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Medicare Officials Back Off a Proposal to Make Hospital Inspection Reports Publicly Available; CLIA Inspections of Medical Laboratories Are Still Not Public

The Joint Commission opposed the Medicare proposal, and patient advocate groups say rescinding it is a setback for hospital  transparency

Powerful interests arrayed against greater transparency in the performance of hospitals, physicians, and medical laboratories have stopped a proposed Medicare program that would have allowed the public to see the results of hospital inspections.

Stopped in its tracks was an effort by the Centers for Medicare and Medicaid Services (CMS) to make hospital accreditation inspection reports available for public viewing. Opposition to this program led CMS to withdraw its plan for heightened transparency.

CMS originally called the proposal “groundbreaking” in a National Public Radio (NPR) article. That’s because it would have enabled consumers to view reports that private accreditation organizations, such as The Joint Commission, complete after each inspection. Inspection reports contain information on errors and problems found during hospital surveys. CMS’ push for more transparency in hospital inspections is consistent with the healthcare industry’s trend toward open sharing of healthcare quality, price, and other data.

“We are proposing changes relating to transparency of accrediting organizations survey reports and plans of correction of providers and suppliers,” CMS officials wrote in a proposed rule published on April 28.

CMS Pulls Back Proposal to Make Hospital Survey Reports Public

But it was not to be. After receiving comments, CMS officials stated in early August that the agency had pulled back the proposal.

“CMS is committed to ensuring that patients have the ability to review the findings used to determine that a facility meets the health and safety standards required for Medicare participation. However, we believe further review, consideration, and refinement of this proposal is necessary to ensure that CMS establishes requirements, consistent with our statutory authority, that will inform patients and continue to support high quality care,” noted a CMS fact sheet.

Agencies Find Problems in Hospitals That Accreditors Do Not, CMS Declares

It’s against federal law for CMS to release data related to hospital inspections, Becker’s Hospital Review reported. And, as part of the Clinical Laboratory Improvement Amendments (CLIA), clinical laboratories must participate in inspections to ensure they qualify for Medicare and Medicaid payments. However, the inspection reports of the nation’s medical laboratories are not made public.

So, what motivated CMS to make healthcare organizations’ inspection information public? CMS noted that private accreditation organizations miss serious provider problems that state inspectors find in follow-up visits to hospitals, ProPublica explained.

In fact, state agency reviews of 103 hospitals in 2014 found 41 serious deficiencies, including 39 missed by the accreditors, noted the NPR article.

The chart above based on Johns Hopkins research was compiled by the National Center for Health Statistics and reported by The Washington Post. It shows that medical errors are now the third leading cause of death in the US. (Photo copyright: The Washington Post.)

“Right now, the public has very little information about the places where they’re putting their life on the line, and that’s just not acceptable. If [they are] a good place, what are they afraid of?” Rosemary Gibson, Senior Advisor at The Hastings Center, stated in the NPR article.

Reaction from Accreditors and Consumer Groups Differs

The Joint Commission opposed the CMS proposal. And, now, patient safety advocacy groups are disappointed about the decision by Medicare officials to rescind the proposed program.

“We believe the proposal will have significant detrimental consequences on our nation’s ability to continually improve the delivery of healthcare services,” stated Mark Chassin, MD, FACP, MPP, MPH, Joint Commission President and Chief Executive Officer, in a June letter to CMS published partially in an HCPro blog post.

HCPro, a firm that aids organizations in accreditation, credentialing, and other needs, noted the following Joint Commission concerns about publicly shared survey reports in the blog post:

  • Providers may be less likely to be open about opportunities for improvement;
  • Accreditors could struggle to create new standards;
  • The number of non-accredited facilities may increase;
  • Accreditation may be devalued; and,
  • Costs to providers and accreditors would likely rise.

The Center for Improvement in Healthcare Quality (CIHQ), another accreditation option for hospitals, also expressed concerns with the CMS proposal, according to the ProPublica report.

“Knowing that survey [inspection] reports are public knowledge will only incentivize hospitals and other healthcare entities to go back to the days of ‘hiding’ quality of care issues from accreditors, rather than working with us to improve the quality and safety of care rendered to patients,” CIHQ advised in the ProPublica article.

The Leapfrog Group, which bills itself as an advocate of hospital transparency, called the reversed proposal “a disappointing setback for healthcare transparency.”

