Once Health Regulators, Now Partners

"When the government takes a position, you would expect it to be neutral, that patients would have the same rights as doctors and hospitals," he said.

'Great Question'

Rollow said the complaint process has "improved substantially" since Shipp's lawsuit. QIOs are now required to assign case managers to monitor complaints "and answer any questions that patients have," he said. "I think you would find it's much better than it was."

Why aren't more Medicare patients taking advantage of the improved process? "There seem to be not as many as you might think there should be," Rollow acknowledged. He offered several possible explanations: Patients and families are not aware they can file a complaint. They are aware but think it isn't valuable. The response is not timely. "What the actual explanation is, I don't know," Rollow said.

Maryland's QIO reported reviewing 15 complaints between 2003 and 2004; the District's QIO reviewed two. Both are owned by the Delmarva Foundation, a nonprofit based in Easton, Md. "I don't know why we don't receive more complaints," said Maulik S. Joshi, the group's president. "That's a great, great question."

Some QIO spokesmen acknowledge that the complaint process is not as well publicized as it could be. Most QIOs include a description on their Web sites, but not all Medicare patients use the Internet or know where to look.

Government investigators looked into the complaint system in 2001, posing as patients and calling hotlines at 10 QIOs. They found that only four provided accurate information, said the report by the inspector general's office of the Department of Health and Human Services. They also found that QIOs did not routinely interview the parties involved in complaints, relying instead on reviews of medical charts.

In extreme cases, QIOs may recommend that the inspector general sanction a provider, ranging from a fine to exclusion from Medicare. From 1986 to 1994, QIOs recommended 278 sanctions against all providers, mostly doctors. From 1995 to 2003, they recommended 12 sanctions, according to the inspector general's office. In four of the nine years, there were none at all.

Schulke said QIOs still suggest sanctions in egregious cases. But with the emphasis now on helping doctors and hospitals, "a lot of times the problems are better addressed by not punishing the provider," he said.

Some QIOs have gone years without recommending a sanction. The contractor in North Carolina hasn't filed one in 10 years, spokeswoman Peg O'Connell said. She added that the number of sanctions declined sharply when the focus of the program shifted to collaborating with providers.

"The QIOs are continually downplaying their role of oversight," said Arthur A. Levin, director of the nonprofit Center for Medical Consumers. "They don't want to do anything that upsets the doctors and hospitals. To me, it seems like an obvious conflict. Sometimes you have to punish providers for doing bad things."

Joshi, of the Delmarva Foundation, said it is valid to ask if the QIO partnership mission conflicts with its investigative role. "We need to have a discussion," he said. "Does it fit or not fit?"

Well-Paid Executives

As they work more closely with health care providers, many QIOs also have leveraged their positions and experience to compete aggressively for other government and private health care contracts.

As a group, QIOs have been collecting nearly as much from their outside work as from Medicare. In fiscal 2004, the most recent year data are available, their total revenue topped $500 million, according to tax documents examined by The Post.

Most QIOs are nonprofit but a few are for-profit companies. Some have merged or expanded into other states. In 2002, the for-profit Health Services Advisory Group, the QIO for Arizona, acquired its Florida counterpart for an undisclosed sum. The Arizona organization has contracts to review care provided to Medicaid patients in 10 states from Hawaii to Michigan, and last year had revenue of about $25 million.

The West Virginia Medical Institute Inc., based in Charleston, owns the QIOs in Delaware and Pennsylvania and has a multimillion-dollar contract with the Department of Veterans Affairs. Delmarva has government contracts in California, Florida, West Virginia and Virginia.

The QIOs' expanding mission has been lucrative for some executives and board members. Eleven QIO executives collected $300,000 or more in salary and benefits, according to the latest tax records. Thirty others received more than $200,000. Highest-paid was Martin Margolies, chief executive of PRONJ in New Jersey. He received $519,084 and had the use of a 2001 BMW, according to records and interviews.

Jim Anderson, chief financial officer for the New Jersey QIO, who was paid $309,860, offered several reasons for Margolies's pay package. He said the 58-year-old executive, who has worked at PRONJ since 1977, was "one of, if not the longest-serving" QIO managers. In addition, Anderson said, Margolies works 75 hours a week and is responsible for four affiliates, including a for-profit company.

PRONJ also is generous with its trustees. In 2003, it paid more than $500,000 to its directors, including 13 physician board members who received between $34,000 and $45,000 each, tax records show. Only two members of the QIO's 21-person board weren't paid something that year, according to the records.

"Our board has been with us a very long time," Anderson said. "It's not just a show-up-once-a-quarter board. They're into the operation of the business."

Anderson said that as part of their board pay, some of the physician-trustees get $250 an hour to conduct the QIO's medical reviews. Others "answer correspondence or attend meetings, such as the hospital association or the medical society," he said.

Nationally, only 2 percent of all nonprofit groups pay board members, according to BoardSource, a Washington organization.

Most QIO boards are dominated by doctors and other health care providers. Consumers appear to play little, if any, role. By law, QIOs are required only to have a single consumer member on their boards -- and that is what most have, one consumer.

An analysis of the latest filings shows that two-thirds of all QIO board members are physicians. At three QIOs, 90 percent or more are doctors.

All but one of the 21 board members of New Jersey's QIO are physicians. The board counts several retired doctors as consumer members. Margolies said the board sees no reason to change. "We're clearly a physician-controlled organization," he said. "That's the way they want to keep it."

But some QIO executives say change may be overdue.

"I don't think it's acceptable anymore to have so little consumer input," said Bennett of HealthInsight, where half of the board members are doctors. "Our work has changed," he said. "It's much more about bringing communities together to work on difficult health care issues. We believe consumers need a voice."

That would suit critics such as Swankin, of the Citizen Advocacy Center, who contends that the "history of QIOs is one of tokenism" when it comes to consumers.

"You don't regulate the airlines by having the board made up of airline pilots," he said. "But that's pretty much what QIOs do."