Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
The External Review of Hospital Quality 
The Role of Medicare Certification 
JUNE GIBBS BROWN 
Inspector General 
JULY 1999 
OEI-01-97-00052  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.  Principal OEI staff included: 
BOSTON  HEADQUARTERS 
Joyce M. Greenleaf, Project Leader  Jennifer Antico, Program Specialist 
Lynne G. Dugan, Senior Analyst  Alan Levine, Program Specialist 
Meredith A. Vey, 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://www.dhhs.gov/progorg/oei  E X E C U T I V E   S U M M A R Y  
PURPOSE 
To assess the role of the Health Care Financing Administration and Medicare certification 
in the external review of hospital quality. 
BACKGROUND 
External Quality Review of Hospitals in the Medicare Program 
Hospitals routinely offer valuable services, but also are places where poor care can 
lead to unnecessary harm.  The external quality review of hospitals plays an important role 
not only in protecting patients from such harm, but also in complementing the hospitals 
own internal quality efforts.  The Federal Government relies on two types of external 
review to ensure hospitals meet the minimum requirements for participating in Medicare: 
accreditation, usually by the Joint Commission on Accreditation of Healthcare 
Organizations, and Medicare certification, by State agencies.  About 20 percent of the 
6,200 hospitals that participate in Medicare are nonaccredited and certified by the States. 
This Inquiry 
This report, part of a series of four companion reports that resulted from our 
inquiry, focuses on the Medicare certification process, carried out by State agencies.  Our 
inquiry draws on aggregate data, file reviews, surveys, and observations from a rich 
variety of sources, including the Health Care Financing Administration (HCFA), the Joint 
Commission, State agencies, and other stakeholders. 
We organized this report around a framework for considering the external review 
of hospital quality.  This framework consists of five components: announced, on-site 
surveys of hospitals; unannounced, on-site surveys of hospitals; responses to complaints 
concerning hospitals; responses to major adverse events in hospitals; and collection and 
dissemination of standardized performance measures. 
FINDINGS 
The HCFAs routine hospital certification surveys are a low priority. 
The backlog of surveys is growing.  The proportion of nonaccredited hospitals not 
surveyed within the 3-year industry standard grew from 28 percent in 1995 to 50 percent 
1 
Hospital Quality: The Role of Medicare  OEI-01-97-00052  in 1997.  For those hospitals waiting over 3 years for a survey, the average time between 
surveys is over 5 years.  In fact, the total number of certification surveys conducted 
decreased from 286 surveys in 1995 to 184 surveys in 1997, a drop of 36 percent. 
The HCFAs survey and certification budget goes first to nursing homes and 
home health agencies, which have mandated survey cycles that hospitals lack. 
Hospital certification surveys appear 10th on a list of 12 HCFA workload priorities 
for States, behind surveying both nursing homes and home health agencies.  Congress 
mandates that HCFA survey nursing homes and home health agencies on a regular cycle. 
Hospitals lack such a mandate. 
The HCFAs hospital review focuses on complaints and serious incidents. 
State survey agencies are the front-line responders to complaints and serious 
incidents at both accredited and nonaccredited hospitals.  The HCFA assigns responding 
to such events a higher budget priority than routine surveys. 
The HCFAs certification survey results fail to make meaningful distinctions 
among nonaccredited hospitals. 
Certification surveys simply result in a status of certified or not certified; no grades 
or rankings stem from the survey.  Hospitals rarely fail to achieve certification.  The 
HCFA decertified 7 hospital in 3 years. 
The HCFA has not sought to collect or disseminate standardized performance 
data for nonaccredited hospitals. 
While HCFA has made strides in collecting data from other provider types, such as 
home health, managed care, and nursing homes, it is not currently collecting or analyzing 
such data as part of its system of hospital review.  However, the proposed revision of the 
hospital conditions of participation (issued on December 19, 1997) invite comments on 
whether HCFA should collect performance data and what that data should encompass. 
CONCLUSION 
In the domain of external quality reviews, the State agencies play major roles as 
troubleshooters:  responding to complaints and serious incidents at accredited and 
nonaccredited hospitals.  But given the limited pool of Federal funds available to support 
State survey and certification activities in general and the relatively low priority of routine 
hospital surveys in particular, the 1,442 nonaccredited hospitals across the country receive 
insufficient attention through external reviews.  Surveys of such hospitals tend to be 
2 
Hospital Quality: The Role of Medicare  OEI-01-97-00052  triggered on the basis of a serious incident involving patient harm rather than as part of a 
routine review intended to prevent such incidents.  This is the central and troubling 
conclusion of this report.  In our summary report, A Call for Greater Accountability, we 
direct our recommendations to HCFA stemming from this report and our entire inquiry. 
COMMENTS 
Within the Department of Health and Human Services, we received comments 
from HCFA.  We also solicited and received comments from the following external 
parties:  Joint Commission on Accreditation of Healthcare Organizations, Association of 
Health Facility Survey Agencies, American Osteopathic Association, American 
Association of Retired Persons, Service Employees International Union, National Health 
Law Program, and Public Citizens Health Research Group.  We include the detailed text 
of all of these comments and our responses to them in our summary report, The External 
Review of Hospital Quality: A Call for Greater Accountability (OEI-01-97-00050). 
3 
Hospital Quality: The Role of Medicare  OEI-01-97-00052  T A B L E  O F  C O N T E N T S  
PAGE 
EXECUTIVE SUMMARY 
INTRODUCTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

FRAMEWORK FOR EXTERNAL QUALITY REVIEW OF HOSPITALS . . . . . . . . . . . . . 8

PROFILE OF MEDICARE CERTIFICATION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

FINDINGS 
Surveys Are a Low Priority  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Focus on Complaints and Adverse Events  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Survey Results Fail to Make Meaningful Distinctions . . . . . . . . . . . . . . . . . . . . . . . . . . 13

No Standardized Hospital Performance Data  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

CONCLUSION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15

APPENDICES 
A: Medicare Conditions of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

B: Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

C: Certification Survey Observation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

