oversight

Health Care: Limited State Efforts to Assure Quality of Care Outside Hospitals

Published by the Government Accountability Office on 1990-01-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United   States   General   Accounting   Office
                 Report to the Chairman, Subcommittee
                 on Health and Long-Term Care, Select
                 Committee on Aging, House of
                 Representatives

January   1990
                 HEALTH CARE
                 Limited State Efforts
                 to Assure Quality of
                 Care Outside Hospitals
Human Resources    Division

B-236203

January 30,199O

The Honorable Edward R. Roybal
Chairman, Subcommittee on Health
  and Long-Term Care
Select Committee on Aging
House of Representatives

Dear Mr. Chairman:

In this report, we respond to the request of the former Chairman, the Honorable Claude
Pepper, for information on the state requirements relating to quality assurance for health
care delivered by both freestanding providers and health maintenance organizations. We
have included information on state quality assurance activities concerning (1) licensing,
inspection, and enforcement for 16 types of freestanding providers and (2) inspection and
enforcement activities for health maintenance organizations.

As arranged with your office, unless you publicly announce its contents earlier, we plan no
further distribution of this report until 30 days after its issue date. At that time, we will send
copies to the Department of Health and Human Services and other interested parties.

Please call me on (202) 275-5451 if you or your staff have any questions about this report,
Other major contributors are listed in appendix XIII.

Sincerely yours,




Janet L. Shikles
Director, Health Financing
  and Policy Issues
Executive Summaxy


                       Over the past two decades, medical and diagnostic procedures that tra-
Purpose                ditionally have been done in a hospital are increasingly being done in
                       “freestanding” facilities. These are facilities that provide such services
                       as cardiac catheterization, testing of blood samples, and radiation ther-
                       apy for cancer. Relocating complex and risky medical procedures from
                       hospitals to freestanding facilities has prompted concern about quality
                       assurance.

                       In response to this concern, the former Chairman, Subcommittee on
                       Health and Long-Term Care, House Select Committee on Aging, asked
                       GAO to determine how states license and inspect freestanding providers
                       and otherwise ensure quality care. The Chairman also asked GAO to
                       determine how and the extent to which states inspect health mainte-
                       nance organizations (HMOS) to assure they provide quality care.


                       Measures commonly used to promote quality are (1) licensing, which
Background             allows states to establish regulations covering providers, (2) inspection,
                       which allows states to oversee providers’ adherence to regulations, and
                       (3) enforcement, which allows states to impose sanctions for deficien-
                       cies. (These measures cannot, of course, guarantee quality, but they do
                       provide a foundation for quality care.)

                       In its study, GAO focused on state licensing, inspection, and enforcement
                       for 16 types of freestanding providers (see p. lo), including ambulatory
                       surgical centers, cancer treatment centers, and hospice care. GAO sent a
                       questionnaire to health department licensing officials in the 50 states
                       and the District of Columbia to obtain information on freestanding prov-
                       iders. GAO also did a telephone survey of the state officials responsible
                       for regulating HMOS in the 50 states and the District of Columbia.

                       Information in this report on state licensing and inspection, including
                       information on relevant state laws, is based on survey results received
                       from states, reflecting activity through September 30, 1987, except as
                       otherwise noted.

                   -
                       States have been slow to license freestanding providers. In fact, states
Results in Brief       do not license or otherwise regulate most of the 16 types of freestanding
                       providers in GAO'S review.

                       For those freestanding providers that are licensed, however, states have
                       imposed few sanctions for deficiencies identified during inspections.


                       Page 2                                      GAO/HRD-90-53   Freestanding   Providers
                             Executive   Summary




                             State officials cited appeals processes and the lack of intermediate sanc-
                             tions as impediments to imposing sanctions. In addition, state officials
                             expressed concern about the adequacy of their oversight and licensing
                             efforts.

                             Nevertheless, states’ plans for expanding licensing requirements to unli-
                             censed providers are limited. Because of minimal state regulatory
                             efforts, consumers do not have adequate assurance that unlicensed free-
                             standing providers are offering quality care.



GAO’s Analysis

Limited State Licensing of   Nine of the 16 types of providers GAO studied were reported to be oper-
                             ating in more than 30 states; 3 of them (alcohol and drug abuse treat-
Freestanding Providers       ment centers, ambulatory surgery centers, and home health agencies)
                             were typically required to obtain licenses. Licensing patterns were
                             spotty for the other types-ambulatory     care centers, ambulatory psy-
                             chiatric centers, diagnostic imaging centers, hospices, independent
                             clinical laboratories, and comprehensive rehabilitation centers.

                             Of the 45 states reported to have ambulatory care centers, 10 required
                             licenses. Among 34 states reported to have diagnostic imaging centers,
                             3 required licenses. No state required licenses for pain control centers or
                             cancer centers providing chemotherapy or radiation treatment, even
                             though such centers were reported to be operating in from 14 to 18
                             states. (See pp. 17-19.)


State Sanctions Against      Overall, states report licensing more than 23,000 freestanding providers.
                             Out of this number, for the 12-month period ending September 30, 1987,
Freestanding Providers       2 1 states reported imposing 165 sanctions against licensed freestanding
Limited                      providers for deficiencies identified during inspections. The remaining
                             states reported not sanctioning any freestanding providers. Lengthy
                             appeals processes and the lack of intermediate sanctions were cited as
                             impediments to imposing sanctions.

                             The states imposed sanctions against six types of providers (alcohol and
                             drug abuse centers, ambulatory care centers, ambulatory psychiatric
                             centers, ambulatory surgical centers, home health care, and independent



                             Page 3                                     GAO/HRD-9063   Freestanding   Providers
                                 Executive   Summary




                                 clinical laboratories); most frequently, against independent clinical labo-
                                 ratories Service restriction was the most frequently imposed sanction.
                                 (See pp. 24 and 25.)

                                 States reported that the most effective sanctions were monetary penal-
                                 ties and service restrictions and the least effective, revocation, suspen-
                                 sion, or other limits on providers’ licenses. The most frequently
                                 mentioned impediment to imposing sanctions against providers was the
                                 time required to complete administrative or judicial hearings and
                                 appeals. (See pp. 24 and 25.)


-----       -ns About
        -------                  Thirty-six state officials expressed concerns about assuring quality of
                                 care for freestanding providers. Typically, officials saw a need for
Assuring Quality of Care         (1) expanding licensing and (2) additional resources to carry out quality
for Freestanding Providers       assurance programs. They also questioned whether staff working for
                                 freestanding providers have proper credentials and training. Still others
                                 expressed concern about the public’s false presumption that freestand-
                                 ing providers are regulated. Concerns officials raised included:

                             l   Treatment and procedures performed by freestanding providers without
                                 state or federal oversight, such as laboratories in supermarkets, may not
                                 be safe.
                             l   Unless freestanding providers are regulated, the quality of care may not
                                 be as good as that provided in a hospital.
                             l   More staff are needed to provide oversight of existing providers as well
                                 as for future ones.
                             l   Professional and nonprofessional staff of freestanding providers may
                                 not be adequately qualified and credentialed.
                             l   Staff lack training in infection control and emergency care in
                                 life-threatening situations (see pp. 25-27).


States Lack System to            Most states reported receiving complaints about the quality of care pro-
                                 vided by freestanding providers, and almost half reported lacking sys-
Address Complaints               tems for receiving and resolving such complaints.

                                 Forty-two states reported receiving complaints during the 12-month
                                 period ending September 30, 1987. Complaints included

                             l   insufficient and unqualified staff and inappropriate care,
                             l   alleged poor quality of care and lack of attention to patient needs, and
                             l   the staff’s standards of medical practice (see pp. 27 and 28).


                                 Page 4                                     GAO/HRB90-63   Freestanding   Providers
                         Executive   Summary




Limited Plans to         Health department officials from only 13 states identified plans to
                         license additional providers; those plans were generally limited to licens-
Expand Licensing         ing one or two types of freestanding providers, typically those most fre-
                         quently licensed by other states (see p. 28).


State Programs to        Twenty-two states had on-site inspection programs for HMOS. Only two
                         had imposed formal sanctions against HMOS during the 3-year period
Assure Quality of Care   ending December 3 1, 1987: California prohibited the enrollment of new
for HMOs Limited         members and New York imposed fines. Sanctions were imposed because
                         of poor or inadequate health care services or other quality-of-care-
                         related deficiencies. Some state officials suggested that sanctions are
                         often not needed because of (1) the willingness of HMOS to take correc-
                         tive actions when deficiencies are identified and (2) the effectiveness of
                         some state licensing programs. (See pp. 29-32.)



Recommendations

Agency Comments




                         Page 5                                      GAO/HRD90-53   Freestanding   Providers
Contents


Executive Summary                                                                                              2

Chapter 1                                                                                                  10
Introduction                Growth of Freestanding Providers
                            Growth of HMOs
                                                                                                           10
                                                                                                           12
                            Quality Assurance Programs                                                     13
                            Objectives, Scope, and Methodology                                             14

Chapter 2
States Have Quality         States Without Licensing Programs Have Little
                                 Knowledge of Freestanding Providers
Assurance Standards         Quality Assurance Requirements                                                 20
If They License             Inspections Generally Done on Schedule                                         21
Freest&ding                 States Report Few Sanctions Against Freestanding                               24
                                 Providers
Providers but               State Officials See Need for Additional Oversight                              25
Licensing Is Limited        Many States Lack Systems to Resolve Complaints                                 27
                            States Have Limited Plans to Require Additional Types of                       28
                                 Providers to Be Licensed

Chapter 3                                                                                                 29
State   Inspections   and   State Licensing of HMOs                                                       29
                            State Inspections of HMOs for Health Care Quality                             30
Enforcement Actions         State Use of Sanctions for Enforcement                                        30
to Ensure That HMOs
Provide Quality Care
Chapter 4                                                                                                 33
Conclusions
Appendixes                  Appendix I: States in Which Freestanding Providers Were                       34
                                Operating (As of Sept. 30, 1987)
                            Appendix II: States in Which Freestanding Providers                           38
                                Operating Were Required to Be Licensed (As of
                                Sept. 30, 1987)
                            Appendix III: Providers Licensed by States (As of                             42
                                Sept. 30, 1987)




                            Page 6                                   GAO/HRD-9oa3   Freestanding   Providers
         Contents




         Appendix IV: States With Freestanding Providers That                            46
             Volunteer to Be Licensed to Meet Federal or State
             Funding Requirements
         Appendix V: States in Which the Operation of                                    48
             Freestanding Providers Was Unknown
         Appendix VI: States With Freestanding Providers in                              50
             Operation That Were Not Required to Be Licensed
             (As of Sept. 30, 1987)
         Appendix VII: State Expenditures for Licensing of All                           55
             Freestanding Providers (For States’ Most Recently
             Completed Fiscal Year)
         Appendix VIII: States Requiring Review of Quality                               57
             Controls During On-Site Inspections by Type of
             Freestanding Providers
         Appendix IX: Sanctions Recommended and Imposed on                               58
             Freestanding Providers (During IS-Month Period
             Ending Sept. 30, 1987)
         Appendix X: Sanctions Imposed on Freestanding                                   60
             Providers by States (During 12-Month Period Ending
             Sept. 30, 1987)
         Appendix XI: State Opinions on Effectiveness of                                 62
             Sanctions
         Appendix XII: HMOs, Enrollees, and On-Site Quality-of-                          63
             Care Inspections by State (As of Dec. 31, 1987)
         Appendix XIII: Major Contributors to This Report                                65

Tables   Table 2.1: Operating Status and Licensing Requirement                            18
             Status for States by Type of Providers
             (As of Sept. 30, 1987)
         Table 2.2: Licensing Programs With Quality Assurance                            21
             Requirements by Type of Providers
         Table 2.3: Frequency of Required Inspections by Type of                         22
             Providers
         Table 2.4: States Setting Inspection Frequencies and                            23
             Promptly Conducting Required Inspections by Type
             of Providers

Figure   Figure 3.1: Sanctions Available to Enforce Quality-of-                          31
              Care Requirements for States Authorized
              to Inspect HMOs




         Page 7                                     GAO/HBD9O-S3   Freestanding   Providers
Contents




Abbreviations

GAO        General Accounting Office
HMO        health maintenance organization
HHS        Department of Health and Human Services


Page 8                                  GAO/HID!30-63   Freestanding   Providers
Page 9   GAO/ISRMW63   Freestanding   Providers
Chapter 1

Introduction


               Over the last two decades, efforts to control health care costs, rapidly
               developing technology, and increased competition have resulted in the
               rapid expansion of freestanding providers,1 which offer specific health
               care services outside the traditional settings of hospitals, nursing homes,
               and physician offices. At the same time, health maintenance organiza-
               tions (HMOS), which offer comprehensive health care services to mem-
               bers, have expanded rapidly as an alternative to the traditional
               fee-for-service method of paying for health care; their heavy emphasis
               on keeping patients out of hospitals has helped fuel an already growing
               ambulatory health care market.

               Expressing concern about the quality of care provided by freestanding
               providers and HMOS, the former Chairman, Subcommittee on Health and
               Long-Term Care, House Select Committee on Aging, asked us to obtain
               information from the states on quality assurance requirements and
               practices for health care delivered by freestanding providers and HMOS.
               In subsequent discussions with the Subcommittee office, we agreed to
               focus on quality assurance in the states as it relates to (1) licensing,
               inspection, and enforcement for 16 types of freestanding providers and
               (2) inspection and enforcement for HMOS.


               Freestanding providers, offering alternatives to hospital-based or nurs-
Growth of      ing home care, are reshaping the nation’s health care system. These
Freestanding   freestanding providers include the following:
Providers      Alcohol and Drug Abuse Treatment Center: A facility providing treat-
               ment, on an ambulatory basis, for drug and alcohol dependence. Such a
               facility is sometimes called a substance abuse service (or program) or
               behavioral health center.

