfied bed size was more than 299 beds.  centr 
basis for analysis of selected varables, again using
These classes of hospitas became a  urbanlocation,
weighted averages and percentages. To the basic classifications of  siz, 
medium/arge bed 
nonprofit status and smalV 
taeadch ing/nonteachig status, profit/ 
fuer diviion-the fruency of poor qualitY car cases in hospitals. This permtted
small 
no poor qualty car cases and 
comparsons, for example, betWeen small hospitas with 
hospitas with six or more por qualty car cases. 
Fiscal Projections 
Firt, prjections were mad using the actual dollar paid for the 7,050 Medicar 
frm HCFA PATBIL f1es). We multiplied the number 
patients in the sample (derived 
be 
size category by the average cost per discharge in bed
of patient discharges in each 
si  figus. 
categories for a tota in rounde  Caculations show the tota dollar paid to 
were 
sampled hospitas in the the be size categories. Smal hospitas, for example, 
98 mion for 2,276 discharges at an average cost of $2,186 per patient. 
paid $4.
Small  Medium  Large 
All admiions (N=7,050): 
2,276  388  386 
# patient dischares 
$2, 186  $3,222  $3,999 
Average cost/discharge 
mions)  $4.  $7.  $9. 
Tota dollar (in 
Next, using the same mathematical approach, ptrhoje ctions were made for the costs 
po  the  bed size categories. For example, 
assoate with  qualty car cases by 
sma hospitas were paid $490,00 for 259 patients receivig poor quality car at 
averge cost of $1,908 per patient. 
Small  Medium  Large
Poor quality care caes (N=464): 
259  122 
# patient discharges 
$1,908  $2,850  $3,540
Average cost/discharge 
Tota dollar (in millons) 
car by the 
Dividig the dollar paid to hospitas for patients receiving poor quality 
all adssions in the sample by bed size category yields the percentage 
dollar paid for 
car.
of dollar assocated with poor quality 
 :::;:::::::::;:::::::::::::::::::;:\:::::;::::::::::::::::::::::::::;::::::::::::::;:;::::::::::;::::::;:::;:::;:::::;::::::=::::::::::::::::::;::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::;:::::::::::::::::::::::?::::::::::::::::::::::::::::::::::::::?::::::::::::::::;:::::::;:::::;:::::::::::::::::::::::::;:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::;::::::::::::::;::
Small  Medium  Large 
Percentage of dollar

po 
for  qualty car cases 
We adjusted for the higher volume of discharges that occur in large hospitas, using FY 
nmming the projections for each bed size category yields a tota projected 
1985 data S progr 
amount of approxitely $1.2 billion paid by the Medicar  for poor quality 
car. 
admisions (F 1985) Small  Medium  Large
PPS 
# dichares (in mions)  1.52
cost!
Multiplied by average 

$2. 186  $3.222  $3.999 
discharge 
Yields dollar paid (in 
mions)  $3,323  $10,020  $14,596
Tuns peentage of sample 
dollar for po qualty  x.. 
x-2 
ca 
cass 
Yields dollar for poor 
qualty car (in mions)  $325.  $460.  $437. 
mions) 
Tota dollar (in 
car:  $1,224.4 
por qualty 
spnt on  APPENDIX F

NUER 
DISTRIBUION OF HOSPITALS BY 
ALTY  CAES  N=239
POR 
itals  Percent 
# OC Cases  Hos 
33. 
24. 
15. 
Totals  464  239  100. APPENDIX G

CHISTICS OF HOITALS UITH 6+ PO ClITY CAE  CASES  Il=2
IlSSY  PR'I  .T.IEIINiGG!  
IPDRITFIT 
STATE  REICII  ADITS  ADITS  DISCGES  SIZE 
53. 
43. 
40. 
36.
30 
30. 
30. 
30. 
30. 
26. 
26.
Mil 
26. 
26. 
.23. 
23. 
23. 
20. 
20. 
20. 
20. 
20. 
20.  liT 
630  177  113
TOTA(LX 1)  
 (38.  (15.  (46. 
PO 
1 PERCENTAGES ARE BASEQ ON THE FACT THAT THERE WRE 464  aJLITY CARE CASES, 740 UNNECESSARY 
050 PATIENTS.

