Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JANET REHNQUIST 

Inspector General 

FEBRUARY 2002 

OEI-01-00-00451 

Quality Oversight of 

Ambulatory Surgical Centers 

The Role of Certification and Accreditation 

Supplemental Report 1 
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 

To assess the role of State agency certification and accreditation in the quality oversight of 

ambulatory surgical centers in the Medicare program. 

BACKGROUND 

In 2000, Medicare paid $1.6 billion for 4.3 million procedures performed in ambulatory 

surgical centers (ASCs). ASCs are generally free-standing facilities and may bill Medicare only 

for surgical procedures that the Centers for Medicare & Medicaid Services (CMS) has 

determined can be performed safely outside of the hospital. While ambulatory surgery has 

been shown to have good surgical outcomes, routine procedures can result in serious 

complications and death. Over 3,000 ASCs participate in the Medicare program. 

Quality oversight of ASCs revolves around Medicare’s minimum health and safety standards, 

called the Conditions of Coverage. CMS requires ASCs to become Medicare-certified or 

privately accredited to show that they meet the Conditions. Certification is carried out by State 

agencies and accreditation by CMS-approved accreditors. The focus of both certification by 

State agencies and accreditation is routine inspections, called surveys. While ASCs are free to 

choose which route they take, the overwhelming majority elect State agency certification. 

This report is the first of two that supplement the main report of this inquiry, A System in 

Neglect. Our companion report, Supplemental Report 2: Holding State Agencies and 

Accreditors Accountable, assesses how State agencies and accreditors are held accountable 

for their performance overseeing ASCs. Our inquiry relies on claims and survey data, survey 

observations, and reviews of relevant laws and documents. 

IMPORTANCE OF QUALITY OVERSIGHT 

Medicare ASCs are experiencing explosive growth 

From 1990 to 2000, the number of ASCs doubled and the annual volume of procedures they 

perform tripled—making ASCs one of the fastest growing providers in Medicare. 

Scope and complexity of procedures are on the rise 

From 1990 to 2000, CMS approved over 800 new procedures for ASCs. Major procedures 

now comprise over a quarter of approved procedures. In this time, the annual volume of major 

procedures performed by ASCs jumped from 12,000 to over 101,000. 

Quality Oversight of ASCs: Certification and Accreditation 1 OEI-01-00-00451 
FINDINGS ON STATE AGENCY CERTIFICATION 

State agency certification allows many ASCs to fall through the cracks 

Nearly a third of ASCs certified by State agencies have gone 5 or more years without a survey; 

over 130 have gone 10 years. From 1990 to 2000, elapsed time between recertification 

surveys grew from 1.8 to 4.4 years. Nearly half of complaints against ASCs certified by State 

agencies remain unresolved—some for as long as 5 years. ASCs consistently rank near the 

bottom of CMS’ survey budget priorities. 

The Conditions of Coverage fall short 

The Conditions have not been updated since 1982. They are one-size-fits-all and fail to 

distinguish among ASCs performing surgery of varying risks and complexities. 

State agency surveys focus entirely on compliance and fail to include continuous 

quality improvement 

Surveys focus on gathering evidence to verify compliance with the Conditions. They do little 

toward improving the quality of ASCs beyond enforcing minimum requirements. 

FINDINGS ON ACCREDITATION 

Accreditation provides regular presence in ASCs 

Each of the accreditors has policies to survey ASCs every 3 years. ASCs expect on-site 

presence at regular intervals. 

Accreditors update their standards regularly and adjust them to match the levels 

of surgery performed by individual ASCs 

Each accreditor has a process in place to regularly update its standards and adjusts them to 

match the risk and complexity of surgery performed by individual ASCs. 

Accreditation surveys focus on helping ASCs continuously improve but pay less 

attention to verifying compliance 

Surveyors spend considerable effort on helping ASCs continuously improve their performance. 

However, the educational nature of surveys, large number of standards, and limited time on-site 

result in less attention to compliance. 

RECOMMENDATIONS 

CMS should determine a minimum cycle for surveying ASCs certified by State 

agencies 

Take into consideration the nature and risks of care ASCs deliver. Consider a strategic 

approach that addresses survey cycles for all types of providers certified by State agencies. 

Consider using analysis of claims data, complaint history, and accreditation status to help 

identify survey priorities. 

Quality Oversight of ASCs: Certification and Accreditation 2 OEI-01-00-00451 
CMS should update the Conditions of Coverage for ASCs 

Add sections that deal with patient rights and continuous quality improvement. Make the 

Conditions adjustable to match the levels of surgery performed by different ASCs. 

CMS should ensure that State agency certification and accreditation strike an 

appropriate balance between compliance and continuous quality improvement 

Monitor State agencies and accreditors to ensure that they protect the public from poor 

performing ASCs while encouraging the rest to go beyond minimal health and safety standards. 

Our companion report, Supplemental Report 2: Holding State Agencies and Accreditors 

Accountable, has recommendations for improving CMS’ oversight of State agencies and 

accreditors. 

Quality Oversight of ASCs: Certification and Accreditation 3 OEI-01-00-00451 
TABLE OF CONTENTS 

PAGE 

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

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

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

IMPORTANCE OF QUALITY OVERSIGHT

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

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

STATE AGENCY CERTIFICATION 

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

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

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

ACCREDITATION 

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

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

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

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

APPENDICES

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

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

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

Quality Oversight of ASCs: Certification and Accreditation 4 OEI-01-00-00451 
INTRODUCTION 

PURPOSE 

To assess the role of State agency certification and accreditation in the quality oversight of 

ambulatory surgical centers in the Medicare program. 

BACKGROUND 

Ambulatory Surgical Centers in the Medicare Program 

Medicare began covering services provided by ambulatory surgical centers (ASCs) in 1982. 

In 2000, Medicare paid $1.6 billion for 4.3 million procedures performed in ASCs. Currently, 

over 3,000 ASCs participate in the Medicare program.1 

Although ASCs have operating rooms and recovery rooms, they are not hospitals. However, 

medical advances enable many of the same procedures that hospitals perform to be performed 

on an ambulatory basis in an ASC. In addition to ASCs, ambulatory surgery is also performed 

in physician offices and hospital outpatient departments. However, unlike hospital outpatient 

departments, ASCs are generally free-standing facilities that provide surgical services to 

patients not requiring hospitalization.2 An ASC may only bill Medicare for surgical procedures 

that the Centers for Medicare & Medicaid Services (CMS) has determined can be performed 

safely outside of the hospital. 

While ambulatory surgery has been shown to have good surgical outcomes, even routine 

procedures can result in serious complications and death.3 For example, a patient undergoing a 

routine Medicare-covered gynecologic procedure died in an ASC from complications during 

surgery; a patient whose bladder was perforated during surgery in an ASC was transported 

while bleeding to the nearest emergency room; a patient undergoing one of the most common 

procedures in Medicare, cataract extraction, went into cardiac arrest and died on the operating 

table in an ASC. While these adverse events could happen in any setting, the risk of such 

complications and the fact that more elderly patients with poorer health conditions are 

becoming candidates for ambulatory surgery illustrate the necessity for strong quality oversight 

of ASCs.4 Yet, since the inception of the ASC program in 1982, CMS’ approach to oversight 

remains unchanged. Despite the rapid evolution of ambulatory surgery and the growth in 

ASCs, there has been little assessment of the adequacy of its quality oversight. 

