Conflicted over accreditation consulting

The organization that accredits Freestone Medical Center, Fairfield, Texas, as a Medicare provider does more than decide whether the 37-bed rural hospital qualifies for the federal program. The Center for Improvement in Healthcare Quality also assists with ensuring Freestone receives that accreditation.

Like its giant healthcare accreditation competitor, the Joint Commission, the CIHQ consults with and offers other forms of assistance to hospitals seeking to keep their accreditation.

Although the CIHQ doesn’t provide consulting services to hospitals it accredits, it does offer clients broader educational services as part of their annual accreditation fee, helping them meet Medicare’s conditions of participation, the standards the CMS established to determine if a healthcare provider can receive Medicare reimbursement. Tools and informational documents are among the services offered. The providers can also call the CEO or the executive director for clarity on specific standards and how to implement them. Customers have their cell phone numbers.

The Joint Commission, which accredits roughly 80% of the hospitals in the U.S., offers both consulting on accreditation as well as a service called Continuous Service Readiness in which an accreditation expert is on call to answer questions through a not-for-profit subsidiary. “Your organization can benefit from having a seasoned healthcare consultant clarify Joint Commission standards with CMS or state requirements, or help with preparing for any of the 10 Disease-Specific Care Certifications,” according to the website of Joint Commission Resources.

Consulting translates into millions of dollars—at least for the Joint Commission, which as a tax-exempt organization must file financial data with the Internal Revenue Service for its consulting unit. Financial data for the CIHQ was not available.

According to its IRS Form 990 filed on Guidestar.org, Joint Commission Resources transferred $1.1 million in royalties or investment-related money to its parent. JCR also sent $6.5 million to the Joint Commission for assistance with infrastructure and administrative assistance. And the Joint Commission also received a transfer of $5.4 million from its consulting unit that was classified as “other” on the Joint Commission’s Form 990. JCR transfers the funds it doesn’t use for its opertions to the Joint Commission so investments are centralized, minimizing fees, according to Maureen Lyons, spokeswoman for the Joint Commission, in an email.

John Yeary, Freestone’s CEO, said that CIHQ’s educational assistance is greatly needed. “When you get into some of the patient areas of (Medicare’s conditions of participation) ... it’s open to interpretation,” he said. “We can read the standard, we think we know what it means ... and it may or may not meet the condition of participation according to the surveyor’s findings. The accreditation organization helps us understand what Medicare wants to accomplish. They’re not telling us how to do it, they are pointing us in the right direction.”

Freestone Medical isn’t alone in its reliance on accreditors to meet Medicare’s conditions of participation. Most providers overwhelmingly oppose the CMS placing any restrictions on the education and consulting services accrediting organizations offer, according to comments from a December 2018 request for information from the agency.

The CMS issued the RFI in response to concerns from the public that the Joint Commission has conflicts of interest by acting as both an enforcer of Medicare rules for provider participation while taking on the same providers as clients to help improve their performance.

The agency hasn’t proposed any rulemaking since the comment period closed in mid-February, and a CMS spokesman declined to comment on potential next steps. The agency already requires accreditors to disclose the policies and procedures it has in place to avoid conflicts, but through the RFI the agency inquired if it should be doing more.

Hospitals and accrediting organizations argue that while it may appear to the public there’s a conflict of interest in consulting arrangements, that’s not the case because accreditors have robust firewalls in place, such as rules that ban surveyors from talking with consultant colleagues about customers. Furthermore, hospitals claim they need the guidance from accreditors to ensure they clearly understand the standards of participation, which they contend are difficult to interpret.

Medicare’s standards were intentionally written in a vague manner so they can be broadly applied, according to experts. With more than 5,000 hospitals in the country that must comply with the standards, it makes sense the CMS leaves room for interpretation, said Nancy Foster, vice president for quality and patient-safety policy at the American Hospital Association.

Ten organizations are currently approved by the CMS to accredit healthcare providers for Medicare participation. Just the Joint Commission and CIHQ offer consultancy services as part of their business model. The other accreditors offer education services to customers, which they argue is different from consulting because it involves a hands-off approach with broadly applicable resources.

“Hospitals want to be in compliance 100% of the time. That’s hard to do if you don’t understand what is written in somewhat broad terms and how that’s applicable to your circumstances, so they use these consultants,” Foster said.

