Contract Management and
Vendor Oversight:
Regulations and Management Oversight
Marianne Klaas, RN, MN, CHSP
Swedish Medical Center
Administrative Director
Accreditation, Safety, Injury Management, and Clinical
Patient Relations
Acknowledgement
 VHA
Program 5/29/12
 Sentara-
Norfolk, Virginia
 St. Lukes’s – Boise, Idaho
Center for Medicare and
Medicaid Services (CMS)
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482.12(e) Standard: Contracted Services
The governing body must be responsible for
services furnished in the hospital whether or not
they are furnished under contracts.
The governing body must ensure that a contractor
of services (including one for shared services and
joint ventures) furnishes services that permit the
hospital to comply with all applicable conditions of
participation and standards for the contracted
services.
CMS

The governing body has the responsibility for assuring that
hospital services are provided in compliance with the
Medicare Conditions of participation and according to
acceptable standards of practice, irrespective of whether the
services are provided directly by hospital employees or
indirectly by contract.

The governing body must take actions through the hospital’s
QAPI program to: assess the services furnished directly by
hospital staff and those services provided under contract,
identify quality and performance problems, implement
appropriate corrective or improvement activities, and to
ensure the monitoring and sustainability of those corrective or
improvement activities. (See 482.21 QAPI.)
The Joint Commission
 LD.04.03.09:
Care, treatment, and
services provided through contractual
agreement are provided safely and
effectively.
Contracted Services
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The same level of care should be delivered
Governing Body / Leaders provide oversight
The contractual agreements are those for hospital’s
patients.
Contracts for consultation or referrals are not
subject to the requirements in Standard
LD.04.03.09.
The expectations for the performance of contracted
services should reflect basic principles of risk
reduction, safety, staff competence, and
performance improvement.
Methods for Oversight

Leaders are expected to select the best methods for their
hospital to oversee the quality and safety of services provided
through contractual agreement.
 Reviews
 Direct observations
 Audits
 Incident reports
 Periodic performance reports
 Collection of efficacy data
 Performance indicators
 Staff input
 Patient satisfaction surveys
 Risk management
CMS- TJC
Crosswalk
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CMS 482.12 (e)(1) The
governing body must
ensure that the services
performed under a contract
are provided in a safe and
effective manner.
(e)(2) The hospital must
maintain a list of all
contracted services,
including the scope and
nature of the services
provided.
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TJC LD.04.03.09 EP4
Leaders monitor contracted
services by establishing
expectations for the
performance of the
contracted services. Note 3:
The leaders who
monitor…are the governing
body
EP2 The hospital
describes, in writing, the
nature and scope of
services provided through
contractual agreements
EP3 Designated leaders
approve contractual
agreements
Clinical vs. Non-Clinical
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
CMS 482.12 (e)(1) The
governing body must
ensure that the services
performed under a contract
are provided in a safe and
effective manner.
(e)(2) The hospital must
maintain a list of all
contracted services,
including the scope and
nature of the services
provided.

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An inventory of contract
services that affect the
quality and safety of patient
care (clinical and nonclinical) should be
developed and maintained.
Using hospital defined
“Inclusion and Exclusion”
criteria to identify relevant
contracts and include on
the hospital's inventory
ONLY those contract
services that meet the
Inclusion criteria.
Inclusion vs. Exclusion
Criteria

Inclusion Criteria: Those
contract services that
contribute to the quality and
safety of care, treatment and
services including contract
services with staff associated.
Examples:

Exclusion Criteria: Those
contract services that do
not contribute to the quality
and safety of care,
treatment and services.
Examples:

Clinical Care
Medication Management
Physician Services (patient care)
Purchased Labor (patient care)
Affiliation Agreements (patient
care)
Translation Services (Deaf
Talk/Interpretation Services)
Entire Department Contracted

