United States General Accounting Office

GAO Report to Ranking Minority Member,

Committee on Veterans’ Affairs, U.S.

Senate

JULY 1995 VA HEALTH CARE

Physician Peer Review

Identifies Quality of

Care Problems but

Actions to Address

Them Are Limited

GAO/HEHS-95-121

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-254062 

July 7, 1995

The Honorable John D. Rockefeller IV

Ranking Minority Member

Committee on Veterans’ Affairs

United States Senate

Dear Senator Rockefeller:

Peer review—physicians reviewing the work of other physicians—is a

crucial element in ensuring that quality medical care is provided to

patients. When used appropriately, peer review can result in both

immediate and long-term improvements in patient care. However, when

used inappropriately, it can prevent the detection of poorly performing

practitioners and cause severe quality of care problems for patients. An

essential element of peer review is management support for actions

recommended by the peer review process. Without such support, peer

review is a meaningless activity because no action is taken on the peer

reviewers’ recommendations.

In response to your request, we have examined the relationship between

problem identification and problem resolution as it pertains to the

Department of Veterans Affairs (VA) physician peer review. Specifically

you asked (1) how the results of VA peer review are being used in the

process of reprivileging and disciplining physicians with performance

problems; (2) what are the impediments to effective peer review; and

(3) whether VA was taking action to identify, follow up on, and report to

state medical boards and the National Practitioner Data Bank on the

actions of those physicians who are not performing in accordance with

professional standards.

Our review was conducted at VA’s Central Office and six VA medical

centers during the period January 1994 through March 1995. At each

location we (1) reviewed peer review policies, procedures, and

documentation; (2) examined quality assurance files; and (3) interviewed

physicians involved in the peer review process. We also examined

malpractice claims paid on behalf of physicians at these medical centers.

The quality assurance data that we reviewed are considered confidential

and privileged under the provisions of Title 38, U.S.C. §5705. Thus, we are

not incorporating in this report any examples of cases that VA peer

reviewers believed an experienced, competent practitioner would have

handled differently. However, these examples will be provided to you

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under separate cover. Further details on our scope of work and

methodology are contained in appendix I.

Our review was conducted in accordance with generally accepted

government auditing standards.

Results in Brief The peer review process at the six medical centers that we visited has

enabled the facilities to identify potential quality of care problems.

However, actions taken by VA clinical service chiefs to address these

problems were often limited to undocumented discussions with the

physicians involved. Further, there was generally no record of the extent

to which quality of care problems were addressed or what, if any, action

was taken to deal with the problems identified. As a result, corrective

actions, if taken, cannot be identified and trends cannot be established to

point the way for improvement.

Peer review in both VA and non-VA facilities is a highly subjective process

that places heavy reliance on professional judgment. While experts

recognize that some element of professional judgment will always be

present in peer review, the development of practice guidelines and use of

peer review by committee can help to reduce it. VA has begun to develop

its own practice guidelines, and some VA medical centers are using the

committee approach to peer review.

By establishing restrictive procedures for reporting to the National

Practitioner Data Bank, VA medical centers are not reporting to the Data

Bank many of the malpractice payments made on behalf of physicians,

dentists, and other licensed health care practitioners or the adverse

actions1

 taken against physicians’ and other practitioners’ clinical

privileges. Failure to make such reports can result in practitioners who

have provided patients with less than optimal care being allowed to

(1) leave VA employment with no record of having been involved in a

malpractice claim or an adverse action or (2) remain in the VA system

without any indication on their record that problems may exist with their

performance.

1

An adverse action is one that results in a reduction, revocation, or suspension of a physician, dentist,

or other health care practitioner’s clinical privileges, licensure, or membership in a professional

society. An adverse action is based on a professional review of a practitioner’s professional

competence or conduct.

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Background VA employs approximately 10,000 physicians in its 158 medical centers. To

help ensure that the care these physicians provide meets accepted

professional standards, VA uses several systems to monitor and evaluate

physician practice. These systems include surgical case review, external

peer review, credentialing and privileging, malpractice claim analysis, and

occurrence screens.2

 An integral part of VA’s process is physician peer

review—physicians evaluating the medical care provided by other

physicians.

Peer review in VA is used by medical centers to determine if practitioner

care is less than optimal and is initiated when an occurrence screen

identifies potential quality of care problems. Peer review is also used to

establish the basis for the granting of privileges to physicians and to

examine malpractice claims made against health care professionals in the

medical center. No disciplinary action is taken against a physician’s

privileges after a peer review following an occurrence screen. This is

because quality assurance information, such as occurrence screen peer

review data, is confidential and cannot be used in disciplinary

proceedings. However, peer review findings can be used by medical center

management to initiate a formal investigation of a physician’s performance

or conduct after which disciplinary action can be taken.

VA guidance, issued in April 1994, presents various methods for conducting

peer review but does not mandate a specific peer review technique.

Specifically, the guidance discusses the disadvantages of the single

reviewer approach and presents three types of multiple reviewer

techniques: (1) committee review, (2) multiple independent review, and

(3) discussion to consensus. At the six medical centers we visited, two

methods of peer review were being utilized: multiple independent review

and committee review. (See app. II for a discussion of these approaches.)

