Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
Quality Oversight of 
Ambulatory Surgical Centers 
The Role of Certification and Accreditation 
Supplemental Report 1 
JANET REHNQUIST 
Inspector General 
FEBRUARY 2002 
OEI-01-00-00451  OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 
protect the integrity of the Department of Health and Human Services programs as well as the health 
and welfare of beneficiaries served by them.  This statutory mission is carried out through a nationwide 
program of audits, investigations, inspections, sanctions, and fraud alerts. The Inspector General 
informs the Secretary of program and management problems and recommends legislative, regulatory, 
and operational approaches to correct them. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) is one of several components of the Office of Inspector 
General. It conducts short-term management and program evaluations (called inspections) that focus 
on issues of concern to the Department, the Congress, and the public. The inspection reports provide 
findings and recommendations on the efficiency, vulnerability, and effectiveness of departmental 
programs. 
OEI's Boston Regional Office prepared this report under the direction of Mark R. Yessian, Ph.D., 
Regional Inspector General and Joyce M. Greenleaf, MBA, Assistant Regional Inspector General. 
Principal OEI staff included: 
BOSTON  HEADQUARTERS 
Kenneth R. Price, Project Leader  Linda Frisch, Program Specialist

Christopher T. Gould, MS, Program Analyst

Megan V. Smith, MPH, Program Analyst

To obtain copies of this report, please call the Boston Regional Office at (617) 565-1050. 
Reports are also available on the World Wide Web at our home page address: 
http://oig.hhs.gov/oei  E X E C U T I V E  S U M M A R Y  
PURPOSE 
To assess the role of State agency certification and accreditation in the quality oversight of 
ambulatory surgical centers in the Medicare program. 
BACKGROUND 
In 2000, Medicare paid $1.6 billion for 4.3 million procedures performed in ambulatory 
surgical centers (ASCs). ASCs are generally free-standing facilities and may bill Medicare only 
for surgical procedures that the Centers for Medicare & Medicaid Services (CMS) has 
determined can be performed safely outside of the hospital.  While ambulatory surgery has 
been shown to have good surgical outcomes, routine procedures can result in serious 
complications and death. Over 3,000 ASCs participate in the Medicare program. 
Quality oversight of ASCs revolves around Medicares minimum health and safety standards, 
called the Conditions of Coverage. CMS requires ASCs to become Medicare-certified or 
privately accredited to show that they meet the Conditions.  Certification is carried out by State 
agencies and accreditation by CMS-approved accreditors.  The focus of both certification by 
State agencies and accreditation is routine inspections, called surveys. While ASCs are free to 
choose which route they take, the overwhelming majority elect State agency certification. 
This report is the first of two that supplement the main report of this inquiry, A System in 
Neglect.  Our companion report, Supplemental Report 2: Holding State Agencies and 
Accreditors Accountable, assesses how State agencies and accreditors are held accountable 
for their performance overseeing ASCs. Our inquiry relies on claims and survey data, survey 
observations, and reviews of relevant laws and documents. 
IMPORTANCE OF QUALITY OVERSIGHT 
Medicare ASCs are experiencing explosive growth 
From 1990 to 2000, the number of ASCs doubled and the annual volume of procedures they 
perform tripledmaking ASCs one of the fastest growing providers in Medicare. 
Scope and complexity of procedures are on the rise 
From 1990 to 2000, CMS approved over 800 new procedures for ASCs. Major procedures 
now comprise over a quarter of approved procedures. In this time, the annual volume of major 
procedures performed by ASCs jumped from 12,000 to over 101,000. 
1 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  FINDINGS ON STATE AGENCY CERTIFICATION 
State agency certification allows many ASCs to fall through the cracks 
Nearly a third of ASCs certified by State agencies have gone 5 or more years without a survey; 
over 130 have gone 10 years. From 1990 to 2000, elapsed time between recertification 
surveys grew from 1.8 to 4.4 years. Nearly half of complaints against ASCs certified by State 
agencies remain unresolvedsome for as long as 5 years.  ASCs consistently rank near the 
bottom of CMS survey budget priorities. 
The Conditions of Coverage fall short 
The Conditions have not been updated since 1982. They are one-size-fits-all and fail to 
distinguish among ASCs performing surgery of varying risks and complexities. 
State agency surveys focus entirely on compliance and fail to include continuous 
quality improvement 
Surveys focus on gathering evidence to verify compliance with the Conditions.  They do little 
toward improving the quality of ASCs beyond enforcing minimum requirements. 
FINDINGS ON ACCREDITATION 
Accreditation provides regular presence in ASCs 
Each of the accreditors has policies to survey ASCs every 3 years. ASCs expect on-site 
presence at regular intervals. 
Accreditors update their standards regularly and adjust them to match the levels 
of surgery performed by individual ASCs 
Each accreditor has a process in place to regularly update its standards and adjusts them to 
match the risk and complexity of surgery performed by individual ASCs. 
Accreditation surveys focus on helping ASCs continuously improve but pay less 
attention to verifying compliance 
Surveyors spend considerable effort on helping ASCs continuously improve their performance. 
However, the educational nature of surveys, large number of standards, and limited time on-site 
result in less attention to compliance. 
RECOMMENDATIONS 
CMS should determine a minimum cycle for surveying ASCs certified by State 
agencies 
Take into consideration the nature and risks of care ASCs deliver.  Consider a strategic 
approach that addresses survey cycles for all types of providers certified by State agencies. 
Consider using analysis of claims data, complaint history, and accreditation status to help 
identify survey priorities. 
2 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  CMS should update the Conditions of Coverage for ASCs 
Add sections that deal with patient rights and continuous quality improvement. Make the 
Conditions adjustable to match the levels of surgery performed by different ASCs. 
CMS should ensure that State agency certification and accreditation strike an 
appropriate balance between compliance and continuous quality improvement 
Monitor State agencies and accreditors to ensure that they protect the public from poor 
performing ASCs while encouraging the rest to go beyond minimal health and safety standards. 
Our companion report, Supplemental Report 2: Holding State Agencies and Accreditors 
Accountable, has recommendations for improving CMS oversight of State agencies and 
accreditors. 
3 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  T A B L E   O F   C O N T E N T S  
PAGE 
EXECUTIVE SUMMARY ...................................................... 1

INTRODUCTION ............................................................. 5

PROFILE OF STATE AGENCY CERTIFICATION AND ACCREDITATION .......... 8

IMPORTANCE OF QUALITY OVERSIGHT

Explosive growth of ASCs .................................................. 9

Increasing scope and complexity of services ..................................... 9

STATE AGENCY CERTIFICATION 
State Agency Certification allows many ASCs to fall through the cracks  ............... 11

The Medicare Conditions of Coverage Fall Short ................................13

Compliance Dominates State Agency Surveys  ..................................14

ACCREDITATION 
Regular Presence at ASCs .................................................16

Standards are Regularly Updated, Adjustable ...................................16

Accreditation Surveys Focus on Continuous Improvement  .........................17

RECOMMENDATIONS ...................................................... 19

APPENDICES

A: Methodology ......................................................... 22

B: Description of three ASC procedures ....................................... 24

