Medicare: CMS Needs Additional Authority to Adequately Oversee Patient Safety in Hospitals
Released: 2004-07-20T00:00:00

Letter

Background

To participate in Medicare, hospitals must maintain standards of patient safety and health that comply with Medicare COPs. For example, the COP related to nursing services includes such requirements for hospitals as providing a 24-hour nursing service that is supervised or furnished by a registered nurse. There are currently 23 Medicare COPs. (See app. II for a description of the 23 Medicare COPs.) CMS proposed revisions to all of the COPs in 1997, but it did not finalize them. Since then, CMS has revised several of the COPs, including those concerning the life safety code; quality assessment and performance improvement; organ, tissue, and eye donations; and nurse anesthetist supervision.

Health care accreditation programs other than JCAHO’s hospital accreditation program may generally adopt their own requirements if CMS determines that an accreditation program’s requirements are at least equivalent to Medicare COPs. If CMS also determines, among other things, that the accreditation program’s survey process is likely to identify any serious deficiencies in COPs, it must generally grant “deeming authority” to the accreditation program and treat entities accredited by these organizations as meeting Medicare COPs. CMS has the authority to review these programs, and it can impose a probationary period while monitoring performance and remove deeming authority if warranted.

Most hospitals demonstrate compliance with standards equivalent to Medicare COPs through accreditation by JCAHO. In 2002, JCAHO accredited 4,211, or 82 percent, of Medicare-participating hospitals. Hospitals accredited by JCAHO received payments for Medicare-covered inpatient services of approximately $98 billion, or 90 percent, of the $109 billion that was spent on hospital care in 2002. JCAHO, as part of its accreditation-related activities, also develops survey procedures, trains its surveyors, and formulates performance measures. JCAHO is governed by a 29-member board of commissioners and has a staff of over 1,000.

JCAHO’s deeming authority for hospitals is established in statute and therefore can only be changed by Congress. As a result of this unique statutory authority, hospitals accredited by JCAHObecause they meet JCAHO standardsare deemed to meet Medicare COPs as well. In contrast, the American Osteopathic Association (AOA)—a private, not-for- profit professional organization that offers accreditation services for hospitals and other health care organizations—holds deeming authority that is subject to CMS’s direct review and approval. While hospital accreditation is its largest program, JCAHO also has accreditation authority under Medicare for certain other health care providers, including clinical laboratories, hospices, ambulatory surgical centers, and home health care agencies. All of these other JCAHO accreditation programs are subject to CMS’s direct review and approval.

To be accredited by JCAHO, a hospital must meet eligibility requirements, satisfactorily complete a triennial on-site survey process, and continue to maintain JCAHO’s standards between surveys. The accreditation surveys that JCAHO conducts every 3 years are particularly important. For most hospitals, the triennial survey is the only time that JCAHO conducts an on- site review of the hospital’s compliance with all quality standards and issues decisions on how well the hospital has complied with JCAHO’s standards. In 2004, JCAHO implemented a new hospital accreditation survey process, which, according to JCAHO, is intended to reduce the cost of accreditation to health care organizations and JCAHO, enhance public confidence that health care organizations are in continuous compliance with standards, increase the real and perceived value of accredited organizations, meet the requirements of deeming authorities and purchasers, and improve satisfaction for hospitals participating in the accreditation program.

CMS Oversight of JCAHO

CMS exercises oversight of JCAHO’s hospital accreditation program primarily through its validation surveys and annual reports to Congress. Under federal law, CMS must continually study the operation and administration of Medicare, including validating the JCAHO hospital accreditation process, and submit annual reports to Congress. CMS has agreements with state agencies to conduct validation surveys. There are different kinds of validation surveys, including traditional validation surveyssurveys conducted on a sample of hospitals within 60 days of their triennial JCAHO survey. Traditional validation surveys provide the basis for assessing the effectiveness of JCAHO’s hospital accreditation process in detecting deficiencies in Medicare COPs, which JCAHO- accredited hospitals are treated as meeting. Validation surveys also include 18-month surveys, which monitor how well JCAHO-accredited hospitals are complying with Medicare COPs midway between their 3-year JCAHO surveys, and allegation surveys, which are triggered by complaints or other reports of situations that pose potential threats to patient health and safety in JCAHO-accredited hospitals. CMS has the authority to remove the deemed status of a JCAHO-accredited hospital where a state agency’s validation survey results in a finding that the hospital is out of compliance with one or more Medicare COP.

CMS uses a rate of disparity measure to summarize the extent to which an accreditation program, such as JCAHO’s hospital accreditation program, has not found serious deficiencies identified by CMS through state agency validation surveys. For a hospital accreditation program, using the results from validation surveys, the rate of disparity for hospitals surveyed by the state survey agencies is calculated as the difference between the number of hospitals found with serious deficiencies by state agencies and the number of hospitals found with comparable deficiencies by the accreditation program, divided by the number of hospitals sampled. CMS regulations provide that if the validation survey results for an accreditation organization with deeming authority indicate a rate of disparity that reaches the threshold level of 20 percent disparity or greater, CMS will notify the organization that its deeming authority may be in jeopardy and that the agency is initiating a deeming authority review. With respect to JCAHO, CMS includes the rate of disparity in its annual reports to Congress in which it reports the results of its validation program for JCAHO’s hospital accreditation program.

JCAHO’s Pre-2004 Hospital Accreditation Process Often Did Not Detect Serious Deficiencies Found by State Survey Agencies

JCAHO’s pre-2004 hospital accreditation process often did not identify either hospitals with serious deficiencies or the individual serious deficiencies found by state survey agencies through CMS’s validation program. In a sample of 500 JCAHO-accredited hospitals, state agency validation surveys conducted in fiscal years 2000 through 2002 identified 31 percent (157 hospitals) with serious deficiencies; of these, JCAHO did not identify 78 percent (123 hospitals) as having serious deficiencies. For the same validation survey sample, the majority of the serious deficiencies state survey agencies identified but JCAHO did not were in the physical environment COP category, which covers fire safety and prevention.

