1. ournal of Health
Care Compliance
Aspen Publishers, Inc. .Volume2, Number2 .
PROSixth Statement of Work Focuseson
Quality Compliance
PROs to Initiate PaymentError PreventionProgram
Using federalprosecutionof health carefraud As a result,quality-of-carecompliancemust
asthe impetus,hospital complianceprograms becomea priority focusfor health carecompliance
focusalmostexclusivelyon the preventionof officers.In this context, peerrevieworganizations
financial health carefraud (upcoding,embezzle- (PROs)areperfectlypositionedto assistcompliance
ment, bribery, kickbacks,and the like) while paying officersin their quality-of-carecomplianceprograms.
lessattention to clinical carecomplianceissues.The PR
O S f W rkrecent releaseof the tatement 0 0
Institute of Medicine On March I, 1999, the
reporton medicalerrors The 6S0W also provides HealthCareFinancing
hasfocusedattention on . . Administration releasedits
the prevalenceof sub- opportunities for PROs to engage triennial requestfor
standard health care. Yet alternative care providers in quality proposal (RFP)for first-
medication errors are not round PROs.!While
the only evidenceof poor improvement projects and focus maintaining the focus
care.There~~eo~ers: attention on disadvantaged ~pon.
. UnderubhzatlOnof InpatIent
health careservicesis populations. hospital
fast becomingthe acutecare
favorite whipping boy quality
for prosecutors. improvement projects,traditional
. Nursinghomesareunder siegefor failing to casereview,and beneficiaryout-
provide adequate oversight, staffing, and services reach, the Sixth Statement of Work
to frail elderly residents. (6S0W) includes opportunities for
. Missouri'sattorney generalis suingMedicaid PROsto engagealternativecare .
managedcareplansfor failing to provide lead settingsand MedicareHMOsin SarahA.Grim
screeningservicesto indigent infants and chil- quality improvementprojects.In
dren in St. Louis. addition, the PaymentError
Sarah A. Grim, MHA, CHE, is chief executive officer
of the Missouri Patient Care Review Foundation. She
can be reached at 800/735-6776 or by e-mail at
mopro.sgrim@sdps.org. Gregg Laiben, MD, medical
director, and Lori Schieferdecker, LPN, clinical review
manager at the Missouri Patient Care Review Foun-
dation, contributed to this article.
Volume 2, Number 2 .Journalof Health CareCompliance
March/April 2000 RoySnell, Editor
Prevention Program will enlist the PROsin health
care fraud prevention activities. This column takes a
closer look at what PROswill be doing under the new
statement of work.
Task 1: National Quality Improvement Projects
PROswill continuein their role as"change
agents"in the quality improvementarena.This
builds upon the Health CareQuality Improvement~
1

2. Initiative (HCQII) with its National Cooperative
Cardiovascular Project (CCP), as well as the Fifth
Statement of Work successor,the Health Care
Quality Improvement Program (HCQIP).
HCQII's successrested upon the ability of PROsto
collaborate with the provider and practitioner
community to achieve measurable improvement in
health care quality. The Fourth Statement of Work
PROcontract implemented the first national quality
improvement project approach while allowing PROs
to develop their own local projects. Now, HCFA is
requiring all PROsto participate in six national
clinical projects, with local projects now relegated to
task 2 activities. The six clinical topic areasare acute
myocardial infarction (AMI), heart failure, pneumo-
nia, stroke/TIA/atrial fibrillation, diabetes, and breast
cancer (seechart, page 75).
Hospital and physician participation in task 1
national quality projects, while voluntary, is a
quality care compliance indicator.
Task 2: Local Quality Improvement Projects
The 6S0W also provides opportunities for PROs
to engagealternative care providers in quality
improvement projects and focus attention on
disadvantaged populations. Under local quality
improvement projects, both a specific setting and a
specific population will be targeted for limited-scope
quality improvement projects.
The second component of Task 2 is a project for
disadvantaged Medicare beneficiaries. This project is
expected to reduce the disparity between care
received by beneficiaries who are members of a
disadvantaged group and all other beneficiaries in
the state. Among targeted disadvantaged popula-
tions are minorities and Medicare/Medicaid "dual
eligibles."
Under a recently issued memorandum from
HCFA, PROswill select settings and topics from
among a list of HCFA priorities. The settings include
skilled nursing facilities (SNFs),home health agencies
(HHAs), end-stage renal diseasefacilities (ESRDs),and
physician offices. As with all PRO quality improve-
ment projects, an alternative setting project must
have clearly stated project goals and objectives (see
chart).
Alternative care provider and physician participa-
tion in the alternative care setting project, while
voluntary, is a quality care compliance indicator.
Task 3: Quality Improvement Projects in Con-
Junction with M+C Plans
Beginning on JanuaryI, 1999,Medicare+Choice
(M+C)plans are requiredto implement quality
improvement projectsaspart of the Quality Im-
provement Systemfor ManagedCare(QISMC)
standards.The plans must achievedemonstrable
2
and sustainedimprovement in significant aspectsof
clinical careand nonclinical services.(Interim
QISMCstandard1.1.2at AttachmentJ-6 of 6S0W
RFP).
EachM+C plan must initiate a certainnumberof
quality improvementprojects,including a HCFA-
directednational project.Diabeticcareis the first
suchproject.Otherprojectswill be selectedby the
plan on a topic that targetsthe specialhealth care
concernsof its enrollees.2
M+C managedcareplan participation in QISMC
is mandatory.Collaborationwith PROprojectsis a
quality carecomplianceindicator.
Journalof HealthCareCompliance. March/April2000