Regardless of the approach used, the result of any peer review is an

evaluation of the care provided by a practitioner and a preliminary

determination as to how, in the reviewer’s opinion, other physicians would

have handled the case. Cases rated as a level 1 (most experienced,

competent practitioners would handle case similarly) usually receive no

further action. Cases rated as a level 2 (most experienced, competent

practitioners might handle the case differently) or a level 3 (most

experienced, competent practitioners would handle the case differently)

2

An occurrence screen is the professional review of cases involving adverse outcomes to identify

opportunities for improvement of care.

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receive a supervisory review by the responsible clinical service chief, such

as the chief of surgery.

All physicians and dentists employed by VA are subject to privileging

procedures. Privileging is the process by which a practitioner is granted

permission by the institution to provide medical or other patient care

services within defined limits on the basis of an individual’s clinical

competence as determined by peer references. Privileging is done at the

time of employment and every 2 years thereafter. However, a physician’s

privileges can be examined at any time if a question about his or her

performance or competence is raised.

The National Practitioner Data Bank was created under Title IV of Public

Law 99-660, the Health Care Quality Improvement Act of 1986. The act

calls for (1) insurance companies and certain self-insured health care

entities to report malpractice payments made for the benefit of a

physician, dentist, or other licensed health care practitioner to the Data

Bank and (2) hospitals and other authorized health care entities, licensing

boards, and professional societies to report professional review actions

relating to possible incompetence or improper professional conduct

adversely affecting the clinical privileges, licensure, or membership in a

professional society of a practitioner for longer than 30 days to the Data

Bank.

The intent of the act is to improve the quality of medical care by

encouraging physicians, dentists, and other health care practitioners to

identify and discipline those who engage in unprofessional behavior and to

restrict the ability of incompetent physicians, dentists, and other health

care practitioners to move from state to state without disclosure or

discovery of their previous damaging or incompetent performance. The

Data Bank acts as a clearinghouse for information about licensed

practitioners’ paid malpractice claims and adverse actions on licensure,

clinical privileges, and professional society membership. It has two main

functions: (1) responding to queries about practitioners from authorized

health care entities and hospitals and (2) collecting and storing adverse

actions and malpractice payment information.

Although the act does not require VA medical centers to participate in the

Data Bank, it directs the Secretary of Health and Human Services (HHS) to

enter into a memorandum of understanding with the Administrator of the

Veterans Administration (now VA) to apply the reporting requirements of

the act to health care facilities under VA’s jurisdiction. Accordingly, a

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memorandum of understanding was signed in November 1990, followed by

interpretive rules effective October 1991.

Peer Review Process

Identifies Quality of

Care Problems

VA’s physician peer review process is identifying cases needing

management attention at the six medical centers that we visited.

Specifically, in fiscal year 1993, peer reviewers at these locations reviewed

a total of 563 cases referred from the occurrence screen process involving

potential quality of care problems. In 373 of these cases, peer reviewers

decided that most experienced, competent practitioners would have

handled the case similarly; in 136 cases, the peer reviewers believed that

most experienced, competent practitioners might have handled the case

differently; and in 54 cases, the peer reviewers believed that most

experienced, competent practitioners would have handled the case

differently.

Each of the VA medical centers that we visited uses occurrence screens to

identify potential physician performance problems that may warrant a

peer review. Under this process, cases are screened against a

predetermined list of criteria, usually by nurses. Those cases that involve

one or more of the occurrences will be reviewed to identify possible

problems in patient care. Occurrences that are reviewed include, but are

not limited to, the following:

• readmittance within 10 days of an inpatient stay;

• readmittance within 3 days of an outpatient visit;

• return to special care unit, such as intensive care;

• return to operating room; and

• death.

Any case for which the occurrence screen results show that a potential

quality of care problem may exist is referred to the cognizant service chief

for medical peer review. Table 1 shows, by medical center, how the peer

reviewers rated the 563 cases.

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Table 1: Classification of Occurrence

Screen Cases by Peer Reviewers VA medical center Level 1 Level 2 Level 3 Total

A 49 11 1 61

B 65 64 19 148

C 75 14 3 92

D 51 9 0 60

E 37 21 14 72

F 96 17 17 130

Total 373 136 54 563

Action Taken by Service

Chiefs on Peer Review

Findings

VA guidance governing peer review of potential quality of care problems

identified through occurrence screens states that when peer review

indicates that practitioner care is less than optimal, the cases are sent to

the service chief for a determination regarding corrective action. The

actions chosen by the service chief will be communicated in writing to the

chief of staff and the occurrence screen program coordinator. If no action

is considered necessary, a notation to that effect should be made by the

service chief. However, VA guidance does not explicitly state the extent to

which (1) discussions with a practitioner should be documented or (2) the

reasons for no action being taken should be justified. As a result, the

worksheets provided to the occurrence screen coordinator generally

contained no elaboration on the action taken. Of the 50 cases we reviewed

where peer reviewers believed that most experienced, competent

practitioners would have handled the case differently than the physician

under review, 32 resulted in a discussion with the physician, 4 resulted in

no action, 8 resulted in a policy change, and 6 resulted in counseling.3

Table 2 shows how the service chiefs at the medical centers we visited

dealt with cases that their peer reviewers believed most experienced,

competent practitioners would have handled differently.

