Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
Quality Oversight of 
Ambulatory Surgical Centers 
A System in Neglect 
JANET REHNQUIST 
Inspector General 
FEBRUARY 2002 
OEI-01-00-00450  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 and Background 
This inquiry assesses how State agencies and accreditors oversee ambulatory surgical centers 
(ASCs) and how the Centers for Medicare & Medicaid Services (CMS) holds them 
accountable. In addition to this report, this inquiry includes two supplemental reports: 
Supplemental Report 1: The Role of Certification and Accreditation and Supplemental 
Report 2: Holding the State Agencies and Accreditors Accountable. 
Medicare annually pays over $1.6 billion for procedures performed by over 3,000 ASCs. 
Quality oversight of ASCs revolves around the Conditions of Coverage, Medicares set of 
minimum health and safety requirements. ASCs must become Medicare certified by a State 
survey and certification agency or privately accredited to show that they meet the Conditions. 
The overwhelming majority of ASCs choose to become certified by State agencies. 
While ambulatory surgery has been shown to have good outcomes, routine procedures can 
result in serious complications and death. For example, a patient undergoing a routine 
Medicare-covered gynecologic procedure died in an ASC from complications; 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. 
Findings 
Oversight of ASCs is more important than ever 
Medicare ASCs are experiencing explosive growthmore than doubling in number from 1990 
to 2000.  Over the same period, the annual volume of major procedures they performed 
increased by 730 percent, from 12,000 to over 101,000 procedures. 
But Medicares system of quality oversight is not up to the task 
Nearly a third of ASCs certified by State agencies have not been recertified in 5 or more years. 
Accredited ASCs are surveyed at least every 3 years, but the survey process devotes less 
attention to verifying compliance. 
And it lacks accountability 
CMS does little to hold State certification agencies and accreditors accountable to the 
Medicare program and the public. 
1 
Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  Recommendations 
CMS should determine an appropriate minimum cycle for surveying ASCs 
certified by State agencies 
CMS should update the Medicare Conditions of Coverage for ASCs 
Add sections to address 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. 
CMS should hold State agencies and accreditors fully accountable to the 
Medicare program for their performance overseeing ASCs 
Use electronic data reporting, Federal oversight surveys, and formal, periodic evaluations to 
monitor and provide feedback to State agencies and accreditors. 
CMS should do more to hold State agencies and accreditors accountable to the 
public for their performance overseeing ASCs 
Take steps to increase public information about State agency certified and accredited ASCs 
and the accessibility of State agencies and accreditors complaint processes. Publish 
performance information about State agencies and the accreditors. 
Comments on the Draft Reports 
Within the Department, we received comments from CMS. We also solicited and received 
comments from the Accreditation Association for Ambulatory Health Care, the Joint 
Commission on Accreditation of Healthcare Organizations, and the American Association for 
Accreditation of Ambulatory Surgical Facilities. The full text is included in appendix A.  In 
response, we made several clarifying and technical changes. 
The commenters expressed much general support for our recommendations.  CMS elaborated 
on options it is considering that are in accord with many of our recommendations.  However, 
citing resource constraints and other concerns, it did not fully commit itself to a number of our 
recommendations, particularly those calling for a minimum survey cycle and a more accessible 
complaint process. We urge CMS to devote a sense of urgency to the early warning signal we 
provide and to develop an action plan detailing the specific actions it will take to improve ASC 
oversight. 
Some commenters took issue with our concerns about the depth of accreditation surveys. We 
still conclude that accreditation surveys tend to pay more attention to education and 
improvement than to verifying compliance, but in the final reports did give more prominence to 
the need for balance between compliance and improvement. 
2 
Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  T A B L E   O F   C O N T E N T S  
PAGE

EXECUTIVE SUMMARY ......................................................1

INTRODUCTION .............................................................4

FINDINGS

Oversight of ASCs is more important than ever ................................... 6

Medicares system of quality oversight is not up to the task ..........................6

Medicares system of quality oversight lacks accountability ..........................7