               Ambulatory Care Center: A facility providing primary or episodic care,
               usually during extended office hours, which may not require an
               appointment. This excludes a physician’s office practice. Such a facility
               is sometimes called a primary care center or a walk-in clinic.

               Ambulatory Psychiatric Center: A facility providing mental health ser-
               vices on an ambulatory basis. Such a facility is sometimes called an out-
               patient psychiatric center or a mental health clinic.


               ‘The term freestanding providers is used throughout this report to include the 16 types of facilities
               and agencies that we studied that provide health care or services. (see pp. 10-12.)



               Page 10                                                     GAO/HRD!3O-53     Freestanding    Providers
Chapter 1
Introduction




Ambulatory Surgical Center: A facility providing surgical procedures
that do not require an overnight stay, which may specialize in certain
procedures, for example, cataract surgery or hernia repair.

Cancer Treatment Center (Using Chemotherapy): A facility providing
diagnosis and treatment of cancer on an ambulatory basis, which uses
chemotherapy.

Cancer Treatment Center (Using Radiation Therapy): A facility provid-
ing diagnosis and treatment of cancer on an ambulatory basis, which
uses radiation therapy.

Cardiac Catheterization Laboratory: A facility providing cardiac cathe-
terization-a   diagnostic procedure involving the insertion of a catheter
into the heart-on an ambulatory basis and not providing overnight
accommodations.

Comprehensive Rehabilitation Center: A facility providing medical reha-
bilitation for a variety of disabilities, which uses coordinated multidis-
ciplinary therapy performed by or under the supervision of a physician.

Diagnostic Imaging Center: A freestanding mobile or fixed facility pro-
viding radiologic diagnostic services using techniques that may include
advanced imaging technologies. Some offer disease-specific services, for
example, breast cancer diagnosis.

Emergency Center: A facility providing 24-hour emergency service with
capability for emergency life support and stabilization. Such a facility is
often called a freestanding emergency center.

General Diagnostic Center: A facility providing a variety of diagnostic
procedures, usually on physician referral. Such a facility may specialize
in urologic, cardiovascular, or gastrointestinal disorders.

Home Health Care Service: An agency providing services to treat
patients at home for existing medical problems and usually requiring
physician orders and professional assistance.

Hospice Care: An agency providing care for people who are terminally
ill.

Independent Clinical Laboratory: A facility providing diagnostic testing
of samples or specimens in a freestanding laboratory.


Page 11                                    GAO/HRD9lM3   Freestanding   Providers
                     Chapter 1
                     Introduction




                     Pain Control Center: A facility providing a multidisciplinary approach
                     to diagnose and treat chronic pain. Some may specialize in a single disci-
                     pline or certain types of chronic pain.

                     Specialized Rehabilitation Center: A facility providing medical rehabili-
                     tation using a single-discipline therapy or multidisciplinary therapy and
                     specializing in certain types of disabilities.

                     Freestanding providers have experienced rapid growth in recent years;
                     projections are for continued growth. For example:

                 . The National Association for Ambulatory Care expected the number of
                   ambulatory care centers to increase from 180 in 1980 to an estimated
                   5,500 in 1990.
                 . SMG Marketing Group, Inc., Chicago, projected an increase from about
                   784,000 procedures performed in 459 freestanding surgery centers in
                   1985 to over 1.9 million procedures in 829 centers in 1990.
                 l Medicare-certified home health agencies increased from 2,212 in 1972 to
                   about 5,661 in 1988.2

                     A study prepared for the National Conference of State Legislatures pre-
                     dicted that by 1990, up to 40 percent of all diagnostic procedures and
                     surgeries may be done outside hospitals.3


                     Paralleling the growth of freestanding providers has been the growth of
Growth of HMOs       HMOS.  They offer comprehensive health services to their members in
                     return for a prepaid, fixed payment regardless of the quantity of ser-
                     vices given to any particular member; frequently, HMOS contract with
                     freestanding providers to provide services for their members. HMOS have
                     a financial incentive to reduce overall health care costs so they empha-
                     size preventive medicine and minimize the use of health services. Such
                     an incentive, however, can also foster the provision of fewer services
                     than needed, thereby compromising the quality of care.

                     The Health Maintenance Organization Act of 1973 (42 U.S.C. 30Oe et
                     seq.) authorized a program to help develop new HMOS and expand
                     existing ones by (1) providing financial assistance to and (2) requiring

                     “Medicare is a federal health insurance program that assists almost all Americans 65 years of age and
                     over, as well as certain disabled people in paying for their health care costs.
                     3Barbara Yondorf and others, Hospital Cost Containment, a Legislator’s Guide (NatIonal Conference
                     of State Legislatures, May 1985), p. 169.



                     Page 12                                                   GAO/HRD-9063      Freestandiny   Providers
                            Chapter 1
                            Introduction




                            certain employers to offer their employees the option of membership in
                            HMOS that demonstrate their qualifications to the Department of Health
                            and Human Services (HHS) under the act. The act has led the way in
                            alternatives to fee-for-service health care. By January 1975, 183 HMOS,
                            with an enrollment of over 6 million, were operating in 32 states and the
                            District of Columbia. By the end of 1987,746 HMOS, with an enrollment
                            of 3 1.8 million, were operating in all states except Alaska.


                            Some health industry observers have raised concerns about the quality
Quality Assurance           of care in the growing numbers of freestanding providers and HMOS per-
Programs                    forming complex medical procedures traditionally provided in highly
                            regulated hospitals with specialized equipment and skilled staff. The
                            concerns arise because of a perception that no one is taking steps to
                            assure consumers that they will receive quality care from these free-
                            standing providers.

                            Quality assurance can be broadly defined as activities to safeguard or
                            improve the quality of medical care by assessing quality and taking
                            action to correct any problem found. Examples of quality assurance
                            activities include (1) regulating providers through licensing, (2) provid-
                            ing the necessary oversight to see that regulations are adhered to, and
                            (3) imposing sanctions, if necessary, when providers fail to meet
                            requirements. Although not covered in this report, accreditation of free-
                            standing providers and HMOS by organizations, such as the Joint Com-
                            mission on the Accreditation of Healthcare Organizations and the
                            Accreditation Association for Ambulatory Health Care, is another exam-
                            ple of an activity that can help assure consumers of quality care.


Quality Assurance           Quality assurance programs help ensure that patients receive quality
                            care; the programs are intended to provide a process by which to evalu-
Activiti .es of State and   ate such areas as the (1) appropriateness of patient care and services
Federal Governments         provided; (2) utilization of resources; (3) safety of patients; (4) conduct
                            and performance of physicians and others providing patient care; (5)
                            patient access to appropriate medical care; (6) outcomes of medical care
                            rendered; and (7) licensing, training, and certification of physicians and
                            other professionals providing direct medical care. Using the results of
                            these evaluations, the programs are expected to make recommendations
                            to health care providers for improvement in deficient areas.




                            Page 13                                     GAO/HRD9@63   Freestanding   Providers
                        Chapter 1
                        Introduction




                        State implementation of licensing programs helps meet a consumer
                        expectation of quality care. The federal government, through the Medi-
                        care program, also helps meet this expectation by requiring the opera-
                        tion of quality assurance programs4 States usually operate licensing
                        programs for physicians, hospitals, and HMOS. In addition, the Medicare
                        program imposes quality standards for hospitals, HMOS, and physicians
                        wishing to qualify for Medicare payments.


Provider Quality        Internal quality assurance programs for most health care providers par-
                        ticipating in the Medicare program vary but typically include such
Assurance               things as a (1) written quality assurance plan describing the program;
                        (2) system for resolving complaints of poor quality care; (3) system of
                        peer review to independently review and verify the appropriateness and
                        quality of the care being provided; and (4) credentialing process to sys-
                        tematically review and verify the licenses, education, and training of all
                        applicants for appointment and reappointment.

                        Little information is available on the extent of state quality assurance
                        programs of freestanding providers. Federal quality assurance stan-
                        dards have been established for five types of freestanding providers-
                        ambulatory surgery centers, home health agencies, clinical laboratories,
                        comprehensive rehabilitation centers, and hospices-choosing to partici-
                        pate in the Medicare program. HHS contracts with state health depart-
                        ments or other state agencies to do periodic inspections of these
                        freestanding providers to determine compliance with Medicare require-
                        ments. There are no federal quality assurance standards for the other 11
                        types of freestanding providers (see p. lo), (except for physicians who
                        are and other health professionals who may be individually licensed).
                        These types of providers are essentially unregulated unless the state
                        imposes quality assurance requirements through its licensing and
                        inspection processes.


                        The former Chairman, Subcommittee on Health and Long-Term Care,
Objectives, Scope,and   House Select Committee on Aging, asked us to obtain information on the
Methodology             extent of state quality assurance requirements and practices for health
                        care services given by freestanding providers and HMOS. In subsequent


                        4Quality assurance programs also exist under the Medicaid program and the health programs of the
                        Departments of Veterans Affairs and Defense. Medicaid is a federally aided, state-administered medi-
                        cal assistance program that serves needy people. The Health Care Financing Administration, within
                        HHS, has overall responsibility for administering the program at the federal level.



                        Page 14                                                   GAO/HRIHO-53     Freestanding   Providers
                             Chapter 1
                             Introduction




                             discussions with Subcommittee staff, we agreed to focus on state quality
                             assurance activities concerning

                         l licensing, inspection, and enforcement for 16 types of freestanding
                           providers and
                         . inspection and enforcement for HMOS.

                             We agreed with Subcommittee staff to limit our work on HMOS to state
                             inspection and enforcement activities because the staff already had
                             information on quality assurance activities concerning licensing of HMos.

                             To obtain the requested information about the 16 types of freestanding
                             providers, we developed and mailed copies of a questionnaire to health
                             department licensing officials in the 50 states and the District of Colum-
                             bia (51 states), asking them to provide information about their licensing
                             and regulatory programs. We asked the states to categorize their free-
                             standing providers, using the broad definitions we gave them (see p. 10).
                             Because our focus was on efforts states have taken on their own to regu-
                             late health care given by freestanding providers, we did not ask about
                             possible state efforts on behalf of the federal government to assure that
                             providers comply with federal law and regulation under the Medicare
                             and Medicaid programs.


Regulatory Program for       The questionnaire for freestanding providers was divided into two
                             parts, In part I, we asked specific questions about state licensing, inspec-
Freestanding Providers       tion, and enforcement activities (as of Sept. 30, 1987) for each of the 16
                             types of providers. In part II, we asked general questions about these
                             providers as a group, including questions about state oversight problems
                             and concerns about the quality of medical care.

                             After pretesting the questionnaire, we mailed the final version on Octo-
                             ber 16, 1987. When responses were returned, we reviewed them for con-
                             sistency and completeness before including them in our data base. When
                             responses appeared inconsistent or incomplete, we telephoned state rep-
                             resentatives and attempted to obtain the missing data or resolve any
                             inconsistency. We did not, however, verify the data provided by the
                             states.

                             Although all states responded to the questionnaire, they did not answer
                             all questions. For example, 26 states either did not respond or were
                             unable to say how much they had spent for licensing activities relating
                             to freestanding providers during the most recently completed fiscal year


                             Page 15                                     GAO/HRD90-63   Freestanding   Providers
                         Chapter 1
                         introduction




                         (see app. VII). Two broad categories of providers-alcohol     and drug
                         abuse treatment centers and ambulatory psychiatric centers-generally
                         were not under the jurisdiction of licensing officials from the state
                         health department. For these providers, over half (29) of the respon-
                         dents referred us to another state regulatory agency, which we tele-
                         phoned when necessary to obtain clarification of the responses.


Inspection and           We conducted a telephone survey of HMO regulators in each state to
                         determine whether states had imposed sanctions against HMOS because
Enforcement Activities   of deficiencies in the quality of health care they provided. We pretested
for HMOs                 the telephone survey by speaking (on the telephone) with the Chairper-
                         son of the Quality Assurance Committee, National Association of Health
                         Maintenance Organization Regulators, a nonprofit association of state
                         and federal government officials responsible for the regulation of HMOS.
                         The pretest results were used to refine the questions and prepare an
                         interview guide for use during our telephone survey. Through the tele-
                         phone survey, we sought information about (1) the number of HMO plans
                         and enrollees and (2) state inspection and enforcement activities relating
                         to the quality of medical care provided by HMOS.When responses
                         appeared inconsistent or incomplete we resolved discrepancies through
                         discussions with state regulators. We did not, however, verify the data
                         provided by the states.

                         Complete and accurate information on the number of HMO plans and
                         enrollees was not always available, in part because (1) some HMOS were
                         not timely in reporting this information to states and (2) HMOS used dif-
                         ferent reporting methods. For example, because some HMOS that operate
                         in more than one state report total enrollment to each state, enrollment
                         data are overstated. Likewise, HMO plans that serve residents of more
                         than one state are usually counted by each state, resulting in overstate-
                         ment of HMO plans. For six states that did not provide HMO enrollment
                         data, we used data from a quarterly report of HMOgrowth and enroll-
                         ment as of December 31,1987.5 We did not attempt to adjust or audit the
                         HMO data reported to us by states or obtained from the report.


                         Our work, was done in accordance with generally accepted government
                         auditing standards.



                         “Interstudy, The Interstudy Edge, Excelsior, Minn.: Sp rin g 1988. Interstudy is an organization that
                         specializes in HMO research.



                         Page 16                                                     GA0/IiRD9063Freestanding          Providers
Chapter 2

States Have Quality Assurance Standards If
They License Fkestanding Providers but
Licensing Is Limited
                            States frequently do not require freestanding providers to obtain a
                            license to operate. If a license was not required, it was usual for the
                            state to report not knowing whether a type of provider was operating
                            or, if known to be operating, how many providers of this type were in
                            the state.