D: Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

4 
Hospital Quality: The Role of Medicare  OEI-01-97-00052  I N T R O D U C T I O N  
PURPOSE 
To assess the role of the Health Care Financing Administrations Medicare certification in 
the external review of hospital quality. 
BACKGROUND 
Hospital Safety 
Hospitals are an integral part of our healthcare system, offering services that 
improve, extend, and even save lives.  But they are also places where inappropriate care 
can lead to unnecessary harm.  This reality was clearly underscored in 1991, when a 
Harvard medical practice study revealed the results of its review of about 30,000 
randomly selected records of patients hospitalized in New York State during 1984.  The 
study found that 1 percent of the hospitalizations involved adverse events caused by 
negligence.1  On the basis of its sample, the study team estimated that during that year, 
negligent care provided in New York State hospitals was responsible for 27,179 injuries, 
including 6,895 deaths and 877 instances of permanent and total disability.  Many other 
more recent studies have reinforced the concerns raised by the Harvard study.  Of 
particular note was one that focused on the care received by 1,047 hospitalized  patients in 
a large teaching hospital affiliated with a medical school.  It found that 17.7 percent of 
these patients received inappropriate care resulting in a serious adverse event--ranging 
from temporary disability to death.2  In the public eye, these scholarly inquiries have been 
overshadowed by media reports that describe, often in graphic detail, the harm done to 
patients because of poor hospital care.3 
Hospitals rely upon a variety of internal mechanisms, from physician credentialing, 
to peer review and benchmarking, in order to try to avoid such incidents and to improve 
the quality of care provided in their facilities.  External quality review serves as a vital 
additional safeguard.  It provides a more detached, independent mechanism for assessing 
the adequacy of hospital practices.  Such oversight is of fundamental importance to 
patients and to the public and private entities that purchase health care services on their 
behalf.  Protecting patient safety and improving the quality of patient care must be a top 
priority of external review. 
Medicares Interest in External Hospital Quality Review 
The Medicare program covers about 38 million elderly and disabled individuals, 
many of whom are high users of hospital care.4  In 1997, Medicare spent about $136 
5 
Hospital Quality: The Role of Medicare  OEI-01-97-00052  billion on Part A, the hospital insurance benefit.5  This figure is just over half the total 
amount the Federal government spent on all Medicare benefits.6  In the same year, 
Medicare spent over $80 billion for inpatient acute hospital care alone. 
Since Medicares inception, external quality review has been a part of the 
Medicare program.  When Congress enacted the Medicare Act in 1965, it required 
hospitals to meet certain minimum health and safety requirements to participate in the 
program.7  Those minimum requirements, called the Medicare conditions of participation, 
were published in 1966, revised in 1986, and are now being revised again (see appendix 
A).8  Within the Medicare Act itself, however, Congress  provided that hospitals 
accredited by the Joint Commission on Accreditation of Healthcare Organizations were 
deemed to be in compliance with the conditions of participation.  Congress also provided 
that hospitals accredited by the American Osteopathic Association could be considered in 
compliance, but only to the extent that the Secretary deemed appropriate.9 Thus, 
accreditation by the Joint Commission or the American Osteopathic Association provides 
entree into the Medicare program.  About 80 percent of the 6,200 hospitals that 
participate in Medicare are accredited by the Joint Commission.  Those hospitals wishing 
to participate in Medicare without accreditation must go through a Medicare certification 
process.  The Health Care Financing Administration (HCFA) relies on State survey and 
certification agencies (hereafter called State agencies) to conduct certification surveys at 
these hospitals to determine compliance with the Medicare conditions of participation. 
States currently certify 1,442 nonaccredited hospitals nationwide.10 
Regardless of the route a hospital takes to Medicare participation, Medicare bears 
a cost for the external review, either directly by funding State agencies or indirectly 
through hospital charges that include the overhead cost of periodic accreditation surveys. 
The Nature of Medicare Certification 
The Medicare certification process is a public, regulatory function.  It aims to 
ensure that hospitals wishing to serve Medicare beneficiaries, but not wishing to be 
accredited, meet the conditions of participation.  The 51 State agencies conduct the onsite 
certification surveys on HCFAs behalf.  The Medicare certification process is available at 
no cost to hospitals. 
This Inquiry and Report 
This report examines the role of Medicare certification in the external review of 
hospital quality.  It focuses on the hospital survey work undertaken by State certification 
agencies on behalf of HCFA.  In this report, we offer a framework for considering the 
external review of hospital quality and apply that framework to Medicare certification. 
6 
Hospital Quality: The Role of Medicare  OEI-01-97-00052  This report is part of a series of four companion reports that resulted from our 
inquiry.  A second, The Role of Accreditation (OEI-01-97-00051), assesses the Joint 
Commissions approach to hospital accreditation.  A third, Holding the Reviewers 
Accountable (OEI-01-97-00053), describes how HCFA oversees both the Joint 
Commission and the State survey agencies.  The fourth report, A Call for Greater 
Accountability (OEI-01-97-00050), provides a summary of external hospital quality 
review and presents the recommendations emerging from our inquiry. 
Our inquiry draws on a variety of sources.  These include:  data from HCFAs 
Online Survey Certification and Reporting System; aggregate data from the Joint 
Commission concerning hospital survey activity; a pretested mail survey to State  agencies 
in the 50 States and District of Columbia (hereafter referred to as a State); observations of 
the hospital surveys conducted by the Joint Commission and State agencies; reviews of 
accreditation manuals, policies, and hospital survey files from the Joint Commission; the 
systematic gathering of information from representatives of  HCFA central and regional 
offices, State agencies, the Joint Commission, American Hospital Association, consumer 
groups, professional associations, and representatives of other organizations we 
considered to be stakeholders in hospital oversight; and reviews of laws, regulations and 
articles from newspapers, journals, newsletters, and magazines.  We also interviewed 
officials from the American Osteopathic Association and reviewed their accreditation 
materials.  The American Osteopathic Association accredits about 100 to 150 hospitals, 
some of which are also accredited by the Joint Commission.  For purposes of this inquiry, 
however, we focused on the Joint Commission.  See appendix B for more details on our 
methodology. 
We conducted this inspection in accordance with the Quality Standards for 
Inspections issued by the Presidents Council on Integrity and Efficiency. 
7 
Hospital Quality: The Role of Medicare  OEI-01-97-00052  H O S P I T A L   R E V I E W   F R A M E W O R K  
The following five components present a framework for considering the external quality review 
of hospitals. They are intended to complement the internal quality assurance and improvement efforts 
that hospitals undertake themselves. They are approaches that health care purchasers, such as Medicare 
and Medicaid, can rely upon to ensure that their beneficiaries receive quality services from hospitals. 
They can also be of use to beneficiaries and other consumers concerned about the quality of their hospital 
care. 
We present the components to facilitate analysis of the extent and type of external review that is 
desirable, whether carried out by accreditation bodies, certification agencies, Medicare Peer Review 
Organizations, HCFA, or others. Each component has strengths and limitations. Moreover, each can be 
used in support of a review philosophy based on continuous quality improvement, more traditional 
compliance enforcement, or some combination thereof. 
We omitted a sixth component: the retrospective review of medical records to determine 
appropriateness of care. Formerly a role of the Medicare Peer Review Organizations, such medical record 
review is no longer carried out on such a large scale. However, some medical record review does occur as 
