Chemical Innovation: Technologies for Making Products and Processes More Sustainable

Chemistry contributes to virtually every aspect of modern life, and the chemical industry supports nearly 26 percent of the gross domestic product of the United States. While these are positive contributions, chemical processes and production can have negative health and environmental consequences. Mitigating these potential consequences requires thoughtful design and evaluation of the life cycle effects of chemical processes and products.

This testimony—based on a 2018 technology assessment, GAO-18-307 —discusses (1) how stakeholders define and assess the sustainability of chemical processes and products, (2) available or developing technologies to make chemical processes and products more sustainable, (3) the roles of the federal government and others in supporting the development and use of more sustainable chemical processes and products, and (4) opportunities and challenges in the field of sustainable chemistry.

For the 2018 report, GAO selected for assessment three technology categories—catalysts, solvents, and continuous processing; interviewed stakeholders from various fields, such as government, industry, and academia; convened a meeting of experts on sustainable chemistry technologies and approaches; and surveyed a non-generalizable sample of chemical companies.

Stakeholders vary in how they define and assess the sustainability of chemical processes and products; these differences hinder the development and adoption of more sustainable chemistry technologies. However, based on a review of the literature and stakeholder interviews, GAO identified several common themes underlying what sustainable chemistry strives to achieve, including:

improve the efficiency with which natural resources are used to meet human needs for chemical products while avoiding environmental harm;

reduce or eliminate the use or generation of hazardous substances,

minimize the use of non-renewable resources; and

consider all life cycle stages when evaluating a product (see figure).

There are many technologies available and in development that can improve chemical sustainability at each stage of the chemical life cycle. GAO identified three categories of more sustainable chemistry technologies—catalysts, solvents, and continuous processing.

Catalysts are used to make chemical processes run faster or use less material. Without catalysts, many everyday items such as medicines, fibers, fuels, and paints could not be produced in sufficient quantities to meet demand. However, the most common catalysts—including those used in automobile catalytic converters—are rare, nonrenewable metals such as platinum and palladium. Researchers are working to replace such metals with alternatives, including abundant metals (e.g., iron and nickel) where possible.

Solvents are used to dissolve other substances so reactions can occur, to separate and purify chemicals, and to clean the equipment used in chemical processes, among other uses. Solvents constitute a large portion of the total volume of chemicals used in industrial chemical processes. However, many conventional solvents are considered hazardous. There are a variety of alternatives that can be used in some situations, including biobased solvents.

An alternative to traditional batch processing is continuous processing, which allows chemical reactions to occur as the reaction mixture is pumped through a series of pipes or tubes where reactions take place continuously. Compared to batch processing, this approach can improve product yield, product quality, and process safety while reducing waste and costs.

The federal government and other stakeholders play several roles, sometimes in collaboration, to advance the development and use of more sustainable chemistry technologies. The federal government supports research, provides technical assistance, and offers certification programs, while other stakeholders conduct research, develop industry-specific standards, support workforce development development, and address chemicals of concern in consumer products, among other roles.

While using more sustainable options entails challenges--including technological, business, and industry-wide and sector-specific challenges, the field of sustainable chemistry has the potential to inspire new products and processes, create jobs, and enhance benefits to human health and the environment. Stakeholders identified strategic implications of sustainable chemistry and offered a range of potential options and realize the full potential of these technologies, including the following:

Breakthrough technologies in sustainable chemistry and a new conceptual framework could transform how the industry thinks about performance, function, and synthesis.

An industry consortium, working in partnership with a key supporter at the federal level, could help make sustainable chemistry a priority and lead to an effective national initiative or strategy.

Integrating sustainable chemistry principles into educational programs could bolster a new generation of chemists, encourage innovation, and advance achievement in the field.

A national initiative that considers sustainable chemistry in a systematic manner could encourage collaborations among industry, academia and the government, similar to the National Nanotechnology Initiative.

There are opportunities for the federal government to address industry-wide challenges such as developing standard tools for assessment and a robust definition of sustainable chemistry. Federal agencies can also play a role in demonstrating, piloting, and de-risking some technology development efforts.

According to stakeholders, transitioning toward the use of more sustainable chemistry technologies will require national leadership and industry, government, and other stakeholders to work together.

Thank you for the opportunity to discuss our work on sustainable  chemistry, as the Committee considers the merits of H.R. 2051. The bill,  among other things, encourages efforts to characterize sustainable  chemistry among agencies and to incorporate sustainable chemistry into  existing research and programs through the use of grants, loans, and  other mechanisms. As we reported last year, chemistry contributes to  virtually every aspect of modern life, from the production of food and  clean drinking water to medicines, cleaners, personal care products, and  a host of other products. For example, the American Chemistry Council  claims that in 2016 the chemical industry supported nearly 26 percent of  the gross domestic product of the United States. In addition, the Bureau  of Labor Statistics estimates that the chemical manufacturing industry  employed more than 858,000 people in June 2019 and the Department of  Commerce estimated that the sector generated an additional 2.7 million  indirect jobs via industry suppliers. Despite these positive contributions  to quality of life and other social and economic goals, chemical production  can result in negative health and environmental consequences.

Many in the chemical industry are working to address these issues  through improving the environmental sustainability of their own chemical  processes and providing more sustainable products and technologies to  others. For example, Pfizer won a Presidential Green Chemistry  Challenge Award for redesigning the manufacturing process for the active  ingredient in Zoloft®, an antidepressant. The company streamlined a  three-step chemical process into a single step and eliminated the use of  four hazardous solvents, including methylene chloride, by using a more  benign solvent, ethanol. In the end, the new process used two solvents  instead of five and reduced the total volume of solvents used by 76  percent.

Members of Congress have expressed interest in sustainable chemistry  by including a provision in the American Innovation and Competitiveness  Act that supports federal coordination of sustainable chemistry research  and development, and by introducing H.R. 2051, the Sustainable  Chemistry Research and Development Act of 2019, to provide for federal  coordination of activities supporting sustainable chemistry, and for other  purposes.

In my testimony today, I will discuss (1) how stakeholders define  sustainable chemistry and assess the sustainability of chemical  processes and products; (2) available or developing technologies that can  improve the sustainability of chemical processes and products; (3) how  the federal government, industry, and others contribute to the  development and use of such technologies; and (4) opportunities and  challenges in the field of sustainable chemistry.

My testimony is based on a technology assessment we issued in 2018.  For that report, we reviewed key reports and scientific literature;  interviewed approximately 80 stakeholders, including federal and state  officials, chemical companies, industry and professional organizations,  nongovernmental organizations (NGO), academics, and educational  institutions; conducted site visits to federal laboratories; and attended two  technical conferences. In addition, we collaborated with the National  Academies to convene a 2-day meeting of 24 experts on sustainable  chemistry technologies and approaches. We also surveyed a non- generalizable sample of 27 chemical companies that were involved in or  interested in developing and implementing relevant technologies. More  detailed information on our objectives, scope, and methodology can be  found in that report.

We conducted the work on which this statement is based in accordance  with all sections of GAO’s Quality Assurance Framework that are relevant  to technology assessments. The framework requires that we plan and  perform the engagement to obtain sufficient and appropriate evidence to  meet our stated objectives and to discuss any limitations to our work. We  believe that the information and data obtained, and the analysis  conducted, provide a reasonable basis for the findings and conclusions in  this product.

The chemical industry relies on the use of natural resources as inputs to  make chemical products, and the industry’s outputs, in turn, can have an  impact on the environment. The International Trade Administration of the  Department of Commerce identifies the chemical industry as one of the  largest manufacturing industries in the United States, with more than  10,000 companies producing more than 70,000 products.

The term ‘sustainability’ can have many interpretations depending on the  context in which it is used. Sustainability may refer to economic,  environmental, or social sustainability. Achieving all three—a concept  known as the “triple bottom line”—has become a goal of some  businesses, including many in the chemical industry.

Mitigating the potential negative health and environmental consequences  of chemical production requires thoughtful design and evaluation  throughout the life cycle of chemical processes and products —that is, a  thorough assessment of effects resulting from stages of the life cycle  such as sourcing the raw materials, processing raw materials into  products, handling and disposal of by-products and industrial waste,  product use, and end-of-life disposal or recycling (see fig. 1). Attempting  to improve one stage of the life cycle without considering the others runs  the risk of moving sustainability problems around rather than solving  them. Analyzing the full life cycle of a process or product can reveal  benefits as well as trade-offs or unintended consequences of different  choices along the way.

