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entitled 'Dialysis Facilities: Problems Remain in Ensuring Compliance 
with Medicare Quality Standards' which was released on November 07, 
2003.

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Report to the Chairman, Committee on Finance, U.S. Senate:

United States General Accounting Office:

GAO:

October 2003:

Dialysis Facilities:

Problems Remain in Ensuring Compliance with Medicare Quality Standards:

Dialysis Facility Compliance:

GAO-04-63:

GAO Highlights:

Highlights of GAO-04-63, a report to the Chairman, Committee on 
Finance, U.S. Senate 

Why GAO Did This Study:

Most patients with end-stage renal disease (ESRD) must rely on 
dialysis treatments to compensate for kidney failure. Currently, over 
222,000 ESRD patients visit dialysis centers several times a week to 
have toxins removed from their bloodstreams. While dialysis care has 
improved overall, questions remain regarding the quality of care 
provided by some of the nations roughly 4,000 ESRD facilities. We 
examined (1) the extent and nature of quality of care problems 
identified at dialysis facilities, (2) the effectiveness of state 
survey agencies in ensuring that quality issues are uncovered, 
corrected, and stay corrected, and (3) the extent to which the Centers 
for Medicare & Medicaid Services (CMS) funds, monitors, and assists 
state survey activities related to dialysis care.

What GAO Found:

A substantial number of ESRD facilities do not achieve minimum patient 
outcomes specified in clinical practice guidelines, with significant 
proportions of their patients receiving inadequate dialysis or 
treatment for anemia. Similarly, inspections of dialysis facilities by 
state survey agencies have uncovered numerous problems that put 
patient health at risk. Between fiscal years 1998 and 2002, these 
inspections, commonly called surveys, revealed that 15 percent of 
facilities surveyed had serious quality problems that, if left 
uncorrected, would warrant termination from the Medicare program. 
Serious deficiencies commonly found during surveys included medication 
errors, contamination of water used for dialysis, and insufficient 
physician involvement in patient care.

Infrequent, poorly targeted, and inadequate inspections allow 
facilities quality of care problems to go undetected or remain 
uncorrected. Specifically:

* Although ESRD survey activity has increased in recent years, only 
nine state survey agencies consistently met CMSs goal to inspect 33 
percent of ESRD facilities annually. 

* A substantial number of facilities go many years between 
inspections. In fiscal year 2002, 216 facilities nationwide went 9 or 
more years without an inspection. 

* Deficiencies may not have been detected during an inspection if the 
surveyors had little experience in assessing dialysis quality.

Even when deficiencies are identified and facilities take corrective 
action, little incentive exists for these facilities to remain in 
compliance. Data show a pattern of repeated serious deficiencies in 
successive inspections of an individual facility. No effective 
sanctions are available to enforce compliance, short of terminating 
the facility from the Medicare program, which is rarely done.

Federal monitoring of state agencies performance of surveys and 
technical assistance provided is uneven across CMS regions. CMS 
substantially increased its funding for ESRD surveys from an estimated 
$3.1 million in fiscal year 1998 to $8.2 million in fiscal year 2002. 
At the same time, several CMS regional offices in our study did not 
actively oversee how the state agencies used these funds to improve 
survey activities. CMS has not taken steps needed to facilitate 
information sharing between federally funded ESRD networks and state 
agencies on the performance of individual dialysis facilities
information that could help states to target their inspection 
resources. In addition, CMS has not offered adequate training 
opportunities for surveyors inspecting ESRD facilities. 

What GAO Recommends:

GAO suggests that Congress consider authorizing CMS to impose 
immediate sanctions, such as monetary penalties or denying payment for 
new Medicare patients, on dialysis facilities cited with serious 
deficiencies in consecutive surveys. GAO recommends that the CMS 
Administrator create incentives for facilities to maintain compliance 
with quality standards, increase use of expert staff in conducting 
ESRD facility surveys, and enhance the support and monitoring of state 
survey agencies. CMS did not indicate an intention to implement five 
of our six recommendations.

www.gao.gov/cgi-bin/getrpt?GAO-04-63.

