GAB Decision 236
December 8, 1981 Idaho Professional Review Organization; Docket No.
81-109 Ford, Cecilia; Settle, Norval Teitz, Alexander
Introduction
The Idaho Professional Review Organization (IPRO) appealed the Health
Care Financing Administration's (Agency) decision to terminate its
grant, No. 99-P-99517/10, effective September 30, 1981. The
determination provided that the grant be extended, if necessary, to
permit this Board to make a final decision. In its appeal letter, dated
July 17, 1981, IPRO requested a hearing pursuant to Sec. 1152(d)( 2) of
the Social Security Act (Act). A hearing before the Presiding Board
Member was held in Seattle, Washington, on September 9 and 10, 1981.
This decision is based on the Record in this case, which includes the
written submissions of the parties and the evidence presented at the
hearing (as recorded in the transcript (Tr.) of the hearing). /1/ Based
on the analysis below, we conclude that IPRO's grant should not be
terminated.
(2) This decision is divided into three sections. The first provides
general background information on the Professional Standards Review
Organization (PSRO) program and the nationwide evaluation of PSROs which
led to this dispute. The second discusses the evaluation of IPRO - how
it was conducted, and what general objections IPRO raised regarding the
evaluation and the criteria used in the evaluation. The third section
sets out the Board's findings and conclusions on whether IPRO should
receive any additional points for the contested criteria.
I. General Background
A. Information on the PSRO Program
The 1972 Amendments to the Social Security Act provide for the
creation of PSROs, administered and controlled by local physicians, and
designed to involve local practicing physicians in the review and
evaluation of health care services covered under Medicare, Medicaid, and
the Maternal and Child Health programs. (Title XI, Part B, of the Act.)
PSROs are responsible, in specifically designated geographic areas, for
assuring that the health care paid for under these programs is medically
necessary and consistent with professionally recognized standards of
care. The PSROs also review whether the health services are provided at
the level of care which is most economical, consistent with the
patient's medical care needs. The major focus of the PSRO program has
been on review of inpatient hospital services. While PSROs are also
charged with review responsibilities in other health care settings,
budget restrictions have limited the PSROs' ability to review outside
the hospital setting.
The PSROs are responsible for developing and operating a quality
assurance system based on peer review of the quality and efficiency of
services and continuing education. In hospitals, the peer review system
must include: concurrent review, which is review focusing on the
necessity and appropriateness of inpatient hospital services performed
while the patient is in the hospital; medical care evaluation studies,
which are assessments, performed retrospectively, of the quality or
nature of the utilization of health care services and assessments of the
PSROs' impact where corrective action is taken; and profile analysis,
which is the analysis of patient care data to identify and consider
patterns of health care services. (See, e.g., PSRO Program Manual,
Chapter VII, p. 1, March 15, 1974.)
The Act, and regulations governing the program, provide that a PSRO
is "conditionally designated" for a period of time, and that there
will
be an agreement between the Secretary and the PSRO "fully designating"
the PSRO after it has satisfactorily performed PSRO functions during its
trial period as a conditional PSRO. After (3) a maximum of six years, a
conditional PSRO must be fully designated or it can no longer
participate in the program. (Section 1154(b) and (c) of the Act.) A
fully designated PSRO may be terminated only after an opportunity for a
hearing, upon a finding by the Secretary that the PSRO "is not
substantially complying with or effectively carrying out the provisions
of such agreement." (Section 1152(d) of the Act.)
B. The Nationwide Evaluation of PSROs
The Agency has stated that it implemented a nationwide evaluation of
the performance of PSROs in response to proposals by the President, in
February and March, 1981, to phase out the PSRO program within three
years, and to reduce funding for fiscal year 1981. In June, 1981
Congress approved a rescission of $28,701,000 from the PSRO program.
(Pub. L. No. 97-12, Title I, Chapter VIII; 94 Stat.3166). The Agency
maintained that the legislative history of the rescission bill indicated
that the Agency was to accomplish the rescission by terminating
ineffective PSROs. (Agency Response, pp. 3-4, 9.)
The Agency stated that in order to identify ineffective PSROs, it
developed evaluation criteria to measure performance, and asserted:
(these) criteria were based on the requirements for PSROs imposed by
the PSRO statute and regulations, and further interpreted through the
PSRO Program Manual and Transmittals. Many of the criteria were based
on those used to convert PSROs from conditional to fully designated
status.... Because of the Presidential and Congressional mandates to
terminate ineffective PSROs, however, more emphasis was placed in this
most recent evaluation on the effectiveness and the actual impact of a
PSRO's activities. Although the weight attached to certain areas
changed, these criteria impose no new responsibilities on the PSROs.
(Agency Response, pp. 9-10.) The Agency further explained that the
major change from the criteria previously used to assess PSROs was the
increased emphasis on cost effectiveness examined in Part I of the
evaluation criteria, and the PSRO's impact on the utilization and
quality of health care services examined in Part III. (Agency Response,
p. 5.) The proposed criteria were sent to all PSROs for review and
comment on March 20, 1981. After considering the comments received and
implementing some of the suggestions, the Agency distributed the final
version of the criteria to all PSROs on April 15, 1981. The criteria
were not promulgated as a regulation nor published in the Federal
Register.
(4) The final version of the criteria was sent to the Agency's
Regional Offices to be completed for each PSRO, along with instructions
for the evaluation. The evaluations were conducted by the Agency's
project officer. The instructions included the following:
Performance described in the indicators must be sustained throughout
calendar year 1980 or the most recent grant period (period should cover
12 months). If another time period is to be considered, it is specified
in the instructions for that item within the criteria set.
Each scoring level, positive or negative, must be reasonably
verifiable by previous site visit, reports, grant applications, PSRO
reports, correspondence or other relevant documentation. The Project
Officer should assure the completeness of documentation on each PSRO.
PSROs may be consulted for additional information.
The Central Office (CO) scoring methodology will be sent to each RO
(Regional Office) following CO receipt of the evaluations. After CO has
completed scoring ROs will be notified of the scores of each PSRO for
verification.
(Agency Response, second attachment to Exhibit B.)
The Agency stated that in order to insure uniformity and objectivity,
the "Regional Offices were instructed that no consideration was to be
given to factors not included in the criteria" (Agency Response, p. 5),
and representatives from the central office staff were sent to the
regions to review the evaluations and determine the validity of the
supporting documentation. (Agency Response, p. 6; Tr; p. 292.) The
Director of the Division of Program Operations for the PSRO program
testified that the central office also conducted telephone conferences
with regional personnel to discuss the evaluation criteria. She said
that in order to have consistent application of the criteria, the
Agency's central office sent the regions a "Question and Answer" packet
which listed the questions that staff in the various regions had raised
and the responses of the central office. (Tr., p. 292; see also,
Exhibit H-9.)
C. The Format of the Evaluation Criteria and the Scores Needed to Pass
The evaluation was composed of criteria which measured three areas of
performance: Part I -- organization and program management; Part II --
performance of review: compliance and process; and Part III --
performance of review: impact/potential impact. Each criterion (5) was
assigned a point value which the Agency awarded to a PSRO if it "met"
the criterion or, with some criteria, the points were awarded based on
the PSRO's level of performance, as described in the criteria. In order
to pass the evaluation, a PSRO needed a total score of 1105 (of the 2350
available points) and passing scores on two of the three parts.
Part I evaluated organization and management by examining the
following areas: commitment of the PSRO Board and committees;
administration and financial management; cost efficiency and relations
with the State. A PSRO needed 190 of the 300 available points to pass
this part. Part II examined performance of PSRO review based on
compliance with established review processes including the acute care
review process, special actions taken to address identified problems
such as the modification of a review system and adverse actions, medical
care evaluation studies, the adequacy of the PSRO's data system, and the
use of profiles. A PSRO needed 400 of the 850 available points to pass
this part. Part III evaluated PSROs on the basis of their impact and
potential impact on utilization objectives and the quality of health
care. A PSRO needed 515 of 1200 available points to pass this part.
(See Agency Response, p. 6.)
II. The Evaluation of IPRO
A. Summary of the Scores Awarded IPRO and How the Evaluation of IPRO
Was Conducted
The Agency awarded IPRO a base score of 983 points, 122 short of the
1105 needed to pass the evaluation. IPRO passed Part I with 218 points;
IPRO did not pass Parts II or III; IPRO's score of 385 for Part II was
15 short of the 400 needed to pass; and the score of 380 on Part III
was 135 short of the 515 needed to pass.
The project officer testified that she received the evaluation
criteria in mid-April, 1981 and was directed to complete the evaluation
by April 24, later extended until April 30. She said that IPRO's
Executive Director was at a meeting in the Regional Office around the
14th of April, and that she informed him at that time that the process
was going to begin on April 16. She testified that on the 16th she
began gathering data and that on April 20, 1981 she called the Executive
Director and asked him for documentation on certain criteria. (Tr., pp.
336, 391.) Of that conversation, she said:
I went through each of the items that were marked met and emphasized
to them that I could not mark anything met unless I had written evidence
that something occurred and that based on all our files and our
information... I didn't have enough information to mark certain items
met.
(6) (Tr., p. 337.) She said that some time later that day she made a
memorandum to the file regarding that call. (Tr., p. 397.) She said
that "it's routine for us when we have a call like this to document it,
particularly this being the first one and going through the entire
document." (Tr., p. 338.)
The memorandum read as follows:
I called Lee and Bob (IPRO's Executive Director and a staff member)
and read through all the "not mets" or "possible not mets"
on IPRO's
evaluation. Upon discussion of each, IPRO staff either agreed items
were "not met" or agreed to submit supporting documentation by the
end
of the week as to why they feel item should be met.
(AR, p. 169.) The project officer testified that in her discussions
with the Executive Director he said that several of the criteria were
not applicable to IPRO. She said she informed him that she did not have
the option to mark criteria "not applicable." (Tr., pp. 338-39.) It
was
on the basis of this telephone call that many of the disputed criteria
were marked "not met." (See the AR.) She said that she had other
telephone conversations with IPRO representatives to request additional
information but did not make a record of those other calls. (Tr., p.
398.) The project officer said that, at the time the criteria were
marked, the project officers in her region had conference calls with the
central office to discuss the criteria. (Id.) She then sent the
evaluation to the Agency's central office to be scored. /2/
B. Burden of Proof
IPRO claimed that the Agency had the burden of proof to justify its
decision to terminate IPRO's grant because Sec. 556(d) of the
Administrative Procedure Act (APA) states that, in adjudicatory
hearings, "(except) as (7) otherwise provided by statute, the proponent
of a rule or order has the burden of proof." (See, e.g., Appeal Brief,
pp. 2-11.) The Agency responded that this case is not an APA proceeding
and that the burden is on IPRO to show cause why it should not be
terminated based on the Agency's evaluation of IPRO's performance.
(Tr., p. 28.) The Agency argued that the APA burden of proof
requirements do not apply here because, although IPRO is entitled to a
"formal hearing" under the Social Security Act, the Act:
does not include the trigger language set forth in the APA which is
an adjudication to be determined on the record.... What we have is a
proposal by the Agency based on a budget decision and it is their
(IPRO's) burden to show that in fact we have not applied the criteria in
a rational and proper way.
(Tr., p. 28.)
The Board concludes that the APA burden of proof provision does not
apply in this proceeding. Section 556(d) applies only to hearings
required by Sec. 553 or Sec. 554. Section 553 applies to rulemaking and
IPRO did not contend that it is applicable here. Section 554 applies:
(a) ... in every case of adjudication required by statute to be
determined on the record after opportunity for an agency hearing....
(emphasis added.)
The statutory provision under which the PSRO was afforded this
hearing before the Board (Sec. 1152(d)(2) of the Social Security Act)
provides that an agreement with a PSRO may be terminated by the
Secretary "after providing such organization with an opportunity for a
formal hearing on the matter." While this is an adjudication in which
the determination is required by the PSRO statute to be made after an
agency hearing, the statute does not require that the determination be
made on the record. The absence of the underlined words is significant.
IPRO cited American Trucking Associations v. United States, 344 U.S.
298 (1953), as authority for its position that the burden of proof
standard of Sec. 556(d) applies in this proceeding. (Appeal Brief, p.