Consistent with the goals of sustainable chemistry, which include making  chemicals in a purposefully more environmentally benign way, several  federal requirements and directives address chemical and other risks to  public health and the environment. For example, EPA’s ability to  effectively implement its mission of protecting public health and the  environment is critically dependent on credible and timely assessments of  the risks posed by chemicals. Such assessments are the cornerstone of  scientifically sound environmental decisions, policies, and regulations  under a variety of statutes, such as the Toxic Substances Control Act  (TSCA) (as amended), which provides EPA with authority to obtain  information on chemicals and to regulate those that it determines pose  unreasonable risks; the Safe Drinking Water Act (SDWA) (as amended),  which authorizes EPA to regulate contaminants in public drinking water  systems; and the Federal Food, Drug, and Cosmetic Act (as amended),  which authorizes the Food and Drug Administration to oversee the safety  of food, drugs, medical devices, and cosmetics. The Federal Acquisition  Regulation generally requires that federal agencies advance sustainable  acquisition by ensuring that 95 percent of new contract actions for the  supply of products and for the acquisition of services meet certain  sustainability goals.

Various economic factors influence the development of sustainable  products. Consumers are increasingly seeking products that help them  reduce their own environmental footprints, and companies are responding  by developing products made with safer chemicals and by increasing the  use of recycled, biobased, and renewable materials. The supply of such  products can be influenced by the costs of production, competitive  advantage, and reputational effects. For example, if a more sustainable  product or process helps a firm differentiate from another firm and creates  a competitive advantage that consumers recognize and value, it will  enable firms to create more sustainable products.

There are a number of inherent challenges in the market for sustainable  products in the industry. For example, substantial upfront costs coupled  with uncertainty about consumer demand may be a barrier to entering the  market. If the benefits of taking a more sustainable approach are valued  by consumers, companies may be able to recoup the higher costs by  charging higher prices without reducing demand. However, if the benefits  are not easily understood and measureable (e.g., long-term health  benefits), or are external to consumers (e.g., broad environmental  impacts), then consumers may not be willing to pay higher prices for more  sustainable products.

In addition to market incentives that encourage firms to produce more  sustainable products, government entities can, when appropriate, take  actions such as subsidies, award programs, or tax credits, or limits, bans,  and taxes. Governments may also provide environmental and health- related information to help guide the choices of consumers, workers,  downstream users, and investors. For new markets and investments to  be realized, sufficient information is needed on the environmental  damage and health hazards that can be associated with some chemicals  and the possibilities that exist to develop alternatives that overcome these  challenges.

Stakeholders Vary in How They Define and Assess the Sustainability of Chemical Processes and Products

In February 2018, we reported that stakeholders vary in (1) how they  define sustainable chemistry, (2) how they assess sustainability, and (3)  which environmental and health factors they considered most important.  Most companies that responded to our survey agreed that a standardized  set of factors for assessing sustainability would be useful.

Stakeholders do not agree on a single definition of sustainable chemistry.  In total, we asked 71 representatives of stakeholder organizations how  they or their organization defines sustainable chemistry. The most  common response we received was that sustainable chemistry includes  minimizing the use of non-renewable resources. Other concepts that  stakeholders commonly associated with sustainable chemistry included  minimizing the use of toxic or hazardous chemicals, considering trade- offs between various factors during each phase of the life cycle,  minimizing energy and water use, and increasing biodegradability or  recyclability. Based on a review of the literature and stakeholder  interviews, we identified several common themes underlying what  sustainable chemistry strives to achieve, including:  improve the efficiency with which natural resources—including  energy, water, and materials—are used to meet human needs for  chemical products while avoiding environmental harm;  reduce or eliminate the use or generation of hazardous substances in  the design, manufacture, and use of chemical products; protect and benefit the economy, people, and the environment using  consider all life cycle stages including manufacture, use, and disposal  (see fig. 1) when evaluating the environmental impact of a product;  and minimize the use of non-renewable resources.

Stakeholders such as chemical companies, federal agencies, and others  use many different approaches for assessing the sustainability of  chemical processes and products. While the varying approaches provide  flexibility to meet the priorities of the user, the lack of a standardized  approach makes it very difficult for customers, decision makers, and  others to compare the sustainability of various products to make informed  decisions.

Some companies and organizations design their own approaches for  assessing chemical sustainability and use those approaches to make  internal decisions on product design and processing, while others use  metrics, chemical selection guides, or third-party certifications and  assessment tools that are common to their industry. For example,  chemical companies use several established metrics to measure their  efficiency in using materials to generate products. The variety of metrics  used—and variation in the underlying factors included in their  calculation—hinders the ability of companies and others to compare the  sustainability of chemical processes or products.

In addition to common metrics, some sectors have developed guides that  companies and others can use to compare the sustainability of materials  used in chemical processes, including solvent selection guides and  reagent guides. Solvent selection guides assess solvents based on a  variety of sustainability criteria, such as environmental, health, and safety  impacts; recyclability; and regulatory concerns. One pharmaceutical  company reported a 50 percent decrease in the use of certain hazardous  solvents after the introduction of a solvent selection guide.

NGOs, federal agencies, and professional associations are also  developing product certification programs and assessment tools.  Certification programs set minimum criteria that products must meet to be  certified, such as biodegradability, toxicity, performance, or water usage.  Certifying bodies make databases of certified products publicly available  and allow manufacturers to affix certification labels or logos to their  products.

Environmental and Health Factors Considered Most Important

Companies prioritize various environmental and health factors differently  when assessing sustainability, according to our survey of 27 companies.  We asked respondents to indicate the relative importance their company  gives to each of 13 environmental and health factors by comparing a pair  of factors and selecting the factor they considered more important to  optimize, even if that benefit came at the expense of the other factor. For  example, a company might compare “energy use” with “water use” and  determine that it was more important to their company to maximize the  sustainability benefit relative to the “energy use” of a process even if it  resulted in less sustainable use of water. We found that, overall, “toxicity  of the product” was the most important factor for the companies surveyed  and “percentage of renewable or biobased content” was the least  important factor when making trade-offs (see fig. 2). However, there were  sizable differences between companies and sectors regarding which  factors they considered most important to optimize. For a more detailed  description of our analysis, see our report Chemical Innovation:  Technologies to Make Processes and Products More Sustainable.

The Importance of a Standard Definition and Metrics for Sustainability

The literature and the results of our interviews and survey indicate that  the lack of a standard definition for sustainable chemistry, combined with  the lack of standard ways of measuring or assessing sustainability, hinder  the development and adoption of more sustainable chemistry  technologies. It is difficult for consumers, purchasers, policymakers, and  even manufacturers to compare the sustainability of one process or  product with another when such processes and products are assessed  using different metrics that incorporate different factors. In addition, while  there were sizable differences between the companies that responded to  our survey with regard to which environmental and health factors they  considered most important to prioritize, most agreed that it would be  useful to have a standardized set of factors for assessing sustainability  across their industry sector and (to a lesser degree) across the entire  industry.

Technologies Can Make Chemical Processes and Products More Sustainable

There are many technologies available and in development that can  improve chemical sustainability at each stage of the chemical life cycle.  Our February 2018 report focused on three categories: catalysts,  solvents, and continuous processing. Because each chemical process  or product has unique requirements, there is no one-size-fits-all solution  to sustainability concerns.

Catalysts are used to make chemical processes run faster or use less  material. One common application is the catalytic converter in an  automobile, where the catalyst converts pollutant gases in the exhaust  into harmless chemicals. Without catalysts, many everyday items such as  medicines, fibers, fuels, and paints could not be produced in sufficient  quantities to meet demand. Unfortunately, the most common catalysts— including those used in automobile catalytic converters—are rare,  nonrenewable metals such as platinum and palladium. Researchers are  working to replace such metals with alternatives, including abundant  metals (e.g., iron and nickel) and metal-free catalysts (such as  biocatalysts) where possible.

For example, in 2016, Newlight Technologies won a Presidential Green  Chemistry Challenge Award for developing and commercializing a  biocatalyst technology that captures methane (a potent greenhouse gas)  and combines it with air to create a material that matches the  performance of petroleum-based plastics at a lower cost. Several  companies are now using this material to make a range of products,  including packaging, cell phone cases, and furniture.

