Linking Quality and Cost: An Analysis of the Hospital Quality Information Initiatives Measures [CHM]

Research Projects – Health


The Health Section Research Team commissioned two reports on quality and related health care expenses. The first report focused on the return on investment to hospital providers implementing certain programs responding to the CMS Hospital Quality Initiative. This report is labeled: Linking Quality and Cost: An Analysis of the Hospital Quality Information Initiatives Measures ( MPRO).

The second report explored a different aspect of the relationship between quality and health care cost– the mathematical correlation between hospital quality and allowed charges. For this perspective on quality and cost, a research team from Milliman was selected. The Milliman team was led by Eileen Kurtz and John Cookson.

The Project Oversight Group, which oversees completion of the quality-related research projects includes:

  • Curtis Lee Robbins, Chair
  • Jane Jensen
  • Karl Madrecki
  • Guy Marszalek
  • John Stark
  • Steve Siegel, SOA Staff Actuary
  • Jeanne Nallon, SOA Research Assistant
  • John Stark and Curtis Robbins, members of the Project Oversight Group, have provided brief commenatry on this second report examining quality and health care cost. Their observations follow:

    The report includes a thorough analysis and excellent insights. The paper also reports that there is limited and still emerging data to support the analysis of hospital quality and costs, and that existing data did not give conclusive results.

    One recommendation is to do a follow–up study when more data exists. There is a question as to whether or not data will be any better in 12 to 24 months from now. In reading the narrative, the incentives to report data are mixed. A possible conclusion is that the same results will occur if the study is repeated unless the incentives for reporting and data are aligned for all parties.

    Another observation is that current CMS Quality Indicators are limited in scope. Furthermore, some of the indicators are under the control of the provider (e.g., dispensing aspirin) while others are not (e.g., smoking cessation counseling). Hence, compliance with protocols for counseling may be high, for example, but may not result in any change in behavior. As a result, a facility may have high quality scores with few tangible results in improved health care quality and reduced expenses.

    Given the high cost of health care, all parties should devote resources only to those activities that actually improve care and outcomes. Also, efficient reporting of all needed data is essential to managing pay–for–performance programs. The conclusions in this paper show that there are opportunities for improved reporting to demonstrate positive impact of quality initiatives on cost.