This Program Announcement expires on July 24, 2004, unless reissued.

IMPACT OF PAYMENT AND ORGANIZATION ON COST, QUALITY AND EQUITY

Release Date:  July 31, 2001

PA NUMBER:  PA-01-125 (This PA has been deactivated, see NOT-HS-05-009)

Agency for Healthcare Research and Quality

PURPOSE

The Agency for Healthcare Research and Quality (AHRQ) invites applications to 
conduct research related to the effects of payment and organizational 
structures and processes on the cost, quality and equity of health care 
services.  Research results are intended to 1) improve clinical practice, 2) 
improve the health care system"s ability to provide access to and deliver 
high quality, high-value health care, and 3) provide policymakers with the 
ability to assess the impact of payment and organizational changes on 
outcomes, quality, access, cost, and use of health care services.

Responding to the Institute of Medicine’s (IOM) report,  Crossing the Quality 
Chasm,  this Program Announcement (PA) expresses AHRQ’s highest priority 
interests in research that would provide rigorous, objective, and essential 
evidence required by public and private decision-makers seeking to understand 
and improve the health care system, to make changes in health care delivery, 
insurance, and financing, and to manage the system in a manner that would 
induce efficient, effective, equitable, accessible and timely health care.

Important issues to be addressed by such research include: 1) How do 
different payment methodologies and financial incentives within the health 
care system affect health care quality, costs, and access?  a) How do payment 
methodologies affect the behavior of health care organizations and individual 
providers?  b) Which payment arrangements among patients, providers, and 
health plans enhance patient-centered knowledge of and involvement with 
treatment regimens?  c) How do payment policies affect decisions about the 
purchase and selection of health services and health insurance?  What is the 
role of quality in such decisions?  What are the effects of such decisions on 
health care costs?  2) What has been the impact of purchaser and public 
sector initiatives on quality, costs, and access to health care and health 
insurance?  Of particular interest would be the impact of employer and 
coalition efforts on the quality and cost-effectiveness of care in the 
marketplace, the impact of State efforts to monitor and improve access and 
quality, and the impact of public and private payment changes on access to 
health care and to health insurance for vulnerable populations.  3) What 
organizational structures and processes are most likely to sustain high-
quality, efficient, effective, timely, and accessible health care? 4)  How do 
different patterns and levels of market competition affect the quality and 
cost of care?

This PA also expresses AHRQ’s interest in basic methodological work to 
support such research, including: development of payment methodologies, 
improvements in analytical and empirical methods required to simultaneously 
address issues of efficiency, quality, and equity, and improvement in data 
collection methods and qualitative methods needed to understand the structure 
of new health care organizations and an evolving health care system.  
Projects that develop these and other relevant methods are encouraged.  
However, grant applications for research projects that use existing methods 
to answer more immediate questions are also encouraged.

HEALTHY PEOPLE 2010

The Public Health Service (PHS) is committed to achieving the health 
promotion and disease prevention objectives of  Healthy People 2010,  a PHS-
led national activity for setting health improvement priorities for the 
United States (U.S.).  AHRQ encourages applicants to submit grant 
applications with relevance to the specific objectives of this initiative.  
Potential applicants may obtain a copy of  Health People 2010  at 
http://www.health.gov/healthypeople.

ELIGIBILITY REQUIREMENTS

Applications may be submitted by domestic or foreign, public or private not-
for-profit organizations, including universities, clinics, units of State and 
local governments, and eligible agencies of the Federal government.  AHRQ, by 
statute, can make grants only to not-for-profit organizations, however, for-
profit organizations may participate in grant projects as members of 
consortia or as subcontractors.  Organizations described in section 501(c) 4 
of the Internal Revenue Code that engage in lobbying are not eligible.

AHRQ encourages investigators who are women, members of minority groups and 
persons with disabilities to apply as Principal Investigators.

MECHANISM OF SUPPORT

The mechanism of support for this PA generally will be the research project 
grant (RO1).   Responsibility for planning, direction and execution of the 
proposed project will be solely that of the applicant.  The total project 
period for an application submitted in response to this PA may not exceed 
five years.

Awards will be administered under PHS grants policy as stated in the PHS 
Grants Policy statement.

Some of the topics or development of projects encouraged in this PA may also 
be more suitable for a small project grant (projects requesting total costs 
of $100,000 or less) (R03).  If so, applicants are encouraged to apply under 
the procedures outlined in the  AHRQ Small Research Grant Program  PA, 
published in the NIH Guide for Grants and Contracts (NIH Guide), January 2, 
2001.

Program Announcements and grants policy statements listed above are available 
through the AHRQ Web site http://www.AHRQ.gov (Funding Opportunities) and 
from the AHRQ Publications Clearinghouse (see INQUIRIES).

RESEARCH OBJECTIVES

Background

The combination of rapid advances in medical knowledge and increased use of 
evidence-based decision making in medicine holds great promise for improving 
health care.  Developments in genomics, pharmaceuticals, informatics and 
other technologies promise increased longevity and better health and 
functioning.  Health care, however, can only be as good as the systems that 
provide it.  

Much health care in the U.S. is provided within large but often fragmented 
systems with complex funding streams.  While the U.S. has an excellent health 
care system in many ways, it also exhibits waste and inefficiency which in 
turn exacerbates health care costs, affordability, and access problems (IOM, 
2001).  People with low incomes, from rural or urban areas and those who lack 
health insurance are particularly likely to experience these problems.  In 
addition, the current health care system lacks the continuity of services 
that the chronically ill patient needs.

One result of the current health care system is an increased incidence of 
injuries to patients from the care that is intended to help them, as 
documented in a 1999 IOM report  To Err is Human: Building a Safer Health 
System.   Problems with patient safety, however, reflect  only a small part 
of the unfolding story of quality in American health care,  according to a 
more recent IOM report  Crossing the Quality Chasm  (IOM, 2001).  As 
emphasized in this latter report, the current health care system also has an 
impact on other dimensions of quality, such as efficiency, effectiveness, 
equity, timeliness and patient-centeredness.

Specifically,  Crossing the Quality Chasm  draws attention to problems in the 
health care system, identifying a  quality chasm  between the health care we 
have and the health care we could have (IOM, 2001).  The report points out 
that this  chasm  to a large extent springs from two overarching system 
features:  the way we pay for care, and the way we structure the 
organizations that provide it.  Although payment is just one of many factors 
that affect provider and patient behavior, it is an important one that 
subsequently influences the quality of health care.  The current payment 
mechanisms, the IOM asserts  do not adequately support or encourage the 
provision of high quality care.   In addition, the report acknowledges that 
the structure of health care systems and processes within them also make the 
attainment of high-quality care difficult.  The result of current payment and 
organization strategies, according to the IOM, is that  health care harms too 
frequently and routinely fails to deliver its potential benefits.   At the 
same time, public and private decision-makers are concerned about recent 
increases in the cost of care.  

Summarizing these widespread quality problems,  Crossing the Quality Chasm  
declares that  the American health care delivery system is in need of 
fundamental change.   The report calls for  action to improve the American 
health care delivery system as a whole, in all of its quality dimensions 
(i.e., efficiency, effectiveness, equitability, timeliness, patient-
centeredness, and safety), for all Americans.   Improvements in these six key 
dimensions of health care would address not only concerns about quality but 
also concerns regarding the rising costs of care.