Solvents are key components in chemical reactions. They are used to  dissolve other substances so reactions can occur, to separate and purify  chemicals, and to clean the equipment used in chemical processes,  among other uses. Solvents constitute a large portion of the total volume  of chemicals used in industrial chemical processes. However, many  conventional solvents are considered hazardous, both to the environment  and to human health. There are a variety of alternatives that can be used  in some situations, including biobased solvents, less hazardous solvents  such as water or ethanol, and solvent-free or reduced-solvent  technologies.

For example, biobased solvents called citrus terpenes, which are  extracted from citrus peel waste, can be used as flavoring agents or  fragrances in cleaning products. According to a representative from  Florida Chemical, citrus terpenes may be a low-toxicity alternative  compared to traditionally used petroleum-based products for the hydraulic  fracturing industry’s concerns about contamination of source and  groundwater. However, the regionality and seasonality of the citrus supply  can present a challenge to production.

Historically, industrial chemicals have been produced mainly using an  approach known as batch processing, where the starting materials are  combined in a closed vessel or vat and allowed to react, then transferred  to the next vat for the next stage of processing while the first vat is  cleaned, and the process is repeated with the next batch. This approach  can use significant amounts of solvents for cleaning the vats between  batches, consume considerable energy, result in potentially long wait  times, and create safety risks. An alternative to batch processing is  continuous processing, which allows chemical reactions to occur as the  reaction mixture is pumped through a series of pipes or tubes where  reactions take place continuously. This approach can improve product  yield, product quality, reaction time, and process safety while reducing  waste and costs.

For example, researchers developed a process for manufacturing the  active ingredient in medications including Benadryl® and Tylenol® PM  using microreactors that minimized waste, reduced the number of  purification steps, and reduced production times compared to traditional  batch processing.

Roles of the Federal Government and Other Stakeholders in Supporting the Development and Use of More Sustainable Chemical Processes and Products

The federal government and other stakeholders play a number of roles,  sometimes in collaboration, to advance the development and use of more  sustainable chemical processes and products. Federal programs support  research on the impacts of chemicals on human and environmental  health, support the development of more sustainable chemical processes  and their commercialization, and aid the expansion of markets for  products manufactured with more sustainable chemicals and processes.  Other stakeholders play similar roles and some additional roles that  contribute to the development and use of more sustainable chemical  processes and products.

Federal Programs Support Research on the Impacts of Chemicals on Human and Environmental Health

Federal programs conduct and fund basic research on the characteristics  and biological effects of chemicals, which underpins the development and  use of more sustainable chemistry products and processes. Decision  makers must have a scientific understanding of the potential harmful  impacts of exposure to chemicals in order to effectively minimize the  harmful effects of chemicals through regulations and other means, and to  assess the regulated community’s compliance with them. Industry needs  this information to make informed decisions about the selection, design,  and use of more sustainable chemicals in their products and processes,  including their impact on workers.

Federal programs fund and study the impacts of chemicals on human  health and the environment, develop new methodologies for testing and  predicting these effects, award grants for research on chemicals and new  methodologies, identify more sustainable chemical alternatives, and  evaluate the risks of chemicals. (See table 1.)

Federal Programs Support the Development and Commercialization of More Sustainable Chemistry Technologies

Federal programs also seek to support the development and facilitate the  commercialization of new, more sustainable chemistry processes by  conducting and funding basic and applied research to develop more  sustainable processes and products; providing loan guarantees, grants,  and technical assistance to researchers and companies; and recognizing  innovative technologies through an award program, among other  programs. (See table 2.)

Federal Programs Aid Market Growth for Products Made with Sustainable Chemicals and Processes

Federal programs also aid market growth for products made with  sustainable chemicals and processes by informing consumers about  these products and by facilitating their purchase by federal offices. It can  be challenging for consumers seeking out more sustainably manufactured  products to identify them or verify company claims. Federal programs can  help companies seeking to manufacture more sustainable products strive  to ensure that their products are differentiated from less sustainable  products in order to reach these consumers. For example, federal  programs conduct evaluations of the chemical content of products,  manage product certification and labeling programs, provide information  to consumers and federal purchasers on the chemical content of  products, and develop purchasing and sustainability plans to support  agency purchase and use of more sustainable products. EPA’s Safer  Choice voluntary certification and labeling program helps consumers  make informed purchasing decisions and incentivizes manufacturers to  select more sustainable chemical alternatives so they can differentiate  their products in the market.

Industry, Academic Institutions, States, Companies, and Other Stakeholders Support More Sustainable Chemistry

Other stakeholders—such as the chemical manufacturing industry,  companies and retailers, state governments, academic institutions, and  NGOs—also seek to influence the development and use of more  sustainable chemistry processes and products through activities such as  supporting workforce development and developing tools and resources  for industry. These stakeholders may work on collaborative efforts, such  as sustainability initiatives and developing industry-specific standards.  The chemical industry conducts and supports research into more  sustainable chemistry technologies and other activities. Companies and  retailers, such as Kaiser Permanente and Target, create demand for  more sustainable products from their suppliers by setting sustainability  criteria for purchases. Academic institutions conduct research on the  impacts of chemicals and sustainable chemistry technologies and train  the next generation of chemists and engineers. States seek to protect  public health by regulating chemicals in products. NGOs also play a  diverse range of roles such as supporting workforce development,  facilitating collaboration between other stakeholders, and developing tools  and resources for industry.

Strategic Implications in the Field of Sustainable Chemistry

Sustainable chemistry is an emerging field within the chemical sciences  that has the potential to inspire new products and processes, create jobs,  and enhance benefits to human health and the environment.  Stakeholders offered a range of potential options to realize the full  potential of these technologies. However, there are a number of  challenges to implementing more sustainable chemistry technologies,  including technological, business, and industry-wide and sector-specific  challenges.

The field of sustainable chemistry has the potential to inspire new  products and processes, create jobs, and enhance benefits to human  health and the environment. Stakeholders noted that much more work is  needed to realize its full promise and offered a range of potential options  to realize the full potential of these technologies, including the following:

Breakthrough technologies in sustainable chemistry and a new  conceptual framework could transform how the industry thinks about  performance, function, and synthesis.

Integrating sustainable chemistry principles into educational programs  could bolster a new generation of chemists, encourage innovation,  and advance achievement in the field.

A national initiative that considers sustainable chemistry in a  systematic manner could encourage collaborations among industry,  academia, and the government, similar to the National  Nanotechnology Initiative.

There are opportunities for the federal government to address  industry-wide challenges such as developing standard tools for  assessment and a robust definition of sustainable chemistry. Federal  agencies can also play a role in demonstrating, piloting, and de- risking some technology development efforts.

Stakeholders noted that there are a number of challenges to  implementing more sustainable chemistry technologies, including (1)  technological and business challenges, (2) industry-wide and sector- specific challenges, and (3) challenges with coordination between  stakeholders. One example of a technological challenge is the fact that  alternatives to current solvent use can sometimes pose the same inherent  toxicity and volatility risks as their conventional counterparts. Alternatives  can also vary in supply and quality and can be expensive. Less toxic  solvents, such as water, may require specialized equipment, greater  energy input, or elevated pressure, and they can be difficult to scale up  for industrial use.

Companies told us they face many business challenges in implementing  sustainable chemistry technologies, including the need to prioritize  product performance; weigh sustainability trade-offs between various  technologies; risk disruptions to the supply chain when switching to a  more sustainable option; and consider regulatory challenges, among  others. Stakeholders also noted the challenge of overturning proven  conventional practices and acknowledged that existing capital  investments in current technologies can create barriers for new  companies to enter a field full of well-established players.

Our survey and interviews also found that there are several industry-wide  and sector-specific challenges to implementing more sustainable  chemistry technologies, such as the lack of a standard definition for  sustainable chemistry and lack of agreement on standard ways of  measuring or assessing it. Without a standard definition that captures the  full range of activities within sustainable chemistry, it is difficult to define  the universe of relevant players. Without agreement on how to measure  the sustainability of chemical processes and products, companies may be  hesitant to invest in innovation they cannot effectively quantify, and end  users are unable to make meaningful comparisons that allow them to  select appropriate chemical products and processes.