To view the full product, including the scope and methodology, click 
on the link above. For more information, contact Leslie G. Aronovitz 
at (312) 220-7600.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

Quality Problems Prevalent among Dialysis Facilities and Put Patient 
Health at Risk:

Limitations in the ESRD Survey Process Leave Quality Problems 
Undetected or Inadequately Addressed:

CMS Has Increased Funding for State Surveys, but Monitoring and 
Technical Support Are Uneven:

Conclusions:

Matter for Congressional Consideration:

Recommendations for Executive Action:

Agency Comments and Our Evaluation:

Appendix I: Scope and Methodology:

Appendix II: Medicare Conditions for Coverage for Dialysis Facilities:

Appendix III: State Agencies' Progress toward Meeting CMS Survey Goals:

Appendix IV: Comments from the Centers for Medicare & Medicaid Services:

Appendix V: GAO Contact and Staff Acknowledgments:

GAO Contact:

Acknowledgments:

Related GAO Products:

Tables:

Table 1: Proportion of ESRD Facilities Recertified Within 3, 6, 9, or 
More Years, Fiscal Years 1998 to 2002:

Table 2: Association between Surveyor Specialization and Rate of 
Condition-and Standard-Level Deficiencies Cited in Fiscal Years 2001 
and 2002:

Table 3: Rates of Repeated Deficiencies in Consecutive Surveys 
Conducted from Fiscal Years 1998 through 2002:

Table 4: Federal Support for Provider Surveys, Fiscal Years 1998 to 
2001:

Table 5: ESRD Facilities Recertified Annually by State, Fiscal Years 
1998 to 2002:

Table 6: Facilities to Be Recertified to Meet CMS 3-Year Goal, by 
State:

Figures:

Figure 1: Projected Growth in the ESRD Population and Medicare Costs:

Figure 2: Number of Facilities Where Some Patients Receive Inadequate 
Dialysis Treatment and Anemia Management, 2000:

Figure 3: State Variation in the Rate of Condition-Level Deficiencies 
Cited in Recertification Surveys Conducted from Fiscal Year 1998 
through 2002:

Figure 4: ESRD Facility Survey Rate Compared to CMS Goal, Fiscal Years 
1998 to 2002:

Figure 5: State Variation in the Proportion of Dialysis Facilities 
Surveyed for Recertification, Fiscal Year 2002:

Abbreviations:

CMS: Centers for Medicare & Medicaid Services: 
DFC: Dialysis Facility Compare Web site: 
EPO: erythropoietin: 
ESRD: end-stage renal disease: 
ICF/MR: intermediate care facilities for the mentally retarded: 
LTC: long-term care: 
OSCAR: Online Survey Certification and Reporting system:

United States General Accounting Office:

Washington, DC 20548:

October 8, 2003:

The Honorable Charles E. Grassley 
Chairman 
Committee on Finance: 
United States Senate:

Dear Mr. Chairman:

Most patients with end-stage renal disease (ESRD)--a life-shortening, 
chronic illness--must rely on dialysis treatments to compensate for 
kidney failure. Currently, over 222,000 ESRD patients spend 3 to 5 
hours at dialysis centers three times a week, where dialysis machines 
remove toxins from their bloodstreams. In addition to having permanent 
kidney failure, ESRD patients are likely to suffer from diabetes or 
heart disease and are at risk for developing illnesses during their 
course on dialysis. Therefore, the care of ESRD patients requires 
expertise in both the medical and technical aspects of maintaining 
patients on dialysis.

While dialysis care has improved overall, according to a 2002 
Department of Health and Human Services report, questions remain 
regarding the quality of care provided to Medicare beneficiaries by 
some of the nation's roughly 4,000 dialysis facilities. The HHS report 
noted that many ESRD patients do not receive treatment meeting the 
minimum standards established in the National Kidney Foundation's 
clinical practice guidelines, which, when not met, have documented 
adverse effects on patient outcomes. In 2001, 16 percent of dialysis 
patients did not have an adequate amount of toxins removed from their 
blood, 24 percent had anemia that was not brought under control, and 19 
percent of patients were dialyzed for extended periods using catheters, 
the least effective and most risky method for connecting patients to 
dialysis machines.[Footnote 1]

ESRD is the one medical condition that confers eligibility regardless 
of age to the Medicare program, which otherwise pays for health care 
provided to people who are over 65 years of age or to those with 
disabilities. The Centers for Medicare & Medicaid Services (CMS), which 
oversees the Medicare program, has responsibility for ensuring that 
dialysis patients receive quality care. For this purpose, CMS contracts 
with state survey agencies that conduct onsite inspections. Following 
up on a report we issued in June 2000,[Footnote 2] you asked us to 
review CMS's system for enforcing Medicare's minimum quality and safety 
standards for ESRD facilities and to assess whether and how it might be 
strengthened. Specifically, we examined (1) the extent and nature of 
quality of care problems identified at dialysis facilities, (2) the 
effectiveness of state survey agencies in ensuring that quality issues 
are uncovered, corrected, and stay corrected, and (3) the extent to 
which CMS funds, monitors, and assists state survey activities related 
to dialysis care.

