Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JUNE GIBBS BROWN 

Inspector General 

JULY 1999 

OEI-01-97-00050 

The External Review of Hospital Quality 

A Call for Greater Accountability 
OFFICE OF INSPECTOR GENERAL 

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

protect the integrity of the Department of Health and Human Services programs as well as the 

health and welfare of beneficiaries served by them. This statutory mission is carried out through a 

nationwide program of audits, investigations, inspections, sanctions, and fraud alerts. The 

Inspector General informs the Secretary of program and management problems and recommends 

legislative, regulatory, and operational approaches to correct them. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 

Inspector General. It conducts short-term management and program evaluations (called 

inspections) that focus on issues of concern to the Department, the Congress, and the public. The 

inspection reports provide findings and recommendations on the efficiency, vulnerability, and 

effectiveness of departmental programs. 

OEI's Boston regional office prepared this report under the direction of Mark R. Yessian, Ph.D., 

Regional Inspector General. Principal OEI staff included: 

BOSTON HEADQUARTERS 

Joyce M. Greenleaf, Project Leader Jennifer Antico, Program Specialist 

Lynne G. Dugan, Senior Analyst Alan Levine, Program Specialist 

Meredith A. Vey, 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 
EXECUTIVE SUMMARY 

PURPOSE 

To provide a summary and recommendations based on our assessment of the external 

review of hospitals that participate in Medicare. 

BACKGROUND 

External Quality Review of Hospitals in the Medicare Program 

Hospitals are a vital part of our healthcare system, routinely providing valuable 

services. But they are also places where poor care can lead to unnecessary patient harm. 

This reality was clearly underscored in 1991, when a Harvard medical practice study 

revealed the results of its review of about 30,000 randomly selected records of patients 

hospitalized in New York State during 1984. The study found that 1 percent of the 

hospitalizations involved adverse events caused by negligence. On the basis of these 

findings, it estimated negligent care in New York hospitals in that year was responsible for 

about 27,000 injuries, including almost 7,000 deaths and close to 1,000 instances of 

“permanent and total disability.” More recently, a 1997 study of about 1,000 hospitalized 

patients in a large teaching hospital found that almost 18 percent of these patients received 

inappropriate care resulting in a serious adverse event. In the public eye, such scholarly 

inquiries have been overshadowed by media reports that describe, often in graphic detail, 

the harm done to patients because of poor hospital care. 

Hospitals rely upon many internal mechanisms to avoid such incidents and to 

improve the quality of care. External review serves as an additional safeguard. The 

Federal government relies primarily on two types of external review to ensure hospitals 

meet the minimum requirements for participating in Medicare: accreditation, usually by 

the Joint Commission on Accreditation of Healthcare Organizations, and Medicare 

certification, by State Agencies. About 80 percent of the 6,200 hospitals that participate 

in Medicare are accredited by the Joint Commission. 

This Summary Report 

This report synthesizes the findings we present in three parallel reports. It is based 

on our broad inquiry of the external quality oversight of hospitals, for which we drew on 

aggregate data, file reviews, surveys, and survey observations from a rich variety of 

sources, including the Health Care Financing Administration (HCFA), the Joint 

Commission, State agencies, and other stakeholders. 

Hospital Quality: A Call for Greater Accountability 1 OEI-01-97-00050 
The report, as our study as a whole, focuses on the roles played by the Joint 

Commission and the State agencies in reviewing hospitals and by HCFA in overseeing 

these bodies. Other bodies, most especially the Medicare Peer Review Organizations and 

State Professional Licensure Boards, play important related roles. We have reviewed their 

performance in numerous prior studies and will continue our examination of them in future 

studies. They are not discussed in this report. 

FINDINGS 

The current system of hospital oversight has significant strengths that help 

protect patients. 

Joint Commission surveys provide an important vehicle for reducing risk and 

fostering improvement. Hospital leadership takes these accreditation surveys seriously. 

Hospitals spend months preparing for them, seeking to ensure that their hospitals meet 

and, where possible, exceed the Joint Commission’s standards. 

State agency investigations offer a timely, publicly accountable means for 

responding to complaints and adverse events. The HCFA funds these investigations as 

a high priority. For both accredited and nonaccredited hospitals, they serve as a 

significant front-line response to major incidents involving patient harm. 

But it also has major deficiencies. 

Joint Commission surveys are unlikely to detect substandard patterns of care or 

individual practitioners with questionable skills. Quick-paced, tightly structured, 

educationally oriented surveys afford little opportunity for in-depth probing of hospital 

conditions or practices. Rather than selecting a random sample, the surveyors tend to rely 

on hospital staff to choose the medical records for review. Further, the surveyors typically 

begin the process with little background information on any special problems or challenges 

facing a hospital. 

The State agencies rarely conduct routine, not-for-cause surveys of nonaccredited 

hospitals. The percent of nonaccredited hospitals that have not been surveyed within the 

3-year industry standard has grown from 28 percent in 1995 to 50 percent in 1997. In 

some cases, nonaccredited hospitals, usually in rural areas, have gone as long as 8 years 

without a survey. 

Overall, the hospital review system is moving toward a collegial mode of 

oversight and away from a regulatory mode. 

Hospital Quality: A Call for Greater Accountability 2 OEI-01-97-00050 
A collegial mode of oversight is one that focuses on education and improved 

performance. It emphasizes a trusting approach to oversight, rooted in professional 

accountability and cooperative relationships. A regulatory mode focuses on investigation 

and enforcement of minimum requirements. It involves a more challenging approach to 

oversight, grounded in public accountability. It is helpful to consider external hospital 

oversight in terms of a continuum, characterized by the collegial approach on one side and 

the regulatory approach on the other. 

The Joint Commission, the dominant force in external hospital review, is leading 

this movement. It is grounded in a collegial approach to review that stresses education 

and improvement. It focuses on systems in its quest to improve hospital processes and 

patient outcomes. 

The State agencies are rooted in a more regulatory approach to oversight. But 

HCFA, through the proposed Medicare conditions of participation, is looking for 

them to follow the Joint Commission’s lead. Traditionally, the State agencies have 

emphasized investigatory approaches that aim to protect patients from harm more than to 

improve the overall standard of care. The proposed conditions call for them to move in a 

direction parallel to that of the Joint Commission. 

The emerging dominance of the collegial mode may undermine the existing system 

of patient protection afforded by accreditation and certification practices. It 

contrasts significantly with the current regulatory emphasis in nursing home 

oversight. Both the collegial and regulatory approaches to oversight have value. As the 

system increasingly tilts toward the collegial mode, however, it could result in insufficient 

attention to investigatory efforts intended to protect patients from questionable providers 

and substandard practices. 

For nursing homes, recent concerns about the quality of care provided have led to 

a HCFA crack-down involving more immediate penalties, surprise surveys, and posting of 

survey results on the Internet, with scant attention to collegial approaches. Such a heavy 

regulatory emphasis may well not be required for hospitals, but it does reinforce the point 

that when patients are found to be at risk, regulatory approaches have an important part to 

play. As we have noted, many recent studies and media reports make it clear that 

hospitals, too, are places where inappropriate care can and frequently does put patients at 

risk. 

The HCFA does little to hold either the Joint Commission or the State agencies 

accountable for their performance overseeing hospitals. 

The HCFA obtains limited information on the performance of the Joint Commission 

or the States. In both cases, HCFA asks for little in the way of routine performance 

reports. To assess the Joint Commission’s performance, HCFA relies mainly on validation 

Hospital Quality: A Call for Greater Accountability 3 OEI-01-97-00050 
surveys conducted, at HCFA’s expense, by the State agencies. But for a number of 

reasons the value of these surveys has been limited. The methodology for selecting the 

hospitals to survey fails to consider hospital size, type, or past performance. More 

fundamentally, the surveys have been based on different standards (the Medicare 

Conditions of Participation as opposed to the Joint Commission standards) and have been 

conducted subsequent to the Commission’s surveys (when hospital conditions could have 

changed). During 1996 and 97, HCFA piloted 20 observation surveys--during which 

State and HCFA officials accompanied Joint Commission surveyors. This approach 

appears to have much promise, but HCFA has not yet issued any evaluation of the pilots. 

The HCFA observes few hospital surveys conducted by State agencies and 

conducts no validation surveys of them. 

The HCFA provides limited feedback to the Joint Commission and the State 

agencies on their overall performance. Its feedback to the Joint Commission is more 

deferential than directive. Its major vehicle for feedback to the Joint Commission is its 

annual Report to Congress, which is based on the validation surveys and has typically been 

submitted years late. The HCFA is more directive to the State agencies, which carry out 

their survey work in accord with HCFA protocols, but gives them little feedback on how 

well they perform their hospital oversight work. 

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

agencies accountable. The HCFA makes little information available to the public on the 

performance of either hospitals or of the external reviewers. By contrast, HCFA posts 

nursing home survey findings on the Internet and requires nursing homes to post them as 

well. The Joint Commission has been more proactive than HCFA in making hospital 

survey results widely available on the Internet and through other means. 

RECOMMENDATIONS 

We offer one guiding principle and two recommendations that set forth ways in 

which HCFA can, over time, provide leadership to address the shortcomings we have 

identified in our inquiry, holding the Joint Commission and State agencies more 

accountable for their performance. 

GUIDING PRINCIPLE: The HCFA, as a guiding principle, should steer external 

reviews of hospital quality so that they ensure a balance between collegial and 

regulatory modes of oversight. 

The HCFA must recognize that both approaches have value and that a credible 

system of oversight must reflect a reasonable balance between them. In our assessment, a 

balanced system would involve the continued presence of on-site hospital surveys, both 

announced and unannounced; an ongoing capacity to respond quickly and effectively to 

Hospital Quality: A Call for Greater Accountability 4 OEI-01-97-00050 
<

<

<

complaints and adverse events; further development and application of standardized 

performance measures; and, even though it is not much in evidence at this time, a 

mechanism for conducting retrospective reviews of the appropriateness of hospital care. 

A balanced system would also be one in which performance measures are used to protect 

patients from harm as well as to improve the standard of care. 

In its steering role, HCFA must recognize the inherent strengths and limitations of 

accrediting bodies and the State agencies. Each contributes to the external review of 

hospitals, but they do so differently. Thus, in steering, HCFA should look to the Joint 

Commission to tilt (but not too far) toward the collegial end and the State agencies to tilt 

(but not too far) toward the regulatory end. 

RECOMMENDATION 1: The HCFA should hold the Joint Commission and State 

agencies more fully accountable for their performance in reviewing hospitals. 

< Revamp Federal approaches for obtaining information on Joint Commission and State 

agency performance by de-emphasizing validation surveys, giving serious consideration to 

the potential of observation surveys, and calling for more timely and useful reporting of 

performance data. 

< Strengthen Federal mechanisms for providing performance feedback and policy guidance 

to the Joint Commission and State agencies. Given the major role played by the Joint 

Commission, the public purposes associated with its special deemed status authority, and 

the importance of achieving a more balanced system of external review, HCFA should 

negotiate with the Joint Commission to achieve the following changes: 

 Conduct more unannounced surveys. 

 Make the “accreditation with commendation” category more meaningful, 

or do away with it altogether. 

 Introduce more random selection of records as part of the survey process. 

 Provide surveyors with more contextual information about the hospitals 

they are about to survey. 

 Jointly determine some year-to-year survey priorities, with an initial 

priority on examining credentials and privileges. 

 Conduct more rigorous assessments of hospitals’ internal continuous 

quality improvement efforts. 

 Enhance the capacity of surveyors to respond to complaints within the 

survey process. 

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

Hospital Quality: A Call for Greater Accountability 5 OEI-01-97-00050 
< Increase public disclosure on the performance of hospitals, the Joint Commission, and 

State agencies, by, at a minimum, posting more detailed information on the Internet. 

RECOMMENDATION 2: The HCFA should determine the appropriate minimum 

cycle for conducting certification surveys of nonaccredited hospitals. 

Nonaccredited hospitals are subject to limited external review other than those 

reviews triggered by complaints and adverse events. Unlike nursing homes and home 

health agencies, hospitals lack a mandated minimum cycle for surveys. While complaints 

and adverse events may well warrant priority over routine surveys, such surveys play an 

important role in external review, and by determining a minimum cycle HCFA can increase 

the level of attention to hospital oversight. 

COMMENTS 

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

our draft reports from HCFA--the Departmental agency to which all of our 

recommendations are directed. We also solicited and received comments from the 

following external organizations: the Joint Commission on Accreditation of Healthcare 

Organizations, the Association of Health Facility Survey Agencies, the American 

Osteopathic Association, the American Hospital Association, the American Association 

for Retired Persons, the Service Employees International Union, the National Health Law 

Program, and Public Citizen’s Health Research Group. In appendix E, we present each 

organization’s comments in full. Below, we summarize the thrust of the comments and, 

in italics, offer our responses. 

HCFA Comments 

The HCFA reacted positively to our findings and recommendations. It offered a 

detailed hospital oversight plan that incorporates our many recommendations. The plan 

reflects HCFA’s commitment to more frequent surveys of nonaccredited hospitals, to 

strengthened oversight of both the State agencies and the Joint Commission, and to a 

balance between collegial and regulatory approaches to oversight. In addition, HCFA 

presented a hospital performance measurement strategy based on developing standardized 

performance measures that are consumer- and purchaser-driven and that are in the public 

domain. 

