Medicare Reviews Are Part of
Flawed Inspection System

Investigators Blamed for Missing Problems at Hospitals; Conflicts of Interest Cited 

GILBERT M. GAUL / Washington Post 25jul2005

(First part / Second of three parts)

The creators of Medicare faced a problem. They were about to hand out millions — eventually billions — of dollars each year in tax money for hospitals to care for the nation's elderly. But how to make sure those hospitals were qualified?

Government bureaucrats had no experience overseeing the quality of health care, so in 1965 lawmakers turned instead to a private group — a little-known organization that already was in the business of evaluating hospitals.

The responsibility as Medicare's gatekeeper came as a shock to the Joint Commission on the Accreditation of Healthcare Organizations, which never lobbied for it. "In fact, we woke up one morning and found some language in the legislation," said Dennis S. O'Leary, now president of the group. "It was a complete surprise."

Over the next 40 years, that surprise turned out to be a boon to the joint commission's prestige and finances. Today, the nonprofit is one of the nation's most influential health groups, evaluating thousands of medical facilities annually. It collects $113 million in annual revenue, mainly from the fees it charges hospitals.

Yet at the same time, the joint commission's practices raise questions about potential conflicts of interest and the rigor of its hospital surveys. It operates a thriving subsidiary that charges hospitals thousands of dollars for coaching on how to pass its reviews. About 99 percent of the hospitals reviewed by the joint commission win accreditation, and in recent years it has missed glaring examples of poor care in which patients have been injured or killed:

• The joint commission accredited California's Redding Medical Center in July 2002. A few months later, FBI agents raided the hospital amid charges that doctors had performed hundreds of unnecessary heart surgeries and tests from 1999 to 2002, allegedly resulting in some deaths.
• The joint commission gave Maryland General Hospital in Baltimore its seal of approval twice in four years. Yet even as the hospital was collecting plaudits, lab technicians complained that testing equipment didn't work and that hundreds of HIV tests were mishandled. Some patients who tested positive for the virus may have been told they were negative. State regulators found last year that the lab had been "rife with equipment failures and malfunctions" and had lost or mishandled specimens.
• Norwalk Hospital in Connecticut won accreditation from the joint commission in May 2004. Less than a month later, state regulators reported numerous violations at the hospital. One patient received 10 times the prescribed dosage of a painkiller, according to state records. Another had his left testicle mistakenly removed. Still another, experiencing suicidal thoughts, was given a taxi token and told to find a treatment center. He hanged himself hours later, according to a November 2004 consent agreement between the hospital and state. Norwalk officials agreed to pay the state a $50,000 fine without admitting wrongdoing.
• The group awarded accreditation in August 2000 to Florida's Palm Beach Gardens Medical Center even though the hospital received a less than satisfactory grade on infection control. It affirmed the accreditation in 2003, about the time that state and federal regulators were poring over more than 100 complaints of life-threatening infections in the heart unit. The hospital's owners were later fined by the state and paid $31 million to settle plaintiffs' allegations of poor care.

O'Leary said the group's surveys "are the most rigorous in the world," with safety and quality standards that exceed those of Medicare. He acknowledged that joint commission reviewers "still miss" problems, "but so do state agencies and others," he said. "I bet if we went in behind state regulators, we would find things, too."

Some state regulators and consumer advocates take a different view, saying that Medicare relies too heavily on the joint commission and other private groups, which are closely aligned with the health facilities they review.

Nelson J. Sabatini, Maryland's health commissioner during the troubles at Maryland General, said federal oversight of health care is "a fraud. A lot of what they call regulation is really self-regulation," he said. "They're being told to be partners. It doesn't work."

Under Medicare rules, any hospital meeting the joint commission's standards automatically is eligible to participate in the federal health program and receive government reimbursements. Over the years, to save money and avoid duplicating federal efforts, all but a handful of states have abandoned their separate procedures for licensing hospitals and now rely on the joint commission.