Quality Oversight of Ambulatory Surgical Centers 

Quality oversight of ASCs in the Medicare program revolves around Medicare’s 

Quality Oversight of ASCs: Certification and Accreditation 5 OEI-01-00-00451 
Conditions of Coverage.5 The Conditions are minimum health and safety requirements that 

ASCs must meet in order to be eligible for Medicare reimbursement. They cover topics 

ranging from the credentialing and privileging of physicians to the governing body and 

management of a facility. The Conditions are established in the regulations by CMS. 

CMS relies on State agency certification and private accreditation to ensure that ASCs meet 

the Conditions. Facilities must be certified by State survey and certification agencies or 

accredited to participate in Medicare. They are free to choose which route they take. State 

agency certification is available to ASCs free of charge, while they must pay a fee to become 

accredited. Over 90 percent of ASCs choose to be certified by State agencies. Yet the 

number of facilities choosing accreditation is growing.6 Some ASCs that are certified by State 

agencies are also accredited for reasons other than Medicare certification. 

The emphasis of both State agency certification and accreditation is routine inspections of 

ASCs, called surveys. Generally, surveys are conducted to add new ASCs to the Medicare 

program, reevaluate those already in the program, and respond to complaints or adverse 

events. State agency surveys follow CMS’ survey protocol, which is based on the Conditions. 

Accreditation surveys, however, follow accreditors’ own survey protocols and standards. 

Thus, only accreditors whose standards meet or exceed the Conditions have authority to 

approve ASCs for participation in the Medicare program.7 

Medicare certification is carried out by State survey and certification agencies under agreement 

with CMS. CMS has approved three accreditors to survey ASCs for the Medicare program: 

the American Association for Accreditation of Ambulatory Surgical Facilities, the Accreditation 

Association for Ambulatory Health Care, and the Joint Commission on Accreditation of 

Healthcare Organizations.8 (See the Profile of State Agency Certification and Accreditation on 

page 8 for more information on State agency certification and the three approved accreditors.) 

This Inquiry and This Report 

This inquiry focuses on the oversight of ASCs and is part of a larger plan to assess the quality 

oversight of ambulatory surgery in the Medicare program. We chose to evaluate the oversight 

of ASCs first because they are one of the fastest growing settings for ambulatory surgery in 

Medicare. 

This report is the first of two that supplement the main report of this inquiry, A System in 

Neglect, which also includes the full text of the comments we received on the draft reports. 

Supplemental Report 2: Holding State Agencies and Accreditors Accountable, assesses how 

State agencies and accreditors are held accountable for their performance overseeing ASCs. 

Our inquiry draws on a variety of sources. We analyzed data from CMS’ Online Survey 

Certification and Reporting System and the Medicare Part B file, as well as survey data 

Quality Oversight of ASCs: Certification and Accreditation 6 OEI-01-00-00451 
from the three accreditors. We observed surveys of ASCs conducted by the accreditors and 

State agencies. We reviewed policy manuals from the accreditors, CMS’ State Operations 

and Regional Operations manuals, laws, regulations, and articles from newspapers, journals, 

newsletters, and magazines. In addition, through interviews both in-person and over the phone, 

we gathered information from representatives of CMS central and regional offices, State 

agencies, professional associations, and the American Association for Accreditation of 

Ambulatory Surgical Facilities, the Accreditation Association for Ambulatory Health Care, and 

the Joint Commission on Accreditation of Healthcare Organizations. For a more detailed 

description of the data sources we used for this inquiry, please see Appendix A. 

We conducted this inspection in accordance with the Quality Standards for Inspections 

issued by the President’s Council on Integrity and Efficiency. 

Quality Oversight of ASCs: Certification and Accreditation 7 OEI-01-00-00451 
PROFILE OF STATE AGENCY 

CERTIFICATION AND 

ACCREDITATION 

The table below profiles some key characteristics of Medicare certification by State survey and 

certification agencies and the three accreditors: Accreditation Association for Ambulatory Health Care 

(AAAHC), the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), and the 

American Association for Accreditation of Ambulatory Surgery Facilities (AAAASF). 

Characteristics 

Oversight Mechanism 

State Agencies AAAHC JCAHO AAAASF 

Number of Medicare 

ASCs as of Spring 

2001 

2,980 249 55 2 

Cost to ASC None. Ranges from $1,500 

plus per year. 

Ranges from $1,500 

plus per year. 

Ranges from $1,500 

plus per year. 

Standards One size fits all, last 

revised in 1982. 

Adjustable to match 

type of surgery 

performed; ongoing 

revision. 

Adjustable to match 

type of surgery 

performed; ongoing 

revision. 

Adjustable to match 

type of surgery 

performed; ongoing 

revision. 

Survey Unannounced. No 

minimum survey cycle. 

Many ASCs go 5 years 

without a survey. 

Unannounced.* 

Every 3 years; 6 

months or 1 year for 

certain ASCs. 

Unannounced.* 

Every 3 years. Moving 

toward every 18 

months. 

Unannounced.* 

Every 3 years plus selfevaluation every year. 

Type of Surveyors Team rarely includes a 

physician. 

Team always includes a 

physician. 

Team always includes a 

physician. 

Team always includes a 

physician. 

Surveyor Training Offered ad hoc; 2 day 

training in 1999; 

previous training in 

1987. 

Attend 2 1⁄2 day training 

every 2 years. 

Initial 2 week training 

and preceptorship, 

annual training, distance 

learning. 

Attend 1 day training 

every 3 years. 

Public Information Survey results available 

only through State 

agencies or CMS 

regional office. 

Information limited to a 

list of accredited ASCs 

by phone and on 

website. 

Accreditation history 

and most recent survey 

report available by 

phone and on website. 

Information limited to a 

list of accredited ASCs 

by phone and on 

website. 

Standardized 

Performance Data 

None. 

Performance data not 

linked to certification. 

None. 

Performance data not 

linked to accreditation. 

None.** 

Performance data not 

linked to accreditation. 

None. 

Performance data not 

linked to accreditation. 

* The accreditors do request a surgical/business schedule for several months surrounding a survey date to ensure that the ASC 

will be open and caring for patients at time of survey. 

** JCAHO is moving towards the use of outcome/performance data to assess compliance with specific standards. 

Quality Oversight of ASCs: Certification and Accreditation 8 OEI-01-00-00451 
IMPORTANCE OF QUALITY 

OVERSIGHT 

Medicare ASCs are experiencing explosive growth 

The growth of ASCs outpaces almost all other settings in Medicare. Currently 3,266 ASCs 

take part in the Medicare program (with about 30 percent located in California, Florida, and 

Texas). From 1990 to 2000, the number of ASCs increased by close to 200 facilities a year 

while the number of hospitals decreased slightly. In fact, over the past 5 years, the ASC 

growth rate outpaces all other settings in Medicare except for comprehensive rehabilitation 

facilities and rural health clinics. 

As the number of ASCs has increased, so too has the number of surgical procedures that they 

perform. In 1990, 1.3 million procedures took place within Medicare ASCs. By 2000, the 

number of procedures increased over 220 percent to 4.3 million, accounting for over $1.6 

billion in reimbursement. This growth far outpaces that of Medicare’s two other main surgical 

settings, hospital outpatient departments, which increased by 78 percent, and inpatient 

hospitals, which increased by 38 percent. Experts project that procedures performed in ASCs 

will continue to grow steadily between 2000 and 2006.9 

Scope and complexity of procedures are on the rise 

The procedures taking place in ASCs have not only increased in volume, but have also 

increased in scope. In 1990, CMS’ list of procedures approved for ASCs included 1,500 

procedures. The current list, last approved in 1995, includes nearly 2,300 procedures.10 While 

it has always included many minor procedures such as draining of a major joint, biopsy of the 

prostate, and determining urinary bladder pressure, the number of major procedures on the list 

has grown substantially. CMS defines major procedures as those involving high levels of 

anesthesia and invasiveness. In fact, 632 major procedures are now approved for ASCs, 

representing over a quarter of the list. A proposed update to the list, introduced in 1998 but 

not yet implemented, includes over 2,500 procedures, and will increase the number of major 

procedures to 743.11 See Appendix B for descriptions of a major, minor, and an eye 

procedure commonly performed in Medicare ASCs. 

