Department of Health and Human Services

OFFICE OF

INSPECTOR GENERAL

JUNE GIBBS BROWN

Inspector General

MAY 2000

OEI-01-99-00160

The External Quality Review of 

Psychiatric Hospitals
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’s regional office prepared this report under the direction of Mark R.Yessian, Ph.D.,

Regional Inspector General. Principal OEI staff included:

BOSTON HEADQUARTERS

Joyce M. Greenleaf, Project Leader Elise Stein, Program Specialist

Norman J. Han, Program Analyst Bambi Straw, Program Specialist 

Chaletta M. Clark, Program Analyst

To obtain copies of this report, please call the Boston Regional Office at (617) 565-1050.

Reports are also available on the World Wide Web at our home page address:

http://www.dhhs.gov/progorg/oei
The External Quality Review of Psychiatric Hospitals 1 OEI-01-99-00160

EXECUTIVE SUMMARY

PURPOSE

To assess the external quality review of free-standing psychiatric hospitals that participate

in Medicare.

BACKGROUND

Concerns About Psychiatric Hospitals

Recently, the media has drawn attention to the quality of care in psychiatric hospitals due

to deaths attributed to the inappropriate use of restraints and seclusion. This has raised

fundamental questions about how care is delivered and overseen in psychiatric hospitals. 

Medicare requires such hospitals to meet two special conditions of participation (staff

requirements and medical records) that apply only to psychiatric hospitals. The Health

Care Financing Administration (HCFA) relies upon contracted psychiatric nurses and

psychiatrists to assess compliance with these two special conditions. Like general

hospitals, psychiatric hospitals are also subject to all the Medicare conditions of

participation and can be deemed to meet them through either accreditation (usually by the

Joint Commission on Accreditation of Healthcare Organizations) or certification (by State

agencies). Currently 611 psychiatric hospitals participate in Medicare; all but 39 are

accredited.

This inquiry follows-up our recent series on the external review of hospital quality. In this

related inquiry, we focus on the overall system of external review as it applies to

psychiatric hospitals. That system includes HCFA’s contracted surveyors, the Joint

Commission, State agencies, and HCFA itself. We devote particular attention to the 

review provided by HCFA’s contracted surveyors. We based our inquiry on national data

on psychiatric hospital surveys, survey observations, and stakeholder interviews, among

other sources of information.

FINDINGS

The current system of external review for psychiatric hospitals has some

strengths that help protect patients.

The system includes a patient-centered approach aimed at ensuring patients receive

active treatment as opposed to custodial care. HCFA’s contracted surveyors choose a

sample of patients and trace them through the hospital by reviewing their medical records,
The External Quality Review of Psychiatric Hospitals 2 OEI-01-99-00160

observing them on the wards and in sessions, interviewing them, and speaking with their

caregivers. Neither State agencies nor the Joint Commission survey with this approach.

It has achieved some balance between the collegial (aiming to educate and improve)

and the regulatory (aiming to investigate and enforce) approaches to oversight. 

Both HCFA’s contracted surveyor and State agency activities lean toward the regulatory

approach. The Joint Commission surveys lean toward the collegial approach, with an

educational bent. However, the Joint Commission has added some regulatory elements to

its approach by increasing its unannounced surveys of psychiatric hospitals and

maintaining more control over the selection of medical records.

But the external review system also has major deficiencies.

The extent to which it holds psychiatric hospitals accountable for patient care is

questionable. HCFA’s contracted surveyors take an in-depth look at patient care, but the

two special conditions that guide their survey are limited to medical records and staff

requirements. Joint Commission surveyors’ approach to patient care is less in-depth, but

their official findings are much less limited and more far ranging. State agency

involvement in psychiatric hospitals is more episodic and driven by complaints and adverse

events, but they too have a broader range of official findings than HCFA’s contracted

surveyors.

These limitations are particularly apparent with regard to discharge planning and restraints

and seclusion. All external reviewers give marginal attention to discharge planning. The

Joint Commission gives more attention to restraints and seclusion than HCFA’s contracted

survey or State agencies, but its effectiveness is questionable.

Some psychiatric hospitals are falling through the cracks, rarely being subjected to

contracted or State agency surveys. The number of surveys conducted by HCFA’s

contracted surveyors fell from a high of 413 in FY 1993 to 146 in FY 1998, a drop of 65

percent. The elapsed time between such surveys is growing, and some psychiatric

hospitals have not been surveyed in over 5 years.

HCFA’s contracted surveyors, State agencies, and the Joint Commission tend to

carry out their psychiatric hospital oversight on independent tracks with little

coordination. HCFA’s contracted surveyors sometimes survey hospitals on the heels of

the Joint Commission or State agency. Thus, in short order, a hospital could be visited by

each. But HCFA’s contracted surveyors rarely have the results of the other reviews. 

The contracted surveyors are held just minimally accountable for their

performance in overseeing psychiatric hospitals.
The External Quality Review of Psychiatric Hospitals 3 OEI-01-99-00160

HCFA obtains limited information on the performance of its contracted surveyors.

Validation surveys, HCFA’s main source of information on the performance of external

reviewers and hospitals, exclude the two special conditions for psychiatric hospitals. Also,

HCFA asks for little aggregate or routine reporting on the contracted surveys.

HCFA provides some feedback to its contracted surveyors, mostly through its

review of the survey documentation. HCFA lacks a formal or routine mechanism for

providing feedback to its contracted surveyors on their performance. Its feedback tends

to be sporadic.

Public disclosure plays a minimal role in holding the contracted surveyors

accountable. HCFA makes little information available to the public on the performance

of the psychiatric hospitals or the contracted surveyors.

RECOMMENDATIONS

HCFA and Joint Commission responses to the recommendations we posed in our recent

series on the external review of hospital quality help address the deficiencies identified in

this study. Below we offer five additional recommendations that emerge primarily from

the findings in this inquiry, but also draw on those in our previous series, which included

acute care hospitals with psychiatric units. Our recommendations call for HCFA to exert

its leadership in shaping the external review of psychiatric inpatient care. If enacted, these

recommendations will further strengthen external quality review systems intended to

protect psychiatric inpatients.

HCFA should deploy its contracted surveyors more strategically and take better

advantage of their expertise. 

HCFA’s 76 contracted surveyors serve as an important resource, providing expertise that

HCFA and the State agencies would be hard-pressed to duplicate. To take better

advantage of this expertise, we recommend that HCFA strengthen the contracted

surveyors’ background in the full range of Medicare conditions of participation for

hospitals and make them available for:

Responding to complaints and adverse events involving psychiatric care: The

contracted surveyors’ special expertise should be available to enhance the States’ ability to

respond appropriately to complaints and events.

Surveying in both psychiatric hospitals and psychiatric units of acute care hospitals:

We suggest that the contracted surveyors’ expertise would be valuable to these units,

which typically receive just a fraction of surveyors’ time during an accreditation survey.
The External Quality Review of Psychiatric Hospitals 4 OEI-01-99-00160

We are aware of the resource implications of this recommendation. HCFA currently

estimates the costs of each contracted survey at $8,300. HCFA could use its estimates to

seek additional funding or seek authority to establish a user fee to help defray the costs.

HCFA should hold its contracted surveyors more fully accountable for their

performance. Toward that end, it should

Conduct periodic observation surveys of the contracted survey process. HCFA now

lacks any such oversight mechanism of the contracted survey process.

Obtain timely and useful performance reports. These should cover, at a minimum, the

contracted surveyors’ activities, such as types of surveys conducted, findings, and trends.

Provide feedback and guidance to the contracted surveyors. Given their part-time

status and the decline in scheduled surveys, HCFA should stay in closer contact with the

contracted surveyors and consider facilitating a network through a newsletter or website. 

Increase public disclosure. HCFA should make more information available on the

oversight and performance of psychiatric hospitals by, at a minimum, posting information

on the Internet.

HCFA should determine an appropriate minimum cycle for the contracted survey

at psychiatric hospitals.

No mandated cycle for these contracted surveys exists. In determining one, HCFA should

take steps to strengthen its ability to track all participating hospitals and their survey

history in such a way that allows HCFA to easily determine whether the survey was

conducted by the contracted surveyors or State agencies. It should also take steps to

coordinate the survey activity among the external reviewers.

HCFA should negotiate with the Joint Commission to achieve both a more

patient-centered survey approach and a more rigorous assessment of discharge

planning. 

The Joint Commission does not currently use the patient-tracing approach employed by

HCFA’s contracted surveyors. The Joint Commission is well-positioned to apply this

approach more broadly in psychiatric units as well as psychiatric hospitals. Also, the Joint

Commission has a significant base of experience in addressing discharge planning issues in

nonhospital settings and is therefore well-positioned to apply this expertise to the hospital

setting.

