REGULATORY ENTITIES

Hospitals must comply with a number of regulations to carry out state and federal laws. The two primary reasons for health care regulations are the protection of the health and safety of patients and the government’s major role in paying for health care, through Medicare and Medicaid programs.

In addition to providing a range of health care services, hospitals must obtain multiple licenses and undergo numerous surveys. For example, a hospital that offers acute care, home health care, hospice care and long-term care must have separate surveys and a different license for each. This is in addition to the hospital’s license and Medicare certification

Trustees should also have an understanding of the cost of complying with regulations. Often, compliance requires the purchase of special supplies, hiring of additional staff, architectural changes to a facility or the provision of services that are costly to maintain.

JOINT COMMISSION ON ACCREDITATION OF HEALTHCARE ORGANIZATIONS         Top

For decades, hospitals participated in a voluntary self-regulatory process. In the early 1950s, a program of hospital self-inspection, sponsored by the American College of Surgeons, began expanding into the present Joint Commission on Accreditation of Healthcare Organizations (JCAHO). Originally, the "Joint Commission" surveyed and accredited only hospitals. Today JCAHO accreditation includes pathology and clinical laboratory services, home health agencies, managed behavioral health care services, long-term care facilities, ambulatory care centers, and health care networks.

Approximately sixty-eight percent of hospitals in Washington state are accredited by JCAHO.

A multi-disciplinary inspection team spends at least two days in the hospital. Standards that measure plant safety, medical staff, quality assurance, department services and what the hospital is doing to improve the quality of its services are used. The JCAHO wants to see mechanisms and processes in place to ensure that the Board has an oversight role in the credentialing of the medical staff, quality assurance and continuous improvements of the care provided by the hospital. The JCAHO awards three-year accreditation to hospitals that meet its standards. In some cases, it makes receiving accreditation part of meeting certain standards between surveys. If these standards are not met, conditional accreditation or denial of accreditation can result. Costs related to maintaining JCAHO accreditation include a fee for the survey itself and expenses related to training, publications, seminars and consultants.

Malpractice insurance companies look favorably on the risk management practiced by JCAHO-accredited hospitals. It affords prestige to the hospital and is a positive factor in physician recruitment. The community is assured that the hospital is meeting standards for providing quality health care.

The Governing Board must be an active participant in the accreditation process. The JCAHO standards manual includes specific standards for the governing body (see appendix). Board members must be familiar with these standards and their requirements.

Some of these requirements are:

• Credentialing of the medical staff
• Board self-evaluation
• Orientation of new Board members
• Continuing education for the Board
• Adopting bylaws
• Conflict of interest statements
• Performance improvement

During the survey, the Board should meet with the survey team. It is important for Board members to participate in the exit conference with the team and hear its recommendations. The CEO should supply the Board with the written report from the JCAHO survey along with a plan for carrying out the recommendations.

WASHINGTON STATE LICENSING STANDARDS         Top

Hospitals in Washington must be licensed by the state in order to operate. New state licensing regulations (246-320 WAC, 70.41 RCW), modeled after the JCAHO standards, came into effect in March, 1999. The regulations are now less prescriptive, outcome-based and streamlined.

In Washington state there are separate licensing standards for specialty hospitals, such as psychiatric and chemical dependency facilities.

Key sections of the state licensing standards are noted below (see the appendix for the governance section of the state licensing standards):

• Governance
• Leadership
• Management of human resources
• Medical staff
• Management of information
• Improving organizational performance
• Patient rights and organizational ethics
• Infection control program
• Regulations for the range of services a hospital provides, such as pharmaceutical, diagnostic, inpatient and outpatient and specialized care
• Management of environment for care (assures a safe environment for patients, staff and visitors)
• Design, construction review and plan approval
• Facility requirements (for clinical, non-clinical and specialized services areas)

All Washington state hospitals participate in the state licensing survey process which occurs annually. JCAHO accredited hospitals can request an exclusion from a state licensing survey during the year of a JCAHO inspection. Once the survey is complete, the Board should receive a copy of the findings along with recommendations for correction of any problems.

MEDICARE CONDITIONS OF PARTICIPATION         Top

The Medicare Program is the primary source of health care payment for the nation’s and state’s elderly population. Medicare is a federal program authorized by Title 19 of the Social Security Act (also see finance chapter)

Hospitals that participate in the Medicare program must be certified. Reimbursement is based on compliance with the Medicare Conditions for Participation standards. The Conditions for Participation are currently being modified. An updated version modeled after the JCAHO standards is anticipated to take effect by mid-2000.

The Conditions set forth the standards for health care provided to Medicare beneficiaries in the hospital setting and include requirements regarding the governance and administration of hospitals, quality assurance, utilization review, and staffing, such as 24 hour availability of physicians and nurses.