C: Endnotes ............................................................27

4 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  I N T R O D U C T I O N  
PURPOSE 
To assess the role of State agency certification and accreditation in the quality oversight of 
ambulatory surgical centers in the Medicare program. 
BACKGROUND 
Ambulatory Surgical Centers in the Medicare Program 
Medicare began covering services provided by ambulatory surgical centers (ASCs) in 1982. 
In 2000, Medicare paid $1.6 billion for 4.3 million procedures performed in ASCs. Currently, 
over 3,000 ASCs participate in the Medicare program.1 
Although ASCs have operating rooms and recovery rooms, they are not hospitals.  However, 
medical advances enable many of the same procedures that hospitals perform to be performed 
on an ambulatory basis in an ASC.  In addition to ASCs, ambulatory surgery is also performed 
in physician offices and hospital outpatient departments. However, unlike hospital outpatient 
departments, ASCs are generally free-standing facilities that provide surgical services to 
patients not requiring hospitalization.2 An ASC may only bill Medicare for surgical procedures 
that the Centers for Medicare & Medicaid Services (CMS) has determined can be performed 
safely outside of the hospital. 
While ambulatory surgery has been shown to have good surgical outcomes, even routine 
procedures can result in serious complications and death.3 For example, a patient undergoing a 
routine Medicare-covered gynecologic procedure died in an ASC from complications during 
surgery; a patient whose bladder was perforated during surgery in an ASC was transported 
while bleeding to the nearest emergency room; a patient undergoing one of the most common 
procedures in Medicare, cataract extraction, went into cardiac arrest and died on the operating 
table in an ASC. While these adverse events could happen in any setting, the risk of such 
complications and the fact that more elderly patients with poorer health conditions are 
becoming candidates for ambulatory surgery illustrate the necessity for strong quality oversight 
of ASCs.4 Yet, since the inception of the ASC program in 1982, CMS approach to oversight 
remains unchanged.  Despite the rapid evolution of ambulatory surgery and the growth in 
ASCs, there has been little assessment of the adequacy of its quality oversight. 
Quality Oversight of Ambulatory Surgical Centers 
Quality oversight of ASCs in the Medicare program revolves around Medicares 
5 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  Conditions of Coverage.5 The Conditions are minimum health and safety requirements that 
ASCs must meet in order to be eligible for Medicare reimbursement. They cover topics 
ranging from the credentialing and privileging of physicians to the governing body and 
management of a facility.  The Conditions are established in the regulations by CMS. 
CMS relies on State agency certification and private accreditation to ensure that ASCs meet 
the Conditions. Facilities must be certified by State survey and certification agencies or 
accredited to participate in Medicare. They are free to choose which route they take. State 
agency certification is available to ASCs free of charge, while they must pay a fee to become 
accredited.  Over 90 percent of ASCs choose to be certified by State agencies.  Yet the 
number of facilities choosing accreditation is growing.6 Some ASCs that are certified by State 
agencies are also accredited for reasons other than Medicare certification. 
The emphasis of both State agency certification and accreditation is routine inspections of 
ASCs, called surveys.  Generally, surveys are conducted to add new ASCs to the Medicare 
program, reevaluate those already in the program, and respond to complaints or adverse 
events. State agency surveys follow CMS survey protocol, which is based on the Conditions. 
Accreditation surveys, however, follow accreditors own survey protocols and standards. 
Thus, only accreditors whose standards meet or exceed the Conditions have authority to 
approve ASCs for participation in the Medicare program.7 
Medicare certification is carried out by State survey and certification agencies under agreement 
with CMS.  CMS has approved three accreditors to survey ASCs for the Medicare program: 
the American Association for Accreditation of Ambulatory Surgical Facilities, the Accreditation 
Association for Ambulatory Health Care, and the Joint Commission on Accreditation of 
Healthcare Organizations.8 (See the Profile of State Agency Certification and Accreditation on 
page 8 for more information on State agency certification and the three approved accreditors.) 
This Inquiry and This Report 
This inquiry focuses on the oversight of ASCs and is part of a larger plan to assess the quality 
oversight of ambulatory surgery in the Medicare program. We chose to evaluate the oversight 
of ASCs first because they are one of the fastest growing settings for ambulatory surgery in 
Medicare. 
This report is the first of two that supplement the main report of this inquiry, A System in 
Neglect, which also includes the full text of the comments we received on the draft reports. 
Supplemental Report 2: Holding State Agencies and Accreditors Accountable, assesses how 
State agencies and accreditors are held accountable for their performance overseeing ASCs. 
Our inquiry draws on a variety of sources.  We analyzed data from CMS Online Survey 
Certification and Reporting System and the Medicare Part B file, as well as survey data 
6 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  from the three accreditors.  We observed surveys of ASCs conducted by the accreditors and 
State agencies.  We reviewed policy manuals from the accreditors, CMS State Operations 
and Regional Operations manuals, laws, regulations, and articles from newspapers, journals, 
newsletters, and magazines.  In addition, through interviews both in-person and over the phone, 
we gathered information from representatives of CMS central and regional offices, State 
agencies, professional associations, and the American Association for Accreditation of 
Ambulatory Surgical Facilities, the Accreditation Association for Ambulatory Health Care, and 
the Joint Commission on Accreditation of Healthcare Organizations.  For a more detailed 
description of the data sources we used for this inquiry, please see Appendix A. 
We conducted this inspection in accordance with the Quality Standards for Inspections 
issued by the Presidents Council on Integrity and Efficiency. 
7 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  P R O F I L E  O F  S T A T E  A G E N C Y  
C E R T I F I C A T I O N  A N D  
A C C R E D I T A T I O N  
The table below profiles some key characteristics of Medicare certification by State survey and 
certification agencies and the three accreditors: Accreditation Association for Ambulatory Health Care 
(AAAHC), the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), and the 
American Association for Accreditation of Ambulatory Surgery Facilities (AAAASF). 
Oversight Mechanism 
Characteristics  State Agencies  AAAHC  JCAHO  AAAASF 
Number of Medicare 
ASCs as of Spring  2,980  249  55  2 
2001 
Cost to ASC  None.  Ranges from $1,500  Ranges from $1,500  Ranges from $1,500 
plus per year.  plus per year.  plus per year. 
Standards  One size fits all, last  Adjustable to match  Adjustable to match  Adjustable to match 
revised in 1982.  type of surgery  type of surgery  type of surgery 
performed; ongoing  performed; ongoing  performed; ongoing 
revision.  revision.  revision. 
Survey  Unannounced. No  Unannounced.*  Unannounced.*  Unannounced.* 
minimum survey cycle.  Every 3 years; 6  Every 3 years. Moving  Every 3 years plus self-
Many ASCs go 5 years  months or 1 year for  toward every 18  evaluation every year. 
without a survey.  certain ASCs.  months. 
Type of Surveyors  Team rarely includes a  Team always includes a  Team always includes a  Team always includes a 
physician.  physician.  physician.  physician. 
Surveyor Training  Offered ad hoc; 2 day  Attend 2 12 day training  Initial 2 week training  Attend 1 day training 
training in 1999;  every 2 years.  and preceptorship,  every 3 years. 
previous training in  annual training, distance 
1987.  learning. 
Public Information  Survey results available  Information limited to a  Accreditation history  Information limited to a 
only through State  list of accredited ASCs  and most recent survey  list of accredited ASCs 
agencies or CMS  by phone and on  report available by  by phone and on 
regional office.  website.  phone and on website.  website. 
Standardized  None.  None.  None.**  None. 
Performance Data  Performance data not  Performance data not  Performance data not  Performance data not 
linked to certification.  linked to accreditation.  linked to accreditation.  linked to accreditation. 
*	 The accreditors do request a surgical/business schedule for several months surrounding a survey date to ensure that the ASC 
will be open and caring for patients at time of survey. 
**  JCAHO is moving towards the use of outcome/performance data to assess compliance with specific standards. 
8 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  I M P O R T A N C E  O F  Q U A L I T Y  
O V E R S I G H T  
Medicare ASCs are experiencing explosive growth 
The growth of ASCs outpaces almost all other settings in Medicare.  Currently 3,266 ASCs 
take part in the Medicare program (with about 30 percent located in California, Florida, and 
Texas).  From 1990 to 2000, the number of ASCs increased by close to 200 facilities a year 
while the number of hospitals decreased slightly. In fact, over the past 5 years, the ASC 
growth rate outpaces all other settings in Medicare except for comprehensive rehabilitation 
facilities and rural health clinics. 
As the number of ASCs has increased, so too has the number of surgical procedures that they 
perform. In 1990, 1.3 million procedures took place within Medicare ASCs. By 2000, the 
number of procedures increased over 220 percent to 4.3 million, accounting for over $1.6 
billion in reimbursement. This growth far outpaces that of Medicares two other main surgical 
settings, hospital outpatient departments, which increased by 78 percent, and inpatient 
hospitals, which increased by 38 percent. Experts project that procedures performed in ASCs 
will continue to grow steadily between 2000 and 2006.9 
Scope and complexity of procedures are on the rise 
The procedures taking place in ASCs have not only increased in volume, but have also 
increased in scope.  In 1990, CMS list of procedures approved for ASCs included 1,500 
procedures.  The current list, last approved in 1995, includes nearly 2,300 procedures.10 While 
it has always included many minor procedures such as draining of a major joint, biopsy of the 
prostate, and determining urinary bladder pressure, the number of major procedures on the list 
has grown substantially. CMS defines major procedures as those involving high levels of 
anesthesia and invasiveness.  In fact, 632 major procedures are now approved for ASCs, 
representing over a quarter of the list. A proposed update to the list, introduced in 1998 but 
not yet implemented, includes over 2,500 procedures, and will increase the number of major 
procedures to 743.11 See Appendix B for descriptions of a major, minor, and an eye 
procedure commonly performed in Medicare ASCs. 
These changes in the list of approved procedures resulted in a dramatic increase in the volume 
of major procedures performed in ASCs. From 1990 to 2000, the annual volume of major 
procedures taking place in ASCs grew by 730 percent, from 12,000 to over 101,000 
procedures, while those in outpatient departments and hospitals grew by 392 and 57 percent 
respectively.  Thus, Medicare beneficiaries are increasingly going to ASCs for complex 
procedures involving higher levels of invasiveness and anesthesia. Procedures such as 
laparascopic repair of inguinal hernia, shoulder arthroscopy, and arthroscopic 
9 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  repair of the Anterior Cruciate Ligament, all of which require general anesthesia and were once 
performed only in inpatient hospitals, are now commonly performed in ASCs. 
10 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  S T A T E  A G E N C Y  C E R T I F I C A T I O N  
State agency certification allows many ASCs to fall through 
the cracks 
Over 90 percent of ASCs choose state agency certification as their route to participate in the 
Medicare program, making it Medicares primary tool of oversight for ASCs. Yet, despite 
significant growth in ASCs, the level of state agency surveys has changed little. 
Recertification surveys are not keeping 
up 
Nearly a third of ASCs certified by State