3

For purposes of this report, a discussion consists of a notation in the occurrence screen worksheets

indicating that a discussion was held in a staff meeting, with a practitioner, with a resident, with an

attending practitioner, or in an educational conference. However, no details of any of these

discussions were provided. Counseling includes actions specified in the occurrence screen worksheets

as counseled practitioner (without documentation); formal counseling (letter sent to file); and referral

of case for administrative investigation or review.

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Table 2: Actions Taken on Cases Peer

Reviewers Believed That Most

Experienced, Competent Practitioners

Would Have Handled Differently VA medical center

Number of

level 3

casesa Discussion

No action

taken

Policy/

procedure

change Counseling

A 2 1 0 1 0

B 15 10 1 2 2

C 3 2 0 0 1

D 0 0 0 0 0

E 16 12 1 1 2

F 14 7 2 4 1

Total 50 32 4 8 6

aThese numbers refer to the occurrence screen peer review cases we reviewed. The numbers in

table 1 refer to all the occurrence screen peer review cases completed at each medical center

we visited.

Service chiefs clearly favored a discussion of problems over any other type

of action. But in 32 of the 50 level 3 cases in which a discussion took place,

when we asked for documentation about what was actually discussed with

the practitioner about the peer review findings or what, if any, corrective

actions were agreed upon, we were told by staff that they could not find

information in either the occurrence screen worksheets or minutes of the

service meetings. Further, in the 4 cases we reviewed in which no action

was taken by a service chief on peer reviewers’ findings, there was no

indication in the occurrence screen worksheets as to why a decision to

take no action was justified.

VA regulations require cases meeting the occurrence screen criteria to be

entered into an ongoing occurrence screen database, which is reviewed

and analyzed regularly to identify patterns that may be problematic.

However, when actions taken by the service chiefs are not being

documented for future reference, corrective actions, if taken, cannot be

identified and trends cannot be established to point the way for

improvement.

In 14 cases, evidence was present that action was taken on the peer

reviewer’s findings. Specifically, in 8 cases, medical center management

revised certain policies and procedures to ensure that the problems

identified by peer reviewers would not recur. In 6 cases, physicians were

provided counseling on the basis of the peer reviewer’s findings and a

record of the incident was placed in the physician’s privileging file. The

incidents triggering formal counseling included inappropriate medical

management of a patient with diabetes; failure to diagnose, monitor, and

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treat patients; failure to communicate resuscitation plans for a terminally

ill patient; failure to monitor patient response to medication and take

appropriate action; and failure to assess a patient and order the correct

dose of medication.

Impediments to Effective

Peer Review

Experts believe that a significant impediment to effective peer review is

the inherent subjectivity involved in determining whether a potential

quality of care problem exists. The development of practice guidelines that

peer reviewers can use to make performance judgments is one method

suggested by experts to reduce the subjectivity. For example, practice

guidelines could reduce the tendency on the part of some peer reviewers

to focus on the effect of a bad patient outcome rather than whether the

standard of care was met.

In a 1992 Journal of the American Medical Association article, an official in

VA’s Office of Quality Management stated that the development of practice

guidelines would be a great aid to improve peer review. In a corroborating

article, the physician writing about peer review states that peer judgments

regarding appropriateness of care are strongly influenced by perceived

outcomes.4

 This suggests that the standard of care is often unclear to

reviewers. Practice guidelines are being developed with increasing

frequency in both VA and the medical community as a whole. However, at

least one expert does not believe that it will be possible to design

guidelines that will take into account every possible factor that might

constitute an exception to the standard.5

Other experts note a tendency of some reviewers to give consistently more

lenient or harsh ratings than do others. For example, some suggest that

only acknowledged experts should be asked to review the care provided

by other practitioners. In their opinion,

“picking skilled physician-reviewers may be the central and critical step. Simply choosing a

peer physician may not be the best strategy; rather, identifying an expert in both the

condition under study and in quality assessment purposes and techniques may be

required.”6

4

Caplan, Robert A., and others, “Effect of Outcome on Physician Judgments of Appropriateness of

Care,” Journal of the American Medical Association, Vol. 265, No. 15 (1991), pp. 1957-1960.

5

Chassin, Mark R., “Standards of Care in Medicine,” Inquiry, Vol. 25 (1988), pp. 437-453.

6

Brook, Robert H., and Kathleen N. Lohr, “Monitoring Quality of Care in the Medicare Program,”

Journal of the American Medical Association, Vol. 258, No. 21 (1987), p. 3138.

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At the six medical centers we visited, we found that classification of peer

review findings is a highly subjective activity because no systemwide

clinical criterion exists for peer reviewers to determine whether

physicians would or would not have performed in the same manner as the

physician under review. As indicated above, such a situation is not unique

to VA and will be resolved only when a complete set of practice guidelines

is used routinely. Until such criteria are generally available, a case that

might be a level 1 in VA medical center A might be a level 3 in VA medical

center F. Levels assigned to cases may also vary among the specialty

services within the medical center.

Physician Perceptions of

the Peer Review Process in

VA Are Mixed

The degree to which the concept of peer review is accepted or embraced

by physicians depends to a great extent on how the results of peer review

are utilized by medical center management. Although we found

differences among services within medical centers, four of the six VA

medical centers we visited are using peer review primarily to evaluate

physician performance and identify physicians who may have contributed

to adverse patient outcomes. This approach is resulting in negative

perceptions of the peer review process and is impeding its acceptance

among physicians. At these facilities, several physicians questioned the

usefulness of the peer review process and did not view it as having an

important role in identifying opportunities for improving care.

