Medicare Compliance & Reimbursement

Who's overseeing the overseers, legislators want to know.

On July 20, Sen. Chuck Grassley (R-IA) and Rep. Pete Stark (D-CA) unveiled a proposal to give the federal government greater control over the private organization that qualifies hospitals for Medicare funding.

The Joint Commission on the Accreditation of Healthcare Organizations enjoys "deeming" authority for hospitals, meaning that a hospital accredited by JCAHO is deemed to have met the Medicare Conditions of Participation and be eligible to receive reimbursement for treating Medicare enrollees. JCAHO's deeming authority is not unique; what is unique, however, is that the authority was written into the original Medicare statute in 1965.

In contrast, the deeming authority of other accrediting organizations such as the American Osteopathic Association -- and indeed, JCAHO's own authority with respect to non-hospital institutions such as ambulatory surgical centers and home health organizations -- is subject to direct review, approval, and potential revocation by the Centers for Medicare & Medicaid Services. Grassley and Stark want to level the playing field by subjecting JCAHO's hospital deeming authority to this same level of oversight.

Grassley and Stark released a General Accountability Office (formerly General Accounting Office) report finding that JCAHO investigators often missed COP violations when they inspected hospitals. Citing reports sent to Congress by CMS, GAO said that -- in a sample of 500 hospitals JCAHO inspected from 2000 to 2002 -- the Joint Commission failed to flag 78 percent of the institutions where state survey agencies subsequently found "serious deficiencies" in Medicare COPs. The state agencies found the problems in follow-up "validation" inspections, conducted under contract with CMS to test the efficacy of JCAHO inspections.

Overall, GAO said, JCAHO missed 169 of the 241 "serious deficiencies" identified by state agencies. About half of the missed deficiencies (87) involved hospitals' physical environment, including fire prevention and safety.

In its recommendations, the GAO agreed with Grassley and Stark that Congress should give CMS the same power over JCAHO as the agency has over other organizations with deeming authority. In a teleconference with reporters, JCAHO president Dennis O'Leary, MD, said his organization agreed with this recommendation, but he sharply disputed some of the GAO findings. For instance, he argued that the 78 percent "missed deficiency rate" GAO attributes to JCAHO really represents the rate of disagreement between JCAHO and state agencies. GAO "simply assumes that the state agency was right," O'Leary said.

O'Leary also said some deficiencies identified by states but not JCAHO could have appeared in the time between the two inspections. But GAO pointed out that, when CMS reports to Congress on the disparity between the JCAHO and state surveys, the agency "considers whether it is reasonable to conclude that the deficiencies found by state agencies existed at the time JCAHO surveyed the hospital."

O'Leary noted that the problems described by GAO predated the implementation of JCAHO's new hospital evaluation process. Beginning in January of this year, JCAHO implemented reforms such as inspector review of the care given to specific patients; in 2006, JCAHO will start unannounced inspections. Extensive pilot testing showed that the new process, "which relies on tracing patients'actual care experience ... results in better discernment of the types of deficiencies that are directly related to patient care," O'Leary asserted.

GAO's verdict? While unannounced surveys "have the potential to improve detection of serious deficiencies," in general it's too soon to tell how the new set-up will work. JCAHO's pilot testing relied on volunteer hospitals, rather than randomly selected institutions, and was evaluated not by an independent body but by JCAHO itself, GAO complained.