RECOMMENDATIONS ...................................................... 10

COMMENTS on the DRAFT REPORT  ........................................ 14

APPENDICES

A: Comments on the Draft Reports ........................................... 16

B: Endnotes ............................................................34

3 
Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  I N T R O D U C T I O N  
Purpose 
To assess how State agencies and accreditors oversee ambulatory surgical centers (ASCs) and 
how the Centers for Medicare & Medicaid Services (CMS) holds them accountable. 
Background 
ASCs in the Medicare Program 
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 only bill Medicare 
for surgical procedures that the Centers for Medicare & Medicaid Services (CMS) has 
determined can be performed safely outside of the hospital.1 Currently, over 3,000 ASCs 
participate in Medicare. 
While ambulatory surgery has been shown to have good surgical outcomes, even routine 
procedures can result in serious complications and death.2 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.3 
Quality Oversight of ASCs 
Quality oversight of ASCs revolves around the Conditions of Coverage, Medicares set of 
minimum health and safety requirements. CMS requires that ASCs become Medicare-
certified by a State survey and certification agency or privately accredited to show that they 
meet the Conditions.  While ASCs are free to choose which route they take, over 90 percent 
elect to become certified by State agencies rather than through accreditation.  Some ASCs that 
are certified by State agencies, however, are also accredited for reasons other than Medicare 
certification. 
The focus of certification by State agencies and accreditation is routine inspections of ASCs, 
called surveys.  Generally, surveys are conducted to add new ASCs to Medicare, 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, are based on accreditors own standards.  Thus, only accreditors whose 
standards meet or exceed the Conditions may survey ASCs for Medicare.4 CMS has 
approved three accreditors: the American Association for Accreditation of Ambulatory Surgical 
4 
Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  Facilities, the Accreditation Association for Ambulatory Health Care, and the Joint Commission 
on Accreditation of Healthcare Organizations.5 
Holding State Agencies and Accreditors Accountable 
CMS tools for monitoring and holding State agencies and accreditors accountable to 
Medicare include: 1) electronic data reporting that, for each survey, identifies the provider, 
survey date, standards not met by the provider, and follow-up activity; 
2) Federal oversight surveys during which CMS staff observe surveys unfold or evaluate 
recently surveyed facilities; and, 3) periodic evaluations whereby CMS conducts formal 
reviews of State agencies and accreditors performance. 
Tools for holding State agencies and accreditors accountable to the public include: 
1) public release of data on the performance of ASCs; 2) complaint processes that investigate 
complaints about poor care received in ASCs; and 3) public release of data on the 
performance of State agencies and 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.  In addition to this report, this inquiry includes two supplemental reports: 
Supplemental Report 1: The Role of Certification and Accreditation and Supplemental 
Report 2: Holding the State Agencies and Accreditors Accountable. 
We conducted this inspection in accordance with the Quality Standards for Inspections 
issued by the Presidents Council on Integrity and Efficiency. 
5 
Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  F I N D I N G S  
Oversight of ASCs is more important than ever 
Medicare ASCs are experiencing explosive growth 
From 1990 to 2000, the number of ASCs has increased by close to 200 facilities a year while 
during the same period the number of hospitals decreased slightly.  In fact, over the past 5 
years, the growth rate of ASCs 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.  From 1990 to 2000, the annual volume of procedures performed by ASCs grew by 
over 220 percent, from 1.3 to 4.3 million procedures.  This growth outpaces that of Medicares 
two other main surgical settings, hospital outpatient departments and inpatient hospitals, which 
grew by 78 percent and 38 percent respectively. 
Scope and complexity of procedures are on the rise 
From 1990 to 2000, CMS approved over 800 new procedures for ASCsbringing the total 
number of approved procedures to nearly 2,300.6 Many of these new procedures are major 
procedures that involve high levels of anesthesia and invasiveness. In fact, CMS now allows 
ASCs to conduct over 600 major procedures that together represent over a quarter of all 
approved procedures.  Recently CMS proposed expanding its list of approved procedures to 
over 2,500 procedures, 743 of which are major procedures.7 
These changes in the list of approved procedures have resulted in a dramatic increase in the 
volume of major procedures performed in ASCs. Between 1990 and 2000, the annual volume 
of major procedures taking place in ASCs increased by 730 percent, from 12,000 to over 
101,000 procedures, while those in outpatient departments and hospitals grew by 392 percent 
and 57 percent respectively. 
But Medicares system of quality oversight is not up to the task 
State agencies ability to adequately oversee ASCs is crumbling 
Nearly a third of ASCs certified by State agencies (872) have gone 5 or more years and 136 
facilities have gone 10 or more years without a recertification survey.8 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. Elapsed time between surveys grew so dramatically 