These physicians contend that peer review duplicates other quality

assurance monitors. For example, the medical service units at each of the

VA medical centers we visited hold morbidity and mortality conferences to

discuss all deaths and clinical complications that occurred during the

week preceding the meeting. Some of these cases are later selected for

peer review. But, according to physicians involved in peer review, the peer

reviews do not identify any issues that are not identified and discussed in

the morbidity and mortality conferences.

Physicians also told us that peer review committee findings have more

credibility than the findings of a single peer reviewer because the

subjectivity inherent in determining quality of care is reduced. Other

benefits of the committee approach include identifying the underlying

problem that led to an adverse outcome and greater physician acceptance

of peer review. Physicians told us that by focusing on the identification of

system issues, they are better able to identify the underlying cause of an

adverse outcome and prevent it from occurring again.

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Physicians who are members of peer review committees also told us that

the anonymity associated with peer review committees allows them to be

open and honest in their evaluations. Officials from one VA medical center

that switched from using a single reviewer to a peer review committee

stated that the number of cases rated level 2 or 3 rose when they began

using a peer review committee. Specifically, during the first 5 months of

1994, the committee assigned more level 3 designations to cases than did

individual reviewers in all of 1993. At another medical center that began

using peer review committees, the number of cases rated level 2 or 3 by a

committee increased by more than 60 percent.

VA Is Underreporting

Malpractice Payments

to the Data Bank

The Health Care Quality Improvement Act of 1986 requires that all

malpractice claims paid on the behalf of a practitioner be reported to the

Data Bank. However, under rules setting forth VA’s policy for participation

in the Data Bank, VA will file a report with the Data Bank regarding any

malpractice payment for the benefit of a physician, dentist, or other

licensed practitioner only when the director of the facility at which the act

or omission occurred affirms the conclusion of a peer review panel7

 that

payment was related to substandard care, professional incompetence, or

professional misconduct.8

 Thus, before reporting a practitioner to the Data

Bank after a malpractice payment is made, VA is in effect requiring the peer

review panel to make a determination that either the standard of care was

not met or that a practitioner was guilty of professional incompetence or

misconduct. Adherence to these procedures results in VA medical centers’

not reporting to the Data Bank all malpractice payments made on behalf of

their practitioners.

The process followed by VA medical centers to deal with malpractice

claims is as follows: Within 30 days of a claim being filed, the appropriate

VA district counsel notifies the medical center involved in providing the

medical care identified in the allegations that a claim has been filed.

Medical center personnel then conduct a peer review to determine if the

appropriate standards of care were met. These standards can relate to any

part of the system (for example, hospital, outpatient care, equipment,

systems in place, and practitioners). The medical center forwards the

results of the peer review along with a copy of the Tort Claim Information

7

In November 1994, VA issued a directive indicating that a director may not overturn the conclusion of

a peer review panel.

8

Private sector malpractice insurance entities are required to report to the Data Bank the names of

practitioners on whose behalf a payment has been made in response to a settlement or adjudication of

a claim. There is no assessment of whether the standards of care have been met.

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System data and a copy of the patient’s medical record to both the Armed

Forces Institute of Pathology9

 and the appropriate VA district counsel.

Upon receipt of the results of the initial peer review, the district counsel

can make a request for the medical opinion of an external expert. Finally,

the VA district counsel can settle or deny a claim.

If a payment is made on the claim, the responsible medical center director

will convene a second peer review panel to determine if an identifiable

licensed health care practitioner is involved in the case. During this

review, a determination is made as to whether the acts or omission of the

practitioners in relation to the patient injury for which the settlement or

judgment was made constituted care that did not meet generally accepted

standards of professional competence or conduct. The recommendations

of this panel should determine whether the practitioner involved in the

incident is reported to the Data Bank. However, before approving the

report, the director will notify the practitioner to be reported and provide

him or her with an opportunity to discuss the situation with appropriate

medical center officials, including the director.

At the six medical centers we visited, we reviewed 53 paid claim files in

which the claim alleged that an adverse patient outcome was caused by a

licensed practitioner(s). We found that it was possible to determine the

practitioner(s) associated with the adverse patient outcome in each of the

53 claims. However, only four of these individuals were reported to the

Data Bank. The remaining practitioners were not reported for a variety of

reasons, including determination by the panel that the standard of care

was met (13); inability to identify the practitioner responsible for the

patient (3); problem was considered to be a system failure (4); belief that

the resident rather than the attending physician was to blame for the

incident (3); patient was at fault (2); no evidence of misconduct,

negligence, or malpractice (6); panel split on the need to report (1); and

practitioner behavior was not clearly outside the standards of practice (1).

Further, from October 28, 1991, to September 30, 1994, only 73

practitioners from 1,047 paid claims for all VA medical centers were

reported to the Data Bank. (See app. III.)

In his response to this report, VA’s Under Secretary for Health stated that

there is not necessarily an identifiable practitioner associated with every

malpractice claim because (1) malpractice claims involving VA are filed

against the United States of America and typically do not name

9

The Armed Forces Institute of Pathology began trending tort claims for VA in October 1992. The

Institute analyzes the data to determine where problem areas may exist. It issued the first of its

periodic reports to VA in April 1994.