HCFA should consider applying special Medicare conditions of participation both

to psychiatric hospitals and psychiatric units of acute care hospitals.
The External Quality Review of Psychiatric Hospitals 5 OEI-01-99-00160

Many experts suggest that psychiatric inpatients face vulnerabilities that warrant greater

scrutiny than most other hospital patients. But the external review system that HCFA

relies upon falls short in two important ways. First, it does not apply the special

conditions to psychiatric units of acute care hospitals, which is where the great majority of

Medicare beneficiaries receive inpatient psychiatric care. Furthermore, in psychiatric

hospitals, the contracted surveyors are limited to assessing compliance with only the two

special conditions (medical records and staff requirements) even though their patientbased review exposes a broad array of treatment issues.

Given this situation, it would appear timely for HCFA to consider special conditions that it

would use for both inpatient settings. If HCFA moved in this direction, the following are

among the key questions it would have to address:

C Do the proposed Medicare conditions of participation for hospitals and the interim

final rule on patient rights provide sufficient authority for the external reviewers to

apply the extra scrutiny warranted for psychiatric inpatients?

C Are additional authorities needed for key patient-care issues, including discharge

planning?

COMMENTS ON THE DRAFT REPORT

Within the Department of Health and Human Services, we received comments on our draft report

from HCFA. Outside the Department, we received comments from the Joint Commission, the

National Association of Psychiatric Health Systems, the National Alliance for the Mentally Ill, and

Public Citizen’s Health Research Group. Below is a summary of those comments followed by our

responses, in italics.

HCFA Comments

HCFA concurred with all of our recommendations and noted its ongoing work with the Joint

Commission to improve hospital oversight. It is willing to explore more strategic uses of the

contracted surveyors and anticipates funding increases that will allow it to reduce the interval

between the contracted surveys. It also noted its plans for redesigning its information system to

support better reporting of survey trends. Finally, HCFA indicated that it will develop 

interpretive guidelines, with a corresponding plan for the contracted surveyors to enforce them,

for existing regulations that apply to psychiatric units of acute care hospitals, which generally

parallel the special conditions for psychiatric hospitals.

We appreciate HCFA's positive response to our report. In implementing the recommendations,

HCFA will strengthen the system of external review intended to protect psychiatric inpatients. 

We have added some text on funding contracted surveys, which is relevant to our call for HCFA
The External Quality Review of Psychiatric Hospitals 6 OEI-01-99-00160

to use the surveyors more strategically as well as to determine an appropriate minimum cycle for

surveys. We hope this new text will be helpful to HCFA as it explores further funding increases.

Comments from the Joint Commission

The Joint Commission identified many changes either already implemented or underway that

enhance the accreditation process and promote a patient-centered approach to oversight. In

particular, it noted its ongoing process to strengthen its standards for discharge planning.

The Joint Commission took issue with how we characterized the authority of the contracted

surveyors’ ability to hold psychiatric hospitals accountable for patient care issues and our point

that Medicare bears the cost of external review either directly or indirectly.

We appreciate the Joint Commission’s continued responsiveness to our recommendations. The

Joint Commission’s leadership on these issues can influence improvements in accredited

hospitals. In response to the Joint Commission's concerns, we clarified our discussion of the

limits of the contracted surveyors’ authority and the extent to which Medicare bears the cost of

external review.

Comments of Other External Associations

To varying degrees, the external parties supported our findings and recommendations, but also

reflected some concerns. Both the National Alliance for the Mentally Ill and Public Citizen noted

their concerns about accreditation and called for increased funding for the contracted surveys. 

The National Association of Psychiatric Health Systems opposes “widespread dissemination of

information [about the performance of hospitals and surveyors] without adequate explanation and

protection” whereas Public Citizen expressed its concern that without disclosure, "public

discontent will grow."

In its comments, the National Alliance recommended its State organizations as additional

resources for the external review of psychiatric hospitals and pointed to other resources on

discharge planning in the Substance Abuse and Mental Health Services Administration of the

Department.

We suggest that HCFA consider the concerns raised by these stakeholders as it works to improve

the system of hospital oversight. They offer perspectives that can be informative to HCFA.

On the matter of public disclosure, we emphasize our position that such disclosure represents an

important step toward enhancing the public accountability of the contracted survey process and

parallels recommendations we made in our earlier series, "The External Review of Hospital

Quality." 
The External Quality Review of Psychiatric Hospitals 7 OEI-01-99-00160

TABLE OF CONTENTS

PAGE

EXECUTIVE SUMMARY

INTRODUCTION ........................................................ 8

PROFILE OF OVERSIGHT ............................................. 13

FINDINGS

Strengths of Psychiatric Hospital Oversight ................................. 14

Deficiencies of Psychiatric Hospital Oversight ............................... 16

Minimal Accountability ................................................ 20

RECOMMENDATIONS ................................................. 22

COMMENTS ON THE DRAFT REPORT ................................ 26

APPENDICES

A: Summary of Series on the External Review of Hospitals ..................... 29

B: Methodology ...................................................... 36

C: Framework for the External Review of Hospitals ........................... 38

D: Comments on the Draft Report ........................................ 40

E: Endnotes ......................................................... 58
The External Quality Review of Psychiatric Hospitals 8 OEI-01-99-00160

INTRODUCTION

PURPOSE

To assess the external quality review of free-standing psychiatric hospitals that participate

in Medicare.

BACKGROUND

Concerns about Psychiatric Hospitals

Recently, the media has drawn attention to patient deaths attributed to inappropriate use

of restraints and seclusion. In October 1998, The Hartford Courant published an

investigative series that detailed 142 such deaths from around the country over the past 10

years. Over half of those deaths occurred in hospitals. In April 1999, the television news

show 60 Minutes II highlighted the inappropriate use of restraints and seclusion, lack of

trained staff, and questionable record-keeping at psychiatric hospitals in the Charter

Behavioral Hospital chain. In response to these concerns, three restraint bills have been

introduced in Congress. The bills variously call for restricting the use of restraints,

reporting restraint-related deaths and injuries, strengthening protection and advocacy

systems, and assuring the rights of individuals receiving mental health services.

In response to requests from members of Congress, the General Accounting Office

recently issued a report examining the extent to which restraints and seclusion are used in

various inpatient settings. The report found both underreporting of deaths and injuries 1

involving restraints and seclusion as well as variation among State and Federal policies on

restraints and seclusion.

This attention has raised fundamental questions about how care is delivered and overseen

in psychiatric hospitals.

Inpatient Psychiatric Care

Patients needing inpatient psychiatric care generally receive that care in free-standing

psychiatric hospitals or psychiatric units within acute care hospitals. Currently, 611 freestanding psychiatric hospitals operate around the country, all but 39 of which are

accredited. Of about 6,000 acute care hospitals, about 25 percent operate inpatient 2
The External Quality Review of Psychiatric Hospitals 9 OEI-01-99-00160

psychiatric units. Psychiatric care can also be provided in an acute care bed, outside of a

specialized psychiatric unit or hospital.

In 1997, 497,159 Medicare discharges were related to psychiatric care. Sixty-six percent 3

of those discharges were from psychiatric units that are part of acute care hospitals, 27

percent were from free-standing psychiatric hospitals. The remainder were from acute

care beds outside of specialized hospitals or units.

Medicare Conditions of Participation

When Congress enacted the Medicare Act in 1965, it required hospitals to meet certain

minimum health and safety requirements to participate in the program. Those minimum 4

requirements are called the Medicare conditions of participation. In addition to these

conditions that apply to all participating hospitals, free-standing psychiatric hospitals are

subject to two special conditions. One concerns record-keeping and one, staff 5

requirements. These two special conditions stemmed from Congress’ concerns that 6

patients in psychiatric hospitals would be warehoused and receive only custodial care,

rather than active treatment.7

The Health Care Financing Administration (HCFA) published the Medicare conditions of

participation in 1966, revised them in 1986, and, except for the two special psychiatric

conditions, are revising them again. On July 2, 1999, HCFA issued an interim final rule 8

on patient rights, which includes the right to be free from restraints and seclusion as a

means of coercion, convenience, and retaliation by staff. It also calls for hospitals to 9

report restraint-related deaths to HCFA. This interim final rule applies to all hospitals, 10

both general and psychiatric.

External Review of Psychiatric Hospitals for Participating in Medicare

Because the two special conditions for psychiatric hospitals, the Federal government relies

on an additional external reviewer for their oversight: a panel of psychiatric surveyors

under contract to HCFA (hereafter referred to as contracted surveyors). These contracted

surveyors conduct reviews that cover only the special conditions. HCFA does not

consider surveys by the Joint Commission on Accreditation of Healthcare Organizations to

cover these special conditions. HCFA’s contracted surveyors include mostly psychiatrists

and psychiatric nurses, but also psychiatric social workers and pharmacists. All are parttime surveyors.

Within the Medicare Act itself, Congress provided that hospitals accredited by the Joint

Commission were deemed to be in compliance with the conditions of participation.11

However, the two special conditions that psychiatric hospitals must meet are excluded

from that deemed status. Thus, psychiatric hospitals accredited by the Joint Commission

are also subject to a review by the contracted surveyors. 
The External Quality Review of Psychiatric Hospitals 10 OEI-01-99-00160

Psychiatric hospitals wishing to participate in Medicare without accreditation must go

through a Medicare certification process. HCFA funds State survey and certification

agencies (hereafter called State agencies) to conduct certification surveys at these

hospitals to determine compliance with the Medicare conditions. Although HCFA trains

the State surveyors in all the conditions (including the two special psychiatric conditions),

the contracted surveyors may be involved in certifying the nonaccredited psychiatric

hospitals as well. 

