An LTCH is a type of ACH that specializes in treating critically ill individuals who require an intense level of health care with frequent physician and nurse visits for relatively extended periods—more than 25 days, on average. For example, a significant subset of LTCH patients is dependent on a ventilator for breathing and receives therapy to help them breathe on their own. Most LTCH patients have been transferred from intensive or critical care units of ACHs, which provide general, short-term care for a broad range of medical conditions. LTCHs are not evenly distributed across the nation and patients who could be treated by LTCHs might instead receive care at ACHs, other types of hospitals, or nursing homes. Medicare generally pays more for hospital stays in LTCHs than in ACHs. In fiscal year 2010, Medicare paid an estimated $4.7 billion for care provided in more than 400 LTCHs for about 138,000 discharges, which averages more than $34,000 per discharge. To assess whether LTCHs meet federal quality standards, state survey agencies and AOs conduct two types of surveys—routine and complaint. Routine surveys are unannounced and are conducted at specific intervals. State survey frequencies are resource driven and depend on CMS’s annual funding level for such activities. CMS’s policy has been for state survey agencies to conduct surveys every 3 to 5 years since fiscal year 2001. In contrast, AO policy is to conduct surveys every 3 years. Complaint surveys are conducted in response to allegations of quality problems made by families, patients, health care workers, or others and provide survey organizations the opportunity to intervene promptly if problems arise between routine surveys. Complaint surveys may be conducted either by a state survey agency or an AO. However, most complaints are filed with state survey agencies, which conduct complaint surveys both at the LTCHs they survey as well as at AO- surveyed LTCHs. Complaint surveys focus on the specific allegations made and surveyors generally only assess the hospital’s compliance with standards related to those allegations. In general, hospitals have a choice of who conducts their surveys—state survey agencies using federal Medicare standards or CMS-approved AOs that use requirements CMS has determined to be at least equivalent to those standards. Federal Medicare standards consist of 74 standards that are organized under 23 conditions of participation (COP), including categories such as Medical Staff, Infection Control, and Emergency Services. TJC, one of three AOs approved by CMS to survey hospitals, surveys the majority of LTCHs. TJC’s standards for hospitals are organized into 17 categories, such as Medication Management, Leadership, and Medical Staff; each category consists of numerous standards. Prior to the Medicare Improvements for Patients and Providers Act of 2008, TJC had unique statutory deeming authority for hospitals and did not need to apply to CMS to be recognized as a national accreditation body for hospitals. This legislation revoked TJC’s statutory deeming authority effective July 15, 2010, and gave CMS the authority to review and approve TJC’s hospital accreditation program. As a result, in 2009, CMS evaluated the standards and processes used by TJC to conduct hospital surveys, including a comparison of TJC’s standards to Medicare’s and a review of the qualifications of its surveyors. CMS approved TJC’s hospital accreditation program effective July 15, 2010, through July 15, 2014. When surveyors find quality problems during routine and complaint surveys, they cite either deficiencies or requirements for improvement (RFI), depending on the survey organization.  State survey agencies cite deficiencies that are characterized as either standard- or COP-level based on the seriousness of the deficiency. Standard-level deficiencies denote less serious quality problems, while COP-level deficiencies are cited when the problems are serious or systemic in nature. A serious problem is defined as a shortcoming in a hospital’s quality of services that adversely affects, or has the potential to adversely affect, the quality of patient care. When deficiencies are found, a hospital may be required to submit a plan of correction, detailing how and when it will address the deficiencies. If a hospital does not correct the deficiencies cited within the required time frame, CMS may terminate the hospital’s participation in the Medicare program.  TJC cites direct and indirect RFIs when hospitals are found to be out of compliance with TJC’s standards on routine or complaint surveys. According to TJC, direct RFIs are cited when compliance issues are directly tied to quality, such as untreated pain; while indirect RFIs are cited when compliance issues are indirectly related to quality, such as hospital leadership. A hospital that does not correct all of its RFIs may receive conditional or preliminary denial of accreditation. A hospital may be denied accreditation if it has exhausted all review and appeal opportunities, failed to pay the accreditation fee, or refused to allow a survey. CMS may subsequently terminate hospitals from Medicare participation if they lose their accreditation. CMS collects information on state survey results in its On-line Survey, Certification, and Reporting system (OSCAR). To collect data on the results of AO surveys, CMS established its Accrediting Organization System for Storing User Recorded Experiences (ASSURE) database in 2008. On a quarterly basis, all AOs update ASSURE with survey results that are crosswalked from their own standards and RFIs to federal Medicare quality standards and deficiencies. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 provided for the establishment of hospital quality measures and created a penalty for hospitals that do not report related data beginning in 2005. Those hospitals that fail to report quality data are subject to a 2.0 percent reduction in the hospital’s annual Medicare payment rate for the subsequent year. This payment reduction applies to hospitals paid under Medicare’s inpatient prospective payment system, which covers most types of hospitals but not LTCHs. ACHs began voluntarily reporting data for quality measures in 2004. For fiscal year 2011, there are 60 quality measures organized into six areas, including heart attack, heart failure, and pneumonia. For example, the pneumonia quality measures assess several aspects of care, including whether the patients received an antibiotic within 6 hours of arriving at the hospital and if the appropriate antibiotic was provided. In April 2005, CMS launched a Web site called “Hospital Compare” to make information on hospital data available to consumers. CMS posts information for each hospital’s quality measures on a quarterly basis. CMS and its 10 regional offices oversee state and AO survey activities in order to monitor the performance of survey organizations and hold them accountable for meeting CMS’s survey requirements. To do so, CMS: (1) established performance measures, (2) has states conduct validation surveys of AO-surveyed hospitals, and (3) collects data from survey results for all types of hospitals. State survey agencies and AOs have separate performance measures. State survey agency performance measures focus on states’ ability to meet the requirements for the survey and certification program. These measures are organized into three sections: frequency, quality, and enforcement. For example, state performance measures assess states’ abilities to prioritize and conduct complaint surveys within specific time frames. AO performance measures focus on their ability to provide CMS with consistent, accurate, complete, and timely information on the facilities they survey. In October 2008, CMS established three categories of performance measures for AOs: (1) use of an electronic database to track accreditation and enforcement activity; (2) submission of facility notification letters—which contain information on individual facilities’ accreditation status—for all accreditation actions; and (3) submission of survey schedule information. CMS monitors each AO’s performance on the measures and provides written feedback on a quarterly basis. CMS reports to the Congress annually on the extent to which TJC and other AOs meet its performance measures. Validation surveys are conducted to measure the effectiveness of the AO survey process in identifying areas of serious non-compliance with federal Medicare quality standards in accredited facilities, such as LTCHs. Validation surveys have consequences for both AOs and facilities. State survey agencies conduct two types of validation surveys. The first type is a full survey of a sample of AO-surveyed facilities, known as traditional validation surveys. Traditional validation surveys are generally conducted within 60 days following a routine survey conducted by an AO. CMS selects a sample of hospitals for these surveys based on the hospital’s most recent routine survey date and available resources. While CMS policy calls for approximately 1 percent of AO-surveyed hospitals to receive traditional validation surveys each fiscal year, since fiscal year 2007 CMS has supplemented the funding provided to states in order to increase the sample size to 2 percent or higher. Because of budgetary constraints, the number has fluctuated from a 10-year high of 235 in fiscal year 1999 to about 90 in fiscal year 2009. The second type of validation survey is a complaint validation survey, which occurs when a state survey agency investigates a complaint for a hospital surveyed by an AO. Unlike traditional validation surveys that are conducted within 60 days of a routine survey, complaint validation surveys are generally conducted when the complaint is received. Such surveys initially focus on the condition(s) alleged to be out of compliance. If the complaint validation survey cites one or more COP-level deficiencies, the facility is placed under the jurisdiction of the state survey agency. Subsequently, the state survey agency conducts a full survey of all COPs. When all COP-level deficiencies have been corrected, the facility again becomes the responsibility of the AO. CMS submits an annual report to Congress after the end of the fiscal year—known as the CMS Financial Report—that includes information on traditional validation surveys conducted at hospitals surveyed by AOs. Based on such surveys, CMS calculates a hospital disparity rate for each AO. The disparity rate measures the extent to which an AO has failed to cite one or more deficiencies during its routine survey that were later identified by a state survey agency during a traditional validation survey.