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practitioners, (2) payments made are on behalf of care provided at a VA

facility, and (3) the act or omission for which payment was made is not

necessarily practitioner-related. The Under Secretary concluded that

(1) the VA peer review process is necessary to determine if there is an

identifiable licensed health care provider for whom it can be said that

payment was made and (2) only if there is an identifiable practitioner can

it be said that the payment was on his or her behalf.

We agree that malpractice claims are filed against the United States of

America and not against individual practitioners. We found, however, that

identifying practitioners involved in a malpractice claim and on whose

behalf it can be said payment was made is not difficult. Our review of 558

malpractice claims involving VA that were paid during fiscal years 1992 and

1993 shows that 422, or 76 percent, involved claims in which it was alleged

that an adverse patient outcome was caused by a licensed practitioner(s).

Of these practitioners, 409 were physicians.

VA Is Not Reporting

Adverse Privileging

Actions to the Data

Bank

Under its memorandum of understanding with HHS, VA has agreed to report

to the Data Bank through state licensing boards any action that for longer

than 30 days reduces, restricts, suspends, or revokes the clinical privileges

of a physician or dentist due to incompetence or improper professional

conduct. However, regardless of the length of time an individual’s

privileges have been affected, VA will not report adverse actions, including

suspensions lasting longer than 30 days, to the Data Bank until all internal

appeals have been satisfied. Such a policy is not required by the act and

can delay reporting for a considerable time. For example, one VA medical

center we visited suspended the privileges of two physicians in 1993 and

terminated their employment in 1994. One of these physicians was

reinstated in March 1995 with a formal reprimand. As of April 4, 1995, the

other was still involved in the internal appeals process. Neither has been

reported to the Data Bank.

VA’s privileging process includes, among other things, evaluation of a

physician’s relevant experience and current competence. It also includes

consideration of any information related to medical malpractice

allegations or judgments, loss of medical staff membership, loss or

reduction of clinical privileges, or challenges to licensure. In addition, the

evaluation must be determined using evidence of an individual’s current

competence. Initial privileging is done at the time of employment and

every 2 years thereafter. However, a physician’s privileges can be

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examined at any time if the situation requires it; for example, when there

is a question of physician competency or professional conduct.

From October 28, 1991, through September 30, 1994, nine medical centers

reported 11 adverse actions to the Data Bank. However, our analysis

shows that the adverse reporting rate for VA medical centers is lower than

the adverse reporting rate of community hospitals. For example, in

California, VA has 4,008 beds and reported 2 adverse actions for an average

reporting rate of 0.50 reports per 1,000 beds. Conversely, community

hospitals in California have 105,270 beds and reported 390 adverse actions

for an average reporting rate of 3.7 reports per 1,000 beds. (See app. IV for

a complete reporting comparison by state.)

The Under Secretary for Health, in responding to this report, stated that VA

reporting rates are not comparable with community hospital rates because

VA practitioners are employees of VA, not independent entrepreneurs. The

Under Secretary believes that through appropriate supervision, service

chiefs at the medical centers are identifying problems and through

supervision and progressive discipline, if necessary, issues are handled

before formal privileging actions occur. Conversely, in a community

hospital, practitioners are not typically employees of the organization, and

the formal privileging review process is the only legitimate process for

review. The Under Secretary noted, however, that VA policy requires that

licensed health care practitioners who leave VA employment while under

investigation be reported to the Data Bank immediately.

Service chiefs at the medical centers we visited told us that they use

formal and informal processes to deal with physicians who have

performance problems. Formal procedures require due process hearings

that (1) take time to administer, (2) require much documentation, and

(3) involve extensive understanding of the regulations and guidelines

governing such actions. For example, in fiscal years 1993 and 1994, action

was taken to officially remove three physicians at the medical centers we

visited. The time involved from the initiation of disciplinary action to

ultimate removal ranged from 5-1/2 months to a little over 1 year. Reasons

for the varying time frames include complexity of the issues involved

(such as professional misconduct versus quality of care), multiple

independent peer reviews necessary in two cases and not in the other, and

the extent to which the physicians fought the disciplinary actions. In each

case, the physician’s privileges were restricted for more than 30 days;

however, only one of the three cases was reported to the Data Bank. VA

policy requires that the appeals process be completed before any case is

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reported to the Data Bank, and these physicians had appealed the

suspension and revocation of their privileges and the termination of their

employment.

Service chiefs at the medical centers we visited also used an informal

process to remove physicians who had performance problems. However,

the effect is that physicians who may have performance problems are not

reported to the Data Bank. Further, one service chief told us that he tends

to hire part-time physicians to avoid having to adhere to the formal

procedures for dealing with problem physicians. The following is an

example of a situation that resulted in the removal of a problem physician

through informal means.

A service chief reduced a physician’s privileges and personally supervised

the physician for 6 months to determine the physician’s competence level.

The service chief concluded that the physicians’ medical skills did not

improve during the time of observation and recommended to the physician

that he resign. The physician took this advice and resigned from the

medical center. But no documentation of restricted privileges or other

problems appeared in the physician’s credentialing and privileging file.

Conclusions Although physician peer review is performed at the VA medical centers that

we visited and cases of questionable quality of care are identified, actions

taken by service chiefs as the result of peer review findings are seldom

made a matter of record in peer review files. Such information could allow

management to track the performance of practitioners over time and help

ensure that any pattern of less than optimal care is quickly identified.