Regardless of the route a psychiatric hospital takes to Medicare participation, Medicare

generally bears a cost for the external review, either directly by funding State agencies or

HCFA’s contracted surveyors, or indirectly through hospital charges that include the

overhead cost of periodic accreditation surveys.12

Accreditation, contracted surveys, and Medicare certification (by State agencies) involve a

team of trained surveyors visiting a hospital, interviewing staff, reviewing documents, and

inspecting the facility.

Other external parties also have roles in overseeing psychiatric hospitals. Medicare Peer

Review Organizations, for example, have broad authority in overseeing the quality of care

paid for by Medicare, although they have no responsibilities specific to psychiatric

hospitals. Each State also has a federally funded Protection and Advocacy grantee to

protect the rights of and advocate for individuals with mental illness. These grantees have

the authority to investigate reports of abuse and neglect in all facilities that care for or

treat individuals with mental illness, including psychiatric hospitals. And, depending upon

the circumstances, even the Department of Justice and the Food and Drug Administration

can become involved with patient deaths and abuses in psychiatric hospitals.

Recent Reports by the Office of Inspector General

In July 1999, the Office of Inspector General released four reports that assessed the

system in place for reviewing hospitals generally. These reports covered the key roles

played by the Joint Commission, the State agencies, and HCFA. See appendix A for a

more detailed summary of these reports.

The great majority of psychiatric hospitals are accredited by the Joint Commission, thus,

the findings from our recent series apply also to psychiatric hospitals. In our series, we

found that Joint Commission surveys are undertaken in a collegial manner and are tightly

structured, an approach that fosters consistency but leaves little room for probing. They

also provide an important vehicle for reducing risk and fostering improvement in hospitals. 

The hospitals take the surveys seriously and prepare for them. But the surveys are

unlikely to detect substandard patterns of care or individual practitioners with questionable

skills.
The External Quality Review of Psychiatric Hospitals 11 OEI-01-99-00160

Likewise, our findings on the role of Medicare certification are relevant to those few

nonaccredited psychiatric hospitals, which, without a complaint or adverse event, State

agencies are unlikely to survey. In fact, the backlog for surveying nonaccredited hospitals

is growing: in 1997 half of all such hospitals had not been surveyed in over 3 years, up

from 28 percent in 1995.

We also found that HCFA does little to hold either the Joint Commission or the State

agencies accountable for their performance in overseeing hospitals.

In our reports, we called for HCFA to exert leadership in addressing the shortcomings we

identified. First, as a guiding principle, we urged HCFA to steer the external review

process so that it represented a balance between the educationally oriented approaches of

the Joint Commission and the enforcement-oriented approaches of the State agencies. 

Then we offered two sets of recommendations. In the first, we presented a number of

steps HCFA should take to hold both the Joint Commission and the States more fully

accountable for their performance in reviewing hospitals. Second, we called for HCFA to

determine the appropriate minimum cycle for conducting certification surveys of

nonaccredited hospitals. HCFA responded positively to our recommendations by

presenting a detailed hospital oversight plan that incorporates our recommendations and

an accompanying strategy for hospital performance measurement. 

This Inquiry and Report

This inquiry focuses on the oversight of free-standing psychiatric hospitals and, in

particular, on the role of HCFA’s contracted surveyors. It does not address the

implementation of the interim final rule on patient rights. Nor does it address the roles of

Medicare Peer Review Organizations, Protection and Advocacy grantees, the Department

of Justice, or the Food and Drug Administration. Forthcoming Office of Inspector

General reports will address the current Federal and State data systems for reporting

patient abuses, particularly those involving restraints and seclusions that occur in

psychiatric hospitals.

Our inquiry draws on a variety of sources including: national data from HCFA on its

contracted surveys; policies and guidelines on the contracted survey process; interviews

with current and former contracted surveyors, HCFA officials, and other stakeholders;

survey observations of contracted surveys and Joint Commission surveys in psychiatric

hospitals; aggregate data from the Joint Commission; and reviews of laws, regulations,

and articles from newspapers and journals, among others. See appendix B for more

details on our methodology.

While our findings emerge primarily from the above-noted data sources, we also draw on

our observations from our prior reports on the external review of general acute care

hospitals, which often have psychiatric units.
The External Quality Review of Psychiatric Hospitals 12 OEI-01-99-00160

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

issued by the President’s Council on Integrity and Efficiency.
The External Quality Review of Psychiatric Hospitals 13 OEI-01-99-00160

PROFILE OF PSYCHIATRIC 

 HOSPITAL OVERSIGHT

The table below profiles the roles of the three major external reviewers for psychiatric hospitals. See

appendix C for more details on the five-part framework.

Element Surveys Commission Agencies

HCFA’s Contracted Joint State Survey

Routine,

Announced 

On-site Surveys

CCore of contracted CCore of accreditation CApplies to nonaccredited

surveyor activity process psychiatric hospitals only

CPatient-centered CRoutine presence on a 3- CLow priority

approach that leans toward year cycle CMean elapsed time

the regulatory mode CCollegial between surveys=3.4

CNo set cycle for review CSignificant attention to years

CNo clear policy on restraints and seclusion C55 percent of

announced versus nonaccredited hospitals

unannounced surveys have gone over 3 years

CFewer surveys being done without a survey;

CElapsed time between 31 percent, over 4 years;

surveys growing 21 percent, over 5 years

Random

Unannounced

On-site Surveys

CNot Applicable CIncreasingly aimed at CNot Applicable

(although some contracted psychiatric hospitals

surveys are unannounced, CCustomized surveys

none are random) CTruly unannounced

Responses to

Complaints

CRarely involved: CRecent improvements to CCore activity

contracted surveyors the complaint process CConducted an average of

responded to a few per hold promise 314 complaint surveys in

year. FY96, FY97, and FY98

CPublicly accountable

Responses to

Major Adverse

Events

CSame as complaints; CApproach is oriented CCore activity in

HCFA makes no toward research and accredited and

distinction prevention nonaccredited hospitals

CRelies on self-reporting CPublicly accountable

CEnsures hospital

confidentiality

CNo public accountability

Collection and

Dissemination of

Standardized

Performance

Measures

CNot Applicable CNot Applicable CNot Applicable

(core psychiatric

measures under

development)
The External Quality Review of Psychiatric Hospitals 14 OEI-01-99-00160

FINDINGS

Observing Patients 

in a Substance Abuse Session

A contracted psychiatric nurse surveyor sat in

on a substance abuse discussion group, led by a

hospital therapist. She chose the session

because one of her sample patients, whose

medical record she had already reviewed, was a

participant. Her review of the medical record

revealed the patient’s hearing deficiency. She

quietly observed the 45-minute session, paying

particular attention to whether the therapist 

appeared to be aware of that deficiency in his

interactions with the patient. 

The current system of external review for psychiatric

hospitals has some strengths that help protect patients.

The system includes a patient-centered approach aimed at ensuring patients

receive active treatment as opposed to custodial care.

HCFA’s contracted surveyors spend much of their time at psychiatric hospitals following

the care of a sample of patients. They choose the sample at the outset of the survey and

begin by reviewing the medical records of the chosen patients. Spending an hour or more

on a single record, they become familiar with their sample patients’ treatment plans,

whether they are being

implemented, and what outcomes

are being achieved. The

contracted surveyors follow the

record reviews by directly

observing patients in different

settings, for example on the ward

and in activities class. Thus, they

can see for themselves the extent

to which the treatment plan is

being implemented. They also

interview the patients’ caregivers,

thereby eliciting the staff’s

awareness of the sample patients,

such as why they are hospitalized

and what their treatment plans

are. The contracted surveyors

interview the patients themselves, asking them how they are treated, what brought them to

the hospital, what their plans for discharge are, and gauging their awareness of their

treatment plans. Finally, where possible they observe the treatment team discussions,

when the psychiatrist, social worker, and other professionals meet to discuss individual

patient’s treatment and progress. 

This approach gives the contracted surveyors a picture of the hospital’s performance by

using discrete patient experiences as lenses. Already experienced as psychiatric nurses,

social workers, and psychiatrists, the contracted surveyors use these lenses to identify

concerns regarding active treatment ranging from the qualifications and language skills of

hospital staff to the participation of the art therapist in treatment team meetings. The

focus on active treatment pervades the survey process, with surveyors relying on each
The External Quality Review of Psychiatric Hospitals 15 OEI-01-99-00160

portion of the process--record review, patient observation, and caregiver and patient

interviews--to confirm the others.

Neither the Joint Commission nor the State agencies use this approach of tracing the

treatment of a sample of patients through medical records, observations, and interviews. 

While they do involve some patient focus, it is less central to the review process.

It has achieved some balance between the collegial (aiming to educate and

improve) and the regulatory (aiming to investigate and enforce) approaches to

oversight. 

