Legislative and Regulatory Requirements Withholding Payment that the Secretary of HHS had failed to fulfill a statutory duty to promulgate regulations that would enable him to determine whether Medicaid facilities are providing high quality medical care. To comply with the court's order, HHS developed a nursing home review process as part of the survey and certification program that includes a periodic survey of residents and focuses on the provision of services and resident care outcomes. A study conducted by the Institute of Medicine raised a number of questions about the adequacy of the proposed nursing home resident survey, leading to additional refinement. HCFA has also developed programs to review patient care in home health agencies and hospices. While conditions of participation are intended to assure that the structural conditions necessary for quality care are maintained, additional oversight of the services actually delivered to Medicare beneficiaries is also required by statute and regulations. Medicare bars payment for any items or services "which are determined... to be substantially in excess of the needs of individuals or to be of a quality which fails to meet professionally recognized standards of health care". Complying with this directive involves two related types of quality assessment activities: (1) identifying individual claims for reimbursement that do not meet Medicare criteria and standards for payment, and (2) identifying (and sanctioning, as appropriate) institutional providers, physicians, or other health care practitioners who are providing substandard care. The law and federal regulations assign these activities to three types of organizations: Utilization and Quality Control Peer Review Organizations (PROS), intermediaries (which process claims for services covered by Medicare part A hospital insurance, including inpatient hospital, skilled nursing home, home health, and hospice services), and carriers (which process claims for Medicare part B supplementary medical insurance, including physicians services and laboratory and diagnostic services). The HHS Office of the Inspector General provides additional oversight. "HHS presented the final rule on the new Medicare and Medicaid "Long-Term Care Survey" process 7Committee on Nursing Home Regulation, Institute of Medicine, Improving the Quality in Nursing Legislative and Regulatory Requirements Peer Review Organizations The Secretary of HHS is authorized to contract with PROS to review some or all of the professional activities of physicians and institutional and The regulations governing the first set of contracts with PROS required them to review only inpatient hospital care. These activities have since been expanded, primarily by OBRA 1986. Section 9343 of OBRA 1986 requires PROS to review all ambulatory surgical procedures specified by the Secretary of HHS (or, at the Secretary's discretion, a sample of selected procedures). Beginning in spring 1987, OBRA 1986 also requires PRO review of health care provided to Medicare beneficiaries enrolled in health maintenance organizations (HMOS) and competitive medical plans (CMPS). The act prohibits PRO reviews of physician services provided in office settings until January 1, 1989.9 OBRA 1986 further requires hospitals, skilled nursing facilities and home health agencies to maintain an agreement with PROS regarding review of services (other than the inpatient hospital services already required under Medicare prospective payment) and review of beneficiary complaints regarding quality of care. Finally, the act also includes a general 8Section 1801 of the Social Security Act (42 U.S.C. 1395) states "nothing in this title shall be construed to authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided, or over the selection, tenure, or compensation of any officer or employee of any institution, agency, or person providing health services; or to exercise any supervision or control over the administration or operation of any such institution, agency, or person." "Throughout this report, we use the term "PRO" generally to refer to peer review organizations authorized under title XI of the Social Security Act. This definition includes any medical peer review organization that contracts with HCFA for the review of the appropriateness or quality of Medicare services, including organizations contracting to review quality of care in health maintenance organizations and competitive medical plans. Under the first set of review contracts for HMOs and CMPs, all but one of the contractors also operates as a PRO reviewing inpatient Medicare services. Legislative and Regulatory Requirements provision requiring each PRO to devote a "reasonable proportion" of its activities to reviewing the quality of services in additional settings, including post-acute and ambulatory care settings. PRO contracts negotiated before January 1, 1987, do not reflect those 1986 provisions of OBRA which are effective for contracts entered into or renewed on or after January 1, 1987. Further, PRO executives have been told by HCFA that, even under the new legislative mandate, PROS will review skilled nursing facility or home health care only for Medicare patients who have subsequently been readmitted to acute care hospitals within 30 days of their initial hospital discharge and those initiated by beneficiary complaints. 