The HCFA’s action plan is highly responsive to the recommendations we set 

forth. As it is carried out, it can be of considerable value in improving patient safety and 

the quality of patient care. 

Hospital Quality: A Call for Greater Accountability 6 OEI-01-97-00050 
Joint Commission and Association of Health Facility Survey Agencies Comments 

The Joint Commission and the State survey agencies, which the Association of 

Health Facility Survey Agencies represents, are the two key parties that HCFA relies upon 

to conduct external reviews of hospital quality. The Joint Commission agreed with the 

principle of balance between collegial and regulatory approaches, but regarded our 

concerns about an emerging dominance of the collegial approach to be unfounded. It also 

objected to the limitations we cited about its survey approach and to our conclusion that 

the Joint Commission devotes minimal attention to complaints. It did express support for 

stronger, more performance-oriented HCFA oversight of the Joint Commission. The 

Association, while agreeing with the thrust of our assessment, noted some reservations 

about phasing out the validation surveys in favor of an observation survey approach that is 

largely untested. 

We stress here, as we did in the text, the importance of a balance in oversight that 

avoids tilting too far toward either the collegial or the regulatory ends. We believe that 

we established credible bases for such a balanced approach. Similarly, we believe that 

our assessments of Joint Commission practices are balanced and well-supported. We 

identified various strengths that the Joint Commission brings to the field of quality 

oversight. We regard the limitations that we cited as an important part of the overall 

picture. With respect to the Association’s reservations about the observation surveys as 

a tool of oversight, we suggest that the problems we pointed out about the validation 

process are significant ones and that the potential of the observation surveys is 

compelling enough to warrant further exploration. 

Comments of Other External Organizations 

Overall, the other stakeholder organizations offered considerable support for our 

findings and recommendations. But they also expressed concerns. The American 

Hospital Association took issue with how we applied the collegial and regulatory concepts 

and stressed that hospital liability concerns preclude the kind of public disclosure we urge. 

The American Osteopathic Association noted reservations about more unannounced 

surveys and suggested that a closer review of medical care during on-site surveys would 

be more productive. The American Association of Retired Persons agreed with the thrust 

of our recommendations. 

The Service Employees International Union, the National Health Law Program, 

and Public Citizen’s Health Research Group called for even stronger Federal actions than 

we recommended. These included a stronger emphasis on regulatory approaches, greater 

reliance on unannounced surveys, more extensive public disclosure, and firmer HCFA 

action in overseeing the Joint Commission and in reassessing its deeming authority. 

Hospital Quality: A Call for Greater Accountability 7 OEI-01-97-00050 
These stakeholders raise concerns and urge directions that we often heard 

expressed during our study. As HCFA carries out its hospital quality oversight plan, we 

suggest that it take these perspectives into account. We believe that our 

recommendations (and HCFA’s announced action plan) sets forth a balanced course of 

action that draws to some degree on the insights of each of these stakeholders. This 

course is one that can substantially improve the external review of hospital quality in the 

years ahead. 

Hospital Quality: A Call for Greater Accountability 8 OEI-01-97-00050 
TABLE OF CONTENTS 

PAGE 

EXECUTIVE SUMMARY

INTRODUCTION ......................................................... 10

FINDINGS

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

Deficiencies of Hospital Oversight ........................................ 15

Oversight is Moving Toward a Collegial Mode .............................. 16

Little Accountability ................................................... 19

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

COMMENTS ON THE DRAFT REPORTS ................................. 32

APPENDICES

A: Medicare Conditions of Participation .................................... 35

B: Summary of the Roles of Accreditation and Certification ..................... 36

C: Methodology ...................................................... 37

D: Certification Survey ................................................ 40

E: Comments on the Draft Reports ....................................... 47

F: Endnotes ......................................................... 90

Hospital Quality: A Call for Greater Accountability 9 OEI-01-97-00050 
INTRODUCTION 

PURPOSE 

To provide a summary and recommendations based on our assessment of the 

external review of hospitals that participate in Medicare. 

BACKGROUND 

Hospital Safety 

Hospitals are an integral part of our healthcare system, offering services that 

improve, extend, and even save lives. But they are also places where inappropriate care 

can lead to unnecessary harm. This reality was clearly underscored in 1991, when a 

Harvard medical practice study revealed the results of its review of about 30,000 

randomly selected records of patients hospitalized in New York during 1984. The study 

found that 1 percent of the hospitalizations involved adverse events caused by negligence.1 

On the basis of its sample, the study team estimated that during that year, negligent care 

provided in New York State hospitals was responsible for 27,179 injuries, including 6,895 

deaths and 877 instances of “permanent and total disability.” Many other more recent 

studies have reinforced the concerns raised by the Harvard study. Of particular note was 

one that focused on the care received by 1,047 hospitalized patients in a large teaching 

hospital affiliated with a medical school. It found that 17.7 percent of these patients 

received inappropriate care resulting in a serious adverse event--ranging from temporary 

disability to death.2 In the public eye, these scholarly inquiries have been overshadowed 

by media reports that describe, often in graphic detail, the harm done to patients because 

of poor hospital care.3 

Hospitals rely upon a variety of internal mechanisms, from physician credentialing, 

to peer review and benchmarking, in order to try to avoid such incidents and to improve 

the quality of care provided in their facilities. External quality review serves as a vital 

additional safeguard. It provides a more detached, independent mechanism for assessing 

the adequacy of hospital practices. Such oversight is of fundamental importance to 

patients and to the public and private entities that purchase health care services on their 

behalf. Protecting patient safety and improving the quality of patient care must be a top 

priority of external review. 

Hospital Quality: A Call for Greater Accountability 10 OEI-01-97-00050 
Medicare’s Interest in External Hospital Quality Review 

The Medicare program covers about 38 million elderly and disabled individuals, 

many of whom are high users of hospital care.4 In 1997, Medicare spent about $136 

billion on Part A, the hospital insurance benefit.5 This figure is just over half the total 

amount the Federal government spent on all Medicare benefits.6 In the same year, 

Medicare spent over $80 billion for inpatient acute hospital care alone.7 

Since Medicare’s inception, external quality review has been a part of the 

Medicare program. When Congress enacted the Medicare Act in 1965, it required 

hospitals to meet certain minimum health and safety requirements to participate in the 

program.8 Those minimum requirements, called the Medicare conditions of participation, 

were published in 1966, revised in 1986, and are now being revised again (see appendix 

A).9 Within the Medicare Act itself, however, Congress provided that hospitals accredited 

by the Joint Commission on Accreditation of Healthcare Organizations were deemed to be 

in compliance with the conditions of participation. 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.10 Thus, accreditation by the 

Joint Commission or the American Osteopathic Association provides entree into the 

Medicare program. About 80 percent of the 6,200 hospitals that participate in Medicare 

are accredited by the Joint Commission. Those hospitals wishing to participate in 

Medicare without accreditation must go through a Medicare certification process. The 

Health Care Financing Administration (HCFA) relies on State survey and certification 

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

hospitals to determine compliance with the Medicare conditions. States currently certify 

1,442 nonaccredited hospitals nationwide.11 

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

a cost for the external review, either directly by funding State surveys or indirectly through 

hospital charges that include the overhead cost of periodic accreditation surveys. 

Both accreditation and Medicare certification involve a team of trained surveyors 

visiting a hospital, interviewing staff, reviewing documents, and inspecting the facility.12 

However, the nature of these processes is very different. 

The Nature of Accreditation 

Accreditation is a voluntary assessment process whereby industry experts define 

what standards organizations must meet in order to be accredited and then systematically 

review the organization’s performance against those standards.13 It is a form of selfregulation for which hospitals pay a fee.14 The Joint Commission enjoys a special status 

because, by Federal statute, hospitals accredited by the Joint Commission are deemed to 

meet the Medicare conditions of participation.15 As the largest accreditor of hospitals, 

Hospital Quality: A Call for Greater Accountability 11 OEI-01-97-00050 
accrediting about 80 percent of the nation’s 6,200 hospitals, the Joint Commission is 

responsible for the majority of the nation’s external quality review of hospitals. In 1972, 

Congress enacted amendments that gave the Health Care Financing Administration 

(HCFA) responsibility for overseeing the Joint Commission.16 

The Nature of Medicare Certification 

The Medicare certification process, on the other hand, is a public regulatory 

process that aims to ensure hospitals desiring to serve Medicare beneficiaries, but not 

desiring to be accredited, meet the conditions of participation. The HCFA relies on the 51 

State survey and certification agencies (hereafter called State agencies) to determine 

compliance with the Medicare conditions of participation. Hospitals pay no fee for this 

process. States agencies certify 1,442 nonaccredited hospitals nationwide.17 These State 

agencies are paid and trained by HCFA and use HCFA’s survey instrument to survey 

nonaccredited hospitals. 

This Inquiry and Report 

This inquiry focuses on the roles played by the Joint Commission and State survey 

agencies and by HCFA in overseeing these bodies. Other bodies, most especially the 

Medicare Peer Review Organizations and State professional licensure boards, also play 

important roles. We have reviewed their performance in prior studies and will continue to 

examine them in future studies.18 They are not discussed in this report. 

This report summarizes the three other reports that resulted from our inquiry and 

contains our recomendations. The other reports are: The Role of Accreditation (OEI-01-

97-00051), which assesses the Joint Commission’s approach to hospital accreditation; The 

Role of Medicare Certification (OEI-01-97-00052), which assesses the extent and nature 

of the external review for nonaccredited hospitals; and Holding the Reviewers 

Accountable (OEI-01-97-00053), which assesses how HCFA oversees both the Joint 

Commission and the State survey agencies. We offer a summary of two of the reports, 

The Role of Accreditation and The Role of Medicare Certification, in appendix B. 

Our inquiry draws on a variety of sources. These include: data from HCFA’s 

Online Survey Certification and Reporting System; aggregate data from the Joint 

Commission concerning hospital survey activity; a mail survey to State agencies in the 50 

States and District of Columbia (hereafter referred to as a State); observations of the 

hospital surveys conducted by the Joint Commission and State agencies; reviews of 

accreditation manuals, policies, and hospital survey files from the Joint Commission; the 

systematic gathering of information from representatives of HCFA central and regional 

offices, State agencies, the Joint Commission, American Hospital Association, consumer 

groups, professional associations, and representatives of other organizations we 

considered to be stakeholders in hospital oversight; and reviews of laws, regulations, and 

Hospital Quality: A Call for Greater Accountability 12 OEI-01-97-00050 
articles from newspapers, journals, newsletters, and magazines. We also interviewed 

officials from the American Osteopathic Association and reviewed their accreditation 

materials. The American Osteopathic Association accredits about 100 to 150 hospitals, 

some of which are also accredited by the Joint Commission. For purposes of this inquiry, 

however, we focused on the Joint Commission. See appendix C for more details on our 

methodology. 

A Systemic Review 

In this report we focus on the overall system of external review carried out by the 

Joint Commission, State survey and certification agencies and HCFA. We address issues 

that have a significant bearing on how well that system works. In so doing, we draw on a 

wide body of evidence from the sources we noted above. Our findings and 

recommendations represent our conclusions based on our assessment of this evidence. 

We present them with the intent of providing helpful directions on how HCFA, the Joint 

Commission, and the State agencies can play a more effective role in protecting patients 

and improving quality. 

We conducted this inspection in accordance with the Quality Standards for 

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

Hospital Quality: A Call for Greater Accountability 13 OEI-01-97-00050 
FINDINGS 

The current system of hospital oversight has some 

significant strengths that help protect patients. 

Joint Commission surveys provide an important vehicle for reducing risk and 

fostering improvement in hospitals. 

The Joint Commission’s triennial surveys form the core of its accreditation 

process. As such, they serve as the means for a Joint Commission presence in accredited 

hospitals every 3 years. Hospitals know the surveyors are coming, take the process 

seriously, and prepare for it. This institutionalizes attention to the basic protections that 

are encompassed within the Joint Commission standards--standards that promote the 

delivery of quality health care and are widely considered to be state-of-the-art. In 

preparing for the Joint Commission, many hospitals hire consultants to conduct mock 

surveys, update their manuals, and familiarize their staffs with the standards. While at the 

hospitals, the Joint Commission surveyors often take on the role of educator, explaining 

the standards’ intent and relationship to patient care. 

The Joint Commission has also been a leader in promoting performance 

improvement in hospitals. Indeed, attention to performance improvement pervades the 

entire hospital survey process: it is generally the topic of the opening session and most 

sessions include some discussion about improvement projects. The hospitals, in preparing 

for the surveys, display storyboards and posters highlighting their improvement projects 

throughout the hospital. 

State agency investigations offer a timely, publicly accountable mechanism for 

responding to complaints and adverse events in both accredited and 

nonaccredited hospitals. 

State agencies are the front-line responders to complaints and to major adverse 

events in hospitals. Adverse events involving serious patient harm often attract attention 

from the media and concerned citizens who clamor for information and reassurance. The 

State agencies’ investigations fulfill a vital role by ensuring the public’s safety is being 

looked after. The results of the State agencies’ investigations, which are based on the 

Medicare conditions of participation, are available to the public. 