To address these issues, we obtained data from existing national 
databases and original data from 10 states. We analyzed facility-
specific information about quality measures reported on CMS's Dialysis 
Facility Compare, a consumer guide available on the Internet. For the 
nation as a whole and each of the states,[Footnote 3] we also analyzed 
data from CMS's Online Survey Certification and Reporting (OSCAR) 
system for the last 5 fiscal years, 1998 through 2002. This database 
provides information on the dates when surveys took place, the 
deficiencies cited, and the time spent conducting various survey 
activities. In addition, we interviewed cognizant officials at CMS's 
central office and reviewed changes in the CMS budget devoted to survey 
activities from fiscal years 1998 to 2002.

To supplement available national data, we obtained additional 
information from 10 states--Alabama, California, Florida, Kansas, 
Maryland, Mississippi, Missouri, Nevada, New York, and Pennsylvania--
which together accounted for more than one-third of all facilities in 
fiscal year 2001. They were selected to provide variation across a 
range of dimensions, including the proportion of ESRD facilities 
surveyed and deficiencies cited, number of ESRD facilities, and 
geographic diversity. We interviewed state surveyors and 
administrators, representatives from ESRD networks (organizations that 
promote quality improvement in ESRD services), and federal regional 
office officials responsible for monitoring ESRD facility surveys. In 
addition, we collected detailed information on several states' corps of 
ESRD surveyors, including their background, training, and experience. 
We also examined the written reports from numerous facility surveys 
conducted within the last 2 years. (App. I contains more detail on our 
scope and methodology.) Our work was conducted from August 2002 to 
September 2003 in accordance with generally accepted government 
auditing standards.

Results in Brief:

A substantial number of dialysis facilities do not achieve the minimum 
patient outcomes specified in clinical practice guidelines for a 
significant proportion of their patients. Data reported on Dialysis 
Facility Compare show that, in 2000, 512 facilities had 20 percent or 
more of their patients receiving inadequate dialysis treatment, and 
nearly 1,700 facilities had 20 percent or more of their patients 
receiving inadequate care for anemia. In addition, the CMS-funded 
system of on-site inspections of facility conditions, equipment, and 
staffing has uncovered numerous problems that put patient health at 
risk. From fiscal year 1998 through 2002, these inspections, generally 
called surveys, revealed that 15 percent of facility surveys identified 
serious quality problems that, if left uncorrected, would warrant 
termination from the Medicare program. Serious deficiencies commonly 
found during surveys included medication errors, contamination of water 
used for dialysis, and insufficient physician involvement in patient 
care.

Infrequent, poorly targeted, and inadequate inspections by state survey 
agencies allow facilities' quality of care problems to go undetected or 
remain uncorrected. Specifically:

* Although ESRD survey activity has increased in recent years, state 
compliance with CMS's goal to resurvey 33 percent of ESRD facilities 
annually has been inconsistent. While 33 states met the goal in at 
least 1 of the last 2 fiscal years, only 9 of the 33 states surveyed a 
third or more of their facilities in both years. Eighteen states failed 
to meet the goal in either fiscal year 2001 or 2002.

* A substantial number of facilities go many years between inspections. 
In fiscal year 2002, 216 facilities nationwide (5.4 percent) went 9 or 
more years without an inspection, up from 53 facilities (1.6 percent) 
in fiscal year 1998.

* Deficiencies may not have been detected during a survey if the 
surveyors who inspected the facilities had little experience in 
assessing dialysis quality. Data from several states showed that survey 
agencies where designated staff specialized in performing ESRD surveys 
uncovered a substantially larger number of deficiencies than agencies 
without such staff expertise.

Even when deficiencies are identified and facilities take corrective 
action, little incentive exists for these facilities to remain in 
compliance with Medicare's minimum quality standards on a continuing 
basis. As shown in nationwide data, when quality problems were cited, 
the problems were corrected but often did not stay corrected. For 
example, from fiscal years 1998 through 2002, 18 percent of facilities 
found to have serious deficiencies were cited again for the same 
deficiencies in successive inspections. At present, there is no 
effective sanction to encourage a facility to avoid repeating prior 
deficiencies, short of terminating the facility from the Medicare 
program, which is rarely done.

CMS has expanded funding to support state ESRD survey activities, but 
its monitoring of state agencies' performance of surveys and providing 
technical assistance is uneven across CMS regions. CMS substantially 
increased its aggregate funding for ESRD surveys from an estimated $3.1 
million in fiscal year 1998 to $8.2 million in fiscal year 2002. At the 
same time, several regional offices in our study did not actively 
oversee or assist in improving ESRD survey activities. In addition, CMS 
has not removed barriers between federally funded ESRD networks and 
state agencies that inhibit the sharing of information on the 
performance of individual dialysis facilities--information that could 
assist states in targeting their inspection resources. Furthermore, 
surveyors in several states reported that CMS has not offered adequate 
training opportunities for surveyors inspecting ESRD facilities.