JCAHO Did Not Identify Three-Quarters of the Hospitals That State Survey Agencies Found to Have Serious Deficiencies

From fiscal years 2000 through 2002, JCAHO did not identify 123 of the 157 hospitals (78 percent) with serious deficiencies that CMS’s validation program identified out of a sample of 500 JCAHO-accredited hospitals. Table 1 shows the hospitals with serious deficiencies that state survey agencies identified and JCAHO did not during fiscal years 2000 through 2002. In 343 of the 500 hospital validation surveys, state agency surveyors did not find serious deficiencies. Both state agency surveyors and JCAHO surveyors identified 34 hospitals as having a serious deficiency.

According to JCAHO, disparity between state agency and JCAHO findings in the 123 hospitals in part may be attributed to the timing of the two surveys, JCAHO’s phasing in of new requirements, different interpretations of the COPs by state surveyors, and inherent surveyor bias. However, in its comparison to determine disparity between the two surveys, CMS does consider whether it is reasonable to conclude that the deficiencies found by state survey agencies existed at the time JCAHO surveyed the hospital.

JCAHO Did Not Detect Two-Thirds of the Serious Deficiencies Identified by State Survey Agencies

From fiscal year 2000 through 2002, JCAHO did not detect 167 of the 241 serious deficiencies (69 percent) identified through CMS’s validation program from a sample of 500 JCAHO-accredited hospitals. The number of serious deficiencies found by CMS’s validation program represents 2 percent of the 11,000 Medicare COPs surveyed by state agencies in the sample and were found in 157 hospitals. However, one serious deficiency in any one of these hospitals could limit its ability to provide adequate care to its patients. For example, a serious deficiency in the nursing services COP at a hospital in Texas found by a state agency but missed by JCAHO in 2000 included such problems as failure to prepare and administer drugs in accordance with federal and state laws, inadequate supervision and evaluation of the clinical activities of nonemployee nursing personnel, and nursing care and procedures provided to patients that were not within the scope of accepted standards of practice. Among hospitals with serious deficiencies identified by CMS’s validation program but not by JCAHO, there were on average 1.1 serious deficiencies per hospital, with a range from 1 to 6. Table 2 shows the percentage of serious deficiencies identified by CMS’s validation program but not by JCAHO for fiscal years 2000 through 2002.

Of the 167 serious deficiencies identified by CMS’s validation program from fiscal year 2000 through 2002 but not detected by JCAHO, 87 were related to a hospital’s physical environment, which includes life safety code standards on fire prevention and safety. For these 3 years, JCAHO did not detect 81 percent of the serious physical environment deficiencies identified by state agency surveyors. Table 3 shows the number of serious deficiencies, by category, identified by state survey agencies in CMS’s validation program but missed by JCAHO surveyors. The larger number of deficiencies in physical environment may be related to the difference in how state agencies generally survey separately a hospital’s compliance with the life safety code portion of the physical environment COP. JCAHO surveys assess compliance with the life safety code using a combination of the hospital’s self-assessment, a hospital building tour, and observations made by all surveyors during the survey process. Examples of deficiencies in physical environment that JCAHO did not identify but CMS’s validation program found in a hospital in Alabama in 2000 included the following: several exterior exits lacked emergency exit lighting; several exterior exits were illuminated only by single light bulbs; fire alarm system and fire extinguishers had not been inspected annually as required; and an automatic sprinkler system had not been inspected annually and maintained by certified personnel as required. Serious deficiencies in the COP on physical environment compromise patient safety and health.

The total number of deficiencies not identified by JCAHO in the quality-of- care COP categories—those COPs that involve the oversight and delivery of patient care—is similar to the number not identified by JCAHO in the physical environment COP. While the number of serious deficiencies not found by JCAHO in individual quality-of-care COP categories is smaller than the number not found in physical environment, when these quality-of- care COPs are combined, the proportion of serious deficiencies JCAHO missed is almost 60 percent of the total number of serious deficiencies identified by state survey agencies. The following are examples of hospitals found to be out of compliance with multiple quality-of-care COPs: In 2000, CMS removed the deemed status as a Medicare provider of a JCAHO-accredited hospital in California for failure to comply with two COPs, one of which was infection control. The hospital failed to provide a sanitary environment to avoid sources and transmission of infections and communicable diseases and failed to develop a system for ensuring the sterilization of medical instruments.

Also in 2000, CMS notified a hospital in Texas that if it did not implement a plan of correction the hospital’s participation in the Medicare program would be terminated. Serious deficiencies at this hospital included lack of compliance with the pharmaceutical services and nursing services COPs because medications were administered without physician orders and a double dose of narcotics was given in the emergency room, with no explanation for the excessive dosage, to a patient who later died.

State surveyors in CMS’s validation program also may miss serious deficiencies. In related work on skilled nursing facilities and home health agencies, we found that the number of serious deficiencies found by state agencies was highly variable among states and may be understated. State agencies’ detection of serious deficiencies in hospitals also varied widely among states for the 3 years we reviewed. For example, state survey agencies in California, Illinois, and Ohio found serious deficiencies in over 45 percent of the surveys they conducted between fiscal years 2000 through 2002. In contrast, Florida and New York found serious deficiencies in less than 10 percent of the surveys they conducted, and Louisiana did not find serious deficiencies in any of the surveys it conducted.

