Department  of  Health  and Human  Services 
OFFICE  OF 
NSPECTOR  GENERAL 
FEDERAL INITIATIVES TO  IMPROVE 
STATE MEDICAL  BOARDS 
PERFORMANCE 
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FEBRUARY  1993  OFFICE OF INSPECrOR  GENERAL 
The mission of the Office of Inspector General  (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of the Department  of Health and Human Services (HHS) 
programs as well as the health and welfare of beneficiaries served by those programs.  This 
statutory mission is carried out through a nationwide network of audits, investigations, and 
inspections conducted by three OIG operating components:  the Office of Audit Services, the 
Office of Investigations, and the Office of Evaluation and Inspections.  The OIG also informs 
the Secretary of HHS of program and management problems and recommends courses to 
correct them. 
OFFICE OF AUDIT  SERVICES 
The OIGS Office of Audit SeAces  (OAS) provides all auditing services for HHS, either by 
conducting audits with its own audit resources or by overseeing audit work done by others. 
Audits examine the performance of HHS programs and/or its grantees and contractors in 
carrying out their respective responsibilities and are intended to provide independent 
assessments of HHS programs and operations in order to reduce waste, abuse, and 
mismanagement and to promote economy and efficiency throughout  the Department. 
OFFICE OF INVESTIGATIONS 
The OIGS Office of Investigations (01) conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of 
unjust enrichment by providers.  The investigative efforts of 01 lead to criminal convictions, 
administrative sanctions, or civil money penalties.  The 01 also oversees State Medicaid fraud 
control units which investigate and prosecute fraud and patient abuse in the Medicaid program. 
OFFICE OF EVALUATION  AND  INSPECHONS 
The OIGS Office of Evaluation and Inspections (OEI) conducts short-term management and 
program evaluations (called inspections) that focus on issues of concern to the Department, 
the Congress, and the public.  The findings and recommendations contained in these inspection 
reports generate  rapid, accurate, and up-to-date information on the efficiency, vulnerability, 
and effectiveness of departmental  programs. 
This report was prepared  under the direction of Mark R. Yessian, Ph.D., the Regional 
Inspector General, and Martha B. Kvaal, Deputy Regional Inspector General, Boston Region, 
Office of Evaluation and Inspections.  Participating in this project were the following people: 
Boston Region  Headquartm 
David Veroff, Project Leader  Alan Levine  1 
A 
Department  of  Health  and Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
FEDERAL INITIATIVES TO  IMPROVE
STATE MEDICAL  BOARDS

