Baucus, Grassley, Stark Hold Officials Accountable for Improper Approval of Specialty Hospital in West Texas

Baucus, Grassley, Stark Hold Officials Accountable for Improper Approval of Specialty Hospital in West Texas

Sens. Max Baucus and Chuck Grassley and Rep. Pete Stark are asking more questions about how a specialty hospital in West Texas was allowed to participate in the Medicare program despite an enrollment suspension on specialty hospital participation. They also want to know about this hospital, which Medicare now says doesn't meet necessary standards for hospital care, receiving accreditation from the Joint Commission, the entity the government relies on to determine hospital fitness.

In a letter sent today to the Acting Administrator of the Medicare program, these members of Congress pressed for information about the actions of a Medicare contractor in making West Texas Hospital eligible for Medicare dollars and the response of Medicare officials to the contractor's failure to comply with the ban. The Centers for Medicare and Medicaid Services uses contractors to enroll Medicare providers and to process and pay over $300 billion in claims annually. "Given the significant responsibilities delegated to these contractors and the enormous amount of federal money they manage, it is reasonable to expect that CMS would take steps to ensure that their instructions are followed and that there is accountability among the
contractors when these instructions are not followed," Baucus, Stark and Grassley wrote.

The lawmakers also wrote to the President of The Joint Commission for information about its oversight of the West Texas Hospital. An independent, not-for-profit organization, The Joint Commission is the nation's predominant standards-setting and accrediting body in health care. According to the Social Security Act, the Medicare program deems hospitals that are
accredited by the Joint Commission to be compliant with Medicare Conditions of Participation.

"CMS has a serious responsibility to keep Medicare beneficiaries safe, and in this situation it is clear that they failed," said Baucus. "Congress passed a moratorium on physician-owned specialty hospitals because of serious concerns that these facilities don't meet the safety standards and expectations hospitals should. CMS imposed the ban on all new facilities because it agreed with our concerns. It is unacceptable to me that the contractor hired by CMS failed to uphold their ban, and approved the West Texas hospital, but it is even more outrageous that CMS has not sanctioned this contractor. I also wonder why West Texas Hospital failed to comply with four Medicare participation standards less than two years after it was
accredited by the Joint Commission. I am going to keep very close watch to ensure that the Joint Commission, CMS and the contractors it hires are holding physician-owned specialty hospitals up to the high safety standards patients expect and deserve."

"Medicare officials are responsible for making sure their contractors execute their instructions. When the contractors don't meet their responsibilities, the ramifications are enormous given what's at stake, both for patients and taxpayers. So it's very necessary for Medicare officials to aggressively oversee the contractors and hold them accountable when they
drop the ball," Grassley said.

"The regulatory process Congress was told was in place to prevent specialty hospitals from entering Medicare didn't work," said Stark. "Perhaps it should come as no surprise that the Joint Commission - which accredited California's Redding Medical Center despite years of deadly heart surgeries - is partly responsible for this breakdown and for the death of a patient at a
physician-owned facility in West Texas. I expect more from CMS and its fiscal intermediaries." Baucus is Chairman and Grassley is Ranking Republican of the Senate Finance Committee, which oversees Medicare and Medicaid. Stark is the Chairman of the Ways and Means Health Subcommittee.

The text of those letters, along with the text of the inquiry sent last month by Stark, Grassley and Baucus regarding this hospital receiving Medicare payments while it was ineligible for Medicare payments, follows here. On January 23, a patient of the West Texas hospital died after suffering respiratory arrest after spinal surgery and being transferred by ambulance to a local
community hospital when emergency services weren't available at the specialty hospital.

March 6, 2007

Leslie V. Norwalk, Esq.
Acting Administrator
Centers for Medicare and Medicaid Services
Department of Health and Human Services
200 Independence Avenue, SW
Washington, DC 20201

Dear Acting Administrator Norwalk:

The Committee on Finance has exclusive jurisdiction over the Medicare and Medicaid programs in the Senate, and the Committee on Ways and Means has jurisdiction over the Medicare program in the House of Representatives. Accordingly, we have a responsibility to the more than 40 million Americans who receive health care under the program. We take this
responsibility seriously and conduct oversight into the activities of executive branch agencies, including the Centers for Medicare and Medicaid Services (CMS), to ensure that program dollars are spent on the best care available to beneficiaries.

We write today to express our concern about the apparent lack of oversight and accountability of the contractors that CMS entrusts to operate the Medicare program. On February 26, your staff provided a briefing to our staff regarding events surrounding the death that occurred at West Texas Hospital, a specialty hospital, in Abilene, Texas. During the briefing, it was revealed that a Medicare contractor known as a fiscal intermediary, TrailBlazer Health Enterprises, LLC (Trailblazers), approved West Texas Hospital's Medicare enrollment application despite CMS instructions to temporarily suspend the processing of applications from hospitals that met the federal definition of a physician-owned specialty hospital. As a result, this
physician-owned specialty hospital was issued a provider agreement despite the suspension on enrollment and received Medicare payments during a period of time it should not have. It is unclear from the briefing whether TrailBlazers was or will be sanctioned for their failure to comply with CMS' express instructions.