Potential of JCAHO’s New Hospital Accreditation Process Is Unknown, and Testing Was Limited

The potential of JCAHO’s new hospital accreditation process to improve the identification of serious deficiencies is unknown because it is too soon after its January 2004 implementation for a meaningful evaluation; in addition, JCAHO’s testing of the new process was limited. CMS has not had the opportunity to complete its validation program for 2004 to determine whether JCAHO surveyors using the new process are missing serious deficiencies later identified by state agency validation surveys. While unannounced surveys, which are planned for implementation in 2006, have the potential to improve the detection of serious deficiencies, other features of the new process that JCAHO did not test before implementation may have limitations that could affect the potential of the new process to identify problems with patient care. JCAHO’s pilot test of the new process had limitations, including using a sample of hospitals that volunteered for the pilot instead of using a random sample and self- evaluating the results instead of using an independent entity.

Potential of New Process Is Unknown

Because JCAHO’s new accreditation process was implemented in January 2004, it is too soon to know whether the new process is better at detecting serious deficiencies in Medicare COPs than the pre-2004 accreditation process. A JCAHO official told us the new process will aid in the detection of deficiencies, but we found that some of the features may have shortcomings that could limit their effectiveness. New features of the accreditation process include the hospital’s self-assessment of compliance with accreditation standards midway through the accreditation cycle, surveyor review of the care provided to specific patients to determine the adequacy of the hospital’s health care delivery system, and performance of all accreditation surveys on an unannounced basis beginning in 2006. (See app. III for a description of selected new features of JCAHO’s new hospital accreditation process.)

Periodic Performance Review

Periodic performance reviews assess hospital compliance with applicable standards and are performed at the 18-month midpoint between 3-year on- site accreditation surveys. According to JCAHO, the periodic performance review will have several benefits. These include providing hospitals with a process to assess their ongoing compliance and requiring them to correct or plan to correct all deficiencies identified. Periodic performance reviews must be conducted either by the hospital as a self-assessment or, if the hospital chooses, by JCAHO through an on-site review.

However, periodic performance reviews may not necessarily improve the detection of deficiencies. JCAHO did not pilot test these reviews for the potential to detect deficiencies and did not test whether hospitals that conducted reviews do a better job of continuing to comply with standards. In addition, for hospitals performing self-assessments, JCAHO will not check these self-assessments to determine whether hospitals fully and accurately identified quality problems and developed adequate corrective action plans to address the problems identified.

Priority Focus Process and Patient Tracer Methodology

According to JCAHO, the priority focus process and patient tracer methodology together have the potential to enhance the ability of surveys to detect deficiencies by directing the attention of surveyors to key patient care areas. The priority focus process uses a data-based formula to identify a limited number of areas in each hospital that are particularly important to patient health and safety. Priority focus areas might include infection control, medication management, or patient safety. Surveyors use the priority focus process combined with the patient tracer methodology to focus their surveys to specific areas for review. The patient tracer methodology guides their choice of current patients to “trace” through the experience of care within an organization. For example, if the hospital’s priority focus process data suggest that a patient with an orthopedic-related diagnosis such as a hip fracture should be traced, the JCAHO surveyor would review the patient’s medical record, noting where the patient had entered into the hospital and any services and transfers that occurred. Then the surveyor would retrace the steps in the patient’s care process by observing and talking to staff in some of the areas in which the patient received care. If the patient entered through the emergency department, was transferred to a medical/surgical unit, and then went to the operating room, the surveyor would go to these areas to interview staff about the care given to this specific patient. With information from patient tracers, the surveyor will assess whether any compliance issues exist with JCAHO standards. If the surveyor identifies a compliance issue while tracing one patient, the surveyor may review the records of similar patients to determine whether the problem is isolated or represents a pattern of care.

However, JCAHO did not test the extent to which the priority focus process and the patient tracer methodology could help surveyors detect deficiencies. A JCAHO official told us these new features of the accreditation process were intended to help surveyors trace patients in a consistent way and not necessarily to improve the detection of deficiencies.

Unannounced Surveys

JCAHO plans to conduct all hospital accreditation surveys on an unannounced basis beginning in 2006. JCAHO stated that unannounced surveys will ensure that hospital performance is based on the observation of hospitals’ routine operations rather than on how they operate after they have the opportunity to prepare to be surveyed. A JCAHO official also indicated that unannounced surveys will be more likely to detect deficiencies. The OIG and other organizations share JCAHO’s position on the value of unannounced surveys of hospitals and other health care organizations. The value of unannounced surveys also has been recognized for nursing homes, which state agencies survey on an unannounced basis.

JCAHO’s Pilot Test of New Process Was Limited

JCAHO’s pilot test of its new hospital accreditation process was limited and therefore unable to help determine the potential of the new process to detect deficiencies in Medicare COPs. According to JCAHO, the pilot test suggests that the new process was more likely than the former process to find quality problems. However, the pilot test sample included hospitals that volunteered or were selected by JCAHO and were not randomly selected, pilot test surveyors were accompanied by observers from JCAHO’s central office, and pilot test results were not independently evaluated. In addition, CMS has not completed its fiscal year 2004 validation program, which will include hospitals surveyed by JCAHO using the new process and thus does not yet have sufficient data on which to base a meaningful evaluation.

According to JCAHO’s analysis of the pilot test, the new hospital accreditation process is more likely to identify quality problems since proportionately more hospitals under the new process received unfavorable accreditation decisions. JCAHO based its conclusion on a comparison of survey outcomes, called accreditation decisions, between 18 hospitals in the pilot test conducted in 2002 and 2003 and the 1,524 hospitals that had been surveyed under the pre-2004 accreditation process during 2003. Table 4 presents the data JCAHO used to make the comparison. As shown, proportionately fewer hospitals under the new process were accredited without having to make corrections. Although JCAHO provided the accreditation decision outcomes for these 18 pilot tests, it stated it preferred to use the number of “requirements for improvement” as the basis for analysis.