It is helpful to consider external hospital oversight in terms of a continuum, characterized

by a collegial approach on one side and a regulatory approach on the other. External

reviewers in the collegial mode focus on education and improved performance; those in

the regulatory mode focus on investigation and enforcement of minimum requirements. In

the continuum below, we list the major characteristics we associate with each side.

Collegial Mode Regulatory Mode

(Educate and Elevate) ( Investigate and Enforce)

Cooperative Challenging

Flexible Rigid

Foster Process Improvements Enforce Minimums

Guidance Directive

Trusting Skeptical

Professional Accountability Public Accountability

Confidentiality Public Disclosure

Systems Focus Outlier Focus

Improve Patient Outcomes Minimize Preventable Harm

Both approaches to oversight have value. HCFA’s contracted surveyors, State agencies,

and the Joint Commission all have approaches that represent different aspects of the

continuum.

The Joint Commission remains the dominant external reviewer for psychiatric hospitals. 

And it has been grounded on the collegial side of the continuum. Its triennial surveys are

announced in advance, giving hospitals time to prepare. Its process is educational: its

surveyors share insights from other hospitals and explain the intent and significance of the

standards. The surveys focus on performance improvement, giving hospitals opportunities

to present improvement projects throughout the visit. Its approach to adverse events

stresses research, education, and prevention.
The External Quality Review of Psychiatric Hospitals 16 OEI-01-99-00160

However, while the Joint Commission’s approach is still grounded in the collegial mode, it

recently made some changes in its accreditation of psychiatric hospitals that mark a shift

toward the regulatory mode. Over the summer of 1999, it conducted 38 completely

unannounced surveys at Charter psychiatric hospitals in response to the 60 Minutes II

piece on inappropriate restraint use and lack of staff training in Charter hospitals. The 13

Joint Commission assigned a special team of psychiatric surveyors to these unannounced

surveys. During the surveys, the team, rather than the hospital staff, selected the records

for review. The Joint Commission recently announced its plans to expand its new

unannounced surveys in other psychiatric hospitals and acute care hospitals as well. It is

planning tests of an unannounced survey with a focus tailored to the specific hospital and

expanded background information for surveyors.

These changes by the Joint Commission, coupled with the regulatory approaches of

HCFA’s contracted surveys and State agencies, introduce a measure of balance among the

external reviewers and their approaches. HCFA’s surveys lean toward the regulatory side

of the continuum. Their approach is challenging in nature. For example, rather than

relying solely on the medical record, they substantiate its documentation with observations

and interviews. The contracted surveyors focus on ensuring the minimum requirements

for the two special conditions are met. As directed by HCFA, they avoid an educational

approach and pay little attention to performance improvement, both hallmarks of a more

collegial approach. The hospitals have little opportunity for formally presenting

information to the surveyors. The surveyors discourage the hospital’s leadership from 14

accompanying them during parts of the survey, such as patient interviews, therapy

observations, and ward tours. State agencies are also rooted in the regulatory side of the

continuum. Their oversight tends to be driven by complaints and adverse events. Their

visits in response to such events tend to be unannounced. 

But the external review system also has major deficiencies.

The extent to which it holds psychiatric hospitals accountable for patient care is

questionable.

HCFA’s contracted surveys provide an in-depth look into the patient care at psychiatric

hospitals. Surveyors can uncover problems ranging from the adequacy of the treatment

plan to the handling of agitated patients. But their legitimacy in holding the hospital

accountable for those problems is far more limited. The two special conditions on which

the contracted survey is based are staff requirements and medical records. Thus, despite

the far-reaching nature of their inquiry, the contracted surveyors are hard-pressed to hold

hospitals accountable for problems outside either medical records or staff requirements. If

the contracted surveyors find problems but the conditions are still met, they can refer the

problems to HCFA or State agency surveyors, but do not follow-up on the problems

themselves.
The External Quality Review of Psychiatric Hospitals 17 OEI-01-99-00160

On the other hand, both the Joint Commission and State agencies (through HCFA and/or

their own State authorities) have broader authorities on which to base their survey

findings. Indeed, the Joint Commission has several hundred standards grouped across 45

topics, and State agencies can enforce all of the Medicare conditions of participation. 

However, both lack the in-depth look into patient care that the contracted surveyors have. 

And State agencies’ reviews of psychiatric hospitals tend to be further limited by their

episodic nature. They are driven by complaints and adverse events as opposed to

regularly scheduled reviews.

Discharge Planning. The limits of the external review system are especially apparent

in assessing hospitals’ discharge planning. Discharge planning refers to hospitals’ efforts 15

to ensure continuity of care for their patients after discharge by linking them with their

families, clinics, schools, and residential programs, among other community services. 

Increasing acuity and decreasing lengths of stay make successful discharge planning

increasingly crucial for psychiatric patients. And the external review system--which is 16

hospital-based--only goes so far in assessing how well a hospital links patients with

community providers or connects with a patient’s family. For example, HCFA’s

contracted surveyors have just an indirect and narrow window to assess discharge

planning through either the medical records or the staff requirements condition. Likewise,

the Joint Commission lacks a scheduled session dedicated to discharge planning. Both

HCFA’s contracted and Joint Commission surveyors review records of discharge

planning, which document contacts, but fall short of assessing adequacy. Furthermore,

neither HCFA’s contracted surveyors nor Joint Commission surveyors know much

background about a hospital--such as average length of stay, where the patients come

from, the extent of local services, or staff turnover--prior to the survey, making a

meaningful assessment of discharge planning unlikely. Surveyors are hardpressed to

assess whether hospitals are taking adequate advantage of external services. 

Restraints and Seclusion. Like discharge planning, the appropriate use of restraints

and seclusion are critically important patient care topics. Unlike discharge planning,

restraints and seclusion receive considerable attention from the external reviewers. 

HCFA’s contracted surveyors review restraint logs, ask patients and caregivers about

restraints, examine seclusion rooms, and review any documentation in the medical records. 

But as with discharge planning, HCFA’s contracted surveyors have a limited regulatory

basis to hold a psychiatric hospital accountable for inappropriate use of restraints.17

The Joint Commission gives restraints and seclusion more attention, and has for some

time. Since 1984, when it first adopted restraint standards, it has been working to

improve them: it revised them in 1989, broadened their application in 1991, revised them

again in 1993, appointed a Board Task Force on restraints in 1996 and a Restraint Use

Task Force in 1998. Even more recently, the Joint Commission held a series of three 18

public hearings on restraint use. 

19
The External Quality Review of Psychiatric Hospitals 18 OEI-01-99-00160

Words of Warning to the Medical Staff

“Psychiatric hospitals are under a

microscope...Everyone is upset about how you

use restraints. The 60 Minutes Show reflects the

peoples’ perceptions of your hospital. You are

obligated to make them change their minds...It is

a challenge to be attentive and thoughtful with

restraints. Some hospitals put their staff and

physicians in them to see what it is like. And in

every case those staff and physicians will be less

likely to use restraints. It’s a question of

dignity. Restraints are dehumanizing. You must

ask yourselves: Are you using them only when

you’ve tried everything else?”

-A Joint Commission psychiatrist, in his remarks

to the medical staff leadership at a psychiatric

hospital, during the triennial accreditation

survey (spring, 1999).

Attention to restraints and

seclusion pervades the Joint

Commission survey process. 

Surveyors stop orderlies and

custodians in the hallways to ask

them what they should do if a

nearby patient became agitated. 

They review medical records for

proper documentation and

personnel records for evidence of

proper training. They examine

seclusion rooms for safety. In

fact, for the past 2 years, restraintrelated deficiencies have been

among the top five most

commonly identified deficiencies

in psychiatric hospitals.20

Nevertheless, as evidenced by the

60 Minutes II segment on restraint

abuses in an accredited hospital,

the ability of the surveyors to

identify such abuses is questionable. Hospitals usually know the Joint Commission is

coming and prepare for the survey, thereby perhaps presenting surveyors with only a slice

of the hospital’s actual operations.

Of course, no system of hospital oversight is foolproof. The continued evidence of abuses

concerning restraints and seclusion reinforces that external reviewers serve to reduce

risks--not guarantee appropriate treatment. They also serve to reinforce the important

safety valve that responding to complaints provides.

Some psychiatric hospitals are falling through the cracks, rarely being subjected

to contracted or State agency surveys.

Since FY 1993 the number of contracted surveys at psychiatric hospitals has dropped 65

percent: from a high of 413 to 146 in FY 1998. This drop reflects the reduced resources 21

available for these surveys. From FY 1993 to FY 1999 the budget for these surveys fell

from $3,000,000 to $670,000. During that same time, the number of contracted 22

surveyors fell from 147 to the current 76. Fewer contracted surveys means psychiatric

hospitals go longer without surveys. Since FY 1993, the average elapsed time between

contracted surveys has tripled from 14 months to 3.5 years. In fact, we identified 37

hospitals that have gone 5 or more years without a contracted survey, including 3 that

have gone 10 years. HCFA relies on input from its regional offices in selecting which
The External Quality Review of Psychiatric Hospitals 19 OEI-01-99-00160

psychiatric hospitals to survey each year. But regional participation in that process varies

greatly, and no mandated cycle for review of the special conditions exists.