Responding to complaints and adverse events is a high priority for the State 

agencies: HCFA ranks responding to such events third--after routine nursing home and 

Hospital Quality: A Call for Greater Accountability 14 OEI-01-97-00050 
home health surveys but before routine hospital surveys--in its priorities for State 

agencies’ survey and certification budgets. 

But it also has major deficiencies. 

Joint Commission surveys are unlikely to detect substandard patterns of care or 

individual practitioners with questionable skills. 

Joint Commission surveyors get a broad rather than in-depth view of hospitals they 

survey. The surveys generally last just a few days. The survey agendas are packed with 

back-to-back sessions that allow 45 minutes to an hour for most areas of the hospital. 

Furthermore, the surveyors lack much background information on the hospital that could 

help them hone their surveys. 

The surveyors’ broad view of the hospitals, coupled with the Joint Commission’s 

approaches to medical record and credentials reviews, make such surveys unlikely to 

uncover patterns or individuals responsible for poor care. First of all, surveyors do not 

select the records for review based on indications of poor quality. Indeed, the hospitals 

themselves often choose the records for review. In reviewing medical records, surveyors 

focus more on processes than appropriateness of care: surveyors “do not judge directly 

whether the care given is good or bad, right or wrong.”19 Likewise, the review of 

physician credentials and privileges falls short of identifying individuals whose skills may 

be questionable: the sessions are too short for an in-depth review, hospitals often choose 

the records themselves, and the questioning rarely uncovers marginal practitioners. The 

Joint Commission’s own publications note that the process “does not evaluate the quality 

of care provided by individual medical staff members.”20 

The State agencies rarely conduct routine, not-for-cause surveys of 

nonaccredited hospitals. 

Routine surveys of nonaccredited hospitals are a low priority. Only a few years 

ago, State survey agencies surveyed nonaccredited hospitals every year or two. But as of 

October 1997, the average elapsed time between surveys was about 3.3 years and 

growing. Indeed, fully half of the nonaccredited hospitals had not had a survey within 3 

years as of late 1997. The total number of certification surveys for nonaccredited 

hospitals fell from 286 in 1995 to 184 in 1997, a drop of 36 percent in 2 years. The 

decline in routine hospital surveys coincides with the dramatic rise in home health 

agencies, which States must also survey. 

The HCFA sets the survey and certification budget priorities for the State 

agencies: routine nursing home and home health agency surveys and responses to 

Hospital Quality: A Call for Greater Accountability 15 OEI-01-97-00050 
complaints of any kind all precede routine surveys of nonacredited hospitals.21 Unlike 

nursing homes and home health agencies, hospitals lack a mandated minimum cycle for 

surveying. For fiscal year 1998, HCFA funded State agencies to survey 10 percent of 

their nonaccredited hospitals and 60 percent of their home health agencies. 

Overall, the hospital review system is moving toward a 

collegial mode of oversight and away from a regulatory 

mode. 

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

Flexible

Foster Process Improvements

Guidance

Trusting

Professional Accountability

Confidentiality

Systems Focus

Improve Patient Outcomes

Challenging

Rigid

Enforce Minimums

Directive

Skeptical

Public Accountability

Public Disclosure

Outlier Focus

Minimize Preventable Harm

The Joint Commission is leading this movement toward the collegial mode. 

The Joint Commission is and has been the dominant force in the external review of 

hospitals. As such, its approach holds great sway. And its approach is grounded in the 

collegial mode. Indeed, its very mission statement demonstrates this: “to improve the 

quality of care provided to the public through the provision of accreditation and related 

services that support performance improvement in health care organizations.”22 Support 

for performance improvement is widespread. Its approach is grounded in the theory that 

Hospital Quality: A Call for Greater Accountability 16 OEI-01-97-00050 
improving overall performance even marginally is far more important than dealing with the 

poor performers at the margin.23 

The Joint Commission recently implemented a policy for dealing with serious 

adverse events in hospitals that embodies the collegial approach to oversight.24 This 

policy stresses research, education, and prevention--all laudable goals that favor the 

collegial side of the continuum. It relies on hospitals to self-report certain events, thereby 

stressing professional accountability and trust. And it emphasizes confidentiality for the 

self-reporting hospitals. Indeed, the success of the policy’s research and prevention goals 

rest in large measure on the safe venue that the assurance of confidentiality provides to 

reporting hospitals. Through this approach, the Joint Commission seeks to encourage 

hospitals to address a variety of adverse events that would never even come to the 

attention of the Joint Commission, the State agencies, the media, or the public in general. 

Other aspects of the Joint Commission’s hospital accreditation program also 

demonstrate it to be grounded in the collegial mode. For example, it has increasingly 

stressed systems and continuous quality improvement. Its surveyors tend to applaud 

hospitals’ improvement efforts with little skepticism of their underlying value. 

Furthermore, its announced surveys tend to be carried out in a collegial manner, focus on 

education, and leave little opportunity for the kind of digging or inspecting that would 

characterize a more regulatory approach. 

State agencies have traditionally stressed the regulatory mode. But HCFA, 

through the proposed Medicare conditions of participation, is looking for them to 

follow the Joint Commission’s lead. 

According to HCFA’s instructions, State survey agencies prioritize responding to 

complaints and adverse events higher than any other hospital-related activity.25 These 

surveys tend to be unannounced. They aim not only to investigate the event but also to 

respond to public fears about the safety of the hospital. Their focus tends to be on 

ensuring safety and preventing harm. All this grounds State agencies on the regulatory 

side of the continuum. Activities that would be more characteristic of the collegial mode, 

such as performance improvement projects, are not part of the existing Medicare 

certification system for hospitals. (For a summary of our observations of one Medicare 

certification survey conducted by a State agency, see appendix D.) 

By contrast, the proposed conditions of participation for hospitals, published on 

December 19, 1997, reveal a major move toward the collegial mode.26 They eliminate 

prescriptive, process-oriented conditions in favor of more patient-centered conditions, 

more nearly like those of the Joint Commission.27 They shift away from a focus on 

enforcing minimums toward one stressing improvements. Accordingly, they call for States 

to work in “partnerships for improvement” with the hospitals and they call for hospitals to 

conduct a minimum number of data-driven performance improvement projects.28 

Hospital Quality: A Call for Greater Accountability 17 OEI-01-97-00050 
At the core, the proposed changes appear to be constructive ones, because they 

give greater emphasis to actual hospital performance as opposed to mere paper 

compliance and because they will facilitate evaluations of the Joint Commission (because 

the proposed conditions are more nearly parallel to the Joint Commission’s standards). 

Yet, it is noteworthy that the proposed conditions fail to recognize the important role 

State agencies fulfill as front-line, publicly accountable responders to complaints and 

adverse events--situations where a “partnership” approach could be a disadvantage. In 

this context, it is also notable that the conditions suggest there may be a lesser need for 

on-site compliance surveys as hospitals and State agencies work together toward 

improvement. The frequency of such surveys, as we have noted, has dropped significantly 

in recent years. 

The emerging dominance of the collegial mode may undermine the existing 

system of patient protections afforded by accreditation and certification 

practices. It contrasts significantly with the current regulatory emphasis toward 

nursing home oversight. 

The collegial mode holds much promise, with its focus on systems and 

improvements. We do not seek to discredit it. But we find that there is a danger of 

relying too heavily upon it as the basis for external oversight. In this context, we direct 

attention to the recent conclusions of the National Roundtable on Health Care Quality, 

convened by the Institute of Medicine.29 The Roundtable’s conclusions support a 

balanced approach to oversight, one that avoids depending too extensively on any one 

approach. In addressing the collegial approach represented by continuous quality 

improvement initiatives, it indicates that advocates can point to important successes, 

especially “when used as an integral part of a scientific approach to improving clinical 

practice.”30 But the Roundtable also pointed out that minimal data exist to document the 

effectiveness of this approach, and that “even exemplary practitioners have had difficulty 

in disseminating its benefits uniformly throughout their institutions.” 

In addressing the regulatory approach, the Roundtable underscored that it “is the 

only mechanism we have to protect the public from egregiously poor providers.”31 But 

then it added that this approach tends to be “inflexible” and is poorly suited “to motivate 

those already performing well to strive for even greater achievement.”32 

This emerging emphasis on a collegial approach to hospital oversight contrasts 

significantly with the highly regulatory approach being taken toward nursing home 

oversight. During 1998, a HCFA Report to Congress, a General Accounting Office report 

on nursing home oversight, a congressional hearing, a presidential press conference, and 

various HCFA announcements have all reiterated the inadequacy of current nursing home 

oversight practices and called for much tougher enforcement.33 Among the many 

initiatives being taken or proposed are those calling for immediate penalties on nursing 

homes violating Federal standards, more “surprise” inspections on weekends and at night, 

Hospital Quality: A Call for Greater Accountability 18 OEI-01-97-00050 
posting of information on the Internet information about nursing home survey results, and 

background criminal checks on nursing home personnel. The initiatives are presented as 

part of a “crack down” that involves tough, no-nonsense enforcement.34 One finds little 

mention of collegial approaches involving continuous quality improvement. 

Our point in noting this contrast is not to address the merits of these nursing home 

initiatives or to suggest that they be mirrored in hospital oversight. Rather, it is to 

reinforce the point that regulatory approaches have a place in oversight systems intended 

to protect patients. In our conversations with stakeholders, we have heard that such 

tough approaches toward hospitals are unwarranted because hospitals lack a similar 

history of patient abuses, because they have more peer review and physician involvement, 

and because they have more community involvement. These are reasonable points, but we 

found no data to support a contention that hospitals are safer places than nursing homes, 

and recent studies and media reports reinforce the point that hospitals are, indeed, places 

where inappropriate care can and often does lead to patient harm. 

The HCFA does little to hold either the Joint Commission or 

the State agencies accountable for their performance in 

overseeing hospitals. 

The HCFA obtains limited information on the performance of the Joint 

Commission or the State agencies. 

The HCFA has relied on three major mechanisms for obtaining performance 

information: validation surveys, observation surveys, and reports. For the Joint 

Commission, HCFA uses mostly validation surveys, through which State surveyors 

conduct reviews of accredited hospitals after a Joint Commission survey. But for a 

number of reasons the value of these surveys is limited. They are based on different 

standards that are applied at different points in time. The HCFA’s methodology for 

selecting the sample of hospitals to validate fails to consider hospital size, type, or past 

performance.35 Furthermore, validation surveys are costly to conduct. The HCFA does 

not conduct such surveys to monitor the State survey agencies’ performance. 

The observation surveys, on the other hand, aim to address the fundamental flaws 

of the validation surveys, as HCFA and/or State surveyors accompany Joint Commission 

surveyors to hospitals and observe the survey directly. But HCFA uses these surveys only 

minimally. The HCFA piloted observation surveys with the Joint Commission in 20 

hospitals in 1996 and 1997, but its plans for expansion are unknown. And among the 

HCFA regional offices, charged with overseeing the State agencies, only 6 of 10 reported 

conducting observation surveys to monitor the States’ performance in hospitals. 

Hospital Quality: A Call for Greater Accountability 19 OEI-01-97-00050 
Finally, HCFA asks for little in the way of routine reporting from the Joint 

Commission or the State agencies. Indeed, most of what it asks for from the Joint 

Commission is simply scheduling information used to carry out the validation surveys. 

The HCFA asks for little in the way of aggregate data on accreditation survey trends or 

results, complaints or adverse events, or surveyor training. Likewise, on a national basis, 

HCFA obtains little information on the State agencies’ performance specific to hospitals. 

Rather, it gets a rather superficial and blurred picture of the States’ performance across 

provider types, such as nursing homes, home health agencies, and hospitals. Furthermore, 

HCFA does not track trends of such basic information as how many termination notices it 

issues based on the findings of certification surveys of nonaccredited hospitals, although it 

does track actual terminations.36 

The HCFA provides limited feedback to the Joint Commission and the 

States on their overall performance. 

The HCFA’s feedback to the Joint Commission is negligible. Its main vehicle for 

feedback is its Report to Congress, which provides a summary of the validation surveys. 

Historically, the Report to Congress has been of limited value not only because the survey 

results are dated (sometimes by as much as 3-4 years), but also because it is based on the 

validation surveys themselves, which are fundamentally flawed. Furthermore, HCFA 

designs the report to meet the needs of Congress--indeed, the report itself is mandated by 

Federal law--so its use as feedback to the Joint Commission is secondary.37 

The HCFA takes little advantage of other opportunities for feedback to the Joint 

Commission. Indeed, its posture to the Joint Commission is more deferential than 

directive. For example, HCFA modeled its revisions of the hospital conditions of 

participation on the Joint Commission’s approach to hospital oversight--both in content 

and tone.38 The HCFA also tends to defer to the Joint Commission when both are at one 

hospital at the same time, investigating a particular incident. In such instances HCFA 

plays no coordinating or information-sharing role. 

When it comes to the State agencies, HCFA is more directive on the one hand, yet 

gives them little feedback on how they perform their hospital oversight work, on the other. 

For example, HCFA routinely gives State agencies step-by-step guidance on investigating 

and documenting problems in a specific hospital. But it relies on the State agencies 

themselves to assess their own performance, and by working with the HCFA regions, to 

develop and implement their own quality improvement plans.39 This process is called the 

State Agency Quality Improvement Program, or SAQIP. Once or twice a year, HCFA 

distributes a summary report of all the States’ SAQIP activities to each State agency. 