                            States with licensing requirements, on the other hand, generally
                            (1) establish minimum requirements for quality assurance, (2) conduct
                            on-site inspections to determine compliance with such requirements, and
                            (3) impose sanctions against those providers not in compliance. Of the
                            more than 23,000 licensed freestanding providers, states reported
                            imposing sanctions against 165 during the year ending September 30,
                            1987, as a result of deficiencies identified during inspections. Lengthy
                            appeals processes and the lack of intermediate sanctions were most
                            often cited as reasons why sanctions were not imposed against more
                            providers.

                            Despite expressing concerns about the adequacy of their quality assur-
                            ance efforts or identifying complaints of poor quality care or both, state
                            plans for expanding licensing requirements were limited to one or two
                            types of freestanding providers, typically those most frequently licensed
                            by other states.


                            States frequently reported limited knowledge of the types and numbers
States Without              of freestanding providers. For 8 of the 16 types of providers studied, the
Licensing Programs          majority of state officials responding to our questionnaire did not know
Have Little Knowledge       whether certain types were operating or how many. Generally, states
                            were able to provide data on the number of providers operating only for
of Freestanding             those types required to obtain a license. Of the 16 types of providers,
Providers                   the number required to obtain a license to operate ranged from 0 (in
                            Iowa and Vermont) to 9 (in Massachusetts and Rhode Island).


State Mandatory-Licensing   Of the nine types of providers known to be operating in more than 30
                            states, three-alcohol   and drug abuse treatment centers, ambulatory
Programs                    surgery centers, and home health agencies-were required to have a
                            license to operate in more than 70 percent of the states where they were
                            operating (see table 2.1 and apps. I and II). The remaining six types of
                            providers- ambulatory care centers, ambulatory psychiatric centers,
                            diagnostic imaging centers, hospices, independent clinical laboratories,
                            and comprehensive rehabilitation centers-were allowed to operate
                            without licenses in 20 to 35 of the states where they were known to be


                            Page 17                                   GAO/HBD-soSS   Freestanding   Providers
                                              chapter 2
                                              States Have Quality Aa9urauce Standards           lf
                                              They Liceuae Preestanding  Providers but
                                              Licellslng Is Limited




                                              operating. Officials from these states were generally unable to tell us
                                              how many of the providers within each of these six types were operat-
                                              ing (see app. III).

Table 2.1: Operating Status and
Licensing Requirement Status for States                                                                                       status
by Type of Providers (As of Sept. 30, 1987)                                                                                                  Licensing
                                                                                                                Operating                  requiremenr
                                                                                                                               Don’t
                                              Type of provider                                              Yes         No     know           Yes          No
                                              Alcohol and drug abuse center                                   50          1            0          42b        8
                                              Ambulatory care center                                          45          5            1          10        35
                                              Ambulatory psychiatric center                                   42          5            4          20        22
                                              Ambulatorv suraical center                                      50          1            0          41         9
                                              Cancer treatment (chemotherapy)                                 14         23           14           0        14
                                              Cancer treatment (radiation)                                    15        21            15           0        15
                                              Cardiac catheterization lab.                                    11        30            10           2         9
                                              General diaanostic center                                       22        19            10           3        19
                                              Diagnostic imaging center                                       34        12             5           3        31
                                              Emergency center                                                25        22             4           4        21
                                              Home health care                                                51         0             0          38c       13
                                              Hospice care                                                    48         3             0          28        20
                                              Independent clinical lab.                                       49         2             0          25        24
                                              Pain control center                                             18        20            13           0        18
                                              Rehab. center (comprehensive)                                   38        12             1          10        28
                                              Rehab. center (specialized)                                     24        17            10           4d       20
                                              aApplles only to those states in which the type of provider was reported to be operating.

                                              bOnly methadone treatment centers are required to be licensed in California and Ohio

                                              Cldaho requires home health care to be licensed only if operated for profit.

                                              dOnly cardiac rehabilitation   programs are subject to licensing in North Carolina.


                                              The other seven types of providers, although known to be operating in
                                              11 to 25 states, were required to obtain a license in 4 or fewer states. For
                                              example, no states required cancer treatment centers (either radiation
                                              therapy or chemotherapy) or pain control centers to obtain a license to
                                              operate, although such providers were known to be operating in 14 to 18
                                              states. Similarly, only 2 of the 11 states reporting the existence of car-
                                              diac catheterization laboratories required them to obtain licenses.

                                              From the perspective of individual states, Montana and New York were
                                              the only ones that required each type of provider known to be operating
                                              in a state (five for Montana and eight for New York) to obtain a license.
                                              Four other states (Massachusetts, Nebraska, New Hampshire, and


                                              Page 18                                                         GAO/HRD9O-53          Preestandhg     Providers
                            chapter 2
                            States Have Quality Assurance Standarda    Lf
                            They License Freestanding  Providers but
                            Licensing Is Lhlted




                            Rhode Island) required all but one of the types of providers known to be
                            operating (from 6 to 10) to obtain a license; New Jersey required 8 of
                            the 10 types operating in the state to obtain a license. Usually, however,
                            states were at the other end of the spectrum. For example, Iowa and
                            Vermont did not require any of the types of providers operating (10 for
                            Iowa and 6 for Vermont) to obtain a license, and 10 other states required
                            25 percent or fewer of the types of providers known to be operating to
                            obtain a license (see apps. I and II).

                            Even when licensing was required, 12 states reported not implementing
                            the requirements for certain types of providers, usually because regula-
                            tions were new, had not been promulgated, or did not apply to existing
                            providers. Other reasons included the nonavailability of funds and legal
                            challenges.


Other State Licensing       In addition to mandatory-licensing programs, 12 states reported having
                            voluntary-licensing programs in which certain types of providers could
Programs                    participate. These programs cover

                            1,054 ambulatory psychiatric centers in eight states (see app. IV),
                            393 alcohol and drug abuse centers in four states (see app. IV),
                            35 independent clinical laboratories (Utah),
                            259 home health agencies (Indiana and Washington), and
                            15 hospices (Washington).

                            Indiana and Iowa had not implemented their voluntary licensing pro-
                            grams for hospices at the time of our review.

-   -   ~~
States Often Did Not Know   States often did not know whether those freestanding providers that
                            were allowed to operate without a license were operating. On the other
Which and How Many          hand, if states reported knowing that these providers were operating,
Freestanding Providers      they frequently did not know how many. In total, 26 states reported
Were Operating              that they did not know whether one or more types of freestanding prov-
                            iders were operating in the state.

                            Hawaii did not know if 8 of the 16 types of freestanding providers were
                            operating, followed by Washington, which did not know if 7 were oper-
                            ating. Fifteen states indicated that they did not know if one or two of
                            the types were operating (see app. V). All states knew whether the five
                            most frequently licensed types were operating: alcohol and drug abuse



                            Page 19                                         GAO/HRD9O-63   Freestanding   Providers
                    Chapter 2
                    State8 Have Quality Assurance Standards    If
                    They Liceme Freestanding   Providers but
                    Licensing la Llmlted




                    centers, ambulatory surgical centers, home health care services, hos-
                    pices, and independent clinical laboratories.

                    For those types of freestanding providers allowed to operate without
                    licenses, states frequently reported knowing that they were operating
                    but not knowing how many were operating. All but five states (Mon-
                    tana, Nebraska, New Hampshire, New York, and South Dakota) were
                    unable to provide data on the number of providers operating for at least
                    one type of provider they knew to be operating in the state (see app. VI).


                    To obtain a license, freestanding providers must meet certain quality
Quality Assurance   assurance requirements established by the state. These requirements
Requirements        vary by type of provider and state: for the 13 types of providers with
                    licensing requirements (see table 2. l), states reported 207 operational
                    licensing programs; 73 percent of the programs require providers to
                    have quality assurance plans; 74 percent, credentialing processes for
                    nonphysician staff; 67 percent, credentialing processes for physicians;
                    58 percent, systems for resolving complaints; and 48 percent, peer
                    review programs (see table 2.2).




                    Page 20                                         GAO/HBD90-63   Free.standing   Providers
                                           Chapter 2
                                           States Have Quality Assurance Standards       If
                                           They License Freestanding  Providers but
                                           Licensing Is Limited




Table 2.2: Licensing Programs With Quality Assurance Requirements by Type of Providers
                                                 Licensing
                                                 programs                            Requirement
                                               with quality    Quality
                                                assurance   assurance          Peer    Complaint                      Credentialing process
Type of provider                             requirementsa        plan       review       system                      Physician Nonphysician
Alcohol and drug abuse center                           42                 26                  11            29                 16                24
Ambulatory care center                                   9                  5                   4             7                  7                 7
Ambulatory psychiatric center                           18                 14                  10            12                 13                13
Ambulatory surgical center                              38                 29                  23            21                 36                31
Cardiac cathetenzation lab.                              2                  1                   1             0                  2                 2
General diagnostic center                                3                  1                   1              1                  1                1
Diaanostic imaarna center
              w   ”
                                                         3                  2                   1              2                 2                 2
Emergency center                                         2                  2                   1              1                 2                    1
Home health care                                        33                 21                  19             19                15                26
Hospice care                                            22                 18                  14             12                15                19
independent clinical lab.                               24                 23                   6              7                17                18
Rehab. center (comprehensrve)                            8                  7                   7              7                 7                 6
Rehab. center (specialized)                              3                  3                   2              3                 3                 3
Total                                                  207               152                  100            121              138               153
Percent                                                 100               73                  48             58                 67                74
                                           %ome states that license freestandlng   providers have not wued   regulations



                                           States generally reported that they conduct on-site inspections of
Inspections Generally                      licensed freestanding providers at or near scheduled intervals, typically,
Done on Schedule                           at least annually. Such inspections generally include review of
                                           (1) patient records, (2) physician and nonphysician credentials, and
                                           (3) the provider’s quality assurance program. Annual expenditures
                                           ranging from $0 to $12.8 million were reported by 25 states for their
                                           freestanding provider licensing activities (see app. VII).

                                           The operational licensing program in each state requires on-site inspec-
                                           tions, except for (1) Pennsylvania, which does not require them for
                                           home health care agencies, and (2) California, which does not require
                                           them for cardiac catheterization laboratories. Of the 205 on-site inspec-
                                           tion programs identified,

                                       l   198 include review of patient records,
                                       l   157, physician credentials,
                                       l   180, nonphysician credentials, and




                                           Page 21                                                     GAO/HRBSO-53        Freestanding   Providers
                                       Chapter 2
                                       States Have Quality Assurance Standards If
                                       They License Freestanding  Providers but
                                       Licensing Is Limited




                                   .   152, implementation of the provider’s quality assurance plan (see app.
                                       VIII).

                                       For 10 of the 13 types of licensed providers, all states reported they
                                       require that at least a sample of patient records be reviewed during on-
                                       site inspections. However, a review of patient records is not required by
                                       5 of the 24 states inspecting independent clinical laboratories, 1 of 32
                                       states inspecting home health agencies, and 1 of 8 states inspecting com-
                                       prehensive rehabilitation centers. Although requirements for inspection
                                       frequency vary by state and by provider type, requirements for annual
                                       inspections are common. For example, over 70 percent of the states
                                       require at least an annual inspection for alcohol and drug abuse centers,
                                       ambulatory surgical centers, and home health agencies. Although no
                                       state reported requiring on-site inspections at intervals greater than 24
                                       months, regulations for some providers are not specific as to frequency
                                       (see table 2.3).

Table 2.3: Frequency of Required
inspections by Type of Providers                                               State           Frequency required
                                                                          inspection        3-12         13-24                  Not
                                       Type of provider                    programs       months       months            specified
                                       Alcohol and drug abuse center                42        31               8                  3
                                       Ambulatory care center                        9         6               2              -__ 1
                                       Ambulatory psychiatric center                18         8               8                  2
                                       Ambulatory surgical center                   38        28               4                  6
                                       Cardiac catheterization lab.                  1         1               0                  0
                                       General diagnostic center                     3         2               0                  1
                                       Diagnostic Imaging center                     3         1               1                  1
                                       Emergency center                              2         1               0                  1
                                       Home health care                             32        24               0                  8
                                       Hospice care                                 22        15               1                  6
                                       Independent clinical lab.                    24        15               6                  3
                                       Rehab. center
                                       (comprehensrve)                               8          3               3   ~-       _-__ 2
                                       Rehab. center (specialized)                    3         1              2                       0
                                       Total                                        205      136              35                      34


                                       States reported that providers are inspected as frequently as, or more
                                       frequently than, required by state regulations, with few exceptions. Not
                                       all states, however, reported the frequency of their inspections for all
                                       types of providers, either because the information was not available or
                                       because no inspections had been conducted, for example:



                                        Page 22                                           GAO/HRDSO-S3   Freestanding     Providers
                                           Chapter 2
                                           States Have Quality Assurance Standards      If
                                           They License Freestanding  Providers but
                                           Licensing Is Limited




                                       l   Adequate resources were not available to conduct the required biennial
                                           inspections of comprehensive rehabilitation centers (California).
                                       l   Funds were not available to implement the licensing program for home
                                           health agencies (Delaware).
                                       l   Regulations requiring inspections of alcohol and drug abuse treatment
                                           centers (South Dakota) and hospices (Massachusetts) were new and no
                                           inspections had been conducted.

                                           The states reported meeting or exceeding the required inspection fre-
                                           quency 75 to 100 percent of the time, (see table 2.4). (We adjusted for
                                           those states that did not provide the information and excluded those
                                           states in which the frequency of required inspections was not specified.)
                                           For states whose regulations did not specify an inspection frequency for
                                           a particular type of provider, 21 of 34 states reported conducting
                                           inspections within a 12-month period; none reported an inspection inter-
                                           val that exceeded 24 months.