In a statement, Leah Binder, President and Chief Executive Officer of The Leapfrog Group, noted, “We are disappointed to learn that the agency that runs Medicare (CMS) has reversed course on its proposal to require private accrediting organizations, such as the Joint Commission, to publicly release reports of problems they found in hospitals and other healthcare facilities. The public deserves full transparency on how the healthcare industry performs.”

Clearly the public is calling for increased transparency in healthcare. As are many organizations and industry journals, such as the Association of Health Care Journalists (AHCJ), which presented a national award to Ellen Gabler, an investigative reporter for the Milwaukee Journal Sentinel, for her work covering weaknesses in inspections for clinical laboratories. (See Dark Daily, “Journalists Take Home Top National Awards for Their Work Covering Theranos and the Clinical Laboratory Industry,” May 16, 2016.)

Some Accreditation Information Available Online

So, for the time being, it appears that what is found during hospital inspections will stay within the inspection report and will not become available to the general public. However, with consumers expecting greater transparency and higher levels of service in all aspects of healthcare, the interest in public access to the quality performance of hospitals, physicians, clinical laboratories, and anatomic pathology groups will only increase.

Meanwhile, for patients interested in existing resources about provider quality, The Joint Commission has an online “find a gold star healthcare organization” quality check. Also, the American College of Surgeons publishes an online search for accredited facilities. And, the Centers for Disease Control and Prevention (CDC) offers an online search for CLIA accredited labs.

—Donna Marie Pocius


Related Information:

Secret Data on Hospital Inspections May Become Public At Last

Proposed Centers for Medicare and Medicaid (CMS) Rule

Changes to the Application and Reapplication Procedures for National Accrediting Organizations

CMS Backs Off Proposal to Make Hospital Accredited Investigations Public; Five Things to Know

Accreditors Can Keep Their Hospital Inspection Reports Secret, Feds Decide

Joint Commission Comments on Proposed CMS Transparency Rule

Disappointing Setback for Healthcare Transparency

Journalists Take Home Top National Awards for Their Work Covering Theranos and the Clinical Laboratory Industry


Reference Pricing and Price Shopping Hold Potential Peril for Both Clinical Laboratories and Consumers

While multiple studies show reference pricing is an effective approach to reduce the cost of testing and procedures, medical laboratories and consumers alike must continue to focus on quality to ensure positive outcomes

The Dark Report in its September 2016 issue highlighted how reference pricing is positioned to become one of the biggest contributors to price erosion medical laboratories and pathology groups have faced in more than a decade. The issue featured details of a 2016 study published in JAMA Internal Medicine outlining how Safeway’s use of reference pricing for clinical laboratory tests decreased laboratory spending for itself and employees by 32% between 2011 and 2013—a total savings of more than $2.5-million.

That issue of The Dark Report also highlights a similar use of reference pricing by CalPERS (California Public Retirement System) that involved hip and knee replacement surgeries. CalPERS saw a 30% reduction in the cost of these surgeries after 12 months.

These highly publicized efforts have fueled interest in how reference pricing might work for other businesses, insurers, and the US government. The 2014 Protecting Access to Medicare Act (PAMA) is already collecting private payer rates paid to laboratories for tests. This data will then be used to create new rate-based fee schedules in 2018.

Speaking with Joseph Burns, Managing Editor of The Dark Report, about the outcome and potential rise of reference pricing, study author James C. Robinson, PhD, of University of California Berkeley noted that, “Any discussion about how to contain inappropriate healthcare utilization is challenging. By contrast, significant price variation is the low-hanging fruit. Employers would much rather save money by having patients travel to cheaper clinical labs than get into some esoteric discussion about whether a clinical procedure is appropriate or not.”

Quality is Key to Both Avoiding Price Erosion and Improving Patient Outcomes

There’s no question that reference pricing has forever changed the landscape of clinical laboratory pricing. Paired with increased pricing transparency and easier access to pricing information through platforms such as Castlight Health, Healthcare Blue Book, and Change Healthcare Corporation, consumers and businesses can quickly compare prices across a range of service providers.

However, in April, Leah Binder, President and CEO of The Leapfrog Group, published an article in Forbes that highlights the potential downsides to price shopping for laboratory testing and medical care.

“Differences among providers in quality can eliminate any cost advantages,” stated Binder in the Forbes article. “Some purchasers assume they can get around this problem by targeting reference pricing only for procedures that don’t vary in quality. When quality is all the same, decisions can pivot on price alone. Unfortunately, no such procedures exist. Extreme variation is the hallmark of our healthcare system.”