However, JCAHO’s pilot test analysis was limited in three respects, which may have accounted for the smaller number of favorable accreditation decisions hospitals received under the new process.

The hospitals participating in the pilot test were not randomly selected by JCAHO. As a result, these hospitals may not be representative of all JCAHO-accredited hospitals and therefore results cannot be generalized.

During the pilot test, an observer from JCAHO’s central office accompanied each surveyor, and the knowledge that they were being observed may have influenced the surveyors’ actions. Under the pre-2004 process, observers only rarely accompanied JCAHO surveyors.

JCAHO conducted its own evaluation of pilot test results. Evaluation of the pilot test by an entity independent of either JCAHO or the hospitals tested could help to ensure that survey outcomes were impartially interpreted. For example, CMS used an independent group to evaluate its redesign of the nursing home survey process.

CMS Oversight Authority of JCAHO’s Hospital Accreditation Program Is Limited and Needs Improvement

CMS has limited oversight authority over JCAHO’s hospital accreditation program, and its existing oversight activities need improvement. The unique status of JCAHO’s hospital accreditation program, which is specified in statute, does not permit CMS to take corrective action, such as restricting or removing its deeming authority. Additionally, CMS uses a measure that provides limited information to evaluate the performance of JCAHO’s hospital accreditation program, has significantly reduced the number of surveys conducted as part of CMS’s validation program, and does not use measures that are based on sound statistical methods to assess the performance of JCAHO’s hospital accreditation program.

CMS Oversight Authority of JCAHO Is Limited

Because of JCAHO’s unique legal status, CMS’s oversight of JCAHO’s hospital accreditation program is limited in two major ways: Unlike other accreditation programs with deeming authority, JCAHO does not have to reapply to CMS to reauthorize its deeming authority, and CMS cannot take action to address performance problems with JCAHO’s hospital accreditation program.

JCAHO’s hospital accreditation program is the only Medicare accreditation program for which CMS does not have to conduct an evaluation of the accreditation standards and the processes used to conduct surveys. Without this evaluation, CMS is deprived of key oversight tools it is authorized to use with other accreditation programs: detailed information about any proposed changes to the accreditation process and public input. CMS cannot require JCAHO to provide information about proposed changes to its accreditation requirements and hospital survey processes. Also, because it is not required to reapply to CMS for deeming authority, JCAHO does not have to provide CMS information that other accreditation programs must provide, such as a detailed description of its survey processes, a comparison of its standards to Medicare requirements, and the qualifications of its surveyors, which CMS reviews to ensure that the programs comply with Medicare requirements. For example, when JCAHO’s hospice accreditation program applied for deeming status in 1999, CMS required changes to JCAHO’s hospice accreditation process, including requiring JCAHO to make unannounced surveys of Medicare- certified hospices. According to a CMS official, JCAHO’s hospital accreditation program has provided much of the information required of other accreditation organizations; however, CMS has no authority to require JCAHO to make changes to the hospital accreditation program as it does with other health care accreditation programs. Statutory provisions regarding public notice and comment do not apply to JCAHO’s hospital accreditation program as they do to other accreditation programs. The reapplication process for other accreditation programs requires affording the public an opportunity to provide input to CMS on an accreditation program’s request for deeming authority. Because JCAHO does not have to reapply for deeming authority, the public does not have the opportunity to review and comment on JCAHO’s hospital accreditation program.

A second limitation is CMS’s inability to address any performance issues with JCAHO’s hospital accreditation program. Although the rate of disparity for JCAHO’s hospital accreditation program exceeded 20 percent in fiscal years 2000, 2001, and 2002 a rate that would have triggered a deeming authority review for any other Medicare accreditation programCMS was unable to take enforcement action to address JCAHO’s performance. When other Medicare accreditation programs have a rate of disparity of 20 percent or more, CMS can take steps such as imposing a year-long probationary period and removing deeming authority at the end of the probationary period if the rate of disparity remains at 20 percent or more. For JCAHO, however, CMS’s actions toward correcting the program’s deficiencies are limited to including recommendations for improvement in its annual reports to Congress and negotiating with JCAHO to voluntarily adopt CMS’s recommendations.

In its annual report to Congress, CMS made recommendations in fiscal year 2002 aimed at improving JCAHO’s ability to detect serious deficiencies in the life safety code, part of the COP on physical environment. CMS noted that JCAHO permits hospitals to self-assess compliance with life safety code requirements. While CMS stated that it did not object to the concept of hospital self-assessment of life safety code requirements, it made five recommendations to JCAHO for improving implementation: 1. Require hospitals to use qualified personnel, such as fire marshals and architects, to conduct self-assessments of compliance with the life safety code requirements. 2. Set minimum standards for identifying and improving life safety code deficiencies identified by hospital self-assessments. 3. Require hospitals to submit their self-assessments on life safety code issues prior to JCAHO conducting accreditation surveys to provide surveyors and personnel in JCAHO’s central office time to review the material prior to the accreditation surveys. 4. Increase the use of JCAHO experts in the life safety code requirements in its central office. 5. Address the issue of hospitals that do not make improvement within self-determined time frames.