 Crossing the Quality Chasm  and similar calls for action immediately raise 
research questions about public and private sector changes in the health care 
system that would most likely yield desired improvement.  Payment changes 
under consideration include new methods of reimbursement for providers, 
practical and effective risk adjustment methods, alternative approaches to 
addressing capital requirements for improving the delivery of health care, 
and changes in public and private purchasing efforts.  Organizational and 
system changes include more efficiently designed care processes, effective 
use of information technologies, the development of effective teams, improved 
coordination of care across patient conditions, services, and settings, 
network affiliations and alliances that promote high-quality care and 
different market rules and incentives.

Given the importance of payment and organization on the cost, quality and 
equity of health care, evidence-based decision making will be as important in 
the policy and management arena as it is in medicine (Kovner et al., 2001).  
In choosing among alternative methods for financing and organizing health 
care, it will be critical for public and private policymakers to have recent, 
evidence on the impact of differing payment methods and organizational 
structures, and in particular on how these variables affect cost, quality and 
equity of health care.  Achieving this knowledge will be a sizeable and 
continuing task, given the complexity and frequent change in the marketplace.  
Adding to the importance and difficulty of the task is the need to be able to 
identify the impact of payment and organizational structure not just in the 
aggregate but for particular priority populations (e.g., inner-city areas, 
rural areas, including frontier areas, low-income groups, minority groups, 
women, children, the elderly, and individuals with special health care needs, 
including individuals with disabilities and individuals who need chronic care 
or end-of-life health care).   It is not enough to improve health care on 
average.  A systematic examination of ways to improve health care for all is 
essential.

Some of the evidence for answering these questions will come from research 
AHRQ has supported in the recent past through a series of Requests for 
Applications (RFAs) ( Market Forces in a Changing Health Care System (RFA-HS-
95-005), Referrals from Primary to Specialty Care  (RFA-HS-96-006),  Quality 
of Care Under Varying Features of Managed Care Organizations  (RFA-HS-98-
005),  Health Care Access, Quality and Insurance for Low-Income Children  
(RFA-HS-99-005),  Health Care Markets and Managed Care  (RFA-HS-00-001)).  In 
addition, research funded by more recent AHRQ initiatives will inform 
processes related to two (i.e., patient-centeredness and safety) of the six 
quality dimensions of health care (e.g.,  Patient-Centered Care: Customizing 
Care to Meet Patients  Needs ,  Improving Patient Safety: Health Systems 
Reporting, Analysis, and Safety Improvement Research Demonstrations (RFA-HS-
01-003)).  Given the magnitude and complexity of recent payment, market, and 
delivery system changes, and given the IOM-documented impact of these 
variables on the efficiency, effectiveness, equitability and timeliness of 
health care, AHRQ believes a broader, continuing and more sustained research 
effort is needed.

Objectives and Scope of Activity

To improve the quality of the health care system, providers, purchasers, 
system managers and policymakers need knowledge of the impact of different 
payment and organizational arrangements on the cost, quality and equity of 
health care.  AHRQ seeks to support research in four areas including: 1) 
payment methods and policies, 2) public and private purchasing initiatives, 
3) organizational structures and processes, and 4) market forces.

1.   Payment Methods and Policies

Payment methodologies and policies are a critical determinant of the success 
of any health care system.  They strongly influence the delivery of care by 
health care organizations and professionals and the selection and utilization 
of services by patients.  For example, under a fee-for-service system, there 
is an incentive to overuse services that are not necessary or may harm a 
patient.  On the other hand, under a capitated system, there is an incentive 
to under use necessary services.  Other reimbursement strategies and 
methodologies (e.g., diagnostic related groups (DRGs), risk adjustment, 
carve-outs, tax policies, physician reimbursement) also can affect the cost 
and quality of care.  As suggested in the IOM’s  Crossing the Quality Chasm  
report, current payment mechanisms often create obstacles to the goal of 
achieving efficient, high quality care.  Payment methods often do not 
adequately support or compensate health care professionals for providing high 
quality care, or reward providers for quality improvements.  Financial 
barriers embedded in payment policies  reinforce fragmentation by paying 
separately according to the setting of care and provider type, and by not 
giving providers the flexibility to customize care for individual patients  
(IOM, 2001).  While there has been a great deal of research on the incentives 
of payment methods with respect to cost and utilization, there has been 
comparatively little on how payment methods and incentives affect quality of 
care from the perspective of the provider, patient or family.  The IOM’s 
report,  Crossing the Quality Chasm,  specifically suggests that  private and 
public purchasers should examine their current payment methods to remove 
barriers that currently impede quality improvement, and to build in stronger 
incentives for quality enhancements. 

AHRQ encourages studies that will a) examine existing payment methodologies 
and incentives designed to reduce barriers to quality and incorporate 
stronger incentives for quality enhancement, b) examine processes needed to 
remove barriers to providing high quality, efficient, effective care under 
new payment systems that reward providers for integrated care, c) examine 
methodological issues surrounding the definition of provider and the economic 
unit at which payment methodologies have their effect, d) pilot test and 
evaluate innovative financing systems that provide incentives for a high 
quality, cost-effective and efficient mix of preventive, acute and long-term 
care (Cohen and Spector, 1996), e) pilot test and evaluate innovative payment 
mechanisms such as:  blended methods of payments for providers, multi-year 
contracts, payment modifications to encourage the use of electronic 
interaction among clinicians and between clinicians and patients, risk 
adjustment, bundled payments for priority conditions and alternative 
approaches for addressing the capital investments needed to improve quality  
(IOM, 2001), and/or f) pilot test or evaluate innovative financing systems 
that provide incentives for enhanced patient/family participation in medical 
care decisionmaking and long term care planning.  

In particular, AHRQ encourages researchers to examine the influence of 
payment methodologies and policies on the behavior of health care 
organizations and providers, patient participation in care and employee 
decision making.  Illustrative questions in each of the areas include:

a)  Behavior of Health Care Organizations and Providers

o  How do payment methodologies affect integration of care?  What payment 
methodologies do a better job of integrating physical and mental health? 
Acute and long-term care?  What financial incentives increase continuity of 
care and access to appropriate services for particular groups, such as 
children, people with low incomes, the elderly, people with disabilities or 
people with chronic illness?
o  How can barriers to providing high quality, efficient, effective care be 
removed under new payment systems that reward providers for integrated care?
o  How do different payment systems affect the distribution of health care 
services? (e.g., Cohen and Cunningham, 1995). 
o  What impacts do different payment arrangements have on the organization of 
providers?
o  How can reimbursement strategies be used to increase quality of care and 
reduce caregiver burden for families with long-term health care needs (e.g., 
home health, respite care, nursing home and other residential facilities, 
assisted living facilities)? 
o  How do payment strategies affect staff turnover and supply (e.g., nursing 
shortages in hospitals, staff shortages in long-term care facilities and home 
care)?

b)  Patient Involvement in Care

o  Which payment arrangements among patients, providers, and health plans 
enhance patients  knowledge of and involvement in treatment regimens? 
o  How have existing payment arrangements affected patient participation in 
care?  Does the use of these arrangements encourage patient involvement in 
care?  
o  What payment arrangements do patients prefer?  How do these preferences 
vary?  
o  How can payment arrangements encourage the use of innovative technologies 
to improve patient involvement in care?  Where and when are specific payment 
arrangements appropriate? 
o  How do payment arrangements influence the interaction between patients and 
clinicians?
o  What is the impact of enhanced patient involvement on the utilization of 
health care services and associated expenditures?

c)  Employee Behavior

o  How do payment policies (either current policies or alternative policies) 
affect employee decisions about the purchase and selection of health services 
and health insurance?  For example, to what extent does benefit coverage, 
coverage of dependents and co-payments influence decisions about the purchase 
of health insurance?  
o  How does employee behavior in response to payment policies subsequently 
influence quality of care?
o  How do payment systems affect employee access to specific health care 
services? 
o  How do payment systems affect what employers and employees spend on health 
care?