Cable TV
Vending/ATMs
Lawn Services and Maintenance of
Plants/Flowers
Lease agreements
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TJC- LD 04.03.09
LD.04.03.09 EP1- 4
Contracted Services
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1-Clinical leaders and medical staff advise on the sources of clinical
services to be provided through contractual agreement.
2 - The hospital describes the nature and scope of services provided
through contractual agreements.
3 - Designated leaders approve contractual agreements.
4 - Leaders monitor contracted services by establishing expectations
for the performance of the contracted services.
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Note 1: In most cases, each licensed independent practitioner providing
services through a contractual agreement must be credentialed and
privileged by the hospital using their services following the process
described in the “Medical Staff” (MS) chapter.
Note 3: The leaders who monitor the contracted services are the
governing body.
LD.04.03.09 EP 5-7
Contracted Services
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5 – Leaders monitor contracted services by communicating the expectations
in writing to the provider of the contracted services.
 Note: A written description of the expectations can be provided either as
part of the written agreement or an addendum.
6 - Leaders monitor contracted services by evaluating these services in
relation to the hospital's expectations.
7 - Leaders take steps to improve contracted services that do not meet
expectations.
 Examples of improvement efforts to consider include the following:
 Increase monitoring of the contracted services.
 Provide consultation or training to the contractor.
 Renegotiate the contract terms.
 Apply defined penalties.
 Terminate the contract.
LD.04.03.09 EP 8-10
Contracted Services
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8 – When contractual agreements are renegotiated
or terminated, the hospital maintains the continuity
of patient care.
10 - Reference and contract laboratory services meet
the federal regulations for clinical laboratories and
maintain evidence of the same. *
 *: For law and regulation guidance on the
Clinical Laboratory Improvement Amendments
of 1988, refer to 42 CFR 493.
LD.04.03.09 EP 23
Contracted Services
(Telemedicine)
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23 - For hospitals that use Joint Commission accreditation for deemed status
purposes: The originating site has a written agreement with the distant site
that specifies the following:
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The distant site is a contractor of services to the hospital.
The distant site furnishes services in a manner that permits the originating site to be in
compliance with the Medicare Conditions of Participation (Appendix A)
The originating site makes certain through the written agreement that all
distant site telemedicine providers’ credentialing and privileging processes
meet, at a minimum, the Medicare Conditions of Participation at 42 CFR
482.12(a)(1) through (a)(9) and 482.22(a)(1) through (a)(4). (See also
MS.13.01.01, EP 1)
If the originating site chooses to use the credentialing and privileging
decision of the distant-site telemedicine provider, then the following
requirements apply:
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The governing body of the distant site is responsible for having a process that is consistent with
the credentialing and privileging requirements in the “Medical Staff” (MS) chapter (Standards
MS.06.01.01 through MS.06.01.13).
The governing body of the originating site grants privileges to a distant site licensed independent
practitioner based on the originating site’s medical staff recommendations, which rely on
information provided by the distant site.
Det Norske Veritas
(DNV)
DNV
DNV
DNV
So Easy?
So Far From It!
Oversight Issue #1
 Contracted
Services’ own accreditation
and certification
 Validate
currency
 “Meets all applicable standards”
Oversight Issue #2
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Direct Observation
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After hours
Weekends
Oversight Issue #3
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Documentation Audits:
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Vendor may use different forms
Vendor may lack details/specific for tracking and tracing
Vendor may not have access to electronic medical record
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Vendor forms may be scanned into the record
Not documented, not done
Oversight Issue #4
 Incident
 If
Reporting Structure
asked to produce any incident reports
based on contractor/vendor, could you?
 Role of risk management
 How can staff/medical staff report issues
for tracking and trending? (ends up via
QAPI)
Oversight Issue #5
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Timely reviewing of
periodic reports
submitted by the
individual or
organization
providing the
services
Oversight Issue #6
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Trust but verify
that the
organization is
collecting data that
addresses the
service efficacy.
Oversight Issue #7
Oversight Issue #8
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Human Resources:
Monitoring contracted
services can be
challenging because
people doing the work
are not direct
employees of the
organization.
COMPETENCY!
“Trust but verify”
Oversight Issue #9
Sub-contracting:
 No contractor should be sub-contracting their work
without your express consent and knowledge.
 Sub-contractors must meet same performance
metrics.
 Audit for any variances e.g., a different dialysis
machine suddenly shows up (substituted) from a
sub-contracted vendor.
Oversight Issue #10

Review patient
satisfaction surveys
Bottom Line
 Highly
regulated
 Specifics for being compliant
 Daunting scope
 Quality and patient care at stake
 Financial gains possible (reducing
contracts; patient satisfaction)
Thank you!