42 U.S.C. § 1320c–3 — Functions of quality improvement organizations

(a) Subject to subsection (b), a quality improvement organization that contracts with the Secretary^* under this part must perform one or more of the following functions.

(1) The organization must review some or all professional activities in its area of physicians, other health care practitioners, and institutional and noninstitutional providers when they provide health care services and items for which payment may be made, in whole or in part, under subchapter XVIII. This review must follow the contract and subsection (d). This includes services for which payment is made to eligible organizations under contracts under section 1395mm, to Medicare Advantage organizations under contracts under part C, and to prescription drug^* sponsors under contracts under part D. The purpose is to decide whether—

(A) the services and items are or were reasonable and medically necessary, and whether they are not allowed under section 1395y(a)(1) or (a)(9);

(B) their quality meets professionally recognized standards of health care; and

(C) if the services and items are proposed for inpatient care in a hospital or other health care facility, they could, while still providing appropriate medical care^*, be provided effectively and more economically as outpatient care or in an inpatient facility of a different type.

If the organization reviews a type of practitioner other than medical doctors, it must establish procedures for involving practitioners of that type in those reviews.

(2) Based on the review under paragraph (1)(A), (B), and (C), the organization must decide whether payment will be made for services under subchapter XVIII. That decision is final on those issues for payment under subchapter XVIII, except that payment may be made if—

(A) section 1395pp allows the payment;

(B) for inpatient hospital services or extended-care services, the organization decides that more time is needed to arrange care after discharge. Payment may continue under this subparagraph for no more than two days, and only if the provider did not know and could not reasonably have been expected to know, as determined under section 1395pp, that payment otherwise would not be made for the services under subchapter XVIII before the organization gave the notice under paragraph (3);

(C) a hearing or review of the decision under section 1320c–4 changes the decision; or

(D) section 1395x(v)(1)(G) authorizes the payment.

The organization may identify cases for which payment should not be made because of paragraph (1)(B) only by using criteria developed under guidelines established by the Secretary.

(3)(A) If the organization decides that health care services or items provided or to be provided to a patient by a practitioner or provider are disapproved, it must promptly notify the patient and the agency or organization responsible for paying claims under subchapter XVIII of this chapter.

(B) If the disapproval is based on paragraph (1)(A) or (C), the organization may not give that notice until 20 days after it has both—

(i) given the practitioner or provider preliminary notice of the proposed decision; and

(ii) given the practitioner or provider an opportunity to discuss and have the proposed decision reviewed.

(C) That discussion and review do not take away the practitioner’s or provider’s right to formal reconsideration of a decision under this part, as provided in section 1320c–4.

(D) If the disapproval is based on paragraph (1)(B), the organization may not give the notice until—

(i) it has told the practitioner or provider involved about the decision and the right to formal reconsideration under section 1320c–4; and

(ii) if the provider or practitioner asks for reconsideration, the organization has completed that reconsideration.

If a provider or practitioner receives this reconsideration, it replaces any later reconsideration that the provider or practitioner might otherwise receive under section 1320c–4. It does not affect a beneficiary’s right to seek reconsideration under that section of the organization’s decision, after any reconsideration requested by the provider or physician^* under clause (ii).

(E)(i) If a physician provided services or items that were disapproved because of paragraph (1)(B), the notice to the patient must say: “In the judgment of the quality improvement organization, the medical care received was not acceptable under the medicare program. The reasons for the denial have been discussed with your physician.”

(ii) If an entity or practitioner other than a physician provided the services or items, the Secretary may replace the word “physician” in that notice with the entity or practitioner that provided them.

(4)(A) After consulting the Secretary, the organization must decide which types and kinds of cases it will review under its contract so that it can best carry out this part. It may classify cases by the type of health care or diagnosis involved, or by other relevant criteria about providing health care services. It must periodically tell the Secretary about these decisions. Each organization must devote a reasonable share of its activities to reviewing service quality under paragraph (1)(B), and must reasonably distribute those activities among different cases and settings, including post-acute-care settings, ambulatory settings, and health maintenance organizations. In deciding how to distribute them, it must consider—

(i) whether past quality-of-care problems give reason to believe that particular cases or settings especially need review;

(ii) the cost of the reviews and what they are likely to find, including the number and seriousness of quality-of-care problems likely to be found; and

(iii) whether other quality-review and quality-assurance systems are available and adequate.