As fewer and fewer contracted surveys have been conducted, HCFA’s contracted

surveyors are finding more hospitals out of compliance with the two extra conditions of

participation. In FY 1993, they found 13 percent of the psychiatric hospitals out of

compliance with one or both conditions. By FY 1998, 21 percent were out of compliance.

HCFA’s system for tracking psychiatric hospitals often misses hospital mergers, closures,

and name changes, making it difficult to accurately and easily identify which hospitals have

gone the longest without a contracted survey. The situation is even worse for

nonaccredited hospitals. HFCA’s records indicate that 65 of the 611 psychiatric hospitals

are nonaccredited. However, we determined that 26 of those 65 were, in fact, accredited. 

Over half--55 percent--of the nonaccredited psychiatric hospitals for which we had data

have gone longer than 3 years without a State agency survey; a third, 4 years; and a fifth,

5 years.

HCFA’s contracted surveyors, State agencies, and the Joint Commission tend to

carry out their psychiatric hospital oversight on independent tracks with little

coordination.

HCFA schedules the contracted surveys with little regard for any other external reviewer. 

Thus a hospital could, in short order, be surveyed by the contracted surveyors, the Joint

Commission, and the State agency. This could present a burden to the hospital being

reviewed. For example, both of the contracted surveys we observed were at hospitals that

had other reviews within 3 to 4 months: one had a Joint Commission survey prior to the

contracted survey; the other, a State agency survey to validate the results of the Joint

Commission’s survey. In neither case did the contracted surveyors have the results of

those surveys in advance. 

Even in cases of complaints or adverse events, HCFA rarely coordinates with the Joint

Commission. For example, a State agency received six complaints about a psychiatric

hospital with the highest level of accreditation (accredited with commendation). It

received the complaints within 7 months of the Joint Commission’s survey. These

complaints triggered a series of announced and unannounced surveys over the ensuing 12

months, beginning with a simultaneous State agency complaint investigation and

contracted survey. The State agency and contracted surveyors found the hospital to pose

an immediate and serious threat to its adolescent patients. Problems ranged from lack of

patient supervision, inappropriate use of restraints, and even sexual abuses. Even while

the local media picked up the story and the State agency and HCFA’s contracted

surveyors conducted more surveys and follow-ups, HCFA did not coordinate any of its

response with the Joint Commission.
The External Quality Review of Psychiatric Hospitals 20 OEI-01-99-00160

The contracted surveyors are held just minimally

accountable for their performance in overseeing psychiatric

hospitals.

HCFA obtains limited information on the performance of its contracted surveyors.

While validation surveys represent HCFA’s main vehicle for information on the

performance of the Joint Commission, they play no role in the oversight of the contracted

surveys. Over the past 3 years, 23 psychiatric hospitals ended up in the random sample 23

HCFA draws for validation surveys. But the special psychiatric conditions that the

contracted surveyors focus on are excluded from the validation process. Furthermore,

HCFA rarely observes the contracted surveyors conducting their surveys as a way to

obtain performance information.24

HCFA asks for little in the way of aggregate reporting on its contracted surveyors, 

despite contractual requirements calling for regular reports highlighting trends in surveys

conducted and their results. Occasionally, HCFA will ask for special reports, such as its 25

recent request for a rundown on survey activity in Charter facilities. Even HCFA’s own

data system is ill-equipped to provide insights into psychiatric hospital oversight. For

example, the database contains survey dates, but HCFA was unable to readily determine

whether the dates entered reflected contracted surveys or State agencies surveys. It was

also unable to determine through its database whether surveys were announced or

unannounced.

HCFA provides some feedback to its contracted surveyors, mostly through its

review of the survey documentation.

Given the drop in contracted surveys conducted, many contracted surveyors conduct only

a few surveys each year. Thus feedback and guidance from HCFA become important 26

avenues for the contracted surveyors to keep their survey skills sharp. Yet HCFA lacks

any formal system for providing feedback to them. Rather, the contracted surveyors

submit their survey documentation to HCFA’s central office, where one or two staff

review the paperwork and provide any guidance or feedback on a case-by-case basis. This

feedback focuses on the documentation, not the skills of the surveyors.

Contracted surveyors with whom we spoke expressed interest in receiving more feedback

and guidance from HCFA. One remembered an instance over her 10 years of surveying

when she received written feedback from HCFA, which she found useful. Others

suggested simply knowing more about the current trends in surveyor findings or recent

problems surveyors faced would be helpful to them. Although HCFA does convene the

contracted surveyors for training, this happens about once every 3 years.27
The External Quality Review of Psychiatric Hospitals 21 OEI-01-99-00160

Public disclosure plays a minimal role in holding the contracted surveyors

accountable.

Publicly disclosing information about psychiatric hospitals and their reviewers can convey

an assurance that a process exists for the external review of hospitals for which the

reviewers are accountable. Public disclosure can spur improvements on the part of the

hospital as well as the reviewers. HCFA will disclose survey findings on psychiatric

hospitals upon request, but lacks a web page or central number from which to request

such information. HCFA has little to disclose on the performance of the contracted

surveyors.
The External Quality Review of Psychiatric Hospitals 22 OEI-01-99-00160

RECOMMENDATIONS

HCFA and Joint Commission responses to the recommendations we posed in our recent

series on the external review of hospital quality help address the deficiencies identified in

this study (see appendix A for more detail on those recommendations). In its response,

HCFA committed to an action plan that incorporates most of our recommendations. It

identified specific steps it will take to hold the Joint Commission and State agencies more

accountable for their performance. It also committed to identifying an appropriate

minimum cycle for certifying nonaccredited hospitals. Since the reports came out, the

Joint Commission announced that it will increase its unannounced survey visits to

hospitals. It also set forth other plans that will contribute to a more challenging survey

process.

Below we offer five additional recommendations that emerge primarily from the findings

in this inquiry, but also draw on those in our previous series, which included acute care

hospitals with psychiatric units. Our recommendations call for HCFA to exert its

leadership in shaping the external review of psychiatric inpatient care. If enacted, these

recommendations will further strengthen external quality review systems intended to

protect psychiatric inpatients.

HCFA should deploy its contracted surveyors more

strategically and take better advantage of their expertise.

The 76 contracted surveyors serve as an important resource for HCFA. They are

psychiatrists, psychiatric nurses, and social workers with extensive experience with

psychiatric patients and facilities. They provide expertise that HCFA and the State

agencies would be hardpressed to duplicate. To take better advantage of this expertise,

we recommend that HCFA strengthen the contracted surveyors’ background in the full

range of Medicare conditions of participation for hospitals and make them available for:

Responding to complaints and adverse events involving psychiatric care:

HCFA rarely deploys its contracted surveyors to respond to complaints and adverse

events, relying instead on the State agencies as its frontline responders. The contracted

surveyors’ special expertise should be available to enhance the States’ ability to respond

appropriately to complaints and events.

Surveying in both psychiatric hospitals and psychiatric units of acute care

hospitals: Inpatient psychiatric units in acute care hospitals provide the majority of the

psychiatric care paid for by Medicare. We suggest that the contracted surveyors’
The External Quality Review of Psychiatric Hospitals 23 OEI-01-99-00160

expertise would be valuable to these units, which typically receive just a fraction of

surveyors’ time during an accreditation survey.

We are aware of the resource implications of this recommendation. HCFA currently

estimates the costs of each contracted survey at $8,300. HCFA could use its estimates to

seek additional funding or seek authority to establish a survey user fee to help defray the

costs.

HCFA should hold its contracted surveyors more fully

accountable for their performance.

The contracted surveyors provide expertise and perform an important review of

psychiatric hospitals on HCFA’s behalf. But they are part-time surveyors who rarely

gather as a group and conduct as few as three or four surveys a year. Thus, HCFA should

take steps to ensure that its contracted surveyors maintain their survey skills, are wellinformed on trends in survey findings, and that in general, they are upholding Federal

interests. Toward that end, HCFA should take the following steps that promote

accountability:

Conduct periodic observation surveys of the contracted survey process.

HCFA now lacks any such oversight mechanism of the contracted survey process. By

accompanying contracted surveyors, HCFA gets direct and immediate information on both

the performance of the hospital and the performance of the contracted surveyors.

Obtain timely and useful performance reports. HCFA’s tracking of psychiatric

hospitals and their survey results is not up to the task of providing a timely, relevant, and

up-to-date picture of the external review of psychiatric hospitals, let alone which hospitals

are currently accredited. HCFA should improve its tracking and get regular reports that

cover, at a minimum, the contracted surveyors’ activities, such as types of surveys

conducted, findings, and trends.

Provide feedback and guidance to the contracted surveyors. HCFA should

provide timely feedback to the contracted surveyors on the basis of its observation

surveys. Furthermore, given the contracted surveyors’ part-time status and the decline in

scheduled surveys, HCFA should consider establishing a newsletter or website to facilitate

a network among the surveyors.