To encourage ESRD facilities to adhere to Medicare quality standards, 
we suggest that Congress consider authorizing CMS to impose immediate 
sanctions, such as monetary penalties or denying payment for new 
Medicare patients, on dialysis facilities cited with serious 
deficiencies in consecutive surveys. We are also recommending that CMS: 
conduct more frequent surveys of facilities with serious deficiencies; 
publicize facilities' survey results; encourage state agencies to use 
ESRD-specialized surveyors; expand ESRD surveyor training 
opportunities; require periodic, routine sharing of information between 
ESRD networks and state survey agencies; and enhance oversight of state 
agency performance.

In its comments on a draft of this report, CMS affirmed its commitment 
to strengthening oversight of dialysis facilities and state survey 
agencies, but did not indicate an intention to implement five of our 
six recommendations. Instead, the agency highlighted its efforts to 
develop tools to assist states in selecting facilities for inspection 
and to make the survey process more uniform. We continue to believe 
that more focused efforts to evaluate compliance with Medicare 
requirements and stronger actions against poor performers are needed to 
ensure an effective, consistent, and timely ESRD survey and 
certification program.

Background:

Individuals with ESRD, characterized by permanent kidney failure, must 
undergo either regular dialysis treatment or a kidney transplant to 
stay alive. In 2000, about 248,000 individuals received one of two 
modes of dialysis treatment--hemodialysis or peritoneal dialysis--both 
of which can be performed at a facility or at home.[Footnote 4] Most 
ESRD patients undergo hemodialysis.[Footnote 5] The number of 
hemodialysis patients enrolled in Medicare has risen sharply, from 
about 118,000 in 1991 to over 222,000 in 2000. With anticipated annual 
growth of over 7 percent, the dialysis population is projected to reach 
more than 520,000 by 2010.[Footnote 6] (See fig. 1.) This growth in 
enrollment has been attributed largely to improvements in the survival 
rate for people with ESRD and an increase in the number of Americans 
with conditions, such as diabetes or high blood pressure, that often 
lead to kidney failure.

Figure 1: Projected Growth in the ESRD Population and Medicare Costs:

[See PDF for image]

[End of figure]

Growth in the ESRD population has been matched by growth in the number 
of dialysis facilities. In the decade between 1991 and 2001, the number 
of outpatient dialysis facilities doubled from about 2,000 to more than 
4,000 facilities. In 2001, 83 percent of all facilities were 
freestanding (nonhospital-based) and 79 percent of all facilities were 
for-profit. In 2001, the four largest for-profit dialysis chains 
accounted for about two-thirds of all freestanding facilities.

The rise in the ESRD population has been accompanied by an even more 
rapid increase in program spending. Medicare not only provides coverage 
to most beneficiaries with ESRD for all ESRD-related services but for 
their other health care needs as well.[Footnote 7] From 1990 to 2001, 
Medicare expenditures for beneficiaries with ESRD rose from about $5 
billion to over $15 billion, and are forecast to grow to $28 billion in 
2010. Spending growth has been fueled by an expansion of enrollees with 
greater medical needs--older beneficiaries and those with chronic 
comorbidities[Footnote 8]--and the program's inclusion of new 
treatments, particularly erythropoietin (EPO)--a synthetic hormone 
widely used to manage anemia--and other injectable medications. While 
Medicare pays ESRD providers a set amount--a composite rate--including 
the nursing services provided and supplies used in each dialysis 
treatment, it pays separately for injectable drugs.[Footnote 9] The 
composite rate for dialysis services has remained virtually unchanged 
since the program's inception. However, payments to freestanding 
dialysis facilities for injectable drugs have grown considerably in 
recent years, increasing from 33 percent of total payments in 1997 to 
40 percent in 2001.

In 1976, CMS established minimum requirements that dialysis facilities 
must meet in order to receive Medicare payments. The regulations, 
referred to as "conditions for coverage," address 11 general areas, 
including the facility's physical environment and overall management by 
a governing body, as well as the adequacy of patient treatment 
plans.[Footnote 10] (See app. II.) One condition covers the detailed 
procedures that facilities must follow if they choose to reuse certain 
supplies, such as dialyzers, rather than replace them for each 
treatment.[Footnote 11] Under each condition are related "standards." 
For example, under the condition "physical environment," there are 
specific standards to maintain the purity of water used for dialysis. 
Even deficiencies found solely at the standard level indicate potential 
harm to patients. But, deficiencies cited at the condition level are 
the most egregious, as they indicate a problem that is widespread at a 
facility or serious in terms of its harm, or potential to harm 
patients. Typically, they are accompanied by multiple standard-level 
deficiencies under that condition.