part of the components described below. 
1. Announced, On-Site Surveys of Hospitals 
These involve some combination of observations of facility and equipment; reviews of medical 
credentials, and other records and documents; and interviews. They result in a pass/fail or some kind of 
score intended to distinguish level of performance. They can also involve follow-up to correct or improve. 
2. Unannounced, On-Site Surveys of Hospitals 
The approach is basically the same as above except that the hospital has not had time to prepare. 
The intent is to gain a clear assessment of the facility as it typically functions and to trigger any necessary 
follow-up. 
3. Response to Complaints Concerning Hospitals 
These involve complaints of a particular instance of care or more encompassing matters 
concerning a hospitals performance. The response to complaints can range from a minimal distant 
review to a thorough on-site review. The process can trigger corrective actions and system improvements. 
4. Response to Major Adverse Events in Hospitals 
These involve cases where substantial patient harm resulted from what may be poor performance 
on the part of the hospital and/or its practitioners. Here, too, the response can range from minimal to 
thorough and can trigger corrective actions and system improvements. 
5. Collection and Dissemination of Standardized Performance Measures 
The aim here is to establish the standardized use of measures in ways that enable purchasers, 
consumers, accrediting bodies, and others to compare hospital performance. The comparisons can focus 
on a hospitals own performance over time and/or on how its performance compares to other hospitals. 
The data can be drawn from surveys of patients or providers, billing claims, and the hospitals own 
records. 
8 
Hospital Quality: The Role of Medicare  OEI-01-97-00052  P R O F I L E  O F   C E R T I F I C A T I O N  
The table below summarizes our assessment of Medicares approach to certifying 
nonaccredited hospitals, based on the framework we presented on the previous page.  The 
report generally follows this profile in its evaluation of Medicare certification. 
State agencies carry out certification surveys under the same guidelines from 
HCFA.  However, their implementation is likely to vary from State to State.  We observed 
one routine, announced certification survey, and include our observations in appendix C. 
Element  Description  Degree of Emphasis 
Routine, Announced,  State agencies conduct surveys, on behalf of  Minor. Low spending priority. No 
On-Site Surveys  HCFA, to assess compliance with Medicare  mandate requiring certification 
conditions of participation. Can involve  surveys at regular time intervals. 
follow-up. 
Random,  Not Conducted.  None 
Unannounced, On-
Site Surveys 
Responses to  State agencies conduct focused, unannounced  Major. Core of HCFAs oversight. 
Complaints  surveys in both accredited and nonaccredited  High spending priority. 
hospitals on any condition of participation 
involved in a complaint. Survey can be 
expanded to include all conditions if the State 
agency finds conditions out of compliance. For 
accredited hospitals with conditions found out 
of compliance, HCFA can remove deemed 
status. Can involve follow-up. 
Responses to Serious  Same as complaints.  Same as complaints; HCFA makes 
Incidents  no distinction. 
Standardized  Not Collected.  12/19/97 Federal Register Notice 
Performance Data  solicited comments on whether 
HCFA should collect performance 
data. 
9 
Hospital Quality: The Role of Medicare  OEI-01-97-00052  F I N D I N G S  
The HCFAs routine hospital certification surveys are a low 
priority. 
The backlog of surveys is growing. 
In 1995, 28 percent of nonaccredited hospitals nationwide had not been surveyed 
within the 3-year industry standard.11  By 1996, that backlog grew to 37 percent.  By 
1997, 50 percent of the 1,361 
Figure 1  nonaccredited hospitals in the 
50 States and the District of 
Columbia had not had a survey 
in at least 3 years (see Figure 
1).12 
The average elapsed 
time between surveys is 
currently just over 3 years. 
Just a few years ago, States 
were doing much better, with 
elapsed times averaging 1 and 
2 years.13  The increasing time 
between surveys coincides 
with the dramatic rise in home 
health agencies--which State 
agencies must also survey. 
The average elapsed 
time is growing for all but a 
handful of States.  For those 
Source: HCFAs OSCAR System. 
hospitals waiting over 3 years 
for a survey, the average time 
between certification surveys is over 5 years.  Nationwide, 1 in 5 States had at least 1 
hospital go as long as 8 years without a survey.  Indeed, the total number of certification 
surveys conducted has dropped 36 percent in 2 years:  from 286 surveys in 1995 to 184 
surveys in 1997.14 
The situation is worse in States with the most nonaccredited hospitals.  Four States 
account for 27 percent of the nonaccredited hospitals in the country:  Texas, Kansas, 
10 
Hospital Quality: The Role of Medicare  OEI-01-97-00052  California, and Louisiana.  Each of those States has over 50 nonaccredited hospitals.  The 
average elapsed time between surveys in Texas is 4.4 years; in Kansas, 4.6 years; in 
California, 4.5 years; and Louisiana, 3.8 years.  Between October 1, 1996 and September 
30, 1997, Texas conducted just 4 routine certification surveys; Kansas conducted 8; 
California, 13; and Louisiana, 3.15 
Of course, nonaccredited hospitals are also subject to State licensure laws, another 
form of external hospital oversight.  Indeed, every State except Ohio requires hospitals to 
be licensed.  But what that licensure translates to in terms of on-site surveys at 
nonaccredited hospitals varies considerably across the States.  Surveying nonaccredited 
hospitals on-site is a costly undertaking for States.16  Indeed, 25 States reported trying to 
piggyback their State licensure surveys onto Medicare certification surveys whenever 
possible--making licensure surveys unlikely without a certification survey.  The number of 
recent licensure surveys among the four States with the most nonaccredited hospitals 
ranged from surveying all (California) to surveying none (Texas); with Kansas and 
Louisiana surveying 30 and 40 percent respectively.17 
The HCFAs survey and certification budget goes first to nursing 
homes and home health agencies. 
Hospital certification surveys appear 10th on a list of 12 HCFA workload priorities 
for States, behind surveying nursing homes, Intermediate Care Facilities for the Mentally 
Retarded, home health agencies, and all types of complaint investigations and allegations 
of patient dumping.18  By statute, HCFA must survey nursing homes and home health 
agencies at regular time intervals, an activity that uses up most of the survey budget.19 
Hospitals, however, lack such a mandate, making hospital surveys significantly more 
vulnerable to budget cutting.  In fact, the portion of HCFAs 1997 survey budget 
dedicated to hospital certification surveys appears to have dropped by about half from that 
of 1996.20 
For Fiscal Year 1999, HCFA funded States to survey 10 percent of the 1,415 
nonaccredited hospitals, or a total of 140 hospitals.21  With this level of funding, States 
could survey hospitals every 10 years.  By contrast, HCFA funds surveys for 62 percent of 
home health agencies per year.22  That means for 1999, HCFA will fund surveys for over 
6,000 of the 10,119 home health agencies.23  At that level of funding, States could survey 
home health agencies about every 18 months.  One director of a State Health Department 
captured some of the frustration surrounding hospital survey funding in a 1997 letter to 
the Secretary of Health and Human Services where she writes: 
At a time when the health care system is changing more rapidly than ever before 
and pressure for cost reduction creates the potential for reduced quality, our 
budget in the Health Department has been cut in half.  An example of the impact of 
this cut is the incredible reduction in funds for hospital survey activity...This 
11 
Hospital Quality: The Role of Medicare  OEI-01-97-00052  potentially means that Medicare beneficiaries may be deprived of access to a 
hospital where they can receive quality health care services.  Most of the Medicare 
allocation...supports...[regulating] nursing homes. 
In addition to contending with low Federal priority, half the States report having 
fewer hospital survey staff now than they did 5 years ago.  States do, however, have some 
flexibility in deciding which hospitals to survey with their limited resources.  Most States 
identified two factors as playing major roles in those decisions: complaints received about 
hospital care (identified by 41 of 50 States) and time elapsed since the last certification 
