Department of Health and Human Services 

OFFICE OF 

NSPECTOR GENERAL 

FEDERAL INITIATIVES TO IMPROVE 

STATE MEDICAL BOARDS’ 

PERFORMANCE 

w A 

g 

u I 

FEBRUARY 1993 
OFFICE OF INSPECrOR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services’ (HHS) 

programs as well as the health and welfare of beneficiaries served by those programs. This 

statutory mission is carried out through a nationwide network of audits, investigations, and 

inspections conducted by three OIG operating components: the Office of Audit Services, the 

Office of Investigations, and the Office of Evaluation and Inspections. The OIG also informs 

the Secretary of HHS of program and management problems and recommends courses to 

correct them. 

OFFICE OF AUDIT SERVICES 

The OIG’S Office of Audit SeAces (OAS) provides all auditing services for HHS, either by 

conducting audits with its own audit resources or by overseeing audit work done by others. 

Audits examine the performance of HHS programs and/or its grantees and contractors in 

carrying out their respective responsibilities and are intended to provide independent 

assessments of HHS programs and operations in order to reduce waste, abuse, and 

mismanagement and to promote economy and efficiency throughout the Department. 

OFFICE OF INVESTIGATIONS 

The OIGS Office of Investigations (01) conducts criminal, civil, and administrative 

investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of 

unjust enrichment by providers. The investigative efforts of 01 lead to criminal convictions, 

administrative sanctions, or civil money penalties. The 01 also oversees State Medicaid fraud 

control units which investigate and prosecute fraud and patient abuse in the Medicaid program. 

OFFICE OF EVALUATION AND INSPECHONS 

The OIG’S Office of Evaluation and Inspections (OEI) conducts short-term management and 

program evaluations (called inspections) that focus on issues of concern to the Department, 

the Congress, and the public. The findings and recommendations contained in these inspection 

reports generate rapid, accurate, and up-to-date information on the efficiency, vulnerability, 

and effectiveness of departmental programs. 

This report was prepared under the direction of Mark R. Yessian, Ph.D., the Regional 

Inspector General, and Martha B. Kvaal, Deputy Regional Inspector General, Boston Region, 

Office of Evaluation and Inspections. Participating in this project were the following people: 

Boston Region Headquartm 

David Veroff, Project Leader Alan Levine 
1 A 

Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

FEDERAL INITIATIVES TO IMPROVE�

STATE MEDICAL BOARDS’


PERFORMANCE


FEBRUMY 1993 oEI-ol-93mo 

—. 

INTRODUCTION 

PURPOSE 

To review proposed and recommended Federal 

boards’ disciplinary, licensure, and other quality 

BACKGROUND 

initiatives to improve State medical 

assurance efforts. 

State medical boards provide a vital front line of protection for the millions of people 

who receive medical care including those in the Medicare and Medicaid programs. 

They determine whether or not a physician meets the minimum necessary 

qualifications to practice medicine. And through their enforcement of State medical 

practice acts, they identi~ and take action against physicians responsible for poor 

quality care, unprofessional behavior, and other violations of these acts. 

In the past decade, State medical boards have steadily advanced their efforts in the 

areas of licensure and discipline. Boards have come up with significant new 

approaches, authorities, and resources to safeguard the public. Important efforts 

include: widespread use of national licensure exams, strict mandatory reporting laws, 

efforts to assist impaired physicians, re-education efforts, and aggressive prosecution of 

physicians who abuse or exploit patients. In addition, as we highlight in our report 

entitled “State Medical Boards and Quality-of-Care Cases: Promising Approaches,” 

States have begun a number of innovative and important efforts to address 

incompetent physicians and substandard care.l 

The boards, however, still have many problems. Their capacity to be effective is often 

hampered by lack of resources. Funding for boards is not always a high priority for 

State legislatures. While boards often raise substantial amounts of money through 

licensure and registration fees, in many States large proportions of these funds go into 

general revenues rather than the boards’ own budgets. Budget crises in many States 

in recent years have not helped this situation. Because of this and other limitations, 

boards have not been at the forefront of quality assurance efforts. 