These changes in the list of approved procedures resulted in a dramatic increase in the volume 

of major procedures performed in ASCs. From 1990 to 2000, the annual volume of major 

procedures taking place in ASCs grew by 730 percent, from 12,000 to over 101,000 

procedures, while those in outpatient departments and hospitals grew by 392 and 57 percent 

respectively. Thus, Medicare beneficiaries are increasingly going to ASCs for complex 

procedures involving higher levels of invasiveness and anesthesia. Procedures such as 

laparascopic repair of inguinal hernia, shoulder arthroscopy, and arthroscopic 

Quality Oversight of ASCs: Certification and Accreditation 9 OEI-01-00-00451 
repair of the Anterior Cruciate Ligament, all of which require general anesthesia and were once 

performed only in inpatient hospitals, are now commonly performed in ASCs. 

Quality Oversight of ASCs: Certification and Accreditation 10 OEI-01-00-00451 
STATE AGENCY CERTIFICATION 

State agency certification allows many ASCs to fall through 

the cracks 

Over 90 percent of ASCs choose state agency certification as their route to participate in the 

Medicare program, making it Medicare’s primary tool of oversight for ASCs. Yet, despite 

significant growth in ASCs, the level of state agency surveys has changed little. 

Recertification surveys are not keeping 

up 

Nearly a third of ASCs certified by State

agencies (872) have gone 5 or more years

and over 130 have gone 10 or more years

without a recertification survey (see figure

1).12 From 1990 to 2000, the elapsed

time between recertification surveys of

ASCs already in the program more than

doubled, from 1.8 years to 4.4 years. 

Periodic surveys are important for ensuring

that ASCs continue to meet minimum

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

concept is reinforced by the Joint

Commission, where a movement is

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

every 1.5 years.13 

ASCs certified by State agencies are going 

so long between surveys because the level 

of recertification surveys has failed to match 

ASC growth. Between 1990 and 2000, the 

number of ASCs certified by State agencies 

more than doubled from 1,197 to 2,966, but 

the level of State agency surveys has 

changed little—6hovering at an average of 

610 surveys per year.14 Of these, an 

increasing portion has been used to survey 

new ASCs entering the Medicare program 

rather than to recertify existing ASCs. For 

Source: OIG analysis of OSCAR data. example, in 1990, State 

Quality Oversight of ASCs: Certification and Accreditation 11 OEI-01-00-00451 
agencies conducted 30 surveys to add new ASCs to the program and 483 surveys to recertify 

the 1,197 ASCs that were already in the program.15 Yet, in 2000, State agencies performed 

287 surveys to add new ASCs and 310 surveys to recertify the 2,966 ASCs already in the 

program (see Figure 2 for the overall trend). 

Complaint surveys lack follow through 

Complaints serve as possible warning signs of deficiencies in patient care and safety. CMS 

considers surveys in response to complaints and serious incidents as priorities in its budget and 

instructions to State agencies. 

In the past 5 years, State 

agencies conducted 141 

surveys in response to 

complaints. However, the 

follow-through on 

deficiencies (resurveys and 

plans of correction) 

identified during these 

surveys was limited.16 For 

example, as of 2001, 47 

percent of complaints in 

CMS’ data system are 

unresolved.17 In some 

cases, complaints remain 

unresolved for as many as 5 

years. In fact, 17 percent 

One ASC That Slipped Through The Cracks 

A State agency received a complaint against an ASC in 1999 from 

a woman whose mother, a Medicare beneficiary, underwent a 

routine cataract extraction there. The beneficiary died during 

surgery. In response to the complaint, the State agency surveyed 

the ASC and found it to be out of compliance with 5 of the 10 

Medicare Conditions, including missing emergency equipment, 

uncredentialed staff participating in surgery, and falsified medical 

records. The surveyors suspected that the ASC’s lack of emergency 

equipment was related to the death of the beneficiary. Although 

the ASC submitted a plan of correction, CMS rejected it and 

instead, in October of 1999, gave the facility 23 days to resolve 

deficiencies or be terminated from the Medicare program. Yet 

neither the facility nor CMS has taken any action toward resolving 

these deficiencies. Despite its unresolved deficiencies related to 

patient safety, the facility continues to perform surgeries and treat 

Medicare patients. 

of unresolved complaint surveys uncovered deficiencies serious enough to warrant terminating 

the ASC from Medicare.18 The large number of unresolved cases shows that after a complaint 

survey, facilities are frequently left unmonitored without a resurvey or without a requirement for 

them to resolve their deficiencies (see box above). 

Finally, we acknowledge that poor follow-through indicated by CMS’ data system could be the 

result of lags in data entry of updates to complaint cases. However, we reviewed the paper 

records for 18 cases and found that they agreed with the data system records. 

ASCs are a low priority in CMS’ survey and certification budget 

Over the last 5 years, ASCs have consistently ranked near the bottom of CMS’ survey 

priorities.19 ASCs compete for survey funding with over 25,000 other facilities in the Medicare 

program.20 In their last place priority category, called “other,” ASCs still compete with over 

10,000 facilities in the Medicare program, including hospices, rural health clinics, and 

psychiatric hospitals.21 By statute, CMS must survey nursing homes and home health agencies 

at regular intervals. Home health agencies must be surveyed every 3 years while nursing homes 

must be surveyed every 12-15 months.22 ASCs, 

Quality Oversight of ASCs: Certification and Accreditation 12 OEI-01-00-00451 
however, lack such a mandated survey cycle. Thus, they drop even lower in survey priority. 

The Medicare Conditions of Coverage fall short 

The Conditions set the overall tone and approach of CMS’ oversight model for any given 

provider type in the Medicare program. They drive the structure and content of State agency 

surveys and set a baseline that the standards of CMS-approved accreditors must meet or 

exceed. Indeed, the effectiveness of Medicare’s entire system of quality oversight depends 

upon having Conditions that are adequate in light of the nature and risks of care delivered by a 

given provider type. CMS is in the process of updating the Conditions for several provider 

types, including hospitals. 

They are outdated 

CMS has not updated the Conditions for ASCs since the inception of the ASC program in 

1982.23 Thus Medicare’s approach to overseeing ASCs has failed to keep pace with 

important advances in quality oversight. We note that CMS did attempt to update the 

Conditions in 1996, but the effort never reached conclusion. Below we highlight two key areas 

where the Conditions have fallen behind. 

The Conditions do not address patient rights. The Conditions fail to address 

important patient protections such as complaint processes, safeguarding patient privacy, 

and making available information on treatment options. Yet, in its Strategic Plan CMS 

cites a renewed commitment ‘to beneficiaries as the ultimate focus of all CMS activities, 

expenditures, and policies.’24 Indeed, CMS has added patient rights to the Conditions 

for several other provider types, including hospitals and nursing homes, but it has not 

yet done so for ASCs.25 

The Conditions do not address continuous quality improvement. The Conditions 

offer little commitment to continuous quality improvement. While CMS speaks to the 

importance of continuous quality improvement in its interpretive guidelines to ASC 

surveyors, the Conditions themselves do not require ASCs to conduct continuous 

quality improvement efforts. Nor do they require the use of standardized performance 

measures for assessing performance and directing quality improvement efforts. 