To ensure provider compliance with dialysis quality standards, Medicare 
contracts with state survey agencies.[Footnote 12] These agencies 
conduct initial on-site surveys of dialysis facilities when providers 
seek enrollment in the Medicare program. Subsequently, state agencies 
periodically conduct unannounced inspections, referred to as 
recertification surveys, to ensure that facilities are maintaining 
compliance with Medicare standards. Although no statutory or regulatory 
requirements exist regarding the frequency of recertification surveys, 
CMS has established goals for state survey agencies to ensure that 
facilities are surveyed within certain intervals. States are expected 
to survey 33 percent of their dialysis facilities annually, and each 
facility every 3 years. In addition, state survey agencies must respond 
to complaints that they receive concerning dialysis facilities and, 
when warranted, conduct on-site investigations.

If the state agency determines that a facility is out of compliance 
with any condition or standard, CMS requires that the facility develop 
a plan to correct the deficiency. The state agency is then responsible 
for determining if the plan of correction is adequate to address the 
quality problems identified. Facilities that do not correct condition-
level deficiencies within a reasonable amount of time, generally within 
90 days, are subject to termination from the program. A much shorter 
time frame for termination applies in situations where a facility's 
noncompliance poses an immediate and serious threat to patient health 
or safety.

CMS also contracts with 18 ESRD network organizations that are 
responsible for helping providers improve the quality of care patients 
receive in dialysis facilities. Rather than enforcing compliance with 
federal quality regulations, the networks recruit facility 
participation in national and regional quality improvement projects 
that focus on enhancing specific clinical outcomes of dialysis 
patients. Networks collect data from individual facilities on numerous 
clinical indicators and provide them feedback on their performance. The 
networks also provide technical assistance to facilities and handle 
grievances concerning patient care. Each network has a medical review 
board composed of dialysis facility representatives, physicians, and 
dialysis patients, that oversees network operations.

To assist beneficiaries with ESRD in deciding where to get dialysis 
services, CMS reports certain information on Dialysis Facility Compare, 
an Internet Web site. Initiated in 2001, the site provides information 
on specific characteristics--such as the location, operating hours, and 
size--of all Medicare-certified facilities. It also provides data on 
clinical outcomes related to several quality measures, but does not 
contain the results of state agency surveys. In contrast, CMS routinely 
posts survey results for nursing homes on a similar but separate 
Internet Web site called Nursing Home Compare.

Quality Problems Prevalent among Dialysis Facilities and Put Patient 
Health at Risk:

Data made public by CMS reveals that poor care is a problem at many 
facilities, with large numbers of patients receiving inadequate 
hemodialyis or treatment for anemia. Similarly, inspections of ESRD 
facilities continue to find evidence that serious health and safety 
problems exist for dialysis patients. From fiscal year 1998 through 
2002, as many as one out of seven surveys identified problems 
sufficiently severe to initiate the process of terminating the facility 
from the Medicare program. These deficiencies, such as medication 
errors and contamination of water used for dialysis, put the health of 
patients at risk.

Many Facilities Do Not Provide Adequate Care to Their Hemodialysis 
Patients:

Data reported on the Dialysis Facility Compare Web site provides 
evidence that the care delivered at many facilities is substandard. The 
most recent information available indicates that, in 2000, a 
substantial number of facilities did not provide all of their Medicare 
patients with a level of care that meets minimum clinical practice 
guidelines. Figure 2 shows the extent to which facilities did not 
achieve two commonly accepted quality benchmarks based on the National 
Kidney Foundation guidelines: (1) the percent of the facility's 
patients not receiving adequate hemodialysis and (2) the percent of the 
facility's patients receiving EPO whose anemia was not adequately 
managed.[Footnote 13] Despite some measurement limitations, both of 
these indicators are considered characteristics of patient care that 
reflect dialysis facility quality.

Figure 2: Number of Facilities Where Some Patients Receive Inadequate 
Dialysis Treatment and Anemia Management, 2000:

[See PDF for image]

Notes: Adequacy of dialysis is measured as the percentage of the 
facility's hemodialysis patients that had the minimum recommended urea 
reduction ratio--a measure of the waste products removed from the 
blood--of 65 or more. Data were reported for 3,158 facilities.

[End of figure]

Anemia management is measured as the percentage of the facility's 
patients who received EPO that had a hematocrit level--a measure of low 
red blood count--of 33 or greater. Data were reported for 3,325 
facilities.

