Senate Report Faults Medicare's Handling of Complaints

Medicare's process for investigating complaints about bad care is "broken," leaves patients in the dark, and is of "no benefit to improving the overall quality" of medical care received by millions of elderly and disabled beneficiaries, Senate investigators have found.

The ongoing probe by the Senate Finance Committee determined that the number of complaints investigated by Medicare appears "disproportionately low," Sen. Charles E. Grassley (R-Iowa), the committee chairman, wrote in a five-page letter sent to Medicare officials Friday. Grassley called on federal officials to consider major reforms, including redesigning the program and re-bidding contracts.

Medicare pays private contractors known as Quality Improvement Organizations about $300 million a year to work with hospitals, doctors and nursing homes to improve care and investigate complaints in the giant health insurance program. There are 53 QIOs -- one in each state plus one each in the District, Puerto Rico and U.S. Virgin Islands. Most are set up as nonprofits.

As the QIOs come under increased scrutiny from Congress, the prestigious Institute of Medicine is scheduled on Thursday to release findings of its 18-month review of the groups. Yesterday, the QIO trade group issued its own call to improve the beneficiary-complaint process, agreeing that it was broken.

Under the existing system, QIOs that investigate patients' complaints and find serious breaches are supposed to refer their findings to the Office of Inspector General for possible discipline of doctors and hospitals. A Washington Post investigation last July found that QIOs rarely make referrals and treat complaint investigations as a low priority.

In 2004, the contractors investigated 3,100 complaints for 43 million Medicare patients. Even then, patients had only a 1 in 4 chance of having their complaints upheld, and the findings often were not shared with patients, The Post found.

The Post also documented lavish salaries and perks paid to some QIO executives and directors, and it reported that the physician-dominated boards included few consumers.

In August, Grassley's committee began a probe of the QIOs, requesting a broad range of documents covering their finances and policies. He expanded the probe to look at salaries, potential conflicts of interest, travel by some QIO executives and Medicare's oversight of the contractors.

In his letter last week to Mark B. McClellan, head of the Centers for Medicare and Medicaid Services, Grassley noted that his committee's preliminary review raised "a number of concerns regarding questionable expenditures, board member and executive staff conflicts of interest and the quality and effectiveness of QIO services."

Grassley noted that little of the money paid to the QIOs is based on their performance, and he questioned why so few contracts are subject to competitive bids. In the most recent three-year contract cycle, six contracts were bid, and of the six only one was not renewed. Yet at the same time, Grassley wrote, "There is sparse evidence to suggest that QIOs are effective."

Grassley noted in his letter that some QIO board members appeared to be paid "exorbitant" amounts compared with other nonprofit groups. For example, he wrote, one QIO paid its trustees an average of $25,000 in 2003. According to the Washington-based group BoardSource, most charities do not pay board members.

Grassley wrote that some QIO trustees have traveled to expensive retreats at resorts in Colorado Springs; Cape Cod, Mass.; and Stowe, Vt. In addition, "it appears that some QIOs have financial arrangements or relationships" with board members that "appear to pose conflicts of interest," he wrote.

One QIO trustee was paid $37,000 annually as a consultant. A government audit concluded that the arrangement could "cause a loss of objectivity . . . or otherwise interfere with free exercise of his or her judgment," Grassley wrote.

Medicare officials said yesterday that they are reviewing the letter from the Senate committee, adding in a statement that the QIO program "is improving the quality of American health care."

In a statement yesterday, the American Health Quality Association, the QIO trade group, said Congress should rewrite a two-decades-old law barring contractors from sharing the results of their investigations with patients without first obtaining the permission of the doctors being investigated. The association said findings should be given to patients "along with information about actions taken to prevent the problem from recurring."

The trade group also said Medicare should allow QIOs to publish annual quality reports for each state, including data on the performance of hospitals, doctors and nursing homes, in addition to releasing the names of providers who have been referred for enforcement actions.

Late last year, the association announced what it called a "new code of conduct" to ensure that QIOs conform to the "highest standards for business practices, governance and public accountability."

Among other things, the code called for increased consumer representation on QIO boards. Two-thirds of the 53 QIOs have adopted the code, the trade group said.