survey (identified by 35 of 50 States).  (For a summary of our observations from one 
Medicare certification survey conducted by one State agency, see appendix C.) 
The HCFAs hospital review focuses on complaints and 
serious incidents. 
The HCFA spends most of its hospital survey budget investigating complaints and 
serious incidents at either accredited or nonaccredited hospitals.  These activities fall third 
on HCFAs list of survey budget priorities.24  Thus, HCFA and the States devote far more 
resources to responding to complaints than conducting announced surveys of 
nonaccredited hospitals, which fall 10th on that list.  In fact, according to data reported by 
HCFA, State agencies conducted several thousand complaint surveys over the past few 
years:  2,166 in 1996, 2,079 in 1997, and 1,577 in 1998.  This level of attention reflects 
the expectations of stakeholders who largely view government--State and Federal--as 
public protectors: in their words, It falls on the government to be the bad guy, or 
policeman and its a traditional government function [to respond to such events].25 
The focus on responding to complaints and serious incidents has grown in recent 
years:  38 of the 51 States (75 percent) we surveyed reported that the number of hospital 
complaints they receive has increased over the last few years.  Of course, some of this 
increase could be due to the anti-dumping laws passed in 1986, which spawned 
complaints.26  Plus, errors in hospitals appear to be garnering the medias, and therefore 
HCFAs and the States, attention.27  The HCFA regional offices also receive complaints 
and refer them on to the States.  The States, in turn, look to HCFA for guidance on which 
complaints to investigate, especially when the hospitals in question are accredited. 
Unlike certification surveys, which are announced in advance, most responses to 
complaints and incidents are unannounced.  The responses tend to be intensive, focusing 
on a specific service area or incident--at least at the start--because Federal law requires the 
scope of that response to be limited to the particular condition in question.28  But, if the 
surveyors find a hospital to be out of compliance with a condition during that narrow 
investigation, they can expand the scope of their response to encompass all the conditions 
of participation.29  Responses to complaints and incidents also tend to last longer than the 
12 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  few days it takes to conduct a certification survey.  For example, we observed parts of one 
response that lasted 2 weeks. 
The HCFAs certification survey results fail to make 
meaningful distinctions among nonaccredited hospitals. 
Certification surveys simply result in a status of certified or not certified.  They 
neither rank nor grade hospitals.  Surveyors can find three levels of deficiencies: 
condition-level, standard-level, and requirement-level.  One hospital could have 
deficiencies in one, two, or all three levels.  Condition-level deficiencies are the most 
serious.  Hospitals with standard- and/or requirement-level deficiencies can maintain their 
Medicare certification.  In fact, HCFA does not require such hospitals to make 
corrections.  Only condition-level deficiencies can terminate a hospitals certification 
status.  And that rarely happens.  The HCFA reports that it terminated 7 hospitals over the 
past 3 years: 2 in 1996, 3 in 1997, and 2 in 1998. 
The path to termination is not direct, however, as the survey process gives 
hospitals opportunities to correct their condition-level deficiencies.  Medicare surveyors 
use termination notices to prompt hospitals to make corrections.  The HCFA uses a 
termination notice as a temporary certification status; hospitals either correct their 
deficiencies and receive full certification or are terminated.  When Medicare surveyors find 
a hospital to be out of compliance with the conditions to such an extent that patients are in 
jeopardy, they use the 23-day termination notice.  For hospitals with condition-level 
deficiencies but no finding of patients in jeopardy, surveyors use a 90-day termination 
notice.  The HCFA does not track the number of hospitals that receive termination 
notices. 
The HCFA has not sought to collect or disseminate 
standardized performance data for nonaccredited hospitals. 
The HCFA is not currently collecting or analyzing standard hospital performance 
data or quality measures as part of its system of reviewing hospitals.  The proposed 
revisions to the hospital conditions of participation (issued on December 19, 1997) invite 
comments on both whether HCFA should collect standardized performance data and what 
that data might encompass.  But while the proposed conditions note an intent to collect 
such data, they fall short of requiring it because we do not believe it is reasonable to 
establish any related requirements at this time, in view of the lack of any current consensus 
or science that could establish a reliable and valid set of measures.30  Stakeholders with 
whom we spoke endorsed the concept of HCFA establishing and collecting standardized 
performance data, identifying it as an appropriate role and a route toward nationally 
comparable data. 
13 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  The HCFA has been more involved in standardized performance data in other 
provider settings than it has in hospital settings.  For example, it led in developing the 
home health data set, which will support performance measurement, for home health 
agencies.31  Furthermore, it recently developed the a set of quality standards for managed 
care organizations.32  It has also called for the managed care organizations that enroll 
Medicare beneficiaries to report certain standardized data in the form of indicators.33 
Indeed, it was involved in developing the indicators for the Medicare population.34 
Additionally, HCFA was involved in the development of the Quality Assurance Reform 
Initiative, a guide for State Medicaid agencies as they develop methods and standards for 
monitoring the quality of care provided to Medicaid managed care enrollees. 
To date, however, no single system of performance data for hospitals has emerged 
as the industry standard.  Hundreds of such systems exist, though, and hospitals all over 
the country have implemented them according to their own needs.  The proposed 
conditions do call for hospitals to have their own system of performance measurement in 
place.  Their approaches must encompass a continuous effort to improve...performance, 
incorporating to the greatest extent possible an approach that focuses on the hospitals 
performance in improving patient outcomes and satisfaction...[and] would require that 
each hospital develop, maintain, and evaluate an effective data-driven quality assessment 
and performance improvement program.35  Indeed, many hospitals have already invested 
in a variety of such systems. 
14 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  C O N C L U S I O N  
In the domain of external quality reviews, the State agencies play major roles as 
troubleshooters:  responding to complaints and serious incidents at accredited and 
nonaccredited hospitals.  But given the limited pool of Federal funds available to support 
State survey and certification activities in general and the relatively low priority of routine 
hospital surveys in particular, the roughly 1,415 nonaccredited hospitals across the 
country receive insufficient attention through external reviews.  Surveys of such hospitals 
tend to be triggered on the basis of a serious incident involving patient harm rather than as 
part of a routine review intended to prevent such incidents.  This is the central and 
troubling conclusion of this report.  In our summary report, A Call for Greater 
Accountability, we direct our recommendations to HCFA stemming from this report and 
our entire inquiry. 
15 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  APPENDIX A 
Medicare Conditions of Participation 
The Medicare conditions of participation (COP) were first published in 1966 and revised in 1986 (42 
C.F.R. 482.1-482.66). On December 19, 1997, HCFA published a proposed COP for hospitals ( 62 Fed. Reg. 
66,726). On July 2, 1999, it published an interim final rule concerning patients rights. Below are the components 
of the existing COP for non-specialty hospitals from 1986, followed by the components of the new proposed COP. 
Existing COP  Proposed COP 
Subpart A- General Provisions  Subpart A- General Provisions 
Provision of emergency services by  Patient Rights (issued as an interim final rule July 2, 1999) 
nonparticipating hospitals 
Subpart B- Patient Care Activities 
Subpart B- Administration 
Patient Admissions, assessment, and plan of care