There is no mechanism for coordinating a standardized set of  sustainability factors across the diverse range of stakeholders at present,  despite the motivation of some specific sectors to do so. Moreover,  although the federal government has worked with stakeholders through  its research support, technical assistance, certification programs, and  other efforts, there are still gaps in understanding. Many stakeholders told  us that without such basic information as a standardized approach for  assessing the sustainability of chemical processes and products, better  information on product content throughout the supply chain, and more  complete data on the health and environmental impacts of chemicals  throughout their life cycle, they cannot make informed decisions that  compare the sustainability of various products. Sector-specific challenges  exist as well. For example, pharmaceutical sector representatives told us  that changing the manufacturing process for an already marketed drug  triggers a new FDA review, which can result in delays and additional  costs—thus discouraging innovation that could make their chemical  processes more sustainable.

In conclusion, according to stakeholders, transitioning toward the use of  more sustainable chemistry technologies requires that industry,  government, and other stakeholders work together. As they and others  noted, there is a need for new processes that make more efficient use of  the resources that are available, reuse products or their components  during manufacturing, and account for impacts across the entire life cycle  of chemical processes and products. Furthermore, they highlight the  importance of disseminating environmental and health-related information  to help guide the choices of consumers, chemists, workers, downstream  users, and investors to facilitate further progress. They also indicated that  momentum in this field will require national leadership in order to realize  the full potential of sustainable chemistry technologies.

Chairwoman Stevens, Ranking Member Baird, and Members of the  Committee, this completes my prepared statement. I would be pleased to  respond to any questions that you may have at this time.

If you or your staff have any questions about this testimony, please  contact me at 202-512-6412 or personst@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this statement. GAO staff who made key contributions to  this testimony include Karen Howard (Assistant Director), Diane Raynes  (Assistant Director), Katrina Pekar-Carpenter (Analyst-in-Charge), Patrick  Harner, Summer Lingard-Smith, Krista Mantsch, Anika McMillon,  Rebecca Parkhurst, and Ben Shouse. Other staff who made key  contributions to the report cited in the testimony are identified in that  report.

This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.

We testified about our earlier work on “sustainable chemistry” that drew on an extensive literature review, 82 interviews, a meeting of experts, and a survey of 27 chemical companies.

These sources didn't agree on how to define sustainable chemistry or measure sustainability.

They did offer options to address challenges to improving the sustainability of chemical production, including federal support for an industry consortium and a national technology initiative.

We also identified emerging technology areas including developing renewable catalysts, using less hazardous solvents and using microreactors during production to minimize waste.


Health Care Quality: CMS Could More Effectively Ensure Its Quality Measurement Activities Promote Its Objectives

To encourage greater value in health care, CMS adjusts its Medicare payments to many health care providers based on measures of the quality of care. Therefore, the decisions CMS makes to choose certain quality measures have significant consequences. These decisions may involve selecting specific existing measures for CMS to use, stopping the use of some measures, or identifying new measures to be developed.

The Bipartisan Budget Act of 2018 contains a provision for GAO to review CMS's quality measurement activities. For this report, GAO (1) assessed the information CMS maintains on funding of health care quality measurement activities, and (2) described and assessed how CMS makes decisions to develop and to use quality measures. GAO analyzed CMS funding data for 2009 through 2018 and data on CMS quality measurement selections for 2014 through 2018. GAO reviewed CMS documentation related to its decisions on quality measurement and interviewed program and contractor officials.

The Centers for Medicare & Medicaid Services (CMS), within the Department of Health and Human Services (HHS), maintains information on the amount of funding for activities to measure the quality of health care provided under Medicare. CMS's information shows it has carried over from each year to the next large amounts of available funding—known as unobligated balances—for quality measurement activities from fiscal years 2010 through 2018 (see figure). CMS officials said they maintained such available funding to ensure there were no gaps in funding for future years. However, CMS officials also told GAO that the information it maintains does not identify all of the funding the agency has obligated for quality measurement activities. Further, it does not identify the extent to which this funding has supported CMS's quality measurement strategic objectives, such as reducing the reporting burden placed on providers by CMS's quality measures. With more complete and detailed information, CMS could better assess how well its funding supports its quality measurement objectives.

CMS takes different approaches for deciding which quality measures to develop and to use. However, CMS lacks assurance that the quality measures it chooses address its quality measurement strategic objectives. This is because CMS does not have procedures to ensure systematic assessments of quality measures under consideration against each of its quality measurement strategic objectives, which increases the risk that the quality measures it selects will not help the agency achieve those objectives as effectively as possible. These procedures, such as using a tool or standard methodology to systematically assess each measure under consideration, could help CMS better achieve its objectives. In addition, CMS has not developed or implemented performance indicators for each of its quality measurement strategic objectives. Establishing these indicators and using them to evaluate its progress towards achieving its objectives would enable CMS to determine whether its quality measurement efforts are sufficient or changes are warranted.

GAO recommends that CMS (1) maintain more complete and detailed information on its funding for quality measurement activities, (2) establish procedures to systematically assess measures under consideration based on CMS's quality measurement strategic objectives, and (3) develop and use performance indicators to evaluate progress in achieving its objectives. HHS concurred with all three recommendations.

Both the federal government and private payers, such as health plans,  increasingly use health care quality measures to encourage providers to  improve health care quality. This often involves measuring the  performance of physicians and other providers to hold them accountable  for the health care they deliver and to adjust their payments accordingly.  The Centers for Medicare & Medicaid Services (CMS) uses a range of  quality measures to assess the care furnished by Medicare providers.  For example, CMS collects data to measure the rates at which a  hospital’s patients acquire certain infections while receiving care. CMS  also funds the development of new measures when it determines they are  needed. Quality measures used in Medicare can also be used by private  payers, so CMS’s decisions to select quality measures or develop new  ones have a major influence over what is known about the quality of care  provided to patients, and over how health care providers are paid. For  example, in fiscal year 2019, CMS’s Hospital Value-based Purchasing  program was expected to adjust approximately $1.9 billion in Medicare  Part A payments to hospitals—shifting payments from hospitals that  scored lower on CMS’s quality measures to hospitals that scored higher.

Providers and others have questioned some of the measures CMS has  chosen to use in Medicare. For example, some providers and other  stakeholders believe that many of the measures that CMS uses are not  good indicators of the quality of care that patients receive. Similarly,  providers and other stakeholders believe they must devote too many  financial and other resources on reporting the data required for many of  these quality measures.

In recent years, CMS has taken steps intended to improve its process for  developing and selecting quality measures. Since 2011, CMS has  incorporated a formal process to obtain stakeholder input into its annual  review of the quality measures it uses for Medicare. In addition, in 2017,  CMS began its Meaningful Measures Initiative, which set strategic  objectives to guide its development and use of quality measures. These  objectives include focusing on developing and using the quality measures  that are most likely to produce substantial improvement in health care and  reducing provider burden associated with reporting information on the  measures.

The Bipartisan Budget Act of 2018 required CMS to report annually on a  comprehensive plan for its quality measurement activities, as well as on  funding for these activities. The Act also included a provision for us to  examine CMS’s funding and planning for its quality measurement  activities. In this report we  1.  assess the information that CMS maintains on its funding of health  care quality measurement activities, and  2.  describe and assess how CMS makes decisions to develop and to  use quality measures in Medicare to promote its quality measurement  strategic objectives.

To assess the information CMS maintains on its funding of health care  quality measurement activities, we reviewed CMS summaries of Medicare  appropriations and spending for fiscal years 2009 through 2018 and  planning documents for future spending provided by CMS, as well as  information for those years drawn from CMS’s central funding database,  the Healthcare Integrated General Ledger Accounting System (HIGLAS).  We also examined CMS documents that describe the procedures CMS  follows in entering and checking these data, explain the content of the  information recorded in HIGLAS, and indicate how CMS officials use the  data for planning and conducting quality measurement activities. In  addition, we interviewed CMS officials about the strengths and limitations  of these data as well as how they are used by CMS officials in conducting  quality measurement activities. We assessed the available information on  funding against federal internal control standards to use complete and  accurate information to achieve agency objectives. We also assessed  the reliability of the HIGLAS data by reviewing relevant documentation  provided by CMS, checking the data extracts for missing information and  inconsistencies, and interviewing CMS officials. We determined that the  data were sufficiently reliable for the purposes of our report.