PERFORMANCE

oEI-ol-93mo 
FEBRUMY  1993 
.   INTRODUCTION 
PURPOSE 
To review  proposed  and  recommended  Federal  initiatives  to improve  State  medical 
boards  disciplinary,  licensure,  and  other  quality  assurance  efforts. 
BACKGROUND 
State  medical  boards  provide  a vital  front  line of protection  for  the  millions  of people 
who receive  medical  care  including  those  in the  Medicare  and  Medicaid  programs. 
They  determine  whether  or not  a physician  meets  the  minimum  necessary 
qualifications  to practice  medicine.  And  through  their  enforcement  of State  medical 
practice  acts,  they  identi~  and  take  action  against  physicians  responsible  for  poor 
quality  care,  unprofessional  behavior,  and  other  violations  of these  acts. 
In the  past  decade,  State  medical  boards  have  steadily  advanced  their  efforts  in the 
areas  of licensure  and  discipline.  Boards  have  come  up with significant  new 
approaches,  authorities,  and  resources  to safeguard  the  public.  Important  efforts 
include:  widespread  use of national  licensure  exams,  strict  mandatory  reporting  laws, 
efforts  to assist impaired  physicians,  re-education  efforts,  and  aggressive  prosecution  of 
physicians  who  abuse  or exploit  patients.  In addition,  as we highlight  in our  report 
entitled  State  Medical  Boards  and  Quality-of-Care  Cases:  Promising  Approaches, 
States  have  begun  a number  of innovative  and  important  efforts  to  address 
incompetent  physicians  and  substandard  care.l 
The  boards,  however,  still have  many  problems.  Their  capacity  to be  effective  is often 
hampered  by lack  of resources.  Funding  for boards  is not  always a high priority  for 
State  legislatures.  While  boards  often  raise  substantial  amounts  of money  through 
licensure  and  registration  fees,  in many  States  large  proportions  of these  funds  go into 
general  revenues  rather  than  the  boards  own budgets.  Budget  crises  in many  States 
in recent  years  have  not  helped  this situation.  Because  of this and  other  limitations, 
boards  have  not  been  at the  forefront  of quality  assurance  efforts. 
The  Office  of Inspector  General  has  a longstanding  interest  in the  quality  assurance 
efforts  of State  medical  boards.  Recent  and  upcoming  reports  include: 
  State  Medical  Boards  and  Medical  Discipline,  August  1990 (0EI-Ol-89-
00560), 
  State  Medical  Boards  and  Medical  Discipline:  A State-By-State  Review, 
August  3990 (OEI-01-89-00562), 
  Quality  Assurance  Activities  of Medical  Licensure  Authorities  in the  United 
States  and  Canada,  Februag  1991 (OEI-01-89-00561), 
1    Performance  Indicators,  Annual  Reports,  and  State  Medical  Discipline:  A 
State-By-State  Review,  July  1991 (OEI-01-89-00563), 
	 The  Peer  Review  Organizations  and  State  Medical  Boards:  A Vital  Link 
(Draft),  August  1992 (OEI-01-92-O0530),  and 
	 National  Practitioner  Data  Bank:  Usefulness  and  Impact  of Reports  to State 
Licensing  Boards  (Draft),  October  1992 (OEI-01-90-00523). 
These  reports  have  highlighted  efforts  States  can take  to protect  the  public  from  poor 
medical  care.  They  have  also identified  a number  of initiatives  the  Federal 
government  could  undertake  to foster  improvement  in the  boards. 
Several  other  proposals  and  reports  have  outlined  new efforts  the  Federal  government 
might  undertake  to improve  the  quality  assurance  efforts  of State  medical  boards. 
The  initiatives  come  from  Congress,  the  Department  of Health  and  Human  Services, 
the  Department  of Justice  and  interagency  task  forces.  Our  cataloging  of initiatives 
highlights  significant  proposals  that  have  received  widespread  attention. 
This report  is timed  so as to provide  the  new Administration  and  Congress  with  a 
brief  overview  of potential  Federal  action  to assist States  quality  assurance  efforts 
focused  at physicians.  By presenting  several  crucial  issues State  medical  boards  face 
(summarized  from  our  reports  findings)  and  describing  a number  of Federal  initiatives 
that  we and  others  have  recommended  to address  the  problems,  we hope  to inform 
Congressional  and  executive  office  decision  makers.  We  do not  implicitly  or explicitly 
either  endorse  or reject  any of the  other  organizations  proposed  initiatives. 
We  conducted  our  review  in accordance  with the Jnterim  Standards for Inspections 
issued  by the  Presidents  Council  on Integrity  and  Efficiency. 
2  PURSUIT  OF  QUALITY-OF-CARE 
CASES 
ISSUE:  States have much difficulty pursuing quality-of-care  cases.  These  cases 
are time-consuming  and complex  and require legal and medical 
expertise.  States often have problems identiijing  significant cases and 
investigating them.  Some  States have medical  practice  acts that make 
pursuing these  cases even more diificuk 
OIG RECOMENDATTONS: 
REQUIRE  MEDICARE  PEER REWEW  ORGANIZATIONS  (PROS) TO REPORT 
CERTAIN  CASES:  One  of the  difficulties  boards  have  is that  they  do not  receive 
complete  and  accurate  information  from  complainants.  The  PROS  could  provide 
detailed  and  significant  case  information  about  poor-quality  physicians.  In our  August 