Compliance with Federal, State, and local laws  Patient care

Governing Body  Quality assessment and performance improvement

Diagnostic and therapeutic services or 

Subpart C- Basic Hospital Functions  rehabilitation services 
Pharmaceutical services 
Quality assurance
 Nutritional services 
Medical staff
 Surgical and anesthesia services 
Nursing services
 Emergency services 
Medical record services
 Discharge Planning 
Pharmaceutical services

Radiologic services
 Subpart C- Organizational Environment 
Laboratory services

Food and dietetic services
 Administration of organizational environment

Utilization review
 Infection control

Physical environment
 Human resources

Infection control
 Physical environment

Life safety from fire

Subpart D- Optional Hospital Services  Blood and blood products transfusions

Potentially infectious blood and blood products

Surgical services  Utilization review

Anesthesia services 
Nuclear medicine services 
Outpatient services 
Emergency services 
Rehabilitation services 
Respiratory care services 
16 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  APPENDIX B 
Methodology 
We collected information presented in this report from the following sources: 
The HCFA 
We obtained dates of certification surveys from HCFAs Online Survey 
Certification and Reporting System (OSCAR).  The HCFA authorizes States to update 
and maintain this database with survey information.  We extracted survey data pertaining 
to the frequency of certification surveys.  We subsequently verified the accuracy of our 
extraction by comparing it to on-line OSCAR system information to ensure the dates we 
used corresponded to routine certification surveys, rather than complaint investigations or 
other types of surveys.  We are satisfied that our information is as accurate as HCFAs 
OSCAR system. 
Additionally, we selected 4 States (California, Kansas, Minnesota, and Texas) that 
contain over 50 nonaccredited hospitals and represented different areas of the United 
States.  We then examined the OSCAR data for those States in greater detail.  We verified 
the status of  the nonaccredited hospitals in those States which had not been surveyed in 
over 5 years using the American Hospital Associations 1997 Hospital Guide. 
We also interviewed staff and managers at each HCFA regional office and the 
central office.  We reviewed a variety of HCFA documents, including budget call letters, 
reinvention materials, and reports to Congress, among others. 
The State Survey and Certification Agencies 
In August 1997, we mailed a pretested survey to the hospital certification agencies 
in the 50 States and the District of Columbia.  The response rate for this survey was 100 
percent.  The State survey addressed four areas of hospital quality oversight:  private 
accreditation of hospitals, Medicare certification of hospitals, HCFA oversight of State 
certification agencies, and State licensure of hospitals.  We interviewed State officials on 
the telephone or in person as well. 
Accrediting Organizations 
We interviewed officials from both the Joint Commission on Accreditation of 
Healthcare Organizations and the American Osteopathic Association.  We also reviewed 
documents from both organizations, including mission statements, accreditation manuals, 
17 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  APPENDIX B 
policies, and hospital survey files.  We requested and received aggregate data from the 
Joint Commission reflecting its recent hospital survey activity.  All Joint Commission data 
are presented as reported by the Joint Commission, unless otherwise noted.  For purposes 
of this inquiry, we focused our analysis on the Joint Commission. 
Survey Observations 
Based on schedules of upcoming triennial surveys, we identified nine hospitals in 
which to observe triennial Joint Commission surveys.  Of those, we were able to observe 
seven.  In two cases, the hospitals declined the Joint Commissions request that we be 
allowed to observe.  The 7 hospitals varied in size from 80 to 775 beds, represented both 
teaching and community hospitals, and were located in different areas of the country (both 
rural and urban).  We also observed one random unannounced Joint Commission survey. 
Although we observed different teams of surveyors, the survey agenda, lines of inquiry, 
and tone were consistent across the surveys, which were conducted in accordance with 
Joint Commission policy, based on review of survey manuals and interviews with 
representatives of the Joint Commission.  Finally, we observed a certification survey and 
parts of two complaint investigations performed by State surveyors under HCFAs 
auspices. 
Stakeholder Interviews 
We interviewed representatives of organizations we considered to be stakeholders 
in hospital oversight.  These stakeholder organizations included a union, professional 
organizations, hospital associations, and consumer groups. 
Other Documents 
In addition to the documents referenced above, we reviewed statutory and 
regulatory language and a variety of articles from newspapers, journals, magazines, and 
newsletters. 
18 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  APPENDIX C 
Certification Survey