However, CMS has begun to require nursing homes, home health agencies, and 

hospitals to report standardized performance measures which can be used to direct 

continuous improvement.26 

They cannot adjust to match the levels of surgery that different ASCs offer 

Nearly half of ASCs are single-specialty facilities, performing only one type of procedure, such 

as pain management injections, eye surgery, endoscopy, or orthopedic surgery.27 Yet, the 

Conditions fail to distinguish among ASCs performing surgery of varying risk and complexity. 

Instead, they take a one-size-fits-all approach that appears geared toward 

Quality Oversight of ASCs: Certification and Accreditation 13 OEI-01-00-00451 
large, multi-specialty ASCs that use general anesthesia. They cannot adjust to reflect the 

degree of invasiveness or type of anesthesia, among other factors, that vary among ASCs. This 

could overburden some ASCs while leaving others with a set of standards that may not 

effectively address key aspects of their operations. 

State agency surveys focus entirely on compliance and fail to 

include continuous quality improvement 

State agency surveys revolve 

around ensuring compliance with 

the 10 requirements that comprise 

the Conditions of Coverage. 

Surveyors use a standard protocol 

called the Interpretive Guidelines 

that CMS derives directly from the 

Conditions. These guidelines serve 

as a road map to focus the survey, 

suggesting probes for ascertaining 

compliance with each requirement. 

In our observations, surveyors did 

not veer from these guidelines. 

Further focusing their review, they 

often collapsed the guidelines into 

1 - 3 page checklists of evidence 

necessary to complete the survey. 

To verify that they had an accurate 

picture of compliance, surveyors 

would cross-reference evidence 

from different sources. For 

example, they often crossreferenced evidence through the 

surgical log to verify that surgeons 

practiced within their privileges, 

A State Agency Survey We Observed 

The ASC was a large multi-specialty facility with 5 

operating rooms and over 25 staff. On the day of the 

survey, two nurses from the State agency arrived at the 

facility unannounced. The survey began at 9AM with a 15 

minute conference with the surveyors and the facility 

administrator. At this time the lead surveyor provided the 

facility administrator with a list of documents she would 

need to review: bylaws, surgical log, and personnel lists. 

She used these documents to develop a list of medical 

record and personnel files for review. The second surveyor 

went on a 1.5 hour tour of the facility, and then a 1.5 hour 

tour of the operating rooms. At this time, a representative 

of the State Insurance and Fire Safety Commission arrived 

to do a 2-hour life safety inspection of the facility, 

measuring doorways and checking smoke barriers. 

Meanwhile, the second surveyor reviewed medical records 

and other documents. Next, the surveyors reconvened and 

together completed a review of medical records, 

credentialing, and the facility’s quality assurance 

program, consistently probing in areas where they found 

problems by requiring additional documents and asking 

additional questions. Surveyors frequently asked ASC staff 

to explain how hypothetical situations would unfold at the 

facility--such as emergency situations and 

application/reapplications for privileges for a doctor 

joining the staff. The next morning, surveyors held an exit 

conference to describe the deficiencies they found. 

that peer review dealt with problem cases, and that the ASC followed its bylaws. 

The State agency survey is characterized by a challenging, direct approach in which surveyors 

aim to enforce minimums, rather than educate toward continuous quality improvement.28 This 

approach is ingrained in State agency surveys. It is delineated in CMS’ policy, which states that 

the role of the surveyor is, “to assess the quality of care and services and relate those findings to 

statutory and regulatory requirements.”29 The policy goes on to explain that the surveyor’s role 

is not to educate, advise, or consult with the facility on ways to improve the quality of care. 

This is reinforced by the Conditions in their failure to require ASCs to address continuous 

quality improvement. Thus State 

Quality Oversight of ASCs: Certification and Accreditation 14 OEI-01-00-00451 
agency surveys focus on assessing compliance with the Conditions and do little toward 

improving the quality of ASCs beyond Medicare’s minimum requirements. For example, at exit 

conferences of State agency surveys, surveyors run down a list of what is out of compliance 

and refuse to discuss strategies a facility could use to improve its level of care. As one surveyor 

told us, “CMS specifically tells its surveyors not to act as educators or give advice. My role is 

to simply make sure everyone is safe.” 

Quality Oversight of ASCs: Certification and Accreditation 15 OEI-01-00-00451 
ACCREDITATION 

Accreditation provides regular presence in ASCs, but covers 

a small proportion of facilities 

Each of the accreditors has policies to survey ASCs every 3 years. In fact, data from the two 

accreditors with more than 3 years of experience accrediting Medicare ASCs show that both 

survey facilities every 3 years.30 Routine on-site presence at ASCs provides oversight that is 

important to ensuring patient safety and reducing risk. Even though the surveys are 

unannounced, ASCs who voluntarily chose to be accredited expect such an on-site presence at 

regular intervals. This usually means that at a minimum, the facility must update policy manuals, 

recheck credentials and privileges, and perform staff training to retain accreditation. 

For some facilities, the survey cycle is shorter than every 3 years. For example, the 

Accreditation Association for Ambulatory Health Care accredits facilities where it finds patient 

safety concerns for shorter periods (6 and 12 months).31 This means these ASCs will be 

resurveyed sooner, so it can follow up on problem areas. Currently, the Joint Commission has 

a program in place to survey 5 percent of their facilities within a year of the ASCs’ 

accreditation. In addition, to increase its on-site presence, the Joint Commission is moving 

toward surveying ASCs every 18 months.32 Finally, the American Association for 

Accreditation of Ambulatory Surgical Facilities requires its facilities to complete a selfevaluation in the years between the on-site surveys. On this form, facilities must evaluate their 

compliance with its standards.33 

Finally, while each of the accreditors reserves the right to survey ASCs in response to 

complaints, these surveys do not play a prominent role in their approach to oversight. As of 

February 2001, the accreditors have received a total of 10 complaints against ASCs and 

conducted surveys in response to 2 of them.34 

Accreditors update their standards regularly and adjust them 

to match the levels of surgery performed by individual ASCs 

Each accreditor has a process in place to regularly update its standards. For example, in 

consultation with the ASC industry, the Accreditation Association for Ambulatory Health Care 

updates its standards on a yearly basis. Similarly, the Joint Commission revises its standards at 

a minimum of one year and the American Association for Accreditation of Ambulatory Surgical 

Facilities last revised its standards 2 years ago. 

This approach enables the accreditors to keep up with advances in ambulatory surgery and 

with important developments in quality oversight. For example, each of the 

Quality Oversight of ASCs: Certification and Accreditation 16 OEI-01-00-00451 
accreditors developed standards concerning malignant hyperthermia, a recently recognized 

complication triggered by commonly used general anesthetics. Furthermore, each of the 

accreditors also developed standards for several focal areas within health care, such as patient 

rights and quality improvement, while the Joint Commission also added a test standard for pain 

management. 

Furthermore, each of the accreditors builds adjustability into its standards to reflect the diverse 

surgical procedures offered within ASCs. The accreditors are able to scale these standards on 

the basis of the types of procedures performed in the ASCs, the complexity of services offered, 

and the levels of anesthesia used. For example, the American Association for Accreditation of 

Ambulatory Surgical Facility’s standards accommodate three levels of surgery based on the 

types of anesthesia used. Similarly, the Accreditation Association for Ambulatory Health Care 

applies a modular approach, using eight sets of core standards that apply to all facilities and 

several sets of adjunct standards that are used only for specific services offered by each facility, 

such as anesthesia services and surgical services. The Joint Commission also applies its 

standards so that their surveys are individualized according to the services provided at each 

ASC. 