JCAHO did not adopt all of these recommendations. It disagreed with the first recommendation. Its response indicated that its requirement to use qualified personnel to complete the self-assessment, while more general, was sufficient. It further indicated that policies were in place for CMS’s second and fifth recommendations. CMS later agreed that JCAHO’s policies do satisfactorily address the fifth recommendation. JCAHO planned to examine ways to adopt CMS’s third and fourth recommendations. CMS however, had no authority to compel JCAHO to comply with the remaining recommendations. According to CMS, it continues to discuss implementation of its recommendations with JCAHO. JCAHO stated that while its initial response to CMS’s recommendations in 2003 reflected then current JCAHO policies, subsequent policy evolutions are addressing CMS’s recommendations. Specifically, JCAHO is working with the American Society of Hospital Engineers to develop a process for review by experts of hospital self-assessments on life safety code issues prior to JCAHO’s conducting on-site accreditation surveys and to identify those hospitals for which engineering expertise should be added to on-site surveys.

CMS’s Validation Program Needs Improvement

CMS states that the goal of its validation program is to provide reasonable assurance to Congress that the JCAHO accreditation process ensures hospital compliance with Medicare COPs. However, the measure CMS uses to evaluate the performance of JCAHO’s hospital accreditation program provides limited information and could mask problems with an accreditation program’s performance in detecting serious deficiencies, and it is based on a target sample size of 1 percent of JCAHO-accredited hospitals. In addition, CMS does not report the extent to which its sample reflects the performance of the larger population of JCAHO-accredited hospitals.

Rate of Disparity

The rate of disparity between JCAHO’s hospital accreditation survey findings and state survey agency findings, as currently calculated by CMS, does not fully explain the performance of JCAHO’s hospital accreditation program in detecting serious deficiencies. CMS uses this measure in its reports to Congress to assess JCAHO’s hospital accreditation program and as the basis for making recommendations for improvement. CMS calculates the rate of disparity as the difference between the number of hospitals found with serious deficiencies by state survey agencies and the number of hospitals found with serious deficiencies by the accreditation survey, divided by the number of hospitals in the sample. For example, if state survey agencies conducted 200 surveys as part of CMS’s validation program and found 60 hospitals out of compliance with at least one COP, but JCAHO’s survey found that only 22 of the hospitals were out of compliance, the rate of disparity would be 19 percent ((60 - 22)/200).

CMS has established in regulation a rate of disparity of 20 percent or greater as the threshold for taking action against an accreditation program. According to a CMS official, the use of 20 percent as the threshold is not based on empirical evidence but rather on what CMS believed Congress would find acceptable. Consequently, the threshold may not be appropriately placed to indicate unacceptable performance by a hospital accreditation program. For example, if JCAHO failed to identify serious deficiencies in all 14 hospitals that the state agencies identified with serious deficiencies from a sample of 79 hospitals, the rate of disparity would be a satisfactory 18 percent ((14-0)/79).

CMS’s rate of disparity measure used in isolation does not consistently reflect an accreditation program’s ability to detect serious deficiencies. As the number of hospitals with serious deficiencies detected by state survey agencies decreases, regardless of JCAHO’s performance in detecting them, it is more likely that the rate of disparity will be less than CMS’s 20 percent threshold. As a result, the performance of JCAHO’s hospital accreditation program is difficult to judge based on this measure alone. For example, if state survey agencies performed 200 validation surveys and found 100 hospitals or 50 percent with serious deficiencies and JCAHO found 30 hospitals or 30 percent of the hospitals found by state agencies, the rate of disparity would be 35 percent ((100-30)/200). However, if the state agencies found 50 hospitals, or 25 percent, of the 200 hospitals with serious deficiencies and JCAHO found 15 hospitals, or 30 percent of the hospitals that the state agencies identified, the rate of disparity would be almost 18 percent ((50-15)/200). The percentage of serious deficiencies found by state survey agencies and also by JCAHO remained the same in both examples, but the rate of disparity was improved significantly by the larger number of hospitals without serious deficiencies in the second example. This indicates that the rate of disparity does not consistently measure the accreditation program’s ability to detect serious deficiencies found by state survey agencies. (See table 5.) In addition to the rate of disparity, other components, such as the proportion of hospitals with serious deficiencies and the total number of serious deficiencies found by state agencies but missed by the accreditation program, are important indicators of an accreditation program’s overall performance.

CMS does not analyze the statistical results of its validation survey samples in ways that would allow it to better assess JCAHO’s ability to detect serious deficiencies. CMS has not documented the methods it uses to select hospitals for validation surveys and did not supply us with clear technical justification for the methods used. Further, CMS’s validation sample includes hospitals that, because of its sampling method, have varying chances of selection, but it does not take this into account when calculating statistics based on the sample. According to CMS’s sampling method, the selection of hospitals is influenced by factors such as the month in the fiscal year that JCAHO performed the accreditation survey and how many hospitals were targeted for completion that year in the state in which the hospital was located. Thus, some hospitals have a greater chance of selection than others. CMS also does not take these different chances of selection into account when calculating statistics for its annual reports to Congress, which prevents CMS from accurately assessing JCAHO’s performance. Moreover, CMS does not measure and report in its annual reports the extent to which its estimates based on the validation survey sample are likely to reflect how well JCAHO detects deficiencies in the larger population of hospitals it accredits.

In addition, the number of usable traditional validation surveys completed is smaller than the number of hospitals CMS samples for validation surveys. This difference may affect the accuracy of the data that CMS presents to Congress if the hospitals where the traditional surveys were completed produce different results than those where surveys are not completed or are not usable. During its sampling process, CMS selects a sample size close to the targeted number of hospitals each year. Some hospitals from this sample may be excluded because CMS chose to perform another type of survey for them that cannot be used to validate a JCAHO accreditation survey. In addition, state agencies are not always able to complete the requested traditional validation surveys within 60 days from the JCAHO accreditation survey, as required, or a hospital may be excluded because it lost its deemed status or closed. The size of the difference between the number of hospitals sampled and the number of usable traditional validation surveys completed therefore varies, as it did during the 3-year review period (see table 6).