(B) Each organization’s contract must provide for review of inpatient and outpatient services provided by eligible organizations under a risk-sharing contract under section 1395mm, or services that are subject to review under section 1395ss(t)(3). The purpose is to decide whether the quality of those services meets professionally recognized standards of health care. The review must include whether appropriate services were not provided or were provided in inappropriate settings, and whether people enrolled with an eligible organization have adequate access to services provided by or through that organization. The access review must be based in part on a survey of enrolled people who have not yet used the organization to receive those services.

The contract must also require the organization, for health care provided by a health maintenance organization or competitive medical plan under section 1395mm, to maintain a beneficiary-outreach program. The program must tell people receiving care under that section about the peer-review system, their rights under that system, and how and why to contact the organization. The two preceding sentences do not apply during a contract year if another entity has been awarded a contract under subparagraph (C).

Under the contract, the organization’s effort on reviews under this subparagraph, measured per enrollee, must equal its effort on utilization and quality reviews for people who are not enrolled with an eligible organization.

(5) For its responsibility under paragraph (1) to review practitioners’ and providers’ professional activities, the organization must consult nurses, other professional health care practitioners besides the physicians described in section 1395x(r)(1), and representatives of institutional and noninstitutional providers of health care services.

(6)(A) Consistent with its contract, the organization must use professionally developed norms of care, diagnosis, and treatment^* as its main points for evaluation and review. These norms must be based on typical practice patterns in the geographic area the organization serves, while considering national norms when appropriate. For treatment of particular illnesses or health conditions, the norms must include—

(i) the types and amounts of health care services that, considering different but acceptable ways to treat and organize and deliver care, are within the range of appropriate diagnosis and treatment for the illness or condition, consistent with professionally recognized and accepted patterns of care; and

(ii) the type of health care facility in which, consistent with those standards, medically appropriate services for the illness or condition can be provided most economically.

As part of these norms, the organization must consider the special problems of providing care in remote rural areas, available alternatives to inpatient hospitalization^*, and other appropriate factors that could harm the safety or effectiveness of outpatient treatment. These factors include the distance from the patient’s home to the care site, family support, nearby alternative care sites, and the patient’s ability to perform required or prescribed self-care.

(B) The organization must—

(i) several times each year, offer to have a physician representing the organization meet at a hospital or regional meeting with the medical and administrative staff of each hospital whose services the organization reviews, concerning the organization’s review of that hospital’s services for which payment may be made under subchapter XVIII; and

(ii) at least once a year, publish and distribute to providers and practitioners whose services are subject to review a report describing the organization’s findings about types of cases in which it often decided that (I) inappropriate or unnecessary care was provided, (II) services were provided in an inappropriate setting, or (III) services did not meet professionally recognized standards of health care.

(7) To the extent needed and appropriate to perform its contract, the organization must—

(A)(i) arrange to use people who practice or specialize in the various areas of medicine, including dentistry, optometry, and podiatry, or in other types of health care. To the maximum extent practicable, these people must practice their profession in the area served by the organization; and

(ii) for psychiatric and physical-rehabilitation services, arrange, when possible, for a physician trained in psychiatry or physical rehabilitation, as appropriate, to perform the initial review;

(B) make professional inquiries before care is provided, after it is provided, or both, when the organization judges that the inquiries will help its review activities;

(C) examine the relevant records of any practitioner or provider that provides services for which the organization is responsible for review under paragraph (1); and

(D) inspect the facilities in the area where any such practitioner or provider gives care or provides services.

(8) The organization must perform the duties and functions, assume the responsibilities, and meet the other requirements imposed by this part, by the Secretary’s regulations under this part, or to carry out section 1395y(a)(15).

(9)(A) The organization must collect information relevant to its functions and keep the required records in the form the Secretary requires to carry out this part. It must allow the Secretary the access to and use of that information and those records that the Secretary requires for those purposes, subject to section 1320c–9.

(B) If, after giving reasonable notice and an opportunity to discuss the matter with the physician or practitioner, the organization finds that the physician or practitioner provided services in violation of section 1320c–5(a), and decides that the physician or practitioner should enter a corrective action plan under section 1320c–5(b)(1), it must notify the State^* board or boards responsible for licensing or disciplining that physician or practitioner. The notice must state the finding and any action taken because of it.