Relatively few dialysis facilities reported meeting these two national 
guidelines for 100 percent of their patients. At about half of the 
facilities, fewer than 10 percent of their patients fell short of the 
hemodialysis guideline, but at 512 facilities, 20 percent or more of 
their patients received inadequate hemodialysis. Results for anemia 
treatment were less favorable overall. Nearly 1,700 facilities fell 
short of meeting the guideline for anemia management for 20 percent or 
more of the patients in their care; at 135 facilities, more than 50 
percent of patients received inadequate treatment for anemia. Research 
has shown that variation in such patient outcomes as dialysis adequacy 
is largely attributable to factors at the facility--its policies 
governing dialysis care, associated practice patterns, and attention to 
individual patient problems--as opposed to patient-specific 
causes.[Footnote 14]

Facility Inspections Identify an Unacceptable Level of Serious Quality 
Problems:

The cumulative results of surveys conducted from fiscal years 1998 
through 2002 suggest that condition-level deficiencies--quality 
problems severe enough to warrant termination from the Medicare program 
unless corrected within 90 days--are still far from rare. Fifteen 
percent of recertification surveys conducted nationwide from fiscal 
year 1998 through 2002 reported one or more condition-level 
deficiencies. The distribution across states of condition-level 
deficiencies cited was substantially uneven. Several states reported no 
condition-level deficiencies during that 5-year period, whereas other 
states found such deficiencies in roughly 60 percent of their surveys. 
As shown in figure 3, most states were at the lower end of the range, 
with 39 states citing condition-level deficiencies in fewer than 20 
percent of their surveys, and 21 states, in fewer than 10 percent of 
their surveys.

Figure 3: State Variation in the Rate of Condition-Level Deficiencies 
Cited in Recertification Surveys Conducted from Fiscal Year 1998 
through 2002:

[See PDF for image]

[End of figure]

Problems Cited at ESRD Facilities Create the Potential for Harm to 
Patients:

Our review of recertification survey reports from fiscal years 2001 and 
2002, collected from the 10 states in our study, identified condition-
level deficiencies that were commonly cited among noncompliant 
facilities. Multiple instances were found of inadequate clinical 
management, medication errors, improper use of reusable dialysis 
equipment, contamination of water used for dialysis, and insufficient 
professional medical involvement in the dialysis patients' care. State 
surveyors documented these problems after reviewing facility personnel 
files, policies, procedures, and the facility's overall environment. In 
addition, surveyors reviewed a random sample of medical records from 10 
percent of the facility's patients.[Footnote 15] The vignettes 
presented below--which illustrate the types of problems found in 35 
percent of all surveys conducted from fiscal year 1998 through 2002--
were extracted from surveyors' findings reports. Registered nurses with 
substantial ESRD survey experience, who we asked to comment on the 
clinical implications of these findings, indicated that the 
deficiencies could lead in some cases to severely adverse patient 
outcomes.

* Failure to monitor laboratory values and medication supply. A 
Maryland surveyor found that for 31 days, one facility did not provide 
any of its patients with EPO, a medication routinely used to stimulate 
the production of red blood cells that are compromised by chronic 
kidney disease. Upon reviewing patients' medical records, 8 out of 10 
sampled records indicated that the patient's red blood cell count was 
below normal, thus requiring EPO. In addition, 5 of these records 
showed that the patient's red blood cell level decreased over a 4-month 
period. The facility's head nurse did not monitor and report the 
patients' abnormal laboratory values to the physicians and did not 
respond to the patients' complaints of feeling tired and lacking 
energy.

According to our nurse reviewers, patients who have a diminished red 
blood cell count for an extended period of time can develop health-
related complications, including heart irregularities and a decrease in 
brain function.

* Failure to administer medication as prescribed. A California surveyor 
cited a condition-level deficiency when she found that physician orders 
were not being followed. One patient's medical record documented that 
6,000 units of EPO were prescribed for each dialysis treatment but that 
the patient received only 600 units at each treatment for 20 
treatments. Staff confirmed that the patient was receiving the wrong 
dose, and when questioned by the surveyors, could not provide an 
explanation. Another patient's medical record revealed that, despite a 
physician-ordered increase in EPO, the patient received an incorrect 
dosage of the medication for almost 2 months. Again, staff acknowledged 
that the order to increase the dosage was not carried out. A review of 
two more patients' medical records showed written orders for Venofer, a 
medication to treat iron deficiency. The records documented that both 
patients failed to receive this medication for a week or more. Staff 
acknowledged that there was a period of time during which the facility 
ran out of the medication.

Our nurse reviewers reported that a reduction of Venofer or EPO could 
increase the dialysis patients' risk for anemia, a condition that, as 
noted above, can cause a patient to experience extreme fatigue and 
eventually clinical impairments to the heart and brain.

