Health policy analysts see many opportunities for eliminating wasteful spending on health care and improving quality at the same time, but lament a lack of funding for organizing these efforts.

Now under a little-noticed provision of the new Medicare law (PL 110-275) blocking physician payment cuts, efforts to set national priorities for quality and efficiency gains will accelerate, those analysts say.

The legislation provides $10 million a year from fiscal 2009 through 2012 from the Medicare trust funds to fund a process for setting priorities for improving health care quality and efficiency and for endorsing specific measures to meet those priorities.

The law provides “a clear, steady funding source,” said Richard Sorian, vice president for public policy at the National Committee for Quality Assurance (NCQA), a private group that develops specific quality performance measures used by public and private health insurance programs. With the law “you have a pot of money to really drive the process forward.”

Section 183 of the law directs the Health and Human Services secretary “as soon as is practicable” to sign a contract with an organization “such as the National Quality Forum” (NQF) to undertake the effort. Practically, that means the money will go to NQF, insiders in the health quality improvement field say.

NQF is the result of years of voluntary efforts to figure out ways to measure and improve the quality of care not only to help doctors, nurses, hospitals, and health plans focus their internal efforts, but also to help consumers and other health care payers decide which plans and providers to use. The forum has brought together a wide cross-section of health care players including purchasers, health plans, providers and consumers to achieve consensus on more than 300 specific measures of quality of care.

Congressional Budget Office Director Peter R. Orszag has identified geographic variation as an area ripe for health system changes that could eliminate hundreds of billions of dollars in wasteful spending.

NQF President Janet Corrigan said the forum is likely to tackle the issue of geographic variations in the types and volumes of services used to treat specific medical conditions. That effort could involve developing measures to identify unnecessary or redundant services and to help bring health service usage levels down to more medically appropriate levels.

The idea of setting national priorities in the health care quality field “has been percolating for more than a decade,” Sorian noted. Although NQF has begun the process, “a key part of this is to have resources to make it work.”

Until now, “it’s always been to some extent hand to mouth” when it comes to funding for NQF projects, he said.

A version of this story originally appeared in CQ HealthBeat.