2.   Public and Private Purchasing Initiatives

In any health care system, those who pay for care have a major impact on the 
cost, quality and equity of that care.  In the U.S. market-driven system, the 
major payers are private employers and public purchasers.  In 1999, 84.2 
percent of all Americans in the civilian noninstitutionalized population had 
some type of private or public health insurance coverage.  About 68.1 percent 
of Americans obtained health insurance from private sources.  Another 16.1 
percent had only public sources of coverage, primarily Medicare and Medicaid.  
(The remaining 15.8 percent of Americans, 42.8 million people, were uninsured 
(Rhoades and Chu, 2000).)   

The future behavior of these public and private purchasers will be a major 
determinant of our capacity to close the  chasm  identified by the IOM, to 
maximize quality and equity, and minimize waste and inefficiency, in the 
health care system.  At this point, however, little is known about the 
present motivations, strategies and behaviors of these purchasers, and even 
less about the impact of such strategies on the quality of care (i.e., if and 
how purchasers are using their market power to drive quality improvements).  
For example, although some literature suggests that non-clinical  quality  
markers may be a consideration of purchasers, little research exists about 
how, when and under what circumstances these private purchaser strategies 
affect individual, corporate and community health (Fraser, 2000), and even 
less knowledge is available about public purchasing efforts.

To date, most purchaser efforts to improve quality and efficiency have been 
done individually or through regional health care coalitions.  During the 
past year, however, a new national group of large purchasers and coalitions   
the Leapfrog Group (see www.leapfroggroup.org)   has formed with the 
deliberate intent of combining forces to increase their purchasing power.  
The Leapfrog Group is a consortium of Fortune 500 companies and other large 
private and public health care purchasers sponsored by The Business 
Roundtable.  Their explicit goal is to  mobilize employer purchasing power to 
trigger breakthroughs in the safety and the overall value of health care to 
American consumers.   Such an effort provides a natural demonstration that 
could prove extremely instructive to the purchasing and policy community 
seeking ways to close the  quality chasm,  but rigorous empirical evidence is 
not yet available. 

Closing these information gaps is critical to closing the  Quality Chasm.   
Employers, coalitions and public purchasers need evidence of which strategies 
are effective, and under what circumstances, for maximizing quality, equity, 
and efficiency, and what the payoff for employee/family health, satisfaction 
and productivity can be.  Federal and State policymakers who set the ground 
rules for the marketplace also need to know the extent and success of such 
activities so they can determine how to influence employer behavior and the 
market in which health care is bought and sold, and in fact so they can 
assess the likelihood that our market-based system ever will be able to close 
the quality chasm.  Evidence-based decisionmaking by purchasers and 
policymakers requires rigorous qualitative and quantitative analyses of past 
purchaser behaviors as well as evaluations of future natural experiments, 
pilots, and demonstrations by private and public purchasers.  Examples of 
particular questions include:

o  Motivation and extent of value-based purchasing efforts:  To what extent 
and in what ways do purchasers factor particular dimensions of quality and 
efficiency into their purchasing decisions and relationships?  How do these 
efforts vary by types of employer (public vs. private, small vs. large, 
national vs. local)?  Are there market factors that affect employer and 
coalition decisions to pursue these efforts, and if so, what are they?  How 
do employer efforts to purchase quality care differ across geographic 
regions?  What are the organizational differences between purchasers who are 
implementing strategies to improve quality and those who are not?  What are 
organizational barriers to implementing purchasing strategies aimed at 
improving quality or moderating cost?

o  Use of market-based purchasing strategies:  What determines which 
strategies they pursue, and what is known about the extent and circumstances 
of success for alternative strategies?  Do providers respond to purchasers  
demand for information, and if so, do they report information accurately?  
What types of purchaser strategies motivate providers to change behavior?  Do 
purchasers change who they contract with when quality standards are not met 
by providers?  Do providers take steps to improve care as a result of these 
efforts?  What impact do these efforts have on the broader marketplace?

o  Impact on cost, quality, and equity:  What is the impact of market-based 
purchaser strategies on cost, quality, and equity of care for a) employees 
and beneficiaries, b) the community as a whole, c) vulnerable populations?  
How much market share is required for purchasers to affect quality in the 
market as a whole?  What is the impact of value-based purchasing efforts by 
public and private purchasers on access, quality and cost of care for the 
uninsured in the community? 

o  Use of employee-based strategies:  Some purchasers are focusing their 
efforts not on direct market leverage but on educating employees to make 
informed choices.  What tools are purchasers using to communicate quality of 
health care information to employees, and how effective are these tools?  
Does the information communicated provide incentives for consumers to choose 
higher quality care, or only comparative information?  Which incentives or 
types of information are most likely to motivate consumers to choose higher 
quality care?  What is the impact of such strategies on employee choices?  
What is the impact on the marketplace and on employee health?

o  Use of community-based strategies:  Another approach some purchasers are 
taking is to create or participate in community-wide efforts to improve 
health care and community health.  What has been the concrete impact of such 
strategies, and what lessons can these efforts provide to other communities?

o  Business case for quality:  Does higher quality health care improve 
employee health so that it in turn affects the corporate bottom line, and if 
so, to what extent does employee health affect corporate profits?  Is there a 
business case for quality for providers, or a minimum threshold that would 
make the business case compelling for providers? 

3.   Organizational Structures and Processes

The health care system has undergone tremendous changes over the last decade.  
Consolidations among health plans, hospitals and physician practices have 
significantly altered the market structure.  In coping with environmental 
turbulence, health care organizations have tried various survival strategies, 
ranging from building strategic alliances to enhancing internal capabilities 
(Luke et al., 2000). 

Consolidation and integration has been pursued by many health care 
organizations.  Prior research in this area has focused on the impact on cost 
while little is known about the effects on quality of care.  For example, 
studies on system integration or network affiliation have revealed mixed 
results on the effectiveness of such interorganizational arrangements on cost 
control (Bazzoli et al., 2000, Clement et al., 1997).  Building physician and 
clinical integration, which has been suggested as a promising mechanism for 
improving quality of care and efficiency, were found highly prevalent among 
urban hospitals but with little impact on hospital costs (Burns et al., 1998, 
Alexander et al., 1999, Bazzoli et al., 2000).  As new organizational forms 
continue to evolve in the health care sector, policymakers and health care 
managers need to understand the interrelationships among providers, health 
plans, and purchasers that are represented by these new forms and the 
implications for cost and quality of care.