The Office of Inspector General has a longstanding interest in the quality assurance 

efforts of State medical boards. Recent and upcoming reports include: 

� “State Medical Boards and Medical Discipline,” August 1990 (0EI-Ol-89-

00560), 

� “State Medical Boards and Medical Discipline: A State-By-State Review,” 

August 3990 (OEI-01-89-00562), 

� “Quality Assurance Activities of Medical Licensure Authorities in the United 

States and Canada,” Februag 1991 (OEI-01-89-00561), 

1 
� “Performance Indicators, Annual Reports, and State Medical Discipline: A 

State-By-State Review,” July 1991 (OEI-01-89-00563), 

�	 “The Peer Review Organizations and State Medical Boards: A Vital Link 

(Draft),” August 1992 (OEI-01-92-O0530), and 

�	 “National Practitioner Data Bank: Usefulness and Impact of Reports to State 

Licensing Boards (Draft),” October 1992 (OEI-01-90-00523). 

These reports have highlighted efforts States can take to protect the public from poor 

medical care. They have also identified a number of initiatives the Federal 

government could undertake to foster improvement in the boards. 

Several other proposals and reports have outlined new efforts the Federal government 

might undertake to improve the quality assurance efforts of State medical boards. 

The initiatives come from Congress, the Department of Health and Human Services, 

the Department of Justice and interagency task forces. Our cataloging of initiatives 

highlights significant proposals that have received widespread attention. 

This report is timed so as to provide the new Administration and Congress with a 

brief overview of potential Federal action to assist States’ quality assurance efforts 

focused at physicians. By presenting several crucial issues State medical boards face 

(summarized from our reports’ findings) and describing a number of Federal initiatives 

that we and others have recommended to address the problems, we hope to inform 

Congressional and executive office decision makers. We do not implicitly or explicitly 

either endorse or reject any of the other organizations’ proposed initiatives. 

We conducted our review in accordance with the Jnterim Standards for Inspections 

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

2 
PURSUIT OF QUALITY-OF-CARE 

CASES 

ISSUE: States have much difficulty pursuing quality-of-care cases. These cases 

are time-consuming and complex and require legal and medical 

expertise. States often have problems identiijing significant cases and 

investigating them. Some States have medical practice acts that make 

pursuing these cases even more diificuk 

OIG RECOM’’ENDATTONS: 

REQUIRE MEDICARE PEER REWEW ORGANIZATIONS (PROS) TO REPORT 

CERTAIN CASES: One of the difficulties boards have is that they do not receive 

complete and accurate information from complainants. The PROS could provide 

detailed and significant case information about poor-quality physicians. In our August 

1992 draft report entitled “The Peer Review Organizations and State Medical Boards: 

A Vital Link,” we recommended that the Health Care Financing Administration 

(HCFA) propose legislation mandating that PROS provide case information to State 

medical boards when they have confirmed, after medical review, that a physician is 

responsible for medical mismanagement resulting in significant adverse effects on the 

patient.2 An interagency task force on fraud, abuse, and waste echoed our 

recommendation .3 l%e HCFA did not concur with our recommendation. l%ey 

expressed concern that disclosure of this information would damage the cooperatz”ve 

relationship between the PROS and physicians that they are trying to foster. 

ALLOW STATE MEDICAID PROGRAMS TO SHARE CASE I“FORM4TION. 