Accreditation surveys focus on helping ASCs continuously 

improve but pay less attention to verifying compliance 

By its nature, accreditation 

focuses on continuous quality 

improvement through peer-topeer interaction around the 

standards of the accreditors.35 

Each of the accreditors describes 

its process as a consultative one, 

sending at least one physician as 

part of every survey team. These 

survey teams spend considerable 

effort educating physicians and 

staff on ways to continuously 

improve their facility’s 

performance. Indeed, a trusting 

and instructional manner 

characterized the interaction 

within each of the accreditation 

surveys we observed. As one 

surveyor said, “I'm not here to 

find you doing things wrong. 

We're here to find things you can 

do 

An Accreditation Survey We Observed 

The ASC was a two-operating room facility that specialized 

in ophthalmology and pain management, but had recently 

added podiatry and orthopedics to its services. The survey 

team of two, one of whom was a physician, arrived 

unannounced at 8:30 am and began with a tour of the 

facility. During the tour, the surveyors asked the Head Nurse 

a series of questions about the ASC’s operating policies and 

took notice of the layout and equipment within the facility. 

After the tour, they reviewed the bylaws, staff and quality 

assurance minutes, the surgical log, and other documents. 

They also reviewed a sample of 25 medical records chosen by 

the ASC staff based on criteria provided by the survey team. 

After the survey concluded for the day, the surveyors visited 

the office of one of the physician-owners of the ASC, where 

they talked informally about the local health care market. 

Upon returning to the facility the following morning, the 

surveyors changed into surgical dress and did an in-depth 

tour and inspection of the facility. During the tour, they 

observed surgery, assessed sterile technique, security of 

narcotics, and the presence of required emergency 

equipment. Following the tour, the surveyors briefly 

discussed the survey findings with each other and then, at 

11:30 am, 

During the exit conference, a positive tone prevailed as 

surveyors reviewed a handful of problems they found and 

praised staff for things the facility was doing well, which they 

called ‘Wows.’ 

held an exit conference with the facility staff. 

Quality Oversight of ASCs: Certification and Accreditation 17 OEI-01-00-00451 
better. Since you asked us here, we presume you're doing things well.” Insights passed along 

by surveyors ranged from those having to do with quality of care and patient safety to business 

and financial operations. In addition, surveyors often praised staff, particularly when they felt 

that a facility had done well within important areas. 

However, while working within this instructional manner, accreditation surveyors must also 

assess compliance with hundreds of standards for each ASC, often within surveys that last less 

than 2 days.36 This results in surveyors paying less attention to verifying compliance with 

accreditation standards. For example, we observed that accreditation surveyors rarely used 

the surgical log to verify that surgeons practiced within the scope of their privileges or that 

adverse events were flagged for quality review. Instead, they relied on conversations with staff 

or review of a limited sample of medical records. This tact may result in superficial review of 

serious problems. For example, during a survey of an endoscopy center that we observed, 

staff disclosed that they had used the crash cart two times in the last 6 months, one of which 

was for a ‘code blue’ situation. Yet, in response, the surveyor did not check the facility’s 

quality assurance minutes or peer review worksheets to see that it examined the cases 

appropriately. Instead, he simply stressed the importance of using a quality assurance process 

to analyze such cases for evidence of a pattern of problems. 

Quality Oversight of ASCs: Certification and Accreditation 18 OEI-01-00-00451 
RECOMMENDATIONS 

CMS should determine an appropriate minimum cycle for 

surveying ASCs certified by State agencies 

Over the past 10 years, State agencies’ oversight has weakened dramatically while the number 

of ASCs certified by State agencies and the scope of services they provide has increased 

dramatically. Currently, only nursing homes and home health agencies have a minimum survey 

cycle to ensure that they receive routine on-site surveys. ASCs, along with all other Medicare 

provider types, lack such a cycle. In determining a minimum survey cycle for ASCs, CMS 

should consider the nature and risks of care ASCs deliver.37 CMS should consider a strategic 

approach that addresses survey cycles for ASCs within the overall context of adequately 

surveying all types of providers certified by State agencies. In addition, it should consider how 

its analysis of certain data could help it prioritize surveys across ASCs. For example, it could 

draw on volume of Medicare procedures, complaint history, and whether an ASC is accredited 

for reasons other than Medicare certification. CMS should also consider whether the financial 

demands presented by the rising number of Medicare-certified providers warrant establishing 

user fees, which would require legislative change. Such steps might enable CMS to better 

manage and plan for growth in the number of State agency surveys required to adequately 

oversee certified providers. 

CMS should update the Conditions of Coverage for ASCs 

CMS has not updated the Conditions of Coverage for ASCs since it began covering 

procedures performed in ASCs in 1982. Several times since, however, CMS has increased 

the number of ASC-approved procedures as medical advances have enabled ASCs to perform 

increasingly varied and complex types of surgery. Yet, the effectiveness of Medicare’s quality 

oversight system depends upon having Conditions that are adequate in light of the nature and 

risks of care ASCs deliver. The Conditions are of central importance because they set the 

overall tone and approach of CMS’ oversight model, thus driving the structure and content of 

State agency surveys. They also set a baseline which the standards of Medicare-deemed 

accreditors must meet or exceed. Indeed, CMS is in the process of updating the Conditions 

for several provider types, including hospitals. 

At a minimum, add sections that deal with patient rights and continuous quality 

improvement 

As ASCs continue to gain importance within the Medicare program, it is important that CMS 

ensures that they provide a core set of patient rights to Medicare beneficiaries. Adding a 

section to the Conditions that addresses issues such as how ASCs will respect 

Quality Oversight of ASCs: Certification and Accreditation 19 OEI-01-00-00451 
patients’ dignity and resolve patient complaints would be an important step in this direction. 

Indeed, such a step would reflect with CMS’ renewed focus on beneficiaries within its strategic 

plan and goals aimed at strengthening beneficiary satisfaction and protections. 

Similarly, addressing continuous quality improvement is also in line with several goals of CMS’ 

strategic plan including those for enhancing quality of care and improving program 

administration. CMS should ensure that the Conditions require ASCs to conduct continuous 

quality improvement efforts. Over the longer term, we urge CMS to explore developing 

performance measures for ASCs. ASCs could use the measures to direct continuous quality 

improvement efforts while CMS could use them to monitor ASCs’ performance and to adjust 

the frequency and focus of surveys. We note that CMS already has a similar initiative 

underway using indicators reported by nursing homes and home health agencies. Both the 

Medicare Payment Advisory Commission and Congress have recently called on CMS to 

explore the expanded use of quality indicators.38 

Make the Conditions adjustable to match the levels of surgery performed by 

different ASCs 

In updating the Conditions, CMS should move away from its current one-size-fits-all model and 

instead consider an adjustable approach that would enable them to be tailored to individual 

ASCs.39 Such an approach might take into account anesthesia, invasiveness, and other factors 

that drive the riskiness of procedures done by a given ASC. This would improve the 

effectiveness and efficiency of State agency certification as well as minimize the regulatory 

burden by focusing the standards and the State agency survey on the level of services offered 

by each ASC. For example, an ASC that specializes in pain management would have a set of 

standards different from that of an ASC offering general surgery. 

CMS should ensure that State agency certification and 

accreditation strike an appropriate balance between 

compliance and continuous quality improvement 

While compliance typifies the regulatory approach taken by State agencies, continuous quality 

improvement is central to the collegial approach of accreditors. Both have important roles to 

play in quality oversight. In previous work, the OIG has highlighted work done by the National 

Roundtable on Health Care Quality and others that suggests that both approaches have value, 

but not so much that one should dominate at the expense of the other.40 Balance between the 

approaches would protect the public from poorly performing ASCs while encouraging the rest 

to improve beyond minimal health and safety standards. Yet, quality oversight of ASCs 

provided by State agencies and accreditors engages almost exclusively in one approach or the 

other. 