Refining internal capabilities is another widely adopted strategy by health 
care organizations.  The most common emphasis has been on improving process 
of care through implementation of reengineering programs such as continuous 
quality improvement (CQI)/ total quality management (TQM).  The literature, 
however, has yet to demonstrate the success of reengineering in lowering cost 
and improving patient outcomes (Walston and Bogue, 1999, Walston et al., 
2000).  This points to the need for more research to understand the role of 
organizational design at different levels (i.e., system, organization, 
department and individual practitioner) in influencing the process and 
quality of care.  Effective organizational design results from a match with 
the specific environment and the nature of technologies involved in providing 
care.  Empirical studies have shown the utility of employing such a 
perspective to study changes within health care organizations.  For example, 
researchers have found that the inclusion of clinical staff in strategic 
decisionmaking was associated with lower hospital costs (Ashmos et al., 1998) 
and better resident outcomes in nursing homes (Anderson and McDaniel, 1999).

Despite these changes, the current design of the health care system is poorly 
organized and highly fragmented.  The health care system and organizations 
lack  rudimentary clinical information capabilities  (IOM, 2001), resulting 
in poor quality of care that is characterized by unnecessary duplication of 
services, long waiting times and overuse, underuse or misuse of services.  In 
addition, care delivery processes are overly complex.  Care processes  waste 
resources, leave unaccountable gaps in coverage, result in loss of 
information, and fail to build on the strengths of all health professionals 
involved to ensure that care is timely, safe and appropriate  (IOM, 2001).  
The 2001 IOM report calls for a fundamental redesign in the organization and 
delivery of health care.  Specifically, the report challenges representatives 
from health care organizations (e.g., health care systems, health care 
networks, managed care organizations, health plans hospitals, medical groups, 
multi-specialty clinics, integrated delivery systems) to  identify, adapt and 
implement state-of-the art approaches . . . [that] redesign care processes 
based on best practices, use information technologies to improve access to 
clinical information and support clinical decisionmaking, enhance knowledge 
and skills management, develop effective teams, coordinate care across 
patient conditions, services and settings over time and incorporate 
performance and outcome measures for improvement and accountability. 

To support the fundamental redesign of the organization and delivery of 
health care and support evidence-based management, health care organizations 
and institutions, clinicians and policymakers need rigorous research on the 
impact of organizational structures and processes on the cost, quality and 
equity of care.  Illustrative questions are as follows:

o  How can organizational structures and processes (e.g., network 
affiliations and alliances, clinical integration, provider consolidation and 
integration, case management, care coordination, interaction between 
physicians and non-physician members of the care team, development of 
effective teams, leadership within organizations, organizational culture) 
reduce fragmentation and increase continuity of care across settings and 
services for children?  For chronically ill individuals?  For the disabled 
and elderly needing long-term care?
o  How do various strategic activities pursued by health care organizations 
(e.g., hospitals, assisted living facilities, long-term care facilities, 
mental health facilities, community health facilities) influence the cost and 
quality of care?  For example, what impact do system integration, network 
affiliation, and alliance formation have on internal organizational aspects 
of individuals and providers and the subsequent care processes?
o  Given many of the challenges currently faced by health care organizations 
(e.g., long-term care staffing shortages, growth of the uninsured population, 
provision of care in non-traditional sectors, including social welfare, 
criminal justice and education), what are effective innovative approaches 
that can be taken to organize the delivery of care that will increase 
efficiency and improve quality?
o  How can organizational structures and processes be modified to increase 
access to services by under-served minority members?  To improve the quality 
of care to minority populations and decrease racial and ethnic disparities?
o  How can organizational structures and processes be modified to decrease 
staffing shortages that compromise quality care and to maximize the quality 
and efficiency of care in the face of such shortages?
o  What is the impact of changes in ownership and restructuring of health 
care organizations on organizational culture and climate and the subsequent 
care processes?

4.   Market Forces

Organizational structures, payment, and associated processes operate within 
the context of market forces, such as increasing managed care, incentive 
driven behavior, and general market competition.  Legislative, regulatory, 
and other public sector activities (e.g., decreased funding for Federal, 
State and local providers and regulatory and legal actions) interact with 
market forces to provide additional environmental effects on the health care 
system (IOM, 2001, Appendix B).

In the last several years, with the absence of major national health care 
reforms, relatively unconstrained market forces have driven periods of 
relatively frequent mergers, acquisitions and affiliations within and between 
health plans, hospitals and physician practices, and other organizational 
changes.  Recently some observers, however, have offered evidence of re-
fragmentation in some of these sectors (Robinson, 1996).  In addition 
purchasers and health plans also have been experimenting with new 
affiliations and partnerships.  

Taken together, such activities have led to increased complexity in both the 
financing and organization of the health care system.  These changes in the 
health care marketplace raise a number of research questions concerning the 
extent and nature of market forces, the role of market forces in payment 
policies, the effect of market forces on financing and organization, and the 
associated organizational effects of these market forces on health care 
costs, quality and access.  In order to make desirable fundamental changes in 
America’s health care system and avoid unintended consequences of 
decisionmaking, public and private policy leaders need evidence not only on 
payment mechanisms and organizational structures affecting cost, quality and 
access, but also on policy-relevant characteristics of the environment that 
shape health care financing and organization.  Illustrative questions are as 
follows:

o  Market Forces:  How do market forces (e.g., new broader forms of managed 
care, consolidation in certain health care sectors, fragmentation in others, 
changes in prices of pharmaceuticals, economic characteristics of new health 
care technology, changes in the supply of physicians, nurses, and allied 
health professionals, availability of capital for improvements, variation in 
contractual arrangements, and especially payment arrangements) affect 
organizational structure (e.g., HMOs, PPOs and new organizational types), 
behavior (e.g., integration of services, choices of technology including 
informatics and use of resources) and outcomes (e.g., efficiency, financial 
stability of organizations serving disadvantaged and priority populations)?  

Specifically, how do different patterns and levels of market competition 
affect the organization and delivery of health care and its cost and quality?  
Similarly, how have competitive factors affected cost and quality of care in 
rural markets?  In urban markets?  In long-term care markets?  What is the 
impact of market competition operating through organizational change on the 
quality of care provided to the poor?  How has the consolidation of 
facilities and institutions and rise in bankruptcies affected access, quality 
and cost of long-term care?  What features of health care markets have 
demonstrated improvements in the efficient use of resources used in providing 
health services?  What are the consequences of such improvements for the 
distribution of costs across providers, plans, patients and purchasers?  Who 
really pays?  What are the associated consequences of market-driven 
organizational change for health care quality and access to care?  How has 
the growth of the assisted living industry influenced the use, quality and 
cost of nursing homes?  What has been its impact on the long-term care needs 
of families?

o  Interaction of Market Forces with Public Sector Initiatives:  How does the 
legislative, regulatory and judicial environment (e.g., Employee Retirement 
Income Security Act (ERISA), Health Insurance Portability and Accountability 
Act of 1996 (HIPAA), Balanced Budget Act of 1997 (BBA), Olmstead decision of 
1999) interact with market forces as described above to effect organization 
and payment?  What are the effects of regulatory and legislative changes on 
public sector initiatives to provide incentives for quality-enhancing 
organizational structure and processes?  On the distribution of 
organizational types?  On features of health care organizations?  On payment 
arrangements and associated consequences for health care costs, quality and 
equity?  How have regulatory policies that encourage or restrict civil 
lawsuits influenced provider behavior?  What is the impact on quality and 
cost?  How has the Olmstead decision impacted the financing and organization 
of health care delivered to individuals with disabilities?  What has been the 
subsequent affects on cost, quality and access?