ADMISSIa.S AND 74 PREMATURE DISCHARGES IN THE SAMPLE OF 7,
 APPENDIX H

NUERS
DISTRIBUTION OF PATIENTS BY 

PROBLE 
OUALTY 
CA  COC\ ents\ 
(1331 Problems/464 Pat 
Percent 
i Patients 
i OC Problems 
24. 
115 
27. 
127 
21. 12
10. 
1'0 
Totals  464  100.  APPENDIX I

COMPARISON BY TYPE OF HOSPITAL

AVEGE LEGTHS OF STAY  ALOS 
ualit 
Patients Receivin  Care
Good and Poor 

POR  (N=4 64)  GOOD  (N=6  586)
CHCTSTICS 
ALS  ALS 
Small  259  017 
Medium  122  266 
Large  10.  303 
Rural  285  391 
Urban  179  195 
Profit 
650
Nonprofit 
425  936 
Teaching  11.  770 
Nonteaching  409  816  APPENDIX J

II 
CA 
Fa CUllY OF  PI  18133 
, PILBt  . PECE 
Care 0I tted 
Serices/follow- ordre 
up not 
Serf ce orre, bu:
. inate/fncomlete 
pride 
. not  058  79. 
. contraindfcated

prfde 
. not  in time to be useful 
l icatim of Care 
Incorret serices 
Umessary coml ication  155  11. 
Prde 
Care 
uvary
"rded seri ce 
Unorded serices provide
I---
Doati 
te 
MTAL  1 ,331  100.  APPENDIX K

DISCHGE DISPOSITION 
uali  Care 
ents Rece

Good and Poor

050
N=7 
POR  GOOD
CAES 
DISCHGE  PATIENS  CAES 
TYPE OF 
076  264  56.  4 , 812  73. 
Home  16.  366
Died  442 
15.  600 
Intermed. Care Fac.  670 
140 
158 
Short-term Hosp. 
375 
390 
Home Health Orders 
122 
Fac.  131 
Skilled Nurs. 
114 
119 
Other Institution 
other 
Totals  7 , 050  464  100.  586  100. APPENDIX L

COMPARISON BY TYPE OF HOSPITAL

AVEGE AGE OF PATIENS RECEIVING 
ALITY
R AND GOD 

CA 
POR  (N=464)  GOD  (N=6, 586)  D(IFYFEERE)C E 
CHCTSTICS 
AV. AGE  A V . AGE
Small  259  78.  017  75. 
Medium  122  76.  266  73. 
Large  74.  303  72. 
Rural  285  78.  391  75. 
Urban  179  75.  195  72. 
Profit  77.  650  72.
Nonprofit  425  76.  936  73.
Teaching  74.  770  71. 
Nonteaching  409  77.  816  74.
E OF HOSPITAL

ACOVMPAERSOGN BYE   AGE OF DECEED PATIENS 
CEIVNG POOR  ALITY 
AN GOD 
CA  CA 
POR  76)  GOD  (N=3 66)  DI(FYFEERN)C  E 
CHCTSTICS 
AV. AGE  AV - AGE
Small  81.  79. 
76.  121  77.  -0. 
Medium 
Large  82.  150  76. 
Rural  80.  113  78. 
Urban  79.  77. 
83.  77.
Prof it

Nonprofit  79.  348  77. 
Teaching  80.  113  76. 
Nonteaqhinq  80.  253  77.  APPENDIX M

SEATUIi OF Pm  CAS IN JI FRCI DRGS 
ClITT CA 
,ex  GO CA  TOTAL' 
CAS
DEIPTICl  (11) (11.58) (117 05) 
127  HEAT FAIWRE AN SHO  356 
SIMP PNEUIOUA AM PLEURISY. PATIENTS 
316  351 
OVR AG 69 
245  261 
140  ANGINA PECTCRIS 
182  DIGESTIVE DISOERS, PATIENTS OVER AGE 69  245 
190  217 
STRacS, exCEPT TRANSIENT ISCHEMIC ATTACKS 
BROCHITIS AND ASTHMA, PATIENTS OVR 
168  179 
AGE 69 
NUTRITIDW Al MISCELLAEOU METABIC 
159  173 
DISCDERS, PATIENTS OVER AGE 69 
CCTIa. 
138  CAIAC ARHYTHMIA AM 
DISOERS, PATIENTS OVR AGE 69  157  166 
TRAIENT ISCHEIC ATTACKS  129  146 
CHRa.IC OBTRUTIVE PUNARY DISEASE  121  130 
mAL  193 
(Pe ce)  (41.  (31.3)  (32.  APPENDIX N