agencies (872) have gone 5 or more years

and over 130 have gone 10 or more years

without a recertification survey (see figure

1).12 From 1990 to 2000, the elapsed

time between recertification surveys of

ASCs already in the program more than

doubled, from 1.8 years to 4.4 years. 

Periodic surveys are important for ensuring

that ASCs continue to meet minimum

standards for health and safety. This 
Source: OIG analysis of OSCAR data.

concept is reinforced by the Joint

Commission, where a movement is

underway to increase the frequency of reaccreditation surveys from once every 3 years to once

every 1.5 years.13 
ASCs certified by State agencies are going 
so long between surveys because the level 
of recertification surveys has failed to match 
ASC growth. Between 1990 and 2000, the 
number of ASCs certified by State agencies 
more than doubled from 1,197 to 2,966, but 
the level of State agency surveys has 
changed little6hovering at an average of 
610 surveys per year.14 Of these, an 
increasing portion has been used to survey 
new ASCs entering the Medicare program 
rather than to recertify existing ASCs.  For 
example, in 1990, State 
Source: OIG analysis of OSCAR data. 
11 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  agencies conducted 30 surveys to add new ASCs to the program and 483 surveys to recertify 
the 1,197 ASCs that were already in the program.15 Yet, in 2000, State agencies performed 
287 surveys to add new ASCs and 310 surveys to recertify the 2,966 ASCs already in the 
program (see Figure 2 for the overall trend). 
Complaint surveys lack follow through 
Complaints serve as possible warning signs of deficiencies in patient care and safety. CMS 
considers surveys in response to complaints and serious incidents as priorities in its budget and 
instructions to State agencies. 
In the past 5 years, State 
agencies conducted 141  One ASC That Slipped Through The Cracks 
A State agency received a complaint against an ASC in 1999 from 
surveys in response to 
a woman whose mother, a Medicare beneficiary, underwent a 
complaints. However, the 
routine cataract extraction there. The beneficiary died during 
follow-through on  surgery. In response to the complaint, the State agency surveyed 
deficiencies (resurveys and  the ASC and found it to be out of compliance with 5 of the 10 
Medicare Conditions, including missing emergency equipment, 
plans of correction) 
uncredentialed staff participating in surgery, and falsified medical 
identified during these 
records. The surveyors suspected that the ASCs lack of emergency 
surveys was limited.16 For  equipment was related to the death of the beneficiary. Although 
example, as of 2001, 47  the ASC submitted a plan of correction, CMS rejected it and 
instead, in October of 1999, gave the facility 23 days to resolve 
percent of complaints in 
deficiencies or be terminated from the Medicare program. Yet 
CMS data system are 
neither the facility nor CMS has taken any action toward resolving 
unresolved.17 In some 
these deficiencies. Despite its unresolved deficiencies related to 
cases, complaints remain  patient safety, the facility continues to perform surgeries and treat 
unresolved for as many as 5  Medicare patients. 
years.  In fact, 17 percent 
of unresolved complaint surveys uncovered deficiencies serious enough to warrant terminating 
the ASC from Medicare.18 The large number of unresolved cases shows that after a complaint 
survey, facilities are frequently left unmonitored without a resurvey or without a requirement for 
them to resolve their deficiencies (see box above). 
Finally, we acknowledge that poor follow-through indicated by CMS data system could be the 
result of lags in data entry of updates to complaint cases.  However, we reviewed the paper 
records for 18 cases and found that they agreed with the data system records. 
ASCs are a low priority in CMS survey and certification budget 
Over the last 5 years, ASCs have consistently ranked near the bottom of CMS survey 
priorities.19 ASCs compete for survey funding with over 25,000 other facilities in the Medicare 
program.20 In their last place priority category, called other, ASCs still compete with over 
10,000 facilities in the Medicare program, including hospices, rural health clinics, and 
psychiatric hospitals.21 By statute, CMS must survey nursing homes and home health agencies 
at regular intervals.  Home health agencies must be surveyed every 3 years while nursing homes 
must be surveyed every 12-15 months.22 ASCs, 
12 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  however, lack such a mandated survey cycle. Thus, they drop even lower in survey priority. 
The Medicare Conditions of Coverage fall short 
The Conditions set the overall tone and approach of CMS oversight model for any given 
provider type in the Medicare program. They drive the structure and content of State agency 
surveys and set a baseline that the standards of CMS-approved accreditors must meet or 
exceed. Indeed, the effectiveness of Medicares entire system of quality oversight depends 
upon having Conditions that are adequate in light of the nature and risks of care delivered by a 
given provider type.  CMS is in the process of updating the Conditions for several provider 
types, including hospitals. 
They are outdated 
CMS has not updated the Conditions for ASCs since the inception of the ASC program in 
1982.23 Thus Medicares approach to overseeing ASCs has failed to keep pace with 
important advances in quality oversight. We note that CMS did attempt to update the 
Conditions in 1996, but the effort never reached conclusion.  Below we highlight two key areas 
where the Conditions have fallen behind. 
The Conditions do not address patient rights. The Conditions fail to address 
important patient protections such as complaint processes, safeguarding patient privacy, 
and making available information on treatment options.  Yet, in its Strategic Plan CMS 
cites a renewed commitment to beneficiaries as the ultimate focus of all CMS activities, 
expenditures, and policies.24 Indeed, CMS has added patient rights to the Conditions 
for several other provider types, including hospitals and nursing homes, but it has not 
yet done so for ASCs.25 
The Conditions do not address continuous quality improvement. The Conditions 
offer little commitment to continuous quality improvement. While CMS speaks to the 
importance of continuous quality improvement in its interpretive guidelines to ASC 
surveyors, the Conditions themselves do not require ASCs to conduct continuous 
quality improvement efforts.  Nor do they require the use of standardized performance 
measures for assessing performance and directing quality improvement efforts. 
However, CMS has begun to require nursing homes, home health agencies, and 
hospitals to report standardized performance measures which can be used to direct 
continuous improvement.26 
They cannot adjust to match the levels of surgery that different ASCs offer 
Nearly half of ASCs are single-specialty facilities, performing only one type of procedure, such 
as pain management injections, eye surgery, endoscopy, or orthopedic surgery.27 Yet, the 
Conditions fail to distinguish among ASCs performing surgery of varying risk and complexity. 
Instead, they take a one-size-fits-all approach that appears geared toward 
13 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  large, multi-specialty ASCs that use general anesthesia.  They cannot adjust to reflect the 
degree of invasiveness or type of anesthesia, among other factors, that vary among ASCs.  This 
could overburden some ASCs while leaving others with a set of standards that may not 
effectively address key aspects of their operations. 
State agency surveys focus entirely on compliance and fail to 
include continuous quality improvement 
State agency surveys revolve 
A State Agency Survey We Observed 
around ensuring compliance with 
The ASC was a large multi-specialty facility with 5 
the 10 requirements that comprise 
operating rooms and over 25 staff. On the day of the 
the Conditions of Coverage.  survey, two nurses from the State agency arrived at the 
Surveyors use a standard protocol  facility unannounced. The survey began at 9AM with a 15 
minute conference with the surveyors and the facility 
called the Interpretive Guidelines 
administrator. At this time the lead surveyor provided the 
that CMS derives directly from the 
facility administrator with a list of documents she would 
Conditions.  These guidelines serve  need to review: bylaws, surgical log, and personnel lists. 
as a road map to focus the survey,  She used these documents to develop a list of medical 