during this period because the level of State agency surveys changed little while the number of 
ASCs certified by State agencies more than doubled.9 These numbers are significant because 
the overwhelming majority of ASCsover 90 percent are certified by State agencies. 
State agencies oversight of ASCs is also weak in following through with complaints. In the 
past 5 years, State agencies responded to 141 complaints with a complaint survey. 
6 
Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  Yet, as of 2001, 47 percent of these complaints remain unresolvedin some cases for as many 
as 5 years.  In fact, nearly a fifth of these complaints are against facilities that have deficiencies 
serious enough to warrant termination from Medicare.10 
In addition, the standards that drive State agency surveys, the Medicare Conditions of 
Coverage, have not been updated since the inception of the ASC program in 1982. Thus, 
State agency certification has failed to keep pace with important advances in quality oversight. 
For example, the Conditions do not address patient rights, such as handling patient complaints 
and safeguarding patient privacy.  They also fail to address continuous quality improvement.11 
CMS has begun to address these issues in the Conditions for other provider types including 
nursing homes, home health agencies, and hospitals.12 We note that CMS attempted to update 
the Conditions in 1996, but its effort never reached conclusion. 
Finally, State agency surveys perform a focused review around the Conditions, but fail to 
encompass quality improvement. These surveys are characterized by a challenging, direct 
approach in which surveyors aim to enforce minimums, rather than educate toward quality 
improvement. This approach is reinforced by CMS survey policy, which states that surveyors 
are not to educate, advise, or consult with the facility on ways to improve its quality of care. 
Accreditors offer routine surveys based on up-to-date standards, but pay 
less attention to verifying compliance 
Unlike State agencies, accreditors survey ASCs every 3 years.  This gives them and their 
standards high visibility and allows them to keep abreast of changes in facilities. In addition, the 
accreditors update their standards far more often than CMS, in some cases annually. This 
allows them to keep pace with advances in technology and changes in the ASC industry.  For 
example, each has developed standards concerning malignant hyperthermia, a recently 
recognized complication triggered by common general anesthetics.  Finally, accreditors tailor 
their standards to reflect the varying risk and complexity of services offered by different ASCs. 
By their nature, accreditors focus on continuous quality improvement through peer-to-peer 
interaction during surveys.13 Yet, while on-site, accreditation surveyors must assess compliance 
with hundreds of standards, usually within surveys that last less than 2 days.  This packed 
agenda and the accreditors instructive approach result in less attention to verifying compliance 
with their standards.  For example, we observed surveyors asking a series of questions about 
key standards, but not verifying the existence of supporting evidence. At times this approach 
can result in superficial review. 
Medicares system of quality oversight lacks accountability 
CMS does little to hold State agencies and accreditors accountable to the 
Medicare program 
CMS does little to monitor the performance of State agencies and accreditors.  It limits its use 
of electronic survey data to reviewing quarterly summaries of deficiencies, and does 
7 
Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  not use it to monitor elapsed times between surveys, disciplinary actions, or other metrics of 
performance. It cannot obtain a unified picture of survey activity in the ASC program because 
State agency and accreditation data each contain different information and are stored in 
separate, incompatible systems.14 It rarely performs Federal oversight surveys to monitor State 
agencies and accreditors performance surveying ASCs.  While State agencies and accreditors 
conducted over 3,400 surveys of ASCs from 1995 to 2001, CMS conducted just 15 Federal 
oversight surveys11 of which were in California. Finally, CMS periodic, formal evaluations 
shed little light on performance.  Evaluations of State agencies only address their performance 
surveying nursing homes and those for accreditors are largely removed from their performance 
surveying ASCs. 
With so little monitoring of their performance, CMS is hard-pressed to provide meaningful 
feedback to State agencies and accreditors.  It provides virtually no feedback to the State 
agencies on their performance overseeing ASCs. Its feedback to the accreditors, which is 
comprised of a letter following formal evaluation, is limited since it focuses on their policies and 
procedures rather than the quality of surveys they conduct. 
Finally, CMS routine, operational feedback to State agencies and accreditors is problematic. 
Officials from State agencies and accreditors cited lingering confusion over the permissibility of 
keeping Medicare patients for overnight stays, the required frequency of Life Safety Code 
surveys, and which accreditors were approved to survey ASCs. 
CMS does little to hold State agencies and accreditors accountable to the 
public 
State agency certification provides little public information on the performance of ASCs; 
accreditation provides slightly more. While CMS uses the Medicare web site, a telephone 
hotline, and postings within facilities to disseminate State agency survey reports for other 