Methods

1.   Types of Research

Individual projects may use rigorous qualitative or quantitative methods, or 
a combination of the two.  Qualitative methods may be especially useful in 
studying complex multi-tiered organizations and can either be used alone to 
deepen understanding of how organizational characteristics are connected to 
the quality and efficiency of health services or to complement quantitative 
methods and thereby strengthen the research design.  For a detailed 
discussion of the use of qualitative methods in health services research, see 
Health Services Research, 1999, Issue No. 5, Part II.  

Quantitative methods should be rigorous and use state-of-the-art 
methodologies.  Projects using such methods should be grounded in appropriate 
theoretical frameworks.  Hypotheses-testing projects should present competing 
hypotheses clearly.  Applied and new quantitative methods are expected to 
address methodologic problems, such as endogeneity, selection bias, 
confounding variables, and clustering.

AHRQ encourages basic methodologic research including development of tools 
and methods as well as more applied research.  For example, the development 
of new measurement tools to permit accurate and valid estimates of health 
care utilization, expenditures and sources of payment for care received under 
a more  patient-centered  system are encouraged, as are the identification of 
cost efficient and feasible modifications to existing data systems to obtain 
the necessary linkages in episodic provider and patient specific data that 
facilitate more accurate estimates of expenditures.

2.   Data Sources

For research that is designed to use existing data, AHRQ encourages research 
applications that will use data from the Medical Expenditure Panel Survey, or 
MEPS (http://www.meps.ahrq.gov/), the Healthcare Cost and Utilization 
Project, or HCUP (http://www.ahrq.gov/data/hcup/), and other AHRQ sources. 
Additional information is listed below in the AHRQ Data Section under 
Application Procedures. 

Development of large new surveys is not discouraged, but it is expected that 
most research supported under this initiative will use existing data, where 
possible, for several reasons: 1) Such data may be quite appropriate for 
research expected under this PA, given that they are often connected to 
reimbursement, 2) Use of such data is efficient and expedient, since they do 
not require collection and are relatively available, 3) Given rapid changes 
in health care organizations and commensurate changes in the legislative and 
regulatory environments, both the research questions and the decisionmaking 
context for some research encouraged under this PA imposes demands for 
timeliness in conducting such research and on the reporting of results, thus 
making existing data sources attractive, 4) Application of rigorous 
statistical techniques can be used to address certain inherent weaknesses in 
the use of existing data.  Thus, investigators are expected to acquire, 
process, and use existing data from multiple sources to capture complex 
interactions within organizations and between organizations. 

Investigators interested in larger data acquisition efforts are urged to 
contact program staff.  Note that proposed projects with direct costs 
exceeding $500,000 in any one year require permission from AHRQ program staff 
two months prior to submission of the application. (See INQUIRIES).

3.   Partnerships and Co-Sponsors

AHRQ also encourages partnerships with private and public organizations to 
facilitate development and sharing of scientific knowledge and resources, 
including cost-sharing mechanisms, projects that will produce results within 
two to three years, and results that can be integrated rapidly into practice 
or policy.  

AHRQ encourages investigators to consider evaluations of Federal- and State-
level initiatives (e.g., demonstrations) intended to align current payment 
methods and purchaser strategies with quality improvement goals.  In 
addition, State governments with access to unique data that would contribute 
to the research areas described in this PA are encouraged to partner with 
research institutions, especially if proposed research could be generalized 
to other State health care experiences.  In the case of evaluation of Federal 
or State public programs, applications should include letters of support and 
cooperation from the appropriate Agency and show how the information will be 
disseminated to inform subsequent efforts.

AHRQ is interested in co-funding projects with other public and private 
agencies.  In particular, the National Cancer Institute (NCI) has expressed 
interest in co-sponsoring selected projects that have the potential to 
improve the translation of research evidence to improved cancer care 
services.  The PA is consistent with the extramural program focus of both the 
Outcomes Research and Health Services and Economics Branches of the Applied 
Research Program in Division of Cancer Control and Population Sciences 
(DCCPS).  Efforts to make cancer care and other health services more 
efficient, effective, equitable, timely, patient-centered and safer should 
draw on the best evidence about how to accomplish these objectives, and 
successes should be well documented and widely disseminated.  Interested 
applicants should contact a program officer in the Center for Organization 
and Delivery Studies (CODS) for further details (see INQUIRIES). 

In addition, the Changes in Health Care Financing and Organization (HCFO) 
initiative at the Robert Wood Johnson (RWJ) Foundation has expressed an 
interest in co-sponsoring selected projects on the Leapfrog Group to evaluate 
the effect of current program efforts on quality of care.  Interested 
applicants should contact a program officer in the CODS for further details 
(see INQUIRIES). 

4.   Special Considerations

In addition, AHRQ has identified, as a special focus of research, those 
health payment and organizational issues related to the following priority 
populations: low income groups, racial and ethnic minority groups, women, 
children, the elderly, individuals with special health care needs, including 
individuals with disabilities and those who need chronic care and end-of-life 
care, and individuals living in inner-city, rural and frontier areas.  
Research focused on specific conditions is also encouraged.  Particular 
emphasis is placed on those conditions that are prevalent, expensive to 
manage, or policy relevant.

Policy Relevance and Dissemination

Studies under this PA are expected (1) to contribute to our basic 
understanding of recent changes in health care payments, markets and 
organizations, (2) to build capacity   research tools, data, and teams-- to 
answer associated questions of policy relevance, and (3) to produce 
information in formats useful to participants in the formulation of public 
and private policy.  Applicants should be concrete in describing (1) the 
decision making audiences that potentially would be most interested in the 
proposed research and (2) how applicants anticipate their results being used 
for public and private policy purposes.  Dissemination strategies should not 
be limited to publication in peer-reviewed journals but may encompass a 
variety of approaches, such as translating results into non-technical 
monographs and distributing them through associations of private and public 
officials, educating legislators, public administrators, health plan 
executives, employers, and others in seminars, and outreach to mass media.  
Plans, time lines, personnel, and budgets for such dissemination efforts 
should be explicitly presented.

SPECIAL REQUIREMENTS

Data Privacy

Pursuant to section 903(c) of the Public Health Service Act (42 USC 299a-
1(c)), information obtained in the course of any AHRQ-supported study that 
identifies an individual or entity must be treated as confidential in 
accordance with any promises made or implied regarding the use and purposes 
of the data collection.  Applicants must describe in the Human Subjects 
section of the application procedures for ensuring the confidentiality of 
such identifying information.  The description of the procedures should 
include a discussion of who will be permitted access to the information, both 
raw data and machine readable files, and how personal identifiers and other 
identifying or identifiable data will be safeguarded.

The grantee should ensure that computer systems containing confidential data 
have a level and scope of security that equals or exceeds those established 
by the Office of Management and Budget (OMB) in OMB Circular No. A-130, 
Appendix III - Security of Federal Automated Information Systems.  The 
National Institute of Standards and Technology (NIST) has published several 
implementation guides for this circular.  They are : An Introduction to 
Practices for Securing Information Technology Systems, and Guide for 
Developing Security Plans for Information Technology Systems.  The circular 
and guides are available on the web at: 
http://csrc.nist.gov/publications/nistpubs/800-12/.