record and personnel files for review. The second surveyor 
suggesting probes for ascertaining 
went on a 1.5 hour tour of the facility, and then a 1.5 hour 
compliance with each requirement. 
tour of the operating rooms. At this time, a representative 
In our observations, surveyors did  of the State Insurance and Fire Safety Commission arrived 
not veer from these guidelines.  to do a 2-hour life safety inspection of the facility, 
measuring doorways and checking smoke barriers. 
Further focusing their review, they 
Meanwhile, the second surveyor reviewed medical records 
often collapsed the guidelines into 
and other documents. Next, the surveyors reconvened and 
1 - 3 page checklists of evidence  together completed a review of medical records, 
necessary to complete the survey.  credentialing, and the facilitys quality assurance 
program, consistently probing in areas where they found 
To verify that they had an accurate 
problems by requiring additional documents and asking 
picture of compliance, surveyors 
additional questions. Surveyors frequently asked ASC staff 
would cross-reference evidence  to explain how hypothetical situations would unfold at the 
from different sources.  For  facility--such as emergency situations and 
example, they often cross- application/reapplications for privileges for a doctor 
joining the staff. The next morning, surveyors held an exit 
referenced evidence through the 
conference to describe the deficiencies they found. 
surgical log to verify that surgeons 
practiced within their privileges, 
that peer review dealt with problem cases, and that the ASC followed its bylaws. 
The State agency survey is characterized by a challenging, direct approach in which surveyors 
aim to enforce minimums, rather than educate toward continuous quality improvement.28 This 
approach is ingrained in State agency surveys. It is delineated in CMS policy, which states that 
the role of the surveyor is, to assess the quality of care and services and relate those findings to 
statutory and regulatory requirements.29 The policy goes on to explain that the surveyors role 
is not to educate, advise, or consult with the facility on ways to improve the quality of care. 
This is reinforced by the Conditions in their failure to require ASCs to address continuous 
quality improvement. Thus State 
14 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  agency surveys focus on assessing compliance with the Conditions and do little toward 
improving the quality of ASCs beyond Medicares minimum requirements.  For example, at exit 
conferences of State agency surveys, surveyors run down a list of what is out of compliance 
and refuse to discuss strategies a facility could use to improve its level of care. As one surveyor 
told us, CMS specifically tells its surveyors not to act as educators or give advice. My role is 
to simply make sure everyone is safe. 
15 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  A C C R E D I T A T I O N  
Accreditation provides regular presence in ASCs, but covers 
a small proportion of facilities 
Each of the accreditors has policies to survey ASCs every 3 years.  In fact, data from the two 
accreditors with more than 3 years of experience accrediting Medicare ASCs show that both 
survey facilities every 3 years.30 Routine on-site presence at ASCs provides oversight that is 
important to ensuring patient safety and reducing risk. Even though the surveys are 
unannounced, ASCs who voluntarily chose to be accredited expect such an on-site presence at 
regular intervals. This usually means that at a minimum, the facility must update policy manuals, 
recheck credentials and privileges, and perform staff training to retain accreditation. 
For some facilities, the survey cycle is shorter than every 3 years. For example, the 
Accreditation Association for Ambulatory Health Care accredits facilities where it finds patient 
safety concerns for shorter periods (6 and 12 months).31 This means these ASCs will be 
resurveyed sooner, so it can follow up on problem areas. Currently, the Joint Commission has 
a program in place to survey 5 percent of their facilities within a year of the ASCs 
accreditation.  In addition, to increase its on-site presence, the Joint Commission is moving 
toward surveying ASCs every 18 months.32 Finally, the American Association for 
Accreditation of Ambulatory Surgical Facilities requires its facilities to complete a self-
evaluation in the years between the on-site surveys.  On this form, facilities must evaluate their 
compliance with its standards.33 
Finally, while each of the accreditors reserves the right to survey ASCs in response to 
complaints, these surveys do not play a prominent role in their approach to oversight.  As of 
February 2001, the accreditors have received a total of 10 complaints against ASCs and 
conducted surveys in response to 2 of them.34 
Accreditors update their standards regularly and adjust them 
to match the levels of surgery performed by individual ASCs 
Each accreditor has a process in place to regularly update its standards.  For example, in 
consultation with the ASC industry, the Accreditation Association for Ambulatory Health Care 
updates its standards on a yearly basis.  Similarly, the Joint Commission revises its standards at 
a minimum of one year and the American Association for Accreditation of Ambulatory Surgical 
Facilities last revised its standards 2 years ago. 
This approach enables the accreditors to keep up with advances in ambulatory surgery and 
with important developments in quality oversight.  For example, each of the 
16 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  accreditors developed standards concerning malignant hyperthermia, a recently recognized 
complication triggered by commonly used general anesthetics. Furthermore, each of the 
accreditors also developed standards for several focal areas within health care, such as patient 
rights and quality improvement, while the Joint Commission also added a test standard for pain 
management. 
Furthermore, each of the accreditors builds adjustability into its standards to reflect the diverse 
surgical procedures offered within ASCs. The accreditors are able to scale these standards on 
the basis of the types of procedures performed in the ASCs, the complexity of services offered, 
and the levels of anesthesia used. For example, the American Association for Accreditation of 
Ambulatory Surgical Facilitys standards accommodate three levels of surgery based on the 
types of anesthesia used. Similarly, the Accreditation Association for Ambulatory Health Care 
applies a modular approach, using eight sets of core standards that apply to all facilities and 
several sets of adjunct standards that are used only for specific services offered by each facility, 
such as anesthesia services and surgical services. The Joint Commission also applies its 
standards so that their surveys are individualized according to the services provided at each 
ASC. 
Accreditation surveys focus on helping ASCs continuously 
improve but pay less attention to verifying compliance 
By its nature, accreditation 
An Accreditation Survey We Observed 
focuses on continuous quality 
The ASC was a two-operating room facility that specialized 
improvement through peer-to-
in ophthalmology and pain management, but had recently 
peer interaction around the  added podiatry and orthopedics to its services. The survey 
standards of the accreditors.35  team of two, one of whom was a physician, arrived 
unannounced at 8:30 am and began with a tour of the 
Each of the accreditors describes 
facility. During the tour, the surveyors asked the Head Nurse 
its process as a consultative one, 
a series of questions about the ASCs operating policies and 
sending at least one physician as  took notice of the layout and equipment within the facility. 
part of every survey team. These  After the tour, they reviewed the bylaws, staff and quality 
assurance minutes, the surgical log, and other documents. 
survey teams spend considerable 
They also reviewed a sample of 25 medical records chosen by 
effort educating physicians and 
the ASC staff based on criteria provided by the survey team. 
staff on ways to continuously  After the survey concluded for the day, the surveyors visited 
improve their facilitys  the office of one of the physician-owners of the ASC, where 
they talked informally about the local health care market. 
performance. Indeed, a trusting 
Upon returning to the facility the following morning, the 
and instructional manner 
surveyors changed into surgical dress and did an in-depth 