4.) This case is by no means the last word of the Supreme Court on this
question, but in any event, American Trucking Associations does not
support IPRO's argument. IPRO correctly stated that in American
Trucking Associations the Supreme Court basically held that, unless the
Agency's governing statutes required a hearing on the record, the Agency
would not be bound by the APA burden of proof standard. IPRO then
quoted the "opportunity for a formal hearing" language of the PSRO
statute, and concluded that "(this) requirement for a formal hearing on
the record appears to dovetail closely with that found in the
Administrative Procedure Act." (emphasis added.) (8) (Appeal Brief, pp.
4-5.) The words "on the record" are not to be found in the statute
providing for this hearing, however. The statute provides only "an
opportunity for a formal hearing on the matter." The word "formal"
does
not necessarily mean the same as "on the record," nor do we find
anything in the context of the Act as a whole which would lead us to
conclude that Congress intended that an APA hearing was required.
More recent Supreme Court cases show that the omission of the words
"on the record" can be determinative. In United States v.
Allegheny-Ludlum Steel Corporation, 406 U.S. 742, 757 (1972) the Supreme
Court said that:
... Sections 556 and 557 need be applied "only where the agency
statute, in addition to providing a hearing, prescribes explicitly that
it be 'on the record.'"
The next year the Supreme Court followed the Allegheny-Ludlum
principle in United States v. Florida East Coast Railway Company, 410
U.S. 224 (1973). The Board therefore concludes that the hearing in this
case is not required by statute to be "on the record" and is therefore
not subject to the technical burden of proof rule in Sec. 556(d) of the
APA. /3/
Nevertheless, the Board holds that the Agency does bear a burden, to
support its determination that IPRO did not meet certain criteria. The
Agency must show a reasonable basis for its determination on the
contested criteria in order for the Board to uphold that determination.
This does not mean, however, that IPRO has no corresponding obligation.
As appellant, it is incumbent on IPRO to demonstrate where the Agency's
(9) evaluation of IPRO lacked a reasonable basis /4/ or to show either
that IPRO met the criteria or performed at a certain level described in
the criteria.
C. IPRO's Objections to How the Evaluation Was Conducted
IPRO claimed that in making its decision to terminate IPRO's grant,
the Agency "failed to follow the regulations, guidelines and internal
memoranda of the Department," and that "(it) is axiomatic in
administrative law that the agency must comply with its own rules and
regulations." (Appeal Brief, pp. 6-7.) IPRO claimed the project officer
violated the Agency's own instructions on completing the evaluation,
specifically that she took on an adversarial approach to her dealings
with IPRO; that she based her decision on the April 20 telephone call,
rather than following Agency instructions requiring that she "assure
documentation" of each criterion; and that she failed to ask for
additional documentation if she was not satisfied with what IPRO had
provided. (See, e.g., Appeal Brief, pp. 3-11; IPRO Post-hearing Brief,
pp. 8-10.)
IPRO also contended that "no notice was given to IPRO that in fact
its grant was being considered for revocation. (Appeal Brief, p. 8.)
IPRO claimed its staff was told instead that the evaluation was for the
purpose of ranking PSROs nationwide in case of future funding cutbacks.
(Appeal Brief, p. 23.)
The Agency maintained that the project officer made every effort to
obtain information about IPRO's activities and to conduct the evaluation
in a manner fair to IPRO. The project officer said that she contacted
IPRO staff on several occasions to discuss the evaluation and to obtain
documentation from IPRO which would allow her to mark the criteria
"met." She said she had no interest in seeing IPRO's grant terminated.
(See Tr., pp. 336-43.)
As a practical matter, the Board need not reach the issue of whether
certain criteria were improperly marked "not met" because the project
officer allegedly did not obtain documentation. The Board has accepted
and considered all relevant documentation which IPRO submitted in
support of the criteria, even if the project officer did not consider
the material in making her decision.
In response to IPRO's objection to the Agency's use of the alleged
admissions by the Executive Director in the April 20 call, the Board
determined that it would not hold IPRO to those alleged admissions for
any criterion (10) which IPRO claimed it met, where IPRO submitted
evidence in support of that claim. The Board so determined because the
contact report summarizing this one call (AR, p. 169) did not list which
criteria IPRO admitted it had "not met," and it did not refer to the
criteria which IPRO objected to as "inapplicable" (even though the
project officer testified that IPRO did so object, see Tr., pp.
338-39). The Board did find the call to be evidence of an admission in
cases where IPRO objected to the call but did not contend, nor submit
any information to support, that it met the criteria.
The Board is also not persuaded that IPRO was unaware that its grant
could be terminated as a result of the evaluation. IPRO admitted that
it received a copy of the final version of the criteria. (Tr., p.
194.) The cover letter dated April 15, 1981, stated that: (the)
Administration's PSRO budget proposal provides funds for only the most
effective PSROs to be continued.PSRO effectiveness will be determined
through the application of the performance criteria." The letter also
stated that PSROs would be ranked based on the scores they received on
the evaluation and that PSROs could be terminated based on that ranking.
(Exhibit B to Agency Response.) The Board concludes that IPRO was on
notice that it could be terminated based on this evaluation.
D. IPRO's Objection to Certain Criteria Used in the Evaluation
IPRO objected to certain criteria which the Agency used in conducting
this evaluation. IPRO claimed that some of the criteria were
inapplicable to it and that, as a result, IPRO was unfairly denied
points it needed to pass the evaluation and retain its funding. (Appeal
Brief, pp. 20-23.) IPRO claimed that these criteria were originally
developed "to provide a rank ordering of all PSROs in the nation so that
if Congress began to cut funding, only the most effective PSROs would
receive the scarce resources available," and argued that "for the
purposes of reviewing an on-going grant, however, the criteria make no
sense." (Appeal Brief, p. 20.) IPRO claimed that it is an effective
PSRO, given the limitations of its geographical location and the
resistance it received from Idaho physicians.(Tr., pp. 45-51.) IPRO
maintained that it did not pass this evaluation in part because IPRO was
denied points for not doing things required to pass the criteria, but
which were unnecessary for IPRO to perform its duties as a PSRO. (See,
e.g., criteria I.D.1., I.D.3., II.A.3., II.B.1(f), (g), and II.B. 2(d),
(e), and (f); Appeal Brief, pp. 20-23.) In support of its claim that
the evaluation did not accurately reflect its performance as a PSRO,
IPRO submitted that it had recently passed the Agency's annual
evaluation and another Agency evaluation performed when it was fully
designated less than six months prior to this evaluation. (Tr., p. 16.)
(11) The Agency admitted that the evaluation had two purposes -- to
identify those PSROs that, notwithstanding budgetary considerations, did
not meet minimum program performance requirements and must therefore be
terminated; and to develop a ranking of PSROs based on performance to
be used in the event that Congress approved the budget rescission.
(Agency Response, p.4.) The Agency maintained, however, that the
criteria used here did not impose any new obligations on PSROs and are
based on past evaluation criteria, the PSRO statute, regulations, the
Program Manual and Agency Transmittals. (Tr., pp. 284-89; see also,
Agency Response, pp. 4-5.) The Agency asserted that any change in the
result since prior evaluations was due to the emphasis on the PSRO's
impact on the quality and cost of health care. (Agency Response, p. 5.)
The Agency asserted that this change in emphasis was in response to
statements by Congress and the President. The Agency also explained
that the evaluation for full designation involved a different time
frame. The Agency's witness said that the evaluation for full
designation "was a snapshot in time whereas this evaluation was trying
to look at sustained performance over a certain time frame." (Tr., p.
288.)
The Agency's witness also stated that in selecting criteria for the
evaluation the Agency recognized that PSROs had different methods of
performing, and that the criteria allowed for such differences by
requiring a PSRC to achieve only 1105 of 2350 available points (and
minimum scores on only two parts). (Tr., p. 288.)
IPRO did not persuasively rebut the Agency's assertion that the
criteria were based on reasonable program requirements and that a
minimally performing PSRO could achieve 1105 of the 2350 available
points. The Board will not substitute its judgment on program policy
for reasonable policy choices of the Agency charged with administering
the program. See, e.g., Wisconsin Department of Health and Social
Services, Decision No. 116, August 16, 1980; New York Department of
Social Services, Decision No. 101, May 23, 1980; Family Health Care,
Inc., Decision No. 147, January 29, 1981. In those cases, the Board
said that it will not interfere with an Agency's exercise of its
discretion if the Agency acts in accord with the rules and regulations,
and the discretion is exercised in a reasonable manner. IPRO did not
show that it was unreasonable for the Agency to expect PSROs to perform
the activities described in the criteria. IPRO also did not show that
the Agency's decision requiring a PSRO to achieve minimum scores on two
parts and less than one-half of the total available points in order to
pass, did not compensate reasonably for any situation unique to this
PSRO.
III. The Board's Assessment of the Specific Criteria in Dispute
This section of the decision sets out each criterion in dispute (in
the same order as it appeared in the evaluation criteria), the arguments
of the parties regarding whether IPRO should receive points for the (12)
criterion, and the Board's findings and conclusions. The Board has
found that IPRO should receive an additional 144 points for a total of
1127; IPRO needed a total of 1105 points to pass this evaluation. With
these additional points IPRO has also passed two of the three parts of
the evaluation. See discussion of criteria I.B.4, I.B.6.b., II.B.2(c),
II.C.1, and III.A.
Part I of the Evaluation Criteria: Organization and Program Management
IPRO scored 218 points in this part; 190 were needed to pass. The
Board concludes that IPRO should receive an additional 19 points in this
part. IPRO disputes the Agency's marking of the following criteria in
this part:
CRITERIA SECTION B. Administrative and Financial Management
CRITERION I.B.4. Submitted reports, proposals, plans, etc. are
well-developed and accurate. Less than 10% require Regional Office to
request revision or greater depth.
The Agency did not award IPRO the 15 points available for this
criterion because the Agency determined that "well over 10 percent
require substantial revision and supplementation." (AR, p. 11.)
In support of marking this criterion "not met," the Agency submitted
the following documents: IPRO's Focused Review Plan (AR, pp. 170-87),
Quality Review Plan (AR, pp. 188-271), Profile Analysis Plan (AR, pp.
272-96), Quarterly Progress Reports (AR, pp. 297-305), Surgical
Procedures Review Plan (AR, pp. 306-11), Hospital Memorandum of
Understanding, (AR, pp. 312-18) and Grant Application (AR, pp. 319-64.)
See also, Agency Response, pp. 12-17; Tr., pp. 344-64.
IPRO objected to the use of this documentation, claiming that much of
it was dated in 1981, while the the evaluation period was calendar year
1980. IPRO argued that since the Agency's instructions for completing
the PSRO performance evaluation stated that the evaluation period was to
be either "calendar year 1980 or the most recent grant period (period
should cover 12 months)," the evaluation should be based on calendar
year 1980. IPRO argued that its latest grant began March 1981, and
using that grant period would not cover 12 months.
The Agency Response stated that, with some exceptions, the evaluation
period for IPRO was calendar year 1980 (p. 7), but also stated (at p.
36) that "(the) basic period of assessment for the evaluation appealed
here was February 28, 1980 to May 4, 1981."
(13) At the hearing, however, the parties agreed that the period of
the evaluation for IPRO was its last complete grant period of March 31,
1980 to March 31, 1981. (Tr., p. 10; see also, Agency Post-hearing
Brief, p. 1.)
IPRO also argued that it met this criterion, and that the relevant
documentation regarding the quality review plan "merely shows that
appellant IPRO personnel diligently prepared the quality review plan and
responded to input from Region X staff." With regard to the profile
analysis documentation, IPRO stated that it "merely indicates that...
IPRO should develop a plan by the 1st of December, 1980, for agency
approval." (Reply Brief, p. 8.) In addition, IPRO maintained that the
grant application is an inappropriate document to consider in this
context since, by its nature, the approval process is more analogous to
arms-length contract negotiations between parties. (See Reply Brief,
pp. 7-13.)
Finding: IPRO should receive the 15 points.