CAS  MA 
PO CIITY CA  BY  DIA(XTIC cATEGOY 
, QC  , All  % QC 
DEIPTICJ  Adi ts 
Diseases en Disordrs of the Circulatory System  107  643 
Diseases en Disorders of the Respiratory System  052 
Diseases an Disordrs of the Digestive System 
Diseases an DiSordrs of the Nerv Sytem  565 
Diseases en Disords of the Musloseletal Systea
an Cotive 
Tissu 
627 
Kidn an 
Diseases an Disorders of the  Urinary Tract  332 
Endrine , Nutritionl an 
Metabol ic 
Diseases an Disorders 
an 
Menta l Diseases  Disorders  112  14. 
Diseases en Disorders of the Ear Nose en Throat  155 
Infect10U an Parasitic Diseases  108 
Factors Influeing Health Status 
an Other cotact with Health services  13. 
Bloo, Bloo Forming Orga 
an IlIilogical Diseasesan Disorders 
Disease aann D isordrs of the Skin
Tissu an Breast  181 
Heptcbi l iary 
Sytel an Panreas  194 
tane Abue and  tane Inded 
Orgaic Metal Disordrs 
Injur, Poisoning and Toxic Effects of Drugs  4.9 
Diseases an Disorders of the  rodtive 
Male R  System  194  1.6 
Myelopol iferative Diseases and Disorders 
an 
Poorly Differentiated Neolasm 
120 
DRG 
Disease an Disorders of the Eye  104 
Diseases an Disorders of the Femle Reprodtive System 
Burns 
Pregn, 
Chilclirth and the Puerperiun  APPENDIX 0
 ~~~~
\,... .
,.(!  ",  \ ,".  '
..  ..:.-  .".., - .. ...,.  ', ' -.:.-,' :. '/  . ,. :'j'. "

1!"CI:!'. ':arp. 
r H. r.-\ Ii f. U '\ T 0 J H f -\ II Ii  H l ' \, '" q R \ (( f.  it' 
'I
1(;
7' 
M erTf 
I"  "r .  ....1(r.:a. -n\d

U(rh..  ". 1",-
.. I .. 
Date 
-7 
1988 SE?  PH I: 02  1 (;
From  AWildlimam iLn. iRsopterra, tMo. r V.  ALHI 
D. (J(;C IG 
VI 
SE( 
EX 
Subject 
OIG Draft Report  Nationa1 DRG Validation Study, Quality of patiJktTtat'-:
i ri Hospi tal s, II OAI-09-88-00870 
The I nspector General 
Offi ce of 
the Secretary 
We have revi ewed the OIG draft report that exami nes the qual i ty of care in
hospitals under PPS. 
We are concerned that the OIG study may result in 
misleading conclusions and incorrect impressions 
about quality of care in

general, and the Peer Review Organization (PRO) program in particular.

Our most significant concern is the report' 
s conclusion that, in effect,

PRO judgments are insufficient because they are not 
identifying as many.

quality problems as SuperPRO and th

OIG' s own reviewer$. This would 
result in conti ued poor care for Medicare patients and the expenditure of

mi 11 ions of do 11 ars for substandard care. 
The report' s conclusions indicate an apparent misunderstanding of the

function of PROs vs. SuperPRO.  local 
The backbone of the PRO program is 
physician peer review. The legislation maintda.t ed this approach and HCFA' 
management of the program has emphasized 
Local peers can best judge
the care rendered by local physicians within the broad context of

professionally recognized standards. 
The SuperPRO,  ike the OIG

reviewers, is not hampered by the reality of dealing with a patient or

with local conditions and practice patterns. 
Their view is, in some ways,

an abstract, pure review of a medical record. 
While this type of review

is valuable as '  art 
accept it as thae g uiddee orf ais na itive wor  of an evaluation effort, we do not
on quality of care. 
In fact, it is for
this reason that we use the SuperPRO findings 
carefully, in concert with

other consultants and our regional offices, to determine 
if the

performance of individual PROs needs improvement. 
We agree with OIG that SuperPRO findings and other 
measures should be used

to improve PRO performance and we. are already making changes in our

evaluation protocols. However, the 
SuperPRO findings should never

represent the " 
last word" in any case under review. 
This draft report also does not take into account HCFA'
s effectiveness

initiative. A major thrust of this effcrt is to provide PROs with more

objective review criteria and an improved review methodology. Of course,
the par.ticipation of leading clinicians 
and health service researchers has 
been critical to this effort. 
Not only will the effectiveness initiative

improve PRO review, but we believe it will contribute significantly to

improvement of medical education and practice.
 Page 2

In sum, while we agree with. numerous points raised in the study, we are

concerned that certai n i nappropri ate assumptions may make it 
controversial and counter-productive effort.

your 
Our specific comments on the recommendations are attached for 
cons i derat ion. Thank you for the opportun i ty to comment on th is draft 
report. 
Atta  hment  Comments of the Health Care Financin Administra  ion o  the 
ationa 
OIG Draft Report:  DRG Validation Study, 
.9uality of Patient Care in Hospitals, 
OMI-09-88-00c70 
OIG Recommendat ion 
Immediately issue the regulations to implement the COBRA 1985 provision

gi vi ng PROs authori ty to deny Medi care reimbursement for patients 
receiving substandard medical care.

HCFA ResjJonse 
Thi s provi s i on is one of the most controvers i a 1 and compl ex
responsibilities assigned to PROs. 