Increase public disclosure. HCFA should make the results of the contracted surveys

widely available to the public through the Internet or other appropriate mechanisms. It

should also make available any performance reports it collects, as described above.
The External Quality Review of Psychiatric Hospitals 24 OEI-01-99-00160

HCFA should determine an appropriate minimum cycle for

the contracted survey at psychiatric hospitals.

This recommendation parallels one we made regarding nonaccredited hospitals in our

previous series. No mandated cycle for these contracted surveys exists. As with our

earlier recommendation, we are aware of this recommendation's resource implications.

In determining an appropriate minimum cycle, HCFA should take steps to strengthen its

ability to track all participating hospitals and their survey history in such a way that allows

HCFA to easily determine whether the surveys were conducted by the contracted

surveyors or State agencies. It should also take steps to coordinate the survey activity

(accreditation, validation, State agency certification, and contracted survey) among the

external reviewers.

HCFA should negotiate with the Joint Commission to

achieve both a more patient-centered survey approach and a

more rigorous assessment of discharge planning.

In our previous reports, we recommended HCFA negotiate a number of survey changes

with the Joint Commission. Here, we recommend that HCFA negotiate two more changes

that are especially relevant to psychiatric inpatients.

The Joint Commission is the primary external reviewer for 94 percent of the psychiatric

hospitals that participate in Medicare. As such, it has a routine presence in those hospitals

every 3 years. But it does not currently use the patient-tracing approach employed by

HCFA’s contracted surveyors. Applying such an approach could reinforce a patientcentered approach to the Joint Commission’s process. Likewise, the Joint Commission

has a significant base of experience in addressing discharge planning issues in nonhospital

settings, such as mental health centers and residential treatment centers. That experience

could be instructive in strengthening the review of discharge planning in psychiatric

hospitals.

HCFA should consider applying special Medicare conditions

of participation to both psychiatric hospitals and psychiatric

units in acute care hospitals.

Many experts suggest that psychiatric inpatients face vulnerabilities that warrant greater

scrutiny than most other hospital patients. But in this respect, the external review system
The External Quality Review of Psychiatric Hospitals 25 OEI-01-99-00160

that HCFA relies upon falls short in two important ways. First, it does not apply the

special conditions to psychiatric units of acute care hospitals, which is where the great

majority of Medicare beneficiaries receive inpatient psychiatric care. Second, in 28

psychiatric hospitals, the contracted surveyors are limited to assessing compliance with

only the two special conditions (medical records and staff requirements) even though their

patient-based review exposes a broad array of treatment issues.

Given this situation, it would appear timely for HCFA to consider special conditions that it

would use for both inpatient settings. If HCFA moved in this direction, the following are

among the key questions it would have to address:

C Do the proposed Medicare conditions of participation for hospitals and the interim

final rule on patient rights provide sufficient authority for the external reviewers to

apply the extra scrutiny warranted for psychiatric inpatients?

C Are additional authorities needed for key patient-care issues, including discharge

planning?
The External Quality Review of Psychiatric Hospitals 26 OEI-01-99-00160

COMMENTS ON THE DRAFT REPORT

Within the Department of Health and Human Services, we received comments on our

draft report from HCFA. Outside the Department, we received comments from the Joint

Commission, the National Association of Psychiatric Health Systems, the National

Alliance for the Mentally Ill, and Public Citizen’s Health Research Group. We include the

full text of those comments in appendix D. Below we summarize the comments and, in

italics, offer our responses.

HCFA Comments

HCFA concurred with all of our recommendations. It pointed to the recently expanded

regulations on Patient Rights that affect all inpatients, and include the rights of those

patients to be free from the inappropriate use of restraints and seclusion. It noted both its

planned training of the contracted, regional office, and State agency surveyors on those

regulations and its work on a new performance evaluation system for the contracted

surveyors. HCFA also indicated its willingness to explore using its contracted surveyors

in psychiatric units of acute care hospitals. It expects that recent funding increases to its

psychiatric program will allow it to reduce the interval between contracted surveys and

notes that it will explore how to further increase the funding. HCFA is committed to a

redesign of its system to generate trend reports on psychiatric hospital surveys. 

Furthermore, HCFA noted it will continue to work with the Joint Commission to improve

the oversight of psychiatric hospitals.

Finally, HCFA pointed out that psychiatric units in acute care hospitals that are excluded

from the prospective payment system are subject to regulations that generally parallel the

special conditions for psychiatric hospitals. It indicated that it will develop interpretive

guidelines for these parallel regulations as well as a plan for the contracted surveyors to

review them.

We appreciate HCFA’s positive response to our report. In implementing the

recommendations, HCFA will strengthen the system of external review intended to

protect psychiatric inpatients. We also note that the progress HCFA reports making in

working with the Joint Commission stemming from our earlier series, “The External

Review of Hospital Quality,” will further strengthen that system.

We have added some text on funding the contracted surveys, which is relevant to both our

call for using the contracted surveyors more strategically as well as for determining an

appropriate minimum cycle between surveys. We hope this new text will be helpful to

HCFA as it explores further funding increases.
The External Quality Review of Psychiatric Hospitals 27 OEI-01-99-00160

We are pleased with HCFA’s commitment to an improved system for generating

information on the psychiatric surveys, and we continue to urge HCFA to include reports

on recent trends in survey findings in its feedback to the contracted surveyors, through a

newsletter or website. Such feedback can enhance the effectiveness of those psychiatric

professionals, who survey only a few hospitals each year for HCFA.

Joint Commission Comments 

The Joint Commission identified many changes either already implemented or underway

that enhance the accreditation process and promote a patient-centered approach to

oversight. Among them are the discontinuation of any advance notice for random surveys,

enhanced presurvey information for surveyors, revised survey agendas to allow surveyors

more time to focus on patient issues, pilot testing of onsite survey activities during

evenings and weekends, and a more random selection of medical and personnel records

for review. It also noted its process, already underway, to strengthen its standards for

discharge planning.

The Joint Commission took issue with how we characterized the authority of the

contracted surveyors’ ability to hold psychiatric hospitals accountable for patient care

issues. It also took issue with our point that Medicare bears the cost of external review

either directly or indirectly, pointing out that while costs related to accreditation may have

been included in base-year calculations for prospective payment, a hospital’s decision to

continue to be accredited or not does not affect its Medicare reimbursement.

We appreciate the Joint Commission’s continued responsiveness to our

recommendations, both in this report and our previous series, “The External Review of

Hospital Quality.” The Joint Commission’s leadership on these issues can influence

improvements in accredited hospitals.

In response to the Joint Commission's concerns, we clarified our discussion of the limits

of the contracted surveyors’ authority and the extent to which Medicare bears the cost of

external review.

Comments of Other External Associations

To varying degrees, the external parties supported our findings and recommendations, but

also reflected some concerns. 

The National Association of Psychiatric Health Systems is opposed to “widespread

dissemination of information [about the performance of hospitals and surveyors] without

adequate explanation and protection” whereas Public Citizen expressed its concern that

without disclosure, "public discontent will grow."
The External Quality Review of Psychiatric Hospitals 28 OEI-01-99-00160

Both the National Alliance for the Mentally Ill and Public Citizen noted their concerns

about accreditation and called for an increase in funding for the contracted surveys.

In its comments, the National Alliance for the Mentally Ill recommended its State

organizations as a resource to the external review of psychiatric hospitals and pointed to

other resources on discharge planning in the Center for Mental Health of the Substance

Abuse and Mental Health Services Administration within the Department.

We suggest that HCFA consider the concerns raised by the stakeholders as it works to

improve the system of hospital oversight. They offer perspectives that can be informative

to HCFA.

On the matter of public disclosure, we emphasize our position that such disclosure

represents an important step toward enhancing the public accountability of the

contracted survey process and parallels recommendations we made in our earlier series,

"The External Review of Hospital Quality." 

With regard to the call for increase funding made by the National Alliance and Public

Citizen, we note the text added to our recommendation section. 
APPENDIX A

The External Quality Review of Psychiatric Hospitals 29 OEI-01-99-00160

Summary of 

The External Review of Hospital Quality Series

On July 20, 1999, the Office of Inspector General released the four reports named below.

A summary of each report follows.

The External Review of Hospital Quality: A Call for Greater Accountability

(OEI-01-97-00050)

The External Review of Hospital Quality: The Role of Accreditation (OEI-01-97-

00051)

The External Review of Hospital Quality: The Role of Medicare Certification

(OEI-01-97-00052)

The External Review of Hospital Quality: Holding the Reviewers Accountable

(OEI-01-97-00053)

A Call for Greater Accountability

This report synthesizes the three other reports and includes our recommendations to

HCFA.

Continuum of Oversight

In developing this report, we found it helpful to consider external hospital oversight in

terms of a continuum, characterized by a collegial approach on one side and a regulatory

approach on the other. Oversight in the collegial mode emphasizes trust, professional

accountability, and education. Oversight in the regulatory mode emphasizes

investigations, enforcement of minimum requirements, and public accountability.

Strengths and Deficiencies of External Hospital Review 

C The Joint Commission’s strengths are rooted in the collegial side of the continuum,

as its surveys focus on education, fostering improvement, and reducing risks. But
APPENDIX A

The External Quality Review of Psychiatric Hospitals 30 OEI-01-99-00160

these educationally oriented surveys are unlikely to detect patterns of poor care or

individual practitioners with questionable skills.