That report provides few meaningful insights into the challenges or successes of any one 

State in overseeing hospitals or other providers, but it devotes considerable attention to 

the SAQIP process itself, and the challenges States face in its implementation. 

Hospital Quality: A Call for Greater Accountability 20 OEI-01-97-00050 
Public disclosure plays only a minimal role in holding the Joint 

Commission and States accountable. 

Publicly disclosing information about hospitals and their reviewers conveys an 

assurance that a process exists for the external review of hospitals and that the reviewers 

are also accountable. Public disclosure can also serve as a key motivator for improvement 

on the parts of both the hospitals and the reviewers. Despite progress in general in the 

availability of healthcare information and the rise of consumerism, little public information 

is available on hospitals and their reviewers. The Joint Commission has been a leader in 

making hospital survey results accessible through its performance reports.40 But despite 

its strides in public disclosure, there are significant limits to what the Joint Commission 

discloses. For example, the Joint Commission treats as confidential the details on adverse 

events and their causes as reported by hospitals. Still, the hospital information is in some 

ways more accessible from the Joint Commission than it is from HCFA. While HCFA will 

disclose survey findings--including those associated with adverse events--it lacks a web 

page or central number from which to request such information. By contrast, HCFA has a 

web page devoted to nursing homes that allows visitors to view information on the scope 

and severity of survey findings. By Federal law, nursing homes must post their survey 

findings so they are accessible to residents and their families.41 No such mandate exists for 

hospitals. 

Likewise, little valuable information is readily available on the performance of the 

external reviewers. For example, while HCFA releases its Report to Congress, its value is 

questionable as it is based on the validation surveys. Similarly, HCFA has little of value to 

disclose on the performance of States agencies: its SAQIP reports lack any State 

identifiers or comparisons and its survey database would need considerable massaging to 

provide insights into a State’s performance. Both the survey data and the SAQIP reports 

are available upon request. 

Hospital Quality: A Call for Greater Accountability 21 OEI-01-97-00050 
RECOMMENDATIONS 

Hospitals are places where patients routinely receive valuable, even life-saving 

services. Yet, as many studies have shown, they are also places where patients can be 

exposed to unnecessary harm.42 External review, as a complement to hospitals’ own 

internal review systems, can serve as a vital safety valve that minimizes the likelihood of 

such harm and enhances quality. The HCFA relies upon the Joint Commission and State 

survey agencies as its primary agents in carrying out external reviews to help protect 

Medicare beneficiaries when they rely upon hospital services. Both make important 

contributions that HCFA would be hard-pressed to match. 

Given the degree of HCFA’s dependence on these external agents, it is important 

that HCFA provides leadership to address the shortcomings we have identified, holding 

the Joint Commission and State agencies more accountable for their performance. 

Through one guiding principle and two recommendations, directed to HCFA, we set forth 

ways in which it can provide this leadership. 

In our recommendations we call upon HCFA to devote more concerted attention 

to hospitals and their external quality review systems. We recognize that in an 

environment of limited resources and competing priorities, such attention is not easily or 

readily provided. In that context, we present the recommendations as a blueprint for 

action that can be carried out over a reasonable period of time. 

Through the guiding principle and recommendations, we call upon HCFA to lead 

and stay attuned to important nuances involving the relationships among HCFA, the Joint 

Commission, the State agencies, and the hospitals themselves. In this context, we stress 

that while HCFA has authority and leverage it can assert, it must approach the Joint 

Commission and State agencies not as subordinates in a chain of command, but as partners 

sharing a commitment to high-quality hospital care. Similarly, we stress that external 

review generally should be conducted in ways that minimize the regulatory burden on 

hospitals and seek to complement hospitals’ own internal quality review efforts. 

Hospital Quality: A Call for Greater Accountability 22 OEI-01-97-00050 
GUIDING PRINCIPLE. The HCFA, as a guiding principle, 

should steer external reviews of hospital quality so that they 

ensure a balance between collegial and regulatory modes of 

oversight. 

Both approaches have ardent supporters, with consumer advocates urging more 

regulatory types of oversight and professional groups stressing the advantages of collegial 

approaches. From HCFA’s standpoint, it is important to recognize that both approaches 

have value and that a credible system of oversight must reflect a reasonable balance 

between the two. Thus, as HCFA moves toward an increasingly data-driven system, as 

reflected in the proposed conditions, it should ensure that such systems are used both as 

means to foster improvement as well as means to enforce minimums. In other words, data 

present opportunities for both sides of the continuum. Well-designed data systems could 

include elements that, for example, elevate standards of care overall as well as identify 

outliers requiring interventions. 

In aiming to achieve balance between the collegial and regulatory modes of 

oversight, it is instructive to note the conclusion of a recent case study of regulatory 

approaches of the Occupational Safety and Health Association (OSHA): 

It has become cliche for critics of regulation to tout increased cooperation as a 

means of curing what they perceive ails the regulatory process. While cooperation 

holds promise as an effective enforcement technique, the policy literature suggests 

that caution is due. Although a mix of cooperation and punishment is likely to be 

an optimal enforcement policy, the literature provides no clear guidance 

concerning what policy is optimal. OSHA’s situation confirms that agencies 

should maintain a viable enforcement program while cautiously experimenting with 

additional cooperative approaches.43 

As we noted earlier, the conclusions of the National Roundtable on Health Care Quality 

also reinforce the theme of balance. They suggest that while both collegial and regulatory 

approaches have advantages, neither is backed with sufficient data to warrant a 

concentration on one at the expense of the other. Thus, as the overall system of quality 

oversight becomes increasingly oriented to the collegial side of the continuum, the risks 

begin to mount, with potentially significant consequences to patients. The Roundtable, it 

is important to remember, stated that regulation “is the only mechanism we have to 

protect the public from egregiously poor providers.”44 The Prospective Payment 

Assessment Commission reinforced this theme of balance, noting that “continuous quality 

improvement activities need to be accompanied by effective methods to identify and 

monitor providers of questionable performance.”45 

Hospital Quality: A Call for Greater Accountability 23 OEI-01-97-00050 
We recognize no precise definition of what represents a balance between collegial 

and regulatory approaches exists. Balance depends on judgment and continuing 

assessments of the thrust and impact of the different components of external quality 

review. A balanced system, in our view, will involve the continued presence of on-site 

hospital surveys, both announced and unannounced; an ongoing capacity to respond 

quickly and effectively to complaints and adverse events; further development and 

application of standardized performance measures; and, even though it is not much in 

evidence at this time, a mechanism for conducting retrospective reviews of the 

appropriateness of the care received by hospitalized patients. Each of these approaches 

can add value and a measure of patient safety. Until much more compelling evidence can 

be mustered, no one approach should dominate. Accordingly HCFA should view with 

some concern the emerging dominance of the collegial mode. 

In its steering role, HCFA must develop a broad perspective so that it can clearly 

determine not only how the external review systems as a whole are functioning but also 

when and how to adjust them. Thus, it is particularly important that, as a general point, 

HCFA recognize the distinctive strengths and limitations of both the Joint Commission 

and the State agencies, which we elaborate on below. 

Recognize the inherent strengths and limitations of accrediting bodies and the 

State agencies. 

Each of these entities contributes to the external review of hospitals. But they 

contribute differently. If HCFA is to steer effectively, it must act in accord with the 

inherent strengths and limitations of these two types of bodies. 

Accreditation, first of all, is a form of self-regulation.46 The Joint Commission’s 

board, for example, is dominated by members closely associated with the hospital 

industry. Notwithstanding the presence of non-industry members on its board or of 

various advisory bodies or of certain public purposes it may fulfill, it is primarily 

responsive to the interests of entities it accredits. In this context, it is important to view 

the Joint Commission as an entity closely connected with the hospital industry and having 

greater credibility with that industry than any governmental entity is likely to have. That 

connection makes the Joint Commission inherently inclined to tilt toward the collegial side 

of the oversight continuum we presented. Working cooperatively with its hospital 

constituency and drawing on its considerable expertise on hospital practices , it can 

provide leadership in defining accreditation standards and helping hospitals achieve them. 

It can (and must) play a certain regulatory role as well, but if it begins to tilt in this 

direction, it will likely encounter greater resistance from its core constituency that could 

undermine its efforts to educate and elevate. 

State agencies, on the other hand, are public bodies (usually health departments) 

with traditional regulatory responsibilities. Within their States, they are accountable to 

Hospital Quality: A Call for Greater Accountability 24 OEI-01-97-00050 
executive and legislative leaders who expect them to protect consumers. This is especially 

apparent whenever there is a high profile adverse event or major complaints involving a 

hospital. In such cases, elected officials as well as the local media are likely to look to the 

State agency as a front line of response in determining what went wrong and what to do 

about it. Thus, State survey agencies are inherently inclined to tilt toward the regulatory 

side of our continuum. That is not to suggest that they can not and do not play a role in 

fostering improvements through a collegial orientation, but any substantial movement in 

that direction is likely to conflict with their longstanding role in enforcing minimum 

standards and ensuring patient safety. 

Thus, as HCFA exerts its steering role in years ahead, it would be sound policy for 

it to look to the Joint Commission to tilt (but not too far) toward the collegial end and the 

State survey agencies to tilt (but not too far) toward the regulatory end. Such a frame of 

reference can be helpful as HCFA weighs specific policy and operational choices. For 

example, as HCFA incorporates, through its proposed conditions, certain aspects of the 

Joint Commission’s approach to oversight, it should maintain the primacy of the State 

agencies’ role as front-line responders to complaints and adverse events, and all that that 

role entails, such as probing and challenging approaches to surveys. Furthermore, it 

would make sense for HCFA to support the Joint Commission’s sentinel event policy, 

which treats adverse events confidentially and as opportunities for improvement, as long 

as the State agencies still responded to such events in a way that held hospitals publicly 

accountable. Similarly, it would make sense to continue to support explorations for datadriven measures of outcome that someday could provide an important basis for external 

quality review, as long as that vision does not undermine a strong, continued role for onsite inspections. It is likely, after all, to be some time before the development and 

application of data-driven systems of oversight are sufficiently sophisticated to justify a 

deemphasis of on-site surveys. 

RECOMMENDATION 1. The HCFA should hold the Joint 

Commission and State agencies more fully accountable to 

HCFA for their performance in reviewing hospitals. 

The Joint Commission is a private entity accountable to its governing board and to 

the hospitals that pay for its accreditation services. The State survey agencies are public 

bodies accountable to their States’ governors and legislatures. But in carrying out their 

external reviews of hospitals, both the Joint Commission and State agencies are also 

accountable to HCFA for services they are performing on behalf of Medicare and 

Medicaid beneficiaries. They must balance this line of accountability with their own 

reporting channels to their respective board and legislatures. And while HCFA should be 

respectful of these channels, it should, as we have indicated, be ready to exert stronger 

leadership to ensure that Federal interests are upheld. 

Hospital Quality: A Call for Greater Accountability 25 OEI-01-97-00050 
In accord with the accountability framework we have developed for this inquiry we 

specify below the kind of operational steps HCFA should take in (1) obtaining 

information, (2) providing feedback, and (3) disclosing information. 

1. a. Revamp Federal approaches for obtaining information on the Joint 

Commission and State agency performance. 

Validation Surveys. The HCFA should deempahsize and perhaps even phase out 

validation surveys as a tool for overseeing the Joint Commission’s performance. Our 

findings revealed fundamental limitations associated with this approach to accountability. 

In our assessment the limits are substantial and may well be too basic to correct. The 

HCFA should seek to identify more cost-effective approaches that are less intrusive to 

hospitals. Given the current congressional mandate for validation surveys, HCFA would 

have to seek legislation to achieve the intent of this recommendation. 

In the case of State surveys of nonaccreditated hospitals, HCFA has not been 

conducting validation surveys as a means of obtaining performance information on the 

States’ expectations. We recommend that it not initiate such surveys, even if the 

resources become available. 

Observation Surveys. The HCFA should give serious consideration to incorporating 

these surveys as a major tool of oversight of both the Joint Commission and State survey 

agencies. The great advantage of accompanying the Joint Commission or State surveyors 

during a hospital visit is that it provides direct and immediate information on the 

performance of both the surveyors and the hospitals. The HCFA conducted a pilot of this 

process through 20 observation surveys--during which HCFA and State officials observed 

the performance of Joint Commission surveyors. But it has yet to issue its evaluation of 

the experience. This lack of followup represents a significant missed opportunity, one that 

should be addressed. 

In further consideration and/or testing of observation surveys, HCFA should 

consider adapting two features that were not part of the initial pilot. One would be to 

conduct some such surveys on an unannounced basis. This could add an important 

element of balance to the approach. A second feature would be to allow the observing 

surveyors to participate to some degree in the survey process. It appears untenable and 

unnecessary to us to have skilled, experienced surveyors from State agencies (or HCFA) 

serving as silent witnesses when they could contribute along the way. 