CMS reduced the number of validation surveys conducted by state agencies from a target of approximately 5 percent of the total number of hospitals that JCAHO accredits to a target of approximately 1 percent, with at least one survey in each state. Reducing the target of validation surveys from 5 percent to 1 percent results in the number of validation surveys being reduced from 227 in fiscal year 2002 to a target of 75 validation surveys in fiscal year 2003 and 72 in fiscal year 2004.

Reducing the targeted number of validation surveys to 1 percent provides less reliable information on how well JCAHO’s hospital accreditation program ensures compliance with Medicare COPs. For example, for a 5- percent target, the estimate of the proportion of JCAHO-accredited hospitals with a particular deficiency that is derived from the validation survey could be as much as 6.0 percentage points higher or lower, for a range of 12.0 percentage points. If the 5-percent target produced an estimate that 50 percent of JCAHO-accredited hospitals had a particular deficiency, the percentage of JCAHO-accredited hospitals not complying could range from 44.0 to 56.0 percent. However, for a 1-percent target the estimate could be 11.4 percentage points higher or lower, for a range of about 22.8 percentage points. For example, if the 1-percent target produced an estimate that 50 percent of JCAHO-accredited hospitals had a particular deficiency, the percentage of JCAHO-accredited hospitals not complying with a Medicare COP could range from 38.6 to 61.4 percent.

This reduction in the number of validation surveys is of additional concern because it coincides with the implementation of JCAHO’s new accreditation process, which has an unproven capacity to detect deficiencies. CMS’s target sample size for traditional validation surveys for fiscal year 2004 will be further reduced because the sample also includes 18-month validation surveys. In 2004, CMS is planning to conduct 17 of these 18-month surveys as part of its overall validation survey target of 72. Thus, CMS could be using as few as 55 validation surveys to determine JCAHO’s performance.

Conclusions

For 3 consecutive years, JCAHO’s hospital accreditation program, which accredits most of the hospitals participating in Medicare, exceeded CMS’s threshold for unacceptable performance. CMS validation surveys during that time period confirmed that JCAHO missed the majority of serious deficiencies found by state survey agencies. Yet, CMS was unable to take action against JCAHO’s hospital accreditation program as it can with other accreditation programs because it lacked the authority to do so. Although CMS has recommended in its annual reports to Congress that JCAHO make changes in its hospital accreditation program to improve its ability to detect serious deficiencies, some of these recommendations have not been implemented. Thus, it is vital for patient safety that JCAHO hospital accreditation surveys detect existing serious deficiencies and deny accreditation to hospitals that do not comply with Medicare COPs.

CMS is unable to present to Congress an adequate assessment of JCAHO’s performance because of limitations in its process for selecting hospitals for validation surveys and analysis of the survey results. CMS does not consistently portray the extent to which serious deficiencies are missed and does not identify the limitations in reporting the estimates it makes from its survey sample. CMS cannot assure Congress that JCAHO- accredited hospitals meet Medicare COPs because the measure for the rate of disparity, which determines poor performance, allows JCAHO to miss the majority of serious deficiencies and still be in an acceptable range of performance. Further, CMS’s reduction in the number of validation surveys it uses to determine the performance of JCAHO’s hospital accreditation program will provide less reliable information at a time when JCAHO is implementing a new hospital accreditation process that is unproven in its ability to detect serious deficiencies. In light of these limitations in CMS’s validation of JCAHO’s hospital accreditation program, we believe that CMS must improve its oversight so it can provide Congress with more accurate information regarding JCAHO’s performance.

Matter for Congressional Consideration

Given the serious limitations in JCAHO’s hospital accreditation program and that efforts to improve this program through informal action by CMS have not led to necessary improvements, Congress should consider giving CMS the same kind of authority over JCAHO’s hospital accreditation program that it has over all other Medicare accreditation programs.

Recommendations for Executive Action

To strengthen the ability of CMS to identify and report to Congress on JCAHO’s ability to ensure that the hospitals it accredits protect the safety and health of patients through compliance with the Medicare COPs, we recommend that the Administrator of CMS take the following three actions: modify the method used to measure the rate of disparity between validation survey findings and accreditation program findings to provide a reasonable assurance that Medicare COPs are being met and consider whether additional measures are needed to accurately reflect an accreditation program’s ability to detect deficiencies in Medicare COPs; provide in the annual report to Congress an estimate, based on the validation survey sample, of the performance of all JCAHO-accredited hospitals, including the limitations and protocols for these estimates based on generally accepted sampling and statistical methodologies; and develop a written protocol for these calculations; and annually conduct traditional validation surveys on a sample of JCAHO- accredited hospitals that is equal to at least 5 percent of all JCAHO- accredited hospitals.

Agency and Other External Comments and Our Evaluation

CMS and JCAHO commented on a draft of this report. In its comments, CMS concurred with our recommendations. JCAHO stated it had no objection to our suggestion that Congress give CMS the same authority over its hospital accreditation program as it does over other Medicare accreditation programs. However, JCAHO took issue with the methodology we used for evaluating the performance of its hospital accreditation program. CMS’s and JCAHO’s specific comments and our response follow. CMS’s comments are reprinted in appendix IV and JCAHO’s comments are reprinted in appendix V. CMS and JCAHO also provided technical comments, which we incorporated as appropriate.

CMS stated that it has begun to examine the need for additional or alternative measures for the rate of disparity calculation. CMS also stated it will seek additional resources to further develop and implement new sampling and statistical methodologies that may allow results to be projected to all JCAHO-accredited hospitals, and to increase the validation sample size. CMS specifically noted that it considers life-safety code compliance, on the part of all provider types, to be critically important. In the past 8 years, in its annual reports to Congress and its dialogues with JCAHO regarding its hospital accreditation program, it has identified physical environment as an important area where JCAHO needs to focus attention, and CMS noted that 68 percent of facilities that had a deficiency finding not identified by JCAHO had them in the physical environment area.