Documentation also establishes the degree to which management

addressed the issues raised by peer reviewers. From an organizational

perspective, this establishes accountability on the part of service chiefs,

increases practitioner awareness of the importance that the medical

center places on the delivery of quality care, and is a good

risk-management tool because it requires managers to go on record as to

how a potential problem was addressed.

By establishing restrictive Data Bank reporting procedures, VA has

shielded its physicians from the professional accountability that is

required of private sector practitioners. In so doing, VA could be facilitating

the delivery of substandard care outside the VA health care system by

allowing practitioners with poor performance records to leave its

employment with no record of having been involved in a malpractice claim

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or an adverse action. Conversely, failure to report also allows some

physicians who provide patients with less than optimal care to remain in

the VA system without any indication on their record that problems may

exist with their performance.

Recommendations We recommend that the Secretary of Veterans Affairs direct the Under

Secretary for Health to

• require service chiefs to fully document all discussions held with

practitioners involved in cases that peer reviewers conclude that most

experienced, competent practitioners might or would have handled

differently, and

• revise the criteria now being used by medical centers to report VA

practitioners to the National Practitioner Data Bank so that they are more

consistent with the reporting practices now used in the private sector.

Agency Comments VA’s Under Secretary for Health concurred with our recommendation that

service chiefs fully document all discussions held with practitioners and

stated that VA will reinforce, on a systemwide basis, the requirement that

service chiefs must fully document appropriate actions taken in response

to peer review conclusions. The Under Secretary also concurred in

principle with our recommendation relating to reporting to the National

Practitioner Data Bank. While he does not believe that a change in policy

is needed for the reporting of malpractice payments, he does agree that

more timely reporting of initial summary suspensions of physician

privileges lasting longer than 30 days is an option. In this regard, he said

that a group of knowledgeable program staff will explore all policy options

and report their recommendations to him by the end of September 1995.

Under VA’s current procedures, the postpayment peer review is made to

determine if there is an identifiable licensed health care practitioner

responsible for a breach in care. The Under Secretary stated that effective

May 19, 1995, these reviews will be completed outside of the medical

center for which payment was made (for example, in another medical

center). This is an interim measure, and VA is in the process of pursuing

peer review options that are external to the VA system, such as utilization

of the clinical reviewers participating in VA’s External Peer Review

Program.

Page 15 GAO/HEHS-95-121 Physician Peer Review
B-254062 

We disagree with the Under Secretary’s contention that no policy change

is needed with respect to the reporting of malpractice payments. VA’s

policy of reporting only those malpractice payments involving

practitioners who have been determined to have breached the standard of

care remains more restrictive than required under Public Law 99-660. The

law requires only that all malpractice payments made on behalf of a

physician or licensed health care practitioner be reported to the Data

Bank. In addition, the law states that payment of a claim should not be

construed as creating a presumption that medical malpractice has

occurred. Thus, any post-payment peer review need only determine that

the payment was for the benefit of a practitioner, not that it results from a

breach in care.

We also believe that reporting initial summary suspensions rather than

only final actions should be viewed as more than an option. VA’s

memorandum of understanding with HHS clearly states that it will report to

the Data Bank any action that for longer than 30 days reduces, restricts,

suspends, or revokes the clinical privileges of a physician or dentist due to

incompetence or improper professional conduct.

As arranged with your office, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days from its

issue date. At that time, copies will be sent to appropriate congressional

committees; the Secretary of Veterans Affairs; the Director, Office of

Management and Budget; and other interested parties. We will also make

copies available to others upon request.

If you have questions on this report, please contact James Carlan,

Assistant Director, Federal Health Care Delivery Issues, on (202) 512-7120.

Other staff contributing to this report were team coordinators Patrick

Gallagher and Patricia Jones and team members Deena M. El-Attar,

Barbara Mulliken, and George Bogart.

Sincerely yours,

David P. Baine

Director, Federal Health Care

 Delivery Issues

Page 16 GAO/HEHS-95-121 Physician Peer Review
Page 17 GAO/HEHS-95-121 Physician Peer Review
Contents

Letter 1

Appendix I 

Scope and

Methodology

20

Appendix II 

Types of Peer Review

Conducted in the

Medical Centers We

Visited

21

Appendix III 

Adverse Action and

Malpractice Payment

Reports Submitted to

the Data Bank, by VA

Medical Center (Oct.

28, 1991-Sept. 30,

1994)