HCFA has been working with
representat i ves of consumers, provi ders, phys i ci aps, and PROs to draft a 
ng. 
Not ice of Proposed Ru 1 emak i  These proposed ru 1 es have undergone 
extensive review throughout the Department, including the OIG. Presently,
the proposal is pending clearance by the Office of Management and Budget. 
01 G Recommend at ion 
Determine why PROs identify a substantially lower rate of poor quality

care cases than either the SuperPRO or the OIG.

HCFA Response 
As previously mentioned, we believe comparing PRO findings with either OIG

or SuperPRO results is inappropriate. The PRO review process includes at 
least two major steps which are not performed by the other mechanisms.

These are: (1) PRO physician reviewers must discuss the cases with the

attending physicians before making the final decision that a quality of

care problem exists; and (2) PRO physician reviewers must also take into

consideration local medical practices and other factors such as the

availability of appropriate ambulatory facilities. 
This does not mean

tshat twea expenct ad lowear lerveld of csare .to  be rendered in certain areas, but

that local peers can best determine the appropriateness of care rendered

by local physicians w;thin the broad context of professionally recognized

Our PRO monitoring and final evaluation protocols are designed to identify

prob 1 ems in PRO performance and in it i ate  corrective act 
appropri ate  i on. 
PROs that fail to substantially fulfill the requirements of their

contracts are either termi 
nated or not renewed on a noncompet i ti ve bas is. 
During the first PRO Scope of Work, we recognized that there were problems
with the review determinations being made by PROs. As a 
result, 25 of the 
first PRO contractors were not renewed noncompetitively and 2 PRO

contractors were termi nated.  Page 2

Additionally, in the second Scope of Work, we implemented the use of

generic quality screens to identify potential quality of care problems

that were not being satisfactorily addressed through PRO review. We are 
and will continue to evaluate PRO review determinations, including 
identifying poor quality of care problems, and initiate appropriate action

where requ ired. 
01 G Recommend at ion 
Deve lop acceptable di sagreement rates between PROs and the SuperPRO for 
identified cases of poor quality care.

HCFA Response 
uat ion protocol, 
In the current PRO performance eva  we have developed 
acceptable disagreement rates between PROs and the regional offices for

quality of care. 
Disagreements between PROs and 
identified tases of  poor 
SuperPRO for identified cases of poor quality care are analyzed by the

appropriate regional office and corrective action plans are established to

address i dent i fi ed problems in the PROs I performance. We are current 1 y 
considering incorporating the Super PRO review. results into our ongoing and

luati on protocols. 
fi na 1. eva 
OIG Recommendation 
Incorporate reconci  ati on of hi 
gh di sagreement rates into PRO performance 
1 i 
evaluations for consideration in renewal of PRO contracts. 
HCFA Response 
The disagreement rates have always been part of the overall PRO

performance evaluation system. In the past, xhe results of regional

office 
staff monitoring have been included in the final evaluation 
package. As stated 
above, we are considering incorporating the SuperPRO 
findings in the PRO performance evaluation protocol for the third PRO

Scope of Work.
 Page 3

OIG Recommendation 
Analyze quality review practices of PROs with low disagreement rates to

identify exemplary models and best practices which could be used to assist 
other PROs.

HCFA Response

We will explore the possibility of identifying exemplary models of

detecting quality of care problems that could be applied to other PROs

systems. It is important to remember that the legislation authorizing the

PRO program requires local peer review. This legislative mandate limits

our ability to standardize some aspects of peer review, especially as it

relates to the use of specialists that may not be available in certain

States. 
OIG Recommendation 
Require that PROs continue to improve their identification and follow-up

of cases involving poor quality patient care in order to better target

prob 1 em hospi ta 1 s. and phys i ci ans. Approaches mi ght i nc 1 ude focus i ng on 
types of hospitals, DRGs frequently associated with poor quality care or

patients at highest risk of receiving poor quality care. 
HCFA Response

The third Scope of Work for PRO contracts includes increased emphasis on

the generation of profiles which will result in the accomplishment of this

recommndation. 
PROs will be required to generate physician, hospital 
and DRG profiles which will assist them in identifying poor quality care

practices. Where program monitoring identifies deficiencies in PRO

generation and use. of profi 1es, PROs wi 11 be required to develop 
corrective action plans.