characterized the interaction  tour and inspection of the facility. During the tour, they 
within each of the accreditation  observed surgery, assessed sterile technique, security of 
narcotics, and the presence of required emergency 
surveys we observed. As one 
equipment. Following the tour, the surveyors briefly 
surveyor said, I'm not here to 
discussed the survey findings with each other and then, at 
find you doing things wrong.  11:30 am, held an exit conference with the facility staff. 
We're here to find things you can  During the exit conference, a positive tone prevailed as 
surveyors reviewed a handful of problems they found and 
do 
praised staff for things the facility was doing well, which they 
called Wows. 
17 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  better. Since you asked us here, we presume you're doing things well. Insights passed along 
by surveyors ranged from those having to do with quality of care and patient safety to business 
and financial operations.  In addition, surveyors often praised staff, particularly when they felt 
that a facility had done well within important areas. 
However, while working within this instructional manner, accreditation surveyors must also 
assess compliance with hundreds of standards for each ASC, often within surveys that last less 
than 2 days.36 This results in surveyors paying less attention to verifying compliance with 
accreditation standards. For example, we observed that accreditation surveyors rarely used 
the surgical log to verify that surgeons practiced within the scope of their privileges or that 
adverse events were flagged for quality review.  Instead, they relied on conversations with staff 
or review of a limited sample of medical records. This tact may result in superficial review of 
serious problems.  For example, during a survey of an endoscopy center that we observed, 
staff disclosed that they had used the crash cart two times in the last 6 months, one of which 
was for a code blue situation. Yet, in response, the surveyor did not check the facilitys 
quality assurance minutes or peer review worksheets to see that it examined the cases 
appropriately. Instead, he simply stressed the importance of using a quality assurance process 
to analyze such cases for evidence of a pattern of problems. 
18 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  R E C O M M E N D A T I O N S  
CMS should determine an appropriate minimum cycle for 
surveying ASCs certified by State agencies 
Over the past 10 years, State agencies oversight has weakened dramatically while the number 
of ASCs certified by State agencies and the scope of services they provide has increased 
dramatically. Currently, only nursing homes and home health agencies have a minimum survey 
cycle to ensure that they receive routine on-site surveys. ASCs, along with all other Medicare 
provider types, lack such a cycle.  In determining a minimum survey cycle for ASCs, CMS 
should consider the nature and risks of care ASCs deliver.37 CMS should consider a strategic 
approach that addresses survey cycles for ASCs within the overall context of adequately 
surveying all types of providers certified by State agencies.  In addition, it should consider how 
its analysis of certain data could help it prioritize surveys across ASCs. For example, it could 
draw on volume of Medicare procedures, complaint history, and whether an ASC is accredited 
for reasons other than Medicare certification. CMS should also consider whether the financial 
demands presented by the rising number of Medicare-certified providers warrant establishing 
user fees, which would require legislative change. Such steps might enable CMS to better 
manage and plan for growth in the number of State agency surveys required to adequately 
oversee certified providers. 
CMS should update the Conditions of Coverage for ASCs 
CMS has not updated the Conditions of Coverage for ASCs since it began covering 
procedures performed in ASCs in 1982.  Several times since, however, CMS has increased 
the number of ASC-approved procedures as medical advances have enabled ASCs to perform 
increasingly varied and complex types of surgery.  Yet, the effectiveness of Medicares quality 
oversight system depends upon having Conditions that are adequate in light of the nature and 
risks of care ASCs deliver. The Conditions are of central importance because they set the 
overall tone and approach of CMS oversight model, thus driving the structure and content of 
State agency surveys. They also set a baseline which the standards of Medicare-deemed 
accreditors must meet or exceed.  Indeed, CMS is in the process of updating the Conditions 
for several provider types, including hospitals. 
At a minimum, add sections that deal with patient rights and continuous quality 
improvement 
As ASCs continue to gain importance within the Medicare program, it is important that CMS 
ensures that they provide a core set of patient rights to Medicare beneficiaries. Adding a 
section to the Conditions that addresses issues such as how ASCs will respect 
19 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  patients dignity and resolve patient complaints would be an important step in this direction. 
Indeed, such a step would reflect with CMS renewed focus on beneficiaries within its strategic 
plan and goals aimed at strengthening beneficiary satisfaction and protections. 
Similarly, addressing continuous quality improvement is also in line with several goals of CMS 
strategic plan including those for enhancing quality of care and improving program 
administration. CMS should ensure that the Conditions require ASCs to conduct continuous 
quality improvement efforts. Over the longer term, we urge CMS to explore developing 
performance measures for ASCs. ASCs could use the measures to direct continuous quality 
improvement efforts while CMS could use them to monitor ASCs performance and to adjust 
the frequency and focus of surveys. We note that CMS already has a similar initiative 
underway using indicators reported by nursing homes and home health agencies. Both the 
Medicare Payment Advisory Commission and Congress have recently called on CMS to 
explore the expanded use of quality indicators.38 
Make the Conditions adjustable to match the levels of surgery performed by 
different ASCs 
In updating the Conditions, CMS should move away from its current one-size-fits-all model and 
instead consider an adjustable approach that would enable them to be tailored to individual 
ASCs.39 Such an approach might take into account anesthesia, invasiveness, and other factors 
that drive the riskiness of procedures done by a given ASC. This would improve the 
effectiveness and efficiency of State agency certification as well as minimize the regulatory 
burden by focusing the standards and the State agency survey on the level of services offered 
by each ASC. For example, an ASC that specializes in pain management would have a set of 
standards different from that of an ASC offering general surgery. 
CMS should ensure that State agency certification and 
accreditation strike an appropriate balance between 
compliance and continuous quality improvement 
While compliance typifies the regulatory approach taken by State agencies, continuous quality 
improvement is central to the collegial approach of accreditors.  Both have important roles to 
play in quality oversight. In previous work, the OIG has highlighted work done by the National 
Roundtable on Health Care Quality and others that suggests that both approaches have value, 
but not so much that one should dominate at the expense of the other.40 Balance between the 
approaches would protect the public from poorly performing ASCs while encouraging the rest 
to improve beyond minimal health and safety standards. Yet, quality oversight of ASCs 
provided by State agencies and accreditors engages almost exclusively in one approach or the 
other. 
Adding continuous quality improvement to the Conditions would be a good first step toward 
bringing balance to quality oversight of ASCs. The challenge for CMS lies in 
20 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  monitoring and working closely with State agencies and accreditors to ensure that their work 
reflects an appropriate balance.  However, in our companion report, Supplemental Report 2: 
Holding State Agencies and Accreditors Accountable, we find that CMS does little to 
oversee State agencies and accreditors performance. In that report, we offer 
recommendations for ways that CMS can improve its oversight of State agencies and 
accreditors. 
21 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  APPENDIX A 
Methodology