Similarly, Medicaid agencies have information about quality problems. In our August 

1990 report entitled “State Medical Boards and Medical Discipline,”a we 

recommended that HCFA amend Medicaid regulations or propose legislation to allow 

State Medicaid agencies to share with the medical boards case information on 

physicians against whom they have taken adverse action. In response to the 

recommendation, HCFA aqyed that action on the Medicaid reporting was unnecessa~ 

since the HHS Ofice of General Counsel had made clear that State law determines 

whether thk information is reportable. Howeve~ the Omnibu Budget Reconciliah’on Act 

of 1990 requires State Medicaid agencies to notijj their State k medical board when a 

physician is terminated, suspended, or otherwise sanctioned. The HCFA has not 

publiihed regulations to implement thk prowkion. 

PROMOTE IDENTIFICATION OF QUALITY PROBLEMS IN NURSING HOMES: 

In our “Boards and Discipline” report, we recommended the Administration on Aging 

(AoA) and HCFA assure that the Long Term Care Ombudsman Program and the 

aHereafter referred to as “Boards and Discipline.” 

3 
States’ survey and certification agencies provide assistance to State medical boards in 

identifying instances of improper medical care provided to nursing home residents. 

While AoA fhllj concured with our report and sent copies of the report to Ontbu&nan 

program administration, HCFA asked for firther clarification. We provided firther 

explanation in our jinal report. 

ENCOURAGE BOARDS TO USE PROS TO ASSIST ON QUALITY-OF-CARE 

CYISES: Some boards have difficulty getting access to medical opinions on quality-ofcare cases. In our “Boards and Discipline” report, we recommended that PHS in 

collaboration with HCFA determine ways to encourage and assist boards to contract 

with PROS to conduct reviews of quality-of-care cases. Z7zePHS concurred with our 

recommendation, but felt it was HCFA h role to provide encouragement and assktance to 

States on this issue. l%e HCFA also concurred with our recommendation, but has not 

provided any encouragement or assistance. 

PROK?DE ASSISTANCE TO STATES TO IMPROVE INJ?ESTIGAT~ EFFORTS: 

In our “Boards and Discipline” report, we recommended PHS provide financial 

support for technical assistance intended to improve boards’ investigative efforts. We 

also recommended that PHS, through its Agency for Health Care Policy and Research, 

provide demonstration funding concerning the use of practice standards and guidelines 

to guide investigative efforts in quality-of-care cases. 7he PHS concurred with both 

recommendations and has begun discussing the use of pracn”cestandards and guidelines 

with States. 

O12%ERPROPOSED FEDERAL IN~17’Kt?S: 

PROVDE ASSISTANCE TO STATES TO EVALUATE MEDICAL PRACTICE ACTS: 

Some States’ medical practice acts could be improved to allow boards and their staff 

more authority to investigate and prosecute incompetent or unprofessional physicians. 

A report from an HHS task force recommended the Department provide technical 

assistance to States for educating legislators on evaluations of their medical practice 

acts? l%e Public Health Service has, in ~hepast, awarded grants to the Federation of 

State Medical Boar& to provide technical assistance to States to improve their practice 

acts and to develop a model medical prach”ceact. There k no such effort cuvently. 

4 

— 
PROACTIVE QUALITY ASSESSMENT�

AND ASSURANCE�

ISSUE	 After initial I.icensure examinations, State medical boards have little or 

no role in proactively assessing and assuring quality medical care. All 

boards respond to complaints and reports about poorquality care, but 

few do anything either to independently assess and address individual 

physician performan= or to promote improved quality of care for all 

physicians. 

OIG RECOMUEJWAITONS: 

TEST RANDOM PRACTICE AUDITS: In our February 1991 report entitled “Quality 

Assurance Activities of Medical Licensure Authorities in the United States and 

Canada,’fb we recommended that PHS provide demonstration funding to States on the 

use of random practice audits as preventive, quality assurance measures. This report 

noted the successful use of random practice audits, particularly with isolated 

physicians, to assess performance and improve practices. Z7ie PHS concumed with the 

intent of the recommendation, but believes that medical review criteria and medical 

outcomes measures must be more&l& developed pn”orto implementah”on. 

