On February 8, 2024, the Centers for Medicare & Medicaid Services (CMS) issued the proposed rule,  Strengthening Oversight of Accrediting Organizations and Preventing Accrediting Organization Conflict of Interest, and Related Provisions. A Fact Sheet for the rule can be found here. Accrediting Organizations (AOs) are responsible for determining compliance for over 9,000 Medicare and Medicaid providers and suppliers. Recently, CMS has become concerned with the performance of AOs, who, among other issues, have missed instances of noncompliance in surveys of facilities that were later identified in surveys by State Agencies (SAs) and often provide fee-based consulting services to the providers and suppliers that they accredit, creating potential conflicts of interest.

To address these concerns, CMS proposes a number of provisions to strengthen oversight over AOs and prevent potential conflicts of interest including:

• Limiting AOs ability to provide fee-based consulting services to providers and suppliers they accredit,
• Obtaining declarations of relationships with provider and suppliers that could represent conflicts of interest from all AO employees,
• Preventing AO employees with relationships with a provider or supplier from being involved in their accreditation process,
• Requiring that AOs use Medicare conditions as minimum accreditation standards,
• Requiring that AOs align their survey processes more closely with SAs,
• Requiring AOs to promptly rescind accreditation of providers and suppliers who are involuntarily terminated from Medicare and strengthening the thresholds for these providers to reenter the program, and
• Requiring AOs that fail to meet certain thresholds to submit a plan of correction to CMS.

The proposed rule also contains provisions that would revise the psychiatric hospital survey process, and a severability of provisions clause.

The proposed rule is scheduled to be published in the Federal Register on February 15, 2024, and comments on the rules are due 60 days after its publication, on Monday, April 15, 2024.

CMS PROPOSES LIMITS ON AOS ABILITY TO PROVIDE FEE-BASED CONSULTING SERVICES

Currently, AOs are able to provide fee-based consulting services to providers and suppliers that they accredit. CMS has longstanding concerns about the conflict of interest this relationship could create. In 2018, the Agency published an RFI “Medicare Program: Accrediting Organizations Conflict of Interest and Consulting Services; Request for Information” (83 FR 65331), on this subject. While the responses they received were mixed, CMS believes that a financial relationship between a regulator and the entities they regulate causes a conflict of interest and accordingly, proposes a number of restrictions on the ability for AOs, their consulting divisions, and any separate entities established by the AO to provide fee-based consulting services to the suppliers and providers they regulate.

Under the proposed rule, AOs would not be able to consult with providers or suppliers that the AO would accredit until the supplier or provider had completed their first accreditation survey from that AO. AOs would also not be able to provide fee-based consulting services to providers and suppliers that had already completed this first survey during the 12 months preceding their next reaccreditation survey. Generally, providers and suppliers are re-accredited once every three years. Under this proposal, AOs would still be able to provide fee-based consulting services for 2 years following reaccreditation[1]. AOs would also not be able to provide fee-based consulting in response to a complaint received by the AO about a provider or supplier regardless of their reaccreditation schedule. AOs are required by CMS to investigate these complaints and the Agency does not believe AOs should profit from a function they are required to perform.

AOs would only be allowed to provide fee-based consulting services under the following circumstances:

• When the AO does not accredit the provider or supplier,
• When the consulting is only related to issues that have been investigated by a State Survey Agency, after the completion of the investigation, and
• In the first two years of the three-year period between reaccreditation surveys.

AOs would need to report the following information regarding their fee-based consulting services on a bi-annual basis: The names and CCNs of all provider and suppliers who received fee-based consulting services from the AO in the last 6 months, a description of the services provided, the dates the services were provided, whether the AO had ever provided accreditation services to the providers and suppliers who received the services, and the dates of their most recent and next re-accreditation surveys. If the AO fails to comply with proposed restrictions, they would be subject to proposed penalties of a program review or termination of their accreditation program. CMS does not anticipate this proposal would negatively impact patient care as providers and suppliers will still be able to seek consulting from third parties and from the AO under certain circumstances. If finalized, these provisions would go into effect one year following the effective date of the final rule.

To ensure a clear division between accreditation activities and fee-based consulting, CMS proposes that AOs must have written “firewall” procedures stating that fee-based consulting services are provided by a separate division of the AO than accreditation services, or by a separate business entity. The procedures would also stipulate that accreditation staff could not market consulting services to accreditation clients, and that accreditation staff could not perform consulting services and vice versa.

CMS PROPOSES PROVISIONS TO PREVENT CONFLICT OF INTEREST FOR AO EMPLOYEES

To ensure that AOs employees do not have a conflict of interest with the organizations they are accrediting, CMS proposes the following provisions:

• AOs would need to obtain declarations from all of their surveyors regarding any relationships they have with healthcare facilities the AO accredits. These declarations would need to be submitted to CMS with an AO’s initial application, and then updated annually and sent to CMS by December 31 each year. If finalized, this provision would become effective 1 year following the effective date of the final rule.
• AO employees would be prohibited from being involved in the accreditation of a facility which they had any relationship with in the past two years. A list of relationships that would prohibit involvement can be found on page 55 of the unpublished rule.