Center for Medicare & Medicaid Services 
Data. We obtained dates of State agency surveys from CMS Online Survey Certification and

Reporting System (OSCAR). CMS authorizes States to update and maintain this database

with survey information.  We used OSCAR to gather basic demographic information on ASCs

certified by State agencies as well as explore the accuracy of data in OSCAR on those ASCs

that are accredited. We extracted survey data pertaining to the frequency of State agency

surveys between 1990 and 2000.  In addition, we used OSCAR to identify ASCs that had a

complaint survey between 1995 and 2000.  We analyzed these data sets using the SAS

software program. We are satisfied that our information is as accurate as CMS OSCAR

system.

Additionally, we obtained other descriptive information using OIG-generated random samples

of 1 percent of Medicares Part B claims from 1990 and 2000. We used these samples to

determine the total number of procedures taking place in ASCs, to sum reimbursement, to

identify the top procedures, and to find what Medicare approved procedures are being

performed in ASCs.  Also, by applying the Berenson-Eggers Type of Service codes to the

samples, we determined the number of major procedures taking place in ASCs.  We

conducted all of our analysis of Medicare claims data using SAS software.  We are satisfied

that our information is as accurate as the Part B 1 percent sample files.

Documents. We reviewed a variety of documents from CMS, including:

C  Budget call letters for each year from 1995 to 2001

C  Regional Office and State Operations Manuals

C  ASC Conditions of Coverage and Interpretive Guidelines

C  Strategic plan

C  Data compendium from 1995 to 1999

C  Internal policy memos from the central and regional offices

C  Correspondence with the accreditors.

Finally, we reviewed 18 ASC complaint files from both State agencies and CMS regional

offices from the years 1995 to 2000.  We chose complaint files for review based on information

obtained from OSCAR on date of complaint survey, number of complaints, and follow-up

action taken. Additionally, we reviewed documents pertaining to CMS evaluation of the

accreditors performance, as well as the findings of CMS oversight surveyors at site visits with

the accreditors.

22 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  APPENDIX A 
Interviews.  We interviewed CMS employees involved with the ASC program at both central 
and regional offices. 
State Survey Agencies 
We interviewed State surveyors and State health agency officials involved in the certification of 
ASCs.  We obtained a variety of documents from State agency certification surveys including 
checklists used by surveyors and final survey findings including deficiencies found and plans of 
correction. 
Accreditors 
We interviewed officials from all three accreditors.  We also reviewed documents from the 
three organizations, including mission statements, accreditation manuals, policies, and ASC 
survey reports, communication from CMS, and complaint files. We requested and received 
aggregate data from these organizations reflecting their survey activity and findings over the last 
3 years. In addition, we attended surveyor training sessions for the American Association for 
Accreditation of Ambulatory Surgery Facilities and Accreditation Association for Ambulatory 
Health Care. 
Survey Observation 
We observed a total of nine ASC surveys in seven states during the course of this study. Four 
were State agency surveys and five were accreditation surveys. 
Other Sources 
Other sources of information that we used for this report include relevant laws and regulations. 
We also reviewed a variety of articles from newspapers, peer reviewed journals, medical text 
books, and medical web sites.  Finally, we interviewed stakeholders, including consumer 
advocates, members of several professional associations, practicing physicians, and practicing 
lawyers. 
23 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  APPENDIX B 
Description of Three ASC Procedures

Injection for Pain  Cataract Removal  Knee Arthroscopy 
Management  with Lens Insertion  with Meniscectomy 
(CPT 62311)  (CPT 66984)  (CPT 29881) 
Procedure Description  Diagnostic and/or  A cataract is broken-up  An arthroscope and other 
therapeutic medication is  and removed, either  instruments are inserted 
injected into the  manually or by the use of  through small incisions 
lumbar/sacral spinal area.  ultrasonic pulses. Once  made in the knee joint. 
the cataract is removed, a  The condition of the knee 
new lens is put in place.  joint is evaluated and any 
damaged tissue is 
removed and/or repaired. 
Anesthesia  ! Local anesthesia.  ! Topical anesthetic eye  ! IV sedation with local 
! IV sedation (rare).  drops with or without  anesthetic for knee. 
IV sedation.  ! General anesthesia 
! Nerve block with or  with nerve block. 
without IV sedation. 
Average Surgery time  <10 minutes  19 minutes  30 minutes 
Average Recovery time  <30 minutes  29.5 minutes  90 minutes 
Number of procedures 
1990 (Ranking)  9,800 (14)  521,600 (1)  5,700 (21) 
2000 (Ranking)  159,500 (6)  1,349,400 (1)  22,200 (21) 
Injection of diagnostic or therapeutic substance into the lumbar/sacral area 
The procedure begins with a consultation period to determine if the injection is warranted for 
the patient.  This will vary between 10 and 30 minutes, depending upon how complex the 
patients history and examination are.41 
This procedure, which generally takes 10 minutes to complete, involves injecting medication 
into the epidural space, which is the vertical tunnel surrounding the spinal canal and extends 
from the base of the skull to the sacrum. Normally, the patient will not require IV sedation for 
this procedure, rather, local anesthetic is placed at the site of injection.  By injecting the 
medication into the epidural space, it is able to wash over the nerve roots which have just left 
the spinal cord and are, for a short space, enclosed within the epidural space. The medication 
used most frequently is a steroid with or without local anesthetics or opioids (such as 
morphine). Occasionally, anti-spasmodic medication, such as Baclofen, is also injected into the 
epidural space. There are also occasions in 
24 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  APPENDIX B 
which steroids are not used.  In the case of obese patients and patients who have undergone 
surgery and, consequently, have scar tissue in the area of this procedure, the procedure may 
take substantially longer, though normally not longer than 45 minutes. 
There are some situations when medication is injected directly into the spinal canal. In this 
case, the medication is injected at or below the level of the first lumbar vertebrae.  There is also 
a caudal approach in which medication is injected into the epidural space at the lowest end of 
the spine. 
Depending upon whether local anesthesia was placed at the site of injection, the recovery for 
this procedure usually takes 30 minutes. On rare occasions, when this procedure is done as a 
diagnostic event, it is necessary to keep the patient on-site for physician evaluation and pain 
relief over the course of several hours. 
Cataract removal with lens insertion 
Prior to the procedure, an ophthalmologist takes several measurements of the eye, such as an 
ultrasound and other non-invasive means, to evaluate the curvature of the eye. Also, the 
general health of the patient is evaluated prior to the surgery to determine the patients fitness 
for the procedure. Most patients with comorbidities are able to undergo this procedure.42 
Typically the eye will be anesthetized using topical anesthetic eye drops or a nerve block. 
Often, patients are also given IV sedation to help them relax throughout the procedure. 
With the help of a microscope, the edge of the cornea is incised in order to get to the cataract 
that has formed on the lens. Manual removal of the cataract calls for a small incision of the 
cornea, while use of ultrasound to break up the cataract requires an even smaller incision.  The 
cataract is then either manually or ultrasonically crushed into small pieces, which are then either 
manually removed or vacuumed out of the eye. 
Once the pieces of the cataract are removed, the lens is inserted through the incision in the 
cornea. Oftentimes, no sutures are needed to close the incision. A patch is placed over the eye 
and is removed the next day at the postoperative examination. Antibiotic and anti-inflammatory 
eye drops are prescribed and the eye is completely healed in about 10 weeks. 
Knee arthroscopy with meniscectomy 
The patient can be placed under local, spinal, or general anesthesia, however, it is 
recommended that the patient be given general anesthesia. After the patient is anesthetized, a 
tourniquet is put into place about the thigh.  A leg-holding device is also 
25 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  APPENDIX B 
put in place to assist in stressing the knee to open up the different compartments that require 
exploration for diagnostic or operative procedures.43 
Prior to surgery, the leg, from ankle to tourniquet, is thoroughly scrubbed and prepared for 
surgery. The patients leg is then draped to isolate the knee. The patient can be placed in 
either one of two positions; laying down with either the surgically prepared leg angled off the 
side of the table, or with both legs dangling off the end of the table at 90 degrees. 
Next, the patient is ready for the incisions through which the arthroscope and other instruments 
will be inserted. First, the surgeon uses a skin-marking pen to mark several landmarks, 
including all standard and optional incisions, and the outlines of ligaments, tendons and joint 
lines. Next, before any incisions are made for insertion of the scope and other instruments, the 
knee joint must be distended in order ensure the view of the arthroscope is not obscured. 
Distention involves inserting a tube, called an inflow cannula, into the knee joint through a small 
incision. This tube is connected to a fluid bag situated four to five feet above the patient. 
Constant inflow of this fluid into the knee joint assures the surgeon has a proper view of the 
joint.  Once the knee is fully distended, the surgeon should check the initial landscape markings 
of the knee to ensure the incisions will be made in the proper areas. 
The surgeon can now make the small incisions at the standard incision sites and, if need be, at 
the optional incision sites as well.  Once the small incisions are made the surgeon inserts the 
arthroscope which enables the surgeon to see inside the knee joint. While manually 
manipulating the knee joint by moving the leg, the surgeon probes the entire knee joint in order 
to determine where the damage is and what course of action should be taken. In the case of a 
meniscectomy, there is a tear in the meniscus, which is the disc shaped cartilage in the knee 
joint, and the damaged portion of the meniscal cartilage must be removed.  The surgeon then 
inserts either basket forceps, scissors, or an arthroscopic knife into another portal to remove 
the damaged meniscal cartilage. Once the damaged cartilage is removed, the remaining 
meniscal cartilage is probed to ensure there are no additional tears and that it is balanced and 
stable. Finally, the knee joint is thoroughly lavaged and suctioned in order to remove any small 
cartilage particles that may have dropped into the joint during the removal procedure, and the 
small incisions are sutured. 
26 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  APPENDIX C 
Endnotes