National Nurses United is convinced the tactic fosters conflicts of interest, no matter the safeguards in place. “It creates this system that is overly complicated where the CMS has to monitor the monitors,” said Carmen Comsti, regulatory policy specialist at the union, which represents roughly 155,000 registered nurses nationally. “They could create firewalls but who is going to make sure that is actually happening? It’s a burden on the federal government that the CMS has to monitor this. It’s much easier to say you can’t do it (offer consultancy services) at all.”

Whether hospitals using consulting services from the same organizations that accredit them results in conflicts of interest is difficult to gauge. Hospitals have myriad consultants to choose from and some likely opt to hire experts affiliated with the accrediting organization because they feel it’ll improve their chances of achieving accreditation, said Andrew Wachler, principal of consulting firm Wachler and Associates.

Consultancy divisions of accrediting institutions also face pressure to contribute to the bottom line, he added, which means providers must believe that working with them will enhance their chances of accreditation so they’ll remain customers.

“If every time you hire the consulting arm you fail the survey, the consulting arm wouldn’t be (successful),” he added.

The financial relationship between the Joint Commission and its separate, and lucrative, not-for-profit arm, Joint Commission Resources, is a sticking point for critics of the practice.

The financial relationship explains why the Joint Commission rarely pulls accreditation from its customers, argues Comsti with National Nurses United. “Having hospitals as clients puts into question the entire accreditation process,” she added.

Even with the financial connection between the two entities, the Joint Commission contends their firewall policy ensures there is no conflict of interest.

A firewall policy prohibits the consultants and surveyors from sharing information about customers. Consultants can’t help customers appeal survey findings, be in contact with a customer during a survey or be on-site when surveyors are present.

The Joint Commission also has established a board-level committee that oversees the policy and every two years third-party auditors test compliance with the policy.

“The way Joint Commission Resources does consulting, we intentionally disadvantage the consultants with respect to what they can do compared to what their competitors can do,” said Joint Commission CEO Dr. Mark Chassin.

Despite all the protections, Joint Commission Resources still has a leg up in the consulting game given its affiliation with the accreditor. Joint Commission Resources established the consulting arm in 1986 as a reaction to complaints from customers that they were deficient on standards even though they sought help from independent consultants, according to its comment letter to the CMS in response to the December RFI.

“The Joint Commission believed that a consulting organization affiliated with but separate from the Joint Commission … could provide more accurate and expert advice on standards compliance,” Margaret VanAmringe, the organization’s executive vice president for public policy and government relations, wrote in a comment letter to the CMS.

But the benefit to hospitals of hiring the consultancy division might just be a matter of perception. The Joint Commission doesn’t allow its surveyors to be consultants. Furthermore, it doesn’t provide consultants with any information that isn’t public nor train them on how to interpret Joint Commission standards. Instead, consultants rely on the detailed surveys that surveyors leave with their hospital clients. Consultants review those and over time understand how the Joint Commission standards are applied, Chassin said.

“We’ve gotten better in the last five or six years in making surveyor observations more consistent,” he added.

All of those resources are available to independent consultants too, so hospitals may choose to go with their accreditor’s consultancy division because they think it will ensure they get accreditation right, not because they have a malicious intent to cheat the system, said Mark Silberman, a partner at the law firm Benesch.

“It sort of depends on if you are looking at this from a glass half full or glass half empty perspective,” he said.

The perception that accreditation is almost guaranteed if you work with the affiliated consulting division is the reason some accreditors have opted not to offer the service. For instance, the Accreditation Commission for Health Care, which accredits hospices, home health agencies and other sites, only provides education to its customers.

Offering consulting services “almost comes with an understanding you are going to do well on accreditation,” said José Domingos, CEO of the ACHC.

This perceived upper hand has made Joint Commission Resources a profitable business. In 2017, Joint Commission Resources reported net income of $6.6 million on revenue of $67.9 million, according to its IRS Form 990. The Joint Commission’s accreditation division reported $14.7 million of profit on revenue of $180 million to the IRS in 2017.

Hiring a consultant isn’t something all hospitals can afford.

“Being a small hospital fighting for survival, I can’t spend $600 on a consultant to help me fix a problem,” Freestone Medical’s Yeary said.

Freestone is accredited by CIHQ because it’s more affordable than the Joint Commission, he said. CIHQ’s education services are part of the flat fee all hospital clients pay to receive accreditation services.

CIHQ, which accredits about 80 U.S. hospitals for Medicare participation, does offer consulting services for hospitals but only for facilities they don’t accredit. “That we would consider a conflict of interest,” said CEO Richard Curtis.