The criterion required a determination that less than 10% of
"submitted reports, proposals, plans, etc.," require revision or greater
depth. The Agency has not stated a reasonable basis to support its
determination that IPRO has "not met" this criterion since the Record
does not indicate how many documents were considered in making this
determination, whether multiple submissions of the same document were
counted as one submission or several, or which time period was in fact
used as the basis for marking this criterion "not met."
It is not clear from the Record that the Agency followed its own
instructions, which required the Agency to base its evaluation on
calendar year 1980 or the last grant period (which must be a 12 month
period). The Agency's submissions refer to several possible evaluation
periods (February 19, 1980 to May 4, 1981, calendar year 1980, and
IPRO's last grant period -- March 31, 1980 to March 31, 1981), and the
Agency's supporting documentation spans a time period from April 1980 to
June 1981. In addition, the Agency admits that items 1-4 referred to at
AR 170 (which includes the Focused Review Plan) should not be considered
by the Board because they do not pertain to the relevant time period.
(Tr., p. 352; see also, items at AR, pp. 188, 272, 296, 306, 312, 319.)
The Board can not sustain the Agency's scoring of this criterion
based on the information in the Record because much of the documentation
is outside the period of the evaluation (the last grant period), and
there is no indication of how the Agency determined what percentage of
IPRO's submissions during the evaluation period required revision.
(14) CRITERIA SECTION B. Administrative and Financial Management
CRITERION I.B.6.b. Audit findings indicating deficiencies in accounting
systems and/or financial management. Findings are defined as....
Inability to allocate costs.
The Agency did not award IPRO the four points available for this
criterion because the Agency determined that audits of IPRO in September
1979 (ACN-10-06900) and September 1980 (ACN 10-06904) indicated "that in
certain areas the PSRO failed to allocate costs in accordance with
established Agency policies." (Agency Response, pp. 17-18; see also,
Tr., pp. 159, 201, 364.) In accordance with the instructions, the Agency
marked this criterion on the basis of the most recent and second most
recent audits performed.
The Agency's summary explaining how this criterion was marked stated,
"Audit No. 10-06904 was resolved by reducing the PSRO's subsequent grant
award by the unexpended or carryover funds of $65,806." (AR, pp. 365,
368.) A summary of audit findings and recommendations for 10-06904 and
10-06900 also stated that "a financial adjustment should be made for
excess contributions to the pension fund." (AR, pp. 367, 369.) The Audit
Clearance Document for 10-06900 stated: "(a)ction Taken on Finding:
This amount was never charged on the expenditure report for the audit
period in question. This amount will be claimed on the SF-269 as an
expense in the subsequent accounting period. In the future the PSRO
will monitor expenses more closely and adhere to DFAFS regulations for
anticipated expenditures." (AR, p. 367.) The Audit Clearance Document
for 10-06904 stated: "(a) ction Taken on Finding: The $2,332 cited by
the Audit Agency as being an overcontribution to the pension fund as of
6/30/79, was used to reduce contributions in the following quarters."
(AR, p. 369.)
Finding: IPRO should receive the 4 points.
The Agency's submissions do not provide a reasonable basis for the
determination that IPRO is unable to allocate costs. The Agency did not
explain, or submit documents which would explain, the connection between
the determination regarding carryover funds and the Agency's claim that
IPRO demonstrated an inability to allocate costs. The Agency did not
show any correlation between the payments to the pension fund and a
finding regarding IPRO's ability to allocate costs. The July 17, 1981
letter submitted by the Agency regarding a later audit is outside the
evaluation period, and in any event, the letter states that "IPRO's
implementation of procedures to accurately identify the differences
between the functional parts of the budget is acceptable." (AR, p. 372;
see also, Tr., pp. 159-61, 201-02, 364-65.) The project officer did not
supplement this information with her testimony at the hearing. She said
only that she marked the criterion "not met" because "that deficiency
or
problem showed up two years in a row... it dealt with allocation of
costs and their pension plans in particular." (Tr., p. 366.) The Board
cannot sustain the Agency's scoring of this criterion based on the
information in the Record.
(15) CRITERIA SECTION D. Relationship To State. Indicators of State
Relationships:
CRITERION I.D1. PSRO communicates with State to resolve any issues
related to review.
CRITERION I.D.3. PSRO has modified review system to accommodate State
defined needs where problems were identified by PSRO and/or State (e.g.,
pre-surgical review, weekend admissions, etc.).
The Agency did not award IPRO the ten points available for each of
these criteria because the Agency determined that "IPRO did not provide
documentation of any activity to support marking this (I.D.1.) criterion
met," and that, "the PSRO Executive Director agreed via telephone
(4/20/81) that this (I.D.3.) criterion was not met." (AR, p. 376.) The
Agency also asserted that there was no documentation of communication
with the State. (See Agency Response, p. 19; Tr., pp. 365-66.) IPRO's
position was that it did in fact communicate with the State but there
had not been problems during the evaluation period which needed to be
resolved.
The Agency maintained that these two criteria, and the method by
which they were scored, were valid indicators of a PSRO's capability.
The Agency submitted that the PSRO statute and regulations, specifically
42 CFR 463, require a close working relationship with the State and that
it is inconceivable that in a productive relationship there are no
problems to resolve. The Agency stated:
... IPRO's admission indicates a total lack of interaction with the
state. IPRO argues that it should in effect be given points for doing
nothing when the question is intended to reward those PSROs that do have
an active productive relationship with the state.
(Agency Response, p. 20; see also, Tr., p. 294.)
IPRO asserted that, as a seven year old PSRO, its problems with the
State had been worked out in prior years and, therefore, these criteria
were not applicable to IPRO. (See Exhibits H-1, H-4, Tr. pp. 19, 71-75,
112-17, 134-36, 161-65, 202-04, 294, 365, 405-08.) IPRO argued that
without a showing by the Agency that there were bad relations between
IPRO and the State, IPRO was entitled to the points for these criteria.
(Reply Brief, p. 20.)
IPRO also stated that the Executive Director did not admit to the
project officer that IPRO had not met these criteria and claimed that
"there had been no activity from the State to either resolve disputes or
a formal request from the State to modify IPRO's review process." (Reply
Brief, pp. 17-18.) IPRO argued that its relationship with the State is
good and submitted the following statement from the Chief of the State's
Bureau of Benefit Payments:
(16) (the) State has not identified any potential problem areas which
would require IPRO to make modifications in their review procedures. I
am confident that, if we had identified such problem areas, IPRO would
have responded to the needs of the State Agency.
(Exhibit H-1.) The President of IPRO's Board of Directors, Dr. John
Meyer, stated that "there were no direct contacts (with the State during
the evaluation period) either adverse or positive, and basically my
judgment is that the program was operating satisfactorily. We had
anticipated their needs." (Tr., pp. 72-73.) The Executive Director also
testified that IPRO communicates with the State "as needs dictate."
(Tr., p. 161.) He stated that there was communication during the period
of the evaluation, specifically, "the State addressed a particular
potential problem with leaves of absence for Medicaid beneficiaries.
They brought it to our attention and we addressed the issue
appropriately." (Tr., p. 162.) He later clarified that this took place
in 1978. (Tr., p. 202.) The Executive Director also stated that he
served on State committees but that those committees were not releated
to PSRO activities. (Tr., p. 204.)
Finding: IPRO should not receive the 30 points.
The Board is not persuaded that IPRO should receive these points
based on its claim that it did not find it necessary to take the actions
described in the criteria. The Agency can reasonably choose to award
points to PSROs which modify their activities based on communication
with the State. Although IPRO maintained that the State has not
identified problems to resolve, the criteria did not require that
problems be identified, or communication initiated, by the State. The
Agency can reasonably expect PSROs to play an activist role in
identifying and resolving problems.
We also find that the Record does not indicate that IPRO has met
these criteria. Even without relying on IPRO's alleged statement in the
April 20 telephone call that these criteria were "not met," IPRO
admitted that it had minimal, if any, contact with the State during the
evaluation period, and IPRO did not show that it engaged in the
activities oiutlined in the criteria during the evaluation period.
Part II of the Evaluation Criteria: Performance of Review Operations -
Compliance and Process
IPRO received 385 of 850 available points for this part; 400 points
are needed to pass. The Board concluded that IPRO should receive an
additional 80 points in this part and thereby achieve the minimum
passing score for this part. IPRO disputed the Agency's scoring of the
following criteria:
(17) CRITERIA SECTION A. Acute Care Review. Indicators of acute
care review process are:
CRITERION II.A.2. PSRO is reviewing medical necessity of selected
surgical procedure(s) on a presurgical basis and/or PSRO is reviewing
the appropriate setting for selected surgical procedures.
The Agency did not award IPRO the 20 points available for this
criterion because the Agency determined that IPRO's Executive Directors
agreed via telephone that this criterion was "not met." (AR, p. 377.)
The project officer also testified that "the basis for marking this
criterion not-met was verbal verification by (the Executive Director)
that they were not doing presurgical review." (Tr., pp. 388-90.)
The Agency maintained that IPRO indicated to the project officer that
there were no problems in Idaho that indicated a need for these
procedures, but that some of IPRO's impact objectives identified problem
areas that could have been reviewed for medical necessity on a
presurgical basis or for appropriate setting. (AR, p. 378.)
The only IPRO response in the Record concerning how his criterion was
marked was that "(n)o argument or documentation was presented by the
Agency to justify the subtraction of 20 points from the IPRO score.
Since no argument is presented, there is simply no justification for the
reduction of the score by 20 points...." (Reply Brief, p. 22.)
Finding: IPRO should not receive the 20 points.
IPRO did not claim, nor does the Record indicate, that IPRO was
performing presurgical review during the evaluation period. The Board
concludes that the Agency stated a reasonable basis for its
determination and that IPRO failed to submit any evidence to show that
it had earned the points.
CRITERIA SECTION A. Acute Care Review
CRITERION II.A.3. PSRO has recommended rebuttal or revocation of
waiver of liability for a class of cases or an institution as a whole
within past 24 months.
The Agency did not award IPRO the 30 points available for this
criterion because the Agency determined that IPRO's Executive Director
admitted this criterion was not met. (AR, p. 378.)
The Agency's position was that monitoring to ensure that rebuttal or
revocations of waivers of liability take place when necessary is an
essential element of the PSRO review system. The Agency referred for
support to an Agency policy statement (Transmittal No. 94) which sets
(18) out a PSRO's responsibilities, and the procedures for evaluating a
provider's "waiver of liability" status. (Agency Response, p. 21.)
The
Agency asserted that IPRO's claim that there were no problems indicates
IPRO was not adequately monitoring the care under its review. (Tr., pp.
366-68.)
The Agency stated that providers of health care are awarded a "waiver
of liability" which allows them to be paid when certain non-covered
services are provided, based on the presumption that they could not have
known that the care was not covered. Rebutting this presumption in a
particular case, or revoking it for a particular provider, would result
in the denial of payment for those non-covered services. (See Tr., pp.
366-67.)
IPRO maintained that no recommendation of rebuttal or revocation of
waiver of liability was necessary within the past 24 months. (Notice of
Appeal, p. 4.) IPRO argued that the Agency has not presented any
evidence that a rebuttal or waiver of liability was necessary, but
rather conjectured without further evidence that if it was not done,
IPRO was not performing properly. (Reply Brief, p. 21.)
Finding: IPRO should not receive the 30 points.
The Board is not persuaded that IPRO should receive the points based
on its claim that it did not find it necessary to take the actions
described in the criterion. The Agency may reasonably choose to award
points to PSROs which perform an authorized PSRO function which the
Agency considers important. IPRO did not claim, nor does the Record
indicate, that IPRO has met this criterion.
CRITERIA SECTION A. Acute Care Review
CRITERION II.A.4. PSRO has "carved out" medically unnecessary days
during a certified stay in the past 24 months ("Carved out" means
denied
days within the total stay).
The Agency did not award IPRO the 20 points available for this
criterion because the Agency determined that the "documentation of one
denied day (in 12 months) plus the PSRO statement 'on rare occasion' was
not sufficient to satisfy the substantial performance requirement found
in the instructions for completion (of the evaluation)." (AR, p. 379;
see also, AR, pp. 22, 381; Tr., pp. 167-72, 205A-07, /5/ 210-15, 368.)
The Agency's instructions for filling out the evaluation stated that
performance of the activities outlined in the criteria must be sustained
throughout the evaluation period.