Adding continuous quality improvement to the Conditions would be a good first step toward 

bringing balance to quality oversight of ASCs. The challenge for CMS lies in 

Quality Oversight of ASCs: Certification and Accreditation 20 OEI-01-00-00451 
monitoring and working closely with State agencies and accreditors to ensure that their work 

reflects an appropriate balance. However, in our companion report, Supplemental Report 2: 

Holding State Agencies and Accreditors Accountable, we find that CMS does little to 

oversee State agencies’ and accreditors’ performance. In that report, we offer 

recommendations for ways that CMS can improve its oversight of State agencies and 

accreditors. 

Quality Oversight of ASCs: Certification and Accreditation 21 OEI-01-00-00451 
APPENDIX A 

Methodology

Center for Medicare & Medicaid Services 

Data. We obtained dates of State agency surveys from CMS’ Online Survey Certification and

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

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

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

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

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

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

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

system.

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

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

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

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

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

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

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

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

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

C Budget call letters for each year from 1995 to 2001

C Regional Office and State Operations Manuals

C ASC Conditions of Coverage and Interpretive Guidelines

C Strategic plan

C Data compendium from 1995 to 1999

C Internal policy memos from the central and regional offices

C Correspondence with the accreditors.

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

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

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

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

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

the accreditors.

Quality Oversight of ASCs: Certification and Accreditation 22 OEI-01-00-00451 
APPENDIX A 

Interviews. We interviewed CMS employees involved with the ASC program at both central 

and regional offices. 

State Survey Agencies 

We interviewed State surveyors and State health agency officials involved in the certification of 

ASCs. We obtained a variety of documents from State agency certification surveys including 

checklists used by surveyors and final survey findings including deficiencies found and plans of 

correction. 

Accreditors 

We interviewed officials from all three accreditors. We also reviewed documents from the 

three organizations, including mission statements, accreditation manuals, policies, and ASC 

survey reports, communication from CMS, and complaint files. We requested and received 

aggregate data from these organizations reflecting their survey activity and findings over the last 

3 years. In addition, we attended surveyor training sessions for the American Association for 

Accreditation of Ambulatory Surgery Facilities and Accreditation Association for Ambulatory 

Health Care. 

Survey Observation 

We observed a total of nine ASC surveys in seven states during the course of this study. Four 

were State agency surveys and five were accreditation surveys. 

Other Sources 

Other sources of information that we used for this report include relevant laws and regulations. 

We also reviewed a variety of articles from newspapers, peer reviewed journals, medical text 

books, and medical web sites. Finally, we interviewed stakeholders, including consumer 

advocates, members of several professional associations, practicing physicians, and practicing 

lawyers. 

Quality Oversight of ASCs: Certification and Accreditation 23 OEI-01-00-00451 
APPENDIX B 

Description of Three ASC Procedures

Injection for Pain 

Management 

(CPT 62311) 

Cataract Removal 

with Lens Insertion 

(CPT 66984) 

Knee Arthroscopy 

with Meniscectomy 

(CPT 29881) 

Procedure Description Diagnostic and/or 

therapeutic medication is 

injected into the 

lumbar/sacral spinal area. 

A cataract is broken-up 

and removed, either 

manually or by the use of 

ultrasonic pulses. Once 

the cataract is removed, a 

new lens is put in place. 

An arthroscope and other 

instruments are inserted 

through small incisions 

made in the knee joint. 

The condition of the knee 

joint is evaluated and any 

damaged tissue is 

removed and/or repaired. 

Anesthesia ! Local anesthesia. 

! IV sedation (rare). 

! Topical anesthetic eye 

drops with or without 

IV sedation. 

! Nerve block with or 

without IV sedation. 

! IV sedation with local 

anesthetic for knee. 

! General anesthesia 

with nerve block. 

Average Surgery time <10 minutes 19 minutes 30 minutes 

Average Recovery time <30 minutes 29.5 minutes 90 minutes 

Number of procedures 

1990 (Ranking) 

2000 (Ranking) 

9,800 (14) 

159,500 (6) 

521,600 (1) 

1,349,400 (1) 

5,700 (21) 

22,200 (21) 

Injection of diagnostic or therapeutic substance into the lumbar/sacral area 

The procedure begins with a consultation period to determine if the injection is warranted for 

the patient. This will vary between 10 and 30 minutes, depending upon how complex the 

patient’s history and examination are.41 

This procedure, which generally takes 10 minutes to complete, involves injecting medication 

into the epidural space, which is the vertical “tunnel” surrounding the spinal canal and extends 

from the base of the skull to the sacrum. Normally, the patient will not require IV sedation for 

this procedure, rather, local anesthetic is placed at the site of injection. By injecting the 

medication into the epidural space, it is able to wash over the nerve roots which have just left 

the spinal cord and are, for a short space, enclosed within the epidural space. The medication 

used most frequently is a steroid with or without local anesthetics or opioids (such as 

morphine). Occasionally, anti-spasmodic medication, such as Baclofen, is also injected into the 

epidural space. There are also occasions in 

Quality Oversight of ASCs: Certification and Accreditation 24 OEI-01-00-00451 
APPENDIX B 

which steroids are not used. In the case of obese patients and patients who have undergone 

surgery and, consequently, have scar tissue in the area of this procedure, the procedure may 

take substantially longer, though normally not longer than 45 minutes. 

There are some situations when medication is injected directly into the spinal canal. In this 

case, the medication is injected at or below the level of the first lumbar vertebrae. There is also 

a “caudal” approach in which medication is injected into the epidural space at the lowest end of 

the spine. 

Depending upon whether local anesthesia was placed at the site of injection, the recovery for 

this procedure usually takes 30 minutes. On rare occasions, when this procedure is done as a 

diagnostic event, it is necessary to keep the patient on-site for physician evaluation and pain 

relief over the course of several hours. 

Cataract removal with lens insertion 

Prior to the procedure, an ophthalmologist takes several measurements of the eye, such as an 

ultrasound and other non-invasive means, to evaluate the curvature of the eye. Also, the 

general health of the patient is evaluated prior to the surgery to determine the patient’s fitness 

for the procedure. Most patients with comorbidities are able to undergo this procedure.42 

Typically the eye will be anesthetized using topical anesthetic eye drops or a nerve block. 

Often, patients are also given IV sedation to help them relax throughout the procedure. 

With the help of a microscope, the edge of the cornea is incised in order to get to the cataract 

that has formed on the lens. Manual removal of the cataract calls for a small incision of the 

cornea, while use of ultrasound to break up the cataract requires an even smaller incision. The 

cataract is then either manually or ultrasonically crushed into small pieces, which are then either 

manually removed or vacuumed out of the eye. 

Once the pieces of the cataract are removed, the lens is inserted through the incision in the 

cornea. Oftentimes, no sutures are needed to close the incision. A patch is placed over the eye 

and is removed the next day at the postoperative examination. Antibiotic and anti-inflammatory 

eye drops are prescribed and the eye is completely healed in about 10 weeks. 

Knee arthroscopy with meniscectomy 

The patient can be placed under local, spinal, or general anesthesia, however, it is 

recommended that the patient be given general anesthesia. After the patient is anesthetized, a 

tourniquet is put into place about the thigh. A leg-holding device is also 

Quality Oversight of ASCs: Certification and Accreditation 25 OEI-01-00-00451 
APPENDIX B 

put in place to assist in stressing the knee to open up the different compartments that require 

exploration for diagnostic or operative procedures.43 

Prior to surgery, the leg, from ankle to tourniquet, is thoroughly scrubbed and prepared for 

surgery. The patient’s leg is then draped to isolate the knee. The patient can be placed in 

either one of two positions; laying down with either the surgically prepared leg angled off the 

side of the table, or with both legs dangling off the end of the table at 90 degrees. 