CMS PROPOSES ALIGNMENT OF SURVEY PROCESSES

Currently, AOs are required to have accreditation standards that meet or exceed CMS standards, as demonstrated by providing a “’comparable’ standard for each of the applicable Medicare conditions or requirements.”[2] The vagueness of this requirement can cause confusion for facilities, who are often more familiar with AO standards than Medicare standards, and unaware of when the AO standards are stricter. Similarly, the requirement that AO standards are comparable, as opposed to identical, to Medicare standards has resulted CMS identifying instances where AO standards do not meet the Medicare minimums. To make the requirements clearer, CMS proposes that AOs must use the exact text of applicable Medicare conditions as their minimum accreditation standards for each provider and supplier type. The AOs would still be able to enact stricter standards, but these standards would have to be clearly identified.

Currently, AOs are required to submit a crosswalk with their applications to CMS detailing which Medicare condition is comparable to each of their accreditation requirements and standards. Under this proposal, the crosswalk would be revised to demonstrate that the AO had incorporated the Medicare condition language and identify any standards that exceeded the Medicare conditions. For examples, see page 61 of the unpublished rule.

When reviewing an AOs application, CMS must complete a survey process review to determine if the AOs processes are comparable to those required by CMS and implemented by SAs. CMS found that 14 of 22 AO applications received between January 2017 and August 2021 needed revisions to their survey processes. Similarly, SA have found high rates of “condition-level” noncompliance in facilities accredited by AOs, many of which were missed by AOs. For example, in FY 2019, SAs found 60 such instances, 51 of which were missed by AOs. In response, CMS proposes to strengthen survey requirements such that AOs must use survey processes comparable to those used by SAs as laid out in the CMS State Operations Manual (SOM). This includes:

• Requiring more details on how the AO surveys for compliance in the AO’s application,
• Adding language about the core fundamental activities of the survey process at § 488.5(a)(4),
• Strengthening the requirement that AOs describe their document review processes,
• Requiring AOs to provide a summary of their staff training programs,
• Strengthening the requirement that AOs describe their procedures and timelines for correcting non-compliance,
• Requiring that AOs describe their criteria for determining survey team size and composition,
• Strengthening the requirement that AO demonstrate they employ an adequate number of surveyors,
• Strengthening requirements that AOs include information on how they investigate facility complaints, and
• Strengthening requirements that AOs describe their processes for accreditation decision making.

Currently, AOs enter some survey findings information into a CMS database called Accrediting Organization System for Storing User Recorded Experiences (ASSURE). However, this data is limited and often does not include actual survey reports. To gather better data, CMS proposes that AOs must submit all survey reports to CMS and submit a statement agreeing to provide these reports.

If finalized, all of these provisions would become effective one year after the effective date of the final rule.

CMS PROPOSES TO STRENGTHEN AO VALIDATION PROGRAM

Currently, correcting AOs poor performance is handled via verbal or written correspondence between CMS and AO staff, making it difficult to hold AOs accountable. Under the proposed rule, AOs that do not reach performance thresholds for process or outcome disparity rates would be required to submit a plan of correction within 10 business days of being notified by CMS that they failed to meet these thresholds. This plan of correction would include specific actions being taken by the AO to address performance, the timeframe of implementation, and the plan for ongoing monitoring of this implementation, as well as identify the individual responsible for these activities. CMS would evaluate progress as needed and publicly report the plan of correction once approved.

The proposed rule would also include new definitions for process or outcome disparity rates, as well as to add the “direct observation of the AO’s survey process by SA or CMS surveyors,” referred to as a direct observation survey, to the AO validation program.

CMS PROPOSES STRICTER REGULATIONS ON PROVIDERS WHO ARE INVOLUNTARILY TERMINATED FROM MEDICARE

To address concerns that providers and suppliers who have been involuntarily terminated from Medicare retain their AO accreditation, falsely signaling high quality of care to consumers, CMS proposes that AOs must terminate a provider’s accreditation within 5-business days of being notified of the provider’s involuntary termination. The proposed rule would also strengthen the requirements that terminated providers would need to fulfill before obtaining a new agreement for Medicare participation. Under this proposal, SAs, as opposed to AOs, would be responsible for the initial survey of providers seeking reentry into the program.

CMS PROPOSES REVISIONS TO PSYCHIATRIC HOSPITAL SURVEY PROCESS

Psychiatric hospital surveys are currently performed separately from other hospital surveys. While all AOs are eligible to apply for accreditation to survey psychiatric hospitals, only two AOs have CMS-approved Psychiatric hospital accreditation programs. This means two different survey teams are often surveying a given facility. CMS is concerned under current policy, systemic quality issues in psychiatric hospitals can be missed as no one team has a full view of a given facility.

Accordingly, CMS proposes to combine the acute care and psychiatric hospital surveys for both SAs and AOs. CMS would also require that AOs who have an existing hospital accreditation program also survey psychiatric hospitals, meaning that these AOs would need to resubmit their standards, survey process, and surveyor training to CMS for approval. Survey processes for inpatient psych units located in acute care hospitals would not change under this proposal.

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This Applied Policy® Summary was prepared by Will Henkes with support from the Applied Policy team of health policy experts. If you have any questions or need more information, please contact him at whenkes@appliedpolicy.com or at (202) 558-5272.

[1] For an example of this timeline, see page 43 of the unpublished rule

[2] See page 61 of the unpublished rule

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