House Energy and Commerce Chairman Billy Tauzin (R-La.) has decided to dig into the brewing controversy over whether the nation’s chief Medicare official may have improperly favored a small survey-research firm in devising a new national hospital survey.

Tauzin spokesman Ken Johnson said the chairman will send a letter later this week to Center for Medicare and Medicaid Services (CMS) Administrator Thomas Scully, asking him about allegations that he sided with a small Nebraska firm, National Research Corp. (NRC/Picker), in developing a pilot program for a national hospital patient satisfaction survey.

“Mr. Scully has a lot of explaining to do,” said Johnson. “Before we launch a formal investigation, we generally give people a chance to defend themselves.”

Though NRC/Picker was not compensated for its participation, other survey-research firms, such as The Gallup Organization, say the use of the NRC/Picker methodology in the pilot survey could give the company a virtual monopoly on hospital survey contracts. CMS is using the draft document to develop a nationwide survey that all hospitals would have to complete in order to receive Medicare reimbursement.

Tauzin’s letter comes on the heels of an item in Al Kamen’s “In the Loop” column last week in The Washington Post that revealed a sharply worded e-mail Scully sent to Bob Nielsen, managing partner for Gallup.

In the March 5 e-mail, Scully used expletives and called Nielsen a “weasel,” an “idiot” and a “jerk” for suggesting to an Office of Management and Budget official that federal funding for the pilot project should be suspended until an investigation can be conducted. Scully also threatened to quit speaking to the OMB official if she continued to meet with Nielsen.

“Four-letter e-mails don’t usually command the attention of the chairman, but allegations of collusion do,” Johnson said.

If unconvinced by Scully’s explanation of events, Johnson said Tauzin could order a full Congressional investigation.

Rep. Lee Terry (R-Neb.), in whose district Gallup is headquartered, alerted Tauzin to the controversy in early March. Terry also sent a letter last week to OMB Director Mitch Daniels asking that funding for the pilot survey be cut off in lieu of an investigation.

An OMB spokesman did not return a request for comment, but Terry’s office said they had not yet heard back from Daniels on their request.

A CMS spokesman said the pilot program, set to begin in the next month in Arizona, Maryland and New York, would continue to move ahead despite Tauzin’s questions.

“We’ll wait until we receive the letter from the chairman, and we will respond,” said the spokesman, who cautioned that the pilot survey was still under review and that CMS was still looking for input from survey industry leaders.

Nielsen said the crux of the controversy involves NRC/Picker’s unusual access to CMS officials, which began in May 2002 when CMS hosted a meeting to determine whether a standard national model for hospital patient satisfaction was needed. NRC/Picker was the only survey-research firm invited to attend, according to documents from the meeting.

NRC/Picker President and CEO Michael Hays said that was because his company is the only one in the industry that already has national contracts for patient satisfaction surveys with Great Britain and Canada.

“I’m not sure if any [other survey firms] could have spoken to the national survey,” said Hays, who acknowledged that CMS did eventually adopt the primary survey methodology to which NRC/Picker has the proprietary rights.

Since that initial meeting, Nielsen said Gallup and other survey-research firms were cut out of the development process in favor of NRC. Nielsen and Jose Inguanzo, the president and CEO of Professional Research Consultants, said the bias in favor of NRC likely results from the fact that a number of CMS employees and its advisers at Harvard University, RAND Corp. and the American Institutes of Research once worked for the Picker Institute, a nonprofit research firm whose survey-research methods were purchased by the for-profit NRC in 2000.

Gallup and other survey-research firms say the perceived exclusivity of NRC/Picker’s relationship with CMS has allowed NRC/Picker to promote itself as the only survey-research firm with the knowledge to help hospitals score well on the survey. If hospitals buy that argument, other survey-research firms, such as Gallup and Professional Research Consultants, could lose hundreds of current clients.

“The ones with the smallest market share, all of the sudden, are driving the whole industry,” complained Inguanzo. “By having a mandatory questionnaire, hospitals are probably going to do that questionnaire and that’s it.”

Inguanzo and Nielsen’s suspicions that NRC/Picker could use the pilot survey to steal clients were only reinforced by public pronouncements from NRC/Picker, they say.

Following the December 2002 release of the draft pilot survey by the Agency for Healthcare Research and Quality — a sub-agency of CMS — NRC/Picker aggressively advertised its connections to CMS and even began marketing its products and services to hospitals based on that perceived relationship.

In a Jan. 23 press release, NRC/Picker crowed that “National Research Corporation’s Picker Approach Used as Foundation for AHRQ’s Newly Introduced Hospital-CAHPS Survey.” Another release in February alerted hospitals that NRC has “designed a preparation product utilizing its Picker approach to ensure positive hospital performance during the public reporting phase. As the originators of the [methodology], and therefore the only organization to possess the benchmark data, we’re in a unique position to evaluate a hospital’s current position in the marketplace.”

NRC’s Hays denied that his company was exploiting AHRQ’s choice of the Picker approach for financial gain.

“Whatever instrument that AHRQ develops will be put in the public domain. Any research organization as well as hospital will have access to it,” Hays said. “So we won’t have any exclusivity.”

However, spokesmen for both CMS and AHRQ said NRC/Picker had been asked to stop promoting its relationship with CMS.

As for claims that NRC/Picker’s methods were the basis for the pilot survey, AHRQ spokeswoman Karen Migdail called it a “grievous overstatement.”

“They did not have a developmental role,” said Migdail, who noted that eight other survey-research firms are credited with devising the pilot questionnaire.

Migdail acknowledged, however, that AHRQ relied heavily on the so-called “Picker approach” because CMS (previously known as the Health Care Financing Administration) had used the methodology in surveys of managed-care companies, nursing homes and home health providers since 1995, when Picker was a nonprofit entity.

“The key was not to reinvent the wheel,” Migdail said.