Performance Reports. The HCFA should obtain more timely and useful performancerelated information, both from the Joint Commission and State survey agencies. This is 

particularly important with respect to the Joint Commission, from which it obtains little 

ongoing information. We suggest that HCFA work with the Joint Commission to develop 

a set of specifications for limited, but regular reporting, preferably through electronic 

Hospital Quality: A Call for Greater Accountability 26 OEI-01-97-00050 
format. We suggest that such reporting be presented in a manner that facilitates an 

understanding of trends and at a minimum include information on the following: 

< On-site surveys (such as the number of triennial, random unannounced, and 

unscheduled surveys) 

< Survey results (for example, the number of hospitals achieving each level of 

accreditation, accreditation scores, most common problems identified, and the 

number and types of follow-up actions, by survey type) 

< Complaints (such as the number and types received overall, then broken down to 

reflect those received centrally and on-site, and finally the number and type of 

complaints resulting in recommendations for improvement) 

< Adverse events (for example, the number and type of sentinel event reports, the 

number of hospitals placed on Accreditation Watch, the number resulting in a 

change of accreditation status because of the sentinel event, and the number 

resulting in recommendations for improvement) 

< Performance measures (such as the number of hospitals participating in the Joint 

Commission’s performance measurement programs: Oryx and Oryx+) 

We suggest that each year, this information be compiled and presented in an annual 

report that facilitates year-to-year comparisons. That report should be submitted to 

HCFA and to Congress. It should also be available on the Internet. 

With respect to State survey agencies, HCFA already requires considerable 

reporting through its Online Survey Certification and Reporting (OSCAR) system. It 

includes some but not all of the categories of information noted above. We suggest that 

HCFA reexamine the OSCAR reporting system to ensure that at a minimum it include 

categories of information parallel to those set forth above. We also suggest that HCFA 

reexamine the reporting that the States currently provide on their improvement projects, 

with the intent of generating more precise and comparable information. 

Finally, if HCFA were to incorporate the observation surveys as a major tool of 

oversight, it would be important to specify the extent and type of information to be 

collected from those surveys. It would be essential that data from these surveys be fed 

into a central data base that HCFA could draw upon in giving performance feedback to 

the Joint Commission and State survey agencies. 

1. b. Strengthen Federal mechanisms for providing performance feedback to the 

Joint Commission and State agencies. 

Performance Assessments. The HCFA should provide timely, ongoing feedback to the 

Joint Commission and State survey agencies on the basis of information obtained through 

the observation surveys (which we recommend) and, in the case of the Joint Commission, 

through the validation surveys (as long as they remain). Such feedback is a vital element 

Hospital Quality: A Call for Greater Accountability 27 OEI-01-97-00050 
that is now almost completely missing in the system of external review. In some fashion, 

the feedback should follow each observation visit or validation survey. It should also be 

provided on a cumulative basis, drawing on a number of such visits or surveys. Ideally, 

such cumulative feedback would be part of an annual report, paralleling the annual report 

we suggest that State agencies and the Joint Commission submit to HCFA. 

The HCFA should also give attention to feedback in the form of special alerts 

based on accumulated information revealing a problematic pattern of performance by the 

Joint Commission or by individual States. In such cases, the Joint Commission or the 

States involved should be expected to indicate how they will respond and correct the 

situation identified by HCFA. 

All such performance feedback noted above, as well as the performance reports 

noted earlier, could be part of the annual report to Congress that is mandated by statute. 

While that mandate applies only to the Joint Commission, it would be helpful to 

incorporate in that report a full array of information applying to nonaccredited as well as 

accredited hospitals. That way, Congress and the interested public could gain a better 

appreciation of the overall adequacy of external systems for reviewing hospital quality. 

Policy and Procedural Guidance. Our focus is on guidance to the Joint 

Commission. Given that HCFA now provides minimal such guidance, given that 

the Joint Commission is the primary external reviewer for about 80 percent of the 

hospitals in the country, and given our call for a more balanced system of 

oversight, we recommend that HCFA negotiate with the Joint Commission to 

achieve some redirection in Joint Commission priorities and practices. We suggest 

that this can be done in a manner that respects the Joint Commission’s 

considerable expertise on accreditation practices, yet calls for the Joint 

Commission to accommodate public purposes associated with its special deemed 

status. To the extent that HCFA continues to rely on the Joint Commission, it 

should negotiate the following to help achieve a more balanced system of 

oversight: 

1. Conduct more unannounced surveys, both regular surveys and surveys made 

in response to complaints. Further, unlike the Joint Commission’s current 

“unannounced” surveys, we suggest that such surveys involve no prior notice at all 

for the hospitals. We recognize that such practice may add some operational 

difficulties to the survey process--for example, records and policies may not be 

assembled and ready for surveyors. However, it is certainly plausible that such an 

on-the-spot review would offer insights that an announced survey would not and 

that it would add a measure of public credibility to the entire accreditation process. 

Hospital Quality: A Call for Greater Accountability 28 OEI-01-97-00050 
2. Make “accreditation with commendation” a more meaningful category or 

do away with it altogether. This top level of accreditation tends to suggest a 

greater level of distinction than is warranted by the underlying scoring system. 

Hospitals use it for marketing purposes to suggest a degree of excellence that can 

be misleading to the public. We suggest that the degree of rigor called for in 

attaining this designation be increased or that the designation be dropped. 

3. Introduce more random selection of records as part of the survey process. 

Allowing hospitals to select records for review by the surveyors introduces too 

much possibility for manipulation and undermines the credibility of the process. 

Here is a practice where the move toward collegiality seems to go too far. It is 

essential that surveyors gain a balanced assessment of hospital practices, not one 

that is likely to enhance the positives. 

4. Provide surveyors with more contextual information about the hospitals they 

are about to survey. Background information on organizational or ownership 

changes involving the hospital, on developments in the local healthcare 

marketplace, and on other such matters can help surveyors ask more probing and 

challenging questions during their visits. The goal of fostering consistency in 

surveyor practices should not be pursued at the expense of vital contextual 

information that can help surveyors focus on the distinctive features and situations 

at each hospital. 

5. Jointly determine some of the year-to-year priorities. For instance, the Joint 

Commission determined at one point that restraint reduction--certainly a desirable 

objective--would be a priority. We suggest that HCFA could play a role in 

suggesting such priorities. Based on our inquiry, a good initial priority would 

focus on hospital privileging and credentials verification practices--an area where 

we found Joint Commission reviews to be too superficial. One aspect of this 

inquiry could be further attention to hospitals’ compliance with Federal 

requirements to report to the National Practitioner Data Bank. 

6. Conduct more rigorous assessments of hospitals’ internal continuous quality 

improvement (CQI) efforts. Within the hospital community, the Joint 

Commission has helped raise awareness and interest in CQI efforts. But the 

survey process raises few questions about such efforts. The time has come to raise 

the bar and subject hospitals to greater scrutiny in terms of the purpose, methods, 

and consequences of their CQI efforts. 

7. Enhance the capacity of surveyors to respond to complaints as part of the 

survey process. The rigid schedule of surveyors leaves little opportunity to review 

a complaint, either in its own right or as a possible indicator of a broader problem. 

To the extent that information about complaints can be provided to surveyors prior 

Hospital Quality: A Call for Greater Accountability 29 OEI-01-97-00050 
to the visit, such opportunities could be enhanced. As a complementary approach, 

the Joint Commission could also give more attention during its triennial survey to 

hospitals’ internal complaint systems and whether they serve as a means of 

identifying broader, systems problems. 

1. c. Assess periodically the justification for the Joint Commission’s deemedstatus authority. 

Once a hospital is accredited by the Joint Commission, it is deemed to meet the 

Medicare conditions of participation. This delegation of authority to the Joint 

Commission is granted by Congress, not by HCFA. As such, it is a unique authority held 

by no other accrediting body in the healthcare field. 

We are not addressing whether the Joint Commission warrants this special 

authority. But we do suggest the granting of this unique status should not be for 

perpetuity, without accountability for performance. The HCFA already has the regulatory 

authority to review the deeming authority when validation survey results reach a certain 

disparity rate.47 That rate has never been reached, however. Accordingly, we call for 

HCFA from time to time to assess whether the Joint Commission’s performance continues 

to warrant its unique deeming authority and to report its conclusions to Congress as part 

of an annual report or otherwise. Any change in this status would, of course, depend 

upon congressional action. 

If HCFA were to move in the direction we call for here, it would be particularly 

important for it to collect information and provide feedback--as we call for in the 

preceding recommendations. In fairness, it would also be important that it communicate 

in advance to the Joint Commission what its own criteria would be for determining 

adequate performance. This is a matter that it could profitably address with the Joint 

Commission itself, as well as with other parties. 

1.d. Increase public disclosure. 

The HCFA is in a unique position to give the public information on the 

performance of individual hospitals and also of entities that oversee those hospitals. 

Ultimately HCFA is responsible for the oversight of hospitals and it should be committed 

to making every aspect of oversight as meaningful and effective as possible. One way to 

accomplish that is to make results widely available to the public through the Internet and 

other appropriate mechanisms. 

Through greater disclosure of information, HCFA can reinforce that hospitals and 

external reviewers of hospitals are accountable to the general public as well as to the 

government.48 Disclosure on the Internet can be a particularly effective tool in this regard 

as the media, advocates, and other interested parties can draw on it to inform wider 

Hospital Quality: A Call for Greater Accountability 30 OEI-01-97-00050 
audiences. Also, such disclosure can be helpful to healthcare purchasers interested in 

quality-of-care issues. 

The HCFA should consider putting some hospital-specific information on the 

Internet in a way that facilitates comparisons among hospitals and gives a sense of what 

each oversight body does and what each has found at a given hospital. The HCFA has 

already made strides in making information on nursing home survey results available. 

Perhaps that can serve as a model. 

Performance of Hospitals. The HCFA could make any or all of the following 

performance information available by hospital on its Web site: the most recent survey date, 

survey results, and information on complaints or adverse events. 

Performance of the Joint Commission and State Agencies. In previous 

recommendations, we call for both the Joint Commission and State agencies to submit 

regular reports to HCFA. The HCFA could easily post these reports on its Web site, or 

require State agencies and the Joint Commission to post the reports on their Web sites. 

RECOMMENDATION 2. The HCFA should determine the 

appropriate minimum cycle for conducting certification 

surveys of nonaccredited hospitals. 

The backlog for routine surveys of nonaccredited hospitals is large and it is 

growing. And, unlike nursing homes and home health agencies, hospitals lack a 

congressionally mandated cycle for surveys. Thus, nonaccredited hospitals are subject to 

limited external review. Furthermore, the proposed conditions of participation suggest an 

even lesser role for routine certification surveys.49 Current policy gives priority to 

responding to complaints and adverse events in hospitals over routine surveys, which we 

endorse. But by determining an appropriate minimum cycle for hospital surveys, HCFA 

will increase the attention hospital quality issues receive and improve oversight 

comparability from State to State. 

Hospital Quality: A Call for Greater Accountability 31 OEI-01-97-00050 
COMMENTS ON THE DRAFT REPORT S 

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

our four draft reports from HCFA. Outside of the Department, we solicited and received 

comments from the Joint Commission, the Association of Health Facility Survey Agencies, 

the American Osteopathic Association, the American Hospital Association, the American 

Association for Retired Persons, the Service Employees International Union, the National 

Health Law Program, and Public Citizen’s Health Research Group. 

We include the complete text of these comments in appendix E. Below we 

summarize the comments and, in italics, offer our responses. First we focus on the 

comments offered by HCFA, the Department component to which we directed all of our 

recommendations. Second, we turn to the perspectives of the Joint Commission and of 

the Association of Health Facility Survey Agencies, which represents the State survey and 

certification agencies. The HCFA relies upon these agencies and the Joint Commission as 

the major agents of external review of hospital quality. Finally, we present the responses 

of other key stakeholder organizations. 

HCFA Comments 

The HCFA supported our findings and reacted to our recommendations as an 

opportunity to make significant improvements in hospital oversight and to see that these 

changes fit in with its broader goals of performance measurement. It offered a detailed 

hospital quality oversight plan, which incorporated our many recommendations, and it 

presented a performance measurement strategy based on developing standardized hospital 

performance measures that are consumer- and purchaser-driven and that are in the public 

domain. 

The HCFA’s oversight plan affirmed its commitment to more frequent State 

surveys of nonaccredited hospitals, to strengthened oversight of both the State agencies 

and the Joint Commission, and to balancing the collegial and regulatory approaches to 

oversight. Toward the latter end, it indicated that it will look to the Medicare Peer 

Review Organizations, with which it contracts, as its chief agents in pursuing collegial 

approaches to advance the quality of care in hospitals. It will rely upon the Joint 

Commission and in particular on its on-site surveys as a key part of the regulatory 

framework needed to enforce compliance with Medicare standards. 

We find HCFA’s detailed action plan to be highly responsive to the shortcomings 

we identified in hospital quality oversight and to our specific recommendations. This 

plan sets forth an agenda that can be of great significance in improving patient safety 

and improving the quality of patient care. 

Hospital Quality: A Call for Greater Accountability 32 OEI-01-97-00050 
With respect to HCFA’s comments on how it will foster a balance between 

collegial and regulatory approaches, we urge that HCFA give adequate recognition to 

the important regulatory role that State survey agencies have to play not only in 

conducting surveys but also in responding to complaints and adverse events. We agree 

that Joint Commission on-site surveys represent an important regulatory mechanism that 

should be more fully used, but note that as an accrediting body that is engaged in 

standard-setting and that has close ties with the hospital industry, the Joint Commission 

can also serve as an important force in quality improvement. 