Table 2.4: States Setting Inspection
Frequencies and Promptly Conducting                                                                                          States
Required Inspections by Type of                                                                                       Number           Percent
Providers                                                                                                              setting     conducting
                                                                                                                   inspection       inspection
                                           Type of provider                                                       frequencya          promptly
                                           Alcohol and drug abuse center                                                     37                 89
                                           Ambulatory care center                                                             8                 88
                                           Ambulatorv osvchiatric center                                                     15                 87
                                           Ambulatory surqical center                                                        31                 97
                                           Cardiac catheterization lab.                                                       1                100
                                           General diagnostic center                                                          2                100
                                           Diagnostic imaging center                                                           1               100
                                           Emerqency
                                                 -    . center                                                                 1               100
                                           Home health care                                                                  23                 87
                                           Hosoice care                                                                      15 -93
                                           lndeoendent clinical lab.                                                         21                 81
                                           Rehab. center (comprehensive)                                                      4                 75
                                           Rehab. center (specialized)                                                        2                100
                                           Total                                                                            161
                                           aExcludes states that did not also provide data on whether they were conducting mspectlons




                                           Page 23                                                    GAO/HRD90-53      Freestanding    Providers
                              Chapter 2
                              States Have Quality Assurance Standards If
                              They License Freestanding  Providers but
                              Licensing Is Limited




                              With more than 23,000 licensed freestanding providers in all states, 2 1
States Report Few             states reported imposing 165 sanctions against freestanding providers
Sanctions Against             during the year ending September 30, 1987. Lengthy appeals processes
Freestanding                  and the lack of intermediate sanctions (see below) were cited as impedi-
                              ments to imposing sanctions.
Providers

Available Sanctions           Most states that require licensing for freestanding providers can revoke
                              that license if providers do not comply with state requirements. State
                              laws in Delaware and Idaho, however, do not authorize revoking the
                              licenses of independent clinical laboratories. Eighty-two percent of the
                              states also have authority to suspend licenses.

                              Authority to impose intermediate sanctions, such as restrictions on the
                              services that can be performed and monetary penalties, is more limited.
                              Of the states operating licensing programs for independent clinical labo-
                              ratories, service restrictions are available to 67 percent and monetary
                              penalties to 42 percent; these intermediate sanctions are available less
                              frequently for other types of providers. For example, 6 of the 33 states
                              that have operational licensing programs for home health care agencies
                              are authorized to impose monetary penalties, and 5 of the 22 states that
                              have operational licensing programs for hospices can impose service
                              restrictions.


Sanctions Recommended         States reported licensing more than 23,000 freestanding providers (see
                              app. III). For the 12-month period ending September 30, 1987, 21 states
and Imposed                   reported imposing 165 sanctions:

                          . 23 license revocations,
                          . 5 license suspensions,
                          . 38 fines, and
                          l 99 service restrictions.

                              Independent clinical laboratories accounted for 116 of the 165 sanctions;
                              49 sanctions were reported against 5 other types of providers (see apps.
                              IX and X).


Impediments to Imposing       Officials of 17 states cited delays caused by the hearing and appeals
                              processes as the primary impediment to imposing sanctions. For exam-
Sanctions                     ple, a Connecticut official reported that legal proceedings have proved


                              Page 24                                      GAO/liRDW63   Freesta.ndhg   Providers
                           Chapter 2
                           Statea Have Quality Assurance Standards    If
                           They License Freestandiug  Providers but
                           Licensing Is Limited




                           to be excessively time consuming, while a Florida official said that pro-
                           vider appeal rights can delay imposition of sanctions.

                           Officials of seven states cited the lack of intermediate sanctions as an
                           impediment. These officials believe existing sanctions available to them
                           are too severe or, in some cases, impractical. For example, a Nebraska
                           official said the authority to impose intermediate sanctions would
                           enable the state to regulate in a more reasonable manner than the more
                           severe sanction of license revocation.

                           Officials in Delaware, Oklahoma, and South Dakota reported that politi-
                           cal pressures or resistance by professional groups are impediments to
                           imposing sanctions, Referring to political pressures, a South Dakota offi-
                           cial added, “It is very difficult to close one [health care provider], even
                           when it’s bad.”


Most and Least Effective   We asked each state to describe the most effective and least effective
                           sanctions available in the state. Twenty-eight states described the most
Sanctions                  effective sanctions; 25 described the least effective. Opinions were
                           mixed. Officials in 10 states cited monetary penalties as most effective,
                           but officials in 2 states-Rhode Island and Tennessee-believe these
                           sanctions are least effective. Limits or restrictions on the procedures or
                           services a provider may perform were viewed by 7 states as most effec-
                           tive; no state saw such restrictions as ineffective. Although 9 states
                           believe revocation, suspension, or other limits on providers’ licenses are
                           the most effective sanctions, 21 believe such actions are least effective
                           (see app. XI).

                           An Iowa official commented that licensing sanctions are ineffective
                           because the legal protection afforded providers prevents revocation. A
                           Colorado official said legal action is the least effective sanction because
                           of the length of time and the multitude of appeals involved. An Illinois
                           official noted that providers know few deficiencies warrant such drastic
                           action as license revocation.


                           Officials of 36 states expressed concerns about the adequacy of their
State Officials See        oversight of freestanding providers, Typically, these officials saw the
Need for Additional        need to expand regulatory oversight or provide additional resources to
Oversight                  carry out oversight activities. Others, while not specifically citing the
                           need for increased oversight, questioned whether staff working for free-
                           standing providers have proper credentials and training. Still others


                           Page 26                                         GAO/HRtHO-63   Fkeestanding   Providers
Chapter 2
States Have Quality Assurance Standards    If
They License Preestanding  Providers but
Licensing Is Limited




expressed concern about the public’s false presumption that freestand-
ing providers are regulated. The need for additional oversight was ques-
tioned, however, by officials from three states.

Officials of 18 states expressed concerns relating to the lack of regula-
tory oversight of most freestanding providers. For example, they
expressed concern that:

Treatment and procedures performed by freestanding providers without
state or federal oversight, such as laboratories in supermarkets, may not
be safe (Colorado).
Without licensing, there is no review of the quality of care of freestand-
ing providers (Florida).
Unless freestanding providers are regulated, the quality of care may not
be as good as that provided in a hospital (District of Columbia).

Officials of 9 states said that adequate resources were not available to
carry out regulatory oversight activities for freestanding providers. For
example, they told us that:

Enough staff are never available to conduct inspections (Idaho).
More staff are needed to provide oversight of existing providers, as well
as future ones (South Dakota).
Adequate funds are not available (Alabama).

Officials of eight states said that staff working for unregulated free-
standing providers may not have proper credentials and training. They
expressed concern, for example, that

professional and nonprofessional staff of freestanding providers may
not be adequately qualified and credentialed (District of Columbia, New
Hampshire, Oklahoma, Texas);
staff lack training in infection control and emergency care in life-
threatening situations (Louisiana);
nonprofessional staff may not be adequately trained and sufficient num-
bers of professional staff may not be available (Connecticut); and
unqualified and unsupervised home health aides are being used (Rhode
Island).

A Massachusetts official said that effective prelicensing evaluation and
screening is needed to ensure the competence of freestanding providers,
as well as their financial ability to provide adequate services and their
overall fitness for licensing. State officials also expressed concern that


 Page 26                                        GAO/HRLMO-63   Preestanding   Providers
                               Chapter 2
                               States Have Quality Assurance Standards If
                               They License Freestanding  Providers but
                               Licemiug Is Limited




                               the public (1) needs to be better educated and (2) falsely presumes that
                               freestanding providers are regulated. They said, for example:

                     l         Consumers unknowingly receive substandard health care from unregu-
                               lated freestanding providers (Texas).
                     l         Consumers are at risk of not obtaining appropriate medical care because
                               of the proliferation of freestanding providers and the resultant “confu-
                               sion of choices” (Colorado).
                     l         Consumers are often given medically unnecessary services (Maine).
                     l         Consumers need better education about selecting health care providers
                               (Arkansas).

                               Although most state officials expressed concern about the adequacy of
                               their current quality assurance efforts, three states expressed opposing
                               views:

                         l Consumers expect too much of the government, which lacks the funds to
                           regulate all types of providers (Virginia).
                         . Studies are needed demonstrating the existence of quality-of-care prob-
                           lems before oversight is warranted (Iowa).
                         l Costs for regulating providers offering less than 24-hour care may not
                           be justified (North Carolina).


                               Regardless of licensing requirements, most states reported receiving
Many States Lack               complaints about the quality of care provided by freestanding provid-
Systems to Resolve             ers, and almost half reported lacking systems for receiving and resolving
Complaints                     such complaints. Forty-two states reported receiving complaints during
                               the 12-month period ending September 30, 1987. Complaints included

                               poor conditions of the providers’ physical environment (Florida),
                               insufficient and unqualified staff and inappropriate care (Texas),
                               alleged poor quality of care and lack of attention to patient needs
                               (Illinois), and
                             . the staffs’ standards of medical practice (Illinois).

                               California estimated that it receives about 7,000 complaints each year
                               related to the quality of care provided in all licensed facilities, including
                               hospitals, nursing homes, and freestanding providers. A state official
                               commented that the complaints range from cold food to wrongful death;
                               the official indicated, however, that the state does not retain data for




                               Page 27                                      GAO/HRD90-53   Freestanding   Providers
                      Chapter 2
                      States Have Quality Afwurance Standards If
                      They License Freestanding   Providers but
                      Licensing Is Limited




                      complaints about the types of unlicensed freestanding providers, There-
                      fore, he was unable to estimate the number of complaints received for
                      freestanding providers.

                      Although California has a complaint system for licensed freestanding
                      providers, 23 states reported no systems for resolving complaints about
                      licensed or unlicensed freestanding providers. A Texas official, for
                      example, indicated that although the state regularly receives complaints
                      about care received from unlicensed providers, it was unable to provide
                      specifics because the state does not keep records for unlicensed provid-
                      ers. A Colorado official recognized the need to build a case for regulation
                      by documenting horror stories before going to the state legislature for
                      authorization to license, but indicated that the state does not keep such
                      records. The 28 states that reported having complaint resolution sys-
                      tems provided limited information concerning complaints.


                      Despite concerns about the quality of care provided by unregulated free-
States Have Limited   standing providers, health department licensing officials from only 13
Plans to Require      states identified plans to license additional providers; those plans were
                      generally limited to licensing one or two types of freestanding providers,
Additional Types of   typically, those most frequently licensed by other states.
Providers to Be
Licensed




                      Page 28                                      GAO/HIRIM@53   Freestanding   Providers
State Inspections and Enforcement Actions to
Ensure That HMOs Provide Quality Care

                      On-site inspections of the quality of care provided by HMOS were being
                      conducted in 22 of the 51 states as of December 31, 1987.’ Although
                      states generally had a variety of sanctions available during the 3-year
                      period ending December 31, 1987, only two states-California      and New
                      York-had imposed sanctions against HMOS because of deficiencies
                      related to quality of care. Some state officials suggested, however, that
                      sanctions are often not needed because of the willingness of HMOS to take
                      corrective actions when problems are identified and the effectiveness of
                      some state licensing programs.


                      States generally require an HMO to obtain a license (usually called a cer-
State Licensing       tificate of authority) to operate, and a growing number of states have
of HMOs               enacted quality assurance requirements as part of their HMO licensing
                      laws. Although primary responsibility for regulating HMOS is generally
                      vested in a commissioner of insurance or similar official, quality assur-
                      ance requirements are usually the responsibility of a department of
                      health or similar state agency.

                      Section 1301(c)(6) of the Public Health Service Act (42 U.S.C.
                      300e(c)(6)) requires federally qualified HMOS(see p. 12) to have quality
                      assurance programs. HHS regulations state that such programs must

                  . include a method for physicians and other health professionals to
                    review health care delivery processes;
                  . systematically collect data on the services provided and patient out-
                    comes, use the data to evaluate care given, and institute needed changes;
                    and
                  l assure that hospitals and other health care facilities, through which
                    they provide services, are certified under title XVIII of the Social Secur-
                    ity Act.

                      HHS, as part of its federal qualification process, is responsible for a pre-
                      liminary review of HMO quality assurance programs. Federal qualifica-
                      tion is viewed by some as a quasi seal of approval, assuring that HMOS
                      are fiscally viable and that minimum quality standards are being met.2
                      Under the Medicare program, the federal government also contracts


                      ‘On-site inspections are conducted at an HMO’s administrative office or principal place of business in
                      a state and may include visits to HMO providers.

                      ‘Nancy M. Matlin, “HMOa: New Rules Aimed at Making Industry More Competitive,” Child Health
                      Financing Report, Vol. 6, No. 2, (Winter 1989), p. 6.



                      Page 29                                                    GAO/TXttDQO-53 Freestanding Providers
                             Chapter 3
                             State Inspections and Enforcement  Actions
                             to Ensure That HMOs Provide Quality Care




                             with peer review and quality review organizations to independently
                             examine the quality of care in HMOS.


                             Thirty-nine states reported that they are authorized to conduct on-site
State Inspections of         quality-of-care inspections, and such inspections are required in 28 of
HMOs for Health Care         the 39. Yet, these inspections are actually conducted in only 22 states, of
Quality                      which 3 were not required. Collectively, these 22 states had 454 HMO
                             plans with more than 23 million enrollees (see app. XII).

                             Of the 39 states that are authorized to conduct on-site inspections of
                             HMOS, 17 had not conducted them at the time of our review. States
                             offered varying reasons for this:

                         . In Montana, the state’s only HMO was relatively new, and quality-of-care
                           inspections were required only once every 3 years.
                         . In Alabama, the HMO law had been recently enacted, and inspections had
                           not begun at the time of our work.
                         l In Utah, HMOS had not been a top priority, and the state did not have
                           personnel to conduct quality-of-care inspections.
                         l In Colorado, the necessary personnel and funding to undertake quality-
                           of-care inspections of HMOS were not available.
                         l In Louisiana, adequate procedures for conducting HMO quality-of-care
                           inspections may not have been available.
                         . In Wyoming, on-site inspections were to be conducted if a problem arose,
                           but no problems had been reported.

