The Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) initiative was initially developed as a result of the Medicare Prescription Drug, Improvement and Modernization Act (MMA) of 2003. Section 5001(a) of Pub. 109-171 of the Deficit Reduction Act (DRA) of 2005 set out new requirements for the RQHDAPU program, which build on the ongoing voluntary Hospital Quality Initiative.

The initiative is intended to equip consumers with quality of care information to make more informed decisions about their health care, while encouraging hospitals and clinicians to improve the quality of inpatient care provided to all patients. The hospital quality of care information gathered through the initiative is available to consumers on the Hospital Compare website.

The RHQDAPU initiative requires hospitals to submit data for specific quality measures for health conditions common among people with Medicare, and which typically result in hospitalization. For fiscal year 2007, CMS requires that hospitals submit data regarding all 21 AMI, HF, PN, and SCIP clinical quality measures to the QIO Clinical Warehouse beginning with third quarter 2006 discharges. Additionally, hospitals are required to meet 80% reliability on validation.

Hospitals that do not participate in the RHQDAPU initiative will receive a reduction of 2.0 percent in their Medicare Annual Payment Update for fiscal year 2007. To avoid the reduction in their Annual Payment Update, hospitals must meet specific requirements outlined in the RHQDAPU Participation Steps (Reference Checklist) for FY 2007.