During the course of our inquiry, one Office of Inspector General (OIG) analyst 
observed one Medicare certification survey.  What follows is a summary of the 
observations from that survey. 
Background 
The survey was of a 34-bed nonaccredited county hospital located in a rural area. 
The hospital had recently undergone major renovations but still used parts of the older 
buildings, which were at least 50 years old.  Staff could pass from the renovated parts of 
the building to the older parts, and construction was still underway.  Plastic strips hung in 
doorways to minimize the dust from the ongoing renovations.  The pharmacy and 
operating rooms were housed in the older building, which was plagued by roof leaks and a 
finicky cooling system, leaving the area humid and musty.  Warehouse style buildings in 
the back of the hospital housed the medical records and some administrative offices. 
The hospital came under new management 2 years prior to the observed survey. 
During the time of the survey, the hospital had an average daily census of 13, an increase 
over prior years.  Most of the surgeries performed at this hospital were hernia repairs, 
cholecystectomies, or gynecological procedures.  Since the renovations, the hospital 
experienced an increase in deliveries. 
Three experienced nurse surveyors and one surveyor in training (also a nurse) 
surveyed this hospital.  One served as team leader.  All of the surveyors had clinical 
nursing experience.  At least one surveyor had been at the hospital previously.  Before 
arriving at the hospital, they reviewed the States historical files of compliance and 
complaints for this hospital.  Thus they were familiar with the hospitals history of 
compliance problems.  They were also aware of the hospitals recent problems involving 
physicians on the hospital staff.  For example, one physician on staff was imprisoned for 
narcotics abuses and another lost his medical license due to a pattern of unnecessary 
surgeries, high complication rates, and poor care. 
The State survey agency notified the hospital of the survey 3 weeks in advance. 
19 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  APPENDIX C 
Summary Observations 
The survey began around 11:30 in the morning on the first day and went until noon 
on the third day, lasting about 19 hours total.  The surveyors continued surveying until 
5:30 or 6:00 PM on the first 2 days.  The survey began with an opening conference that 
included the surveyors and the hospitals leadership.  After general introductions and 
reviewing a loose agenda, the hospital presented an overview of its recent improvements. 
Then the surveyors began their document reviews, which covered hospital logs, minutes, 
bylaws, and medical records, among others.  By early afternoon, the surveyors split up to 
begin their sessions, with the trainee always assigned to follow a senior surveyor. 
The surveyors relied on interviews, document reviews, and observations.  Once or 
twice a day, the surveyors would compare notes and share concerns so others could 
pursue them in different areas of the hospital.  The surveyors selected the files they would 
review themselves, based on staff rosters; surgical, admission, and emergency logs; and 
other documents.  They also pushed alarm bells and observed responses.  They tested the 
hospital staffs knowledge by asking them to demonstrate certain tasks, such as turning on 
pieces of equipment, testing a defibrillator, changing oxygen tanks, and sterilizing a scope. 
Through the information gleaned from the above, the surveyors identified a range 
of concerns.  Among them were the following: 
<	 Staff were untrained in certain hospital equipment.  For example, when surveyors 
asked for a demonstration of the hospitals new negative pressure room, no one 
knew how to turn it on. 
<	 The hospitals emergency call systems were inadequate.  For example, the 
surveyors pulled call bells in the emergency room and procedures room.  No one 
answered the calls. 
<	 Medical record documentation was problematic.  In particular, patient consent 
forms failed to spell out risks in lay terms and included broad consent for any 
other necessary procedure.  Physician signatures were also missing from records. 
Legibility was a problem, too. 
<	 The nursing department appeared to have inadequate staff.  Also, the nursing 
department failed to use individualized care plans, follow-through on incident 
reports, or identify patients educational needs. 
20 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  APPENDIX C 
<	 The hospital lacked a policy for transferring high-risk obstetrical patients, had a 
high c-section rate, and lacked documentation for fetal distress.  For example, the 
hospital delivered an infant at 27-weeks gestation even though it lacked neonatal 
capacity.  Furthermore, three of six obstetrical records the surveyors reviewed 
documented some sort of adverse outcome. 
<	 The hospital lacked a performance appraisal system for its medical staff and its 
reappointment process excluded peer review data.  Furthermore, physicians 
covering the emergency room lacked privileges for common emergency 
procedures, such as placing chest tubes and performing tracheotomies. 
<	 The appropriateness of care in three or four records was questionable.  The 
surveyors copied those records and forwarded them to a peer review organization 
for review. 
During the exit conference (the last session of the survey), the surveyors discussed 
their findings, but couched their comments as preliminary.  After all, they had collected a 
variety of documents to review and analyze off-site.  Findings from those documents could 
alter their on-site findings.  The hospital would not know the final survey outcome until 
that process occurred (see page 23 for a final summary of the surveys findings). 
Sessions observed by the OIG included, in part or in whole, pharmacy, medical 
staff, nursing, discharge planning, operating and recovery rooms, procedure room, 
emergency room, dietary, and the building and grounds tour.  Highlights of some of the 
observed sessions follow. 
Medical Staff Session 
This session lasted 3 hours on the first day and continued for 1 hour on the second 
day.  Before beginning the session, the surveyor read the bylaws.  During the session, she 
interviewed the administrative staffperson in charge of credentialing and reviewed 
credential files.  She selected the files herself, and by the end of the second day, had 
reviewed the credentials of each of the six staff physicians, among others.  In questioning 
the staff and reviewing the files, the surveyor was especially interested in how the medical 
staff took responsibility for quality, how the hospital delineated privileges, and evidence of 
a reappraisal and peer review system.  No one from the medical staff participated in this 
session. 
21 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  APPENDIX C 
The surveyor interview covered the following topics: appointment and 
reappointment process, language skills of foreign medical graduates, reliance on the 
American Medical Associations physician profile database, conscious sedation, 
emergency room coverage and procedures, the on-call system, pending litigation, licensure 
limitations, prerequisites for active staff, availability of surgical services, use of podiatrists 