(19) The Agency maintained that "carving out" medically unnecessary
days was a good indicator of the skill with which a PSRO performed its
review functions. The Agency gave the following as an example of a
carved out day:
A patient enters the hospital for diagnostic tests and surgery is
scheduled for several days later. Although medically unnecessary, the
patient remains in the hospital until the surgery is performed. The
days necessary for the tests and the surgery are approved but the
unnecessary days in the hospital between the two events must be carved
out and those days disallowed.
(Agency Response, p. 22.)
IPRO maintained that "while rarely, IPRO has indeed carved out days
within a patient's stay for reasons of level of care." (Appeal Brief, p.
14.) IPRO defined a carved out day as:
during a patient's length of stay within the hospital, for one reason
or another, that the level of care has gone down below the acute level
and at that point in time, the PSRO serves a denial and that following
that denial and the issuance, the patient's condition deteriorates to
the point where they are again at the acute level and the PSRO
recertifies them. (emphasis added.)
(Tr., pp. 167-68.)
IPRO submitted as evidence five examples of denials of payment. The
Agency did not contest that the first example was a valid denial. The
four other examples stated the reasons for denial as "leave of absence
from hospital." (Exhibit 1 to Appeal Brief.) The project officer had
considered only the first example when she made her evaluation and
denied points for this criterion. IPRO maintained that the project
officer should have requested additional information and documentation
if the example presented by IPRO was insufficient to meet this
criterion. (Reply Brief, pp. 23-24.)
The Agency argued that leave of absence" denials are not denials
based on the PSRO's determination but are instead, "coverage
determinations requiring automatic denials by the intermediary...
without any type of PSRO medical necessity determination." (Agency
Post-hearing Brief, p. 5.) The Agency cited the Medicare Manual and 42
CFR 463.26 in support of this statement. The Agency also argued that
the absence of an appeal right from the PSRO denial for leave of absence
was further evidence that this was not a medical necessity
determination, as 42 U.S.C. 1320c-8 provides a right of appeal from that
kind of PSRO determination.
(20) IPRO rejected the Agency's reliance on the Medicare manual to
support its claim that leave of absence denials are not denials within
the meaning of this criterion. IPRO argued:
... the Medicare reimbursement Manual really does not say that IPRO's
actions are improper or irrelevant to the carved out procedure. It
simply states in Section 3104.4 that days on which a patient began a
leave of absence are not to be counted. The manual does not state who
is to determine when the leave of absence began and ended.
(IPRO Post-hearing Brif, p. 20.)
Finding: IPRO should not receive the 20 points.
Even by IPRO's own definition of "carved out," the leave of absence
denials did not qualify because a denial based on a patient's absence
from the hospital was not necessarily related to a change in the
patient's "level of care." Although there is one example of a carved
out
day which the Agency does not contest, the criterion requires more than
one example. While the Agency arguably could interpret the plural
"days" to mean "day" in the context of a single stay, the
fact is that
the Agency does not do so, and the criterion says what it says -- i.e.,
"days."
CRITERIA SECTION A. Acute Care Review
CRITERION II.A.6. PSRO monitors samples of focused out cases. points
available for this criterion because the Agency determined that (the)
PSRO
The Agency did not award IPRO the 15 did not provide documentation to
support the criterion that focused out cases are systematically
monitored." (AR, p. 383.) The project officer testified that "focused
out cases are those where you have determined that something is not a
problem and therefore you do not spend your resolurces on it." She said
that, when there has been "focusing out," the only review that occurs
is
monitoring to see whether a problem has emerged in that area or
hospital. (Tr., pp. 370-71.)
The Agency maintained that IPRO used random sampling instead of
concentrating review on the identified problems and that, if there were
no properly "focused out" cases, there could be no sampling of those
focused out cases. (See Agency Response, p. 23; AR, pp. 178, 382; Tr.
pp. 98-101, 295, 350, 369, 373.) According to the Agency, the purpose of
focused review is to conserve the resources of the PSRO by focusing on
problem areas in need of special attention. The Agency maintained that
IPRO did not identify and examine particular problems, but, rather, used
methods called "body (21) systems" (which identified patients for
PSRO
review by general areas such as "Cardiovascular" and "Urinary
System"
without regard to whether a problem existed in that area) and "terminal
digit "(which involved a random selection based on patient
identification numbers). (Agency Response, p. 23.) The Agency rejected
both these methods of selecting which patients the PSRO would review,
claiming that they waste resources by sampling without focusing on
problem areas and without a defined objective.
IPRO maintained that it has met this criterion, and argued that the
information and documents on which the Agency relied to determine that
IPRO did not meet this criterion were not relevant because they were
generated after the evaluation period. (See AR, pp. 171-87; Reply
Brief, pp. 24-26; Tr., p. 103.) The Agency agreed that items 1-4 listed
at AR, p. 170 (which encompass AR, pp. 171-79) should not be considered.
(Tr., p. 352.)
Regarding IPRO's method of focusing review, Dr. Meyer testified that
terminal digit is "a focusing methodology within the plan," rather
than
the IPRO's entire focusing plan.
... Our focusing program has to be described with the two elements.
The focusing in our data gathering, and then extracting from that
information and from other episodic reports the information that we
receive from our field people, our profile analysis, getting our problem
pool from there, and then coming up with problem-oriented focusing which
is the final element of our plan. They are all in the plan....
(Tr., p. 103.)
Finding: IPRO should not receive the 15 points.
Even if we do not consider the documentation which was generated
after the evaluation period (which ended March 31, 1981), the Record
does not indicate that IPRO monitored samples of focused out cases. The
two documents generated during the evaluation period are a memorandum
from IPRO's Executive Director confirming that IPRO was switching from
the body system to the terminal dight system, and comments by the
project officer to the effect that "terminal digit" was not an
acceptable method because it did not focus on problem areas. (See AR,
pp. 184-85.) Except for the general statement by Dr. Meyer that terminal
digit is just one element of its focused review, IPRO did not submit any
evidence to indicate that terminal digit or some other element of its
review system focused on problem areas. And, even if we did accept that
the terminal dight system does focus, the Board still could not conclude
that IPRO has met the criterion. The criterion (22) equires the PSRO to
monitor samples of those cases which its system "focused out." Even
if
we were to accept that IPRO's method does "focus," IPRO has not
presented any evidence that it monitors samples of the "focused out"
cases.
CRITERIA SECTION II.B. Special Actions to Address Identified
Problems. Subsection 1. Modification of Review System
CRITERION II.B.1(b) PSRO modified system is based on data and
reflects PSRO objectives.
The Agency did not award IPRO the 15 points available for this
criterion because the Agency determined that although "the first part
was met... there was no link between IPRO's review system and its stated
objectives." (Tr., p. 372; see also, AR, pp. 182-87.) /6/ The Agency
said that IPRO has failed to implement focused review and has not
implemented any other meaningful modified review system, further arguing
that:
IPRO has failed to present any evidence that it had implemented an
acceptable modified review system, that the system it did implement was
based in any way on any type of data collected, or that it was based in
any way on the PSRO's stated objectives.
(Agency Response, p. 25.)
IPRO argued that the main document on which the Agency relied was the
project officer's memorandum, dated May 20, 1981, and that it was
irrelevant because it was generated after the evaluation took place.
(See AR, p. 177.) IPRO argued that the same was true of the other
documents in the Record. IPRO did not submit any information in support
of its claim to have met the criterion. (Reply Brief, pp. 27-28.)
(23) Finding: IPRO should not receive the 15 points.
The Board concludes that the Agency stated a reasonable basis for
marking this criterion "not met." IPRO objected to some of the documents
submitted by the Agency but did not contest that its review systems were
the body system and terminal digit system which are discussed in those
documents. Although the documents may have been generated after the
evaluation period, they refer to IPRO's activities during the evaluation
period and are therefore relevant. But, even without these documents,
the Board could not conclude that IPRO has met this criterion. The
issue here is whether the "PSRO modified system is based on data and
reflects PSRO objectives," and there is no evidence in the Record to
support such a finding.
CRITERIA SECTION II.B. Special Actions to Address Identified
Problems. Subsection 1. Modification of Review System
CRITERION II.B.1(d) PSRO is focusing its review system based on
identified problems in admission policies, such as weekend admissions,
Monday discharges, etc.
CRITERION II.B.1(e) PSRO is addressing identified problems through
education.
CRITERION II.B.1(f) PSRO is addressing identified problems by
performing preadmission review.
CRITERION II.B.1(g) PSRO is addressing identified problems by
performing preprocedure review.
The Agency did not award IPRO any of the 45 points available for
these criteria because the Agency determined that "IPRO's Executive
Director agreed via telephone (that) these criteria were not met." (AR,
p. 390.)
IPRO claimed it should receive the 15, 10 and 10 points for II.B.1(
d), (f), (g), respectively, because these criteria were not relevant to
IPRO, and IPRO had not identified the type of problems listed in the
criteria. (See Exhibit 2 to Appeal Brief; Tr., pp. 173, 215, 373-74.)
IPRO claimed that it should receive the 10 points for II.B.1(e) because
it met this criterion. (See Exhibit 2; Tr., p. 374.)
The Agency maintained that, contrary to IPRO's assertions that there
were no problems identified, IPRO's Impact Objectives for 1981 and 1982
identified problem areas which IPRO could have reiewed (to satisfy
criteria II.B.1 (d), (f), and (g)). As examples, the Agency referred
to:
(24) Data indicating Idaho's length of stay (of patients in
hospitals) without operation for certain fractures are consistently
above regional average.
A 1980 study that the more costly procedure of abdominal hysterectomy
was being performed when a vaginal hysterectomy in specific instances
would reduce patient length of stay and cost.
HCFA reports on surgical rates for 1973-76 which show that Idaho's
rate per 1000 eligibles is approximately 50% greater than the regional
and national rates.
A utilization index indicating that chest pain was the 18th major
discharge diagnosis for Medicare/Medicaid patients in Idaho.
(Agency Response, pp. 26-27; see also, AR, pp. 325, 343, 345, 350.)
The Agency maintained that these problems could have been the basis for
further examination, and when appropriate, further action by IPRO. The
Agency asserted (at p. 27):
... these types of actions go to the heart of the PSRO program, and
its basic objectives for identifying services that are unnecessary, of
poor quality, or provided at an inappropriate level of care. IPRO's
statement that no problems existed in... Idaho during the evaluation
period is just not credible given the possiblities of problem
identification discussed above.
IPRO maintained that it would be a useless exercise to focus review
systems based on identified problems in admission policies or address
identified problems by performing preadmission and preprocedure review
when in fact there were no such problems identified.
IPRO objected to the Agency's reliance on the telephone conversation
between the project officer and the Executive Director as the basis for
marking these criteria "not met" without any additional support. IPRO
also objected to the use of the impact objectives to support the
Agency's actions and argued that "the government... seeks to turn
against IPRO its own efforts to comply with the government's requirement
to establish impact objectives." (Reply Brief, p. 29.) IPRO
characterized the objectives as "an analysis by IPRO of the problems
which have occurred in Idaho and their objectives to be met in 1981 and
1982 to solve these problems." (Id.)
Regarding II.B.1(e), the project officer testified that in order to
mark this criterion "met," she was looking for such things as "medical
directives, educating the medical staff, or the medical society's use of
physician assistants or advisors doing education to M.D.'s, local
specialists putting on training programs." (Tr., p. 374.)
(25) IPRO claimed that it addressed identified problems through
education, (Notice of Appeal, pp. 6-7) and submitted as support a letter
from IPRO's Medical Director to a Hospital Administrator, notifying him
that an IPRO study indicated the hospital, and particularly, a doctor at
the hospital, performed a particular type of surgery four times as often
as the State average. The letter said that IPRO intended to conduct
more studies on this matter, and offered the hospital "technical or
administrative assistance." (Exhibit 2 to Appeal Brief.) /7/ The
Executive Director stated that the letter to the hospital was a step in
the education process, but admitted that it did not indicate and
established educational program. (Tr., p. 216; see also Tr., pp. 173,
215.)
Finding: IPRO should not receive the 45 points.