* Failure to administer dialysis treatments as prescribed. A 
recertification survey in Pennsylvania discovered that, for over half 
of the medical records reviewed, the facility did not ensure that 
diagnostic and therapeutic orders were followed. Specifically, 
documentation in patients' medical records revealed that the duration 
of dialysis treatments deviated from the amount of time prescribed by a 
physician. One patient's medical record indicated that dialysis 
treatments were ordered for 3.5 hours in duration. However, actual 
treatment periods were all less than the prescribed amount--by 20 to 90 
minutes. Similarly, another patient's record indicated that dialysis 
treatments were ordered for a duration of 3 hours and 45 minutes but 
most treatments were for shorter duration--as much as an hour less.

Nurse reviewers indicated that when the dialysis treatment period is 
reduced, the patient retains toxins and other fluids that have not been 
removed adequately from the blood stream. This condition can adversely 
affect the patient's overall general health and lead to loss of 
appetite, swelling, fatigue, shortness of breath, and possibly heart 
failure.

* Failure to monitor concentration of chemicals in the water system. A 
New York surveyor found that a facility did not monitor the purity of 
water used for dialysis. The water used to prepare dialysate, a 
solution that removes wastes from the blood during dialysis, contained 
chemical contaminates in excess of allowed concentrations. For at least 
8 months, fluoride levels were 1.0--five times greater than the maximum 
allowable limit of 0.2. In addition, two water tests showed that 
calcium levels were above 5.25, well above the maximum allowable limit 
for calcium of 2.0. The facility medical director did not monitor the 
results of water tests conducted and did not ensure that the facility's 
staff took appropriate action, such as reporting abnormal values or 
resampling the water.

Nurse reviewers told us that excessive amounts of fluoride could cause 
a dialysis patient's red blood cells to rupture and clot and that 
excessive amounts of calcium in the blood could increase the incidence 
of bone disease.

* Failure to involve a transplant surgeon in the review of patients' 
long-term care plans. A recertification survey in Mississippi revealed 
that the facility did not involve a transplant surgeon, as required, in 
the review of patients' long-term care plans. All of the medical 
records reviewed in that facility had long-term care plans that were 
not updated within the required 6-month time frame. The surveyor 
interview with the facility's medical director confirmed that a 
transplant surgeon or his designee had not examined patients' long-term 
care plans.

Nurse reviewers commented that, until screened by a transplant surgeon, 
the dialysis patient's potential for kidney transplantation cannot be 
properly assessed.

Limitations in the ESRD Survey Process Leave Quality Problems 
Undetected or Inadequately Addressed:

Infrequent or poorly targeted inspections allow facilities' quality of 
care problems to go undetected or remain uncorrected. Although state 
survey activity increased from fiscal year 1998 to 2002, numerous state 
agencies did not meet the goal currently set by CMS to survey 33 
percent of all ESRD facilities annually. An increasing number of 
facilities continued to operate 9 or more years between inspections. In 
addition, states that relied primarily on surveyors with limited 
experience in conducting inspections of ESRD facilities tended to 
report substantially fewer deficiencies than states using more 
experienced surveyors, suggesting that surveyors in the first group of 
states may have missed some quality problems. We also found patterns of 
repeated condition-level deficiencies, and particularly, citations for 
the same problem in successive inspections of an individual facility. 
Finally, facilities had little incentive to ensure continued adherence 
to Medicare's minimum quality standards in the absence of sanctions for 
noncompliance other than termination from the Medicare program--which, 
historically, has been rarely used.

Increased CMS Goals Have Led to Greater Survey Activity, but Many 
States Fall Short:

In recent years, CMS has underscored the importance of conducting 
recertification surveys of ESRD facilities by raising its expectations 
for the state agencies regarding the frequency with which such surveys 
should take place. In fiscal year 2001, CMS increased the 
recertification goal for states to 33 percent of facilities each year, 
up from 10 percent in fiscal year 1999 and 17 percent in fiscal year 
2000. Moreover, since fiscal year 2001, there has been a parallel goal 
for states to survey every dialysis facility within a 3-year period. 
Thus, by the end of fiscal year 2003, no dialysis facility should have 
gone more than 3 years since its last recertification survey.

In response to CMS's heightened expectations, state agencies surveyed 
more ESRD facilities, but not enough to fully meet CMS's current goals. 
As shown in figure 4, the percentage of ESRD facilities undergoing 
recertification surveys annually grew substantially from fiscal year 
1998 to 2001. However, collectively, state agencies did not achieve the 
current goal, effective in 2001, of surveying 33 percent of all ESRD 
facilities each year. In fact, after increasing to over 28 percent in 
fiscal year 2001, the survey frequency rate declined to about 27 
percent in fiscal year 2002.