                             Officials from 12 states told us that (1) their laws and regulations do not
                             specifically authorize on-site inspections of health care quality in HMOS
                             and (2) they had not conducted such inspections. One of the 12 states-
                             Alaska-has no HMOS. Two others-New          Mexico and Wisconsin-
                             reported that examiners at state insurance departments review HMO
                             complaint files and quality assurance documentation during the course
                             of periodic financial audits.


                             States have a variety of sanctions available to enforce the quality-of-
State Use of Sanctions       care requirements in their HMO licensing law. For example (see fig. 3. l),
for Enforcement              of the 39 states authorized to conduct quality-of-care inspections, all can
                             revoke and most can suspend a license; many can impose intermediate
                             sanctions-such as monetary penalties or cease-and-desist orders-for
                             failure to comply with state law or regulations.



                             Page 30                                      GAO/HRDBM3   F’reestanding   Providers
                                        Chapter 3
                                        State Inspections and Enforcement  Actions
                                        to Ensure That HMOs Provide Quality Care




Figure 3.1: Sanctions Available to
Enforce Quality-of-Care Requirements
for States Authorized to Inspect HMOs




                                        During the 3-year period ending December 31,1987, two states formally
                                        imposed sanctions against HMOS because of quality-of-care deficiencies.
                                        New York fined an HMO in late 1987 for failing to implement an
                                        approved quality assurance program; California prohibited three HMOS
                                        from enrolling new members because (1) the HMOS did not have suffi-
                                        cient providers to accommodate existing enrollees and (2) access to care
                                        was, according to that state, inadequate.

                                        Eleven states told us that HMOShad been responsive to state demands
                                        for corrective actions and states had few problems obtaining compliance
                                        with quality-of-care regulations. Several states, including some of those
                                        discussed above, identified administrative enforcement measures that
                                        were effective in bringing HMOSinto compliance without the need to
                                        impose sanctions.




                                        Page 31                                      GAO/ERD9@53   Freestanding   Providers
Chapter 3
State Inspections and Enforcement  Actions
to Ensure That HMOs Provide Quality Care




Officials in two states (California and Rhode Island) identified adverse
publicity of quality-of-care deficiencies as an effective enforcement
measure. Because an HMO is dependent upon retaining existing premium-
paying members while attracting new ones, any adverse publicity about
the HMO can adversely affect it. A Rhode Island health department offi-
cial told us that because the department’s letters citing HMOS for failure
to correct quality-of-care deficiencies become public documents, the
department found that the threat of issuing such letters has resulted in
timely corrective action by the HMOS.

Four states (California, Georgia, Illinois, and Pennsylvania) said that
another effective enforcement measure is the refusal to approve new
provider contracts or requests for changes in the geographic areas
served by HMOS. Some HMOS seek to add new members by expanding the
geographic areas that they serve. As more members are added, addi-
tional providers are usually needed. In Pennsylvania, for example, HMOS
must obtain state permission before changing their service areas or add-
ing new providers. A Pennsylvania official told us the state has used its
approval authority as a tool to ensure compliance with quality-of-care
regulations, refusing to approve HMO expansion plans until deficiencies
are corrected.

Officials in two states (Iowa and North Dakota) told us that their
requirements that HMOS pay the cost of inspections are effective enforce-
ment measures. In Iowa, HMOS pay the cost of initial inspections. If an
HMO fails to adequately correct identified deficiencies, it must pay for an
additional follow-up inspection. Likewise, North Dakota officials
advised us that the implied threat of additional inspections at the HMOS'
expense has kept them in compliance.

Finally, some states indicated that well-planned licensing programs can
decrease the need for sanctions. Of seven states conducting inspections
and three states that did not, each state had denied a license requested
by an HMO because of concerns related to quality of care. For example,
an important protection, although not an enforcement measure against
poor-quality health care, a Pennsylvania official told us, is denying or
withholding approval for establishment of an inadequately planned HMO.
California also saw the licensing program as an opportunity to avoid
future problems.




Page 32                                      GAO/HRD-90-53   Freestanding   Providers
Chapter 4

Conclusions


              Freestanding providers offer consumers alternatives to care tradition-
              ally provided in hospitals, nursing homes, and physicians’ offices. With
              the expansion of the number of these providers comes a challenge to
              ensure that they will give quality health care. One way to do this is
              through licensing. States that license freestanding providers generally
              establish minimum quality assurance requirements, conduct on-site
              inspections to determine compliance with requirements, and impose
              sanctions against providers when necessary. This provides the con-
              sumer with some assurance that licensed providers are capable of giving
              quality care. States, however, have been slow to license freestanding
              providers; further, they have limited plans to expand licensing require-
              ments. No one else currently fills the gap. Consumers, therefore, do not
              have adequate assurance that unlicensed freestanding providers are giv-
              ing quality care.




              Page 33                                  GAO/HBD90-53   Fkeestandi.ng   Providers
  PW

?&f&s in Which Freestanding Providers Were
Operating (As of Sept. 30,1987)


                    Alcohol and                Ambulatory                                              Cardiac
                    drug abuse       care    psychiatric    surgical       Cancer treatment       catheterization
State                    center    center        center      center    Chemotherapy     Radiation           lab.
Alabama                       1         1             1            1                 a               a                  a
Alaska                        1         1             1            1                 a               a                  a
Arizona                       1         1             1            1                1              1                   1
Arkansas                      1          a            1            1                 a             1                    a
California                    1         1             1            1                1              1                   1
Colorado                      1         1             1            1                 a              a                   a
Connecticut                   1         1             1            1                 a              a                   a
Delaware                      1         1              a           1                 a              a                  1
Dist. of Cotumbra             1         1             1            1                1              1                    a
Florida                       1         1             1            1                1               a                  1
Georgia                       1          a            1            1                1              1                   1
Hawaii                        1         1              a           1                 a              a                   a
Idaho                         1         1              a           1                 a              a                   a
Illinois                      1         1             1            1                 a              a                   a
lndrana                       1         1             1            1                1               a                   a
Iowa                          1         1             1            1                 a              a                   a
Kansas                        1         1             1            1                 a              a                   a
Kentucky                      1         1              a           1                 a              a                   a
Louisiana                     1         1             1            1                1              1                   1
Maine                         1          a            1            1                 a              a                   a
Maryland                      1         1             1            1                 a             1                    a
Massachusetts                 1         1             1            1                 a              a                   a
Michigan                      1         1             1            1                 a              a                   a
Minnesota                     1         1             1            1                 a              a                   a
Mississrppr                   1         1             1            1                 a              a                   a
Missouri                      1         1             1            1                1              1                   1
Montana                       1          a            1            1                 a              a                   a
Nebraska                      1         1             1            1                 a              a                   a
Nevada                        1         1              a           1                 a              a                  1
New Hampshire                  a        1              a           1                 a              d                   a
NewJersey                     1         1             1            1                 a              a                   a
New Mexico                    1         1             1            1                 a              a                   a
New York                      1         1             1            1                 a              a                   a
North Carolina                1         1             1            1                1              1                    a
North Dakota                  1         1             1            1                 a              a                   a
Ohio                          1         1             1            1                1              1                   1
Oklahoma                      1         1             1            1                 a              a                   a
Oregon                        1         1             1            1                 a             1                    a




                           Page 34                                           GAO/IXRDsod3   Freestanding   Providers
                                                    Appendix I
                                                    States in Which Freestanding    Providers   Were
                                                    Operating (As of Sept. 30,1987)




   General       Diagnostic
diagnostic          imaging        Emergency        Home health          Hospice Independent            Pain control       Rehab. centers
    center            center           center              care             care clinical lab.                center Comprehensive Specialized
             a                 a            1                    1                1                1               a                1                     a
          a                1                1                    1                 a               1              1                 1                     a
         1                 1                1                    1                1                1              1                  a                    1
         1                 1                 a                   1                1                1               a                1                      a
         1                 1                1                    1                1                1              1                 1                      a
          a                1                1                    1                1                1               a                1                    -a
          a                 a                a                   1                1                1               a                1                    1
         1                     a            1                   1                 1                1               a                1                    1
         1                 1                 a                  1                 1                1              1                  a                    a
         1                 1                1                   1                 1                1              1                 1                     a
         1                 1                1                   1                 1                1              1                 1                    1
          a                 a               1                   1                 1                1               a                1                     a
             a                 a
                                            1                   1                 1                1               a                1                     a
         1                 1                 a                  1                 1                1              a                 1                     a
         1                 1                1                   1                 1                1              1                 1                    1
          a                1                1                   1                 1                1               a                1                     a
         1                  a               1                   1                  a               1              1                 1                    1
          a                1                1                   1                 1                1               a                1                     a
         1                 1                1                   1                 1                1              1                 1                    1
             a             1                1                   1                 1                1               a                 a                    a
             a             1                 a                  1                 1                1              a                 1                     a
          a                1                 a                  1                 1                1              a                 1                    1
         1                 1                1                   1                 1                1              a                  a                   1
         1                  a                a                  1                 1                1              1                 1                    1
         1                 1                  a                 1                 1                1               a                1                    1
         1                 1                    a               1                 1                1              1                 1                    1
             a                 a                a               1                 1                 a              a                 a                    a
         1                 1                    a               1                 1                 a             a                  a                    a
             a             1                1                   1                 1                1              a                1                      a
             a              a                a                  1                  a               1              a                1                     1
             a             1                 a                  1                 1                1              a                1                     1
             a             1                1                   1                 1                1              1                 a                    1
             a
                               a                a               1                 1                1               a               1                      a
         1                 1                1                   1                 1                1             1                  1                    1


         1                 1                1                   1                 1                1              a                 1                     a
             a             1                1                   1                 1                1              a                  a                   1
             a             1                    a               1                 1                1              a                 1                    1
                                                                                                                                           (continued)




                                                    Page 36                                                  GAO/IiRD9M3   F’reestanding     Providers
                         Appendix I
                         States in Which Freestanding    Providers   Were
                         Operating (As of Sept. 30,1987)




                 Alcohol and                 Ambulatory                                                      Cardiac
                 drug abuse      care      psychiatric          surgical         Cancer treatment       catheterization
State                 center   center          center            center      Chemotherapy     Radiation           lab.
Pennsylvania               1          1                    a            1                  a              a                  a
Rhode Island               1          1                1                1                  a              a                  a
South Carolina             1          1                1                1                  a              a                  a
South Dakota               1           a                a               1                  a              a                  a
Tennessee                  1          1                1                1                 1              1                   a
Texas                      1          1                1                1                 1              1                   1
Utah                       1          1                1                1                  a              a                   a
Vermont                    1          1                1                 a                 a              a                   a
Virginia                   1          1                1                1                 1              1                   1
Washington                 1          1                 a               1                  a              a                   a
West Virginia              1          1                1                1                  a              a                   a
Wisconsin                  1           a               1                1                 1              1                    a
Wyoming                    1          1                1                1                  a              a                   a
Total                     50        45                42              50                 14            15                11




                         Page 36                                                    GAO/HRD9@53   Freestanding   Providers
                                                    States in Which Freestanding    Providers   Were
                                                    @TXatillg  (h  Of !kQt. 30,1987)




   General       Diagnostic
diagnostic          imaging        Emergency        Home health           Hospice Independent            Pain control       Rehab. centers
    center            center           center              care              care clinical lab.                center Comprehensive Specialized
         1                 1                    a                1                 1                 1                 1                    1                    1
         1                     a            1                    1                 1                 1                     a                1                     a
                                                                                                                                           __--_____
         1                     a                a                1                 1                 1                 1-                     a                  a
             a                 a                a                1                 1                 1                     a                    a-                   a
             a             1                    a                1                 1                 1                 1                    1                    1
             a             1                    a                1                 1                 1                 1                    1                    1
             a             1                    a                1                 1                 1                     a                 a                       a
             a                 a                a                1                 1                 1                     a                    a                    a
         1                 1                    a                1                 1                 1                 1                    1                        a
             a             1                    a                1                 1                 1                     a                1                    1
             a                 a            1                    1                 1                 1                     a                1                    1
             a                 a            1                    1                 1                 1                     a                1                    1
             a                 a                a                1                 1                 1                     a                1                        a
        22
        --                -
                          34               25                  51                48                49                18                    38               24
                                                    aThlstype of provider was either not operating In the state or it was unknown If thts type of provider was
                                                    operatmg (see app. V).