Joint Commission and Association of Health Facility Survey Agencies Comments 

The Joint Commission agreed with the principle of balance between collegial and 

regulatory approaches, but felt that our concerns about the emerging dominance of the 

collegial approach were unfounded. It also took issue with our findings that Joint 

Commission surveys were unlikely to detect substandard patterns of care or individual 

practitioners with questionable skills and that the Joint Commission devotes little emphasis 

to complaints and treats major adverse events as opportunities for improvement. It noted 

that some of the specific suggestions we made for improving the survey process have 

already been put in effect and that all the remaining ones are under consideration. It also 

expressed support for our recommendation that HCFA obtain more useful and timely 

performance-related information from the Joint Commission. 

We stressed the principle of balance because there is insufficient evidence to 

support an emphasis on either the collegial or regulatory approach. We cited the 

conclusions of the National Roundtable on Health Care Quality and other sources as 

support for our conclusion. We still conclude that Joint Commission surveys are unlikely 

to detect substandard patterns of care, such as inappropriate surgeries or high 

complication rates, or to identify individual practitioners with poor skills. (In this 

regard, we found the on-site process of reviewing hospital privileging and credential 

verification procedures particularly lacking.) In the text, we spell out in some detail the 

bases for these findings. Similarly, we believe that the evidence is clear that the response 

to complaints is a relatively minor part of the accreditation process and that adverse 

events are treated as opportunities for improvement. 

The Association of Health Facility Survey Agencies agreed with our assessment of 

the current system of hospital oversight. It devoted particular attention to our discussion 

of validation and observation surveys. It indicated that the aim of validation surveys is not 

to evaluate the Joint Commission but rather to validate hospital compliance with Medicare 

standards. Further, on the basis of the experience of an Association member who 

participated in an observation survey, it expressed reservations concerning the 

effectiveness of this approach in improving patient care and outcomes. Finally, it 

supported the posting on websites of in-depth information on how hospitals fared as a 

result of survey visits and complaint investigations. 

Hospital Quality: A Call for Greater Accountability 33 OEI-01-97-00050 
We appreciate the Association’s supportive comments. Regarding the 

Association’s concerns about validation surveys, we found that they have served as the 

single most important mechanism for assessing Joint Commission performance. We note 

that HCFA, in its comments to our report, indicated that it will clarify that the purpose of 

validation “is to evaluate the performance of the accrediting body in assuring that the 

Secretary’s standards are met or exceeded.” We urge that the Association consider the 

significant limitations we addressed about the effectiveness of the validation surveys and 

examine further the potential of observation surveys as a more cost-effective and timely 

tool of oversight. We recognize that further experimentation with this approach is 

required, but suggest that it may well be worthwhile. 

Comments of Other External Organizations 

Overall, the other stakeholder organizations expressed considerable support for 

our findings and recommendations. Yet, they also noted a number of concerns. The 

American Hospital Association took issue with how we applied the regulatory and 

collegial concepts and stressed that hospital liability concerns impede the kind of public 

disclosure we recommend. The American Osteopathic Association noted reservations 

about more unannounced surveys and suggested that a closer review of medical care 

during on-site surveys would offer better value. The American Association of Retired 

Persons agreed with the thrust of our recommendations. 

The Service Employees International Union, the National Health Law Program, 

and Public Citizen’s Health Research Group each called for even stronger Federal actions 

than we recommended. These included a stronger emphasis on regulatory approaches, 

greater reliance on unannounced surveys, more extensive public disclosure, and firmer 

HCFA action in overseeing the Joint Commission performance and in reassessing its 

deeming authority. 

As HCFA carries out its hospital quality oversight plan, we suggest that it take 

into account the perspectives of these various stakeholders. They express concerns and 

offer suggestions that we often heard expressed during our inquiry. We believe that our 

recommendations set forth a balanced course of action that draws to some degree on the 

insights of each of these stakeholders and that, overall, can substantially improve 

hospital quality oversight. 

Hospital Quality: A Call for Greater Accountability 34 OEI-01-97-00050 
APPENDIX A 

Medicare Conditions of Participation

The Medicare Conditions of Participation (COP) were first published in 1966 and revised in 1986 (42 

C.F.R. 482.1-482.66). On December 19, 1997, HCFA published a proposed COP for hospitals ( 62 Fed. Reg. 

66,726). On July 2, 1999, it published an interim final rule concerning patients’ rights (64 Fed. Reg. 36,070). 

Below are the components of the existing COP for non-specialty hospitals from 1986, followed by the components 

of the proposed COP. 

Existing COP 

Subpart A- General Provisions 

Provision of emergency services by 

nonparticipating hospitals 

Subpart B- Administration 

Compliance with Federal, State, and local laws 

Governing Body 

Subpart C- Basic Hospital Functions 

Quality assurance

Medical staff

Nursing services

Medical record services

Pharmaceutical services

Radiologic services

Laboratory services

Food and dietetic services

Utilization review

Physical environment

Infection control

Subpart D- Optional Hospital Services 

Surgical services 

Anesthesia services 

Nuclear medicine services 

Outpatient services 

Emergency services 

Rehabilitation services 

Respiratory care services 

Proposed COP 

Subpart A- General Provisions 

Patient Rights (issued as an interim final rule on July 2, 

1999) 

Subpart B- Patient Care Activities 

Patient Admissions, assessment, and plan of care

Patient care

Quality assessment and performance improvement

Diagnostic and therapeutic services or 

rehabilitation services 

Pharmaceutical services 

Nutritional services 

Surgical and anesthesia services 

Emergency services 

Discharge Planning 

Subpart C- Organizational Environment 

Administration of organizational environment

Infection control

Human resources

Physical environment

Life safety from fire

Blood and blood products transfusions

Potentially infectious blood and blood products

Utilization review

Hospital Quality: A Call for Greater Accountability 35 OEI-01-97-00050 
APPENDIX B 

Roles of Accreditation and Medicare Certification

Element (Accreditation) 

Joint Commission 

(Medicare Certification) 

State Survey Agency 

Announced 

Surveys 

Core of accreditation process 

Routine presence on a 3-year cycle 

Collegial 

Tight structure 

Limited opportunity to follow leads 

or respond to complaints 

Dynamic standards 

Spurs hospital improvement 

Reduces risk 

Unlikely to identify patterns of 

substandard care or individual 

practitioners with questionable skills 

Survey results fail to make 

meaningful distinctions across 

hospitals 

Low priority 

Elapsed time between surveys growing 

Medicare Conditions of Participation 

outdated 

Survey results fail to make meaningful 

distinctions across hospitals 

Random 

Unannounced 

Surveys 

Used for about 5 percent of 

accredited hospitals per year 

Not truly unannounced; hospitals get 

24-48 hours notice 

Focuses on five areas commonly 

found out of compliance 

Not applicable 

Response to 

Adverse 

Events 

Approach is oriented toward 

research and prevention 

Relies on self-reporting 

Ensures hospital confidentiality 

No public accountability 

Core activity with higher priority than 

routine hospital certification or validation 

surveys 

Includes authority to respond to events in 

accredited as well as nonaccredited hospitals 

Publicly accountable 

Responses to 

Complaints 

Considered adjunct to triennial 

surveys 

Surveys present limited opportunities 

to follow-up on complaints 

No public accountability 

Core activity with higher priority than 

routine hospital certification or validation 

surveys 

Includes authority to respond to events in 

accredited as well as nonaccredited hospitals 

Publicly accountable 

Standardized 

Performance 

Data 

Lacks uniformity, thus comparability 

across hospitals 

Not linked to accreditation 

Not applicable 

Source: Office of Inspector General, The Role of Accreditation (OEI-01-97-00051) and The Role of 

Medicare Certification (OEI-01-97-00052). 

Hospital Quality: A Call for Greater Accountability 36 OEI-01-97-00050 
APPENDIX C 

Methodology

The HCFA 

We obtained dates of certification surveys from HCFA’s Online Survey 

Certification and Reporting System (OSCAR). The HCFA authorizes States to update and 

maintain this database with survey information. We extracted survey data pertaining to the 

frequency of certification surveys. We subsequently verified the accuracy of our extraction by 

comparing it to on-line OSCAR system information to ensure the dates we used corresponded 

to routine certification surveys, rather than complaint investigations or other types of surveys. 

We are satisfied that our information is as accurate as HCFA’s OSCAR system. 

Additionally, we selected 4 States (California, Kansas, Minnesota, and Texas) that 

contain over 50 nonaccredited hospitals and represented different geographic regions of the 

United States. We then examined the OSCAR data for those States in greater detail. We 

verified the operational status of the nonaccredited hospitals in those States that had not been 

surveyed in over 5 years using the American Hospital Association’s 1997 Hospital Guide. 

We also interviewed staff and managers at each HCFA regional office and the 

central office. We reviewed a variety of HCFA documents, including budget call letters, 

reinvention materials, and reports to Congress, among others. 

The State Survey and Certification Agencies 

In August 1997, we mailed a pretested survey to the hospital certification agencies 

in the 50 States and the District of Columbia. The response rate for this survey was 100 

percent. The State survey addressed four areas of hospital quality oversight: private 

accreditation of hospitals, Medicare certification of hospitals, HCFA oversight of State 

certification agencies, and State licensure of hospitals. We interviewed State officials on the 

telephone or in person as well. 

Accrediting Organizations 

Hospital Quality: A Call for Greater Accountability 37 OEI-01-97-00050 
APPENDIX C 

We interviewed officials from both the Joint Commission on Accreditation of 

Healthcare Organizations and the American Osteopathic Association. We also reviewed 

documents from both organizations, including mission statements, accreditation manuals, 

policies, and hospital survey files. We requested and received aggregate data from the Joint 

Commission reflecting its recent hospital survey activity. All Joint Commission data are 

presented as reported by the Joint Commission, unless otherwise noted. For purposes of this 

inquiry, we focused our analysis on the Joint Commission. 

Survey Observations 

Based on schedules of upcoming triennial surveys, we identified nine hospitals in 

which to observe triennial Joint Commission surveys. Of those, we were able to observe 

seven. In two cases, the hospitals declined the Joint Commission’s request that we be allowed 

to observe. The 7 hospitals varied in size from 80 to 775 beds, represented both teaching and 

community hospitals, and were located in different areas of the country (both rural and urban). 

We also observed one random unannounced Joint Commission survey. Although we observed 

different teams of surveyors, the survey agenda, lines of inquiry, and tone were consistent 

across the surveys, which were conducted in accordance with Joint Commission policy, based 

on review of survey manuals and interviews with representatives of the Joint Commission. 

Finally, we observed a certification survey and parts of two complaint investigations performed 

by State surveyors under HCFA’s auspices. 

Stakeholder Interviews 

We interviewed representatives of organizations we considered to be stakeholders 

in hospital oversight. These stakeholder organizations included a union, professional 

organizations, hospital associations, and consumer groups. 

Other Documents 

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

regulations and a variety of articles from newspapers, journals, magazines, and newsletters. 

A Systemic Review 

Hospital Quality: A Call for Greater Accountability 38 OEI-01-97-00050 
APPENDIX C 

In this report we focus on the system of external review considered as a whole. 

We address issues that have a significant bearing on how well that system works. In so doing, 

we draw on a wide body of evidence from the sources we noted above. Our findings and 

recommendations represent our conclusions based on our assessment of this evidence. We 

present them with the intent of providing helpful directions on how HCFA, the Joint 

Commission, and the State agencies can play a more effective role in protecting patients and 

improving quality. 

Hospital Quality: A Call for Greater Accountability 39 OEI-01-97-00050 
APPENDIX D 

Certification Survey

During the course of our inquiry, one Office of Inspector General (OIG) analyst observed 

one Medicare certification survey. What follows is a summary of the observations from that 

survey. 

Background 

The survey was of a 34-bed nonaccredited county hospital located in a rural area. The 

hospital had recently undergone major renovations but still used parts of the older buildings, 

which were at least 50 years old. Staff could pass from the renovated parts of the building to 

the older parts, and construction was still underway. Plastic strips hung in doorways to 

minimize the dust from the ongoing renovations. The pharmacy and operating rooms were 

housed in the older building, which was plagued by roof leaks and a finicky cooling system, 

leaving the area humid and musty. Warehouse style buildings in the back of the hospital 

housed the medical records and some administrative offices. 

The hospital came under new management 2 years prior to the observed survey. During 

the time of the survey, the hospital had an average daily census of 13, an increase over prior 

years. Most of the surgeries performed at this hospital were hernia repairs, cholecystectomies, 

or gynecological procedures. Since the renovations, the hospital experienced an increase in 

deliveries. 

Three experienced nurse surveyors and one surveyor in training (also a nurse) surveyed 

this hospital. One served as team leader. All of the surveyors had clinical nursing experience. 

At least one surveyor had been at the hospital previously. Before arriving at the hospital, they 

reviewed the State’s historical files of compliance and complaints for this hospital. Thus they 

were familiar with the hospital’s history of compliance problems. They were also aware of the 

hospital’s recent scandals with its medical staff. For example, one physician on staff was 

imprisoned for narcotics abuses and another lost his medical license due to a pattern of 

unnecessary surgeries, high complication rates, and poor care. 