The group's role, O'Leary said, is to help hospitals and other facilities meet the standards, not to regulate or punish them.

"We can't fine you or close you," O'Leary said. "It's right in the articles of incorporation. Our role is to evaluate and educate."

The joint commission is one of three main legs in Medicare's oversight system. To ensure that the care it pays for meets quality standards, Medicare also allocates more than $250 million a year to state regulators to investigate complaints and inspect a wide range of health care facilities. And it awards nearly $300 million annually to private groups in each state called Quality Improvement Organizations, which work closely with hospitals and others to improve care and review patient concerns.

In recent years, Medicare officials have stressed a more collegial approach in which the private groups and even some state regulators work together with the hospitals and other groups they oversee. The focus of this approach is collaboration, not punishment.

The joint commission is a good example of the change. The idea is that collaboration and continual monitoring can result in broader improvements and better care than simply weeding out poor performers.

But some critics say the outsourcing and shifting focus of Medicare's oversight system puts patients at risk.

The relationship between Medicare and the joint commission is a large part of the problem, Sabatini said. "The fundamental structure of the joint commission doesn't make sense," he said. "It's one big built-in conflict, and the fact that Medicare allows it is appalling."

For their part, Medicare officials say they are required by law to accept the joint commission's congressionally mandated accreditation system.

"Legally we have no authority" over the commission, said Frank Sokolik, who directs hospital surveys for the Centers for Medicare and Medicaid Services, the agency that oversees the giant federal insurance program.

"We work together," Sokolik said, "but there is no requirement they do anything."

The $98 Banner

The joint commission, which is based outside Chicago, boasts that its imprimatur represents a "Gold Seal of Approval." And to advertise that, it suggests that the 15,000 groups it oversees purchase banners, decals, coffee mugs and enamel pins to tout their accomplishments.

" 'We Are Accredited' products are available exclusively to Joint Commission accredited organizations," the group's Internet site proclaims. The cost of a 5-by-2-foot blue and burgundy banner: only $98. "No one who walks into your reception areas or waiting rooms can miss the message," the Web site says.

The money from these vanity sales is pocket change for the group, which takes in millions from its accreditation surveys, consulting services and educational materials. Still, it helps to drive home a message that the joint commission has been selling in one way or another for more than half a century: If you have our stamp of approval, you are the best.

The "best," it turns out, includes almost every institution that pays the joint commission's fees, which for a large hospital average $26,000 per survey. The nonprofit inspects hospitals once every three years.

Some critics point to the approval rate as evidence that the joint commission is captive to hospitals. The joint commission notes in its literature that the group wants to work together with the facilities it accredits, referring to them as "customers" and "clients." The commission still tells hospitals in advance when its survey teams are coming but says it will switch to surprise reviews next year.

The board of directors of the joint commission is dominated by representatives of the American Hospital Association and the American Medical Association.

"I agree that on the surface if you look at our board, you'd have those concerns and you would probably wonder how in the hell it even works," O'Leary said. "But I would say you have to look at what we have done and not how we look. I think our record speaks for itself."

The joint commission serves as more than just a gatekeeper for Medicare, O'Leary said. It collects and analyzes data on medical mistakes, works to improve patient safety and provides consumers with a portal on its Web site to check hospital performance.

One initiative of the joint commission is relatively new. Its subsidiary, Joint Commission Resources, was established in the 1990s to consult with hospitals on how to gain accreditation and improve their performance. It also operates the nonprofit's busy publishing and conference business.

JCR solicits hospitals so that they can "achieve peak performance on their next survey," one brochure notes, and also sells its services to state hospital associations.

The average bill for one of its 300 annual consultations runs about $10,000, said Karen H. Timmons, JCR's president and chief executive. Directly or indirectly, most of JCR's nearly $33 million in revenue comes from helping hospitals win the joint commission's seal of approval.

Timmons said that there is a firewall between the subsidiary and the joint commission, and no inspection information is exchanged. "The joint commission would have no knowledge who we're dealing with," she said. "We're in a separate building several miles away" from the commission's Oakbrook Terrace, Ill., headquarters.

