[Congressional Record Volume 143, Number 105 (Wednesday, July 23, 1997)]
[Extensions of Remarks]
[Pages E1494-E1496]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               WHY MANAGED CARE PLANS NEED OUTSIDE AUDITS

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                        Wednesday, July 23, 1997

  Mr. STARK. Mr. Speaker, one of the issues under debate between the 
House and Senate in the Medicare budget reconciliation bill is the 
issue of whether managed care plans should have an external and on-
going--outside--quality review, or whether we should just rely on them 
being periodically reviewed through the accrediting process.
  The Peer Review Organization for parts of the Delaware, Maryland, 
D.C., and Virginia area has written me, showing how HMO's that obtain 
accreditation from private accrediting agencies can, upon review and 
check by an external quality reviewing organization, be found to have 
serious problems.
  It is important that we have both accrediting and outside, external 
review. The excerpt from the letter from the Delmarva Foundation for 
Medical Care, Inc., speaks for itself. Second, I would like to include 
in the Record a memo from the National Health Law Program concerning 
the limits and dangers of relying on private accreditation.

     [From the Delmarva Foundation for Medical Care, July 11, 1997]

       Table 1 presents non-compliance rates from a Medical Record 
     Review we did of five managed care organizations for FY 97. 
     All but one is accredited by NCQA. Each of these clinical 
     areas were reviewed against specific standards well known and 
     accepted by the industry. For instance, for hypertension, 
     specific processes of care were measured, such as whether the 
     patient had a physical examination, specific laboratory 
     tests, blood pressure monitoring, and diet/exercise 
     education.

TABLE 1--ACCREDITATION AND NON-COMPLIANCE RATE WITH CLINICAL PERFORMANCE
                                STANDARDS                               
------------------------------------------------------------------------
                                        HMO1   HMO2   HMO3   HMO4   HMO5
------------------------------------------------------------------------
NCQA Accreditation \1\...............      3      1      3      0      1
External Review: \2\                                                    
    Hypertension.....................     38     39     39     46     53
    Immunizations....................  (\3\)  (\3\)  (\3\)     57     55
    Mental health....................  (\3\)  (\3\)     35  (\3\)  (\3\)
    Initial assessment...............     56     49     43     44     57
    Problem corrections..............     47     67     55     44     67
------------------------------------------------------------------------
\1\ Accreditation figures given in years.                               
\2\ External Review Non-compliance rates given in percent.              
\3\ Met an acceptable threshold.                                        

       These final data reflect results from a review of the 
     SYSTEMS in place at those HMO's. Using health education as an 
     example, 58 percent of the performance standards were not met 
     by one HMO, 33 percent for another. In another example, one 
     HMO, which has a three year accreditation had an overall non-
     compliance rate of 23 percent; 33 percent of the enrollee 
     rights standards were not met; 39 percent of the patient 
     satisfaction standards were failed and 33 percent of the 
     health education standards were not met.
                                                                    ____


Privatizing Government Regulation of Publicly Funded Health Plans: The 
                    Limits of Private Accreditation

                 (Prepared by Claudia Schlosberg, Esq.)

       Senate and House conferees begin deliberations this week to 
     reconcile legislation designed to balance the federal budget 
     in the next five years. Both the Senate and House versions 
     contain a daunting number of changes to the nation's health 
     safety net programs: Medicaid and Medicare. Some, such as 
     eliminating the waiver requirement, have received a great 
     deal of attention. Many other provisions, however, lie 
     obscured within hundred of pages of text and have received 
     little, if any public scrutiny. One such provision exempts 
     Medicaid managed care plans from the requirement of an annual 
     external, independent review if they have attained 
     accreditation from a private, non-profit accrediting body 
     such as the National Committee for Quality Assurance or the 
     Joint Commission on the Accreditation of Health 
     Organizations. The annual external review process is designed 
     to look at quality outcomes and the extent to which he 
     managed care entity is meeting the terms of its contract with 
     the state. In similar fashion, the House Medicare provision 
     waive requirements for external review if a plan is privately 
     accredited.
       Consumers should be deeply troubled and concerned by this 
     extension of ``deemed status'' to publicly-funded health 
     plans. Although private accreditation of health care 
     facilities and services historically has played