The State survey agency notified the hospital of the survey 3 weeks in advance. 

Hospital Quality: A Call for Greater Accountability 40 OEI-01-97-00050 
APPENDIX D 

Summary Observations 

The survey began around 11:30 in the morning on the first day and went until noon on 

the third day, lasting about 19 hours total. The surveyors continued surveying until 5:30 or 

6:00 PM on the first 2 days. The survey began with an opening conference that included the 

surveyors and the hospital’s leadership. After general introductions and reviewing a loose 

agenda, the hospital presented an overview of its recent improvements. Then the surveyors 

began their document reviews, which covered hospital logs, minutes, bylaws, and medical 

records, among others. By early afternoon, the surveyors split up to begin their sessions, with 

the trainee always assigned to follow a senior surveyor. 

The surveyors relied on interviews, document reviews, and observations. Once or twice 

a day, the surveyors would compare notes and share concerns so others could pursue them in 

different areas of the hospital. The surveyors selected the files they would review themselves, 

based on staff rosters; surgical, admission, and emergency logs; and other documents. They 

also pushed alarm bells and observed responses. They tested the hospital staff’s knowledge by 

asking them to demonstrate certain tasks, such as turning on pieces of equipment, testing a 

defibrillator, changing oxygen tanks, and sterilizing a scope. 

Through the information gleaned from the above, the surveyors identified a range of 

concerns. Among them were the following: 

<Staff were untrained in certain hospital equipment. For example, when surveyors asked for a 

demonstration of the hospital’s new negative pressure room, no one knew how to turn it on. 

<The hospital’s emergency call systems were inadequate. For example, the surveyors pulled 

call bells in the emergency room and procedures room. No one answered the calls. 

<Medical record documentation was problematic. In particular, patient consent forms failed to 

spell out risks in lay terms and included broad consent for “any other necessary procedure.” 

Physician signatures were also missing from records. Legibility was a problem, too. 

<The nursing department appeared to have inadequate staff. Also, the nursing department 

failed to use individualized care plans, follow-through on incident reports, or identify patients’ 

educational needs. 

Hospital Quality: A Call for Greater Accountability 41 OEI-01-97-00050 
APPENDIX D 

<The hospital lacked a policy for transferring high-risk obstetrical patients, had a high c-section 

rate, and lacked documentation for fetal distress. For example, the hospital delivered an infant 

at 27-weeks gestation even though it lacked neonatal capacity. Furthermore, three of six 

obstetrical records the surveyors reviewed documented some sort of adverse outcome. 

<The hospital lacked a performance appraisal system for its medical staff and its reappointment 

process excluded peer review data. Furthermore, physicians covering the emergency room 

lacked privileges for common emergency procedures, such as placing chest tubes and 

performing tracheotomies. 

<The appropriateness of care in three or four records was questionable. The surveyors copied 

those records and forwarded them to a peer review organization for review. 

During the exit conference (the last session of the survey), the surveyors discussed their 

findings, but couched their comments as preliminary. After all, they had collected a variety of 

documents to review and analyze off-site. Findings from those documents could alter their onsite findings. The hospital would not know the final survey outcome until that process 

occurred (see page 23 for a final summary of the survey’s findings). 

Sessions observed by the OIG included, in part or in whole, pharmacy, medical staff, 

nursing, discharge planning, operating and recovery rooms, procedure room, emergency room, 

dietary, and the building and grounds tour. Highlights of some of the observed sessions follow. 

Medical Staff Session 

This session lasted 3 hours on the first day and continued for 1 hour on the second day. 

Before beginning the session, the surveyor read the bylaws. During the session, she 

interviewed the administrative staff person in charge of credentialing and reviewed credential 

files. She selected the files herself, and by the end of the second day, had reviewed the 

credentials of each of the six staff physicians, among others. In questioning the staff and 

reviewing the files, the surveyor was especially interested in how the medical staff took 

responsibility for quality, how the hospital delineated privileges, and evidence of a reappraisal 

and peer review system. No one from the medical staff participated in this session. 

Hospital Quality: A Call for Greater Accountability 42 OEI-01-97-00050 
APPENDIX D 

The surveyor interview covered the following topics: appointment and reappointment 

process, language skills of foreign medical graduates, reliance on the American Medical 

Association’s physician profile database, conscious sedation, emergency room coverage and 

procedures, the on-call system, pending litigation, licensure limitations, prerequisites for active 

staff, availability of surgical services, use of podiatrists and psychologists, autopsies, organ 

donation, physician experience and competence with certain procedures, unexpected surgical 

outcomes such as perforations, role of chart review, and medical staff involvement in appraisal 

process. 

As this session unfolded over the 2 days, the surveyor asked for more and more files, and 

then operating room logs and other documents to confirm the range of procedures the hospital 

provided fell within the privileges granted. By the end of the session, the surveyor identified 

some areas of concern. For example, she expressed concerns about privileges because 

physicians responsible for covering the emergency room lacked privileges for common 

emergency room procedures such as chest tubes. The surveyor offered examples of similar 

problems at other hospitals that lead to unnecessary deaths. She also questioned whether 

medical staff were involved in the evaluation of patient care and physician appraisal. Other 

concerns related to the staff’s failure to follow its own bylaws, the lack of written guidelines 

for certain high-risk patients, and illegibility of medical records. 

Pharmacy Session 

One surveyor conducted the pharmacy review, which lasted about 1 hour. The hospital’s 

pharmacy, located in the old part of the hospital, had one full-time pharmacist and one parttime technician. The pharmacist’s background was in retail pharmacy and he was new to 

practicing in a hospital. 

The surveyor reviewed the pharmacist’s license and other documents. She was 

particularly interested in documentation of proper narcotics tracking, logs tracking after-hours 

access to the pharmacy, and protocols for any performance improvement projects. In addition 

to reviewing the papers, she asked for copies to take with her. While in the pharmacy she also 

inspected the hood and scanned the storage shelves, where she noted narcotics that were 

labeled without strength identified. 

The surveyor’s questions covered the following areas: formulary development, 

mechanism for drug recalls, restocking and security of crash carts, computerization, drug 

utilization review, hospital strategic planning, performance improvement projects, drug errors, 

and reliance on and competency of the pharmacy technician. Because of the obvious humidity 

Hospital Quality: A Call for Greater Accountability 43 OEI-01-97-00050 
APPENDIX D 

problem in the small pharmacy, the surveyor asked questions about the impact of the dampness 

on the efficacy and storage of the drugs. 

The surveyor focused, however, on narcotics and adverse drug reactions and how the 

hospital tracked them. Apparently the nursing department viewed it as a pharmacy 

responsibility and the pharmacist viewed it as nursing. The surveyor was concerned about the 

lack of accountability and spent a lot of time educating the pharmacist about what he needed to 

track and why, referencing requirements of the Drug Enforcement Administration. 

Nursing 

This session lasted about 2 hours and involved the director of nursing and one surveyor. 

The director of nursing was new. In fact, she was the 15th director of nursing the hospital hired 

in 7 years. The surveyor reviewed documentation of the hospital’s nurse staffing plan, among 

other documents. Low staffing and acuity emerged as major concerns. Among the topics the 

surveyor questioned the director of nursing about were: reliance on contract nurses, orientation 

and training of new nurses, determining baseline competency, role of charge nurses, nurse roles 

in tracking and reporting adverse drug reactions, anatomical gifts, contingency plans, incident 

reporting (falls, needle sticks, and employee injuries), use of telephone and verbal orders, and 

infection control. 

Statement of Deficiencies Stemming from the Certification Survey 

Within a few weeks of the on-site portion of the survey, the State agency sent the final 

statement of deficiencies to the hospital. The statement included deficiencies at each of the 

three levels (condition, standard, and element) as noted below: 

Condition of Participation: Governing Body (42 CFR 482.12) 

Two elements under this condition were unmet, concerning the accountability of the 

medical staff and its appointment process. 

Condition of Participation: Quality Assurance (42 CFR 482.21) 

One standard under this condition was unmet, concerning implementation of the quality 

assurance plan. Two elements under this condition were also unmet, both concerning 

clinical plans: one because the hospital lacked evidence that it evaluated drug errors and 

one because it lacked evidence that it evaluated a recent increase in c-sections. 

Hospital Quality: A Call for Greater Accountability 44 OEI-01-97-00050 
APPENDIX D 

Condition of Participation: Medical Staff (42 CFR 482.22) 

This condition was unmet based on the medical staff’s failure to operate under its bylaws 

and develop or implement a system of accountability. Two standards and four elements 

were also out of compliance under this condition. One unmet standard concerned the 

accountability and organization of the medical staff; the other, the medical staff’s failure 

to abide by its bylaws. The unmet elements included the failure of the medical staff to 

conduct periodic appraisals of its members and to delineate clinical privileges, among 

others. 

Condition of Participation: Nursing Services (42 CFR 482.23) 

Two elements under this condition were unmet. One concerned the lack of individualized 

nursing care plans for each patient. The other concerned the problems with the reporting 

of medication errors. 

Condition of Participation: Medical Record Services (42 CFR 482.24) 

Two elements under this condition were unmet. One concerned illegibility and one 

concerned delinquent medical records. 

Condition of Participation: Pharmaceutical Services (42 CFR 482.25) 

One element, concerning the security of drugs, was unmet. 

Condition of Participation: Physical Environment (42 CFR 482.41) 

One standard was unmet. This element encompassed several concerns related to patient 

safety and well-being: the lack of working alarm systems, lack of staff knowledge of and 

response to alarm systems, lack of staff knowledge on certain patient care equipment, 

lack of safe emergency exits, and lack of mechanism to monitor temperature and humidity 

in the pharmacy, among others. 

Hospital Quality: A Call for Greater Accountability 45 OEI-01-97-00050 
APPENDIX D 

Condition of Participation: Surgical Services (42 CFR 482.51) 

Two elements were unmet. One concerned the hospital’s failure to delineate surgical 

privileges in accordance with competency. The other concerned the lack of a properly 

executed informed consent form. 

Condition of Participation: Emergency Services (42 CFR 482.55) 

One element was unmet. It concerned the medical staff’s failure to abide by policies and 

procedures governing care provided in the emergency department and the nursing staff’s 

failure to adhere to established triage policy. 

Based on the above findings, the State survey team conducted two more surveys at this 

hospital, both within 2 months of the original survey observed by the OIG. As of the last 

follow-up survey, the hospital had corrected its deficiencies to the satisfaction of the survey 

team. 

Hospital Quality: A Call for Greater Accountability 46 OEI-01-97-00050 
APPENDIX E 

Detailed Comments on the Draft Reports

In this appendix we present the full comments of all parties that responded to our four 

draft reports. In order, the comments that we present in this appendix are from the following 

parties: 

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

 Joint Commission on Accreditation of Healthcare Organizations 

 Association of Health Facility Survey Agencies 

 American Osteopathic Association 

 American Hospital Association 

 American Association of Retired Persons 

 Service Employees International Union 

 National Health Law Program 

Public Citizen’s Health Research Group 

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Association of Health Facility Survey Agencies Response to OIG Report 

June 1999 

The mission and purpose of the Association of Health Facility Survey Agencies (AHFSA) is to 

strengthen the role of its member state agencies in advocating, establishing, overseeing and 

coordinating health care quality standards that will assure the highest practicable quality of health 

care for all state and federally-regulated health care providers. In addition to other functions, 

AHFSA offers advice and recommendations to the Health Care Financing Administration (HCFA). 

The comments AHFSA offers below concerning the Department of Health and Human Services 

Office of Inspector General (OIG) report entitled “The External Review of Hospital Quality” are 

intended to improve the effectiveness of oversight and regulation of our nation’s hospitals. 

In reviewing the report, our association is in agreement with the OIG’s assessment of the current 

system of hospital regulation and oversight provided by HCFA, state regulatory agencies and the 

Joint Commission on the Accreditation of Healthcare Organizations (Joint Commission). There are 

both positive and negative components to the processes of accreditation and Medicare certification 

that can be developed and strengthened with HCFA’s guidance and direction. 

In the report, the OIG mentions that HCFA’s validation survey process is ineffective in monitoring 

the Joint Commission’s survey performance. The purpose of the validation survey process, as we 

understand it, is not to validate the Joint Commission’s performance, but instead to validate that 

Joint Commission standards and the application of those standards and process does, in fact, 

assure compliance with Medicare Conditions of Participation. Therefore, it is our position that 

validation surveys do have a place in hospital regulatory oversight. However, in order to promote 

consistency in all hospital surveys (validation or standard surveys) from state to state, and thereby, 

ascertain whether these surveys are effective, we believe HCFA should develop and provide 

hospital training on a survey process for states to use as a guide when surveying hospitals. Ideally, 

the survey process would be similar in format to survey processes developed for other Medicare 

programs such as long term care. Additionally, whereas at present, HCFA often may not require a 

hospital to submit a plan of correction and receive follow-up visits as a result of validation survey 

results, we believe the process would be more efficacious if all hospitals with deficiencies from 

validation surveys be required to submit plans of corrections and receive follow-up visits. 