22

Appendix IV 

VA and Community

Hospital Adverse

Action Reporting

Rates Per 1,000 Beds

24

Tables Table 1: Classification of Occurrence Screen Cases by Peer

Reviewers

6

Table 2: Actions Taken on Cases Peer Reviewers Believed That

Most Experienced, Competent Practitioners Would Have Handled

Differently

7

Page 18 GAO/HEHS-95-121 Physician Peer Review
Contents

Table IV.1: VA and Community Hospital Adverse Action

Reporting Rates per 1,000 Beds

24

Abbreviations

HHS Department of Health and Human Services

TCIS Tort Claim Information System

VA Department of Veterans Affairs

Page 19 GAO/HEHS-95-121 Physician Peer Review
Appendix I 

Scope and Methodology

To accomplish our review, we interviewed VA’s medical inspector and

officials in VA’s Professional Affairs Office, Quality Management Planning

and Evaluation Office, Office of Personnel and Labor Relations, and Office

of General Counsel. The objective of these interviews was to obtain

information on (1) the role of peer review in evaluating physicians and

reporting to the National Practitioner Data Bank and state licensing

boards and (2) how VA’s Tort Claim Information System (TCIS) was

developed and is being utilized. We also visited six VA medical centers10

selected on the basis of the number of paid malpractice claims made on

behalf of these facilities. At each location, we (1) interviewed quality

assurance personnel, physicians who served as peer reviewers, and

service chiefs to obtain their perspectives on the peer review process and

(2) reviewed policies and procedures for peer review quality assurance

programs, minutes of any meetings that dealt with potential quality of care

issues, and documentation pertaining to 191 peer reviews made as a result

of an occurrence screen. We also reviewed peer review documentation for

80 tort claims paid and pending for practitioners in 1992 and 1993 at the

six medical centers we visited. In addition, we obtained the Armed Forces

Institute of Pathology11 analysis of VA tort claim information for fiscal year

1993 for all VA medical centers and reviewed HHS information on VA’s

participation in reporting to the Data Bank.

10We visited four university affiliated medical centers: Cleveland, Ohio; Houston, Texas; Hines, Illinois;

and St. Louis, Missouri. And we visited two nonuniversity affiliated medical centers: Martinsburg, West

Virginia, and Fayetteville, North Carolina.

11The Armed Forces Institute of Pathology is a triservice organization “sponsored” by the Army

Surgeon General’s Office. The three Department of Defense services—Army, Navy, Air Force—are

required to report all malpractice claims to the Institute. VA has an agreement with this organization

wherein the Institute will analyze all VA medical malpractice cases referred to it and report its findings

back to VA.

Page 20 GAO/HEHS-95-121 Physician Peer Review
Appendix II 

Types of Peer Review Conducted in the

Medical Centers We Visited

Under the multiple independent reviewer approach, which is being used at

the Cleveland, Hines, and Martinsburg medical centers, physicians

selected by the service chief individually review the work of a colleague

within the same service; for example, surgeons review the work of other

surgeons. During this review, the medical records associated with a case

are examined and any physicians or others involved in the case may be

interviewed. Each peer reviewer independently evaluates the quality of

care involved in the case and makes a preliminary determination as to

how, in his or her opinion, other physicians would have handled the case.

In those cases where the service chief and a peer reviewer disagree, the

service chief’s opinion will prevail. The service chief also determines the

extent to which follow-up action will be taken on the case.

The Fayetteville, Houston, and St. Louis medical centers use a committee

approach to peer review. While each committee is multidisciplinary and

comprised of elected or appointed representatives from the major medical

services such as surgery and medicine, each committee conducts peer

reviews somewhat differently. In Fayetteville, the peer review committee,

which consists of all the service chiefs, performs the peer review as a

group and determines what action to take. The Houston peer review

committee selects individual members of the peer review committee to

review cases and present their findings to the entire committee for

discussion and level determination. While the committee makes the final

peer review level determination, the service chiefs determine what action

to take. In St. Louis, all service level peer reviews are submitted to a

Quality Assurance/Quality Improvement Committee, which then performs

another peer review to validate the original review. The committee has the

final decision-making authority regarding the level assigned and will often

recommend what action should be taken and then follow up to ensure that

the recommended action occurs.

Page 21 GAO/HEHS-95-121 Physician Peer Review
Appendix III 

Adverse Action and Malpractice Payment

Reports Submitted to the Data Bank, by VA

Medical Center (Oct. 28, 1991-Sept. 30, 1994)

VA medical center

Adverse

actions

reported

Malpractice

payments

reported

Phoenix, Arizona • 2

Little Rock, Arkansas • 3

Livermore, California • 1

Long Beach, California 1 1

San Diego, California • 2

California clinics 1 2

Denver, Colorado • 1

Grand Junction, Colorado 1 1

Bay Pines, Florida • 1

Gainesville, Florida • 1

Danville, Illinois • 1

Hines, Illinois • 1

North Chicago, Illinois • 4

Lexington, Kentucky • 2

New Orleans, Louisiana • 1

Togus, Maine • 1

Bedford, Massachusetts • 1

Boston, Massachusetts • 1

Battle Creek, Michigan • 2

Minneapolis, Minnesota • 3

Biloxi, Mississippi • 1

Poplar Bluff, Missouri • 1

St. Louis, Missouri • 1

Fort Harrison, Montana • 2

Manchester, New Hampshire • 1

East Orange, New Jersey 1 •

Lyons, New Jersey 1 1

Albuquerque, New Mexico • 2

Bronx, New York 1 •

Fayetteville, North Carolina • 1

Chillicothe, Ohio • 1

Dayton, Ohio • 1

Muskogee, Oklahoma • 1

Portland, Oregon • 1

Roseburg, Oregon • 2

Altoona, Pennsylvania 2 2

(continued)

Page 22 GAO/HEHS-95-121 Physician Peer Review
Appendix III 

Adverse Action and Malpractice Payment

Reports Submitted to the Data Bank, by VA

Medical Center (Oct. 28, 1991-Sept. 30, 1994)