[[Page E1495]]

     an important role in the evolution of internal health care 
     quality assurance systems, the role and function of a private 
     accrediting organization is very different from that of a 
     public regulatory authority. The extension of deemed status 
     to publicly-funded health plans, as currently proposed, 
     represents a swift and sure erosion of federal oversight and 
     regulatory authority, the elimination of public access to 
     meaningful information about health plan quality, and 
     diminished public accountability. Consider the following:
       (1) Lack of Independence--Private accrediting bodies such 
     as the National Commission of Quality Assurance (NCQA) and 
     the Joint Commission on Accreditation of Health Care 
     Organizations (JCAHO) are closely tied to the industries they 
     oversee and monitor. Industry representatives are heavily 
     represented on their boards and they are financially 
     dependent on the industries they oversee. Fees for 
     accreditation services can run into tens of thousands of 
     dollars. For example, the base rate for NCQA accreditation of 
     a health plan with fewer than 50,000 members in $42,350 just 
     for the initial two to four day survey. Health care 
     organizations such as managed care companies purchase not 
     only accreditation services but also technical assistance and 
     consulting services to improve survey performance. Although 
     both JCAHO and NCQA assert they operate free of conflicts of 
     interest, the close ties to and financial dependency on the 
     managed care industry, as well as their dual roles as monitor 
     and advisor, raise clear concerns about independence and 
     objectivity.
       (2) Lack of Accountability--When the Health Care Financing 
     Administration or a state licensing authority conducts an on-
     site quality review, the findings of the actual survey 
     reports are available to the public (Nursing homes in fact 
     must post a copy of their latest survey report within the 
     facility). In contrast, the private accreditation process is 
     shrouded in secrecy. Although both NCQA and JCAHO release 
     sanitized summaries of accreditation reports to the public, 
     the underlying findings from the actual surveys themselves 
     are held in strictest confidence. Absent specific 
     legislation, public access to meaningful information, even 
     when relied upon by government regulators, is virtually non-
     existent.
       (3) Flawed Survey Protocols--As a general rule, regulatory 
     authorities are required to conduct annual, unannounced, on-
     site surveys. The element of surprise is an important tool 
     that helps ensure that surveyors observe the actual 
     operations of a health plan or facility. In contrast, private 
     accrediting bodies generally survey only every three years, 
     and surveys are scheduled well in advance. NCQA for example, 
     schedules surveys in conjunction with the health plan at a 
     mutually agreeable date. NCQA also gives plans advance notice 
     of the specific clinical records that they will review. 
     Additionally, both NCQA and JCAHO supply the names of the 
     survey team members in advance and strongly encourage health 
     plans to undergo ``practice'' accreditation reviews as a way 
     of preparing for the full accreditation survey. Health plans 
     thus have ample opportunity to assess and spruce-up 
     operations before the survey team's arrival. Often, the fixes 
     are illusionary. When the survey team leaves, the amenities 
     and improvements disappear.
       Private accrediting bodies also make no provision for 
     interested third parties to speak confidentially with the 
     survey team. JCAHO policy provides for disclosure to the 
     health facility of the identity of any person seeking a 
     public information interview with a surveyor--a process 
     unlikely to encourage staff, patients or interested members 
     of the public to come forward with complaints or information 
     about health plan policies and practices. Recently, hospital 
     workers at Columbia Sunrise Hospital in Las Vegas, Nevada 
     requested an opportunity to meet in confidence with a JCAHO 
     survey team to share workers' concerns about quality issues 
     in the facility being surveyed. JCAHO refused. Instead two 
     hospital worker representatives met with the JCAHO survey 
     team on hospital premises, at a place and time set by 
     hospital management, with senior hospital officials present.
       (4) Discretion and Variability Among Surveyors--Both NCQA 
     and JCAHO use consultant surveyors--professionals from health 
     plans and health practitioners who take time off from their 
     regular jobs to conduct site visits over several days. 
     Although surveyors receive training, individual surveyors 
     have much discretion and use their own judgment when 
     evaluating a health plan or facility. Consequently, there can 
     be a great deal of variation in how standards are scored. 
     Complex scoring methodologies also obscure results. For 
     example, under guidelines established in the JCAHO scoring 
     manual on accreditation of hospitals, perfect scores do not 
     necessarily reflect 100 percent compliance with standards. 
     This is because a score of one (on a five-point scale) 
     requires a showing of only 91-percent compliance, while a 
     score of two requires a showing of only 76-percent 
     compliance. Thus, even facilities with significant problems 
     affecting large number of patients can attain high scores.
       (5) Adequacy of Standards.--Although private accrediting 
     bodies purport to utilize rigorous quality standards, the 
     standards will largely focus on process or structure rather 
     than on the outcomes of care. The standards themselves often 
     provide only a minimum framework and give plans enormous 
     discretion to define not only the standards themselves but 