While officials say no information flows between the two groups, tax returns show that a substantial amount of money does change hands.

In the past three years, JCR has paid its parent about $10.5 million in management fees and $867,000 in royalties. And according to its 2003 tax return, JCR owes the joint commission nearly $8.4 million. In addition, the affiliate helps to underwrite two money-losing joint ventures of the commission.

O'Leary said the joint commission has been careful to properly isolate its potentially conflicting missions.

"From a technical standpoint, I don't believe we can be much purer," O'Leary said. "But we still have to deal with perception issues and it's problematic."

States Pull Out

Medicare performs some spot checks on the joint commission's work to make sure the accredited hospitals meet federal standards. But the number of validation surveys has dwindled in recent years because of a lack of funding.

Medicare used to review 5 percent of all hospital accreditation surveys annually, but that was slashed to 1 percent in 2003. This year, Medicare had again hoped to check 5 percent but was forced to scale back to 2 percent because of budget constraints.

A few states have opted out of the commission's accreditation program in recent years because of concerns about accountability. In 2001, Pennsylvania regulators decided to survey their own hospitals again after relying for years on the private group.

Dick Lee, state deputy secretary of health for quality assurance, said his department "found serious problems" with the commission's inspections.

"It was true across hospitals," he said. "We got a complaint one week after [the joint commission] had gone into a hospital and done an inspection."

Maryland regulators used to conduct their own hospital inspections until a wave of deregulation swept the state in the 1980s and state legislators agreed to accept joint commission accreditation for licensing purposes. According to Carol Benner, director of the state Office of Health Care Quality, Maryland "had no authority" over the joint commission: "We couldn't tell them what to look for in their surveys, and they didn't consult us."

The flaws in the state's inspection program were exposed by the massive problems in the laboratory at Maryland General Hospital last year.

The joint commission had given the hospital its approval in 2001 and 2004. Another private group — the College of American Pathologists, or CAP — had also awarded the hospital's laboratory its highest distinction in 2003, shortly before allegations of faulty equipment and shoddy testing became public. (Maryland General has since made numerous changes and is once again fully accredited.)

The state regulators and private accrediting groups blamed one another for missing the problems. The joint commission said it relied on CAP to inspect the laboratory. CAP officials said whistle-blowers at the hospital didn't share critical information with them. Benner said CAP didn't give the state copies of its surveys.

"There was no relationship between CAP and this office. That's just the way it was," Benner said.

"Everyone in this case failed: the state, the federal government, the joint commission and CAP," she said. "It's not pretty."

source: http://www.washingtonpost.com/wp-dyn/content/article/2005/07/24/AR2005072401023_pf.html 24jul2005

Lack of Funds Reduces Frequency of Health Inspections:
Many U.S. Surgery Centers Are Overdue for Review

GILBERT M. GAUL / Washington Post 25jul2005

To understand the gaps in public health inspections in America, consider the taco trucks parked along Harrison Street in San Francisco's Mission District. City inspectors check them at least twice a year.

San Francisco has far fewer outpatient surgery centers than taco vendors. Yet under federal rules, surgical centers have to be inspected only once every six years. In California, even that minimum usually is missed. Inspectors say they get out to the state's 428 surgical centers an average of once every 12 years.

"Would I like to do more inspections? Of course," said Brenda G. Klutz, the state's top health regulator. "The kinds of complicated surgeries that are now being done in ambulatory surgery centers . . . we'd certainly feel better if we were in there more often."

Klutz quickly explains that she can't do more because she doesn't have the money. Unlike cities and counties that rely on user fees and local tax dollars to pay for restaurant inspectors, California and the rest of the states rely on Medicare for most of the money they use to monitor hospitals and other health facilities. And those funds are limited.

Last year, Medicare's budget for policing more than 50,000 facilities -- from big teaching hospitals to tiny hospices -- was $259 million, less than one-third of what it spends in a single day on medical bills.

