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While trustees may understand the Centers for Medicare & Medicaid Services' role in reimbursement, they may not know that CMS also keeps an eye on the board. The agency has defined expectations for hospitals that participate in and receive funds from Medicare in a set of regulations called the Conditions of Participation. The CoPs are standards for the operation and management of hospitals. These conditions, which comprise multiple standards, encompass medical staff, nursing service, pharmacy services, life safety and all other aspects of hospital care that affect patient safety, patient rights and quality of care.

One for the Board

One condition defines specific duties for boards. From CMS' perspective, boards are responsible for the care, safety and rights of patients. This is not a nominal responsibility but an important oversight obligation, which, when ignored, can be cited in a public report and lead to financial and public relations consequences.

CMS monitors hospital compliance with the CoPs by funding state agencies to conduct inspections. Although a number of hospitals undergo inspection by random selection, most state investigations are initiated after a complaint has been filed by a patient, family, staff member or physician. When an inspection is conducted, deficiencies are reported to the hospital and to a CMS regional office. Deficiencies can vary in severity, ranging from standard level to condition level to immediate jeopardy, which is the most severe deficiency.

Each deficiency level has a remediation time frame that is defined in the regulations. Failure to correct a deficiency can result in termination of a hospital's participation in Medicare, which means the hospital can no longer accept Medicare patients for admission. While the loss of Medicare funds can jeopardize a hospital's viability, sanctions from Medicare also can result in termination of contracts with insurance companies and a public relations nightmare. Most hospitals that lose Medicare participation close within a few months.

CMS issues immediate jeopardy citations when it finds dangerous conditions that must be remedied (and validated by a focused survey) within 23 days, which is a very short time frame. In reviews of immediate jeopardy citations, governing body deficiencies often accompany findings in other conditions. Because the governing body is responsible for overseeing quality, safety and patient rights, CMS investigates whether the board did its job.

Refocus on Quality

To prevent citations, boards should learn several important lessons. First, and most importantly, trustees must ensure that they understand their responsibilities as defined in the CoPs. Because the CoPs are unique to hospitals, trustees from outside health care will be unfamiliar with them. They may not even know that they exist. Boards should insist that education about the CoPs be part of new member orientation and an annual review to ensure that all members know their responsibilities.

In investigations of hospitals with governing body citations, the board usually has spent most of its time on finance and business development and relatively little time on clinical operations or patient satisfaction. Many boards prefer to focus on finance and business development, which are familiar to trustees outside the hospital industry. Yet, the board is responsible for the hospital's success, which depends on its clinical operations. Excellence in this area will become even more important as system transformation continues.

In most organizations, boards rely on management to oversee the provision of care. Yet, the CoPs require that the governing body actively oversee hospital operations. This may be different from the role of boards in non-hospital organizations, but it is a federal requirement in the hospital industry. This requirement can be challenging, as trustees often do not feel that they know enough to evaluate the hospital's delivery of services. To fulfill their responsibility, they need to overcome their discomfort with their lack of knowledge of health care delivery details and reduce their reliance on management to provide the necessary clinical information.

The Whole Truth

To appreciate how well the hospital is delivering care from a quality and safety perspective, trustees need to hear unfiltered information. Boards that are cited for immediate jeopardy tend to hear about patient care from management, but do not hear the voice of rank-and-file physicians and nurses. Even trustees who are physicians or nurses may have been selected because of their relationship with administrators and may not represent their clinical peers. Additionally, much can be gleaned from patient complaints and grievance data. The board should know how the hospital manages this information because, per the CoPs, the board is responsible for ensuring that the complaints and grievance process operates according to federal standards.

One symptom to watch for is the absence of bad news. At one decertified hospital, trustees heard about all the awards the hospital was winning, but was not told until the hospital was decertified that CMS had found it to have severe clinical problems. Every hospital has problems that need to be addressed, and the board must insist on knowing about them.

While most trustees know that they must review quality data, many do not know what exactly they should be reviewing. Many hospitals focus on required indicators such as core measures or other popular quality measures. But there are many processes at work in hospitals, and these processes can break down, resulting in noncompliance with the CoPs and adverse consequences for patients. For example, medication administration is a critical process, yet most hospitals only monitor reported medication errors. This under-represents the level of risk and complexity in the process. Boards should push for monitoring critical processes, especially those identified in the CoPs.

Boards have many responsibilities to fulfill, but meeting time is limited. For boards that get into trouble, limited meeting time usually meant that information was addressed quickly, and little discussion of each item took place. Yet, this discussion is the value that trustees bring to the hospital. The board's job is to ensure that management's analysis and decision-making includes reasonable alternatives before selecting a course of action. Deliberation is the only way to uncover the alternatives and ensure that management objectively addresses decisions and obstacles.

The Bottom Line

CMS assigns the governing body responsibility for running the hospital properly, and the CoPs define these responsibilities in concrete, measurable terms. Trustees fulfill this duty when they understand their role and build a plan to ensure that both the hospital and the board are in full compliance. To be successful, boards will need to build a collaborative relationship with administrators. Senior leaders know what is going on in the hospital and they can help the board develop a meaningful oversight plan.

It is said that what you don't know cannot hurt you, but for trustees, this is bad advice. Hospital boards become vulnerable when they do not know what is expected of them nor receive all of the necessary information to do their job. To prevent trouble with the CoPs, boards need to ask the right questions so that they can provide the right answers when CMS comes knocking.

Cary Gutbezahl, M.D. (, is the president and CEO of Compass Clinical Consulting, Cincinnati.