provider types, it does not do so for ASCs.15 The Medicare handbook, which it sends to all 
Medicare beneficiaries, makes no mention of survey reports.  Such reports are available 
through CMS offices or State agencies. However, these reports lack comparative information, 
leaving the public with no information on an ASCs performance relative to its past or its peers. 
The availability of accreditation survey reports is also limited; only the Joint Commission makes 
them available to the public. The Joint Commission makes survey results, called performance 
reports, available over the phone and on-line. These reports include accreditation decisions, 
dates of surveys, and comparative information to other ASCs. They also identify those areas 
requiring improvement and whether they were resolved. 
CMS does little to make State agencies complaint process accessible to Medicare consumers. 
For example, it does not provide prominent, clear instructions for lodging complaints on the 
Medicare web site or over the Medicare telephone hotline, nor does it require ASCs to post 
complaint instructions.16, 17 In the Medicare handbook it instructs beneficiaries to bring 
complaints to peer review organizations, but recent OIG inquiries have found that they have 
flawed complaint processes.18 The complaint processes of the accreditors are slightly more 
accessible. Though not required by CMS, they include toll-
8 
Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  free numbers on certificates of accreditation, which ASCs generally post in their lobbies, and/or 
solicit complaints or feedback through their web sites. 
Finally, CMS makes no information available on how well State agencies and accreditors carry 
out their charge to the Medicare program.  It does not publish the results of formal evaluations, 
summaries of complaint volumes against State agency certified/accredited ASCs, or other 
information that would allow comparison across State agencies and accreditors. 
9 
Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  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 
In determining a minimum survey cycle for ASCs, CMS should consider the nature and risks of 
care ASCs deliver.19 CMS should also 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 a legislative change.  Such steps might enable CMS to better manage and plan for 
growth in the number of certification surveys required to adequately oversee certified providers. 
CMS should update the Medicare Conditions of Coverage for ASCs 
At a minimum, add sections that deal with patient rights and continuous 
quality improvement 
CMS should add a section to the Conditions that addresses issues such as how ASCs will 
respect patients dignity and resolve patient complaints.  Such a step would reflect CMS 
renewed focus on beneficiaries within its strategic plan and goals aimed at strengthening 
beneficiary satisfaction and protections. 
CMS should ensure that the Conditions require ASCs to conduct continuous quality 
improvement efforts. Over the longer term, we urge CMS to explore developing a set of 
standardized performance measures for ASCs. CMS could also use such measures to monitor 
ASCs performance and adjust the frequency and focus of surveys.  CMS already has a similar 
initiative underway for 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.20 
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 surveyors to tailor them to individual 
ASCs.21 Such an approach might take into account anesthesia, invasiveness, and other factors 
that drive the risk and complexity 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 around the level of services 
offered by each ASC. 
10 
Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  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  both approaches have value, but 
not so much that one should dominate at the expense of the other.22 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. 
CMS should hold State agencies and accreditors fully accountable 
to the Medicare program for their performance overseeing ASCs 
Use electronic data reporting to monitor basic metrics of performance 
CMS should use metrics such as elapsed time between surveys, follow-through with 
deficiencies and complaints, and trends in deficiency citations to continuously monitor State 
agencies and accreditors progress overseeing ASCs.  This type of monitoring would allow 
CMS to detect problems within State agency certification and accreditation and take actions to 
correct them.  In addition, it would enable CMS and State agencies to better manage survey 
resources, thus avoiding problems we found such as unresolved complaints and letting ASCs go 
10 or more years without a survey. 
Yet, to make better use of survey data, CMS must address limitations in their structure. We 
note that CMS is in the process of designing a new system for survey data and, in fact, is 
already using it for nursing homes and home health agencies. Thus, as CMS plans to move 
ASCs onto its new system, we offer some specifics for it to consider. First, CMS should 
ensure that its approach captures both State agency and accreditation data and allows them to 
be aggregated. The data should support monitoring the performance of accreditors and State 
agencies.  Second, CMS should ensure that its system captures data on termination tracks, 
plans of correction, and reduced accreditation periods.  Third, if CMS implements standardized 
performance indicators for ASCs, its system should house such data and support their use for 
adjusting the frequency and focus of surveysas its new system does now for nursing homes 
and home health agencies.23 