OXHER PROPOSED FEDERAL IN~ZMZS: 

REQUIRE PERIODIC REEMMIN?ATION OF PHYSICJ%NS EITHER THROUGH 

THE BOARDS OR THROUGH THE DEPARTMENT OF HEALTH AND HUMAN 

SER~CES (HHS): Recently proposed legislation would have required every physician 

treating Medicare patients to take a recertification examination eve~ seven years.5 

The examination, if administered by a State medical board, would have to be 

approved by the Secretary of HHS. Otherwise the examination would be provided 

directly by HHS. This legislation was not voted on in 1991 or 1992. 

REQUIRE STATES TO IMPLEMENT QUALITY ASSURANCE PROGRAMS: 

Recently proposed legislation would have required each State to implement quality 

assurance programs that, among other things, would establish standards of care in 

areas where there is a great risk of negligence. G This legislation was not voted on in 

1992. 

bHereafter referred to as ‘QA Activities.” 

5 
PERFORMANCE ASSESSMENT 

ISSUE	 State medical boards have not been able, over the years, to gauge their 

performance in relation to other State medical boards. More active 

assessment of performance would allow States to focus resources and 

effectively present to the public and to State legislatures their 

accomplishments and needs. 

OIG RECOMMEJWAZZONS: 

PROIZDE ASSISTANCE FOR DEK!5LOPMENT OF PERFORMANCE 

INDICATORS: In “Boards and Discipline,” we recommended that PHS provide 

financial support for the development of performance indicators suitable for 

widespread use by State medical boards. A Department of Justice task force 

recommended HHS itself develop indicators of performance. l%e PHS has supported 

the Federation of State Medical Board’s efforts to develop a peflormance assessment 

program (SAI). Approximate~ seventy indicaton have been developed, but are not 

cun-ently used widely. A second phase of the project, which would involve 

implementation, k scheduled for completion by the end of 1993. 

COLLECT ANALYZE, AND DISSEMINATE STATE-BY-STATE DATA: In “Boards 

and Discipline,” we recommended that PHS collect, analyze, and disseminate State-byState data on staffing, revenues, expenditures, and caseloads of State medical boards. 

7he PHS concurred with this recommendation. The SAI may eventually fulfill this need 

if the information gathered k disseminated. 

OXHER PROPOSED FEDERAL IN~TM5S: 

DEZl?LOP AND REQUIRE BOARDS TO REPORT INFORMATION RELEVANT TO 

PERFORA4XNCE CRITERM: Recently proposed Federal legislation would require 

the Secretary of Health and Human Semites to develop regulations that specify 

performance criteria for medical boards.’ The legislation also would require States to 

collect, analyze, and supply the Secretary with information and data on staffing, 

revenues, disciplinary actions, expenditures, caseloads, and the use of continuing 

medical education programs to demonstrate adherence to the criteria. This legislation 

has not been voted on in 1993. 

6 
FUNDING 

ISSUE	 Medical boards often are inadequately tided. This lack of funding 

restricts boards’ ability to address disciplinary issues adequately and to 

be proactive in assuring quality. 

OIG RECOMMENDAZTONS: 

ENCOURAGE THE SIL4RLNG OF INFORM4TIONABOUT ADDRESSING 

RESOURCE LIMITATIONS: In mu- “Boards and Discipline” report, we recommended 

that PHS convene a national meeting to focus attention on the importance of the 

boards’ oversight role and to examine how the boards’ resource and other limitations 

should be addressed. We also recommended, and a Department of Justice group 

concurred,8 that PHS develop performance standards that would, among other things, 

compare State medical boards on the basis of licensure revenue and expenditures. 

l%e PHS concurred with our recommendations and has, as mentioned before, helped 

develop SAI which includes questions about revenue and expenditures. 

