Beginning in the late 1990s, CMS took steps to broaden the mechanisms in place intended to help ensure that nursing home residents receive quality care. To augment the periodic assessment of homes’ compliance with federal quality requirements, CMS contracted for the development of QMs and tasked QIOs with providing assistance to homes to improve quality. CMS used QMs both to provide the public with information on nursing home quality of care and to help evaluate QIO efforts to address quality-of- care issues, such as pressure ulcers. During the 7th SOW, organizations other than QIOs were also working with nursing homes to improve quality. Two indicators used by CMS to assess the quality of care that nursing homes provide to residents are (1) deficiencies identified during standard surveys and complaint investigations and (2) QMs. Both indicators are publicly reported on CMS’s Nursing Home Compare Web site. Under contract with CMS, state agencies conduct standard surveys to determine whether the care and services provided by nursing homes meet the assessed needs of residents and whether nursing homes are in compliance with federal quality standards. These standards include preventing avoidable pressure ulcers; avoiding unnecessary restraints, either physical or chemical; and averting a decline in a resident’s ability to perform activities of daily living, such as toileting or walking. During a standard survey, a team that includes registered nurses spends several days at a home reviewing the quality of care provided to a sample of residents. States are also required to investigate complaints filed against nursing homes by residents, families, and others. Complaint investigations are less comprehensive than standard surveys because they generally target specific allegations raised by the complainants. Any deficiencies identified during standard surveys or complaint investigations are classified according to the number of residents potentially or actually affected (isolated, pattern, or widespread) and their severity (potential for minimal harm, potential for more than minimal harm, actual harm, or immediate jeopardy). Deficiencies cited at the actual harm and immediate jeopardy level are considered serious and could trigger enforcement actions such as civil money penalties. We have previously reported on the considerable interstate variation in the proportion of homes cited for serious care problems, which ranged during fiscal year 2005 from 4 percent of Florida’s 691 homes to 44 percent of Connecticut’s 247 homes. We reported that such variability suggests inconsistency in states’ interpretation and application of federal regulations; in addition, both we and CMS have found that state surveyors do not identify all serious deficiencies. QMs are relatively new indicators of nursing home quality. Although survey deficiencies have been publicly reported since 1998, CMS did not begin posting QMs on its Nursing Home Compare Web site until November 2002. QMs are derived from resident assessments known as the MDS that nursing homes routinely collect on all residents at specified intervals. Conducted by nursing home staff, MDS assessments cover 17 areas, such as skin conditions, pain, and physical functioning. In developing QMs, CMS recognized that any publicly reported indicators must pass a rigorous standard for validity and reliability. In October 2002, we reported that national implementation of QMs was premature because of validity and reliability concerns. Valid QMs would distinguish between good and poor care provided by nursing homes; reliable QMs would do so consistently. One of our main concerns about publicly reporting QMs was that the QM scores might be influenced by other factors, such as residents’ health status. As a result, the specification of appropriate risk adjustment was a key requirement for the validity of any QMs. Risk adjustment is important because it provides consumers with an “apples-to-apples” comparison of nursing homes by taking into consideration the characteristics of individual residents and adjusting the QM scores accordingly. For example, a home with a disproportionate number of residents who are bedfast or who present a challenge for maintaining an adequate level of nutrition—factors that contribute to the development of pressure ulcers—may have a higher pressure ulcer score. Adjusting a home’s QM score to fairly represent to what extent a home does or does not admit such residents is important for consumers who wish to compare one home to another. Appendix II lists the 10 QMs initially adopted and publicly reported by CMS—6 applicable to residents with chronic care problems (long-stay residents) and 4 applicable to residents with post- acute-care needs (short-stay residents). MDS data are self-reported by nursing homes, and ensuring their accuracy is critical for establishing resident care plans, setting nursing home payments, and publicly reporting QM scores. In February 2002, we concluded that CMS efforts to ensure the accuracy of MDS data, which are used to calculate the QMs, were inadequate because the agency relied too much on off-site review activities by its contractor and planned to conduct on-site reviews in only 10 percent of its data accuracy assessments, representing fewer than 200 of the nation’s then approximately 17,000 nursing homes. Although we recommended that CMS reorient its review program to complement ongoing state MDS accuracy efforts as a more effective and efficient way to ensure MDS data accuracy, CMS