Conduct periodic Federal oversight surveys to monitor the nature and 
extent of review done during State agency and accreditation surveys 
In conducting these surveys, CMS should use an approach that allows for consistency among 
Federal reviewers. CMS should also ensure that oversight surveys result in both routine and 
formal feedback to State agencies and accreditors.  Without the benefit of Federal oversight 
surveys, it is nearly impossible for CMS to judge the quality of review conducted by State 
agencies and accreditors on Medicares behalf. 
11 
Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  Conduct formal, periodic evaluations of State agencies and accreditors 
performance overseeing ASCs 
CMS newest approach to evaluation of State agencies uses national thresholds that are based 
on measurable indicators of performancebut thus far it focuses only on nursing homes.  We 
urge CMS to broaden the scope of its evaluations of State agencies to incorporate other types 
of providers, including ASCs, and to use them to examine performance specific to each type of 
provider they survey. In addition, CMS should focus its evaluations of accreditors toward 
assessing their performance overseeing ASCs, in addition to assessing their organizational 
capacity and operating policies. 
Provide feedback to State agencies and accreditors on their performance 
CMS should use electronic survey data, Federal oversight surveys, and formal evaluations to 
inform routine and formal feedback to State agencies and accreditors.  However, we note that 
for CMS to effectively monitor and provide feedback to State agencies and accreditors, it 
should first work with them to establish a common set of performance expectations for the 
oversight of ASCs. 
In addition, CMS should consider establishing a policy clearinghouse as a way of disseminating 
policy to State agencies and accreditors in a simultaneous and consistent manner. Such a 
clearinghouse would eliminate the confusion around CMS policy that we observed during our 
review. We note that CMS has already established a similar clearinghouse for nursing homes. 
CMS should hold State agencies and accreditors accountable to 
the public for their performance overseeing ASCs 
As our health care system moves toward a consumer-oriented marketplace, public 
accountability takes on increasing importance.  Public accountability leverages CMS oversight 
by focusing the attention of the public, Medicare beneficiaries, and interest groups on the 
performance of ASCs and how well State agencies and accreditors ensure that ASCs provide 
quality care. Indeed, consumer orientation and its implications on CMS programs comprise a 
major theme within CMS strategic plan.24 The CMS Administrator has recently reaffirmed 
CMS commitment to enhancing the information available to the public on the Medicare 
program.25 However, at this time, the information available to Medicare beneficiaries about the 
performance of ASCs, their ability to complain about poor quality of care, and the performance 
of the quality oversight system itself is woefully inadequate. 
Take steps to increase the availability of performance information about 
ASCs certified by State agencies, including publishing it on the Medicare 
web site 
CMS should make full use of mechanisms it has available to disseminate performance 
information about ASCs. For example, with little effort, CMS could immediately place the 
results of State agency surveys on the Medicare web site, as it has done for nursing homes and 
dialysis facilities. In addition, CMS should make them available by request over the Medicare 
telephone hotline and provide instructions for obtaining them within 
12 
Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  the Medicare Handbook. Finally, CMS should require ASCs to post survey results on-site for 
patients to seeas it now does with nursing homes. 
CMS should improve the usefulness of survey results to Medicare consumers by adding 
comparative information such as the average number and types of deficiencies outstanding at all 
ASCs. In addition, CMS should seek to supplement them with other data that it already has 
available, such as the facilitys survey and complaint history. Finally, if CMS were to implement 
performance indicators for ASCs, summaries and comparisons of these data should be made 
available to consumers as well. 
Increase the accessibility of State agencies complaint process 
CMS should make full use of tools it has available to solicit complaints from Medicare 
consumers.  Specifically, CMS should make clear, easy-to-find instructions for how to 
complain about ASCs available on the Medicare web site and over the Medicare telephone 
hotline. CMS should also require ASCs to post complaint instructions. These steps are in line 
with CMS commitment to collecting and investigating complaints that it outlines in its strategic 
plan. 
Negotiate with the accreditors to increase public information about 
accredited ASCs and the accessibility of their complaint processes 
CMS should work with the accreditors to define a minimum amount of information that they will 
make available about the Medicare ASCs they accredit. Similarly, CMS should work with the 
accreditors to ensure that their complaint mechanisms are accessible to Medicare consumers. 
In both cases, each of the accreditors already has in place a web site and telephone number 
where they could make information available. Finally, CMS should require accredited ASCs to 
post survey results and complaint instructions. 
Publish information on the performance of State agencies and accreditors 