C The State agencies’ strengths are more rooted in the regulatory side, as they serve

as front-line responders to complaints and adverse events in both accredited and

nonaccredited hospitals. But they rarely conduct routine, not-for-cause surveys of

nonaccredited hospitals.

Overall, the System Is Moving Toward the Collegial Mode of Oversight

C The Joint Commission, which dominates hospital oversight, is already grounded in

the collegial mode, and is leading the movement. HCFA is clearing the way for

State agencies to follow with its proposed conditions of participation, which

deliberately parallel the Joint Commission’s approach.

C The movement toward the collegial mode may undermine patient protections. 

Both the collegial and regulatory modes have value, but as the system moves too

far toward collegial side, it leaves little attention to the investigatory and patient

protection efforts that are the core of the regulatory mode.

C The movement in hospital oversight contrasts significantly with the recent

movement in nursing home oversight that has emphasized regulatory approaches

such as surprise inspections, penalties, and public disclosure of survey results.

Limited Accountability to HCFA for Performance of Joint Commission and

State Agencies

C HCFA obtains little information on the performance of Joint Commission or the

State agencies. The value of validation surveys, its main vehicle to assess the Joint

Commission, is limited. HCFA has piloted a promising new approach, observation

surveys, but it has yet to issue any evaluation of the pilot. HCFA does not conduct

validation surveys of State agencies and conducts few observation surveys.

C HCFA provides little performance feedback to the Joint Commission and State

agencies. In fact, HCFA is more deferential than directive to the Joint

Commission. And while it is more directive with the State agencies, it gives them

little feedback on how well they perform their hospital oversight work.
APPENDIX A

The External Quality Review of Psychiatric Hospitals 31 OEI-01-99-00160

C Public disclosure plays only a minimal role in holding the Joint Commission and

State agencies accountable. The Joint Commission has been proactive in making

hospital survey results widely available, but HCFA has makes little information on

hospitals or State agencies available. By contrast, HCFA posts nursing home

survey results on the Internet.

Recommendations to HCFA

Guiding Principle: Perform Steering Role to Achieve Balance Between the

Collegial and Regulatory Modes

C A credible system of hospital oversight must reflect a reasonable balance between

both modes.

C HCFA must recognize the inherent strengths and limits of accreditors and State

agencies.

C HCFA must revise the proposed Medicare conditions of participation to (1) affirm

the importance of the regulatory role of State agencies, (2) recognize the vital role

that State agencies play in investigating complaints and adverse events, and (3)

eliminate the suggestion that fewer compliance surveys will be necessary by

working in a partnership mode with hospitals.

Recommendation: Hold the Joint Commission and State Agencies More

Accountable for their Performance

C Deemphasize validation surveys, reconsider observation surveys, and require

performance data.

C Negotiate the following with the Joint Commission to improve accountability and

achieve more balance: 

< More unannounced surveys, 

< More meaningful accreditation levels, 

< More random selection of records during surveys,

< More background information for surveyors,

< More input into survey priorities,
APPENDIX A

The External Quality Review of Psychiatric Hospitals 32 OEI-01-99-00160

< More rigorous assessments of hospital improvement efforts, and

< More attention to complaints.

C Assess periodically the justification for the Joint Commission’s deemed status.

C Increase public disclosure on the performance of hospitals, the Joint Commission,

and State agencies.

Recommendation: Determine Minimum Cycle for Certifying Nonaccredited

Hospitals

C Ensure nonaccredited hospitals are subject to routine external review.

The Role of Accreditation

Announced Surveys

C Announced Joint Commission accreditation surveys are wider than they are deep. 

They are carried out in a collegial and tightly structured manner, leaving little time

to pursue leads or respond to complaints. They serve as a means of reducing risk

and fostering improvement. They are unlikely to surface substandard care or to

identify individual practitioners whose judgement or skills are questionable.

C Although accreditation results matter enormously to hospitals, the results fail to

make meaningful distinctions across hospitals.

C Despite having 6 levels of accreditation, 99 percent of the hospitals surveyed by

the Joint Commission between May 1995 and June 1998 clustered in just 2 of

those levels: accredited with commendation (16 percent) and accredited with

recommendations for improvement (83 percent).

Unannounced Surveys

C The Joint Commission’s reliance on unannounced surveys is limited. It conducts

1-day, random unannounced surveys to ensure continued compliance with

accreditation standards between triennial surveys. From June 1995 through May
APPENDIX A

The External Quality Review of Psychiatric Hospitals 33 OEI-01-99-00160

1998, it conducted such surveys, providing 24 to 48 hours notice, on about 5

percent of its accredited hospitals.

Responses to Major Adverse Events and Complaints

C The Joint Commission treats major adverse events as opportunities for

improvement. Accordingly, it emphasizes education, prevention, and

confidentiality but limits public disclosure on the causes, consequences, and

responses to such events.

C The Joint Commission devotes little emphasis to complaints. Although it has

mechanisms for receiving complaints both within and outside the survey, its survey

process is not particularly geared to dealing with them.

Use of Standardized Performance Measures

C Despite the Joint Commission’s early plans to incorporate standardized hospital

performance data into its accreditation program, such data remain of limited value

to external assessments of hospital quality.

Role of Certification

Announced Surveys

C Routine State agency surveys of nonaccredited hospital are a low priority. The

State agencies’ limited budget goes to nursing home and home health agency

surveys first. Thus the backlog of Medicare certification surveys at nonaccredited

hospitals is growing: 50 percent of nonaccredited hospitals had not been surveyed

within 3.5 years as of late 1997, up from 28 percent in 1995. Elapsed time

between surveys has grown from 1.5 years to 3.3 years.

C HCFA’s certification surveys fail to make meaningful distinctions among

nonaccredited hospitals, simply resulting in a status of certified or not certified. 
APPENDIX A

The External Quality Review of Psychiatric Hospitals 34 OEI-01-99-00160

From January 1996 to June 1998, HCFA terminated just one hospital based on its

certification survey results.

Responses to Major Adverse Events and Complaints

C Complaints and sentinel events drive HCFA’s hospital oversight and precede

routine surveys in budget priority.

Use of Standardized Performance Measures

C HCFA has not sought to collect or disseminate standardized performance data for

nonaccredited hospitals.

Holding the Reviewers Accountable

C The HCFA holds the Joint Commission and the State agencies only minimally

accountable for their performance in reviewing hospitals.

Joint Commission

C HCFA’s main tools for overseeing the Joint Commission are validation surveys,

but these surveys are fundamentally limited because they are based on different

standards that are applied at different points in time. They are also expensive to

implement and based on a sample that is flawed. HCFA has piloted an observation

survey that has promise but remains undeveloped.

C HCFA obtains few reports about the Joint Commission’s performance.

C HCFA’s own feedback to the Joint Commission is of limited value. In fact, its

guidance on policy and procedural matters to the Joint Commission is negligible.

C The Joint Commission has been proactive in making hospital survey results widely

available on the Internet and through other means. HCFA, on the other hand,

makes little available on the performance of the Joint Commission.

State Agencies
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C HCFA conducts no validation surveys and few observation surveys at

nonaccredited hospitals to oversee State agencies’ performance.

C While it varies by region, nationally HCFA obtains little that reflects on the States’

performance specific to hospitals--indeed, it largely relies on States to assess their

own performance.

C HCFA gives State agencies limited feedback on how well they perform their

hospital oversight activities. However, it does give them considerable guidance,

often on a case-by-case basis.

C HCFA makes little information available to the public on the performance of

wither hospitals or the States. By contrast, it posts nursing home survey findings

on the Internet and Federal law requires nursing homes to post their findings as

well.
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Methodology

We collected information presented in this report from the following sources:

HCFA

We obtained data on the number of contracted surveys from HCFA’s consultant that

handles logistical support for the contracted surveyors. These data included the date, type

(recertification, follow-up, initial, and complaint), and results of surveys conducted by the

contracted surveyors.

We also obtained data from HCFA’s Online Survey Certification and Reporting System

(OSCAR). These data included surveys based on complaints at psychiatric hospitals and

the number of nonaccredited psychiatric hospitals. For the latter, we extracted the identity

of nonaccredited psychiatric hospitals and confirmed their accreditation status by visiting

the Joint Commission’s website.

We also interviewed staff and managers at HCFA’s central and regional offices. We

reviewed a variety of HCFA documents, including contracts and HCFA’s interpretive

guidelines for surveys, among others.

Joint Commission on Accreditation of Healthcare Organizations

We interviewed officials from the Joint Commission on Accreditation of Healthcare

Organizations. We also reviewed documents from the Joint Commission, including

accreditation manuals, policies, the briefing book for members of the Restraint Use Task

Force, and hospital survey protocols. We requested and received aggregate data from the

Joint Commission on sentinel events involving restraints and seclusion and on survey

activity in psychiatric hospitals.