PROKTDE FINANCLAL SUPPORT FOR PROACTIVE/INNOVAT~ ACT~TIES: 

As mentioned above, in our “Boards and Discipline” report we recommended that 

PHS provide financial support for a number of important developments. We 

recommended that PHS provide funds for the development of performance indicators 

suitable for widespread use by State medical boards, funds for technical assistance 

efforts intended to improve the boards’ investigative efforts, and, through the Agency 

for Health Care Policy and Research (AHCPR), demonstration funds concerning the 

use of practice standards and guidelines to guide investigative efforts in quality-of-care 

cases. As mentioned above, in our “QA Activities” report, we recommended that PHS 

provide demonstration funding on the use of random practice audits as preventive 

quality assurance measures. 7%e PHS concurred with all of these recommendations 

except the last. 

02HER PROPOSED F~ERi4L INITL477’KES: 

REQUIRE T~T THE TOTAL MllOUNT OF FEES PAID BY PHY5’ICL4NS BE


ALLOCATED TO BOARD ACTIWTIES: In many States, a large proportion of the


licensure and registration fees collected by boards are used to support general


activities of the State government, and are not dedicated to the boards’ activities.


Recently proposed legislation would have required States, in order to receive Federal


PHS or Medicaid funding, to certify that they allocate the total amount of fees paid


for licensing or certification of health care practitioners to the agencies responsible for


disciplinary actions. 9 Neither piece of legislation was voted on in 1992. 

7 
CONCLUSION 

State medical boards are responsible for assuring the basic competence of all 

physicians. A medical license allows physicians to practice on patients with almost no 

restrictions. Since the Federal government has a direct role in assuring that Medicare 

and Medicaid patients are given adequate medical treatment and has an indirect role 

in promoting the health and well-being of all Americans, the OIG and others in 

Federal government have great interest in making sure that State medical boards are 

doing their jobs in protecting the public. 

The Federal government can have a significant role in encouraging, funding, and, in 

some cases, mandating improvements in medical boards. This does not, however, 

imply that they have any explicit oversight authority over boards or that States 

themselves do not have responsibility for boards’ performance. All of the initiatives 

described in this report must supplement active and effective State involvement to 

assure quality medical care. 

8 
APPENDIX A 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

NOTES 

“State Medical Boards’ Pursuit of Quality-of-Care Cases: p~omising 

Approaches,” 0EI-01-92-OO050, Februaxy 1993. 

We and others have been urging action in this area for years. In a 1986 report, 

“Medical Licensure and Discipline: An Overview,” we recommended that 

HCFA’S regulations be amended to require PROS to report more extensive and 

timely information to boards. In “Boards and Discipline,” we recommended 

legislation mandating that PROS share case information with boards. In 

December 1990, Congress, in the Omnibus Budget Reconciliation Act, required 

that PROS notify boards of physicians whom they have found responsible for 

serious quality-of-care problems. Congress, in the law, stipulated that 

notification was not to occur until after notice and hearing are granted to the 

physicians involved. 

“Health Care Anti-Fraud, Abuse and Waste Initiative,” State/Federal Model 

Legislation Working Group of the Administration’s Task Force on Health Care 

Anti-Fraud, Abuse, and Waste, September 17, 1992. 

Otis R. Bowen, M.D., “Report of the Task Force on Medical Liability and 

Malpractice,” Department of Health and Human Services, August 1987, p. 22. 

“The Medicare Physician Qualification Act of 1990,” H.R. 4464, (lOlst 

Congress). 

“Basicare Health Access and Cost Control Act,” S. 2346, (102nd Congress). 

“Health Care Choice and Access Improvement Act of 1993,” H.R. 150, (103rd 

Congress). 

“Medical Malpractice Reform Paper,” Department of Justice, Tort Law Reform 

Working Group (September 21, 1990). 

‘The American Health Quality Act,” S. 1836 in the 102nd Congress linked 

certain Medicaid funds to this requirement. “The Ensuring Access Through 

Medical Liability Reform Act of 1991,” S. 489 in the same Congress linked PHS 

funding to States to this requirement. 

A-1