JCAHO stated that our methodology for evaluating the performance of its hospital accreditation program was incomplete and did not provide a comprehensive assessment of its program’s performance. We did not intend to do a comprehensive evaluation of JCAHO’s overall hospital accreditation program. Rather, we focused our evaluation on how well JCAHO’s hospital accreditation program ensures hospitals’ compliance with Medicare participation requirements. There are four possible outcomes to a comparison between JCAHO’s accreditation survey and a state validation survey: (1) both JCAHO and state agencies identify no deficiencies, (2) JCAHO identifies deficiencies not found by state agencies, (3) both JCAHO and state agencies identify the same deficiencies, and (4) state agencies identify deficiencies that JCAHO does not. We limited our evaluation to the fourth outcome because it illustrates the need for CMS oversight of the hospital accreditation process. We have clarified the scope of our evaluation to emphasize our focus on this outcome.

JCAHO raised a concern that our characterization of JCAHO’s missed deficiencies that state survey agencies found misleads readers to believe that JCAHO misses hospitals with deficiencies 78 percent of the time. We have revised language in the report to further emphasize that the missed deficiency rate applies to hospitals in the validation survey sample in which the state survey agencies found deficiencies and cannot be generalized to all JCAHO-accredited hospitals. JCAHO further stated that our report does not take into account that JCAHO’s hospital accreditation program detects deficiencies in hospitals that CMS does not find. However, it is to be expected that state survey agencies will not find all deficiencies found by JCAHO because hospitals may have corrected the deficiencies prior to the state agency surveys.

JCAHO stated that we misrepresented the potential of the new accreditation process in detecting deficiencies in Medicare COPs and provided new data regarding its first quarter 2004 performance that indicate that JCAHO surveys may have detected a greater percentage of deficiencies related to patient care compared with the pre-2004 accreditation process. However, we maintain that until CMS validation surveys for 2004 are completed, there is no basis on which to determine whether the new process improves the detection of deficiencies in Medicare COPs. In addition, JCAHO stated and we agree that evaluating and improving the quality of care in hospitals is not about counting deficiencies, it is about finding those deficiencies that, if not fixed, will generate poor results for patients and making sure that these deficiencies are remedied in a timely fashion.

JCAHO stated that we mischaracterized its response to the five recommendations that CMS made in 2002 to improve JCAHO’s ability to detect deficiencies in the life safety code and that it is involved in frequent and ongoing dialogue with CMS regarding the recommendations and other life safety code issues. We have clarified language in the report regarding JCAHO’s response to CMS’s recommendations.

As agreed with your offices, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days after its date. We will then send copies of this report to the Secretary of Health and Human Services and other interested parties. We will also make copies available to others upon request. In addition, the report will be available at no charge at the GAO Web site at http://www.gao.gov.

If you or your staffs have any questions about this report, please call me at (202) 512- 7119. Another contact and key contributors are listed in appendix VI.

Appendix I: Scope and Methodology

We examined the extent to which JCAHO’s pre-2004 survey process identified hospitals with deficiencies and individual deficiencies in Medicare COPs that were identified by state survey agencies. We chose these measures because they reflect performance in detecting and correcting serious deficiencies, which according to CMS, substantially limit a hospital’s capability to render adequate care and adversely affect the health and safety of patients. We reviewed data, provided by CMS, on 500 traditional validation surveys conducted by state survey agencies during fiscal years 2000 through 2002. In these validation surveys, state survey agencies documented whether they found serious deficiencies in Medicare COPs. CMS compared state survey agency findings with JCAHO’s accreditation surveys that identified deficiencies in JCAHO’s standards. CMS then determined whether the state survey agencies’ findings on serious deficiencies in the 22 Medicare COPs that can be deemed were comparable to JCAHO’s findings on deficiencies in JCAHO’s standards in the following way. Two CMS experts such as nurses reviewed the comparability of serious deficiencies in the quality-of-care conditions identified in validation surveys to deficiencies in JCAHO’s accreditation standards identified in JCAHO’s hospital accreditation surveys. Two experts, such as building engineers, reviewed the comparability of serious deficiencies identified in the validation surveys on the condition on physical environment. Where there was disagreement, the two experts met to resolve their differences. CMS does not have written protocols for determining comparability. Experts are expected to use their best professional judgment. CMS experts also had to consider whether it is reasonable to conclude that the deficiencies existed at the time that JCAHO surveyed the hospital. For those deficiencies that CMS determines that JCAHO has failed to identify, it met with JCAHO to address disputed findings and to consider additional evidence on comparability offered by JCAHO. There are four possible outcomes to this comparison of survey findings—(1) JCAHO and state agencies both identify no deficiencies, (2) JCAHO identifies deficiencies not found by state agencies, (3) JCAHO and state agencies both identify the same deficiencies, and (4) state agencies identify deficiencies that JCAHO does not—we focused on the fourth because it highlights the need for CMS oversight of the hospital accreditation program. For the second outcome, there could be two reasons for the disparity between JCAHO’s and state survey agencies’ findings: hospitals corrected deficiencies identified by JCAHO prior to the state agency survey or the state survey agency did not identify a deficiency that existed. In addition, not all JCAHO findings are equivalent to noncompliance with a Medicare COP.

From these 500 surveys, we determined the number of hospitals with serious deficiencies and the total number of serious deficiencies identified by state agencies but that CMS determined were not identified by JCAHO. These data include 123 hospitals in which state survey agencies identified one or more serious deficiencies and JCAHO did not make comparable findings according to CMS. These data also include 167 serious deficiencies identified by state agencies but that CMS determined comparable findings were not identified by JCAHO.