VA medical center

Adverse

actions

reported

Malpractice

payments

reported

Erie, Pennsylvania • 1

Pittsburgh, Pennsylvania • 2

Wilkes-Barre, Pennsylvania • 1

Providence, Rhode Island 1 •

Fort Meade, South Dakota • 1

Mountain Home, Tennessee • 1

Amarillo, Texas • 1

Dallas, Texas • 1

Houston, Texas 1 •

San Antonio, Texas • 1

Temple, Texas • 1

Waco, Texas 1 •

Richmond, Virginia • 1

Salem, Virginia • 1

Spokane, Washington • 1

Tacoma, Washington • 1

Walla Walla, Washington • 1

Milwaukee, Wisconsin • 1

Huntington, West Virginia • 2

Martinsburg, West Virginia • 1

Undesignated • 4

Total 11 73

Page 23 GAO/HEHS-95-121 Physician Peer Review
Appendix IV 

VA and Community Hospital Adverse Action

Reporting Rates Per 1,000 Beds

This appendix presents a comparison of VA’s and community hospitals’

reported adverse actions per 1,000 hospital beds. This analysis shows that

VA hospitals are not reporting at the same rate as other hospitals in the

same state. The analysis used information from an HHS Inspector General’s

report that concluded that most hospitals are underreporting to the Data

Bank. VA’s adverse action reports are from its first 3 years’ participation in

the Data Bank, October 28, 1991, through September 30, 1994. The

community hospitals’ adverse action reports are from the first 3-1/2 years

of the Data Bank’s operation, September 1, 1990, through December 31,

1993. Only nine VA medical centers in seven states reported adverse

actions. Hospitals in all states reported adverse actions.

Table IV.1: VA and Community

Hospital Adverse Action Reporting

Rates per 1,000 Beds

VA medical center Community hospitals

State

Number

of beds

Reports

to Data

Bank

Reports

per 1,000

beds

Number

of beds

Reports

to Data

Bank

Reports

per 1,000

beds

Alabama 1,471 0 0.00 23,574 33 1.4

Alaska 0 0 0.00 1,909 6 3.1

Arizona 770 0 0.00 13,629 94 6.9

Arkansas 927 0 0.00 13,328 24 1.8

California 4,008 2 0.50 105,270 390 3.7

Colorado 534 1 1.87 13,691 90 6.6

Connecticut 569 0 0.00 14,238 25 1.8

Delaware 150 0 0.00 2,808 11 3.9

District of Columbia 580 0 0.00 7,527 61 8.1

Florida 2,388 0 0.00 63,415 174 2.7

Georgia 1,450 0 0.00 36,334 91 2.5

Hawaii 0 0 0.00 4,274 6 1.4

Idaho 118 0 0.00 4,045 6 1.5

Illinois 2,789 0 0.00 57,343 84 1.5

Indiana 841 0 0.00 26,143 90 3.4

Iowa 603 0 0.00 17,009 30 1.8

Kansas 871 0 0.00 15,477 52 3.4

Kentucky 916 0 0.00 19,052 43 2.3

Louisiana 855 0 0.00 23,980 35 1.5

Maine 272 0 0.00 6,083 23 3.8

Maryland 987 0 0.00 19,982 70 3.5

Massachusetts 1,942 0 0.00 31,973 55 1.7

Michigan 1,486 0 0.00 39,913 116 2.9

Minnesota 801 0 0.00 24,019 35 1.5

(continued)

Page 24 GAO/HEHS-95-121 Physician Peer Review
Appendix IV 

VA and Community Hospital Adverse Action

Reporting Rates Per 1,000 Beds

VA medical center Community hospitals

State

Number

of beds

Reports

to Data

Bank

Reports

per 1,000

beds

Number

of beds

Reports

to Data

Bank

Reports

per 1,000

beds

Mississippi 809 0 0.00 17,577 19 1.1

Missouri 1,159 0 0.00 29,455 56 1.9

Montana 153 0 0.00 4,742 10 2.1

Nebraska 399 0 0.00 10,292 30 2.9

Nevada 124 0 0.00 4,144 35 8.5

New Hampshire 108 0 0.00 4,831 17 3.5

New Jersey 1,297 2 1.54 37,796 117 3.1

New Mexico 449 0 0.00 6,867 17 2.5

New York 4,784 1 0.21 102,036 210 2.1

North Carolina 1,375 0 0.00 30,151 52 1.7

North Dakota 119 0 0.00 5,213 11 2.1

Ohio 1,626 0 0.00 51,701 149 2.9

Oklahoma 424 0 0.00 15,100 50 3.3

Oregon 639 0 0.00 10,153 38 3.7

Pennsylvania 3,149 2 0.64 66,298 116 1.8

Rhode Island 156 1 6.41 4,301 9 2.1

South Carolina 579 0 0.00 15,166 29 1.9

South Dakota 506 0 0.00 5,450 4 0.7

Tennessee 1,840 0 0.00 29,420 37 1.3

Texas 3,601 2 0.56 79,982 190 2.4

Utah 305 0 0.00 5,641 20 3.6

Vermont 120 0 0.00 2,290 6 2.6

Virginia 1,298 0 0.00 29,349 124 4.2

Washington 813 0 0.00 15,735 88 5.6

West Virginia 772 0 0.00 10,590 18 1.7

Wisconsin 1,103 0 0.00 23,971 50 2.1

Wyoming 283 0 0.00 3,026 8 2.6

(101437) Page 25 GAO/HEHS-95-121 Physician Peer Review
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