1992 draft  report  entitled  The Peer  Review  Organizations  and  State  Medical  Boards: 
A Vital  Link, we recommended  that  the  Health  Care  Financing  Administration 
(HCFA)  propose  legislation  mandating  that  PROS  provide  case  information  to State 
medical  boards  when  they  have  confirmed,  after  medical  review,  that  a physician  is 
responsible  for medical  mismanagement  resulting  in significant  adverse  effects  on the 
patient.2  An interagency  task  force  on fraud,  abuse,  and  waste  echoed  our 
recommendation  .3  l%e HCFA  did not concur with our recommendation.  l%ey 
expressed concern that disclosure of this information  would damage  the cooperatzve 
relationship between  the PROS and physicians that they are trying to foster. 
ALLOW  STATE MEDICAID  PROGRAMS  TO SHARE  CASE IFORM4TION. 
Similarly,  Medicaid  agencies  have  information  about  quality  problems.  In our  August 
1990 report  entitled  State  Medical  Boards  and  Medical  Discipline,a  we 
recommended  that  HCFA  amend  Medicaid  regulations  or propose  legislation  to allow 
State  Medicaid  agencies  to share  with the  medical  boards  case  information  on 
physicians  against  whom  they  have  taken  adverse  action.  In response to the 
recommendation,  HCFA  aqyed  that action on the Medicaid  reporting was unnecessa~ 
since the HHS  Ofice  of General Counsel had made  clear that State law determines 
whether thk  information is reportable.  Howeve~  the Omnibu  Budget Reconciliahon Act 
of 1990 requires State Medicaid  agencies to notijj  their State k medical  board when a 
physician  is terminated, suspended, or otherwise sanctioned.  The HCFA  has not 
publiihed  regulations to implement  thk prowkion. 
PROMOTE  IDENTIFICATION  OF QUALITY  PROBLEMS  IN NURSING  HOMES: 
In our  Boards  and  Discipline  report,  we recommended  the  Administration  on Aging 
(AoA)  and  HCFA  assure  that  the  Long  Term  Care  Ombudsman  Program  and  the 
aHereafter  referred  to as Boards  and  Discipline. 
3  States  survey  and  certification  agencies  provide  assistance  to State  medical  boards  in 
identifying  instances  of improper  medical  care  provided  to nursing  home  residents. 
While AoA  fhllj  concured  with our report and sent copies of the report to Ontbu&nan 
program administration, HCFA  asked for firther  clarification.  We provided firther 
explanation in our jinal  report. 
ENCOURAGE  BOARDS  TO USE PROS TO ASSIST  ON QUALITY-OF-CARE 
CYISES: Some  boards  have  difficulty  getting  access  to medical  opinions  on quality-of-
care  cases.  In our  Boards  and  Discipline  report,  we recommended  that  PHS  in 
collaboration  with HCFA  determine  ways to encourage  and  assist boards  to contract 
with PROS  to conduct  reviews  of quality-of-care  cases.  Z7zePHS concurred with our 
recommendation,  but felt  it was HCFA h role to provide  encouragement  and assktance  to 
States on this issue.  l%e HCFA  also concurred with our recommendation,  but has not 
provided  any encouragement  or assistance. 
PROK?DE ASSISTANCE  TO STATES  TO IMPROVE  INJ?ESTIGAT~  EFFORTS: 
In our  Boards  and  Discipline  report,  we recommended  PHS  provide  financial 
support  for technical  assistance  intended  to improve  boards  investigative  efforts.  We 
also recommended  that  PHS,  through  its Agency  for Health  Care  Policy and  Research, 
provide  demonstration  funding  concerning  the  use of practice  standards  and  guidelines 
to guide  investigative  efforts  in quality-of-care  cases.  7he PHS concurred with both 
recommendations  and has begun discussing the use of pracncestandards  and guidelines 
with States. 
O12%ERPROPOSED FEDERAL IN~17Kt?S: 
PROVDE  ASSISTANCE  TO STATES  TO EVALUATE  MEDICAL  PRACTICE  ACTS: 
Some  States  medical  practice  acts  could  be improved  to allow boards  and  their  staff 
more  authority  to investigate  and  prosecute  incompetent  or unprofessional  physicians. 
A report  from  an HHS  task  force  recommended  the  Department  provide  technical 
assistance  to States  for educating  legislators  on evaluations  of their  medical  practice 
acts?  l%e Public Health  Service has, in ~hepast,  awarded grants to the Federation of 
State Medical  Boar&  to provide  technical assistance to States to improve their practice 
acts and to develop  a model  medical prachceact.  There k no such effort cuvently. 
4 
  PROACTIVE  QUALITY  ASSESSMENT
AND  ASSURANCE
ISSUE	 After initial I.icensure examinations, State medical  boards have little or 
no role in proactively assessing and assuring quality medical  care.  All 
boards respond to complaints and reports about poorquality  care, but 
few do anything either to independently  assess and address individual 
physician performan=  or to promote  improved  quality of care for all 
physicians. 
OIG RECOMUEJWAITONS: 
TEST RANDOM  PRACTICE  AUDITS:  In our  February  1991 report  entitled  Quality 
Assurance  Activities  of Medical  Licensure  Authorities  in the  United  States  and 
Canada,fb we recommended  that  PHS  provide  demonstration  funding  to States  on the 
use  of random  practice  audits  as preventive,  quality  assurance  measures.  This  report 
noted  the  successful  use of random  practice  audits,  particularly  with  isolated 