For fiscal years 2001 and 2002, we obtained from CMS a comparison between the validation surveys conducted by the state survey agencies and the accreditation surveys conducted by JCAHO, which identified serious deficiencies identified by the state agencies but not by JCAHO as determined by CMS. For fiscal year 2000, CMS did not supply its determinations of the comparability of findings in validation and accreditation surveys for 31 of 82 serious deficiencies. We followed a protocol similar to the one used by CMS to determine the comparability of the remaining 31 serious deficiencies, which included 29 quality-of-care serious deficiencies and 2 physical environment serious deficiencies. Two analysts with nursing backgrounds compared the findings and made determinations on their comparability based on their professional judgment. In cases of disagreement, a third analyst with a background in nursing made the determination.

We did not include 1998 and 1999 data in our analysis because CMS used a method that undercounted the number of deficiencies identified by state survey agencies but not identified by JCAHO. CMS did not count as deficient those cases in which state survey agencies determined that a hospital was not meeting the COP on physical environment but JCAHO determined that the hospital was in compliance because the hospital was following correction plans approved by JCAHO.

To determine the potential of JCAHO’s new accreditation process in improving the detection of deficiencies in Medicare COPs, we reviewed material supplied by JCAHO on development and testing of its new process and interviewed JCAHO officials about the steps taken to test the new process and to analyze results. We also examined the features of the new accreditation process by reviewing descriptive material obtained from JCAHO and interviewing experts in health care quality. Because the new accreditation process was implemented in January 2004, we were limited in our ability to determine the effectiveness of the new accreditation process because we were not able to perform a comparative analysis of validation survey and JCAHO survey results under the new process.

To examine the effectiveness of CMS’s oversight of JCAHO’s accreditation process, we analyzed the laws and regulations that define CMS’s authority and JCAHO’s authority. We reviewed the annual reports submitted to Congress on JCAHO’s performance in identifying serious deficiencies and reviewed correspondence between CMS and JCAHO and interviewed officials in both organizations. We analyzed the rate of disparity that CMS uses to determine the performance of JCAHO’s hospital accreditation process in identifying deficiencies in Medicare COPs.

To evaluate CMS’s statistical methodology for the validation surveys, we interviewed CMS officials about the sampling and statistical methods. In the absence of written methodological documentation, we relied on information provided by CMS officials to evaluate the methodology. They gave us the following information about their sampling method. At the beginning of each year, CMS determines a target for the number of hospitals that will be sampled for validation surveys in each state. Each month, CMS receives a list of hospitals scheduled for a JCAHO accreditation survey in that month. Prior to sampling, CMS removes from the list those hospitals that have received a validation survey in the last 3- year accreditation cycle and hospitals that do not participate in Medicare. In the first month of the year, CMS selects a random sample of hospitals to be surveyed from JCAHO’s list. In subsequent months, CMS removes hospitals in states in which the state target has been met and then selects a random sample of hospitals. Prior to sending the list to state survey agencies, CMS determines which hospitals will receive traditional validation surveys and which will receive other types of surveys that cannot be used to assess the performance of JCAHO’s hospital accreditation program. State survey agencies must then complete traditional validation surveys within 60 days of the completion of JCAHO’s accreditation survey for the results to be used by CMS to measure the performance of JCAHO’s hospital accreditation program. According to CMS officials, the sampling procedures CMS uses are necessary because they are not informed more than 1 month in advance which hospitals JCAHO will survey for accreditation.

In reviewing the sampling procedures they described, we determined that CMS initially selects a probability sample of hospitals for its state agency validation surveys. However, hospitals have varying chances of selection in the sample depending on the month in the fiscal year that JCAHO performs the accreditation survey and the number of hospitals targeted for completion that year in the state in which the hospital was located. Additionally, the way that CMS determines which type of survey the sampled hospital receives is not random. Therefore, the analysis we performed is limited to those hospitals included in the validation survey sample and cannot be projected to all JCAHO-accredited hospitals.

Appendix II: Medicare Conditions of Participation

To participate in Medicare, hospitals must maintain standards of patient safety and health that comply with Medicare requirements. There are currently 23 Medicare COPs. Table 7 provides a description of each Medicare COP.

Appendix III: Features of JCAHO’s New Accreditation Process

In January 2004, JCAHO introduced a new hospital accreditation process that includes several new features. Table 8 includes a description of selected new features of JCAHO’s hospital accreditation process.

Appendix IV: Comments from the Centers for Medicare & Medicaid Services

Appendix V: Comments from the Joint Commission on Accreditation of Healthcare Organizations

Appendix VI: GAO Contact and Staff Acknowledgments

GAO Contact

Acknowledgments

In addition to the contact named above, Elaine Swift, Linda Kohn, Behn Kelly, Elizabeth T. Morrison, Roseanne Price, and Marie Stetser made key contributions to this report.

Related GAO Products

Medicare Home Health Agencies: Weaknesses in Federal and State Oversight Mask Potential Quality Issues. GAO-02-382. Washington, D.C.: July 19, 2002.

Medicare: HCFA’s Approval and Oversight of Private Accreditation Organizations. GAO/ HEHS-99-197R. Washington, D.C.: September 30, 1999.

Home Health Care: HCFA Properly Evaluated JCAHO’s Ability to Survey Home Health Agencies. GAO/HRD-93-33. Washington, D.C.: October 26, 1992.

Health Care: Criteria Used to Evaluate Hospital Accreditation Process Need Reevaluation. GAO/HRD-90-89. Washington, D.C.: June 11, 1990.

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