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OIG Raps CMS Oversight of Compounded Drugs

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   January 26, 2015

The Office of Inspector General made two recommendations that it says CMS and CMS-authorized accreditors should use to oversee compounded sterile preparations in hospitals.

More than two years after drugs contaminated with a virulent fungus killed 64 patients and caused related illnesses in another 687, Medicare-approved hospital accreditors still don't properly oversee contracts hospitals have with compounding pharmacies to assure these drugs are safe.

That's the conclusion of an Office of Inspector General report, which made two recommendations for the Centers for Medicare & Medicaid Services to improve oversight of compounded sterile preparations (CSPs) in hospitals.

"Contracting with standalone pharmacies for CSPs gets limited attention from the oversight entities," the OIG report says. "Only one in five oversight entities always reviews hospitals' contracts with standalone pharmacies," a review that could address "recall procedures, proper storage while in transit, and quality assurance related to CSP sterility and potency."

Additionally, "none of the entities plan to change how they assess these contracts in light of [the] FDA's new initiative to register and inspect standalone compounding pharmacies."

In addition to CMS itself, CMS authorizes four organizations to assess and certify hospitals wishing to receive Medicare reimbursement under CMS's requirements for conditions of participation. 

They are:

  • The Joint Commission, which accredits most of the hospitals in the Medicare program
  • Det Norske Veritas Healthcare (DNV)
  • The Center for Improvement in Healthcare Quality
  • The American Osteopathic Association/Healthcare Facilities Accreditation Program

A 2013 OIG report said that 92% of hospitals use CSPs, and 80% contract with at least one standalone pharmacy for their supplies.

The OIG made two overarching recommendations; CMS agreed with both:

  • Ensure that hospital surveyors receive training on standards from nationally recognized organizations related to safe compounding practices
  • Amend the interpretive guidelines to address hospitals' contracts with standalone compounding pharmacies.

The report did not say which of the five agencies failed to engage in recommended accreditation practices related to compounding pharmacy product safety, but detailed how many said they engaged in which of 55 practices "always," "some of the time," or "never."

The report said most of the five CMS-approved accreditors "may lack human capital required to thoroughly review hospitals' preparation and use of CSPs," and said that "none of them are considering changes to how they oversee hospitals' contracts with standalone compounding pharmacies."

Additionally, CMS should make sure that its own surveyors and those of the agencies it accredits to oversee hospital safety train their surveyors on nationally recognized guidelines for safe compounding, such as those prepared by the Institute for Safe Medication Practices, the OIG said. The guidelines address appropriate product labeling, drug storage, and staff management.

Although compounding pharmacies have produced contaminated drugs that caused illness in death in patients treated at hospitals and other healthcare settings many times in the past, the biggest outbreak came in 2012 in connection with steroid injections from the New England Compounding Center in Framingham, MA.

The company, which is now out of business, had sent products contaminated with Exserohilum rostratum or Aspergillus fumigatus fungus, to providers in 20 states. Michigan reported 264 patient illnesses and Tennessee reported 153. The infection caused fungal meningitis and other illnesses in patients treated at 76 healthcare facilities.

The OIG report was prepared on the basis of responses to a questionnaire that asked 55 questions. Most of the five organizations responding replied that they did engage in most of the recommended practices "some of the time."

For example, when asked if surveyors review whether the hospital has documented justification when CSPs are stored longer than appropriate, beyond the use date and storage conditions, three of the accreditors said that they "never" do, and the other two said they do so "some of the time."

To the question, "Do surveyors request copies of all the hospital's policies and procedures for outsourcing CSPs?" one accreditor said it never did and four said they did so "some of the time."

And when asked if the hospitals prepare CSPs onsite, "do surveyors assess whether the area of preparation is appropriate for all CSP risk levels compounded at the hospital?" all five said they do so "some of the time."

CMS said in its response that "while it is not reasonable to expect hospital surveyors to be experts on the highly technical aspects of compounding, surveyors could benefit from more training to ensure their basic competencies in assessing compounding practices in hospitals."

It added that the agency will "explore revising the interpretive guidelines" for conditions of participation for pharmaceutical services for storing and handling drugs and biological, "to make surveyors aware that compounding of CSPs used in hospitals frequently is handled by a contracted compounding pharmacy.

"However, since Medicare regulations do not require hospitals and critical access hospitals to use only those compounding pharmacies that have voluntarily registered with the FDA, surveyors would limit their assessment of the contracts with standalone compounding pharmacies to how the facility assures that its contracted services comply with the regulations."

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