The Board is not persuaded by IPRO's claim that it should receive the
points for II.B.1(d), (f), and (g) because IPRO did not find it
necessary to take the actions described in the criteria. The Board is
also unpersuaded by IPRO's claim that it is unfair to look to its stated
impact objectives in marking these criteria. A PSRO's objectives
reflect the PSRO's determination of the problems which it will attempt
to resolve. It is reasonable to look to these objectives in light of
claims by IPRO that it could not take the actions outlined by the Agency
in the criteria because there were no problems. IPRO did not show that
the Agency acted unreasonably in choosing to award points to PSROs which
performed the review activities outlined in the criteria. Further, to
award points for no effort under a criterion would indirectly penalize
PSRO's which adaquately identified and acted on problems.
The Board also finds that the Record does not indicate IPRO addressed
identified problems through education (II.B.1(3)). The letter IPRO
submitted in support of its claim to have met this criterion shows that
only on one occasion IPRO identified a problem and offered assistance.
The letter does not show that IPRO conducted, or participated in, any
educational activities or programs.
CRITERIA SECTION II.B. Special Actions to Address Identified
Problems. Subsection 2. Adverse Actions
CRITERION II.B.2(a) PSRO has a defined set of procedures for dealing
with potential or actual sanctionable actions.
CRITERION II.B.2(b) Warning letter(s) to institution(s) and/or
practitioner(s) issued on actions which could lead to potential
sanctions.
(26) CRITERION II.B.2(c) PSRO has documentation of resolution of
(problems). Worked with (institutions) and/or (practitioners) thereby
eliminating the need to proceed with sanction recommendation.
CRITERION II.B.2(d) PSRO prepared (recommendations) on sanction to
Secretary forwarded to appropriate party.
CRITERION II.B.2(e) PSRO has undertaken special investigations or
reviews of questionable activities by practitioners or institutions at
request of State, PI, OPI, HSQB, or other governmental agencies and
reported results.
The Agency did not award IPRO any of the 180 points available for
these criteria because the Agency determined that IPRO's "Executive
Director agreed via telephone that these (II.B.2(a), (d), (e)) criteria
were not met" (AR, p. 391), and that IPRO did not provide documentation
to support points for II.B.2(b) or (c). (AR, pp. 392-95; see also,
Tr., pp. 374-76.)
The Agency argued that Section 1157 of the Social Security Act
requires that if a PSRO finds that health care practitioners or
providers are not meeting their obligations (as set out in Section 1160
of the Act), the PSRO should report these findings to the Agency so that
the Agency may determine whether to invoke a sanction. The Agency
argued that: "this PSRO has failed completely to carry out the most
minimal of required activities." (Agency Response, pp. 29-30.) An Agency
witness stated that these criteria were included in the evaluation
because it "is a statutory thing that Congress considered important as
an action that a PSRO may take, and it is an indication of an actively
performing PSRO...." (Tr., p. 323.) The Agency witness stated that she
did not know how many PSROs nationwide had met these sanction-related
criteria, or how many sanction actions there were in process or
recommended at the time. (Tr., pp. 322-24.)
IPRO claimed that it should have received these points because these
criteria were not applicable to IPRO and it was not necessary for IPRO
to take sanction actions. (Appeal Brief, p. 20.) IPRO's Executive
Director testified that, although the PSRO did not have established
procedures (as required by II.B.2(a)), the procedures could be developed
concurrently with the identification of a problem. (Tr., p. 205.) Dr.
Meyer testified that IPRO seeks to resolve its problems without a
sanction recommendation, if possible, because sanction actions involve
costly, time-consuming litigation. He said: "(persuasion), education,
example are the only reasonable ways. Sanction may be inevitable, but
sanction is a last-ditch stand... I feel the high importance placed on
sanction and sanction type activities in this rating is inappropriate."
(27) (Tr., p. 139.) IPRO also argued that these criteria were improperly
marked "not met" based on the Executive Director's statement that
the
actions were unnecessary. (Reply Brief, p. 31; see also, Tr., pp.
165-67, 204-07, 216-29.)
IPRO asserted that it met criteria II.B.2(b) and (c), and submitted
Exhibit 3 /8/ to its Appeal Brief in support of that claim. Exhibit 3
included an excerpt from minutes of a local review committee meeting
during which an audit of a hospital was discussed. The minutes stated
that deficiencies had been corrected by the hospital and that the
Executive Director noted that "sanction proceedings are available but
this is a lengthy procedure." The minutes also stated that IPRO took no
action in this matter because the medical staff at the hospital were
aware of the problems. The second page of the Exhibit is an excerpt
from a Board of Directors' meeting in which the progress of two studies
is discussed. Regarding an "endarterectomy study" the minutes stated
that IPRO staff discussed the study, and "staff were instructed to
contact the Chief of the Medical staff at Hospital #13-003 with this
information and offer consultation to help correct this problem."
Regarding a "craniotomy study," the minutes stated "(the) results
of
this study (were) presented... and the hospital's medical staff has
taken actions to correct this problem."
IPRO maintained that the local review committee minutes show that the
potential for sanctions was discussed, and that the minutes of the Board
of Directors' meeting show that problems regarding craniotomies were
addressed and steps were taken to correct the problems. (See Appeal
Brief, p. 15; Reply Brief, p. 32; Tr., p. 174.) According to IPRO,
these documents demonstrate that "IPRO has worked with institutions,
particularly the hospitals through its audit procedures, to resolve
problems which thereby eliminated the need to proceed with sanction
recommendations." (Appeal Brief, p. 15.)
The Agency contended that the minutes of the meeting during which
sanctions were discussed are not sufficient to support:
that there was any problem resolution, active involvement of the PSRO
in the efforts directed at problem resolution; that the PSRO actually
considered the problem of sufficient magnitude that if it persisted the
PSRO would initiate the Sanction process. Therefore, in the absence of
documented problem resolution and active involvement of the PSRO the
criterion was marked not met.
(AR, p. 393; see also, Agency Response, p. 31.)
(28) Finding: IPRO should not receive the 120 points for II.B.2(a),
(b), (d), and (e). IPRO should receive the 60 points for II.B.2(c).
There was much discussion at the hearing about the importance and
role of sanctions to the functioning of a PSRO. The statutory scheme is
as follows: Sanctions are imposed against practioners /9/ who violate
their obligations under Sec. 1160(a) of the Social Security Act. Those
obligations are to ensure that services to beneficiaries under the Act
are provided only when, and to the extent, medically necessary; that
the services are of the quality which meets professionally recognized
standards; and that there is evidence of medical necessity and quality
in the form required by the PSRO in the exercise of its functions.
PSROs have overall responsibility to ensure that practitioners meet
their obligations under Section 1160(a). If a PSRO finds that a
practitioner has violated its obligations, and the practitioner fails to
correct its actions, the PSRO gives the practitioner notice of the
finding, and an opportunity for discussion. The PSRO then makes a
report and may recommend sanctions to the Secretary of HHS. The
Secretary then decides whether to impose sanctions. The sanctions which
the Secretary can impose are: to exclude the practitioner from
eligibility to be reimbursed for services provided under the the Act,
either permanently or for a shorter period of time, or, to require the
practitioner to pay a monetary penalty. If a sanction is imposed, the
practitioner has the right to an administrative hearing, and
subsequently, to court review of the hearing. (See Secs. 1157 and 1160
of the Act, 42 CFR Part 474; PSRO Program Manual, Chapter XX, October
21, 1977.) The Program Manual also states that PSROs are expected to use
voluntary, educational methods, and/or denial of payment as the initial
and primary methods of correcting behavior which is inconsistent with a
practitioner's legal obligations under Section 1160(a).
Although the Agency may have overstated its case when it said that a
PSRO which does not engage in sanction activities is not performing "the
most minimal of required activities," the Board cannot agree with IPRO's
claim that the Agency acted arbitrarily in awarding points for sanction
related activities.
Although IPRO argued strongly that the Agency placed undue emphasis
on this formal method of correcting inappropriate action by
practitioners, the Agency argued with equal strength that an active
sanction program is an important part of a good PSRO program. IPRO has
not persuasively rebutted the Agency. IPRO has indicated that the
Agency might reasonably have a different policy, but the Board will not
substitute its judgment for the Agency's in matters of program policy
where there are several policy choices and the Agency (29) selected one
which, though contested, is not unreasonable. In developing criteria to
determine which PSROs are most effective, it is not unreasonable, (and
certainly not inconsistent with the statute) for the Agency to reward an
active sanctions policy. As we have stated before, it is not
unreasonable for the Agency to award points to PSROs which perform
activities authorized by the PSRO statute and regulations. Also,
criterion II.B.2(c) provides points to PSROs which opt for other methods
of resolving problems, so that IPRO's approach is accomodated in the
criteria.
Having concluded that the Agency can reasonably award points for
sanction activity, the Board concludes that IPRO should not receive the
10 points for II.B.2(a) because, even if we do not consider the supposed
admission in the April 20 telephone call, IPRO admitted at the hearing
that it does not have established procedures for dealing with sanctions.
It is not unreasonable for the Agency to award points only to PSROs
which have established procedures for performing activities authorized
by the PSRO statute and regulations.
The Board concludes that IPRO should not receive the 60 points for
II.B.2(b) because, even if we do not consider the April 20 telephone
call, there is no evidence in the Record to indicate that IPRO sent
warning letters on actions which could lead to potential sanctions. The
documents to which IPRO referred in Exhibit 3 made no reference to
sending warning letters. In addition, IPRO's Executive Director
admitted that Exhibit 3 did not support IPRO's claim that it sent
warning letters. (See Tr., p. 219.)
The Board concludes that IPRO should not receive the 30 points for
II.B.2(d) because IPRO did not contend, and the Record does not
indicate, that IPRO has forwarded a sanction recommendation to the
Secretary.
The Board concludes that IPRO should not receive the 20 points for
II.B.2(e) because IPRO did not contend, and the Record does not
indicate, that IPRO has undertaken any special investigations of the
type described in the criterion.
The Board concludes that IPRO should receive the 60 points for II.B.
2(c). Although Exhibit 3 by itself is insufficient evidence that IPRO
met this criterion, there is persuasive evidence in the testimony
regarding IPRO's activities pertaining to craniotomies, which IPRO
presented concerning criterion III.C. The Record indicates that IPRO
documented the resolution of a problem with a physician who was found to
be performing a high number of craniotomies; that IPRO, through its
local review committee, presented the information to the medical staff
of the hospital where this physician practiced; and that this action
resulted in a limitation on that physician's medical privileges. (See
Reply Brief, pp. 40-43; Tr., pp. 88-92, 120-25, 185-87, 222-28.) The
minutes of the Board of Directors' meeting supported this testimony. In
finding that IPRO has met this criterion, the Board (30) has determined
only that IPRO resolved a problem by working with institutions, thereby
eliminating the need to proceed with a sanction recommendation. This
does not bear on our finding regarding criterion III.C., discussed
below.
CRITERIA SECTION II.B. Special Actions to Address Identified
Problems. Subsection 2. Adverse Actions
CRITERION II.B.2(f) PSRO has removed delegation from at least one
hospital under review or hospitals are non-delegated for concurrent
review.
The Agency did not award IPRO the 30 points available for this
criterion because the Agency determined that IPRO's "Executive Director
agreed via telephone that (this) criterion was not met." (AR, pp. 391,
65.) IPRO claimed that it had only four delegated hospitals; that it
had extensively monitored these hospitals; and that it had found no
reason to remove delegation from these hospitals. /10/ (Reply Brief,
pp. 33-34; Tr., pp. 54-60, 104-07, 113, 376.)
The PSRO statute and regulations provide that a PSRO may delegate to
hospitals determined capable, any and all review functions required by
the program; that the PSRO is to monitor the hospitals to assure they
were properly performing the delegated functions; and that the PSRO is
to withdraw delegation in whole or in part if the hospitals do not
perform their obligations. (See Sec. 1155 of the Act, 42 CFR 466; Tr.,
p. 55; Agency Response, p. 31.)
The Agency challenged IPRO's claim that it effectively monitored the
delegated hospitals (Tr., p. 106), and emphasized the PSRO's duty to
reassume responsibilities for review when delegated hospitals are not
performing effectively.(Agency Response, p. 31.)