The RFI from the CMS elicited many responses from accrediting organizations about the difference between consulting and education services.

Curtis said it’s the duty of accreditors to offer education to their customers, which he described as offering tools and broad expertise regarding how to successfully implement the standards. Consulting, he argued, is different because it typically involves an individual working with a hospital to fix specific issues at that facility or to help implement programs. Consultants also conduct mock surveys.

Curtis said it would harm providers if accreditors were no longer allowed to offer education services. “There are an awful lot of hospitals that have little resources and depend on us to help them,” he said. “My whole point to the CMS is if you believe that complying with the Medicare conditions of participation results in a hospital providing safer and better quality of care, why in the world would you tie the hand of someone who is trying to help the hospital meet those requirements?”

Although the ACHC has opted not to offer consulting services, it does provide training to independent consultants so they can appropriately advise providers on standards. Consultants can receive a certification from the ACHC after they pass a written assessment and take part in a training class on ACHC standards. The firm began offering the program about four years ago after hearing complaints from customers that consultants were unqualified.

“It doesn’t do us any good, it doesn’t do the consultant any good or the provider any good if they are choosing a consultant that isn’t well-versed in our process or our standards,” Domingos said.

The fact that standards can be interpreted differently comes into play when the CMS releases its annual report to Congress that outlines deficiencies accrediting organizations missed that state surveyors found.

Validation surveys are conducted by states within 60 days following a survey by accrediting organizations. The surveyors are looking for condition-level deficiencies—also known as serious deficiencies—at facilities. The CMS then compares the deficiencies found by state surveyors to those found by the accrediting organization.

The CMS usually finds that accrediting organizations missed deficiencies. The Joint Commission, for instance, has an overall disparity rate—deficiencies state surveyors found that Joint Commission surveyors didn’t—of 42%, according to the agency’s 2018 annual report to Congress released in August. By comparison, the overall disparity rate for DNV GL Healthcare, another Medicare-approved hospital accreditor, is 27%.

Chassin called the methodology used in the validation surveys “invalid” and “a very poor way for (the CMS) to assess accreditation organizations’ performance.” He argues that state surveyors and Joint Commission surveyors have different survey tactics, which can lead to high disparity rates.

Accreditors also claim that another reason the CMS finds differences is because state surveyors have different interpretations regarding how the standards should be applied.

“I’ve read some (state surveyor findings) I would probably advise hospitals to challenge,” said Patrick Horine, CEO of DNV GL.

Hospitals seem to have issues with the methods of some state surveyors as well. In its comment letter to the CMS, the Missouri Hospital Association said, “The number of competing areas of focus, personal bias of surveyors, and surveyor skill and healthcare experience … stands to impact the findings and subsequent deficiencies cited by surveyors.”

State officials disagreed. Dean Linneman, director of regulation and licensing for the Missouri Department of Health & Senior Services, said in an email that the agency takes steps to ensure its survey findings are consistent across facilities.

He said all surveyors are trained on state-specific and federal regulations. Further, surveyors follow the same process during on-site surveys, which includes interviews with staff, family members and patients. If any deficiencies are found, they are shared with supervisors for review.

“While surveyors are involved with the process, final decisions are not made by one individual. It’s this team approach that ensures consistency,” he added.

In light of concerns, the CMS has taken steps to revise the validation survey process. Last year, it began a pilot project that involves sending state surveyors to observe accrediting organizations while they evaluate facilities. The new method, developed with input from the Joint Commission and CIHQ, allows surveyors from accrediting organizations to explain their findings to the state surveyors.

“There is a dialogue,” Chassin said.

A CMS spokesman said in an email that the agency plans to finish the pilot project next year.

“We will continue our evaluation of the effectiveness of this pilot process and are looking for opportunities to expand this approach,” he said.

Although the CMS hasn’t made any changes yet to how it regulates the services that accrediting organizations can provide, accreditors argue not much needs to be done. Accreditors say they already know there must be a strict line between consulting and accreditation services.

“If an accreditor doesn’t have appropriate firewalls, they deserve to be held accountable,” Curtis said.

Domingos, CEO of ACHC, said there’s a fine line between consulting and accreditation, “and we don’t cross it.”

Chassin defended the Joint Commission’s firewall policy, noting, “If they’re contemplating a regulation, we think the regulation should embrace the kind of procedure we have in place.”