Rights in Data
AHRQ grantees may copyright or seek patents, as appropriate, for final and 
interim products and materials including, but not limited to, methodological 
tools, measures, software with documentation, literature searches, and 
analyses, which are developed in whole or in part with AHRQ funds.  Such 
copyrights and patents are subject to a Federal government license to use 
these products and materials for AHRQ purposes.  In accordance with its 
legislative dissemination mandate, AHRQ purposes may include, subject to 
statutory confidentiality protections, making research materials, data bases, 
and algorithms available for verification or replication by other 
researchers, and subject to AHRQ budget constraints, final products maybe 
made available to the health care community and the public by AHRQ, or its 
agents, if such distribution would significantly increase access to a product 
and thereby produce public health benefits.  Ordinarily, to accomplish 
distribution, AHRQ publicizes research findings but relies on grantees to 
publish in peer-reviewed journals and to market grant-supported products.

INCLUSION OF WOMEN, MINORITIES AND CHILDREN IN RESEARCH STUDY POPULATIONS

It is the policy of AHRQ that women and members of minority groups be 
included in all AHRQ-supported research projects involving human subjects, 
unless a clear and compelling rationale and justification are provided that 
inclusion is inappropriate with respect to the health of the subjects or the 
purpose of the research.  

All investigators proposing research involving human subjects should read the 
UPDATED  NIH Guidelines for Inclusion of Women and Minorities as Subjects in 
Clinical Research,  published in the NIH Guide for Grants and Contracts on 
August 2, 2000 
(http://grants.nih.gov/grants/guide/notice-files/NOT-OD-00-048.html), 
a complete copy of the updated Guidelines are available at 
http://grants.nih.gov/grants/funding/women_min/guidelines_update.htm: The 
revisions relate to NIH defined Phase III clinical trials and require: a) all 
applications or proposals and/or protocols to provide a description of plans 
to conduct analyses, as appropriate, to address differences by sex/gender 
and/or racial/ethnic groups, including subgroups if applicable, and b) all 
investigators to report accrual, and to conduct and report analyses, as 
appropriate, by sex/gender and/or racial/ethnic group differences.

To the extent possible, AHRQ requires adherence to these NIH Guidelines.

Investigators may obtain copies from the above sources or from the AHRQ 
Publications Clearinghouse, listed under INQUIRIES, or from the NIH Guide Web 
site http://grants.nih.gov/grants/guide/index.html.

AHRQ program staff may also provide additional information concerning these 
policies (see INQUIRIES).

APPLICATION PROCEDURES

Applications are to be submitted on the research grant application form PHS 
398 (rev. 5/01) available at 
http://grants.nih.gov/grants/funding/phs398/phs398.html.  
Although applicants are strongly encouraged to use the 05/01 revision of the 
PHS 398 as soon as possible, the 4/98 version may be used for receipt dates 
until January 9, 2002.  State and local government applicants may use PHS 
5161-1, Application for Federal Assistance (rev.5/96), and follow those 
requirements for copy submission.  Applicants are encouraged to read all PHS 
Form 398 instructions prior to preparing an application in response to this 
PA.

Submit a signed, typewritten original of the application, including the 
checklist, and five signed photocopies, in one package to:

Center for Scientific Review
National Institutes of Health
6701 Rockledge Drive, Room 1040-MSC 7710
Bethesda, MD  29892-7710
(20817 for express/courier service)

AHRQ is not using the Modular Grant Application and Award process.  
Applicants for funding from AHRQ should prepare applications according to 
instructions provided within form PHS 398.

Beginning with applications for AHRQ submitted for the February 1, 2001 
receipt date, Institutional Review Board (IRB) approval of human subjects is 
not required prior to peer review of an application unless otherwise 
indicated by the Agency 
(http://grants.nih.gov/grants/guide/notice-files/NOT-HS-00-003.html.)  
All investigators/applicants proposing research involving 
human subjects should pay particular attention to the instructions in the 
form PHS 398 regarding human subject involvement. 

The PHS 398 research grant application instructions and forms (rev. 5/2001) 
at http://grants.nih.gov/grants/funding/phs398/phs398.html are to be used in 
applying for these grants and will be accepted at the standard application 
deadlines (http://grants.nih.gov/grants/dates.htm) as indicated in the 
application kit.  This version of the PHS 398 is available in an interactive, 
searchable PDF format. Although applicants are encouraged to begin using the 
5/2001 revision of the PHS 398 as soon as possible, the NIH will continue to 
accept applications prepared using the 4/1998 revision until January 9, 2002. 
Beginning January 10, 2002, however, the NIH will return applications that 
are not submitted on the 5/2001 version.  For further assistance contact 
GrantsInfo, Telephone 301/710-0267, Email: [email protected].

AHRQ applicants are encouraged to obtain application materials from the AHRQ 
Publications Clearinghouse  (see INQUIRIES).

On line 2 of the face page of the application, mark the  yes  box and type 
the PA number and title in the space provided.

AHRQ encourages applicants to review all application Form 398 instruction 
prior to completing an application.  The PHS 398 type size requirements (p.6) 
will be enforced rigorously and non-compliant applications will be returned.

Receipt dates for R01 grant applications are three times annually: October 1, 
February 1, and June 1.  The last date for submitting initial R01 
applications in response to this PA is June 1, 2004.  R03 grant applications 
are received on March 24, July 24, and November 24. The last date for initial 
R03 applications in response to this PA is July 24, 2004.

Application Preparation (for Using Center for Medicare and Medicaid Services 
(CMS) Data)

For applications that propose to use Medicare and Medicaid data that are 
individually identifiable, applicants should state explicitly in the Research 
Design and Methods section of the Research Plan (form 398) the specific 
files, time periods, and cohorts proposed for the research.  In consultation 
with the Center for Medicare and Medicaid Services (CMS), formerly Health 
Care Financing Administration (HCFA), AHRQ will use this information to 
develop a cost estimate for obtaining the data.  This estimate will be 
included in the estimated total cost of the grant at the time funding 
decisions are made.  To avoid double counting, applicants should not include 
the cost of the data in the budget.

Applicants should be aware that for individually identifiable Medicare and 
Medicaid data, Principal Investigators and their grantee institutions will be 
required to enter into a Data Use Agreement (DUA) with CMS to protect the 
confidentiality of data in accordance with standards set out in OMB Circular 
A-130, Appendix III-Security of Federal Automated Information Systems.  The 
use of the data is restricted to the purposes and time period specified in 
the DUA.  At the end of this time period, the grantee is required to return 
the data to CMS or certify that the data have been destroyed.

For the sole purpose of assuring that data confidentiality is maintained, 
included in the DUA is the requirement that the User agrees to submit to CMS, 
a copy of all findings within 30 days of making such findings.  The user 
agrees not to submit these findings to any third party (including but not 
limited to any manuscript to be submitted for publication) until receiving 
CMSs approval to do so.

Grantees must also comply with the confidentiality requirements of Section 
903(c) of the PHS Act.  See the Data Privacy section for details on these 
requirements as well as references to Circular A-130 and its implementation 
guides from the National Institute of Standards and Technology.

In developing research plans, applicants should allow time for refining, 
approving and processing their data requests.  Requests may take six months 
from the time they are submitted to complete.  Applications proposing to 
contact beneficiaries or their providers require the approval of the CMS 
administrator and may require meeting(s) with CMS staff.

CMS data are provided on IBM mainframe tapes using the record and data 
formats commonly employed on these computers.  Applicants should either have 
the capability to process these tapes and formats or plan to make 
arrangements to securely convert them to other media and formats.