Dr. Meyers testified that most of the approximately 50 hospitals in
Idaho are small, widely separated, and ill-prepared by resources and
personnel to do their own review, and therefore IPRO did not delegate to
them. He stated that the criterion unfairly denied points in the
evaluation to (31) PSROs that delegated skillfully and prudently. (Tr.,
p. 57.) He asserted that IPRO properly monitored the delegated hospitals
and "found nothing in those reviews to justify the withdrawal or
modification of those delegation." (Tr., p. 56.)
Finding: IPRO should not receive the 30 points.
IPRO did not show that the Agency acted unreasonably in determining
that IPRO did not meet the criterion. IPRO did not contend, and the
Record does not indicate that IPRO performed the activities required to
meet (and receive points for) this criterion. IPRO's claim,
essentially, was that it did not need to perform the activity described
in the criterion, not that the criterion was unreasonable on its face.
this is an insufficient basis to overtuen the Agency's decision. The
criteria allowed PSROs to earn a potential 2350 points for performing a
variety of activities, but required that PSROs attain a total score of
less than half that amount in order to pass the evaluation. Under these
circumstances, an otherwise reasonable criterion, which awards points to
PSROs that perform an activity authorized by statute and regulations, is
not made unreasonable by the fact that a PSRO may not have had occasion
to perform that activity.
CRITERIA SECTION II.C. Medical Care Evaluation Studies /Quality
Review Studies
CRITERION II.C.1. QA (quality assurance) plan includes a detailed
procedure to assure that topics are based on known or suspected problems
important to patient care outcomes, and contains a method to prioritize
problem areas in selecting study topics for a given year.
The Agency did not award IPRO the 20 points available for this
criterion because the Agency determined that IPRO "did not provide
documentation to support making the criterion met." (AR, p. 396.) The
Agency characterizes IPRO's objection to how this criterion was marked
as, "(IPRO) now alleges that the Quality Assurance Plan is a new
requirement currently in the approval process...." (But, as discussed
below, IPRO claims this is a mischaracterization of its argument.) The
Agency maintained that QA plans are not new requirements and that IPRO
submitted a "deficient" draft of its plan on September 29, 1980. The
Agency asserted that substantial revisions were required but IPRO had
not, as of August 3, 1981, submitted a corrected plan. (Agency
Response, p. 32.) The project officer testified regarding Agency
requirements for QA plans and stated that she "marked the criterion not
met because the method to prioritize the problem area was not detailed
as to who was involved and whether it was hospital staff and that sort
of thing." (Tr., p. 357-60, 377; see also, AR, pp. 192-266.)
(32) The project officer testified, and Agency memoranda in the
Administrative Record stated, among other things, that IPRO's QA plan:
lacked objectives and instead included broad goals which did not
include specific measurable steps on how to reach those goals;
needed to include criteria for monitoring studies by delegated
hospitals;
needed to focus on problems; and
needed to include information on how hospitals are going to be
monitored and what technical assistance IPRO will provide.
(See AR, pp. 189, 217-20; Tr., pp. 257-60.) IPRO submitted another
draft of its plan after it received those comments from the Agency.
IPRO maintained that this criterion should have been marked "met,"
not because quality assurance plans are a new requirement, but because
"new expectations have been developed for meeting this requirement."
(Reply Brief, p. 35.) IPRO claimed that its earlier submissions of its
QA plan reflected the "state of the art" for quality assurance plans
and
that any deficiencies in the plan were a result of "the inability of the
agency to communicate a desire to have these plans meet new
requirements." (Id.) IPRO challenged the assertion that the plan
submitted in August, 1980 was inadequate, and stated that revisions
required as of August 3, 1981, "are outside of the review period for the
performance of evaluation.... The fact that IPRO may or may not have
failed to submit a corrected plan as of August 3, 1981, is not germane
to this appeal." (Id.; Notice of Appeal, p. 10.)
IPRO submitted Exhibit 12 in support of its position. IPRO
identified Exhibit 12 as an excerpt from the Quality Assurance Plan and
stated that the plan was submitted to Region X for review and comment
numerous times during the evaluation period. (See also, Tr., pp. 181,
376; AR, pp. 192-98.)
IPRO's plan stated that each year IPRO would develop a list of six to
eight problems or areas of concern based on data available from the
following sources:
Data generated from hospital abstracting systems, national PSRO data,
length of stay (LOS), procedures/diagnoses, and mortality.
Documented proof of problem or potential area of concern; for
example, through concurrent review, QPC (Quality of Patient Care)
findings, etc.
Input from hospitals, interactions with practitioners, providers,
Medicare, Medicaid and other health agencies.
(33) The plan also stated that "the most severe problems will be
given priority status. If a choice between two equally serious problems
must be made, it will be recommended that the number of patients
affected by the problem be the basis for problem selection." (AR, p.
195.) The plan then listed and ranked the severity of several categories
of problems.
Finding: IPRO should receive the 20 points.
The Board concludes that the Agency has not stated a reasonable basis
for its determination that IPRO has not met this criterion. The Board
finds that the Agency's emphasis on how often IPRO had to revise its
plan is inappropriate. The Board also finds that IPRO's failure to
submit its revisions according to deadlines set by the Agency is not
relevant. The criterion does not specify that the number of revisions,
or the timely manner in which they are made, are critical factors. A
reading of the latest version of IPRO's QA plan indicates that IPRO
incorporated all the suggestions for revisions made during the
evaluation period by the project officer and central office. (See
suggestions at AR, pp. 217-20; revised plan at AR, pp. 192-216.) In
addition, the project officer testified that prior to the submission of
the latest draft, which she admitted she thought would be the last draft
(Tr., p. 360), "we had gone over all the comments again...I tried to
help them develop it (the plan) so that we didn't leave any holes or
anything in the guality review plan...." (Tr., p. 359.) She then
submitted the plan to central office on March 24, 1981 for review.
According to a memorandum in the Record, dated June 11, 1981, (AR, p.
191), the Agency's central office had additional suggestions for IPRO's
plan. The Agency did not show that without these additions the plan
could not "assure topics are based on known or suspected problem areas
important to patient care outcomes." In addition, the Agency did not
show that IPRO failed to address any of the objections the Agency had
raised. It is not reasonable to penalize IPRO for failing to include
information that was suggested after the period of the evaluation.
CRITERIA SECTION II.C. Medical Care Evaluation Studies/ Quality
Review Studies
CRITERION II.C.5. Reaudits (follow-up) conducted on at least one half
of the studies that resulted in deficiencies by at least one year after
the required follow-up.
The Agency did not award IPRO the 15 points available for this
criterion because the Agency determined that IPRO's documentation was
not sufficient to support a scoring of "met." Regarding the
documentation submitted, (34) the Agency stated, "(the) PSRO simply
lists the area wide audit topics without time frames. No documentation
on other audits was included. The documentation did not address the
volume of reaudit activity completed underway, or planned." (AR, p.
397; see also, Agency Response, p. 32.) The project officer also
testified that in the last three quarters of 1980 IPRO had 229 studies
and had restudied only 29 of those. (Tr., p. 379.)
IPRO maintained that it did require follow-ups and submitted Exhibit
4 in support of its claim. (See also, AR, p. 399; Tr., pp. 174, 228,
377-78). Exhibit 4 is a document, entitled "Reaudits-Area-Wide,"
listing seven topics, with an indication of whether a reaudit was
completed or whether a year had no yet passed. IPRO argued that if the
document submitted in support of a criterion was insufficient, "the
project officer should have indicated such, in writing, and requested
further documentation." (Reply Brief, p. 36.)
Finding: IPRO should not receive the 15 points.
The Board concludes that the Agency stated a reasonable basis for
marking this criterion "not met," and that IPRO's claim to have met
the
criterion is not supported by the evidence in the Record. IPRO's
Executive Director testified that the information in Exhibit 4 applied
to the period of the evaluation (Tr., p. 175), but also admitted that
the exhibit did not indicate the total number of studies IPRO had done,
and that he did not know how many had been done. (Tr., p. 229.) Even if
the project officer arguably should have requested additional
information during the evaluation, IPRO has had the opportunity to
submit evidence to this Board, but did not do so. IPRO claimed that
Exhibit 4 provided additional information to support its claim, but
Exhibit 4 and AR 399 appear to be the same document.
CRITERIA SECTION II.C. Medical Care Evaluation Studies/ Quality
Review Studies
CRITERION II.C.7. Areawide studies or multihospital studies have
demonstrated improved care across area hospitals in 90% of studies.
The Agency did not award IPRO the 15 points available for this
criterion because the Agency determined that the documentation IPRO
provides was "only a list of study topics and there has been no
documentation of improvement in care." (AR, pp. 400-02; see also,
Agency Response, p. 33.)
IPRO maintained that it met this criterion and submitted Exhibit 5 in
support of this claim. Exhibit 5 included a list of area-wide audits
and reaudits, a memorandum dated February, 1981 regarding reaudits of
Hospitals #21 and #36, and three documents, undated, and with no
indication of their source, (35) which referred to area-wide studies
regarding chest pain, vaginal versus abdominal hysterectomy, and
endarterectomy. The Executive Director identified Exhibit 5 as "a list
of area wide audits we have completed and a list of reaudits proposed."
(Tr., p. 175.) IPRO claimed that "(this) documentation shows that the
IPRO area-wide audit and reaudit system showed improved care achieved in
all cases where these further studies were conducted." (Appeal Brief,
pp. 16-17; see also, Notice of Appeal, p. 10; Tr., pp. 175, 230-31,
379.)
Finding: IPRO should not receive the 15 points.
The Board concludes that the Agency stated a reasonable basis for
marking this criterion "not met," and that IPRO's claim to have met
this
criterion is not supported by the evidence in the Record. A list of
area wide audits without any reference to the results, or any mention of
the effect on health care, does not satisfy the requirements of this
criterion.
CRITERIA SECTION E: Profiles
CRITERION II.E.2. PSRO routine reports provide for a systematic
comparison of institutions, practitioners, and diagnostic groups in
order to identify potential problems. The reports are case-mix adjusted
and prioritize possible utilization problems based on the potential for
reducing inappropriate use.
The Agency did not award IPRO the 30 points available for this
criterion because the Agency determined that "(the) PSRO Executive
Director and the Data Manager agreed via telephone (4/20/81) that
routine reports are not case-mix adjusted and do not prioritize possible
utilization problems based on the potential for reducing inappropriate
use." (AR, p. 404; Agency Response, p. 33.)
The project officer testified that in her conversation with IPRO
representatives, IPRO "agreed that they had no way to prioritize
utilization problems based on the potential for reducing inappropriate
use, and they also submitted no information on the case-mix." (Tr., p.
380.) The Agency asserted that:
case-mix is a sophisticated data system and it is essential that a
satisfactorily functioning PSRO look at data by case-mix. Raw data will
not properly identify problems. Case-mix allows the PSRO to look at
'like' cases so that, for example, length of stay of a tonsillectomy is
not compared to length of stay for brain surgery."
(Agency Response, p. 34; see also, Tr., pp. 379.)
(36) IPRO maintained that this criterion was met. IPRO asserted that
although routine reports are not case-mix adjusted, "problem areas are
identified through routine reports," and "the thrust of this criterion
is met by IPRO's current activities." (Reply Brief, pp. 37-38.)
Finding: IPRO should not receive the 30 points.
IPRO admitted that it did not meet the literal requirements of the
criterion (in that its routine reports are not case-mix adjusted) but
claimed that its reports accomplished the same result. IPRO did not,
however, present any information about its routine reports or how those
reports accomplished the same result. The Board cannot reverse the
Agency's determination based on IPRO's unsubstantiated claim to have met
"the thrust of this criterion."
Part III of the Evaluation Criteria -- Performance of Review--Impact/
Potential Impact
IPRO received 380 of the 1200 available points in this section; IPRO
needed 515 points in order to pass this section. The Board concludes
that IPRO should receive an additional 45 points in this part. IPRO
disputed the Agency's determination of points for criteria section III.