CMS should use the Medicare web site, the Medicare telephone hotline, and other resources 
to disclose performance reviews of State agencies and accreditors.  Information it discloses 
could include comparative summaries of survey data reporting, results of Federal oversight 
surveys, and formal evaluations. Should CMS implement performance indicators for ASCs, 
information could also include comparative summaries of the performance of State agency 
certified and accredited ASCs. Such disclosure holds State agencies and accreditors 
accountable for how well they oversee ASCs and can be useful for Medicare beneficiaries who 
have a choice between State agency certified and accredited facilities. 
13 
Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  C O M M E N T S   O N   T H E  
D R A F T   R E P O R T  
We received comments from CMS, the Accreditation Association for Ambulatory Health 
Care, the Joint Commission on Accreditation of Healthcare Organizations, and the American 
Association for Accreditation of Ambulatory Surgical Facilities. Below, we summarize their 
comments and offer our response to them in italics. Appendix A contains the full text of all the 
comments. 
CMS 
CMS expressed general concurrence with many of our recommendations and cited many 
options it is considering that are in accord with them. However, noting resource constraints and 
other concerns, it did not fully commit itself to our key recommendations calling for a minimum 
survey cycle, a more accessible complaint process, and the publication of survey results. 
We understand the constraints CMS faces and the complexity of the issues associated 
with ASC oversight. Yet, we urge CMS to view our report as an early warning signal and 
to devote a sense of urgency to our recommendations.  As we note in the report, 
Medicare ASCs are experiencing explosive growth and increasingly are performing 
major procedures that involve high levels of anesthesia and invasiveness.  We urge CMS 
to develop an action plan and timetable that set forth specific actions it will take to 
improve its oversight of ASCs. 
Accreditation Association for Ambulatory Health Care 
The Accreditation Association for Ambulatory Health Care generally agreed with our findings 
and recommendations.  It asked that our reports include comparative data on safety across 
surgical settings and took issue with our concern about the depth of accreditation surveys. It 
noted that it has added a form to its website to solicit feedback, such as complaints, about its 
accredited centers.  It also supported our call for a balance between compliance and 
continuous quality improvement efforts and noted its new policy for random, unannounced 
surveys, which will be effective in 2002. 
While our reports do reference literature on the safety of ambulatory surgery, presenting 
comparative data on safety across all settings was outside the scope of our inquiry, which 
focused on the oversight of ambulatory surgery centers.  Future inquiries are planned 
that will examine the oversight of ambulatory surgery performed in hospital outpatient 
departments and physician offices. We still conclude that accreditation surveys pay more 
attention to education and improvement than to verifying compliance, and spell out the 
details for that conclusion in the supplemental report, The Role of Certification and 
Accreditation.  Furthermore, we give more prominence to the importance of balance 
14 
Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  between compliance and improvement in the final reports.  Finally, we made changes to 
the reports to clarify certain points and acknowledge the Associations feedback 
mechanism on its web site. 
Joint Commission on Accreditation of Healthcare Organizations 
The Joint Commission generally agreed with the findings in our reports.  It pointed out that 
many accredited ASCs have not elected to use their accreditation for deemed status. The Joint 
Commission took issue with our concern about the depth of accreditation reviews and the 
helpfulness of the survey information it discloses. 
In the final reports, we clarified that some ASCs surveyed by State agencies for Medicare 
certification may also, in fact, be accredited without electing to use their accreditation 
for deemed status.  We urge CMS to consider this information, along with volume of 
Medicare claims and complaints, in determining how to best use its limited resources and 
prioritize ASCs for State agency surveys. We still conclude that accreditation surveys 
pay more attention to education and improvement than to verifying compliance. We give 
more prominence to the importance of balance between compliance and improvement in 
the final reports. Finally, although we still contend that a scoring system that results in 
the great majority of ASCs falling into one broad category of accreditation 
(Accreditation with Type I Recommendations) does little to help consumers differentiate 
between an ASC with few or many recommendations for improvement, we did clarify the 
performance information available from the Joint Commission. 
American Association for Accreditation of Ambulatory Surgery Facilities 
The American Association generally agreed with our conclusions.  It noted that its certificates of 
accreditation include a toll-free number for complaints and that these certificates are generally 
displayed prominently by its accredited ASCs. 
In the final reports, we clarified that the certificates of accreditation include a toll-free 
number and address for filing complaints. 
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Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  APPENDIX  A 
Full Text of Comments on the Draft Report