There are several services that Medicare-certified hospitals must either provide within the facility or make available through a contractual or consulting arrangement. These include:

• Pharmaceutical services
• Diagnostic radiology services
• Clinical lab services
• Dietary services

The Conditions of Participation establish standards for optional services for Medicare-certified hospitals. These include surgery, anesthesia services, outpatient services and rehabilitation, nuclear medicine and respiratory care. Medicare-certified hospitals are not required to provide emergency medical services, but must have written policies appraising, treating and referring patients needing emergency care. Standards for the physical environment are not as stringent as the facility requirements in the state’s Hospital Licensing Standards.

Hospitals that are JCAHO accredited are automatically eligible to participate in the Medicare program and can receive federal Medicare monies. Accreditation or Medicare certification is also required for participation in most managed care programs, as well.

The Washington State Department of Health conducts Medicare certification surveys under a contract with the Health Care Financing Administration (HCFA), www.hcfa.gov/. Hospitals that are JCAHO accredited undergo a validation survey while non-JCAHO hospitals participate in a Medicare Certification Survey. The Medicare certification and the hospital licensing surveys are generally conducted at the same time. The hospital is notified of the date that its Medicare survey will occur.

The only time a hospital survey is unannounced is when the Department of Health has received a complaint.

If a hospital meets the standards for Medicare certification, this qualifies the hospital for participation in the Medicaid program. Itdoes not need to undergo and additional survey.

Medicare-certified hospitals must also comply with rules for other services they provide, such as home health , hospice and long-term care services. A separate license and survey are required.

SUMMARY OF PRIMARY HOSPITAL REGULATORY AND ACCREDITING ENTITIES         Top

Standard	Washington State Hospital Licensing Standards (all hospitals in WA state must be licensed)	Medicare Conditions of Participation (required if a hospital desires to treat Medicare patients)	JCAHO Accreditation (voluntary self-regulation)
Agency/organization	Washington State Department of Health	Health Care Financing Administration	Joint Commission on Accreditation of Health Care Organizations
Survey	Annual Survey; if the survey occurs in the same year as a JCAHO survey, the hospital may request an exclusion	Annual Survey; Medicare Certification can be obtained via a validation survey (for JCAHO accredited hospitals)	Surveys are performed every three years

OTHER STATE AND FEDERAL REGULATIONS         Top

The Washington Department of Health, is involved in many hospital activities including hazardous waste management, construction of new facilities, infection control practices, medical device reporting, gathering and compilation of health statistics, reporting of births, inspection of radiographic machines, inspection of clinical laboratories and communicable disease reporting.

The Department of Social and Health Services (DSHS), www.wa.gov/dshs/, monitors the care provided to patients in nursing homes and long-term care facilities. Staff conduct unannounced, on-site inspections on a regular basis and investigate complaints.

Worker' compensation in Washington state is regulated by the Department of Labor and Industries. Its sets the fee schedules for physicians, x-ray, and diagnostic tests for hospital outpatient fees and sets what is called the Percentage of Allowed Charges (POAC) for self-insured hospitals to pay.

Nongovernmental hospitals come under the jurisdiction of the U.S. Occupational Health and Safety Administration for the prevention of job-related accidents and illnesses. All hospitals must comply with federal requirements related to non-discrimination on the basis of age, sex, race, national origin, religion and handicap.

A special area of concern for hospitals is the requirements of the Americans with Disabilities Act. Hospitals must be fully accessible for visitors, employees and patients. All hospital services must be accessible. This means that information may need to be available in Braille or large type, and by telecommunication devices and sign language.

Physicians, nurses, radiologic technologists, nursing home administrators, pharmacists, social workers, respiratory therapists, physical therapists, dietitians and physicians assistants must be licensed or certified by state boards before they can practice in their fields.

LOCAL REGULATIONS         Top

Hospitals are also subject to local regulations including local building codes, fire safety regulations, food sanitation codes and zoning regulations. In urban areas, compliance with these regulations can be costly and complicated. In some rural areas, the effect of these regulations is minimal.

SUMMARY         Top

Trustees need to have an understanding of regulatory agencies and the importance of compliance with their regulations. A special challenge of the Board is to respond to this oversight in a positive and cost-effective manner.

REFERENCES         Top

Bailey, Charles, General Counsel, THA-The Association of Texas Hospitals and Health Care Organizations, Austin, TX, January, 1998.

DSHS (AASA) website, www.wa.gov/dshs/index.html

Griffith, Richard and Dewey Johnson, Texas Hospital Law, Austin, TX: Butterworth Legal Publishers, 1990.

Health and Safety Code, Vol. 1 and 2, Titles 1 to 5, Vernon’s Texas Codes Annotated, St. Paul, MN: West Publishing Co., 1992 and 1998 supplement.

Joint Commission on Accreditation of Healthcare Organizations, 1998 Hospital Accreditation Standards, Oakbrook Terrace, IL, 1998.

McGuire, Catherine, Mary Walker, and Deborah Molsberry, Rural Hospital Models and Recommendations for Their Implementation, Austin, TX: Health Care Options for Rural Communities, August, 1993.

Sjoberg, Elizabeth, Staff Attorney, THA-The Association of Texas Hospitals and Health Care Organizations, Austin, TX, January, 1998.