Questions regarding CMS data should be directed to the AHRQ program official 
listed under INQUIRIES.

AHRQ Data

AHRQ encourages research applications that will use data from the Medical 
Expenditure Panel Survey, or MEPS (http://www.meps.ahrq.gov/), the Healthcare 
Cost and Utilization Project, or HCUP-3 (http://www.ahrq.gov/data/hcup/), and 
other AHRQ sources.

MEPS is a rich data source for healthcare utilization, expenditure and 
insurance information. MEPS directly links data about persons and their 
families with information obtained from their employers, insurers and 
healthcare providers (Cohen et al., 1997).  It is the third in a series of 
nationally representative surveys of medical care use and expenditures in the 
U.S..  Unlike its predecessors, MEPS is an ongoing survey.  MEPS collects 
data on the specific health services that American use, how frequently they 
use them, the cost and source of payment for services, and information on the 
types and costs of private health insurance held by and available to the U.S. 
population.  It provides a foundation for estimating the impact of changes in 
sources of payment and insurance coverage on different economic groups or 
special populations of interest, such as the poor, elderly, uninsured, and 
racial and ethnic minorities.  Current information on the availability of 
MEPS data is on the MEPS section of the AHRQ Web site (http://www.ahrq.gov).

The HCUP includes databases covering 1988-1997, with 1998 and 1999 data 
available in 2001.  These all-payer databases were created through a Federal-
State-industry partnership to build a multistate healthcare data system.  The 
main HCUP databases contain discharge-level information for inpatient 
hospital stays in a uniform format with privacy protections.  The Nationwide 
Inpatient Sample (NIS) is a nationwide probability sample fo about 1000 
hospitals.  The State Inpatient Databases (SID) contain inpatient records for 
all community hospitals in 22 states.  Other HCUP databases contain 
ambulatory surgery data from nine states.  These databases can be directly 
linked to county-level data form the Health Resources and Services 
Administration’s Area Resource File and to hospital-level data from the 
Annual Survey of the American Hospital Association.

Special Application Instructions

Specific instructions for Form 398 (rev. 4/98) are to be followed, with the 
following exceptions:

o  The section entitled  Research Plan  must not exceed 25 pages in length.  
Applicants determine the appropriate length of the areas that must be 
addressed in the  Research Plan,  but the statement must not exceed the 25 
page limit.

o  In listing references, only literature immediately relevant to the 
application may be cited.  The reference list is not counted as part of the 
25 pages allotted for the Research Plan.

o  No appendices should be included with the application with the exception 
of proposed instruments.  These should be attached only if they are judged to 
be crucial for the review of the project.  The instruments will not count as 
part of the 25 pages.

o  If applicable, information such as letters of support, letters of 
participation, and statements of intent to establish a consortium can be 
placed directly before the Checklist page of the application.

Submit a signed, typewritten original of the application, including the 
checklist, and five signed photocopies, in one package to:

Center for Scientific Review
National Institutes of Health
6701 Rockledge Drive, Room 1040-MSC 7710
Bethesda, MD  29892-7710
(20817 for express/courier service)

In carrying out its stewardship of research programs, the AHRQ, at some point 
in the future, may begin requesting information essential to an assessment of 
the effectiveness of Agency research programs.  Accordingly, grant recipients 
are hereby notified that they may be contacted after the completion of awards 
for periodic updates on publications resulting from AHRQ grant awards, and 
other information helpful in evaluating the impact of sponsored research.  

AHRQ expects grant recipients to keep the Agency informed of publications or 
the impact from Agency sponsored research.  Applicants must also agree to 
notify AHRQ immediately when a manuscript based on research supported by the 
grant is accepted for publication, and to provide the expected date of 
publication as soon as it is known, regardless of whether or not the grant 
award is active or has ended. 

To receive an award, applicants must agree to submit an original and 2 copies 
of an abstract, executive summary, and full report of the research results in 
the format prescribed by AHRQ no later than 90 days after the end of the 
project period.  The executive summary should be sent at the same time on a 
computer disk which specifies on the label the format used (WP5.1 or WP6.0 is 
preferable).

REVIEW CONSIDERATIONS

Upon receipt, applications will be reviewed for completeness and 
responsiveness to the PA by AHRQ staff.  Incomplete and/or non-responsive 
applications or applications not following instructions given under 
 Application Procedures  will be returned to the applicant without further 
consideration.  Accepted applications will be evaluated for scientific and 
technical merit by an appropriate peer review group convened in accordance 
with standard AHRQ peer review procedures.

As part of the peer review, all applications will receive a written critique, 
and also may undergo a process in which only those applications deemed to 
have the highest scientific merit will be discussed and assigned a priority 
score.

General Review Criteria

The reviewers will be asked to discuss the following aspects of the 
application in their written critiques in order to judge the likelihood that 
the proposed projects will have a substantial impact on the pursuit of these 
goals.  Each of these criteria will be addressed and considered by the 
reviewers in assigning the overall score, weighting them as appropriate for 
each application.  Note that the application does not need to be strong in 
all categories to be judged likely to have a major scientific impact and thus 
attain a high priority score.  For example, an investigator may propose to 
carry out important work that by its nature is not innovative but is 
essential to move a field forward.

1.  Significance.  Does this study address an important problem?  If the aims 
of the application are achieved, how will scientific knowledge be advanced?  
What will  the effect of these studies be on the concepts or methods driving 
this field?

2.  Approach.  Are the conceptual framework, design, methods, and analyses 
adequately developed, well integrated, and appropriate to the aims of the 
project?  Are the proposed data sources appropriate and adequate?  Does the 
applicant acknowledge potential problem areas and consider alternative 
tactics?

3.  Innovation.  Does the project employ innovative information technology 
applications, concepts, approaches or methods?  Are the aims original and 
innovative?  Does the project challenge existing paradigms or develop new 
methodologies or technologies?
 
4.  Investigator.  Is  the investigator appropriately trained and well suited 
to carry out this work?   Is the work proposed appropriate to the experience 
level of the principal investigator and other researchers?  Is the project 
(or work plan) well organized?  Does the proposed study team reflect the 
multi-disciplinary approach required to address patient safety issues?
 
5.  Environment.  Does the scientific environment in which the work will be 
done contribute to the probability of success?  Do the proposed experiments 
take advantage of unique features of the scientific environment or employ 
useful collaborative arrangements?  Is there evidence of institutional 
support?

6.  Policy Relevance.  Will the project provide Federal and State 
policymakers, and others participating in the formulation of such policy, 
with the evidence-based information they need to improve patient safety?  
Does the application provide a sound plan for achieving this purpose?

The initial review group will also examine: proposed dissemination 
activities, the appropriateness of proposed project budget and duration,  the 
adequacy of plans to include both genders and minorities and their subgroups 
as appropriate for the scientific goals of the research and plans for the 
recruitment and retention of subjects,  the provisions for the protection of 
human and animal subjects,  and the safety of the research environment.

AWARD CRITERIA

Applications will compete for available funds with other recommended 
applications.  The following will be considered in making funding decisions: 
Quality of the proposed project as determined by peer review, availability of 
funds and program priority.