and psychologists, autopsies, organ donation, physician experience and competence with 
certain procedures, unexpected surgical outcomes such as perforations, role of chart 
review, and medical staff involvement in appraisal process. 
As this session unfolded over the 2 days, the surveyor asked for more and more 
files, and then operating room logs and other documents to confirm the range of 
procedures the hospital provided fell within the privileges granted.  By the end of the 
session, the surveyor identified some areas of concern.  For example, she expressed 
concerns about privileges because physicians responsible for covering the emergency room 
lacked privileges for common emergency room procedures such as chest tubes.  The 
surveyor offered examples of similar problems at other hospitals that lead to unnecessary 
deaths.  She also questioned whether medical staff were involved in the evaluation of 
patient care and physician appraisal.  Other concerns related to the staffs failure to follow 
its own bylaws, the lack of written guidelines for certain high-risk patients, and illegibility 
of medical records. 
Pharmacy Session 
One surveyor conducted the pharmacy review, which lasted about 1 hour.  The 
hospitals pharmacy, located in the old part of the hospital, had one full-time pharmacist 
and one part-time technician.  The pharmacists background was in retail pharmacy and he 
was new to practicing in a hospital. 
The surveyor reviewed the pharmacists license and other documents.  She was 
particularly interested in documentation of proper narcotics tracking, logs tracking after-
hours access to the pharmacy, and protocols for any performance improvement projects. 
In addition to reviewing the papers, she asked for copies to take with her.  While in the 
pharmacy she also inspected the hood and scanned the storage shelves, where she noted 
narcotics that were labeled without strength identified. 
The surveyors questions covered the following areas: formulary development, 
mechanism for drug recalls, restocking and security of crash carts, computerization, drug 
utilization review, hospital strategic planning, performance improvement projects, drug 
errors, and reliance on and competency of the pharmacy technician.  Because of the 
22 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  APPENDIX C 
obvious humidity problem in the small pharmacy, the surveyor asked questions about the 
impact of the dampness on the efficacy and storage of the drugs. 
The surveyor focused, however, on narcotics and adverse drug reactions and how 
the hospital tracked them.  Apparently the nursing department viewed it as a pharmacy 
responsibility and the pharmacist viewed it as nursing.  The surveyor was concerned about 
the lack of accountability and spent a lot of time educating the pharmacist about what he 
needed to track and why, referencing requirements of the Drug Enforcement 
Administration. 
Nursing 
This session lasted about 2 hours and involved the director of nursing and one 
surveyor.  The director of nursing was new.  In fact, she was the 15th director of nursing 
the hospital hired in 7 years.  The surveyor reviewed documentation of the hospitals nurse 
staffing plan, among other documents.  Low staffing and acuity emerged as major 
concerns.  Among the topics the surveyor questioned the director of nursing about were: 
reliance on contract nurses, orientation and training of new nurses, determining baseline 
competency, role of charge nurses, nurse roles in tracking and reporting adverse drug 
reactions, anatomical gifts, contingency plans, incident reporting (falls, needle sticks, and 
employee injuries), use of telephone and verbal orders, and infection control. 
Statement of Deficiencies Stemming from the Certification Survey 
Within a few weeks of the on-site portion of the survey, the State agency sent the 
final statement of deficiencies to the hospital.  The statement included deficiencies at each 
of the three levels (condition, standard, and element) as noted below: 
Condition of Participation:  Governing Body (42 CFR 482.12) 
Two elements under this condition were unmet, concerning the accountability of 
the medical staff and its appointment process. 
Condition of Participation:  Quality Assurance (42 CFR 482.21) 
One standard under this condition was unmet, concerning implementation of the 
quality assurance plan. Two elements under this condition were also unmet, both 
concerning clinical plans: one because the hospital lacked evidence that it 
23 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  APPENDIX C 
evaluated drug errors and one because it lacked evidence that it evaluated a recent 
increase in c-sections. 
Condition of Participation:  Medical Staff (42 CFR 482.22) 
This condition was unmet based on the medical staffs failure to operate under its 
bylaws and develop or implement a system of accountability.  Two standards and 
four elements were also out of compliance under this condition.  One unmet 
standard concerned the accountability and organization of the medical staff; the 
other, the medical staffs failure to abide by its bylaws.  The unmet elements 
included the failure of the medical staff to conduct periodic appraisals of its 
members and to delineate clinical privileges, among others. 
Condition of Participation:  Nursing Services (42 CFR 482.23) 
Two elements under this condition were unmet.  One concerned the lack of 
individualized nursing care plans for each patient.  The other concerned the 
problems with the reporting of medication errors. 
Condition of Participation:  Medical Record Services (42 CFR 482.24) 
Two elements under this condition were unmet.  One concerned illegibility and one 
concerned delinquent medical records. 
Condition of Participation:  Pharmaceutical Services (42 CFR 482.25) 
One element, concerning the security of drugs, was unmet. 
Condition of Participation:  Physical Environment (42 CFR 482.41) 
One standard was unmet.  This element encompassed several concerns related to 
patient safety and well-being:  the lack of working alarm systems, lack of staff 
knowledge of and response to alarm systems, lack of staff knowledge on certain 
patient care equipment, lack of safe emergency exits, and lack of mechanism to 
monitor temperature and humidity in the pharmacy, among others. 
24 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  APPENDIX C 
Condition of Participation:  Surgical Services (42 CFR 482.51) 
Two elements were unmet.  One concerned the hospitals failure to delineate 
surgical privileges in accordance with competency.  The other concerned the lack 
of a properly executed informed consent form. 
Condition of Participation:  Emergency Services (42 CFR 482.55) 
One element was unmet.  It concerned the medical staffs failure to abide by 
policies and procedures governing care provided in the emergency department and 
the nursing staffs failure to adhere to established triage policy. 
Based on the above findings, the State survey team conducted two more surveys at 
this hospital, both within 2 months of the original survey observed by the OIG.  As of the 
last follow-up survey, the hospital had corrected its deficiencies to the satisfaction of the 
survey team. 
25 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  APPENDIX D 
Endnotes