The OIG notes the recently piloted Observation survey process whereby state agencies accompany 

Joint Commission surveyors during accreditation surveys as one solution in monitoring Joint 

Commission’s survey performance. However, an AHFSA member from a state who participated 

in the Observation survey process did not feel it was effective in assuring minimum standards of 

care were met, but only determined whether the entity conducting the survey did, or did not, follow 

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their prescribed survey process. Therefore, we have reservations as to the effectiveness of the 

Observation survey with regards to improving patient care and outcomes. 

Concerning the issue of inspections of non-accredited hospitals, AHFSA takes the position these 

facilities should be surveyed at least every three (3) years and that a portion of the surveys should 

be unannounced. This survey cycle would be consistent with the minimum survey cycle offered by 

the Joint Commission. Additionally, as HCFA has clearly demonstrated its priority and 

commitment in monitoring the quality of care provided to residents in long term care facilities, it 

should also do the same for patients receiving care in hospitals by providing the necessary funding 

to state agencies needed to accomplish the regulatory oversight of hospitals. 

The OIG report mentions that surveys conducted by the Joint Commission are structured such that 

there is little time for investigation of complaints. To identify possible substandard care in 

hospitals during accreditation surveys, we believe it is essential the Joint Commission place more 

time and emphasis on conducting complaint investigations. This includes communicating with 

state agencies prior to accreditation surveys in order to gather information about the hospital’s 

compliance/complaint history. The Joint Commission should consider random selection of medical 

records for review, including those patients in the hospital at the time of the survey and those who 

have been discharged. Additionally, we believe the Joint Commission should conduct more 

unannounced accreditation surveys in order to obtain a more realistic picture of the care being 

provided by hospitals. 

Concerning the measure of quality care provided by hospitals, we believe potential patients and 

their families would best be served by on-line computer viewing such as a website of survey results 

from Joint Commission surveys and, where applicable, state agency surveys. We believe such a 

website should go beyond a survey score or level of accreditation, but should include more in-depth 

information such as areas noted to be out of compliance with standards or regulations identified by 

Joint Commission or state agency surveyors during hospital inspections, including those 

inspections based on complaint allegations. 

In conclusion, we believe it is essential for state agencies, HCFA and the Joint Commission to 

work collaboratively in the regulatory oversight of our nation’s hospitals. Only through such 

collaboration can we begin to make strides in assuring quality health care is provided by hospitals 

and the health care interests of the public are protected. 

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Endnotes

1. Troyen A. Brennan et al, “Incidence of Adverse Events and Negligence in Hospitalized 

Patients,” The New England Journal of Medicine 324 (February 7, 1991) 6: 370-376. 

2. The 17.7 percent refers to adverse events considered by the authors to be serious. The authors 

defined adverse events as “situations in which an inappropriate decision was made when, at the 

time, an appropriate alternative could have been chosen” and serious as ranging from “temporary 

disability to death.” See Lori B. Andrews et al, “An Alternative Strategy for Studying Adverse 

Events in Medical Care,” The Lancet 349 (February 1, 1997)309-313. 

See also; Lucian L. Leape, “Error in Medicine,” Journal of the American Medical 

Association 272 (December 21, 1994) 23: 1851-1857; David C. Classes et al, “Adverse Drug 

Events in Hospitalized Patients,” Journal of the American Medical Association 277 (January 

22/29, 1997) 4: 301-306; Mark R. Chassin et al, “The Urgent Need to Improve Health Care 

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

American Medical Association 280 (September 16, 1998) 11: 1000-1005; David W. Bates et 

al,“Effect of Computerized Physician Order Entry and a Team Intervention on Prevention of 

Serious Medication Errors,” Journal of the American Medical Association 280 (October 21, 

1998) 1311-1316; Robert A. Raschke et al, “A Computer Alert System to prevent Injury from 

Adverse Drug Events: Development and Evaluation in a Community Teaching Hospital,” Journal 

of the American Medical Association 280 (October 21, 1998) 1317-1320; and David C. Classen, 

“Clinical Decision Support Systems to Improve Clinical Practice and Quality of Care,” Journal of 

the American Medical Association 280 (October 21, 1998) 1360-1361. 

3. One example is a November 1998 New York Times article under the headline: “Death in 

Surgery Reveals Troubled Practice and Lax Hospital.” The article described a “botched” 

operation on a young woman by a surgeon who was on probation by the State medical board and 

who used unauthorized medical equipment brought in to the operating room by a medical supply 

salesman. Such incidents can happen even in the best of hospitals, but they underscore the point 

that hospitals can be dangerous places and that oversight systems can be lax. See also 

“Overdoses Still Weigh heavily at Dana Farber,” The Boston Globe (26 December 1995); “Florida 

Doctor Sanctioned in New Amputation,” The Boston Globe (19 July 1995); “Two Surgeons 

Surrender Licenses After Mistakenly Removing Kidney,” The Boston Globe (6 June 1996); “How 

Can We Save the Next Victim?” New York Times Magazine (15 June 1997); “Another Hospital 

Death Probed,” The Boston Globe (26 July 1997); “Patient Dies After Drinking Poison Left on 

Nightstand,” San Diego Union-Tribune (6 March 1998); ”Man Arrested for Posing as Doctor for 

4 years,” posted at the CNN interactive webpage (16 May 1998); “Deadly Restraint: Patients 

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Suffer in a System Without Oversight,” The Hartford Courant (13 October 1998). 

4. http://WWW.hcfa.gov/Medicare/Medicare.htm 

5. Ibid. 

6. Ibid. 

7. Ibid. 

8. P.L. 89-97. 

9. The HCFA published its proposed hospital conditions of participation on December 19, 1997 

(62 Fed. Reg. 66,726). On July 2, 1999, it published an interim final rule concerning patients’ 

rights (64 Fed. Reg. 36,070). 

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

11. Health Care Financing Administration, OSCAR 10 Report, as of May 30, 1998. 

12. Two companion reports entitled The Role of Accreditation and The Role of Medicare 

Certification explore the role of accreditation and Medicare certification in greater detail. 

13. Michael S. Hamm, The Fundamentals of Accreditation (Washington, D.C.: American Society 

of Association Executives, 1997) 3. 

14. Nonaccredited hospitals can go through the Medicare certification process for free. Although 

the President’s Department of Health and Human Services Fiscal Year 1999 Budget included a 

proposal authorizing the Secretary to impose a user fee for certification surveys, that proposal 

was excluded from the budget bill passed by Congress. 

15. 42 U.S.C. 1395bb. 

16. 42 U.S.C. 1395aa. 

17. Health Care Financing Administration, Oscar 10 Report, as of May 30, 1998. 

18. Office of Inspector General, Medical Licensure and Discipline: An Overview (June 1986); 

The Utilization and Quality Control Peer Review Organization Program: Quality Review 

Activities (September 1988); The Utilization and Quality Control Peer Review Organization 

Program: Sanction Activities (November 1988); The Utilization and Quality Control Peer 

Hospital Quality: A Call for Greater Accountability 91 OEI-01-97-00050 
APPENDIX F 

Review Organization Program: An Exploration of Program Effectiveness (February 1989); 

Performance Indicators, Annual Reports, and State Medical Discipline: A State-by-State Review 

(August 1990); Quality Assurance Activities of Medical Licensure Authorities in the US and 

Canada (February 1991); Educating Physicians Responsible for Poor Medical Care: A Review 

of the PROs’ Efforts (February 1992); The Sanction Referral Authority of Peer Review 

Organizations (April 1993); The Peer Review Organizations and State Medical Boards: A Vital 

Link (April 1993); The Beneficiary Complaint Process of the Medicare Peer Review 

Organizations (November 1995); The Role of Medicare PROs in Identifying and Responding to 

Poor Performers (December 1995); and Monitoring and Evaluating the Health Care Quality 

Improvement Program (August 1988). 

19. Joint Commission on Accreditation of Healthcare Organizations, “Understanding the 197 

hospital Performance Report,” 4. 

20. Ibid., 10. 

21. HCFA to States, FY 1997 State Survey and Certification Budget Call Program Requirements 

and Budget Guidelines. 

22. Joint Commission on Accreditation of Healthcare Organizations. 

23. See D. E. Berwick, “Continuous Quality Improvement as an Ideal in Health Care,” New 

England Journal of Medicine 320 (January 5, 1989) 1: 53-56 and The Institute of Medicine, 

Medicare: A Strategy for Quality Assurance (Washington, D.C.: National Academy Press, 1990). 

24. Referred to as the Sentinel Event policy. For a fuller discussion of this policy, see our 

companion report, The Role of Accreditation. 

25. For a fuller discussion of the ranking of State survey agency activities, see our companion 

report, The Role of Medicare Certification. 

26. 62 Fed. Reg. 66726, Dec. 19, 1997. 

27. Ibid. 

28. Ibid., 66728. 

29. Mark R. Chassin et al, “The Urgent Need to Improve Health Care Quality: Institute of 

Medicine National Roundtable on Health Care Quality,” Journal of the American Medical 

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

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APPENDIX F 

30. Ibid., 1004. 

31. Ibid. 

32. Ibid. 

33. HCFA, Report to Congress on the Study of: Private Accreditation (Deeming) of Nursing 

Homes, Regulatory Incentives and Non-Regulatory Initiatives, and Effectiveness of the Survey 

and Certification System, July 1998; General Accounting Office, California Nursing Homes: 

Federal and State Oversight inadequate to Protect Residents in Homes with Serious Care 

Violations, GAO/T-HEHS-98-219 (July 28, 1998); Hearings Before the Senate Special 

Committee on Aging, July 27-28, 1998; see also President Clinton’s remarks announcing the new 

nursing home regulations, July 21, 1998 (in Weekly Compilation of Presidential Documents, July 

27, 1998, p 1446). 

34. In his remarks on July 21, 1998 President Clinton called for a “crackdown on unsafe nursing 

homes...[and] a step up [in] investigations” (in Weekly Compilation of Presidential Documents, 

July 27, 1998, p 1446). 

35. Until January 1998, HCFA only selected hospitals for validation surveys from those 

undergoing Joint Commission surveys during certain months of the year. The HCFA reports that 

it corrected this problem. 

36. Tracking termination notices would provide HCFA insights into how often hospitals are 

unable to correct problems identified through a survey within 45 days, because HCFA only issues 

termination notices when problems go uncorrected for 45 days. 

37. 42 U.S.C.1395ll. 

38. 62 Fed. Reg. 66726, Dec. 19, 1997. 

39. The HCFA implemented this approach to overseeing the State survey agencies (referred to as 

the State Agency Quality Improvement Program, or SAQIP) in 1996. The HCFA defined a core 

set of performance standards that apply generally to survey and certification activities for any 

provider, for example nursing homes, hospitals, or home health agencies. The HCFA expects 

State agencies to develop improvement plans for specific standards. 

40. Performance reports from the Joint Commission are available upon request and through the 

Joint Commission’s website. For further discussion of the performance reports, see our 

companion report, Holding the Reviewers Accountable. 

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41. 42 U.S.C. 1395aa. 

42. See Lori B. Andrews et al, “An Alternative Strategy for Studying Adverse Events in Medical 

Care,” The Lancet 349 (February 1, 1997)309-313; Troyen A. Brennan et al, “Incidence of 

Adverse Events and Negligence in Hospitalized Patients,” The New England Journal of Medicine 

324 (February 7, 1991) 6: 370-376; Lucian L. Leape, “Error in Medicine,” Journal of the 

American Medical Association 272 (December 21, 1994) 23: 1851-1857; David C. Classes et al, 

“Adverse Drug Events in Hospitalized Patients,” Journal of the American Medical Association 

277 (January 22/29. 1997) 4: 301-306; Mark R. Chassin et al, “The Urgent Need to Improve 

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

of the American Medical Association 280 (September 16, 1998) 11: 1000-1005; David W. Bates 

et al,“Effect of Computerized Physician Order Entry and a Team Intervention on Prevention of 

Serious Medication Errors,” Journal of the American Medical Association 280 (October 21, 

1998) 1311-1316; Robert A. Raschke et al, “A Computer Alert System to prevent Injury from 

Adverse Drug Events: Development and Evaluation in a Community Teaching Hospital,” Journal 

of the American Medical Association 280 (October 21, 1998) 1317-1320; and David C. Classen, 

“Clinical Decision Support Systems to Improve Clinical Practice and Quality of Care,” Journal of 

the American Medical Association 280 (October 21, 1998) 1360-1361. 

43. Sidney A. Shapiro and Randy S. Rabinowitz, “Punishment versus Cooperation in Regulatory 

Enforcement: A Case Study of OSHA,” Administrative Law Review 49 (1997)4: 713-762. 

44. National Roundtable on Health Care Quality, p 1004. 

45. Prospective Payment Assessment Commission, Report and Recommendations to the 

Congress (March 1997) 13. 

46. Hamm, Fundamentals of Accreditation, 3. 

47. 42 CFR 488.8. These regulations define a 20 percent disparity rate between the accrediting 

organization and the State agency as a trigger for a deeming authority review. 

48. Stephen F. Jencks, “The Government’s Role in Hospital Accountability for Quality of Care,” 

The Journal of Quality Improvement (July 1994)364-369. 

49. 62 Fed. Reg. 66728, Dec. 19, 1997. 

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