disagreed and continued to emphasize off-site reviews. Over the past 24 years, the QIO program has evolved from a focus on quality assurance in the acute care setting to quality improvement in a broader mix of settings, including physician offices, home health agencies, and nursing homes. Established by the Peer Review Improvement Act of 1982 and originally known as Peer Review Organizations (PRO), QIOs initially focused on ensuring minimum standards by conducting retrospective hospital-based utilization reviews that looked for inappropriate or unnecessary Medicare services. According to the 2006 IOM report, as it became apparent that standards of care themselves required attention, QIOs gradually shifted from retrospective case reviews to collaboration with providers to improve the overall delivery of care—a shift consistent with transformational goals set by CMS’s Office of Clinical Standards and Quality, which oversees the QIO program. In contrast to enforcing standards, quality improvement tries to ensure that organizations have effective processes for continually measuring and improving quality. The goal of quality improvement is to close the gap between an organization’s current performance and its ideal performance, which is defined by either evidence-based research or best practices demonstrated in high-performing organizations. According to the quality improvement literature, successful quality improvement requires a commitment on the part of an organization’s leadership and active involvement of the staff. The 2006 IOM report notes that QIOs rely on various mechanisms to promote quality improvement, including one-on- one consulting and collaboratives. While the former provides direct and specialized attention, the latter relies on workshops or meetings that offer opportunities for providers to share experiences and best practices. Quality improvement often relies on the involvement of early adopters of best practices—providers who are highly regarded as leaders and can help convince others to change—for the diffusion of best practices. Key tools for quality improvement include (1) root cause analysis, a technique used to identify the conditions that lead to an undesired outcome; (2) instruction on how to collect, aggregate, and interpret data; and (3) guidance on bringing about, sustaining, and diffusing internal system redesign and process changes, particularly those related to use of information technology for quality improvement. Quality improvement experts also emphasize the importance of protecting the confidentiality of provider information, not only to protect the privacy of personal health information but also to encourage providers to evaluate their peers honestly and to prevent the damage to providers’ reputations that might occur through the release of erroneous information. Section 1160 of the Social Security Act provides that information collected by QIOs during the performance of their contract with CMS must be kept confidential and may not be disclosed except in specific instances; it provides the Secretary of HHS with some discretion to determine instances under which QIO information may be disclosed. The regulations implementing the statute limit the circumstances under which confidential information obtained during QIO quality review studies, including the identities of the participants of those studies, may be disclosed by the QIO. During the 7th SOW, QIOs submitted a list of nursing home participants to CMS as a contract deliverable. During the 7th SOW, CMS awarded a total of $117 million to QIOs to improve the quality of care in nursing homes in all 50 states, the District of Columbia, and the territories. The performance-based contracts for QIO assistance to nursing homes delineated broad expectations regarding QIO assistance to nursing homes, provided deadlines for completing four contract deliverables, and laid out criteria for evaluating QIO performance. For contracting purposes, the QIOs were divided into three groups with staggered contract cycles. The four contract deliverables, however, were all due on the same dates, irrespective of the different contract cycles. The contracts also required QIOs to work with a QIO support contractor tasked to provide guidelines for recruiting and selecting nursing homes as intensive participants, train QIOs in standard models of quality improvement assistance, and provide tools and educational materials, as well as individualized consultation if needed, to help QIOs meet contractual requirements. QIOs and nursing homes were also involved in other quality improvement special studies with budgets separate from the QIO contracts for the 7th SOW. These studies varied greatly in terms of length, the clinical issue(s) covered, the number of QIOs involved, and the characteristics of the nursing homes that participated. Figure 1 shows the 7th SOW contract cycles, deliverables for the nursing home component, and the duration of the special studies. Contract funding. The $117 million awarded to QIOs to improve the quality of care in nursing homes during the 7th SOW included (1) $106 million awarded to provide statewide and intensive assistance to homes, (2) $5.6 million awarded to selected QIOs to conduct eight special studies focused on nursing home care, and (3) $5.3 million awarded to the QIO that served as the support contractor for the nursing home component. CMS allocated a specific amount for each component of the contracts, but allowed QIOs to move funds among certain components.