INQUIRIES
Copies of AHRQ publications can be requested through the:

AHRQ Publications Clearinghouse
P.O. Box 8547
Silver Spring, MD  20907
TDY(toll-free):  1-800-586-6340 or 301-586-6340
Telephone (toll-free):  1-800-358-9295 or 301-358-9295

The PA is also available on AHRQ’s Web site, http://www.AHRQ.gov, and through 
AHRQ InstantFAX at (301) 594-2800.  To use InstantFAX, you must call from a 
facsimile (FAX) machine with a telephone handset.  Follow the voice prompt to 
obtain a copy of the table of contents, which has the document order number 
(not the same as the PA number).  The PA will be sent at the end of the 
ordering process.  AHRQ InstantFAX operates 24 hours a day, 7 days a week.  
For comments or problems concerning AHRQ InstantFax, please call (301) 594-
6344.

AHRQ welcomes the opportunity to clarify any issues or questions from 
potential applicants who have read the PA.  Written and telephone inquiries 
concerning this PA are encouraged.  Note that proposed projects with direct 
costs exceeding $500,000 in any one year require permission from AHRQ program 
staff two months prior to submission of the application.  Direct inquiries 
regarding programmatic issues, including information on the inclusion of 
women, minorities, and children in study populations to:

Direct inquiries regarding programmatic issues about 1a) Behavior of Health 
Care Organizations and Providers, 2) Public and Private Purchasing 
Initiatives, 3) Organizational Structures and Processes, and 4) Market Forces 
to: 

Irene Fraser, Ph.D.
Center for Organization and Delivery Studies (CODS)
Agency for Healthcare Research and Quality
2101 East Jefferson Street, Suite 605
Rockville, MD  20852-4908
Telephone:  (301) 594-6192
Fax:  (301) 594-2314
Email:  [email protected]

Direct inquiries regarding programmatic issues about 1b) Patient Involvement 
in Care and 1c) Employee Behavior to:

Steven Cohen, Ph.D.
Center for Cost and Financing Studies (CCFS)
Agency for Healthcare Research and Quality
2101 East Jefferson Street, Suite 500
Rockville, MD  20852-4908
Telephone:  (301) 594-1400
Fax:  (301) 594-2166
Email:  [email protected] / [email protected]

For additional information on MEPS, email [email protected]
For additional information on HCUP, email [email protected]

Direct inquiries regarding fiscal matters to:

George  Skip  Moyer
Grants Management Specialist
Agency for Healthcare Research and Quality
2101 East Jefferson Street, Suite 601
Rockville, MD  20852-4908
Telephone:  (301) 594-1842
Fax:  (301) 594-3210
Email:  [email protected]

AUTHORITY AND REGULATIONS

This program is described in the Catalog of Federal Domestic Assistance No. 
93.226.  Awards are made under authorization of Title IX of the Public Health 
Service Act (42 USC 299-299c-7) as amended by P.L. 106-129 (1999).  Awards 
are administered under the PHS Grants Policy Statement and Federal 
Regulations 42 CFR 67, Subpart A, and 45 CFR Parts 74 and 92.  This program 
is not subject to the intergovernmental review requirements of Executive 
Order 12372 or Health Systems Agency review.

The PHS strongly encourages all grant and contract recipients to provide a 
smoke-free workplace and promote the non-use of all tobacco products. In 
addition, Public Law 103-227, the Pro-Children Act of 1994, prohibits smoking 
in certain facilities (or in some case, any portion of a facility) in which 
regular or routine education, library, day care, health care or early 
childhood development services are provided to children.  This is consistent 
with the PHS mission to protect and advance the physical and mental health of 
the American people.

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Anderson RA, McDaniel RR Jr.   RN participation in organizational decision 
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Ashmos DP, Huonker JW, McDaniel RR Jr.   Participation as a complicating 
mechanism: The effect of clinical professional and middle manager 
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Bazzoli GJ, Chan B, Shortell SM, D Aunno T.  The financial performance of 
hospitals belonging to health networks and systems.  Inquiry. 2000, 
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Bazzoli GJ, Dynan L, Burns LR, Lindrooth R.  Is provider capitation working? 
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Burns LR, Morrisey MA, Alexander JA, Johnson V.  Managed care and processes 
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Clement JP, McCue MJ, Luke RD, Bramble JD, Rossiter LF, Ozcan YA, Pai CW.  
 Strategic hospital alliances: impact on financial performance.  Health 
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Cohen J, Beauregard K, Monheit A, Cohen S, et al.,   The Medical Expenditure 
Panel Survey: A National Health Information Resource,  Inquiry. 1996/97, 
Winter. 

Cohen, J, Spector W, "The Effect of Medicaid Reimbursement on Quality of Care 
in Nursing Homes," Journal of Health Economics. 1996, May. 

Cohen, J, Cunningham P, "Medicaid Physician Fee Levels and Children"s Access 
to Care," Health Affairs. 1995, Spring. 

Fraser I., McNamara P. Employers:  Quality takers or quality makers?  Medical 
Care Research and Review. 2000, 57(Suppl 2):33-52. 

Health Services Research. 1999,5(Part II). 

Institute of Medicine (IOM). Committee on Health Care in America.  Crossing 
the quality chasm: A new health system for the 21st century.  National 
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Institute of Medicine (IOM). Kohn, Linda T., Corrigan, Janet M., and 
Donaldson, Molla S. (Eds). To err is human: Building a safer health system. 
National Academy Press: Institute of Medicine. 1999. 

Kovner AR, Elton JJ, Billings J.  Evidence-based management.  Frontiers of 
Health Services Management. 2001,16(4):3-46.  

Luke RD, Begun JW, Walston SL.  Strategy Making in Health Care 
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McDaniel RR Jr.  A view from complexity science.  Frontiers of Health 
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PA -  Patient-Centered Care: Customizing Care to Meet Patients  Needs.  2001. 
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http://grants.nih.gov/grants/guide/rfa-files/RFA-HS-00-001.html

RFA HS-01-003.  Improving patient safety: Health systems reporting, analysis, 
and safety improvement research demonstrations.  2001. Available: 
http://grants.nih.gov/grants/guide/rfa-files/RFA-HS-01-003.html

RFA HS-95-005.  Market forces in a changing health care system.  1995.  
Available: http://grants.nih.gov/grants/guide/rfa-files/RFA-HS-95-005.html

RFA HS-96-006.  Referrals from primary to specialty care.  1996. Available: 
http://grants.nih.gov/grants/guide/notice-files/not96-078.html

RFA HS-98-005.  Quality of care under varying features of managed care 
organizations.  1998. Available: 
http://grants.nih.gov/grants/guide/notice-files/not97-224.html

RFA HS-99-005.  Health care access, quality and insurance for low-income 
children.  1999. Available: http://www.ahrq.gov/fund/hs99005.htm

Rhoades J, Chu, M.   Health insurance status of the civilian 
noninstitutionalized population: 1999.   Rockville (MD): Agency for 
Healthcare Research and Quality, 2000  MEPS Research Findings No. 14. AHRQ 
Pub. No. 01.0011.  Available: 
http://www.meps.ahrq.gov/papers/rf14_01-0011/rf14.pdf 

Robinson, JC.  The Dynamics and limits of corporate growth in health care.  
Health Affairs. 1996,15:155-169.

Walston SL, Bogue RJ.  The effects of reengineering: fad or competitive 
factor?  Journal of Health Care Management. 1999,44(6):456-474.
 
Walston SL, Burns LR, Kimberly JR.  Does reengineering really work? An 
examination of the context and outcomes of hospital reengineering 
initiatives.  Health Services Research. 2000, 34(6):1363-1388.

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