                                                     Page 37                                                      GAO/HRD-9063      Freestanding     Providers
Appendix II

States in Which F’reestmding providers
Operating Were Required to Be Licensed
(As of Sept. 30,1987)
                      Alcohol and                Ambulatory                                           Cardiac
                      drug abuse        care   psychiatric    surgical    Cancer treatment       catheterization
State                      center     center       center      center Chemotheraov     Radiation           lab.
Alabama                         1          0             1          1             0               0                   0
Alaska                          0          0            0           1             0               0                   l-l
Arizona                         1          1            1           1             0               0                   0
Arkansas                        1          0            1           1             0               0                   0
Californta                      la         0            0           1             0               0                   1
Colorado                        1          0            1           1             0               0                   0
Connecticut                     1          1            1           1             0               0                   0
Delaware                        1          0            0           1             0               0                   0
Dist. of Columbia               0          0            0           1             0               0                   0
Florida                         1          0            0           1             0               0                   0
Georgra                         1          0            0           1             0               0                   0
Hawaii                          1          0            0           1             0               0                   0
Idaho                           1          0            0           0             0               0                   0
lllinors                        1          0            0           1             0               0                   0
Indiana                         1          0            0           1             0               0                   0
Iowa                                                                                                                  0
Kansas                          1          0            1           1             0               0                   0
Kentucky                        1          1            0           1             0               0                   0
Louisiana                       1          0            1           1             0               0                   0
Maine                                      0                                                                          0
Maryland                        1          0            0           0             0               0                   0
Massachusetts                   1          1            1           1             0               0                   0
Michrgan                        1          0            0           1             0               0                   0
Minnesota                       1          0            0           1             0               0                   0
Mississippi                     0          0            0           1             0               0                   0
Missouri                        0          0            0           1             0               0                   0
Montana                                                                                                               0
Nebraska                        1          1            1           1             0               0                   0
Nevada                          1          0            0           1             0               0                   0
New Hamoshire                   0          1            0           1             0               0                   0
New Jersey                      1          1            1           1             0               0                   0
New Mexico                      0          0            0           1             0               0                   0
Net., Vnrlr
   “1    I”,,\                  1          1            1           1             0               0                   0
  ,rth      Pamlina             1          0            1           1             0               0                   0
North Dakota                    1          0            1           0             0               0                   0
Ohio                            la         0            0           0             0               0                   0
Oklahoma                        1          0            0           1             0               0                   0
Oreaon




                            Page 38                                         GAO/HRD9063    Freestanding   Providers
                                         States in Which Freestanding Providers
                                         Operating Were Required to Be Licensed
                                         (ziSOf&Qt.  30,1987)




   General     Diagnostic
diagnostic        imaging    Emergency Home health          Hospice Independent       Pain control       Rehab. centers
    center          center       center       care             care clinical lab.           center Comprehensive Specialized
           0             0            0           0                0            1               0                   1                   0
           0             0            0           1                 0             0             0                   0                   0
           0             0            0           1                 1             1             0                   0                   0
          0             0            0              1               1             0             0                   1                   0
          0             0            0              1               0             1             0                   1                0
          0             0            1              0               1             0             0                   1                0
          0             0            0              1               1             1             0                   0                0
          0             0            1              1               1             1             0                   0                0
          0             0            0              1               1             0             0                   0                0
          1             0            0              1               1             1             0                   0                 0
          0             0            1              1               1             1             0                   0               Yi
          0             0            0              1               0             1             0                   0                 0
          0             0            0              lb              0             1             0                   0                 0
          0             0            0              1               1             1             0                   0                 0
          0             0            0              0               0             0             0                   0                 0
          0             0            0              0               0             0             0                   0                 0
          0             0            0              1               0             0             0                   0                 0
          0             0            0              1               1             1             0                   1                 0
          0             0            0              1               0             0             0                   0                 0
          0             0            0              1               0             1             0                   0                 0
          0             0            0              1               1             1             0                   1                 0
          0             1            0              0               1             1             0                   1                 1
          0             0            0              0               1             1             0                   0                 0
          0             0            0              1               1             0             0                   0                 0
          0             0            0              1               0             0             0                   0                 0
          0             0            0              1               0             0             0                   0                 0
          0             0            0              1               1             0             0                   0                 0
          1             1            0              1               0             0             0                   0                 0
          0             0            0              1               1             1             0                   0                 0
          0             0            0              1               0             1             0                   0                 1
          0             1            0              1               0             1             0                   1                 0
          0             0            0              1               1             0             0                   0                 1
          0             0            0              1               1             1             0                   1                 0
          0             0            0              1               1             0             0                   0                 1"
          0             0            0              1               1             0             0                   0                 0
          0             0            0              0               1             0             0                   0                 0
          0             0            0              0               0             0             0                   0                 0
          0             0            0              1               1             1             0                   0                 0
                                                                                                                          icontlnued)




                                         Page 39                                            GAO/HRIMO-63   Freestanding     Providers
                      Appendix II
                      States in Which Fkeestanding providers
                      Operating Were ReqM        to Be Licensed
                      (As of Sept. 30,1987)




                 Alcohol and               Ambulatory                                                 Cardiac
                 drug abuse        care   psychiatric         surgical    Cancer treatment       catheterization
State                 center     center       center           center Chemotherapy     Radiation           lab.
Pennsvlvania               1          0               0             1              0               0                  0
Rhode Island               1          1               1             1              0               0                  0
South Carolina             1          0               0             1              0               0                  0
South Dakota               1          0               0             1              0               0                  0
Tennessee                  1          0               1             1              0               0                  0
Texas
Utah                       1          0               1             1              0               0                  0
Vermont                    0          0               0             0              0               0                  0
Virainia                   1          0               1             1              0               0                  1
Washington                 1          0               0             0              0               0                  0
West Virginia              1          1               1             1              0               0                  0
Wisconsin                  0          0               0             0              0               0                  0
Wvomina
Total                     42         10             20             41             0               0                   2




                       Page 40                                              GAO/ZiRD90-63   Fhxstandlng   Providers
                                          Appendix II
                                          States in Which Freestanding Providers
                                          Operating Were Required to Be Licensed
                                          (As of Sept. 30,1987)




   General     Diagnostic
diagnostic        imaging     Emergency Home health               Hospice Independent                Pain control       Rehab. centers
    center          center        center       care                  care clinical lab.                    center Comprehensive Specialized
           0             0             0           1                       0                  1                 0              0 --          0
          1              0            1                 1                  1                  1                 0              0             0
          0              0            0                 1                  1                 0                  0              0             0
          0               0           0                 0                  0                 0                   0             0       .____ 0
          0               0           0                 1                  0                  1                  0             0             0
          0               0           0                 1                  1                 0                   0             0             0
          0              0            0                 1                  1                 0                   0             0             0
          0               0           0                 0                  0                 0                   0             0             0
          0               0           0                 1                   1                0                   0             0             0
          0               0           0                 0                  0                 0                   0             0             0
          0               0           0                 0                   1                0                   0             0             0
          0               0           0                 1                  0                  1                  0             0             0
          n               0           0                 0                  0                  1                  0             1             0
          3              3            4               38                  28                25                   0            10             4
                                          aOnly methodone treatment centers are reqwed            to be licensed

                                          bRequired to be licensed only if operated for profit

                                          COnly cardiac rehabllttatlon   programs are subject to licensing.




                                          Page 41                                                             GAO/HRD90-63   Freestanding   Providers
Providers Licensed by States
(As of Sept. 30,1987)

                    Alcohol and                       Ambulatory                                                     Cardiac
                    drug abuse           care       psychiatric       surgical           Cancer treatment       catheterization
State                    center        center           center         center        Chemotherapy     Radiation           lab.
Alabama                      12                 a           23              17                     a              a                 a
Alaska                             a            a                a           3                     a              a                 a
Arizona                      26           220              139              54                     a              a                 a
Arkansas                     10                 a            0              11                     a              a                 a
California                   6ab                a                a          46                     a              a                 1
Colorado                    170                 a           24              15                     a              a                     a
Connecticut                  78            51               66               8                     a              a                     a
Delaware                      8                 a                a           0                     a              a                     a
Dist. of Columbia                  a            a                a          12                     a              a                     a
Florida                     466                 a                a          45                     a              a                     a
Georgia                      22                 a                a          19                     a              a                     a
Hawaii                       13                 a                a           6                     a              a                     a
Idaho                        49                 a                a               a                 a              a                     a
Illinois                    233                 a                a          38                     a              a                     a
Indiana                     190                 a                a          18                     a              a                     a
Iowa                               a            a                a             a                   a              a                     a
Kansas                      185                 a           30               9                     a              a                     a
Kentucky                     75             9                    a          19                     a              a                     a
Louisiana                    73                 a           42              25                     a              a                     a
Maine                        21                 a           25                 a                   a              a                     a
Maryland                    284                 a                 a            a                   a              a                     a
Massachusetts               117            84              127               6                     a              a                     a
Michigan                    611                 a                 a         25                     a              a                     a
Minnesota                   130                 a                 a         10                     a              a                     a
Mississippi                        a            a                 a          7                     a              a                     a
Missouri                           a            a                 a         20                     a              a                     a
Montana                       8                 a            5               8                     a              a                     a
Nebraska                     20           246               71               2                     a              a                     a
Nevada                       14               a                   a         12                     a              a                     a
New Hampshire                      a       18                     a          5                     a              a                     a
New Jersey                   44            49                 0             12                     a              a                     a
New Mexico                         a          a                   a          3                     a              a                     a
New York                    297           300              946               7                     a              a                     a
North Carolina              601               a            675              31                     a              a                     a
North Dakota                 25               a               8                  a                 a              a                     a
Ohio                         lib              a                   a              a                 a              a                     a
Oklahoma                     55                 a                 a         12                     a              a                     a
Oregon                       10                 a                 a          7                     a              a                     a




                            Page 42                                                         GAO/HlD9O-63 Preestanding   Providers
                                                     Appendix III
                                                     Providers Licensed by States
                                                     (As of Sept. 30,1987)




   General       Diagnostic
diagnostic          imaging        Emergency        Home health         Hospice Independent         Pain control             Rehab. centers
    center            center           center              care            care clinical lab.            Center        Comprehensive Specialized
             a                 a                a                   a          a          108                      a                12                            a
             a                 a                a               7                   a        a                     a                  a                           a
             a                 a                a              70               7         110                      a                  a                           a
             a                 a                a               0               9               a                  a                  3                           a
                                                                                                                                              -__--.
             a                 a                a             486                 a     1200                       a                  4                           a
             a                 a           32                       a          25            a                     a                  3.                      a
             a                 a                a             117               2         109                      a                    a                     a
             a                 a            0                   0               4          17                      a                    a                     a
             a                 a             a                  0               0            a                     a                    a                     a
        43                     a                a             395              32        350                       a                    a                     a
                                                                                                                                             .___-
             a                 a            0                  73              22        123                       a                    a                     a
             a                 a                a              16                   a     31                       a                    a                     a
             a                 a                a              13c                  a    270                       a                    a                     a
                                                                                                                                       -_____
             a                 a                a             295              69        230                       a                    a                     a
             a                 a                a                 a                 a           a                  a                    d                     a
             a                 a                a                 a                 a           a                  a                    a                     a
             a                 a                a             185                   a           a                  a                    a                     a
             a                 a                a             119              27         82                       a                  1                       a
             a                 a                a             194                   a           a                  a                    a                     a
             a                 a                a              47                   a      8                       a                    a                     a
             a                 a                a             106               8        200                       a                  6                       d
                                                                                                                                                -.____
             a             2                    a                   a           0        329                       a                  6                6
             a                 a                a                   a          30        227                       a                    a                a
                                                                                                                                               -~
             a                 a                a               0               0              a                   a                    a                a
             a                 a                a             131                   a          a                   a                    a                a
             a                 a                a             203                   a          a                   a                    a                d
             a                 a                a              42              17              a                   a                    a                a
         1                 1                    a               0                 a          a                     a                    a                a
          a                 a                   a              23               2          19                      a                    a                a
             a              a                   a              63                   a     16                       a                      a                   5
             a             2                    a              63                   a    120                       a                  0                           a
             a                 a                a              60               8               a                  a                      a   -             11
                                                                                                                                                     ---
             a                 a                a             194              17        276                       a                 4                        a
             a                 a                a             122              62              a                   a                      a                 346



             a                 a                a                   a               a          a                   a                      a                       a
                                                                                                                                                  _...__~
             a                 a                a              73               1         50                       a                     d                    a
                                                                                                                                              (conttnued)




                                                    Page 43                                                GAO/IXRIHW53       Freestanding        Providers
                         Appendix IIl
                         Providers Licensed by States
                         (As of Sept. 30,1987)




                 Alcohol and                       Ambulatory                                                     Cardiac
                 drug abuse           care       psychiatric       surgical           Cancer treatment       catheterizatior
State                 center        center           center         center        Chemotherapy     Radiation           lab.
Pennsylvania             316                 a                 a         20                     a                a                 a
Rhode Island              51            21                8               4                     a                a                 a
South Carolina            56                 a                 a          8                     a                a                 a
South Dakota               9                 =                 a          5                     a                a                 a
Tennessee                126                 =          220              30                     a                a                 a
Texas                    250                 =                 a         90                     a                a                 a
Utah                      60                 =            11              6                     a                a                 a
Vermont                         a            a              a                 a                 a                a                 a
Virginia                  75                 =             0             10                        a               a               1
Washington                46                 =                 a              a                    a               a                   a
West Virainia             14             0               35               0                        a               a                   a
Wisconsin                    a               a                 a              a                    a               a                   a
Wyoming                     4                =                 a              a                    a               a               a
Total                  4.947           998            2,477             885                    0               0                   2




                         Page 44                                                         GAO/HRD9O-S3   Preestanding   Providers
                                                    Appendix III
                                                    Providers Licensed by Statea
                                                    (As of Sept. 30,1987)




   General       Diagnostic
diagnostic          imaging        Emergency      Home health              Hospice Independent   Pain control       Rehab. centers
    center            center           center            care                 care clinical lab.       center Comprehensive Specialized
             a                 a                a         302                     a         4200              a             a           a
         1                     a            2                   10                   4               80                  a                    a                 a
             a                 a                a               49                  14                    a              a                     a                a
             a                 a                a                    a                   a                a              a                     a                a
             a                 a                a              352                       a          325                  a                     a                a
             a                 a                a              976                  23                    a              a                     a                a
             a                 a                a               42                   0                    a              a                     a                    a
             a                 a                a                    a                a                   a              a                     a                    a
             a                 a                a                0                   0                    a              a                     a                    a
             a                 a                a                 a                   a                   a              a                     a                    a
             a                 a                a                 a                  6                    a              a                     a                    a
             a                 a                a              167                       a           40                  a                     a                    a
             a                 a                a                    a                   a          173                  a                 1                        a
        45                 5               34               5,029                  391           8,893                   0               40                    56
                                                    aTypes of providers were not licensed by the states (see app. II).
                                                    bOnly methadone treatment centers are required to be licensed.