We find these events deeply troubling because of CMS' heavy reliance upon contractors like TrailBlazers not only for services such as enrolling providers, but also for processing and paying over $300 billion in claims annually. Given the significant responsibilities delegated to these contractors and the enormous amount of federal money they manage, it is reasonable to
expect that CMS would take steps to ensure that their instructions are followed and that there is accountability among the contractors when these instructions are not followed. Accordingly, we request detailed written responses to the following:

(1) Describe in detail all actions CMS has taken or will take in response to TrailBlazer's processing of West Texas Hospital's Medicare enrollment application. (2) In addition to serving as a fiscal intermediary for the state of Texas, identify all other
CMS contracts TrailBlazers currently holds and provide a copy of those contracts. In addition, provide responses to the following questions: a. Describe in detail any other incidents since 2003 in which TrailBlazers failed to follow CMS instructions, how the noncompliance was discovered and what actions CMS took in response to these incidents.
b. Describe in detail any actions taken by CMS to recoup monies paid to TrailBlazers for failed and/or poor performance within the last four years. In complying with this request state the reason for the recoupment and the amount recovered.
(3) Describe in detail all CMS policies and procedures for ensuring contractor compliance with CMS instructions for the last four years and provide copies of all documentation of these policies and procedures.
(4) Describe in detail all CMS policies and procedures for addressing contractor noncompliance with CMS instructions/contracts for the last four years and provide copies of all documentation of these policies and procedures.
(5) Describe in detail all CMS policies and procedures for evaluating contractor performance and provide copies of all documentation of these policies and procedures.
(6) Describe in detail all CMS policies and procedures for addressing poor contractor performance and provide copies of all documentation of these policies and procedures.
(7) Describe in detail all CMS policies and procedures in place for recovering any payments made by CMS that result in incomplete and/or substandard performance by CMS contractors and provide copies of all documentation of these policies and procedures.

We thank you in advance for your cooperation and request that your staff provide a point of contact for this matter no later than March 20, 2007. In complying with this request for information, please respond to each enumerated question by repeating the questions, followed by CMS's response.

Sincerely,

Max Baucus
Chairman
Senate Committee on Finance

Charles E. Grassley
Ranking Member
Senate Committee on Finance

Pete Stark
Chairman, Subcommittee on Health,
House Committee on Ways and Means

March 6, 2007

Dennis S. O'Leary, M.D.
President
The Joint Commission
One Renaissance Blvd.
Oakbrook Terrace, IL 60181

Dear Dr. O'Leary:

The Committee on Finance has exclusive jurisdiction over the Medicare program in the Senate, and the Committee on Ways and Means has jurisdiction over the Medicare program in the House of Representatives. Accordingly, we have a responsibility to the more than 40 million Americans who receive health care under the program. We take this responsibility seriously and
conduct oversight into the activities of executive branch agencies, including the Centers for Medicare and Medicaid Services (CMS), to ensure that program dollars are spent on the best care available to beneficiaries.

We have been outspoken critics of the conflicts created by physician-owned specialty hospitals. Together, we have held hearings, conducted oversight, commissioned studies, and even passed legislation regarding these facilities. One of the overriding concerns that spurred our involvement in this issue is the risk of harm these facilities pose to patients.

A recent example of this risk is the death of a patient at West Texas Hospital in Abilene, Texas. It was reported that on January 23, 2007, staff at this physician-owned specialty hospital placed an emergency call to 911 after a patient went into respiratory arrest several hours following spinal surgery. Following the emergency call, the patient was transferred to a
community hospital, Abilene Regional Medical Center, where he later passed away.

It is alarming that this physician-owned facility holds itself out as a "hospital" yet called 911 to transfer a surgical patient to another hospital in an emergency situation. This practice appears to be the hospital's standing policy in light of CMS' finding that there were 15 instances from May 2005 to February 2007 in which West Texas Hospital called 911 to transfer patients to
other hospitals in emergency situations.

West Texas Hospital has since been notified of its termination from the Medicare program "because of deficiencies that represent an immediate and serious threat to patient health and safety." The facility was out of compliance with Medicare Conditions of Participation including "Governing Body," "Patient Rights," "Nursing Services," and "Emergency Services."

West Texas Hospital received accreditation from the Joint Commission in May 2005.

According to the Social Security Act, the Medicare program deems hospitals that are accredited by the Joint Commission to be compliant with Medicare Conditions of Participation and thus eligible to treat Medicare patients and be reimbursed by Medicare for doing so. CMS therefore relies on the Joint Commission's judgment that a hospital it accredits is in compliance with
Medicare's Conditions of Participation, which aim to ensure that Medicare beneficiaries receive hospital care without risks to their health and safety.

We find it disturbing that a Joint Commission accredited hospital has been found to be out of compliance with Medicare Conditions of Participation less than two years after receiving your accreditation. As part of our investigation, we accordingly request detailed written responses to the following:

(1) Describe in detail the events surrounding the application for and granting of Joint Commission accreditation for West Texas Hospital. (2) Describe in detail all activities the Joint Commission conducted with regard to West Texas Hospital after accrediting the facility. In complying with this request, describe the number and nature of reviews the Joint Commission made of West Texas Hospital during its tenure and the results of each review.
(3) Describe in detail how the Joint Commission learned of the January 23, 2007 patient death and any actions the Joint Commission took in response to this notice.
(4) What is the current status of West Texas Hospital's Joint Commission accreditation?
(5) Provide copies of all the Joint Commission issued reviews or reports of West Texas Hospital for the last three years.

We thank you in advance for your cooperation and request that your staff provide a point of contact for this matter no later than March 20, 2007. In complying with this request for information, please respond to each enumerated question by repeating the questions, followed by the Joint Commission's response.

Sincerely,

Max Baucus
Chairman
Senate Committee on Finance

Charles E. Grassley
Ranking Member
Senate Committee on Finance

Pete Stark
Chairman, Subcommittee on Health,
House Committee on Ways and Means

Cc: Dr. David L. Lakey
Commissioner
Texas Department of State Health Services
West Texas Hospital
5602 Health Center Drive
Abilene, Texas 79606

http://finance.senate.gov/sitepages/grassley.htm