(10) The organization must coordinate activities, including information exchanges, that are consistent with economical and efficient program operation among appropriate public and private agencies or organizations, including—

(A) agencies under contract under sections 1395h and 1395u;

(B) other quality improvement organizations with contracts under this part; and

(C) other appropriate public or private review organizations.

(11) When feasible and appropriate, the organization must make its facilities and resources available for contracts with private and public entities that pay for health care in its area, so that those entities can review services they reimburse.

(12) As part of its review responsibility under paragraph (1), the organization must review all ambulatory surgical procedures specified under section 1395l(i)(1)(A) that are performed in its area, or, if the Secretary chooses, a sample of those procedures.

(13) Despite paragraph (4), the organization must review early-readmission cases under paragraph (1) to decide whether the earlier inpatient hospital services and the post-hospital services met professionally recognized standards of health care. The organization may conduct these reviews using a sample if it and the Secretary decide that is appropriate. An “early readmission case” is a case in which, after being discharged from a hospital, an individual is readmitted to a hospital less than 31 days after the most recent discharge. This section does not define “professionally recognized standards of health care.”

(14) The organization must appropriately review every written complaint about the quality of services not meeting professionally recognized standards of health care if the services would otherwise be payable under subchapter XVIII and the complaint is filed with the organization by an individual entitled to benefits for those services under that subchapter, or by someone acting for that individual. The organization must tell the individual or representative how it finally resolved the complaint. Before deciding that the quality of the services does not meet professionally recognized standards, it must give the practitioner or other person^* involved reasonable notice and an opportunity to discuss the matter.

(15) During each year of the contract under section 1320c–2(b), the organization must perform the on-site review activities that the Secretary considers appropriate.

(16) When the Secretary requests a review and report under section 1395dd(d)(3), the organization must provide them to the Secretary. It must give reasonable notice of the review to the physician and hospital involved. Within the period the Secretary allows, it must give the physician and hospital a reasonable opportunity to discuss the matter and to provide additional information before it issues the report under that section.

(17) The organization must carry out its responsibilities under paragraph (1)(A) and (B) by offering providers, practitioners, Medicare Advantage organizations offering Medicare Advantage plans under part C, and prescription drug sponsors offering prescription drug plans under part D quality-improvement assistance about prescription-drug therapy. For this part and subchapter XVIII, these activities are treated as a review function.

(18) Subject to the contract, the organization must perform other activities that the Secretary decides may be necessary to improve the quality of care provided to people for items and services for which payment may be made under subchapter XVIII.

(b) A quality improvement organization that contracts to perform a function described in a paragraph of subsection (a) must perform all activities described in that paragraph. The exception is when the contract, as negotiated with the Secretary, says otherwise, or when the Secretary decides that it is not appropriate for the organization to perform a function, such as a function that could create a conflict of interest with another function.

(c)(1) A physician may not review—

(A) health care services provided to a patient if that physician was directly responsible for providing the services; or

(B) health care services provided in or by an institution, organization, or agency if the physician or any member of the physician’s family has a significant direct or indirect financial interest in that institution, organization, or agency.

(2) For this subsection, a physician’s family includes only the physician’s spouse, except a spouse legally separated under a divorce or separate-maintenance decree; children, including legally adopted children; grandchildren; parents; and grandparents.

(d) A quality improvement organization may not use anyone who is not a properly licensed doctor of medicine, osteopathy, dentistry, optometry, or podiatry to make a final determination denying services based on the professional conduct of another properly licensed doctor of medicine, osteopathy, dentistry, optometry, or podiatry, or based on an act that such a doctor performed while practicing the profession.

(e)(1) A hospital may give a patient or the patient’s representative a notice, meeting conditions set by the Secretary under section 1395pp, if—

(A) the hospital has decided that the patient no longer needs inpatient hospital care; and

(B) the attending physician agrees with the hospital’s decision.

(2)–(4) Repealed.

(f) After consulting appropriate experts, the Secretary must identify methods that could help quality improvement organizations, under subsection (a)(4), identify cases more likely than other cases to involve a quality of services that does not meet professionally recognized standards of health care.