                                                    %equired   to be licensed only if operated for profit.

                                                    dOnly cardiac rehabilitation   programs are subject to licensmg.




                                                    Page 46                                                        GAO/HRD-90.53   Preestanding    Providers
Appendix IV

States With Freestanding Providers That
Volunteer to Be Licensed to Meet Federal or
State Funding Requirements
                                                                                   Alcohol and             Ambulatory
                                                                                   drug abuse              psychiatric
                States                                                                 centers                centers
                California                                                                     23”                  381
                Georgia                                                                         0                    31
                Illinois                                                                        0                   200
                Maryland                                                                        0                    67
                Mississippi                                                                     1                        1.5
                Ohio                                                                         350”                   300
                Texas                                                                           0                    50
                Vermont                                                                        19                        10
                Total                                                                        393                 1.054
                aThese figures do not include methadone treatment centers, which are required to be licensed (see
                app. II and Ill).




                Page 46                                                   GAO/IUUM@63       Freestanding     Providers
Page 47   GAO/HRD90-63   Freestanding   Providers
Appendix V

States in Which the Operation of F’reestanding
Providers Wm Unknown

                                                       Ambulatory
                                                     care  psychiatric
                State                              center        center
                Alaska                                    0                   0
                California                                0                   0
                Colorado                                  0                   0
                Delaware                                  0                   1
                Dist. of Columbia                         0                   0
                Florida                                   0                   0
                Hawaii                                    0                   1
                Idaho                                     0                   1
                lllinols                                  0                   0
                Indiana                                   0                   0
                Iowa                                      0                   0
                Kansas                                    0                   0
                Kentucky                                  0                   0
                Maine                                     0                   0
                Marvland                                  0                   0
                Michlaan                                  0                   0
                Minnesota                                 0                   0
                Nevada                                    0                   0
                New Mexico                                0                   0
                Ohio                                      0                   0
                Oklahoma                                  0                   0
                Tennessee                                 0                   0
                Texas                                     0                   0
                Washington                                0                   1
                West Virginia                             0                   0
                Wisconsin                                 1                   0
                Total                                     1                   4




                Page 48             GAO/HRD80-63   Freestanding   Providers
                                              Appendix V
                                              States in Which the Operation of
                                              Freestading   Providers Was Unknown




                                  Cardiac         General     Diagnostic
    Cancer treatment        catheterization    diagnostic        imaging     Emergency    Pain control       Rehab. centers
Chemotherapy     Radiation     laboratory          center          center        center         center Comprehensive
                                                                                                                  ____ Specialized
          0               0               0              1              0             0             0                   0                  1
          0               0               0              0              0             0             0                   0                  1
           1              1              1               1              0             0             1                   0                  1
           1              1              0               0              1             0             1                   0                  0
                                                                                                                          .__~
           0              0              0               0              0             1             0                   0                  0
           0                             0                                            0             0
                          1              1                              1             0             1                -__0
            1                                            1                                                                                 1
            1             1              0               0              0             0             1                   0                  1
           1              1              1               0              0             1             1                   0                  1
           0              1              0               0              0             0             0                   0                  0
           1              1              1               I              0             0             1                   0                  1
                                                                                                                                           0
           0              0              0               0               0            0             1                   0                  1
           0              0              0               1               0            0             0                   0                  0
           1              0              0               0               0            0             1                   0                  0
           0              0              0               0               0            0             1                   1                  0
                                                                                      0                                                    0
            1             1              0               0               0            0             0                   0                  0
            1             1              0               0               0            0             0                   0                  0
           0              0              0               0               0            0             1                   0                  1
           1              1              1               1               0            0             1                   0                  0
           0              0              1               1               0            0             0                   0                  0
           0              0              0               1               0            1             0                   0                  0
            1             1              1               1               0            1             1                   0                  0
            1             1              1               1               1            0             1                   0                  0
            0             0              0               0               0            0             0                   0                  0
          14             15             10              10               5            4            13                   1              10




                                              Page 49                                           GAO/IiRD90-53   Freestanding   Providers
Amendix       VI

States With F&standing Providers in
Operation That Were Not Required to Be
Licensed (As of Sept. 30,1987)

                    Alcohol and             Ambulatory                                         Cardiac
                    drug abuse    care    psychiatric    surgical    Cancer treatment     catheterization
State                    centeP centeti       centerC     centeP Chemotherapy* Radiation’           lab.
Alabama                       0       1            0           0             0                0                  0
Alaska                        1       1            1           0             0                0                  0
Anzona                        0       0            0           0             1                1                  1
Arkansas                      0       0            0           0             0                1                  0
Caltfornra                    19      1            1           0             1                1                  0
Colorado                      0       1            0           0             0                0                  0
Connecticut                   0       0            0           0             0                0                  0
Delaware                      0       1            0           0             0                0                  1
Dist. of Columbia             1       1            1           0             1                1                  0
Florida                       0       1            1           0             1                0                  1
Georgia                       0       0
Hawaii                        0       1            0           0             0                0                  0
Idaho                         0       1            0           1             0                0                  0
lllinors                      0       1            1           0             0                0                  0
Indiana
Iowa                          1       1            1           1             0                0                  0
Kansas                        0       1            0           0             0                0                  0
Kentucky                      0       0
Louisiana                     0       1            0           0             1                1                  1
Maine                         0       0            0           1             0                0                  0
Maryland                                                                                                         0
Massachusetts                 0       0            0           0             0                0                  0
Michiaan                      0       1            1           0             0                0                  0
Minnesota                     0       1            1           0             0                0                  0
Mississippi                   1       1            1           0             0                0                  0
Missouri                      1       1            1           0             1                1                  1
Montana                       0       0            0           0             0                0                  0
Nebraska                      0       0            0           0             0                0                  0
Nevada                        0       1            0           0             0                0                  1
New Hampshire                 0       0            0           0             0                0                  0
New Jersey                    0       0            0           0             0                0                  0
New Mexico                    1       1            1           0             0                0                  0
New York                      0       0            0           0             0                0                  0
North Carolina                0       1            0           0             1                1                  0
North Dakota                  0       1            0           1             0                0                  0
Ohro                          1s      1            1           1             1                1                  1
Oklahoma                      0       1            1           0             0                0                  0
Oregon                        0       1            1           0             0                1                  0




                         Page 60                                      GAO/IlRD90-53   Freestanding   Providers
                                          Appendix VI
                                          States With Preeatanding   Providers in
                                          Operation That Were Not I&quhed to Be
                                          Licensed (As of Sept. 39,1987)




   General   Diagnostic
diage$fit$      imaging     Emergency    Home health        Hospice Independent     Pain control       Rehab. centers
                 center’       centeri         carek           care’ clinical lab.m      centeln Comprehensive0 Specializedp
         0              0            1              1              1              0             0              0            0
         0             1             1              0              0                1        1                  1                   0

         1             1             0              0              0                1        0                 0                    0
         1             1             1              0              1                0        1                 0                    0
         0             1             0              1              0                1        0                 0                    0
         0             0             0              0              0                0        0                 1                    1
         1             0             0              0              0                0        0                 1                    1
         1             1             0              0              0                1        1                 0                    0
         0             1             1              0              0                0        1                 1                    0
         1             1             0              0              0                0        1                 1                    1
         0             0             1              0              1                0        0                 1                    0
         0             0             1              1'             1                0        0                 1                    0
         1             1             0              0              0                0        0                 1                    0
         1             1             1              1              1                1        1                 1                    1
         0             1             1              1              1                1        0                 1                    0
         1             0             1              0              0                1        1                 1                    1
                                                                                                                                    0
         1             1             1              0              1                1        1                 1                    1
         0             1             1              0              1                0        0                 0                    0
         0             1             0              0              0                0        0                 0                    0
         0             0             0              1              0                0        0                 n                    r-l
         1             1             1              1              0                0        0                 0                    1
         1             0             0              0              0                1        1                 1                    1
         1             1             0              0              1                1        0                 1                    1
         1             1             0              0              1                1        1                 1                    1
         0             0             0              0              0                0        0                 0                    0
         0             0             0              0              1                0        0                 0                    0
         0             1             1              0              0                0        0                 1                    0
         0             0             0              0              0                0        0                 1                    0
         0             0             0              0              1                0        0                 0                    1
         0             1             1              0              0                1        1                 0                    0
         0             0             0              0              0                0        0                 0                    0
         1             1             1              0              0                1        1                 1                    1s
         0             1             0              0              0                1        0                 0                    0
                                                                                                                                    0
         0             1             1              1              1                1        0                 0                    1
         0             1             0              0              0                0        0                 1                    1
                                                                                                                       (contmued)



                                         Page 51                                          GAO/IIRIMOU   Preestanding    Providers
                       Appendix VI
                       States With Freestanding   Providers in
                       Operation That Were Not Requhed to Be
                       Licensed (As of Sept. 30, MY?)




                 Alcohol and               Ambulatory                                                      Cardiac
                 drug abuse    care      psychiatric        surgical       Cancer treatment           catheterization
State                 centeP centeti         centef          centeti   Chemotherapp    Radiation’               lab.
Pennsylvania               0        1               0              0              0               0                   0
Rhode Island               0        0               0              0              0               0                   0
South Carolina             0        1               1              0              0               0                   0
South Dakota               0        0               0              0              0               0                   0
Tennessee                  0        1               0              0              1               1                   0
Texas                      0        1               1              0              1               1                   1
Utah                       0        1               0              0              0               0                   0
Vermont                    1        1               1              0              0               0                   0
Virginia                   0        1               0              0              1               1                   0
Washington                 0        1               0              1              0               0                   0
West Virginia              0        0               0              0              0               0                   0
Wisconsin                  1        0               1              1              1               1                   0
Wyoming                    0        1               1              1              0               0                   0
Total                     10       35             22               9             14              15                   9




                      Page 62                                              GAO/HRl%9O-53   Freestanding   Providers
                                          Appendix VI
                                          States With Freestanding   Providers in
                                          Operation That Were Not Required to Eie
                                          Licensed (As of Sept. 30,1987)




   General     Diagnostic
diagnostic        imaging    Emergency Home health              Hospice Independent     Pain control       Rehab. centers
   centerh         centerl       centeri     carek                 care' clinical lab.m      center" Comprehensive0 Specializedp
           1             1             0          0                    1              0             1              1             1
           0             0             0          0                    0              0             0              1            0
          1              0       -___  0          0                    0              1             1              0            0
          0              0             0          1                    1              1             0              0            0
          0              1             0          0                    1              0              1             1             1
          0              1             0          0                    0              1             1              1             1
          0              1             0          0                    0              1             0              0            0
          0              0             0          1                    1              1             0              0            0
          1              1             0          0                    0              1             1              1            0
          0              1             0          1                    1              1             0              1             1
          0              0            1                1               0              1             0              1             1
          0              0            1                0               1              0             0              1             1
          0              0           0            -    1               1              0             0              0            0
         19             31          21                14             20              24           19              29           21
                                          aOf the 10 states reporttng the operation of alcohol and drug abuse centers that were not requrred to be
                                          Ircensed. none reported knowtng how many were operatrng.
                                          “Of the 35 states reporting the operation of ambulatory care centers that were not requtred to be
                                          lrcensed, Vermont reported knowrng that 6 were operattng.

                                          ‘Of the 22 states reporting the operation of ambulatory psychratnc centers that were not required to be
                                          licensed, none reported knowtng how many were operattng.

                                          “Of the 9 states reporting the operatton of ambulatory surgical centers that were not requtred to be
                                          Incensed, Maryland reported knowrng that 31 were operating and Wyoming, 1

                                          eOf the 14 states reporttng the operatton of chemotherapy cancer treatment centers that were not
                                          requtred to be Incensed, none reported knowing how many were operating.

                                          ‘Of the 15 states reporting the operatton of radiation cancer treatment centers that were not required to
                                          be Incensed, Maryland reported knowing that 2 were operating.

                                          a0f the 9 states reporting the operatton of cardiac catheterization   laboratones that were not requved to
                                          be licensed, none reported knowing how many were operatrng.
                                          “Of the 19 states reporting the operation of general diagnostic centers that were not requrred to be
                                          licensed, Minnesota reported knowing that 1 was operating; Mississtppt, 4
                                          ‘Of the 31 states reporting the operation of diagnostic imaging centers that were not required to be
                                          Incensed. Colorado reported knowing that 4 were operating; Iowa, 3; Maine, 4. Maryland, 97 MISSISSIPPI.
                                          2; and Utah, 1
                                          IOf the 21 states reporting the operation of emergency centers that were not required to be licensed
                                          Hawaii reported knowing that 2 were operating.

                                          kOf the 14 states reporting the operation of home health care services that were not requtred to be
                                          Incensed, Alabama reported knowtng that 124 were operating; Colorado, 110; South Dakota, 25, Ver-
                                          mont, 17. and Wyoming, 32.




                                          Page 53                                                        GAO/HRIMO-53       Freestanding   Providers
Appendix VI
States With Preestanding   Providers in
Operation That Were Not Required to Be
Licensed (As of Sept. 30,1987)




‘Of the 20 states reporting the operation of hosprce care servrces that were not required to be Incensed,
Alabama reported knowing that 7 were operating; Hawatt. 3; Maine, 23, Nebraska, 2: Pennsytvanra, 75,
South Dakota, 2, Wisconsrn, 45, and Wyomrng, 1

mOf the 24 states reporting the operation of Independent clintcal laboratories that were not requrred to
be licensed, Arkansas reported knowing that 46 were operating; Colorado, 65; the Dtstnct of Columbra,
38; South Dakota, 6, and Vermont, 4
“Of the 18 states reporting the operatton of pain control centers that were not requrred to be licensed,
Florida reported knowing that 18 were operating.