physicians,  to assess  performance  and  improve  practices.  Z7ie PHS concumed with the 
intent of the recommendation,  but believes that medical  review criteria and medical 
outcomes  measures must be more&l&  developed pnorto implementahon. 
OXHER PROPOSED FEDERAL IN~ZMZS: 
REQUIRE  PERIODIC  REEMMIN?ATION  OF PHYSICJ%NS EITHER  THROUGH 
THE BOARDS  OR THROUGH  THE DEPARTMENT  OF HEALTH  AND  HUMAN 
SER~CES  (HHS):  Recently  proposed  legislation  would  have  required  every  physician 
treating  Medicare  patients  to take  a recertification  examination  eve~  seven  years.5 
The  examination,  if administered  by a State  medical  board,  would  have  to be 
approved  by the  Secretary  of HHS.  Otherwise  the  examination  would  be  provided 
directly  by HHS.  This legislation  was not voted  on in  1991 or  1992. 
REQUIRE  STATES  TO IMPLEMENT  QUALITY ASSURANCE  PROGRAMS: 
Recently  proposed  legislation  would  have  required  each  State  to implement  quality 
assurance  programs  that,  among  other  things, would  establish  standards  of care  in 
areas  where  there  is a great  risk of negligence. G This  legislation  was not  voted  on in 
1992. 
bHereafter  referred  to as QA  Activities. 
5  PERFORMANCE  ASSESSMENT 
ISSUE	 State medical boards have not been  able, over the years, to gauge their 
performance  in relation to other State medical boards.  More  active 
assessment  of performance  would allow States to focus resources  and 
effectively  present  to the public and to State legislatures  their 
accomplishments  and needs. 
OIG RECOMMEJWAZZONS: 
PROIZDE  ASSISTANCE  FOR DEK!5LOPMENT  OF PERFORMANCE 
INDICATORS:  In Boards  and  Discipline,  we recommended  that  PHS  provide 
financial  support  for the  development  of performance  indicators  suitable  for 
widespread  use by State  medical  boards.  A Department  of Justice  task  force 
recommended  HHS  itself  develop  indicators  of performance.  l%e PHS has supported 
the Federation  of State Medical  Boards efforts to develop  a peflormance  assessment 
program  (SAI).  Approximate~ seventy indicaton have been developed, but are not 
cun-ently used widely.  A second phase  of the project,  which would involve 
implementation,  k scheduled for completion  by the end of 1993. 
COLLECT  ANALYZE,  AND  DISSEMINATE  STATE-BY-STATE  DATA:  In Boards 
and  Discipline,  we recommended  that  PHS  collect,  analyze,  and  disseminate  State-by-
State  data  on staffing,  revenues,  expenditures,  and  caseloads  of State  medical  boards. 
7he PHS concurred with this recommendation.  The SAI may  eventually fulfill this need 
if the information gathered k disseminated. 
OXHER PROPOSED FEDERAL IN~TM5S: 
DEZl?LOP  AND  REQUIRE  BOARDS  TO REPORT  INFORMATION  RELEVANT  TO 
PERFORA4XNCE  CRITERM:  Recently  proposed  Federal  legislation  would  require 
the  Secretary  of Health  and  Human  Semites  to develop  regulations  that  specify 
performance  criteria  for medical  boards.  The  legislation  also would  require  States  to 
collect,  analyze,  and  supply  the  Secretary  with information  and  data  on staffing, 
revenues,  disciplinary  actions,  expenditures,  caseloads,  and  the  use  of continuing 
medical  education  programs  to demonstrate  adherence  to the  criteria.  This  legislation 
has not  been  voted  on in  1993. 
6  FUNDING 
ISSUE	 Medical  boards often are inadequately  tided.  This lack of funding 
restricts boards ability to address disciplinary issues adequately  and to 
be proactive in assuring quality. 
OIG RECOMMENDAZTONS: 
ENCOURAGE  THE SIL4RLNG OF INFORM4TIONABOUT  ADDRESSING 
RESOURCE  LIMITATIONS:  In mu-Boards  and  Discipline  report,  we recommended 
that  PHS  convene  a national  meeting  to focus attention  on the  importance  of the 
boards  oversight  role  and  to examine  how the  boards  resource  and  other  limitations 
should  be  addressed.  We  also recommended,  and  a Department  of Justice  group 
concurred,8  that  PHS  develop  performance  standards  that  would,  among  other  things, 
compare  State  medical  boards  on the  basis  of licensure  revenue  and  expenditures. 
l%e PHS concurred with our recommendations  and has, as mentioned  before, helped 
develop  SAI which includes questions about revenue and expenditures. 
PROKTDE FINANCLAL  SUPPORT  FOR PROACTIVE/INNOVAT~  ACT~TIES: 
As mentioned  above,  in our  Boards  and  Discipline  report  we recommended  that 
PHS  provide  financial  support  for a number  of important  developments.  We 
recommended  that  PHS  provide  funds  for the  development  of performance  indicators 
suitable  for widespread  use by State  medical  boards,  funds  for technical  assistance 
efforts  intended  to improve  the  boards  investigative  efforts,  and,  through  the  Agency 
for Health  Care  Policy and  Research  (AHCPR),  demonstration  funds  concerning  the 
use  of practice  standards  and  guidelines  to guide  investigative  efforts  in quality-of-care 
cases.  As mentioned  above,  in our  QA Activities  report,  we recommended  that  PHS 
provide  demonstration  funding  on the  use  of random  practice  audits  as preventive 
quality  assurance  measures.  7%e PHS concurred with all of these recommendations 
except the last. 
02HER  PROPOSED F~ERi4L  INITL477KES: 
REQUIRE  T~T  THE TOTAL MllOUNT  OF FEES PAID BY PHY5ICL4NS BE