State regulators say that because federal funding is inadequate and comes with restrictions, they are forced to employ a form of triage. Under rules imposed by Congress, nursing homes and home health agencies must be inspected annually, a requirement that gobbles up about 70 percent of their oversight funds. The result is that thousands of facilities, including outpatient surgery and kidney dialysis centers go years without review.

Dialysis is one of Medicare's fastest-growing services. It spends about $15 billion a year to rinse deadly toxins from the bloodstreams of patients with failing kidneys. In a report earlier this year, federal officials called the health and safety risks of dialysis "extraordinary" and "life-threatening." Yet centers are supposed to be inspected just once every three years -- and only half of all states are able to meet that minimal standard.

Some state regulators note that mortality rates in American dialysis facilities are 15 to 30 percent higher than those for patients in Europe and Japan.

Thomas E. Hamilton, director of the oversight program for Medicare, acknowledged gaps in inspections but said federal officials are doing "the best that they can with constrained resources. Our job is to ensure that we get the maximum benefits for the dollars that are appropriated."

Hamilton said Medicare officials have prioritized inspections into four tiers, with nursing homes in the first tier and outpatient surgery centers at the bottom. The system is set up so that if states find they don't have enough funds, "they cut back on the lowest priorities first."

He added that Medicare officials are making adjustments because of concerns that some facilities aren't being inspected. As part of that effort, they plan to target a small number of dialysis centers for more frequent visits. "The idea is that it isn't all or nothing based on the tiers," he said.

The flaws in the inspection system don't stop at funding. When state regulators do turn up problems, they often run into obstacles trying to get them corrected.

State inspectors who check nursing homes for federal regulators say they are hampered by a lack of precise federal definitions when writing up violations. Thus, the same problem may be written up differently in two different states and may generate two very different fines. Medicare officials also often downgrade penalties recommended by the states, inspectors said, and any nursing home agreeing to forgo an appeal automatically gets a 35 percent discount.

Since 1995, Medicare has levied more than $100 million in penalties against the nation's 17,000 nursing homes based on deficiencies identified by state inspectors. But there are striking variations in those fines around the country, according to a Washington Post analysis of a federal database containing 10 years of records. Facilities in the Midwest and Southeast were most likely to be fined, and homes in California and the Pacific Northwest were the least likely. The average fine varied nearly 13-fold, from a high of $33,650 in California to $2,445 in the Pacific Northwest.

In dealing with troubled hospitals, Medicare has no authority to levy fines even when patients are harmed or killed. That leaves them with only one real weapon: threatening to kick the hospital out of the federal program. Medicare officials are reluctant to use that tool, regulators say, because of political pressure and fears that patients will go without care -- even if it's bad care.

Medicare does send out lots of warnings to hospitals threatening to terminate them: 157 between 2000 and 2002, records show. But since 1998, the federal insurer has cut off only seven small hospitals, each with 55 or fewer beds.

Meanwhile, Medicare continues to pay many large, troubled hospitals.

Last year, Medicare officials threatened to terminate Martin Luther King/Drew Medical Center on three separate occasions. The Los Angeles hospital has repeatedly been cited by state and federal regulators for injuring patients and finally lost its accreditation earlier this year.

Nonetheless, the hospital remained eligible for Medicare reimbursements so long as it promised to fix its problems. "They filed plans of correction," said Jeff Flick, administrator in charge of Medicare's regional office in San Francisco "and we went out and verified they were doing what they said they were."

But even with the government watching closely, problems continued. In April, county officials reported five suspicious deaths at the hospital. And in late June, a federal inspection found a series of "unusual events," according to Flick, including a patient who had been left unattended in the emergency department for 13 hours and later died of an aneurysm.

Flick said federal officials were once again pondering possible punishments. "I don't know what the results will be," he said. "Right now they're still being paid by Medicare."

source: http://www.washingtonpost.com/wp-dyn/content/article/2005/07/24/AR2005072400945_pf.html 24jul2005