‘Of the 28 states reporting the operation of comprehenstve rehabrlitation centers that were not requtred
to be licensed. Alaska reported knowing that 1 was operating; Connectrcut, 6; Delaware, 3. Florlda, 120;
Georgia, 5; Hawart, 1; Illinois. 42; Iowa, 22; Mississippi. 4; Nevada, 1; New Hampshire, 3, Oregon, 6. and
Virginra, 3.

POf the 21 states reporting the operatton of spectalized rehabilitation centers that were not requrred to
be licensed, Delaware reported knowrng that 6 were operating; Georgra, 64: Oregon, 3: and Wtsconsrn,
23.
QAlcohol and drug abuse centers other than methadone treatment centers are not required to be
Incensed.
‘Only if not for profit

SExcept for cardiac rehabilrtatton programs.




Page 64                                                       GAO/HIUMO-S3       Freestanding    Providers
Appendix VII

State Expenditures for Licensing of All
Fhestanding Providers (For States’ Most
Recently Completed Fiscal Year)
               State                                          Expenditures
               Alabama                                               $355,000
               Alaska                                                            a
               Arizona                                                150,000
               Arkansas                                                85,000
               Californra                                                        a
               Colorado                                                 10.000
                                                                                     a
               Connecticut
               Delaware                                                 98,057
               Distnct of Columbia                                               a
               Florida                                                           a
               Georoia                                                           a
               Hawaii                                                 587,056
               Idaho                                                        -a
               Illinois                                                              a
               Indiana                                                               a
               Iowa                                                              0
               Kansas                                                                a
               Kentuckv                                                              a
               Loursiana                                                66,000
               Maine                                                                 a
               Marvland
                   I
                                                                      377 655
               Massachusetts                                                         a
               Michigan                                                              a
               Minnesota                                              274,228
               Mississippi                                             85,000
               Missouri                                                77,165
               Montana                                                156,444
               Nebraska                                                              a
               Nevada                                                                a
               New Hampshire                                                         a
               New Jersey                                                            a
               New Mexico                                                            a
               New York                                             12,765,533
               North Carolina                                        1,520,384
               North Dakota                                                          a
               Ohio                                                              0
               Oklahoma                                                              a
                Oregon                                                  53,500
                Pennsylvania                                         1,219.428
                Rhode Island                                                         a
                                                                (continued)



               Page 65               GAO/HRD-90-53   Freestanding    Providers
Appendix VU
State Ekpenditares  for Licensing of All
Fkeestanding Providers (For States’ Most
Recently Completed Fiscal Year)




State                                                                                         Expenditures
South Carolina                                                                                                 -a
South Dakota                                                                                                        d
Tennessee                                                                                                           a
Texas                                                                                                600,000
Utah                                                                                                 300.000
Vermont                                                                                                             a
Virginia                                                                                             247,100
Washington                                                                                            57,000
West Virainia                                                                                        290.000
Wisconsin                                                                                             63,989
Wyoming                                                                                         -54,ooo
5tate either did not report Its expenditures   or reported that its records did not separately ldentlfy that
Information.




Page 56                                                         GAO/HRWJO-63        Freestanding    Providers
Appendix VIII

States Requiring Review of Quality Controls
During On-Site Inspections by Type of
F’reestandingProviders

                                                             On-site inspections of quality controls
                                                States                                                     Verify
                                             requiring    Review                                          quality
                                               on-site    patient      Review credentials             assurance
Type of provider                          inspections    records      Physician Nonphysician            program
Alcohol and drug abuse center                       42         42            28              35               - 27
Ambulatory care center                               9          9             8               8        ~-        6
Ambulatory psychiatric center                       18         18            17              17                 15
Ambulatory surgical center                          38         38            36              35                 28
Cardiac cathetenzation lab.                          1          1             1               1                  0
General diagnostic center                            3          3              2              2                  2
Diagnostic imagrng center                            3          3              3              3                  3
Emergency center                                     2          2              1              1                  2
Home health care                                    32         31             17             30                 20
Hospice care                                        22         22             18             22                 18
Independent clinical lab.                           24         19             16             16                 23
Rehab. center (comprehenswe)                         8          7              7              7                  5
Rehab. center (specialized)                         3          3              3              3                  3
Total                                             205        198            157            180                152




                                Page 57                                GAO/HRD-9053    Freestanding    Providers
Appendix IX

Sanctions Recommendedand Imposed on
F’reestandingProviders (During 12-Month
Period Ending Sept. 30,1987)
               Sanction and provider type                                         Recommended            Imposed
               License revocation:
               Alcohol and drug abuse center                                                      5               1
               Ambulatory care center                                                             1               1
               Ambulatorv surgical center                                                         2               3
               Home health care                                                                  10               5
               Hospice care                                                                       1               0
               lndeoendent clinical lab.                                                         21              13
               Subtotal                                                                          40              23

               License suspension:
               Alcohol and drug abuse center                                                      2                  0
               Ambulatory psychiatric center                                                      2                  2
               Ambulatorv surgical center                                                         1                  1
               Home health care                                                                   1                  1
               Independent clinical lab.                                                          4                  1
               Subtotal                                                                          10                  5

               Monetarv fine:
               Alcohol and drug abuse center                                                      2               3
               Ambulatory care center                                                            21              21
               Home health care                                                                   I               0
               lndeoendent clinical lab.                                                          4              14
               Subtotal                                                                          28              38

               Service restriction:
               Alcohol and drug abuse center                                                     22              11
               lndeoendent clinical lab.                                                         49              88
               Subtotal                                                                          71              99
               aAn imposed sanction may have been recommended   during an earlier time period.




               Page 68                                                GAO/HRD9063         Freestanding   Providers
Page 59   GAO/HRD4O-63   Freestanding   Frmiders
Appendix X

Sanctions Imposed on F’reestandingProviders
by States (During H-Month Period                                      Ending

Sept. 30,1987)
                          Alcohol and drug abuse centers
                                                          Service          Ambulatory care centers
State              Revoke         Suspend      Fine    restriction         Revoke      Suspend     Fine
California                  0             0       0              0                0                  0            0
Connecticut                 0             0       0              0                0                  0            0
Florida                     0             0       1              0                0                  0            0
Georgia                     0             0       0              1                0                  0            0
Illinois                    0             0       0              0                0                  0            0
Kansas                      0             0       0              0                0                  0            0
Louisiana                   0             0       0              0                0                  0            0
Massachusetts               0             0       0              0                1                  0            0
Michigan                    0             0       0              0                0                  0            0
Mississippi                 0             0       0              0                0                  0            0
Missouri                    0             0       0              0                0                  0            0
Montana                     0             0       1              0                0                  0            0
New Jersey                  0             0       0              0                0                  0           10
New York                    1             0       1              0                0                  0           11
Oklahoma                    0             0       0              0                0                  0            0
Oregon                      0             0       0              0                0                  0            0
Pennsylvania                0             0       0              0                0                  0            0
Tennessee                   0             0       0              0                0                  0            0
Utah                        0             0       0             10                0                  0            0
Wisconsin                   0             0       0              0                0                  0            0
Wyoming                     0             0       0              0                0                  0            0
Total                       1             0       3             11                1                  0           21




                Page 60                                              GAO/IiRD-90453   Freestanding       Providers
                                           Appendix X
                                           !3anctiona Imposed on Fkeestanding Providers
                                           by States (During U-Month Period Jkiing
                                           Sept. 39,1987)




 Ambulatory psychiatric         Ambulatory surgical                                                Independent clinical labs.
        centers                      centers                    Home health care                                                 Service
Revoke   Suspend      Fine   Revoke    Suspend      Fine    Revoke Suspend       Fine         Revoke   Suspend     Fine       restriction
     0          0        0        0           0        0         0          0       0              0          0       0                 10
     0          0        0        0           0        0         0           0      0              0          0       0                     5
     0          0        0        0           0        0         0           0      0              0          0      10                 40
      0          0      0          1           0        0          0             0        0        0           0      0                  0
      0          0      0          0           0        0          0             0        0        4           0      0                 20
      0          2      0          1           0        0          2             0        0        0           0      0                  0
      c-l        0      0          0           0        0          1             0        0        0           0      0                  0
      0          0      0          0           0        0          0             0        0        3           0      0                  0
      0          0      0          0           0        0          0             0        0        2           0      0                  1
      0          0      0          0           0        0          0             1        0        0           0      0                  0
      0          0      0          0           0        0          1             0        0        0           0      0                  0
      0          0      0          0           0        0          0             0        0        0           0      0                  0
      0          0      0          0           0        0          0             0        0        1           1      4                  3
      0          0      0          0           0        0          0             0        0        0           0       0                 0
      0          0      0          0           1        0          0             0        0        0           0       0                 0
      0          0      0          0           0        0          0             0        0        0           0       0                 5
      0          0      0          0           0        0          0             0        0        1           0       0                 3
      0          0      0          1           0        0          0             0        0        0           0       0                 1
      0          0      0          0           0        0          0             0        0        0           0       0                 0
      0          0      0          0           0        0          1             0        0        0           0       0                 0
      0          rl     n          0           0        0          0             0        0        2           0       0                 0
      0          2      0          3           1        0           s            1        0       13           1     14                 88




                                           P8ge 6 1                                              GAO/HRD9@53   Preestanding     Providers
Amendix XI

State Opinions on Effectiveness of Sanctions


                                                                                                      States
                                                                                                  Most           Least
                Sanction                                                                      effective      effective
                Monetary penalties                                                                    10                2
                Licensing actions                                                                      9               21
                Service restrictions                                                                   7                  3
                Adverse publicity                                                                      2                  3
                                                                                                           b
                Letter of dissatisfaction                                                                                  1
                                                                                                           b
                Appointment of a “master”c                                                                                 1


                aNo state reported this sanction as “least effective.

                bNo state reported this sanction as “most effective.”
                CAn officer of the court who assists the judge by undertaking various tasks




                Page 62                                                      GAO/IilUMMS        Freestanding   Providers
Appendix XII

HMOs, Enrollees, and On-SiteQutityaf-Care
Inspections by State (As of Dec. 31,1987)

                                                           On-site inspections
               State            HMOs   Enrollees    Required Authorized’       Conducted
               Alabama            13     144132            1               0                     0
               Alaska              0           0           0               0                     0
               Arizona            17     992,109           0               1                     0
               Arkansas            7      10,172           1               0                     1
               Californra         61   7,7Oc,ooo           1               0                     1
               Colorado           16     574.868           1               0                     0
               Connecticut        12     467,400           1               0                     1
               Delaware            7     123,800           1               0                     1
               District of
               Columbia            4     346443b           0               0                     0
               Florida            34   1,144,066           1               0                     1
               Georgia            12     687,720           1               0                     1
               Hawari              5     218,398b          0               0                     0
               Idaho               3       6,919           0               1                     0
               Illinois           45   1,676,164           1               0                     1
               Indiana            26     448,900           0               0                     0
               Iowa               12     236,143           1               0                     1
               Kansas             13     378,775           1               0                     0
               Kentucky           13     512,141           1               0                     1
               Louisiana          11     197,500           1               0                     0
               Maine               4       6,504b          1               0                     0
               Maryland           20     966,608           1               0                     1
               Massachusetts      21   1,229,677           0               0                     0
               Michiaan           19   1.37~.783           0               1                     1
               Minnesota          12   1,135,654           1               0                     1
               Mississippi         1         217           1               0                     0
               Missouri           20     417,281           0               0                     0
               Montana             1       5,000           1               0                     0
               Nebraska            7      69,443           1               0                     1
               Nevada              4     133,936           0               1C                    0
               New
               Hampshire           4     125,694           0               0                     0
               New Jersey         21     750,000           0               1                     1
               New Mexico          7     157,890           0               0                     0
               New York           29   2,128,841           1               0                     1
               North Carolina     11     337,705           0               0                     0
               North Dakota        6      84,677           1               0                     1
               Ohio
               - .                42   1.500.000           1               0                     1
               Oklahoma           11     165,020            0              1C                 0
               Oreaon             14     513,940b           0              0                  0
                                                                                   (contrnued)



               Page 63                               GAO/HRIMW63    Freestanding     Providers
Appendix XII
HMOs, Ehuolleee, and OnSite Quality-of-Care
Inspections by State (As of Dec. 31,1987)




                                                                  On-site inspections
State                        HMO8         Enrollees        Required Authorizeda       Conducted
Pennsylvania                      28        991,542                  1             0                   i
Rhode Island                       6        180,994                  1             0                   1
South Carolina                     7        164,006                  1             0                   1
South Dakota                       2         17,822                  1             0                0
Tennessee                         11        225,302                  0             1                1
Texas                             43      1,118,987                  1             0 ______         1
Utah                               7        225,419                  0             1                0
Vermont                            3         11,541b                 0             0                0
Virgtnia                          19        358,129                  0             1                0
Washington                        18        470,36Zb                 0             1                0
West Virglnla                      4         55,825                  1             0                0
Wisconsin                         31      1,021,582                  0             0                0
Wyoming                            2          3,185                  0             1C               0
Total                           746      31.815.216                 28           11                22
aAuthorized but not required.

blnterstudy, The Interstudy Edge, (Excelsior, Minn.: Spring 1988)

%spection   required, but not on-site.




Page 64                                                      GAO/HIUMO-63   Freestanding   Providers
Appendix XIII

Major Contributors to This Report


                              Jane L. Ross, Senior Assistant Director, (202) 275-6195
Human Resources               James R. Linz, Assistant Director
Division,                     Donald J. Walthall, Assignment Manager
                              Michael O’Dell, Social Science Analyst
Washington, D.C.
                              Donald Hass, Evaluator-in-Charge
Da11as     Re@ona1   Office   Isabella Seeley, Evaluator




(101120)                      Page 66                                   GAO/HRD9O-53    Freestanding   Providers
.




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