ALLOCATED  TO BOARD ACTIWTIES:  In many  States,  a large  proportion  of the

licensure  and  registration  fees  collected  by boards  are  used  to support  general

activities  of the  State  government,  and  are  not  dedicated  to the  boards  activities.

Recently  proposed  legislation  would  have  required  States,  in order  to receive  Federal

PHS  or Medicaid  funding,  to certify  that  they  allocate  the  total  amount  of fees  paid

for licensing  or certification  of health  care  practitioners  to the  agencies  responsible  for

disciplinary  actions. 9  Neither  piece  of legislation  was voted  on in 1992. 
7  CONCLUSION 
State  medical  boards  are  responsible  for assuring  the  basic  competence  of all 
physicians.  A medical  license  allows physicians  to practice  on patients  with  almost  no 
restrictions.  Since  the  Federal  government  has a direct  role  in assuring  that  Medicare 
and  Medicaid  patients  are  given adequate  medical  treatment  and  has  an indirect  role 
in promoting  the  health  and well-being  of all Americans,  the  OIG  and  others  in 
Federal  government  have  great  interest  in making  sure  that  State  medical  boards  are 
doing  their  jobs  in protecting  the  public. 
The  Federal  government  can  have  a significant  role  in encouraging,  funding,  and,  in 
some  cases,  mandating  improvements  in medical  boards.  This  does  not,  however, 
imply that  they  have  any explicit  oversight  authority  over  boards  or that  States 
themselves  do not  have  responsibility  for boards  performance.  All of the  initiatives 
described  in this report  must  supplement  active  and  effective  State  involvement  to 
assure  quality  medical  care. 
8  APPENDIX  A 
NOTES 
1.  State  Medical  Boards  Pursuit  of Quality-of-Care  Cases:  p~omising 
Approaches,  0EI-01-92-OO050, Februaxy  1993. 
2.  We  and  others  have  been  urging  action  in this area  for years.  In a  1986 report, 
Medical  Licensure  and  Discipline:  An  Overview,  we recommended  that 
HCFAS regulations  be  amended  to require  PROS to report  more  extensive  and 
timely  information  to boards.  In Boards  and  Discipline,  we recommended 
legislation  mandating  that  PROS share  case  information  with boards.  In 
December  1990, Congress,  in the  Omnibus  Budget  Reconciliation  Act,  required 
that  PROS notify boards  of physicians  whom  they  have  found  responsible  for 
serious  quality-of-care  problems.  Congress,  in the  law, stipulated  that 
notification  was not  to occur  until  after  notice  and  hearing  are  granted  to the 
physicians  involved. 
3.  Health  Care  Anti-Fraud,  Abuse  and  Waste  Initiative,  State/Federal  Model 
Legislation  Working  Group  of the  Administrations  Task  Force  on Health  Care 
Anti-Fraud,  Abuse,  and  Waste,  September  17, 1992. 
4.  Otis  R. Bowen,  M.D.,  Report  of the  Task  Force  on Medical  Liability  and 
Malpractice,  Department  of Health  and  Human  Services,  August  1987, p. 22. 
5.  The  Medicare  Physician  Qualification  Act  of 1990, H.R.  4464, (lOlst 
Congress). 
6.  Basicare  Health  Access  and  Cost  Control  Act, S. 2346, (102nd  Congress). 
7.  Health  Care  Choice  and  Access  Improvement  Act  of  1993, H.R.  150, (103rd 
Congress). 
8.  Medical  Malpractice  Reform  Paper,  Department  of Justice,  Tort  Law Reform 
Working  Group  (September  21, 1990). 
9.  The  American  Health  Quality  Act, S. 1836 in the  102nd Congress  linked 
certain  Medicaid  funds  to this requirement.  The  Ensuring  Access  Through 
Medical  Liability  Reform  Act  of 1991, S. 489 in the  same  Congress  linked  PHS 
funding  to States  to this requirement. 
A-1