1.  Troyen A. Brennan et al, Incidence of Adverse Events and Negligence in Hospitalized 
Patients, The New England Journal of Medicine 324 (February 7, 1991) 6: 370-376. 
2.  The 17.7 percent refers to adverse events considered by the authors to be serious.  The authors 
defined adverse events as situations in which an inappropriate decision was made when, at the 
time, an appropriate alternative could have been chosen and serious as ranging from temporary 
disability to death.  See Lori B. Andrews et al, An Alternative Strategy for Studying Adverse 
Events in Medical Care, The Lancet 349 (February 1, 1997)309-313. 
See also Lucian L. Leape, Error in Medicine, Journal of the American Medical 
Association 272 (December 21, 1994) 23: 1851-1857; David C. Classes et al, Adverse Drug 
Events in Hospitalized Patients, Journal of the American Medical Association 277 (January 
22/29, 1997) 4: 301-306; Mark R. Chassin 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; David W. Bates et 
al,Effect of Computerized Physician Order Entry and a Team Intervention on Prevention of 
Serious Medication Errors, Journal of the American Medical Association 280 (October 21, 
1998) 1311-1316; Robert A. Raschke et al, A Computer Alert System to prevent Injury from 
Adverse Drug Events:  Development and Evaluation in a Community Teaching Hospital, Journal 
of the American Medical Association 280 (October 21, 1998) 1317-1320; and David C. Classen, 
Clinical Decision Support Systems to Improve Clinical Practice and Quality of Care, Journal of 
the American Medical Association 280 (October 21, 1998) 1360-1361. 
3.  One example is a November 1998 New York Times article under the headline: Death in 
Surgery Reveals Troubled Practice and Lax Hospital.  The article described a botched 
operation on a young woman by a surgeon who was on probation by the State medical board and 
who used unauthorized medical equipment brought in to the operating room by a medical supply 
salesman.  Such incidents happen, even in the best of hospitals, but they underscore the point that 
hospitals can be dangerous places and that oversight systems can be lax.  See also Overdoses 
Still Weigh heavily at Dana Farber, The Boston Globe (26 December 1995); Florida Doctor 
Sanctioned in New Amputation, The Boston Globe (19 July 1995); Two Surgeons Surrender 
Licenses After Mistakenly Removing Kidney, The Boston Globe (6 June 1996); How Can We 
Save the Next Victim? New York Times Magazine (15 June 1997); Another Hospital Death 
Probed, The Boston Globe (26 July 1997); Patient Dies After Drinking Poison Left on 
Nightstand, San Diego Union-Tribune (6 March 1998); Man Arrested for Posing as Doctor for 
4 years, posted at the CNN interactive webpage (16 May 1998); Deadly Restraint:  Patients 
Suffer in a System Without Oversight, The Hartford Courant (13 October 1998). 
26 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  APPENDIX D 
4.  http://WWW.hcfa.gov/Medicare/Medicare.htm 
5.  Health Care Financing Administration, 1996 Data Compendium, HCFA March 1995. 
6.  Ibid. 
7.  P.L. 89-97. 
8.  The HCFA published its proposed hospital conditions of participation on December 17, 1997 
(62 Fed. Reg. 66,726).  On July 2, 1999, it published an interim final rule on patients rights (64 
Fed. Reg. 36070). 
9.  42 U.S.C 1395bb. 
10.  Health Care Financing Administration, OSCAR 10 Report, as of May 30, 1998. 
11.  The industry standard is every 3 years, as set by hospital accrediting organizations, like the 
Joint Commission on Accreditation of Healthcare Organizations. 
12.  From HCFAs OSCAR System.  Special Report Dated Oct. 1, 1997.  Data is exclusive of 
Puerto Rico, Virgin Islands, and American Samoa. 
13.  Until about 1990,...the federal government contributed enough money to do inspections 
every year.  After that, federal money began diminishing, and last year [1997] it was enough to 
finance inspections at only 10 percent of hospitals. (Nancy Ruzicka, Iowas Bureau Chief for 
Medicare Certification and Hospital Licensing, in Tom Carney, Hospital Reviews Judged Too 
rare, Des Moines Register, 7 February 1998.) 
14.  States conducted 286 certification surveys from October 1, 1994 to September 30, 1995 and 
184 certification surveys from October 1, 1996 to September 30, 1997.  From HCFAs OSCAR 
System.  Special Report Dated Oct. 1, 1997.  Data is exclusive of Puerto Rico, Virgin Islands, 
and American Somoa. 
15.  Based on OIG analysis of data reported by HCFA. 
16.  Those hospitals tend to be small, rural, and remote, making them often difficult to travel to 
[Institute of Medicine, Medicare: A Strategy for Quality Assurance, Volume I (Washington, 
D.C.: National Academy Press, 1990) 120]. 
17.  Based on Office of Inspector General telephone survey to State Survey and Certification 
Agencies, July and August of 1998. 
27 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  APPENDIX D 
18.  HCFA to States, FY 1999 State Survey and Certification Budget Call Program Requirements 
and Budget Guidelines. 
19.  Under current law (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 USC 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. 
20.  Health Care Financing Administration.  The HCFA does not track actual spending by 
category. 
21.  HCFA to States, FY 1999 State Survey and Certification Budget Call Program Requirements 
and Budget Guidelines. 
22.  HCFA funds States to perform a standard survey of every home health agency no later than 
36 months after the previous standard survey.  In addition, HCFA also funds States to conduct 
initial certification surveys for new home health agencies, and more frequent surveys for problem 
home health agencies.  All told, HCFA will survey about 60-65 percent of all home health 
agencies in a given year. 
23.  From HCFAs OSCAR-10 Report dated 3/27/97. 
24.  HCFA to States, FY 1999 State Survey and Certification Budget Call Program Requirements 
and Budget Guidelines. 
25.  State agencies expect certification to play a greater role responding to complaints than 
accreditation:  92 percent of the States agencies responding to our survey expected that they be 
involved to a great or very great extent while 47 percent of States expected that accrediting 
organizations be involved to that extent.  States held similar views concerning response to adverse 
events involving patient harm:  90 percent expected State certification agencies play a great or 
very great role and 58 percent expected accrediting bodies play a great or very great role. 
26.  The Emergency Medical Treatment and Labor Act (42 U.S.C. 1395dd) prohibits hospitals 
from refusing emergency patients or women in labor medical screening and/or treatment.  If a 
hospital willfully or negligently fails to meet the requirements of the act, it can be fined or its 
participation in Medicare can be suspended or terminated. 
28 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052  APPENDIX D 
27.  Overdoses Still Weigh Heavily at Dana Farber, The Boston Globe (26 December 1995); 
Florida Doctor Sanctioned in New Amputation, The Boston Globe (19 July 1995); Two 
Surgeons Surrender Licenses After Mistakenly Removing Kidney, The Boston Globe (6 June 
1996).; How Can We Save the Next Victim? The New York Times Magazine (15 June 1997); 
Another Hospital Death Probed, The Boston Globe (26 July 1997); Patient Dies After 
Drinking Poison Left on Nightstand, San Diego Union-Tribune (6 March 1998); Man Arrested 
for Posing as Doctor for 4 years, posted at the CNN interactive webpage (16 May 1998); 
Deadly Restraint:  Patients Suffer in a System Without Oversight, The Hartford Courant (13 
October 1998); and Death in Surgery Reveals Troubled Practice and Lax Hospital, The New 
York Times (15 November 1998). 
28.  42 C.F.R., sec. 488.7. 
29.  42 C.F.R., sec. 488.7. 
30.  62 Fed. Reg.  66,729, December 19, 1997. 
31.  The HCFA refers to this data set as OASIS, which stands for Outcomes and Assessment 
Information Set (62 Fed. Reg. 11,004, March 10, 1997). 
32.  Referred to as the Quality Improvement System for Managed Care (QISMC).  Under 
QISMC, HCFA and State agencies use a uniform set of quality standards to determine that an 
organization is eligible to enter into a Medicare or Medicaid contract.  These QISMC standards, 
which were released in June 1998, are scheduled to be effective as of January 1999. 
33.  The indicators referred to are those contained in the Health Plan Employee Data and 
Information Set (HEDIS), which is the National Committee for Quality Assurances (NCQA) set 
of performance measures for the managed care.  The NCQA collects data from over 300 managed 
care plans across the country.  The HCFAs 1997 contracts with risk-based managed care 
organizations called for them to submit HEDIS 3.0 data. 
34.  The HCFA participated in the latest HEDIS development task force.  The latest version of 
HEDIS contains Medicare and Medicaid specific requirements. 
35.  62 Fed. Reg. 11,004, March 10, 1997. 
29 
Hospital Quality: The Role of Medicare Certification  OEI-01-97-00052