     the level of required compliance. For example:
       NCQA Managed Behavioral Health Care Standards for 
     Accreditation require plans to make timely utilization 
     management decisions but the health plan, not NCQA, has 
     discretion to define its own timeliness standard.
       To meet NCQA's requirements for clinical quality 
     improvement activities, a full service behavioral health plan 
     that provides both in-patient and out-patient care need only 
     assess and evaluate three issues relevant to its membership. 
     A managed behavioral health plan not only can pick and choose 
     what clinical issues to assess and evaluate, it also has 
     complete discretion to define the clinical issue, to set its 
     own benchmark, and to adopt or establish quantitative 
     measures to assess performance and identify areas for 
     improvement.
       Private accreditation standards also fail to address key 
     indicators. For example, NCQA Managed Behavioral Healthcare 
     Standards do not require plans to monitor death or adverse 
     drug interactions. Plans also are not required to monitor 
     long and short-term community tenure. Despite the potential 
     for abuse and misuse in the behavioral health field, 
     absolutely nothing in the standards addresses the use of 
     seclusion and physical restraint.
       (5) Public Participation in the Development of Standards--
     When federal or state governments seek to develop or change 
     standards used to regulate health facilities and services, 
     they are required by law to notify the public and provide 
     opportunity for public comment. In contrast, private 
     accrediting bodies are under no obligation to elicit public 
     comment. Although private accrediting bodies have solicited 
     outside comments on drafts of some accreditation standards, 
     the process is entirely voluntary and variable.
       (6) Access to Standards--Unlike federal regulations, 
     standards and surveyor guidelines, which are readily 
     available to the public through libraries, the world wide web 
     or low and no-cost publications, private accreditation 
     standards are difficult and expensive to access. Private 
     accrediting organizations copyright and market their 
     standards and survey materials. The cost of NCQA's Standards 
     for Managed Care Plans is $75.00. Copies of the surveyors' 
     guidelines and data collection tools cost an additional 
     $195.00 each or can be purchased together at the discounted 
     price of $365. Thus, the complete set of NCQA accreditation 
     materials for managed care plans is over $400--an amount 
     which is prohibitive for most of the general public and the 
     public sector advocacy community. Without ready access to the 
     standards and guidelines, consumers and their advocates have 
     little opportunity to effect policy debates, seek 
     improvements or monitor implementation.
       (7) Lack of Meaningful Enforcement--Once a survey is 
     completed and scored, an accreditation decision is made. As a 
     general rule, a health plan or facility can receive full 
     accreditation, accreditation with recommendations, one-year 
     accreditation, denial or deferral. Other than denying, 
     deferring or granting less than full accreditation status, 
     private accrediting bodies do not have the tools or the 
     mandate to pursue intermediate sanctions or take other action 
     to ensure compliance. The result is that poor performing 
     facilities can continue to operate with impunity. To monitor 
     private accrediting bodies' performance, federal Medicare law 
     requires the Health Care Financing Administration to conduct 
     validation surveys of health facilities that have been 
     granted ``deemed'' status. However this important safeguard 
     is not included within the provisions extending deemed status 
     to health plans.
       (8) Complaint Investigations--Unlike state and federal 
     authorities, private accrediting bodies do not routinely 
     respond to or investigate complaints, even when they relate 
     to facilities and services which they have accredited. The 
     extension of deemed status to health plans threatens to 
     undermine public resources needed to sustain these critical 
     regulatory activities.


                               CONCLUSION

       While private accrediting bodies play an important role in 
     the evolution of quality assurance systems, the private 
     accreditation process is inherently limited. Private 
     accrediting bodies operate as partners with health plans and 
     are not accountable to the public. Standards measure process, 
     not quality. Even NCQA admits that ``NCQA accreditation does 
     not constitute a warranty or any other representation by NCQA 
     to any third parties (including, but not limited to, 
     employers, consumers, or organizations members) regarding the 
     quality or nature of the . . . services provided or arranged 
     by the [health plan].'' Accordingly, private accreditation of 
     health plans should not be used to supplant a truly 
     independent oversight process. At the very least, if private 
     accreditation is to be more formally integrated into public 
     oversight of health plans to minimize actual (not just 
     perceived) duplication, public accountability must be 
     preserved. Accordingly, private accrediting bodies must be 
     required to fully disclose survey information, government 
     must have authority to validate survey data; effective 
     enforcement mechanisms must be clearly established in law; 
     government must remain the final arbiter on compliance issues 
     and retain authority to investigate complaints and enforce 
     standards; and standards used to reach accreditation 
     decisions must be developed in a

[[Page E1496]]

     public process and once developed, placed in the public 
     domain at low or no cost.

     

                          ____________________