To describe and assess how CMS makes decisions to develop and to use  quality measures in Medicare, we reviewed CMS guidance and other  documentation related to developing new measures and selecting the  measures for CMS to use. Because CMS contracts with outside  organizations to perform some of these activities, we also reviewed CMS  contract documents, such as task orders and statements of work for its  contractors. We interviewed CMS officials and officials from CMS  contractors regarding their roles in the process. We compared CMS’s  procedures for making decisions on measures to develop and to use  against federal internal control standards, including those related to  control activities. We also analyzed data for 2014 through 2018 from  CMS’s Issue Tracking System, which CMS uses to keep track of quality  measures under consideration for selection in one or more of its quality  programs. To assess the reliability of the Issue Tracking System data, we  reviewed data documentation, checked the data for missing information  and obvious errors, and asked CMS officials about any data issues we  identified. We determined the data to be sufficiently reliable for the  purposes of our report.

We conducted this performance audit from July 2018 to September 2019  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

CMS and private payers use a variety of quality measures to assess  different aspects of health care quality. Process measures assess the  extent to which providers effectively implement clinical practices (or  treatments) that have been shown to result in high-quality or efficient  care, such as the percentage of patients with a myocardial infarction who  receive an aspirin prescription on discharge. Others are outcome  measures, which track the results of health care, such as mortality,  infections, and patients’ experiences of that care.

To calculate providers’ performance on quality measures, CMS and  private payers ask providers to report a variety of clinical data.  Historically, providers have collected data for quality measures through a  detailed, manual review of paper medical records. Other quality measures  use data from billing records and patient surveys. More recently, a limited  number of electronic quality measures have been developed to allow  providers to report data electronically using electronic health records.

Since the early 2000s, CMS has created a number of distinct quality  reporting programs within Medicare. These programs generally focus on  different sites of care, such as hospitals, physician offices, and nursing  homes. Beginning in the early 2000s, CMS launched a number of related  programs that offer financial incentives to providers receiving Medicare  payments to report their performance on specified quality measures.  Some of these programs, such as the Hospital Inpatient Quality Reporting  program, are pay-for-reporting programs, in which providers may receive  higher payments if they report their performance on the quality measures  used in the programs. Others, such as the Hospital Value-based  Purchasing program, are pay-for-performance programs, in which the  level of providers’ performance on the quality measures affects the  amount of the payment they receive. CMS also incorporates pay-for- performance in various alternative payment models, such as accountable  care organizations—where CMS pays groups of providers based in part  on the collective performance of those providers, rather than the fee-for- service traditionally paid in Medicare.

Developing and Adopting New Quality Measures

At any given point in time, CMS has a set of quality measures it is  currently using in its various Medicare quality programs as well as efforts  underway to identify different quality measures to better meet program  needs. These quality measures may either already have been developed  or potentially could be developed. A variety of different entities may  develop new health care quality measures, such as the Joint  Commission, the National Committee for Quality Assurance, and various  medical specialty societies. In some cases CMS itself contracts with  entities for the development of measures for use in its Medicare quality  programs.

CMS has developed a set of guidelines for developing new quality  measures that are described in its Blueprint for the CMS Measures  Management System. The Blueprint lays out the steps measure  developers should follow to first identify health care topics or conditions  where new measures are needed, and then develop and test specific new  measures to fill those identified gaps. According to CMS estimates, it can  take 2 years or more to complete all of these steps. As part of this  process, CMS encourages entities that develop measures to submit them  to the National Quality Forum (NQF), a nonprofit organization that  evaluates and endorses measures—that is, determines which measures  should be recognized as the best available for a given aspect of care.  NQF has endorsed over 700 quality measures.

In addition, NQF plays a major role in CMS’s process for determining  which measures to use in its Medicare quality programs. Since 2009,  NQF has been the sole organization to function under contract to CMS as  the consensus-based entity as described by the provisions of  sections1890 and 1890A of the Social Security Act (SSA). The  consensus-based entity manages the Measure Applications Partnership,  which is a formal process for obtaining stakeholder input on proposed  new measures for Medicare quality programs, along with other measure  endorsement and maintenance activities. CMS also relies on other  contractors to conduct analyses or disseminate information related to the  development and use of quality measures in its Medicare quality  programs.

CMS Quality Measurement Strategic Objectives

CMS has established strategic objectives for the measures CMS  develops or uses in its Medicare quality programs. CMS’s quality  measurement strategic objectives have evolved over the last decade as  CMS has expanded Medicare quality programs and has collaborated with  other organizations that use or develop quality measures, such as private  insurance companies. In 2017 CMS announced a revised version of  these objectives in its Meaningful Measures Initiative. These eight quality  measurement strategic objectives are for CMS to adopt measures that are patient-centered and meaningful to patients, clinicians, and address high-impact measure areas that safeguard public health, are outcome-based where possible,  fulfill each program’s statutory requirements, minimize burden for providers,  create significant opportunity for improvement, address measure needs for population-based payment through  alternative payment models, and align across programs and/or with other payers.

In addition, to provide greater specificity for its objective to address high- impact measure areas that safeguard public health, CMS has designated  19 specific meaningful measure areas. See appendix I for the list of these  meaningful measure areas and the six broad quality priority areas that  they address.

CMS Funding for Quality Measurement Activities

CMS’s quality measurement activities are funded through the federal  budget and appropriations process. Each appropriation includes language  that describes an authorized purpose or purposes for which the funds  may be used. Such language may specifically reference certain activities  such as quality measurement or could refer to a broad purpose under  which activities such as quality measurement may have been authorized.

Available funds are first obligated—that is, committed to a specific  purpose—and then expended when an actual payment is made.  Expenditures can occur one or more fiscal years after the obligation was  incurred. Funds that are available in a given fiscal year but not obligated  during that year are known as unobligated balances. Unobligated  balances can be carried over to the next fiscal year, unless their  availability expires under the terms of their appropriation. Most CMS  funding that is explicitly appropriated for quality measurement activities is  available indefinitely, until obligated and expended.

CMS Lacks Complete Information on Its Quality Measurement Funding and on How It Uses Funding to Achieve Its Strategic Objectives

CMS maintains information in its core budget database on the amount of  funding for its quality measurement activities, such as when funding for  that purpose is specifically authorized by appropriations. However, CMS’s  database does not capture all of the funding the agency has obligated  that pays for quality measurement activities or the extent to which this  funding has supported CMS’s quality measurement strategic objectives.  Our review of CMS’s quality measurement funding information also  shows that CMS maintains a substantial amount of unobligated  balances—funding that CMS has not yet used and remains available—for  quality measurement activities.

CMS Maintains Information on Funding for Some Quality Measurement Activities in CMS’s Core Budget Database

CMS officials report that the agency records funding information for its  quality measurement activities in its core budget database, HIGLAS.  CMS has information on quality measurement funding primarily when the  appropriation is specifically authorized for that purpose. CMS officials  identified eight appropriations that specifically designate funding for  Medicare quality measurement activities over the 10-year period we  reviewed (fiscal years 2009-2018). These include five appropriations that  have funded the consensus-based entity established under sections 1890  and 1890A of the SSA, to carry out various activities under contract with  CMS in accordance with those provisions. CMS officials identified  another three appropriations that focused on more discrete aspects of  quality measurement, such as developing new quality measures for  clinicians. From fiscal years 2009 through 2018, a total of $429.9 million  was authorized for these eight appropriations (see table 1).

In addition, CMS officials identified some funding used—that is,  obligated—for quality measurement activities, from appropriations  authorized for more general purposes. They obtained information on such  usage from HIGLAS based on the presence of labels, such as “quality  measure development,” in the project code and project description data  fields in HIGLAS. According to CMS officials, these data fields provide the  most detailed categorization of activities in HIGLAS.

Table 2 shows the specific project codes and project descriptions used in  HIGLAS to characterize use of quality measurement funding in fiscal year  2018. These obligations are from both appropriations that specifically  authorize quality measurement activities and also from general  appropriations whose authorized purposes do not specifically mention  quality measurement activities. As shown in table 2, the project codes  and their descriptions used in HIGLAS provide high-level information that  largely matches the information known from the appropriation authorizing  such use.