3. Task 4: Payment Error Prevention Program
Using the DIG audit opinion of HCFA's 1996
and 1997 financial statements as an impetus for
changing the 6S0W, HCFA is directing all PROsto
initiate a Payment Error Prevention Program or
PEPP.The purpose of PEPPis to reduce the occur-
rence of payment errors. Specifically PEPPis di-
rected to inpatient hospital PPSservices and
includes correct coding as well as the provision of
unnecessary services. This latter category will
include short-stay hospitalizations and unneces-
sary admissions.
While HCFA continues to make progressin
reducing the level of improper Medicare payments,
inpatient hospital servicesaccount for the majority
of payment errors. Almost 80 percent of all incorrect
payments occur in these areas:
. inpatient hospital services (26%);
. physician services(25%);
. home health agencies (13%); and
. outpatient hospital services (13%).3
According to the DIG, most coding errors fall
into four generalcategoriesand accountfor a set
percentageof the error rate nationally: insufficient
or no documentationerrors(17%),lack of medical
necessity(50%),incorrectcoding (18%),and
noncoveredor unallowableservices(15%).4
PEPPis intendedasan educationalstrategyto
reducepaymenterrors.This strategywill identify
areasof improvementthrough:
. monitoring of hospitalsfor coding and utiliza-
tion compliance;and
. developmentof interventionsto reducepayment
errors.
Hospitalparticipation in PEPPis mandatory.
Participationis a complianceindicator.
Task 5: Other Activities
Both.the law and the regulationsrequirePROsto
conduct a number of activitiesincluding traditional
casereview,post reviewactivities,convocationand
attendance at certain meetings, communication with
beneficiaries and providers, and other routine' ,.'-
responsibilities.

4. Provider,physician, and plan participation in
Task5 medicalreviewactivitiesis mandatory.Coop-
eration is a complianceindicator.
Conclusion
Quality of carecompliancecannot remain the
poor stepchildof the health carecomplianceindus-
try. Payersand employersaredemandingmore
information about health carequality while striving
to eliminate health carefraud and abuse.The 6S0W
quality projectswill build a powerfulnational
databaseon quality carecomplianceamongthe
nation's providers,physicians,and health plans. In
doing so,the databasemay enableHCFAto selec-
tively contract,over time, with the qualitycompliant
organizationsand clinicians while limiting the
participation of thosewho do not adhereto quality
improvementcomplianceprograms.
An electronic copy of the March I, 1999, 6S0W
is availableon the HCFAWeb site at
Reprint from Journalof Health Care Compliance, March/April 2000, 2(2), pages73-75 with permissionfrom
Aspen Publishers Inc., Gaithersburg Md., 800/638-8437. Copyright <02000.
4
www.hcfa.gov/quality/qIty-Sb.htm along with
other pertinent information about peer review
organizations. lHCC
This article was prepared by the Missouri Patient Care Review
Foundation under a contract with the Health Care Financing
Administration (HCFA). The contents do not necessarilyreflect HCFA
policy.
References
1. HCFA divides the 53 peer review organizations into three groups for each
Statement of Work Requestfor Proposal.For purposesof the 19996S0W
RFP,HCFA Round 1 PROswere requestedto submit applications by
March 31, 1999, while Round 2 and Round 3 PROssubmitted proposals
in June 1999.
2. Health Care Financing Administration, Sixth Statementof Work Requestfor
Proposalsfor PROs(March 1, 1999): 32.
3. Ibid., DaIle5.
4. "Testimony of MIke Hash, deputy administrator, HCFA. on the 1998 CFO
audit of HCFA Before the HouseCommittee on Government Reform,
Subcommittee on Government Management, Information, and
Technology," March 26, 1999.
S. Health Care Financing Administration, OCSOTOPSControl #99-22 "Task
2.1 Alternative Settings Memorandum" (October 29, 1999).
Healthjournal of CareCompliance. March/April2000