A. and criteria section III.C.
CRITERIA SECTION A: Management Objectives
Section A rated a PSRO's objectives based on whether they met one of
five stated levels for calendar years 1979 and 1980, or the last and
current grant period, not to exceed 24 months. IPRO was scored at a
"level 2" for the last grant period of March 1980-1981 and the current
grant period of March 1981-1982. (Agency Response, p. 37; Tr. pp.
381-86.) IPRO maintained that it should have received a "level 4"
for
those years. A PSRO scoring at a level 2 was awarded five points for
the last grant period and 10 points for the current grant period; a PSRO
scoring a level 4 was awarded 50 points for the last grant period and 80
points for the current grant period.
Level A.2. reads as follows:
PSRO has great difficulty setting objectives which comply with
criteria: objectives do not reflect significant problems; do not have
measurability; have insufficient or unrealistic methodologies, that is,
methodologies which by themselves could not accomplish intended outcome;
lack time frames; do not follow prescribed grant application format.
Or, the PSRO was unable to develop acceptable (37) objectives in a
timely fashion, i.e., preaward, without extensive technical assistance
involving prolonged mediation by the project officer which required
additional face-to-face or telephonic negotiation and that at times
required specific intervention from higher level and Regional and/or
Central office staff.
Level A.4. reads as follows:
PSRO sets 4-8 objectives each grant period which met the criteria
addressed in III.A.2., and reflect the activity and priorities of the
PSRO. The objective methodologies and measurements have been developed
so as to require only minimal modifications during the grant cycle
(minimal modifications include refinement of data measurements, shifting
of time frames by no more than 30 days, etc.).
The project officer testified that she marked this criterion based on
the requirements prior to the "or" in level 2. (Tr., p. 381.) The
Agency said that no greater score was given because IPRO's objectives
for both years lacked time frames, identified problems lacked
significance, methodologies were insufficient, objectives lacked
measurability, and the grant application format was not followed. The
Agency stated that IPRO "still requires (after 2 1/2 years of objective
setting) extensive technical assistance in order to meet minimal
criteria for objectives." (See AR, pp. 405-06; Agency Response, p. 34;
Tr., pp. 231-36, 380-86.)
The Agency stated:
The PSRO submitted objectives which had very little breadth and
depth, furthermore, as their own progress reports indicate, these
"problems" had been verified or developed by the PSRO prior to their
submission as objectives. In fact the great majority of these so-called
problems were discovered to be coding errors and thus excused as
objectives by the PSRO. All this with no specific objective-related
impact or substitution of new objectives.
(AR, p. 406)
IPRO maintained that it should have been scored at Level 4 because it
had 4-8 approved objectives, and submitted Exhibit 7 in support of its
claim. (See Tr., pp. 176-77, 425; Notice of Appeal, p. 12; Appeal
Brief, pp. 17-18; Reply Brief, pp. 38-40.) Exhibit 7 contained IPRO's
objectives for 1980-81 and 1981-82. (See also, AR, pp. 158-61, 321-54,
354, 362-65.)
(38) IPRO maintained that Exhibit 7 shows that "the objectives were
developed based upon guidance and direction provided by Region 10
through the project officer... and there was no great difficulty in
developing objectives." (Appeal Brief, p. 18.) IPRO also argued (at p.
18) that:
(in) any event, the difficulty of developing objectives in the grant
application and planning process is irrelevant to the effectiveness of a
PSRO. The question is and should be whether the goals and objectives
are properly defined, are significant and have indeed been developed and
accepted by appellee. In this case, this is exactly what occurred.
IPRO challenged the Agency's statements regarding the need for
technical assistance, claiming, "any dialogue with the project officer
or departmental officials has only been that necessary to the
incorporation of the latest state of the art management/objectives."
(Notice of Appeal, p. 12.) IPRO also argued that it was unfair to be
downgraded for using technical assistance when the Agency offered it in
the form of a grant to participate in objective setting. (Tr., pp.
183-85.)
Finding: The Board concludes that the Record does not support the
Agency's determination that IPRO's objectives had the deficiencies set
out in level 2. Essentially, the only difference between the portion of
level 2 on which the Agency based its determination, and level 3 is that
level 3 requires an absence of the deficiencies described in level 2.
/11/ Therefore, the Board concludes that IPRO should receive at least a
level 3. Level 3 reads as follows:
PSRO met objectives which minimally met the criteria (in III. .)
Experience shows that the PSRO has had to make extensive major
modifications (50 percent or greater of the objectives in either of t
two grant cycles being evaluated) of the objectives during or at the
end of the grant cycle. Major modifications being changes in the
methodology or proposed outcome which might have been accounted for i
the objective had been adequately developed prior to submission.
PSROs scoring at a level 3 were awarded 20 points for the last grant
period and 40 points for the current grant period (as contrasted with 5
and 10 for level 2).
(39) The project officer testified about the alleged deficiencies in
the objectives for the current grant period which led her to award IPRO
a level 2; she did not testify regarding any specific deficiencies in
the objectives for the last grant period. For the current period, she
commented on Objective 2, at AR, p. 343, regarding hysterectomies. She
said the objective was not measurable because there was no indication of
the source of the 27% figure (which she also said should have read 24%).
(Tr., p. 384.) She explained that to be measureable it should include
specific numbers such as "from 4.5 days to another level of care."
(Tr.,
p. 385.) She said that although the objective alleged that there was
"high utilization," it did not contain any numbers to define "what
high
utilization is." (Id.) She also said that the methodology was weak
because IPRO's planned intervention was at an inappropriate time.
The project officer's criticisms were addressed to a preliminary
version of the objectives. The preliminary version which appears at AR
343 read as follows: "(reduce) the number of abdominal hysterectomies
which may be performed as vaginal hysterectomies by 27% by January,
1981." (AR, p. 328; see also Exhibit 7 to Appeal Brief.) The revised
objectives IPRO submitted on January 28, 1981 (AR, pp. 322-52) appear to
respond to those concerns. The objectives in the latest version read as
follows:
(r)educe the number of abdominal hysterectomies which may be
performed as vaginal hysterectomies by 24% from 1.53 cases/1000
eligibles to 1.17 cases/1000 eligibles by January 31, 1982.
The later version incorporated the additional information the project
officer stated was necessary. The project officer's comments regarding
utilization were also addressed in the later version, which stated:
(the) IPRO Data Department performed a utilization index for the
first six months of 1980, which indicated that 179 hysterectomies were
performed in the state, 109 were abdominal and 70 were vaginal or a
ratio of 1.56:1.
This appears to respond to the Agency's concern regarding numbers to
indicate "what high utilization is."
The project officer also testified regarding the alleged deficiencies
in Objective 3, on reducing the rate of cholecystectomies performed.
(Tr., pp. 385-86.) Of the objective, she said, (at p. 385):
Basically it's the same problem, they didn't have data source, they
didn't have measurability... and the intervention step came at an
inappropriate time, so their methodology was very weak....
(40) The objective to which she referred at AR, p. 345, had also been
revised; the earlier version to which she referred read as follows:
To reduce the Medicare rate of cholecystectomies performed from 4.5
per 1000 eligibles 5% by January 31, 1982.
The revised version submitted to the Agency on January 28, 1981, (at
AR, p. 332) stated that the objective was to reduce the rate "from 4.5
per 1000 eligibles, 5%, to 4.0 per 1000 eligibles by January 31, 1982."
Both versions indicated that Agency "reports on surgical rates for 1973
and 1976 show Idaho's rate per 1000 eligibles to be approximately 50 per
cent greater than regional and national rates both in provider and
beneficiary studies." The later version added that the source of the
information was "PHDDS data." Again, it appears that the project
officer's concerns were addressed in the later version of the
objectives.
In addition, the project officer's testimony about the 1981-1982
objectives is contradicted by a site report she wrote, dated February
10, 1981, in which she stated that IPRO's objectives were "acceptable"
(it specified that objectives 1, 3, and 4 were acceptable "per IPRO's
revision of 1/28/81"). (AR, p. 332.) The site report commends IPRO
staff "on their excellent expansion of the proposed impact objectives
and for including quality of care issues as well as utilization issues
in these objectives." (Id.) This memorandum did not indicate that the
objectives had the deficiencies described in level 2.
The Board concludes, in addition, that the Record does not support
the Agency's determination that the objectives for the last grant period
merit a level 2. IPRO submitted seven objectives for the last grant
period in support of the claim that it merited a level 4. Objectives 1,
2, and 3 identified a potential "high utilization problem," but
concluded that there was in fact no high utilization. They stated that
high utilization had been suspected because of errors in the coding of
data. These three objectives were therefore deleted. (This, however,
is less than the "great majority" which the Agency claimed were deleted
because of coding errors. See AR, p. 406.)
The Agency has not shown that the other four objectives for the last
grant period are markedly different from the current objectives, and a
reading of the objectives does not support the Agency's finding that
they lack measurability and specificility. The Agency did not present
any explanation besides the bare assertion that these objectives had the
type of deficiencies described in level 2, to support its determination.
(41) Having determined that the Record does not indicate that the
basis for the Agency's determination was correct, the Board finds that
IPRO should receive at least a level 3 for both sets of objectives.
IPRO claimed that it merited a level 4.
Whether IPRO should be scored at a level 4 depends on the extent of
modification that is required of the objectives. Besides requiring that
the objectives minimally meet the level 2 criteria, level 3 stated:
"(experience) shows that the PSRO has had to make extensive major
modifications (50% or greater of the objectives in either of the two
grant cycles being evaluated) either during or at the end of the grant
cycle." It defines major modifications as: "changes in the methodology
or proposed outcome which might have been accounted for if the
objectives had been adequately developed prior to submission." Level 4
stated: "(the) objective methodologies and measurements have been
developed so as to require only minimal modifications during the grant
cycle (minimal modifications include refinement of data measurements,
shifting of time frames by no more than 30 days, etc.)."
The Board cannot make a finding on the extent of modification which
would be required based on the information currently in the Record, and
therefore cannot find that IPRO did or did not merit a level 4. Neither
the Agency nor IPRO presented information regarding the extent of
modifications that would be required for these objectives. It is not
clear how, at the time of the evaluation (in May, 1981), the Agency
could have determined whether IPRO's objectives for the current grant
period (which did not begin until March, 1981) would require
modifications "during the grant cycle."
In addition, level 4 requires that the objectives "reflect the
activities and priorities of the PSRO;" and there is insufficient
information in the Record to indicate whether IPRO met that requirement.
The Board would have remanded the issue of whether IPRO met level 4
to the Agency for a determination, but for the fact that with a level 3
score IPRO achieved sufficient points to pass this evaluation.
CRITERIA SECTION C: Impact - Quality
Section C rated a PSRO's documented impact on the quality of care.
PSROs were awarded from 0 to 350 points, depending upon the Agency's
determination of which of four levels a PSRO had attained. IPRO scored
a level two; PSROs scored at level two were awarded 50 points. IPRO
claimed it should have been scored a level three; PSROs scored at level
three were awarded 250 points.
(42) Level C.2. reads as follows:
PSRO documented isolated quality impact, affecting only a few
physician or patient groups. Changes were small and insignificant.
PSRO may have had some influence in causing impact, but failed to make
any case that it was primarily responsible.
Level C.3. reads as follows:
PSRO documented quality impact. Documents showed impact encompassed
significant proportion of physicians or patients (10%-25%) or at least
one pattern of life threatening incidence was reduced; (1) Change was
clearly significant in that it improved patient care management or
outcome of care for a selected category of patients by a small
percentage of physicians; (2) Interventions by the PSRO seemed largely
responsible for the impact, though other factors or trends may also have
been significant; (3) Modified behavior patterns were clearly
documented.
IPRO originally claimed to have met level 3 based on activities
involving physicians who performed endarterectomies and craniotomies
(Notice of Appeal, pp. 18-20; Reply Brief, pp. 40-43), but during the
course of the hearing IPRO stated that it was relying on its activities
regarding the craniotomies to support its claim that "at least one life
threatening incidence was reduced." (Tr., pp. 86, 118.)
The Agency's stated basis for making this criterion was:
The PSRO has submitted no documentation in quality which would
justify greater points. Though they do not specifically identify the
"life threatening" situation which they purport should have been
considered, it is our understanding that they make this claim on a study
dealing with endarterectomy. Only the physician was identified in this
study as having questionable practice patterns which were not
specifically or directly life threatening. The PSRO, furthermore, has
not documented that it took any specific interventions, but rather
dropped the matter because the physician left the State. If the PSRO
had considered the situation as one of life-threatening, woul it not be
logical to expect them to pursue the problem regardless of the fact the
physician was not practicing in Idaho, but rather, elsewhere.