CMS Lacks Information on the Total Amount of Quality Measurement Funding and the Extent to Which This Funding Supports Its Strategic Objectives

Our review of the funding information in HIGLAS found that the data do  not capture the total amount of funding CMS has obligated that pays for  quality measurement activities. As we have noted, CMS officials identified  funding obligated for quality measurement activities in HIGLAS either  because 1) the funding came from appropriations specifically designated  for quality measurement purposes, or 2) the funding came from  appropriations for more general purposes but had specific HIGLAS  project codes to identify its use for quality measurement activities.  However, CMS officials told us that they thought there were additional  quality measurement activities funded from appropriations for general  purposes that could not be identified by project codes in HIGLAS. As a  result, they could not determine from HIGLAS what amount of these  funds paid for quality measurement activities as opposed to other  activities. CMS officials stated that while they do not have information on  the amount of this unidentified quality measurement funding, they  estimated that it was less than the amount of quality measurement  funding identified in HIGLAS.

Furthermore, CMS’s funding information in HIGLAS also is not sufficiently  detailed to show the extent to which the funding was used for activities  that support CMS’s eight quality measurement strategic objectives. While  some HIGLAS project descriptions—like “Hospital Outcome Measures”— correspond with one of these objectives, as shown in table 2 most do not.  In addition, the documents that CMS uses to plan and monitor spending  for quality measurement activities generally do not include information  showing how much funding CMS has obligated for activities related to  CMS’s quality measurement strategic objectives.

CMS officials stated that they considered it unduly burdensome to attempt  to use HIGLAS to track quality measurement funding according to their  strategic objectives. First, they said that quality measurement activities  overall constitute a small portion of the funding recorded in HIGLAS. In  addition, officials noted that CMS’s strategic objectives change over time.  Finally, CMS officials stated their belief that all of CMS’s quality measure  activities help to address the agency’s objectives. As a result, CMS  cannot determine how its specific funding for quality measurement  activities addresses each of its quality measurement strategic objectives  and how possible changes in its funding allocations among those  activities could help to promote its objectives more effectively.

Federal standards for internal control call for agencies to use complete  and accurate information and to identify types or categories of information  that enable the agency to achieve its objectives. Without more complete  information on the total amount of funding obligated to quality  measurement activities, CMS officials cannot accurately assess the  magnitude of resources they have provided for quality measurement. In  addition, even if CMS quality measure activities generally address one or  another of its strategic objectives, having information on the extent of  funding for each quality measurement strategic objective could help CMS  officials assess the amount of funding each of the agency’s priorities is  receiving. Doing so would enable CMS officials to make adjustments in  accordance with their objectives.

While collecting more complete and detailed information on funding for  quality measurement activities in HIGLAS—or using some other method  that CMS determines is feasible—would require additional effort, CMS  could realize corresponding benefits. CMS officials told us that at present,  when they need to obtain a higher level of detail about funding for quality  measurement activities, they do not use HIGLAS and instead typically  conduct a manual review of any available underlying documentation, such  as documents related to individual contracts. For example, in order to  respond to a statutory requirement to report on its spending to develop  certain quality measures for physicians, CMS officials told us they needed  to review a set of individual contracts associated with those measures.   CMS officials noted that this process is often laborious and that the  content of available documents may not enable them to obtain all the  desired funding information for the specific quality measurement activities  in question. Collecting more information routinely about funding for quality  measurement activities has the potential to make such manual reviews of  documents less necessary and burdensome.

The limitations in CMS’s information on funding for quality measurement  activities have implications for CMS’s ability to communicate information  outside the agency. As required by the Congress, CMS issued its first  annual report on quality measurement funding in March 2019. In this  report, CMS itemized information on such funding into four broad  categories: “Duties of the consensus-based entity,” “Dissemination of  quality measures,” “Program assessment and review,” and “Program  oversight and design.” CMS’s report listed a number of more specific  activities within these categories without providing the amount of funding  it allocated for each of the described activities. More detailed funding  information could help the Congress to better understand how CMS is  using appropriations for quality measurement, and could assist with  effective oversight of these activities. Internal control standards call for  agencies to consider the needs and expectations of external users, such  as Congress, when collecting and communicating information.

CMS’s Funding Information Shows Substantial Unobligated Balances in Its Quality Measurement Funding

Our review of the funding information CMS provided determined that the  agency has maintained substantial unobligated balances related to its  quality measurement activities from fiscal years 2010 through 2018.  Unobligated balances represent funding that CMS did not use in the year  it was appropriated, and that remains available for use in future years. All  but one of the eight appropriations that specifically authorize spending for  quality measurement activities are available indefinitely. Five of these  appropriations funded quality measurement activities under sections 1890  and 1890A of the SSA. In the case of these five appropriations, with the  exception of fiscal year 2009, CMS had unobligated balances each year  that were larger than or similar to the total amount the agency had  obligated from those appropriations that year (see figure 1). Figure 1 also  shows three other appropriations more narrowly focused on developing  new measures for clinicians and post-acute care providers under  Medicare (appropriated by MACRA section 102 and the IMPACT Act  sections 2a and 2d). Since 2015, unobligated balances for these  appropriations also generally exceeded annual obligations. See appendix  II for more detailed information.

CMS officials stated that unobligated balances reflect broader spending  decisions—for quality measurement as well as other activities—the  agency makes to meet its strategic objectives and any related legislative  requirements. CMS officials said that in general, they chose to use the  available quality measurement funds conservatively to ensure there were  no gaps in funding to carry out their statutory responsibilities, in view of  uncertainty about the availability and timing of funding in future years.  They also said that they took into account the total amount of  appropriated funds—including unobligated balances—in developing the  scope and duration of quality measurement activities. The officials noted  that it often takes more than one year to implement these activities, in  order to gather information, select contractors, or solicit and award grant  applications. Regarding the level of unobligated balances to be carried  over from one fiscal year to the next, CMS officials told us that they work  to obligate all appropriations in accordance with statutory requirements,  and do not have thresholds for maximum unobligated balances.

Maintaining large unobligated balances means that CMS is retaining  funds for future quality measurement activities rather than using them for  current quality measurement activities. One example of how such choices  can affect the scope and timing of CMS’s quality measurement activities  was the outcome of a CMS competition for cooperative agreements,  announced in March 2018, to develop new clinician quality measures to  address identified measurement gaps. Drawing on funds from the  appropriation dedicated to developing, improving, updating, or expanding  new clinician quality measures (MACRA 102) that were available for use  until 2022, CMS set a maximum amount for the awards of $30 million  over three years. CMS officials determined that the $30 million ceiling  meant that there was adequate funding for seven awardees, while CMS  indicated that additional applicants scored well on CMS’s selection criteria  and addressed areas of need. For fiscal year 2018, MACRA 102 had an  unobligated balance of $42 million, with an additional $15 million  appropriation in place for fiscal year 2019. As of May 23, 2019, CMS  officials told us that they had not announced new competitions to develop  clinician quality measures.

CMS Lacks Assurance That the Quality Measures It Decides to Use or Develop Effectively Promote Strategic Objectives

CMS takes different approaches in deciding which Medicare quality  measures to use in its programs, which to remove, and which new  measures to develop. However, CMS lacks procedures to ensure that  these decisions are consistent with its quality measurement strategic  objectives, and CMS has not yet developed or implemented performance  indicators to evaluate its overall progress toward achieving these  objectives.

CMS Takes Different Approaches in Deciding Which Quality Measures to Use and Develop

For selecting measures to be used in its Medicare quality programs, CMS  has an annual process, as defined by the Patient Protection and  Affordable Care Act. CMS makes a number of decisions that influence  measure selection throughout the process. Each year CMS asks measure  developers to submit candidate quality measures to CMS for potential  selection. CMS makes preliminary decisions on which of these measures  to use in its quality programs, and it publishes this selection of measures  in its annual Measures under Consideration list (MUC). The MUC list then  undergoes public review by multiple stakeholders. After this review, CMS  chooses which measures to include in the formal rulemaking processes  that ultimately determine which measures are added to its quality  programs. See table 3.

