Press release



Medicare took another major step today to improve health care quality and protect the Medicare Trust Fund by launching an ambitious billion dollar program that will provide consumers with better information on the quality of care they receive and reward providers for the quality of care they deliver.


Mark B. McClellan, M.D., Ph.D., administrator of the Centers for Medicare & Medicaid Services (CMS), said reporting, improving and rewarding quality will be at the heart of the 8th Statement of Work for the Quality Improvement Organizations (QIOs), a nationwide network of contractors dedicated to improving quality of care for Medicare beneficiaries.


“Focusing on quality will keep Medicare strong for generations to come,” Dr. McClellan said. “The Quality Improvement Organizations can help health care providers succeed in the new environment of public reporting and pay-for-performance, and this in turn significantly raises the quality of care for Medicare beneficiaries.”  


The 8th SOW will help providers assess and report performance on measures of clinical quality, and improve their performance through important changes in how patient care is delivered.   To begin this effort, CMS is releasing today a request for proposals (RFP) for this 8th Statement of Work.  The RFP requests organizations to bid for the 3-year contracts that support the 8th SOW.


The quality improvement effort will focus attention on four settings – nursing homes, home health agencies, hospitals, and physician offices.  It will also help protect beneficiaries and the Medicare Trust Fund through work on appeals, beneficiary complaints, payment error and other case review activities, such as the Hospital Payment Monitoring Program (HPMP).  In addition, work will also focus around electronic health records and electronically transmitted prescribing, which will give patients better coordination of care.


These activities ensure Medicare pays only for those services that are medically necessary and appropriate for the patient’s health care needs while also making sure quality information is used to educate providers in ways to improve care.   Lastly, it will address safety and quality of services provided as a result of the new Medicare pharmaceutical benefit in January 2006.


Specifically, the effort seeks to support providers in making dramatic improvements in:


  • Clinical performance measures for pressure ulcers, physical restraints and management of depression in nursing homes;
  • Acute care hospitalization reduction;
  • The use of telehealth in home health agencies;
  • Hospitals’ adoption of highly effective and efficient quality improvement strategies, such as standardized, effective processes of care;
  • Physician office care of patients with chronic disease and preventive services needs, especially those working with underserved populations and physician offices’ production; use and reporting of electronic clinical information; and adoption of care management such that they can report and improve on a set of expanded clinical and utilization measures that are expected to be part of public and private pay-for-performance (P4P) programs;
  • Medication use, including safety and effectiveness; and
  • Processes identified through expert medical review of beneficiary complaint cases and wider utilization of dispute resolution (mediation) of quality of care issues.


“The key factor that will lead to better health care over the next decade is the effective generation and use of information about the quality of health care services,” Dr. McClellan said.


“Patients will use this information to make informed choices about their treatments and their providers.  Providers will use this information to improve their decisions about the care provided.  And policymakers will use this information to ensure that financial incentives support the best care possible,” Dr. McClellan said.


The 8th Statement of Work builds on accomplishments under the current 7th Statement of Work, which laid the foundation for public reporting of provider performance through the Nursing Home Quality Initiative, the Home Health Quality Initiative, and the Hospital Quality Initiative.


Under the current contracts, providers in these settings have been able to show statistically significant improvements nationwide by working with QIO assistance, including:


  • Nursing homes increased the quality of care in all states and on average were able to show relative improvement in reducing the use of physical restraints by 23 percent, and long-term (chronic) care prevalence of pain in long stay residents by 38 percent.
  • Home health agencies showed improvement in management of oral medications helping to reduce patient’s pain that interfered with activity.
  •    Hospitals, working with QIOs and others, showed an average improvement in the timeliness of administering antibiotics prior to surgery of 35%, and an average improvement of 210% in the rate and timeliness of screening for and administering influenza vaccines in patients hospitalized for pneumonia.


There are 53 QIO contracts, one for each local independent organization covering each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands.   Funds to support QIO work are apportioned from the Medicare Trust Fund, and work is conducted through a three year performance-based contract cycle. 


“Our goal is to promote care that improves safety, effectiveness, efficiency, patient-centeredness, equity, and timeliness,” said William Rollow, M.D., director of the Quality Improvement Program at CMS.  “Through these contracts, QIOs will work with providers, partners and stakeholders to accomplish this and transform healthcare quality.” 


The first Statement of Work for this contract was introduced in 1982 with a focus on case review.  National quality improvement was introduced in the 7th Statement of Work.


CMS today also announced that it is requesting public comments on the potential design of the Medicare Health Care Quality Demonstration. Section 646 of the Medicare Modernization Act requires the demonstration, which is to encourage the delivery of improved quality of patient care through increased efficiency.  CMS will ask for demonstration proposals later this year. Further information may be obtained online at or by writing on-line to