(AR, pp. 168, 406; see also Agency Response, pp. 12-13.)
(43) The Agency's testimony at the hearing was that IPRO could not
prove that intervention by the PSRO was largely responsible for the
impact and that the project officer did not receive documents with
statistics on impact until June 1981. (Tr., p. 386.) The project
officer stated that if she had had statistics which showed change, that
if the PSRO was responsible for the change, and that if it met the
wording of the criterion, she would have scored this criterion
differently. (Tr., p. 402). She stated that IPRO presented baseline
numbers of the craniotomies done but that to score IPRO at a higher
level, she needed impact information showing the numbers after IPRO's
interventions. (Tr., p. 403.) The project officer also stated:
I would have to see proof that Idaho, IPRO was responsible for
changing that physician's behavior, and that the medical staff wouldn't
have done anything on their own....I would like to see proof that Idaho
actually made an impact and that they actually did something. I would
need to see a definition of inappropriate. I still don't know, and IPRO
did not define what appropriate versus inappropriate craniotomies and
craniectomies were.
(Tr., p. 427.)
The Agency also stated that, "there are no statistics the indicate in
any way that the procedures performed before were unnecessary, or that
those not performed would have been appropriate. There is no indication
that any PSRO criteria for expertise was ever used to evaluate this
behavior." (Agency Post-hearing Brief, p. 13.)
IPRO contended that the Agency's statement of reasons for marking
this criterion indicated a confusion regarding IPRO's activities
involving the craniotomies. (See, e.g., Tr. p. 92). IPRO maintained
that the situation in which a physician left the State involved the
craniotomy study, and that in any event, IPRO did take further action
after the physician left the State.
IPRO explained its activities as follows:
(A physician) was performing a high number of these procedures
(craniotomies). IPRO was able to identify that this physician was
involved in this incidence by utilizing IPRO's small area variation
technique, since the provider based rate and beneficiary based rates
were inexplicably higher than could be expected. IPRO therefore
performed a limited quality assurance study to determine various aspects
of outcome and 'redo' rates. Once this information was compiled, an
IPRO staff meeting was held and it was determined that the (44)
situation warranted physician involvement and guidance. The information
was taken to the appropriate local review committee (comprised of
physicians and one hospital administrator in the immediate area). The
committee reviewed the data and took the information as further evidence
to warrant and substantiate a modification, by the hospital medical
staff, of the affected physician's admitting and surgical privileges.
Subsequent to this action, IPRO was informed by its local regional
director in the area that the physician was moving from the area to
Sacramento, California... (and) in late January or early February,
IPRO's Executive Director (called)... the Executive Director of the
Sacramento PSRO and informed him who this physician was and the
statistical findings in Idaho.
(Reply Brief, pp. 40-43; see also Exhibit H-2; and Tr., pp. 88-92,
120-25, 185-87, 222-28.) In his testimony, Dr. Meyer explained that a
craniotomy involved the opening of the bony tables of the head to do
either exploratory or definitive procedures on brain tissue and stated
that it was "absolutely" life threatening. (Tr., p. 87.) /12/
Dr. Meyer also stated that the Agency was aware of these activities
because they were the subject of IPRO's Objective 6A for the last grant
year. (Tr., p. 89.) In response to Agency questions about statistical
data regarding these activities, Dr. Meyer responded that as a result of
IPRO's activities there was 100 percent modification in that the
offending doctor does not do the procedure any more. (Tr., p. 128.) The
Executive Director denied the Agency's implication that IPRO's Medical
Director should have done the study, stating that the medical director
was consulted and that, "the logical progression then was to go to the
local committee." (Tr., p. 240.)
IPRO's documentation regarding the craniotomy study is Exhibit 8 to
its Appeal Brief. Exhibit 8 includes copies of stated objectives for
the year, which are "to reduce by 50% the number of inappropriate
craniotomies and craniectomies by March 31, 1981." The documents include
as "Conclusions," information that as a result of the regional
committee's report to the hospital, the surgeon was required to have
consultation before surgery was recommended and an "assist only"
limitation was placed on the surgeon. The documents also state that 39
craniotomies were performed in 1979, 18 percent by this physician; 21
craniotomies were performed in 1980, nine percent by this physician.
Further:
(45) (the) inappropriate craniotomies and craniectomies were reduced
by 50% as doctor A needed surgical consultation before performing the
procedure. In 1981 Physician A left the State of Idaho.... This reduced
his inappropriate craniotomies and craniectomies completely in the State
of Idaho.
(See 4th and 5th pages of Exhibit 8.) This information regarding
IPRO's craniotomy activities also appears in the AR under the subsection
for the 1978-1980 grant award though not in the identical form. (See
letter dated January 30, 1981 from the Director of the Region X PSRO
regarding IPRO's request for continued funding for the period March 31,
1981 through March 30, 1982, and AR, pp. 158-63.) This memorandum
includes a statement of IPRO's progress toward the achievement of its
objectives, specifically Objective 6.b, which was to reduce the number
of inappropriate craniotomies and craniectomies by 50% by March 31,
1981. The Executive Director stated that had the project officer asked
him for additional information documenting these activities, he could
have provided that information.
Finding: The Board concludes that while it does not have sufficient
information to award IPRO a level 3 based on its craniotomy activities,
the Agency has not shown that its stated reason for marking this
criterion at level 2 is valid. IPRO stated that it had additional
statistical and other information which it could make available to the
Agency in support of its claim that at least one pattern of life
threatening incidence was reduced.
It is not clear from the record whether IPRO claimed impact because
it identified a physician who performed a greater-than-average number of
this type of surgery, or whether it determination that the surgery
performed by this physician was medically inappropriate (and if so, on
what basis this determination was made, or whether such a determination
is necessary). It may be, although the parties have not so indicated,
that simply reducing the number of these operations would in fact be
reducing a pattern of life threatening incidence. Although the Agency
implied that IPRO did not fulfill this requirement because it delegated
certain responsibilities to a local committee, the Agency did not show
that such delegation was in fact inappropriate under the circumstances.
The Record does include certain statistics regarding the numbers of
craniotomies performed, but does not specify whether all those performed
by the physician in question was considered inappropriate, whether any
were so considered, and how the reduction in numbers compared with the
State or national average for such operations. Without this type of
information, the Board cannot determine whether or not IPRO merits a
level 3 score.
(46) But for the fact that IPRO has achieved sufficient points to
pass this evaluation, the Board would have remanded this criterion to
the Agency for further consideration.
IV. Conclusion
Based on the foregoing analysis, the Board has determined that the
Record does not support the Agency's determination to terminate IPRO's
grant, and that IPRO should have received at least the minimum required
total score and at least minimum scores on two of the three parts
required to pass the evaluation. /1/ Below, we refer to: IPRO's
"Notice of Appeal and Request for Formal Hearing," dated July
17, 1981, as the Notice of Appeal; IPRO's "Additional Arguments,
Explanations and Documents in Support of Appeal (Appellant's Brief),"
dated August 24, 1981, as the Appeal Brief; the "Response of the Health
Care Financing Administration," dated August 21, 1981, as the Agency
Response; the Administrative Record submitted in conjunction with that
response as AR; and the "Reply of the Idaho Professional Review
Organization, Inc.," dated September 2, 1981, as the Reply Brief; the
parties' post-hearing briefs dated October 13, 1981 (Agency) and October
15, 1981 (IPRO), as Agency Post-hearing Brief and IPRO Post-hearing
Brief. On November 20, 1981, the Agency submitted a copy of the decision
in Region X Peer Review Systems, Inc. v. Schweiker, Civil No.
C-2-81-1067 (S.D. Ohio, October 1, 1981). By memorandum dated November
30, 1981, IPRO responded that "the decision contains no legal holdings
or findings of fact of any particular relevance to the issues before
this Board." We agree that the opinion of the district court regarding
the termination of that PSRO's long term care review activities does not
have any bearing on issues in this case. /2/ IPRO claims that
its evaluation was scored twice by the Agency. (See Exhibit B to the
Appeal Brief, and pp. 11-12; Tr; pp. 38-39.) IPRO presented the June
18, 1981 letter terminating IPRO as evidence to support its allegation.
The letter stated that IPRO had not met Parts I & II when in fact IPRO
did not pass Parts II & III. (Notice of Appeal, p. 2; June 18, 1981
letter from Acting Director, HSQB). As further evidence, IPRO stated
that it received its termination letter a few days after the other PSROs
received theirs. (Tr., pp. 157-58.) The Agency denied that IPRO was
scored more than once and submitted that the error in the termination
letter was a typographical error, and that IPRO's letter may have
arrived a few days later because Federal Express does not deliver in
Idaho, and therefore, a different carrier was used for IPRO. (See Tr.,
pp. 342, 291-92.) IPRO did not supply any other support for this claim.
Thus, we find the Agency's position, on balance, to be substantially
supported by the Record. /3/ Allegheny-Ludlum and Florida East
Coast Railway were both rulemaking cases under Sec. 553 of the APA. The
principle enunciated in those cases (i.e., that Sections 556 and 557 are
not triggered by a hearing requirement that does not include statutory
language for determination "on the record") should be the same for
adjudications because the same "trigger" language appears in Sec.
554.
Sections 556 and 557 apply under Sec. 553(c) "(when) rules are required
by statute to be on the record after opportunity for an agency hearing."
Section 554, headed "Adjudication," applies by definition "in
every case
of adjudication required by statute to be determined on the record after
opportunity for an agency hearing." Sec. 554(a). (Emphasis added.) The
meaning of the term "hearing" itself can vary depending upon whether
the
context is rulemaking or adjudication, but IPRO has raised no question
in this case about the adequacy of the due process protections accorded.
/4/ In those cases where a criterion was marked "not met" because
there
was no evidence that IPRO performed the activity at issue, the Board
considered the very lack of documentation as a reasonable basis for the
Agency's determination. (See, e.g., criterion II.B.1(b).) /5/
The pages in the transcript were incorrectly numbered as
204-205-206-205-206-207, etc. The Board has renumbered the second
reference to 205 and 206 as 205A and 206A. /6/ In support of its
determination to deny points on this criterion, the Agency submitted
information regarding IPRO's "body system," a memorandum dated March
18,
1981 from IPRO's Executive Director regarding the body system and
terminal digits system, and a May 20, 1981 letter from the project
officer regarding the terminal digit system. (See AR, pp. 384-89,
170-87.) Although the Agency originally submitted a Small Hospital
Waived Review Plan in support of this determination, the Agency withdrew
this document and placed it in the section supporting Criterion II.A.6.
(See Tr., p. 372.) /7/ IPRO originally claimed that the letter marked
Exhibit 2 was evidence that IPRO met criterion II.B.1.(d), but the
Executive Director later admitted that Exhibit 2 does not support IPRO's
claim to have met that criterion. (Tr., p. 216.) /8/ IPRO's
Executive Director stated that some of the documents in Exhibit 3 were
not presented to the project officer at the time of the evaluation.
(Tr., p. 218.) /9/ Reference to practitioners also includes other
providers of health care. /10/ IPRO's brief stated that
IPRO felt that to remove delegation from hospitals granted that status
would create animosity and chaos, but Dr. Meyer testified at the hearing
that this was not the reason IPRO did not remove delegation from these
hospitals. (See Reply Brief, p. 34; Tr., p. 106.) Dr. Meyer also
testified that in addition to the four delegated hospitals, IPRO has
approximately 12 hospitals which have "limited delegation" for the
purpose of conducting Medical Care Evaluation Studies. (Tr., p. 105.)
/11/ Level 3 also requires a determination that at least 50 percent of
the objectives require modification in methodology or proposed outcome.
Although the Record does not indicate that such a determination was
made, the extent of modification differentiates between levels 3 and 4,
not between 2 and 3. /12/ The Agency stipulated during the
course of the hearing that the procedures were life threatening. (Tr.,
pp. 386, 79.)
SEPTEMBER 22, 1983