10 Thus, with the exception of riskbased HMO and CMP services, most PROS are not currently reviewing health care services provided in skilled nursing facilities, by home health agencies, or in other subacute care settings covered by Medicare; their activities continue to focus primarily on inpatient hospital care."1 Section 1156 of the Social Security Act creates a mechanism for PROS to recommend sanctions, including exclusion from Medicare, against health care practitioners, hospitals, organizations, or agencies found to be providing services in a manner failing to meet Medicare requirements for medical necessity or professional standards of quality. PROS are obligated to initiate sanctions against providers who have failed to meet medical standards in a substantial number of cases, or been found to have grossly or flagrantly violated medical standards in one or more cases.12 The Consolidated Omnibus Budget Reconciliation Act of 1985 amended the Social Security Act by specifically authorizing PROS to deny payment for substandard care (as distinct from medically unnecessary or inappropriate). Although PROS already had the authority to deny payment for readmissions resulting from premature discharges or other inappropriate medical care under the existing legislation, the intent of the 1985 provision was to make it clear that PROS could and should deny payment 10HHS has noted in its advance comments on this report that outpatient department services are also included under the PROS' expanded mandate. (See appendix VII.) 11The Pennsylvania PRO began reviewing quality in posthospital settings effective July 1, 1987, and the Massachusetts PRO began posthospital care reviews in March 1988. 12 The process of identifying patterns of quality of care or utilization problems among providers is discussed in chapter 4. Legislative and Regulatory Requirements to providers based upon findings of poor quality of care alone (independent of considerations of medical necessity or appropriateness of treatment). The law stated that denials were to be based on guidelines established by the Secretary of HHS. According to HHS, developing these guidelines has been difficult because of the complexity of the issues involved. 13 Carriers and Carriers, who administer Medicare part B payments (primarily for phy- Intermediaries, who administer Medicare part A payments (primarily for inpatient hospital, skilled nursing facility, home health, and hospice claims from the Hospital Insurance trust fund), are also authorized by law to conduct utilization reviews. 15 They have responsibility for quality reviews of hospice care and for reporting to HCFA survey and certification officials any quality of care problems related to facility standards, staffing, and so forth, uncovered in the course of utilization reviews of home health care. In addition intermediaries perform "quasi-quality" reviews of skilled nursing facility claims and home health claims as part of their coverage reviews. In these reviews, intermediaries ascertain the level of care that beneficiaries require in order to determine if they meet 13 Draft rules under review state that payment would be denied for "substandard quality care that 14Section 1842 of the Social Security Act (42 U.S.C. 1395u) authorizes HHS to enter into contracts 15Section 1816 of the Social Security Act (42 U.S.C. 1395h) authorizes HHS to enter into contracts with intermediaries to make payments to providers who nominate such entities and describes the responsibilities of these entities in terms of safeguarding utilization and making proper payments. Legislative and Regulatory Requirements Monitoring Levels of Services Medicare coverage criteria. Quality reviews of acute inpatient care are performed by PROS (see above), rather than by the intermediaries. Intermediaries and carriers have legal authority to deny payment for Medicare claims and to recommend sanction of providers under the provisions of the Social Security Act barring payment for care determined not to be medically necessary or appropriate. They may not make determinations about medical necessity or appropriateness of services reviewed by PROS, but they are specifically granted authority to make coverage and reimbursement decisions (including denials of payment for services not meeting professional standards of quality) with regard to services that are not subject to PRO review. 16 Determinations by PROS regarding necessity, reasonableness, and appropriateness are conclusive under federal regulations."7 As the entities formally assigned responsibility for assessing the quality of care provided to Medicare beneficiaries, PROS are the primary source of information on quality issues. Under section 1160 of the Social Security Act, PROS are required to provide requested information to assist appropriate federal and state agencies in identifying cases or patterns involving risks to public health and in carrying out appropriate health planning activities. Additionally, PROS must upon request provide aggregate statistical data (without identifying individuals) on a geographical, institutional, or other basis, reflecting the volume and frequency of services furnished, as well as demographic characteristics of populations reviewed. Section 1161 of the Social Security Act requires HHS to submit annual reports to the Congress on the administration, cost, and impact of the PRO program. These reports are supposed to include data on the imposi 1642 C.F.R. 466.86(c). Prior to the establishment of the PRO program, we reported that some problems existed in assigning responsibility for sanctioning providers who overutilized Medicare services. Carriers' failure to initiate the sanctions process seemed to reflect HCFA's view that Professional Standards Review Organizations (PROs' predecessors) had basic responsibility for making determinations about medical necessity of all Medicare services, even though the review organizations were not actually reviewing all Medicare services. We recommended, in 1983, that HCFA make it clear to carriers that they could independently initiate the sanctions process based on the findings of their own medical peer review of providers, and HCFA concurred with this recommendation. GAO, Improving Medicare and Medicaid Systems to Control Payments for Unnecessary Physicians' Services (Washington, D.C.: GAO/HRD-83-16, February 8, 1983), pp. 42-7, 73. 1742 C.F.R. 466.86. |