Next, the patient is ready for the incisions through which the arthroscope and other instruments 

will be inserted. First, the surgeon uses a skin-marking pen to mark several landmarks, 

including all standard and optional incisions, and the outlines of ligaments, tendons and joint 

lines. Next, before any incisions are made for insertion of the scope and other instruments, the 

knee joint must be distended in order ensure the view of the arthroscope is not obscured. 

Distention involves inserting a tube, called an inflow cannula, into the knee joint through a small 

incision. This tube is connected to a fluid bag situated four to five feet above the patient. 

Constant inflow of this fluid into the knee joint assures the surgeon has a proper view of the 

joint. Once the knee is fully distended, the surgeon should check the initial landscape markings 

of the knee to ensure the incisions will be made in the proper areas. 

The surgeon can now make the small incisions at the standard incision sites and, if need be, at 

the optional incision sites as well. Once the small incisions are made the surgeon inserts the 

arthroscope which enables the surgeon to see inside the knee joint. While manually 

manipulating the knee joint by moving the leg, the surgeon probes the entire knee joint in order 

to determine where the damage is and what course of action should be taken. In the case of a 

meniscectomy, there is a tear in the meniscus, which is the disc shaped cartilage in the knee 

joint, and the damaged portion of the meniscal cartilage must be removed. The surgeon then 

inserts either basket forceps, scissors, or an arthroscopic knife into another portal to remove 

the damaged meniscal cartilage. Once the damaged cartilage is removed, the remaining 

meniscal cartilage is probed to ensure there are no additional tears and that it is balanced and 

stable. Finally, the knee joint is thoroughly lavaged and suctioned in order to remove any small 

cartilage particles that may have dropped into the joint during the removal procedure, and the 

small incisions are sutured. 

Quality Oversight of ASCs: Certification and Accreditation 26 OEI-01-00-00451 
APPENDIX C 

Endnotes

1. CMS’ Online Survey Certification and Reporting System (OSCAR), March 5, 2001. 

2. 42 C.F.R., sec. 416.2. 

3. Mark A. Warner et al., “Major Morbidity and Mortality Within 1 Month of Ambulatory Surgery and 

Anesthesia,” Journal of the American Medical Association 270 (September 22, 1993) 12: 1437-

1441. 

G. Mezei & F. Chung, “Return hospital visits and hospital readmissions after ambulatory surgery,” 

Annals of Surgery 230 (November 1999) 5: 721-727. 

Rebecca Twersky et al., “What happens after discharge? Return hospital visits after ambulatory 

surgery,” Anesthesia & Analgesia 84 (February 1997) 2: 319-324. 

4. Margaret Jean Hall et al., “Ambulatory Surgery in the United States, 1996,” Advance Data: National 

Center for Health Statistics, Centers for Disease Control 300 (August 12, 1998). 

Mark A. Warner et al., “Major Morbidity and Mortality Within 1 Month of Ambulatory Surgery and 

Anesthesia,” Journal of the American Medical Association 270 (September 22, 1993) 12: 1437-

1441. 

5. Social Security Act, sec. 1832 (a) (2) (F)(i). 

6. Based on data provided to OIG by the three accreditors. 

7. Social Security Act, sec. 1865, 42 U.S.C. 1395bb. 

8. CMS announced in the Federal Register (50 Fed. Reg. 66, 14906, March 14, 2001) that the 

American Osteopathic Association (AOA) applied for recognition as a national accreditation program 

for ASCs for the Medicare program. As of the date this report was issued the AOA had not yet been 

approved accredit Medicare ASCs. The Joint Commission on the Accreditation of Health Care 

Organizations and the Accreditation Association for Ambulatory Health Care have been approved 

since December 19, 1996 ( 245 Fed. Reg. 61, 67042, Dec. 19, 1996). The American Association for 

Accreditation of Ambulatory Surgical Facilities has had approval since December 2, 1998 (231 Fed. 

Reg. 63, 66554, Dec. 2, 1998). 

9. SMG Marketing Group Inc “Freestanding Outpatient Surgery Centers (FOSCs).” Copyright 2000. 

10. CMS approves procedures to be performed in ASCs based on 42 C.F.R., sec. 416.65 These 

standards limit ASC procedures to those that do not generally result in extensive blood loss, that do not 

require major or prolonged invasion of body cavities, that do not directly involve major blood vessels, 

or that are not generally emergency or life-threatening in nature. 

Quality Oversight of ASCs: Certification and Accreditation 27 OEI-01-00-00451 
APPENDIX C 

11. Section 1833(i)(1) of the Social Security Act requires that the ASC list be reviewed and updated at 

least biennially. The current list of procedures approved for ASCs was last reviewed and updated in 

1995. CMS has not updated this list in over 6 years and has missed its last three scheduled update 

deadlines. 

12. We count the number of ASCs that have not had a survey in 5 or more years in a given year using 

the midyear, July 1, as the point of reference for each year. 

13. JCAHO website information: Accreditation Process Improvement Initiative www.jcaho.org. 

14. Year 2000 data is from December 2000. According to OSCAR, as of May 2001, 3,234 ASCs 

participate in the Medicare program, of those, 2,966 are certified. 

15. Initial surveys and recertification surveys do not total to overall number of surveys for this year 

because State agencies performed two “other” types of surveys. 

16. Between 1995 and 2000 State agencies and CMS regional offices have received 159 complaints 

and performed unannounced surveys in response to all but 3 of them This is the total number of 

complaints that the CMS Regional Office and State Agency entered into OSCAR. It is not known how 

many actual complaints were received that were either not entered into OSCAR or not investigated. 

17. OIG analysis of OSCAR data. Complaint files are considered to be unresolved if they are listed in 

OSCAR as “pending.” We obtained a total of 18 complaint files to check against OSCAR. We found 

that the provider files marked pending in OSCAR have not had a follow-up survey or action against 

them since the complaint survey was performed. 

18. Medicare surveyors have three options when they investigate complaints and find deficiencies. 

They can place a facility on a 23-day or 90-day termination track, or ask the facility to submit a written 

plan of correction. The termination tracks require facilities to correct deficiencies within a specified time 

limit or risk termination from the Medicare program. Facilities placed on termination tracks are usually 

those where the most serious problems exist. If an ASC is out of compliance with the Conditions to 

such an extent that patients are in jeopardy, surveyors use a 23-day termination notice. For ASCs with 

condition-level deficiencies but no finding of patient jeopardy; surveyors use a 90-day termination 

notice. ASCs that are not placed on a termination track, but have non condition-level deficiencies can 

be given a plan of correction whereby the facility sends the State agency a written notice stating the 

date the deficiencies were corrected, how they were corrected, and in some cases, documentation that 

the deficiencies were corrected. Only facilities with condition-level deficiencies can be placed on a 

termination track. The path to termination is not direct. The survey process allows ASCs to correct 

condition-level deficiencies before the deadline for termination from the Medicare program. 