As reference pricing continues to force more consumers to shoulder a portion of medical laboratory testing costs, prices for more expensive laboratories are likely to continue eroding unless they can convince consumers that their services are higher quality or produce better results. (Graphic copyright: California Public Retirement System.)

Binder cites a study in Spine Journal’s April 2017 issue regarding diagnostic error rates for magnetic resonance imaging (MRI). The study involved a 63-year-old woman seeking relief from low back pain. Over a three-week span, she received 10 different scans. These scans resulted in 49 different findings. Of these findings, none were repeated across all 10 scan reports provided to her physician.

“As a result,” the study’s authors concluded, “where a patient obtains his or her MRI examination, and which radiologist interprets the examination, may have a direct impact on radiological diagnosis, subsequent choice of treatment, and clinical outcome.”

Binder reinforced this, stating, “Purchasers should still pursue reference pricing and try to incorporate considerations of utilization and quality to the extent they have the data. Never assume any procedure is like a commodity—largely the same quality everywhere.”

High-Cost Medical Laboratories Likely to Face a Decision Between Volume or Price Erosion

A 2016 study by Health Care Cost Institute found the average pricing of 240 common medical services varied by as much as 200% between states. Within states, prices fluctuated as much as 300%.

Thus, for pathology groups and medical laboratories in the upper percentiles for their region, referencing pricing is likely to impact volume. Even if adoption of reference pricing by payers or self-insured business groups remains stable, price cuts due to PAMA loom on the horizon. As reported by Dark Daily in December 2016, price cuts to the Part B clinical laboratory fee schedule could add up to $400 million in reduced Medicare payments in 2018 alone.

This is particularly troublesome for hospital laboratory outreach programs, where Medicare patients commonly represent 40% to 70% of outreach lab volumes. The combination of reduced volume and reduced Medicare pricing could have dire financial consequences.

It will remain essential for medical laboratories to differentiate their services from those of lower-cost competitors to avoid volume and price erosion. Continuing to optimize test utilization, improving laboratory efficiency, and emphasizing the value of services rendered will help to further strengthen lab positions and reduce the impact of coming change.

—Jon Stone

Related Information:

Price Shopping Could Cut Employer Health Costs by 20%, but There’s a Catch

Variability in Diagnostic Error Rates of 10 MRI Centers Performing Lumbar Spine MRI Examinations on the Same Patient Within a 3-week Period

The Striking Variation of Commercial Healthcare Prices

Some States Pay Twice the Price for Health Care, Finds New Report

Association of Reference Pricing for Diagnostic Laboratory Testing with Changes in Patient Choices, Prices, and Total Spending for Diagnostic Tests

Coming PAMA Price Cuts to Medicare Clinical Lab Fees Expected to Be Heavy Financial Blow to Hospital Laboratory Outreach Programs

Volume XXIII No. 12 – September 6, 2016

Consumers Now Use Medical Cost Websites to Price Shop for Clinical Pathology Laboratory Tests and Other Medical Procedures

OIG Estimates that 1 in 7 Medicare Patients are Injured or Killed by Healthcare Providers

That’s not news to pathologists, who often see how physicians mis-order or mis-interpret clinical laboratory tests

Each month, one out of seven Medicare patients is injured or killed by their healthcare providers. These medical errors cost taxpayers hundreds of millions of dollars each year. And, that doesn’t even include the cost of follow-up care for the injured patients who survive.

Those and other conclusions are part of a recently released study by the Department of Health and Human Services (HHS) Office of Inspector General (OIG) titled “Adverse Events in Hospitals: National Incidence Among Medicare Beneficiaries.”


Finding Reliable Outcomes Measures for Hospitals Continues to Be a Challenge

In the long term, quality measures should elevate recognition of the value of clinical pathology testing

Healthcare quality measures continue to increase, both in numbers and in sophistication. These quality measures offer consumers, insurers, employers, and government health agencies some information about the relative value of clinical services. But the holy grail of quality measures—outcomes data and cost data that adequately reflect patient complexity and environment—is still elusive, say experts.

Dark Daily has long predicted that healthcare quality rating and ranking efforts would boost the fortunes of clinical pathology laboratory testing. Since laboratory tests play an essential role in the diagnosis, treatment, and monitoring of many diseases and health conditions, it stands to reason that physicians would more highly value the knowledge of pathologists and laboratory scientists because it helps them achieve improved outcomes with their patients.