1. CMS Online Survey Certification and Reporting System (OSCAR), March 5, 2001. 
2. 42 C.F.R., sec. 416.2. 
3. Mark A. Warner et al., Major Morbidity and Mortality Within 1 Month of Ambulatory Surgery and 
Anesthesia, Journal of the American Medical Association 270 (September 22, 1993) 12: 1437-
1441. 
G. Mezei & F. Chung, Return hospital visits and hospital readmissions after ambulatory surgery, 
Annals of Surgery 230 (November 1999) 5: 721-727. 
Rebecca Twersky et al., What happens after discharge? Return hospital visits after ambulatory 
surgery, Anesthesia & Analgesia 84 (February 1997) 2: 319-324. 
4. Margaret Jean Hall et al., Ambulatory Surgery in the United States, 1996, Advance Data: National 
Center for Health Statistics, Centers for Disease Control 300 (August 12, 1998). 
Mark A. Warner et al., Major Morbidity and Mortality Within 1 Month of Ambulatory Surgery and 
Anesthesia, Journal of the American Medical Association 270 (September 22, 1993) 12: 1437-
1441. 
5. Social Security Act, sec. 1832 (a) (2) (F)(i). 
6. Based on data provided to OIG by the three accreditors. 
7. Social Security Act, sec. 1865, 42 U.S.C. 1395bb. 
8. CMS announced in the Federal Register (50 Fed. Reg. 66, 14906, March 14, 2001) that the 
American Osteopathic Association (AOA) applied for recognition as a national accreditation program 
for ASCs for the Medicare program. As of the date this report was issued the AOA had not yet been 
approved accredit Medicare ASCs. The Joint Commission on the Accreditation of Health Care 
Organizations and the Accreditation Association for Ambulatory Health Care have been approved 
since December 19, 1996 ( 245 Fed. Reg. 61, 67042, Dec. 19, 1996).  The American Association for 
Accreditation of Ambulatory Surgical Facilities has had approval since December 2, 1998 (231 Fed. 
Reg. 63, 66554, Dec. 2, 1998). 
9. SMG Marketing Group Inc Freestanding Outpatient Surgery Centers (FOSCs). Copyright 2000. 
10. CMS approves procedures to be performed in ASCs based on 42 C.F.R., sec. 416.65 These 
standards limit ASC procedures to those that do not generally result in extensive blood loss, that do not 
require major or prolonged invasion of body cavities, that do not directly involve major blood vessels, 
or that are not generally emergency or life-threatening in nature. 
27 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  APPENDIX C 
11. Section 1833(i)(1) of the Social Security Act requires that the ASC list be reviewed and updated at 
least biennially.  The current list of procedures approved for ASCs was last reviewed and updated in 
1995.  CMS has not updated this list in over 6 years and has missed its last three scheduled update 
deadlines. 
12. We count the number of ASCs that have not had a survey in 5 or more years in a given year using 
the midyear, July 1, as the point of reference for each year. 
13. JCAHO website information: Accreditation Process Improvement Initiative www.jcaho.org. 
14. Year 2000 data is from December 2000.  According to OSCAR, as of May 2001, 3,234 ASCs 
participate in the Medicare program, of those, 2,966 are certified. 
15. Initial surveys and recertification surveys do not total to overall number of surveys for this year 
because State agencies performed two other types of surveys. 
16. Between 1995 and 2000 State agencies and CMS regional offices have received 159 complaints 
and performed unannounced surveys in response to all but 3 of them This is the total number of 
complaints that the CMS Regional Office and State Agency entered into OSCAR. It is not known how 
many actual complaints were received that were either not entered into OSCAR or not investigated. 
17. OIG analysis of OSCAR data.  Complaint files are considered to be unresolved if they are listed in 
OSCAR as pending. We obtained a total of 18 complaint files to check against OSCAR. We found 
that the provider files marked pending in OSCAR have not had a follow-up survey or action against 
them since the complaint survey was performed. 
18. Medicare surveyors have three options when they investigate complaints and find deficiencies. 
They can place a facility on a 23-day or 90-day termination track, or ask the facility to submit a written 
plan of correction.  The termination tracks require facilities to correct deficiencies within a specified time 
limit or risk termination from the Medicare program.  Facilities placed on termination tracks are usually 
those where the most serious problems exist.  If an ASC is out of compliance with the Conditions to 
such an extent that patients are in jeopardy, surveyors use a 23-day termination notice.  For ASCs with 
condition-level deficiencies but no finding of patient jeopardy; surveyors use a 90-day termination 
notice. ASCs that are not placed on a termination track, but have non condition-level deficiencies can 
be given a plan of correction whereby the facility sends the State agency a written notice stating the 
date the deficiencies were corrected, how they were corrected, and in some cases, documentation that 
the deficiencies were corrected. Only facilities with condition-level deficiencies can be placed on a 
termination track. The path to termination is not direct. The survey process allows ASCs to correct 
condition-level deficiencies before the deadline for termination from the Medicare program. 
28 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  APPENDIX C 
19. Ranking of Survey Type on CMS Budget Call Letter FY 1997-2001 
FY Year  Rank of Initial Surveys  Rank of Recertification Surveys 
2001  11 out of 11  10 out of 11 
2000  8 out of 8  7 out of 8 
1999  11 out of 12  10 out of 12 
1998  8 out of 9  7 out of 9 
1997  8 out of 9  7 out of 9 
20. Other facility types in the Medicare program include: Nonaccredited hospitals, skilled nursing 
facilities, nonaccredited home health agencies, hospices, outpatient physical therapy centers, 
comprehensive outpatient rehabilitation centers, x-ray facilities, end-stage renal dialysis facilities, rural 
health clinics, organ procurement organizations, and community mental health centers. 
21. From CMS FY 2001 budget. Our analysis of 2000 Medicare Part B and OSCAR data revealed 
515 ASCs certified by State agencies that made no Medicare claims in 2000 (16% of all ASCs that 
take part in the Medicare program). Further analysis would be needed to determine whether these 515 
are newly certified by State agencies and therefore unlikely to have 2000 claims. 
22. 42 U.S.C. Sec. 1396r All skilled nursing facilities and nursing facilities are subject to a standard 
survey not later than 15 months after the previous standard survey, with a Statewide average interval 
