Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JANET REHNQUIST 

Inspector General 

FEBRUARY 2002 

OEI-01-00-00450 

Quality Oversight of 

Ambulatory Surgical Centers 

A System in Neglect 
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 
EXECUTIVE SUMMARY 

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, Medicare’s 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 growth—more 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 Medicare’s 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. 

Quality Oversight of ASCs: A System in Neglect 1 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. 

Quality Oversight of ASCs: A System in Neglect 2 OEI-01-00-00450 
TABLE OF CONTENTS 

PAGE

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

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

FINDINGS

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

Medicare’s system of quality oversight is not up to the task .......................... 6

Medicare’s 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

Quality Oversight of ASCs: A System in Neglect 3 OEI-01-00-00450 
INTRODUCTION 

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, Medicare’s set of 

minimum health and safety requirements. CMS requires that ASCs become Medicarecertified 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 

Quality Oversight of ASCs: A System in Neglect 4 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 President’s Council on Integrity and Efficiency. 

Quality Oversight of ASCs: A System in Neglect 5 OEI-01-00-00450 
FINDINGS 

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 Medicare’s 

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 ASCs—bringing 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 Medicare’s 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 ASCs—over 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. 

Quality Oversight of ASCs: A System in Neglect 6 OEI-01-00-00450 
Yet, as of 2001, 47 percent of these complaints remain unresolved—in 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 accreditor’s 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. 

Medicare’s 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 

Quality Oversight of ASCs: A System in Neglect 7 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 surveys—11 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 ASC’s 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 tollQuality Oversight of ASCs: A System in Neglect 8 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. 

Quality Oversight of ASCs: A System in Neglect 9 OEI-01-00-00450 
RECOMMENDATIONS 

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. 

Quality Oversight of ASCs: A System in Neglect 10 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 surveys—as 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 Medicare’s behalf. 

Quality Oversight of ASCs: A System in Neglect 11 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 performance—but 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 

Quality Oversight of ASCs: A System in Neglect 12 OEI-01-00-00450 
the Medicare Handbook. Finally, CMS should require ASCs to post survey results on-site for 

patients to see—as 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 facility’s 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. 

Quality Oversight of ASCs: A System in Neglect 13 OEI-01-00-00450 
COMMENTS 

DRAFT 

ON THE 

REPORT 

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 

Quality Oversight of ASCs: A System in Neglect 14 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 Association’s 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. 

Quality Oversight of ASCs: A System in Neglect 15 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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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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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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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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