Quality Oversight of ASCs: Certification and Accreditation 28 OEI-01-00-00451 
APPENDIX C 

19. Ranking of Survey Type on CMS Budget Call Letter FY 1997-2001 

FY Year Rank of Initial Surveys Rank of Recertification Surveys 

2001 11 out of 11 10 out of 11 

2000 8 out of 8 7 out of 8 

1999 11 out of 12 10 out of 12 

1998 8 out of 9 7 out of 9 

1997 8 out of 9 7 out of 9 

20. Other facility types in the Medicare program include: Nonaccredited hospitals, skilled nursing 

facilities, nonaccredited home health agencies, hospices, outpatient physical therapy centers, 

comprehensive outpatient rehabilitation centers, x-ray facilities, end-stage renal dialysis facilities, rural 

health clinics, organ procurement organizations, and community mental health centers. 

21. From CMS’ FY 2001 budget. Our analysis of 2000 Medicare Part B and OSCAR data revealed 

515 ASCs certified by State agencies that made no Medicare claims in 2000 (16% of all ASCs that 

take part in the Medicare program). Further analysis would be needed to determine whether these 515 

are newly certified by State agencies and therefore unlikely to have 2000 claims. 

22. 42 U.S.C. Sec. 1396r All skilled nursing facilities and nursing facilities are subject to a standard 

survey not later than 15 months after the previous standard survey, with a Statewide average interval 

between standard surveys of not more than 12 months. Home health agencies are subject to a standard 

survey not later than 36 months after the previous standard survey (42 U.S.C. Sec. 1395bbb). The 

frequency for surveys of HHAs within this 36 month interval shall be commensurate with the need to 

assure delivery of quality home health services. 

23. CMS has updated the conditions for several other providers such as hospitals, home health 

agencies, and ESRD, however, none have been officially approved. CMS does have plans to update 

the ASC conditions. 

24. CMS Strategic Plan, p. 10, September, 1988. 

25. See 64 Fed. Reg. 36,088, July 2, 1999 and 62 Fed Reg. 11,026, March 10, 1997 respectively. 

26. CMS has implemented the Minimum Data Set in nursing homes and the Outcome and Assessment 

Information Set in home health agencies. In addition, CMS calls for quality indicators within its 

proposed update of the Conditions of Participation for hospitals. 

27. SMG Report. Page 20. 

Quality Oversight of ASCs: Certification and Accreditation 29 OEI-01-00-00451 
APPENDIX C 

28. Office of Inspector General, The External Review of Hospital Quality: A Call for Greater 

Accountability (July 1999). 

29. CMS State Operations Manual section 4018. 

30. Data from 1997, the first year the Joint Commission on the Accreditation of Health Care 

Organizations and the Accreditation Association for Ambulatory Health Care surveyed facilities for the 

Medicare program shows that 26 ASCs applied to have a Medicare survey through the Joint 

Commission in the year 1997. In 2000, the Joint Commission resurveyed a third of those facilities. 

AAAHC had 149 ASCs in the Medicare program in 1997. Three years later, AAAHC resurveyed a 

third of those ASCs. The American Association for Accreditation of Ambulatory Surgical Facilities 

(AAAASF) has been approved for Medicare since December 2, 1998 (231 Fed. Reg. 63, 66554, 

Dec. 2, 1998). AAAASF surveyed its first Medicare ASC in 2000. Therefore, survey data is not 

available for 1998 and 1999. 

31. AAAHC has three survey options for their facilities. Facilities with minor or without any 

deficiencies will be resurveyed in 3 years. However, facilities with some deficiencies that AAAHC 

considers to be more serious or part of a pattern of partial compliance will be given shorter periods of 

accreditation, 6-months to 1 year, meaning these facilities must submit a plan to correct deficiencies and 

be resurveyed in order to gain 3 year accreditation. In fact, in 1998, 34 percent of ASCs surveyed by 

AAAHC received either a 6 month or 1 year accreditation decision and in 1999, 44 percent of ASCs 

received this decision. Through these shorter accreditation periods, which result in more frequent onsite presence, AAAHC helps to ensure that facilities with the most serious problems are not allowed to 

go 3 years in between surveys. 

32. Joint Commission web page “Accreditation Process Improvement Initiative” May 5, 2001. 

Currently, the Joint Commission conducts random unannounced surveys on 5 percent of accredited 

ASCs per year, 9-30 months after a facility’s last accreditation survey. On these surveys areas of 

specific concern about the provider based on prior surveys, complaints, and sentinel events are covered 

as well as elements that vary year to year. Some examples are: performance improvement, 

credentialing and privileging, and medication use. 

33. If ASCs report on the self-evaluation form that they do not meet AAAASF standards they are 

subject to the same 30-day corrective process as would occur after an on-site survey, including the 

possibility of on-site follow-up surveys. 

34. See our companion report, Holding the System Accountable, for further discussion of complaint 

mechanisms. 

35. For more on the nature of accreditation, see Office of Inspector General, The External Review of 

Hospital Quality: A Call for Greater Accountability (July 1999) and Michael S. Hamm, The 

Fundamentals of Accreditation (Washington, D.C.: American Society of Association Executives, 1997) 

3. 

Quality Oversight of ASCs: Certification and Accreditation 30 OEI-01-00-00451 
APPENDIX C 

36. State agency certification has 10 conditions of coverage and about 50 standards for ASCs, 

whereas all three accreditors have over 200 standards for ASCs. In fact, AAAASF has over 300 

standards. 

37. CMS could also consider whether particular ASCs are, in fact, treating Medicare beneficiaries. 

Our analysis revealed 515 ASCs certified by State agencies that made no Medicare claims in 2000 

(16% of all ASCs that take part in the Medicare program). Further analysis would be needed to 

determine whether these 515 are newly certified by State agencies and therefore unlikely to have 2000 

claims. 

38. In its 2000 Report to the Congress, Medpac recommended that CMS expand its indicator-driven 

survey process for nursing homes and home health agencies to other providers in the Medicare 

program. In the Benefits Improvement and Protection Act of 2000, Congress directed the Secretary to 

work with Medpac and the Agency for Healthcare Research and Quality to examine and report on the 

development of standard instruments for patient assessment across settings. 

39. This may require legislative change. 

40. Department of Health and Human Services, Office of Inspector General, The External Review of 

Hospital Quality, OEI-01-97-00050; Office of Inspector General, The External Quality Review of 

Dialysis Facilities, OEI-01-99-00050; Mark R. Chasin et al, “The Urgent Need to Improve Health 

Care Quality: Institute of Medicine National Roundtable on Health Care Quality,” Journal of the 

American Medical Association 280 (September 16, 1998) 11: 1000-1005. 

41. Personal contact with Douglas Merrill, M.D. ASA Committee on Pain, Chair, 06/08/01. 

42. We obtained this information from several sources, including: 

C personal observations of this procedure, 

C Accreditation Association for Ambulatory Health Care, Inc. Institute for Quality 

Improvement, 1999 Performance Measurement Study, Cataract Extraction with 

Lens Insertion, 

C http://www.adam.com/b2b/products/demos/ency/ENCY/ARTICLE/002957.htm, 

accessed 06/12/01 and, 

C wysiwg://222/http://www.healthanswers.com/library/MedEnc/enc/832.asp, accessed 

06/12/01 

43. We obtained this information from several sources, including: 

C Accreditation Association for Ambulatory Health Care, Inc. Institute for Quality 

Improvement, 1999 Performance Measurement Study, Knee Arthroscopy with 

Meniscectomy, 

C S. Terry Canale, M.D., Campbell’s Operative Orthopaedics: Ninth edition, Vol 2 

(St. Louis: Mosby, 1998), 1470 - 1501. 

C http://www.webmd.lycos.com/content/asset/adam_surgery_synovectomy, accessed 

07/11/01. 

Quality Oversight of ASCs: Certification and Accreditation 31 OEI-01-00-00451 
APPENDIX C 

Quality Oversight of ASCs: Certification and Accreditation 32 OEI-01-00-00451