Survey Observations

Based on schedules of upcoming Joint Commission surveys and HCFA’s contracted

surveys, we were able to observe two Joint Commission surveys and two HCFA

recertification surveys. The psychiatric hospitals we observed were located in both urban

and suburban locations, with bed sizes ranging from under 50 to over 400. The Joint

Commission surveys we observed were an announced triennial survey and a special

unannounced survey.
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Expert Interviews

We interviewed various stakeholders from around the country. They included mental

health officials from various States, practicing psychiatrists, experts in restraints and

seclusion, and discussions with surveyors from both the Joint Commission and HCFA.

Other Documents

In addition to the documents referenced above, we reviewed statutes, regulations,

legislative history, and a variety of articles from newspapers, journals, and websites.
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A Framework for Considering the 

External Review of Hospitals

The following five components present a framework for considering the external quality

review of hospitals. They are intended to complement the internal quality assurance and

improvement efforts that hospitals undertake themselves. They are approaches that health

care purchasers, such as Medicare and Medicaid, can rely upon to ensure that their

beneficiaries receive quality services from hospitals. They can also be of use to

beneficiaries and other consumers concerned about the quality of their hospital care.

We present the components to facilitate analysis of the extent and type of external review

that is desirable, whether carried out by accreditation bodies, certification agencies,

Medicare Peer Review Organizations, HCFA, or others. Each component has strengths

and limitations. Moreover, each can be used in support of a review philosophy based on

continuous quality improvement, more traditional compliance enforcement, or some

combination thereof.

We omitted a sixth component: the retrospective review of medical records to determine

appropriateness of care. Formerly a role of the Medicare Peer Review Organizations,

such medical record review is no longer carried out on such a large scale. However, some

medical record review does occur as part of the components described below.

1. Announced, On-Site Surveys of Hospitals

These involve some combination of observations of facility and equipment; reviews of

medical credentials, and other records and documents; and interviews. They result in a

pass/fail or some kind of score intended to distinguish level of performance. They can also

involve follow-up to correct or improve.

2. Unannounced, On-Site Surveys of Hospitals

The approach is basically the same as above except that the hospital has not had time to

prepare. The intent is to gain a clear assessment of the facility as it typically functions and

to trigger any necessary follow-up.
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The External Quality Review of Psychiatric Hospitals 39 OEI-01-99-00160

3. Response to Complaints Concerning Hospitals

These involve complaints of a particular instance of care or more encompassing matters

concerning a hospital’s performance. The response to complaints can range from a

minimal distant review to a thorough on-site review. The process can trigger corrective

actions and system improvements.

4. Response to Major Adverse Events in Hospitals

These involve cases where substantial patient harm resulted from what may be poor

performance on the part of the hospital and/or its practitioners. Here, too, the response

can range from minimal to thorough and can trigger corrective actions and system

improvements.

5. Collection and Dissemination of Standardized Performance Measures

The aim here is to establish the standardized use of measures in ways that enable

purchasers, consumers, accrediting bodies, and others to compare hospital performance. 

The comparisons can focus on a hospital’s own performance over time and/or on how its

performance compares to other hospitals. The data can be drawn from surveys of patients

or providers, billing claims, and the hospitals’ own records. 
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The External Quality Review of Psychiatric Hospitals 40 OEI-01-99-00160

Comments on the Draft Report

In this appendix we present the text of comments of all parties that responded to our draft report. 

They are:

CHealth Care Financing Administration, U.S. Department of Health and human Services

CJoint Commission on Accreditation of Healthcare Organizations

CPublic Citizen, Health Research Group

CNational Association of Psychiatric Health Systems

CNational Alliance for the Mentally Ill
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The External Quality Review of Psychiatric Hospitals 58 OEI-01-99-00160

1. U.S. General Accounting Office, Mental Health: Improper Restraints and Seclusion Use

Places People at Risk, GAO/HEHS-99-176, September 1999.

2. According to HCFA’s Online Survey and Certification Reporting System (OSCAR), 65

psychiatric hospitals are nonaccredited as of August, 1999. However, we determined that 26 of

those hospitals are, in fact, accredited.

3. These data are based on the four most common psychiatric DRGs in Medicare according to

the 1997 HCFA Customer Information Set: DRG 430 (psychosis), DRG 429 (dementia), DRG

426 (depressive neurosis), DRG 427 (neurosis except depressive), and DRG 428 (disorders of

personality and impulse control).

4. P.L. 89-97.

5. Psychiatric units in acute care hospitals are not subject to these extra conditions. 

6. 42 C.F.R. 482.60-62.

7. United States Code, Congressional and Administrative News: Legislative History, First

Session 1965, p. 1970.

8. HCFA published its proposed hospital conditions of participation on December 19, 1997 (62

Fed. Reg. 66,726). 

9. 64 Fed. Reg. 36,070, July 2, 1999.

10. Ibid., 36,089.

11. Congress also provided that hospitals accredited by the American Osteopathic Association

could be considered in compliance, but only to the extent that the Secretary deemed appropriate. 

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

12. Costs associated with accreditation may or may not have been included in the base-year

calculations under the prospective payment system, depending on the hospital’s accreditation

status at that time. Accreditation is voluntary, and whether or not a hospital elects to be

accredited does not change its reimbursement from Medicare.

Endnotes
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The External Quality Review of Psychiatric Hospitals 59 OEI-01-99-00160

13. As of May 2000, the Joint Commission reported that of the 38 Charter hospitals subject to an

unannounced survey, it accredited 2 with commendation, 29 with type 1 recommendations, 3

with conditional accreditation. Another four were not accredited. Since the unannounced

surveys, 17 of the 38 hospitals have closed and 3 were sold.

14. Current HCFA policy, as outlined in the State Operations Manual §2042, is to announce

surveys at psychiatric hospitals. However, practices vary across HCFA regions, with some

regional offices announcing and some not announcing upcoming surveys. In some cases, then, the

hospitals have no advance knowledge that the contracted surveyors are coming and thus are

unlikely to have presentations prepared for the contracted surveyors. HCFA is in the process of

clarifying its policy on announcing such surveys.

15. We recognize that current Medicare conditions of participation require discharge planning

but spell out no requirements for the execution of that plan, thus hospitals cannot be held directly

accountable for that process. However, inadequacy of the discharge plan’s execution could be

related to inadequacies in its planning.

16. According to the American Hospital Association, the length of stay in psychiatric hospitals

dropped 80 percent: from 204 days in 1974 to 41 days in 1997.

17. On July 2, 1999, HCFA issued an interim final rule on patient rights, which covers the use of

restraints. That interim final rule is outside the purview of the contracted surveyors.

18. Joint Commission on Accreditation of Healthcare Organizations, Restraint Use Task Force

Meeting: Agenda and Materials, May 26, 1999.

19. The Joint Commission held these hearings in early 1999: March 29 in San Francisco, April 6

in Atlanta, and April 13 in Washington, D.C..

20. In 1997, Joint Commission surveyors found the standard for time-limited orders for restraints

out of compliance in 16 percent of the psychiatric hospitals surveyed that year. In 1998, they

found that same standard out of compliance 10 percent of the time. (Data as reported by the Joint

Commission).

21. We based this analysis on the recertification surveys of the two special conditions, which

represent the majority of the surveys conducted by the contracted surveyors. Our analysis

excluded follow-up, initial, and complaint investigation surveys conducted by the contracted

surveyors.
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22. According to HCFA, the FY 1993 amount of $3,000,000 funded the contracted surveys for 7

months, from September 19, 1992 through March 1993. In April 1993, HCFA modified the

contract and budgeted an additional $1,187,370 for the next 12 months, taking the contract

through the remainder of FY 1993 and into FY 1994.

23. Validation surveys are on-site reviews of hospitals that are conducted some time after the

accreditors’ or State agencies’ own visits. 

24. HCFA did observe the contracted surveyors at a psychiatric hospital in late summer, 1999. 

That observation resulted in no written report nor formal performance assessment.

25. HCFA has a contract with Romain Consulting to provide logistical support for the contracted

surveyors. Romain schedules surveys at psychiatric hospitals, assigns surveyors, arranges travel,

and tracks the survey activity. HCFA’s contract with Romain calls for the following major

routine reports: (1) monthly progress reports, (2) monthly summary of meetings with HCFA, 

(3) quarterly expenditure reports, and (4) draft and final year-end reports. During the course of

our inquiry, we asked to review samples of the monthly reports as well as the year-end reports. 

HCFA responded that no such reports existed, referring us instead to Romain. Romain likewise

kept no such reports.

26. In FY 1997, 54 percent of the contracted surveyors conducted 3 or fewer surveys; In FY

1998, 42 percent. To date in FY 1999, 58 percent of the contracted surveyors conducted 3 or

fewer surveys (based on data reported by Romain Consulting).

27. According to HCFA, it trained all the contracted surveyors in January 1992, June 1995, and

April 1998. It provided training for newly recruited surveyors in both November 1992 and March

1999.

28. According to 1997 HCFA Customer Information Set data, 66 percent of the 497,159

psychiatric discharges were from psychiatric units in acute care hospitals and 27 percent were

from free-standing psychiatric hospitals.