To make decisions on which measures to include in the MUC list, CMS  officials review the submissions. According to CMS, officials from each  Medicare quality program, referred to as quality program leads,  separately review each measure submitted for use in that program. CMS  officials told us that as necessary, they consult with technical experts and  with other CMS or Department of Health and Human Services (HHS)  officials. According to CMS officials, the program leads make  recommendations to higher level officials, such as division directors, on  whether CMS should accept or reject each measure. CMS internal  guidance outlines factors that, among other things, officials should  consider. Some of these factors reflect the strategic objectives laid out in  the Meaningful Measures Initiative, and the guidance also indicates that  officials may consider additional factors in their decision-making. CMS  officials told us that, when making measure selection decisions, program  teams are given the flexibility to develop criteria that best suits their  programs’ needs, noting that some programs are intended to address a  broad range of areas, such as the Inpatient Quality Reporting Program,  while others have a more limited focus, such as the Hospital  Readmissions Reduction Program. CMS officials told us that the director  of CMS’s Center for Clinical Standards and Quality, which is responsible  for quality measurement, makes the final measure selection decisions  and, in doing so, generally accepts the recommendations of the program  teams.

Our analysis of CMS’s quality measures indicates that the number of  candidate quality measures submitted to CMS for the MUC list has  decreased from 335 measures in 2014 to 67 in 2018. CMS officials told  us the decline in the number of candidate measures submitted reflected  CMS efforts to more clearly define a targeted set of quality measurement  priorities for measure developers and to reduce provider reporting  burden. Minimizing provider burden is one of CMS’s strategic objectives,  and, according to CMS officials, it represents a priority communicated by  the CMS administrator. For more information about CMS’s measure  selection decisions for its annual MUC list in 2014 through 2018, see  appendix III.

CMS officials also make decisions annually about which existing  measures CMS will remove from its Medicare quality programs.  According to CMS officials, the process for deciding which measures to  remove is an ongoing, iterative process, and discussions on which  measures to remove generally occur in parallel with discussions for  selecting measures, with discussions on both measure selection and  removal coming to a conclusion in the drafting of the annual proposed  and final rules for each program. For measures that are being used in its  quality programs, CMS relies on measure developers to monitor the  performance of their measures based on principles defined in CMS’s  Blueprint. According to the Blueprint, information from developers’ monitoring efforts, including recommendations from technical experts,  should be conveyed to and evaluated by CMS officials. CMS officials told  us that their decisions to remove measures often take into account the  recommendations made by technical experts. In addition, CMS has  promulgated through federal rulemaking eight factors for determining  whether to remove existing measures from its Medicare quality programs,  some of which reflect its quality measurement strategic objectives. CMS  officials also said that in deciding to remove measures from CMS quality  programs in 2018 they, in part, considered an assessment of the costs of  reporting measures relative to the benefit of continued use of the  measures. CMS decisions to remove measures have been included in  notices of proposed rulemaking in the Federal Register, which allows for  public comment and further consideration before issuance of final rules to  that effect.

In addition to making decisions on the selection and removal of  measures, CMS officials also make decisions regarding which new  measures to develop. Our review of CMS contract documents, including  task orders, indicates that CMS typically awards multiple year contracts to  conduct ongoing assessments of quality measures and to develop  measures for specific Medicare quality programs, such as inpatient  psychiatric facilities or post-acute care providers. Those task orders often  call on contractors to convene technical expert panels and conduct  additional analyses to assess what measures are currently available for  use and what gaps exist in available measures. CMS officials told us they  review these reports and provide informal feedback to the contractors.  CMS also establishes parameters that guide these efforts. For example,  in its 2016 Measure Development Plan for Medicare’s new physician  payment system, after soliciting public input, CMS designated six medical  specialty areas in which to focus its measure development efforts, and  subsequently added five more specialties on which to focus the work of  its contractors. For more information about outside entities that perform  quality measurement activities under contract with CMS and the efforts  CMS has taken to coordinate these activities across its contractors, see  appendix IV.

CMS Lacks Procedures for Systematically Assessing Whether the Measures It Decides to Develop and Use Address Its Strategic Objectives

CMS has taken some steps that provide opportunities for CMS officials to  consider how quality measures may help address the agency’s quality  measurement strategic objectives. CMS officials said that in 2018 they  began using the Measure Review Template, a spreadsheet used to  consolidate information on quality measures submitted to CMS by  measure developers. CMS officials told us that they use the spreadsheet  to inform their discussions, such as by considering how measures are  distributed across the 19 meaningful measure high-impact areas. CMS is  also developing another tool, the Quality Measure Index, that is intended  to provide a standard methodology to score measures on dimensions that  include several of CMS’s eight quality measurement strategic objectives.

In addition, CMS officials told us that on occasion they have made limited  assessments across measures concerning specific strategic objectives.  CMS officials told us that these limited assessments across measures are  generally performed when a measure submitted for use in its Medicare  quality programs is closely related to another measure, which affects the  CMS objective to increase measure alignment. In addition, they said they  have identified a few indicators that they use to continuously assess their  decision-making process, such as the percentage of outcome measures.

CMS also documents some information about its quality measurement  decisions. For example, the agency announces its final selection of  quality measures to be added to and removed from its Medicare quality  programs in the annual federal proposed and final rules for each of those  programs. The rationale for selecting each measure is provided as a  summary of the peer-reviewed evidence of the impact that use of the  measure will have on clinical care. In addition, CMS maintains an internal  tracking system, which assembles the information that measure  developers provide about the measures they submit to CMS. This system  includes some information related to CMS’s quality measurement  strategic objectives, such as the meaningful measures high-impact area  the measure is intended to address.

While these steps provide some information about the linkages between  certain quality measures and some of CMS’s quality measurement  strategic objectives, CMS lacks procedures to ensure systematic  assessment of each quality measure against each of its eight quality  measurement strategic objectives. For example, while CMS has  implemented the Measure Review Template to consolidate some  information on measures, the template does not provide procedures for  systematically assessing how each measure will help CMS achieve all  eight of its quality measurement strategic objectives. The Quality  Measure Index—currently under development—has the potential to be  used in a systematic assessment of each measure, but according to CMS  officials, as of March 2019 the agency had not yet determined how it  planned to use this tool once its testing was complete.

Furthermore, CMS lacks procedures to ensure a systematic assessment  of whether the collective set of measures it decides to develop or use will  help CMS achieve each of the objectives, which could help determine the  extent to which each of the objectives is being effectively addressed. The  limited assessments across measures that CMS officials said they  perform do not consider whether each of CMS’s objectives is being  addressed. For example, one of CMS’s eight quality measurement  strategic objectives directs CMS to address 19 high-impact measure  areas. CMS officials told us that, for each quality program, they look at  whether measures generally address the high-impact measure areas, but  gaps in these areas remain to be filled. In 2018, there were no measures  used in CMS quality programs that addressed the high-impact area  “equity of care” and 13 of 17 Medicare quality programs had no measures  that addressed the “community engagement” area. Measure developers  did not submit measures to CMS that addressed these areas, and CMS  did not identify specific initiatives to address them. CMS officials told us,  however, that CMS supports discussions of key methodological  considerations for collecting and analyzing measure data that could help  enable future development of these measures.

Last, CMS lacks procedures for documenting the consistent application of  those systematic assessments. Federal internal control standards  indicate the importance of documenting decisions to support achieving  agency objectives. Specifically, CMS does not document, either in its  public reporting or internal tracking system, how each measure it decides  to use is expected to promote each of its eight quality measurement  strategic objectives. For decisions on developing new measures, the  agency records less information. For example, CMS does not maintain a  consolidated list of decisions to initiate the development of new quality  measures across the various Medicare quality programs. CMS officials  also told us that they generally do not maintain documentation of  discussions on how or why they selected one measure for development  over another. If CMS develops procedures to consider the effect of each  of its quality measurement decisions on each of its quality measurement  strategic objectives, then documentation of these procedures would help  to show that they are implemented consistently.

Federal standards for internal control state that management should  design and implement internal control activities, such as tools and  documentation of decisions, to support the agency in achieving its  objectives. Without procedures that ensure that its quality measures fully  address its strategic objectives, CMS increases the risk that the  measures it decides to develop and use will not help the agency achieve  its quality measurement strategic objectives as effectively as possible.

CMS Has Not Established Performance Indicators to Determine Its Overall Progress in Achieving Its Quality Measurement Strategic Objectives

CMS has not developed and implemented performance indicators that  would be needed to determine if it is making progress in meeting its  quality measurement strategic objectives. Establishing these indicators  and using them to evaluate its progress towards meeting each of its  quality measurement strategic objectives would enable CMS to determine  whether its quality measurement efforts are sufficient or whether changes  in these efforts are needed. According to federal internal control  standards, after agencies establish objectives, they should establish a set  of performance indicators and use them to assess their effectiveness in  achieving their objectives and identify improvements in their work, as  needed. However, CMS has not established performance indicators for its  strategic objectives that would provide a basis for determining its  progress towards achieving these objectives. Such performance  indicators would relate to each of CMS’s quality measurement strategic  objectives and provide information on interim progress toward achieving  these objectives. For example, CMS could establish one or more  indicators of its progress toward addressing the 19 high-impact measure  areas that safeguard public health, and an indicator of providers’ reporting  burden for quality measurement to see if it showed an overall reduction.