CMS .................................................................17

Accreditation Association for Ambulatory Health Care ............................23

Joint Commission on Accreditation of Healthcare Organizations  ..................... 27

American Association for Accreditation of Ambulatory Surgical Facilities  .............. 31

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Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  APPENDIX B 
Endnotes

1. 42 C.F.R., sec. 416.2. 
2. 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. 
3. 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. 
4. Social Security Act, sec. 1865, 42 U.S.C. 1395bb. 
5. These are the accreditors approved as of August, 2001. 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 to 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). 
6. 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. 
7. 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. 
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Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  APPENDIX B 
8. 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. 
9. 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. 
10. 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. 
11. CMS does speak to the importance of continuous quality improvement in its interpretive guidelines 
to ASC surveyors.  However, because the Conditions themselves make no demand for ASCs to 
conduct continuous quality improvement, CMS cannot hold ASCs responsible for not engaging in such 
activities. 
12. 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. 
13. 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). 
14. CMS stores State agency data in its Online Survey Certification and Reporting System (OSCAR), 
which resides on its mainframe computer. It stores accreditation data on a personal computer 
spreadsheet. 
15. For example, CMS provides nursing home surveys and comparative data on nursing homes on a 
special section of its web site called Medicare Compare.  CMS also requires nursing homes to post 
recent surveys for consumers to see.  In addition, CMS requires State agencies maintain a hotline for 
beneficiaries to obtain the results of home health surveys. 
16. As of July, 2001, the Medicare web site (www.medicare.gov) listed points of contact for quality of 
care and complaints together in a section called Helpful Contacts, placed two levels beneath the front 
(home) page . The list contained points of contact for a dozen entities including those for complaints 
about nursing homes and end stage renal disease dialysis facilities. Peer Review Organizations appeared 
at the end of the list as a point of contact for complaints about quality of care.  There were no 
instructions about how the complaint process works, its time lines, or beneficiaries rights within the 
complaint process. 
17. We called the Medicare telephone hotline (1-800-MEDICARE) twice in February, 2001 to find 
instructions for complaining about poor care.  One time the operator referred us to the Peer Review 
Organization and the other to the State agency. 
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Quality Oversight of ASCs: A System in Neglect  OEI-01-00-00450  APPENDIX B 
18. See Office of Inspector General, The Beneficiary Complaint Process of the Medicare Peer 
Review Organization, OEI-01-93-00250, November 1995 and Office of Inspector General, The 
Medicare Beneficiary Complaint Process - A Rusty Safety Valve, OEI-01-00-00060, August 
2001. 
19. CMS could also consider whether particular ASCs are, in fact, treating Medicare beneficiaries. 
Our analysis revealed 515 certified ASCs that made no Medicare claims in 2000. Further analysis 
would be needed to determine whether these 515 are newly certified and therefore unlikely to have 
claims for the year 2000. 
20. 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. 
21. Such a change may require legislation. 
22. 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. 
23. CMS new system, called the Quality Improvement and Evaluation System (QIES), uses the 
Minimum Data Set merged with OSCAR data to allow State agencies to monitor the performance of 
nursing homes.  CMS also uses these data to monitor the performance of State agencies.  CMS is now 
integrating the Home Health Care Outcome and Assessment Information Set into QIES to allow for 
similar capability for overseeing home health agencies. 
24. CMS Strategic Plan, Publication HCFA-02135, September, 1998. 
25. Using Technology to Improve Medicare Before the Subcomm. on Science, Technology, and 
Space of the Senate Comm. on Commerce, Science, and Transportation, 107th Cong., 1st Sess. 78 
(2001). 
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