between standard surveys of not more than 12 months. Home health agencies are subject to a standard 
survey not later than 36 months after the previous standard survey (42 U.S.C. Sec. 1395bbb). The 
frequency for surveys of HHAs within this 36 month interval shall be commensurate with the need to 
assure delivery of quality home health services. 
23. CMS has updated the conditions for several other providers such as hospitals, home health 
agencies, and ESRD, however, none have been officially approved. CMS does have plans to update 
the ASC conditions. 
24. CMS Strategic Plan, p. 10, September, 1988. 
25. See 64 Fed. Reg. 36,088, July 2, 1999 and 62 Fed Reg. 11,026, March 10, 1997 respectively. 
26. CMS has implemented the Minimum Data Set in nursing homes and the Outcome and Assessment 
Information Set in home health agencies. In addition, CMS calls for quality indicators within its 
proposed update of the Conditions of Participation for hospitals. 
27. SMG Report. Page 20. 
29 
Quality Oversight of ASCs: Certification and Accreditation  OEI-01-00-00451  APPENDIX C 
28. Office of Inspector General, The External Review of Hospital Quality: A Call for Greater 
Accountability (July 1999). 
29. CMS State Operations Manual section 4018. 
30. Data from 1997, the first year the Joint Commission on the Accreditation of Health Care 
Organizations and the Accreditation Association for Ambulatory Health Care surveyed facilities for the 
Medicare program shows that 26 ASCs applied to have a Medicare survey through the Joint 
Commission in the year 1997.  In 2000, the Joint Commission resurveyed a third of those facilities. 
AAAHC had 149 ASCs in the Medicare program in 1997. Three years later, AAAHC resurveyed a 
third of those ASCs.  The American Association for Accreditation of Ambulatory Surgical Facilities 
(AAAASF) has been approved for Medicare since December 2, 1998 (231 Fed. Reg. 63, 66554, 
Dec. 2, 1998). AAAASF surveyed its first Medicare ASC in 2000. Therefore, survey data is not 
available for 1998 and 1999. 
31. AAAHC has three survey options for their facilities.  Facilities with minor or without any 
deficiencies will be resurveyed in 3 years. However, facilities with some deficiencies that AAAHC 
considers to be more serious or part of a pattern of partial compliance will be given shorter periods of 
accreditation, 6-months to 1 year, meaning these facilities must submit a plan to correct deficiencies and 
be resurveyed in order to gain 3 year accreditation. In fact, in 1998, 34 percent of ASCs surveyed by 
AAAHC received either a 6 month or 1 year accreditation decision and in 1999, 44 percent of ASCs 
received this decision.  Through these shorter accreditation periods, which result in more frequent on-
site presence, AAAHC helps to ensure that facilities with the most serious problems are not allowed to 
go 3 years in between surveys. 
32. Joint Commission web page Accreditation Process Improvement Initiative May 5, 2001. 
Currently, the Joint Commission conducts random unannounced surveys on 5 percent of accredited 
ASCs per year, 9-30 months after a facilitys last accreditation survey. On these surveys areas of 
specific concern about the provider based on prior surveys, complaints, and sentinel events are covered 
as well as elements that vary year to year. Some examples are: performance improvement, 
credentialing and privileging, and medication use. 
33. If ASCs report on the self-evaluation form that they do not meet AAAASF standards they are 
subject to the same 30-day corrective process as would occur after an on-site survey, including the 
possibility of on-site follow-up surveys. 
34. See our companion report, Holding the System Accountable, for further discussion of complaint 
mechanisms. 
35. For more on the nature of accreditation, see Office of Inspector General, The External Review of 
Hospital Quality: A Call for Greater Accountability (July 1999) and Michael S. Hamm, The 
Fundamentals of Accreditation (Washington, D.C.: American Society of Association Executives, 1997) 
3. 
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36. State agency certification has 10 conditions of coverage and about 50 standards for ASCs, 
whereas all three accreditors have over 200 standards for ASCs. In fact, AAAASF has over 300 
standards. 
37. CMS could also consider whether particular ASCs are, in fact, treating Medicare beneficiaries. 
Our analysis revealed 515 ASCs certified by State agencies that made no Medicare claims in 2000 
(16% of all ASCs that take part in the Medicare program). Further analysis would be needed to 
determine whether these 515 are newly certified by State agencies and therefore unlikely to have 2000 
claims. 
38. In its 2000 Report to the Congress, Medpac recommended that CMS expand its indicator-driven 
survey process for nursing homes and home health agencies to other providers in the Medicare 
program. In the Benefits Improvement and Protection Act of 2000, Congress directed the Secretary to 
work with Medpac and the Agency for Healthcare Research and Quality to examine and report on the 
development of standard instruments for patient assessment across settings. 
39. This may require legislative change. 
40. Department of Health and Human Services, Office of Inspector General, The External Review of 
Hospital Quality, OEI-01-97-00050; Office of Inspector General, The External Quality Review of 
Dialysis Facilities, OEI-01-99-00050; Mark R. Chasin et al, The Urgent Need to Improve Health 
Care Quality: Institute of Medicine National Roundtable on Health Care Quality, Journal of the 
American Medical Association 280 (September 16, 1998) 11: 1000-1005. 
41. Personal contact with Douglas Merrill, M.D. ASA Committee on Pain, Chair, 06/08/01. 
42. We obtained this information from several sources, including: 
C  personal observations of this procedure, 
C  Accreditation Association for Ambulatory Health Care, Inc. Institute for Quality 
Improvement, 1999 Performance Measurement Study, Cataract Extraction with 
Lens Insertion, 
C  http://www.adam.com/b2b/products/demos/ency/ENCY/ARTICLE/002957.htm, 
accessed 06/12/01 and, 
C  wysiwg://222/http://www.healthanswers.com/library/MedEnc/enc/832.asp, accessed 
06/12/01 
43. We obtained this information from several sources, including: 
C	 Accreditation Association for Ambulatory Health Care, Inc. Institute for Quality 
Improvement, 1999 Performance Measurement Study, Knee Arthroscopy with 
Meniscectomy, 
C  S. Terry Canale, M.D., Campbells Operative Orthopaedics: Ninth edition, Vol 2 
(St. Louis: Mosby, 1998), 1470 - 1501. 
C  http://www.webmd.lycos.com/content/asset/adam_surgery_synovectomy, accessed 
07/11/01. 
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