CMS officials told us that they assess the impact of the agency’s quality  measurement activities by reviewing changes over time in health care  providers’ reported performance on selected quality measures. However,  these measures are for providers’ quality of care, and are not indicators  designed to determine the agency’s progress in achieving its eight  strategic objectives for quality measurement. Specifically, CMS has  completed the National Impact Assessment of Quality Measures report  every 3 years since 2012. These reports focus on trends in the  performance of health care providers on a number of specific quality  measures. Such analyses do not evaluate CMS’s performance in  developing and choosing to use measures that promote its quality  measurement strategic objectives.

CMS has convened the Meaningful Measurement and Improvement  Affinity Group, a workgroup of CMS officials involved in quality  measurement. This workgroup’s stated mission is to champion the  Meaningful Measures Initiative and facilitate its implementation across the  agency. CMS officials told us that the workgroup has begun to discuss  potential ways to evaluate the agency’s progress in achieving the eight  strategic objectives laid out in the Meaningful Measures Initiative.  However, the information CMS officials provided on the workgroup’s  activities, as of March 2019, indicated that the group had not yet  determined how to gauge such progress, such as by establishing  performance indicators.

CMS plays a leading role in the process of developing new quality  measures and selecting measures for use in its various quality programs  in Medicare. These programs in turn affect the quality of care the  program’s beneficiaries receive. However, CMS lacks complete  information on the amount of resources it has obligated for its quality  measurement activities and how its allocation of those resources relates  to its quality measurement strategic objectives. The agency also lacks  procedures to ensure that the decisions it makes to develop and use  measures for its quality programs are consistent with those objectives.  Finally, CMS has not developed and implemented performance indicators  to evaluate its progress towards achieving these objectives. Taken  together, these issues limit CMS’s ability to determine whether its  allocation of resources and quality measurement decisions are optimal or  whether changes are needed in its approach.

We are making the following three recommendations to CMS:  The Administrator of CMS should, to the extent feasible, maintain more  complete information on both the total amount of funding allocated for  quality measurement activities and the extent to which this funding  supports each of its quality measurement strategic objectives.  (Recommendation 1)

The Administrator of CMS should develop and implement procedures to  systematically assess the measures it is considering developing, using, or  removing in terms of their impact on achieving CMS’s strategic objectives  and document its compliance with those procedures. (Recommendation  2)

The Administrator of CMS should develop and use a set of performance  indicators to evaluate the agency’s progress towards achieving its quality  measurement strategic objectives. (Recommendation 3)

We provided a draft of this report to HHS for review and comment. In its  written comments, which are reproduced in appendix V, HHS concurred  with our recommendations. Regarding our first recommendation, HHS  stated that it has undertaken a review of its fiscal accountability  processes for its quality improvement activities and is implementing more  granular tracking of funding specific to quality measurement to the extent  it is feasible. Regarding our second recommendation, HHS stated that it  will determine what steps may be needed to further document how its  measure decisions impact the achievement of CMS’s quality  measurement strategic objectives. HHS’s comments did not address the  need to develop and implement procedures for systematically assessing  measures against the strategic objectives, as we recommended.  Regarding our third recommendation, HHS stated it would consider how  best to evaluate its progress in meeting its quality measurement strategic  objectives. In addition, HHS provided technical comments, which we  incorporated as appropriate.

We are sending copies of this report to the appropriate congressional  committees, the Secretary of Health and Human Services, the  Administrator of the Centers for Medicare & Medicaid Services, and other  interested parties. In addition, the report is available at no charge on the  GAO website at http://www.gao.gov.

If you or your staff members have any questions about this report, please  contact me at (202) 512-7114 or farbj@gao.gov. Contact points for our  Office of Congressional Relations and Public Affairs may be found on the  last page of this report. GAO staff who made key contributions to this  report are listed in appendix VI.

Appendix I: CMS Quality Priorities and Meaningful Measure Areas

As part of its Meaningful Measures Initiative, the Centers for Medicare &  Medicaid Services (CMS) identified 19 meaningful measure areas to  specify its priorities under its quality measurement strategic objective to  address high-impact measure areas that safeguard public health. The 19  areas are linked to six broader health care quality priorities previously  identified in the 2011 National Strategy for Quality Improvement in Health  Care. See table 4.

Appendix II: CMS Appropriations for Medicare Quality Measurement Activities, Fiscal Years 2009-2018

The Centers for Medicare & Medicaid Services (CMS) has identified five  separate appropriations that for various fiscal years have funded the  activities assigned to the consensus-based entity (currently the National  Quality Forum), along with certain other quality measurement activities,  as described in sections 1890 and 1890A of the Social Security Act. See  table 5. Three additional appropriations focus on specific Medicare quality  measurement activities, such as post-acute care measures. See table 6.

Appendix III: Description of Quality Measures CMS Selected for Its Annual Measures under Consideration List, 2014-2018

Tables 7 to 12 below present descriptive information that the Centers for  Medicare & Medicaid Services (CMS) collects through its issue tracking  system on the measures submitted to CMS by measures developers for  potential use in CMS’s Medicare quality programs.

Appendix IV: CMS-Contracted Organizations That Perform Quality Measurement Activities and Efforts to Encourage Coordination

The Centers for Medicare & Medicaid Services (CMS) has used the  majority of its Medicare quality measurement funding for activities  conducted by outside organizations under contract with CMS. Between  fiscal years 2009 through 2018, the amount of obligations to contracted  organizations increased from $10 million to nearly $55 million. See table  13.

The total amount of funds obligated to each contractor in fiscal years  2009 through 2018 to perform Medicare quality measurement activities  varied, ranging from $1,000 to $139,397,410. For fiscal years 2009  through 2018, 91 percent of funds obligated to contracted organizations  for Medicare quality measurement activities went to 12 of 59 contracted  organizations. See table 14.

CMS has undertaken efforts to coordinate the Medicare quality  measurement activities performed by its contractors. For example, CMS  works with a CMS contractor, Battelle, to facilitate monthly webinars with  its Measure & Instrument Development and Support (MIDS) contractors.  The purpose of the webinars is to provide contractors with a forum to  discuss each other’s quality measurement activities and to exchange  ideas. For more information about CMS’s formal efforts to coordinate the  quality measurement activities of its contractors, see table 15.

Appendix V: Comments from the Department of Health and Human Services

Appendix VI: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Will Simerl, Assistant Director;  Eric Peterson, Analyst-in-Charge, Jonathan Adams, George Bogart,  Krister Friday, Cathy Hamann, Katie Mack, and Dan Ries made key  contributions to this report. Also contributing were Vikki Porter and  Ethiene Salgado-Rodriguez.

Health Care Quality: HHS Should Set Priorities and Comprehensively  Plan Its Efforts to Better Align Health Quality Measures. GAO-17-5  (Washington, D.C.: October 13, 2016).

Patient Protection and Affordable Care Act: Procedures for Reporting  Certain Financial Management Information Should Be Improved.  GAO-14-697 (Washington, D.C.: September 22, 2014).

Budget Issues: Key Questions to Consider When Evaluating Balances in  Federal Accounts. GAO-13-798 (Washington, D.C.: September 30, 2013).

Health Care Quality Measurement: HHS Should Address Contractor  Performance and Plan for Needed Measures. GAO-12-136 (Washington,  D.C.: January 13, 2012).

Program Evaluation: Improving the Flow of Information to the Congress.  GAO/PEMD-95-1 (Washington, D.C.: January 30, 1995).

How does Medicare ensure that hospitals, physicians, and others are providing high-quality health care?

Medicare can adjust payments based on performance, but it also keeps providers accountable by making health care quality information publicly available. Medicare has made it a priority to develop and use measures of health care quality that address key aspects of care while minimizing the data reporting burden on providers.

However, it isn’t always clear that Medicare’s measures address its priorities. We recommended ways to ensure Medicare’s priorities drive its quality measurement activities.