Figure 4: ESRD Facility Survey Rate Compared to CMS Goal, Fiscal Years 
1998 to 2002:

[See PDF for image]

[End of figure]

Underlying this aggregate trend are wide disparities in survey 
frequency rates across the individual state agencies, as shown in 
figure 5. State recertification survey rates ranged from zero to 89 
percent in fiscal year 2002. Even among the 13 states with the largest 
number of ESRD facilities,[Footnote 16] recertification survey rates 
varied widely--from 10 percent to 40 percent.

Figure 5: State Variation in the Proportion of Dialysis Facilities 
Surveyed for Recertification, Fiscal Year 2002:

[See PDF for image]

[End of figure]

While 33 state survey agencies met the expanded CMS survey frequency 
goal in at least 1 of the last 2 fiscal years--sometimes by substantial 
margins--only 9 of those states met the 33 percent goal in both years. 
(See table 5 in app. III.) By contrast, 18 state agencies failed to 
reach 33 percent in either of the two most recent fiscal years, 
including some of the largest ESRD states, such as California, 
Michigan, Pennsylvania, and Virginia.

As a result, many states may have difficulty meeting CMS's second goal 
for state recertification activity, to survey all their ESRD facilities 
within a 3-year period. Because this goal was established in fiscal 
year 2001, the first test of state compliance will come at the end of 
fiscal year 2003. Based on the facilities surveyed in fiscal year 2001 
and 2002, 35 states will have to inspect more than a third of their 
ESRD facilities in fiscal year 2003 if they are to meet the 3-year 
goal. (See table 6 in app. III.) About one in five states has more than 
60 percent of facilities left to survey. Alabama has the most 
facilities--89 percent--that need to be surveyed in the current fiscal 
year. Among the largest states, California and Virginia have the 
largest backlogs to overcome--around 76 percent.

Despite improvement in the overall rate of ESRD facility surveys, a 
significant proportion of dialysis facilities continue to operate for 
long periods without inspections. For example, as of September 30, 
2002, 466 facilities had not been surveyed for 6 or more years, of 
which 216 had not been inspected for recertification in 9 or more 
years. Most of the effort to shorten the interval between 
recertification surveys has focused on reducing the number of 
facilities surveyed within 3 to 6 years. (See table 1.) From fiscal 
year 1998 to 2000, the proportion of facilities not surveyed for more 
than 6 years rose sharply (from 9.8 to 17.4 percent) and then declined 
(to 11.6 percent). Those that operated 9 or more years without a 
recertification survey steadily increased from 1.6 percent (53 
facilities) in fiscal year 1998 to 5.4 percent (216 facilities) in 
fiscal year 2002. This aggregate result reflected highly variable 
survey rates across states. Four states--California, Texas, New York, 
and Missouri--accounted for 174 facilities that had not been surveyed 
within 9 years by the end of fiscal year 2002.

Table 1: Proportion of ESRD Facilities Recertified Within 3, 6, 9, or 
More Years, Fiscal Years 1998 to 2002:

Length of time since last recertification survey: Less than 3 years; 
Percentage of facilities subject to a recertification survey: 1998 
(n=3,250): 51.6; Percentage of facilities subject to a recertification 
survey: 1999 (n=3,462): 51.2; Percentage of facilities subject to a 
recertification survey: 2000 (n=3,679): 49.8; Percentage of facilities 
subject to a recertification survey: 2001 (n=3,882): 62.5; Percentage 
of facilities subject to a recertification survey: 2002 (n=4,011): 
72.4.

Length of time since last recertification survey: 3 to <6 years; 
Percentage of facilities subject to a recertification survey: 1998 
(n=3,250): 38.6; Percentage of facilities subject to a recertification 
survey: 1999 (n=3,462): 32.8; Percentage of facilities subject to a 
recertification survey: 2000 (n=3,679): 32.8; Percentage of facilities 
subject to a recertification survey: 2001 (n=3,882): 22.9; Percentage 
of facilities subject to a recertification survey: 2002 (n=4,011): 
16.0.

Length of time since last recertification survey: 6 to <9 years; 
Percentage of facilities subject to a recertification survey: 1998 
(n=3,250): 8.2; Percentage of facilities subject to a recertification 
survey: 1999 (n=3,462): 13.9; Percentage of facilities subject to a 
recertification survey: 2000 (n=3,679): 14.2; Percentage of facilities 
subject to a recertification survey: 2001 (n=3,882): 10.1; Percentage 
of facilities subject to a recertification survey: 2002 (n=4,011): 6.2.

Length of time since last recertification survey: 9 or more years; 
Percentage of facilities subject to a recertification survey: 1998 
(n=3,250): 1.6; Percentage of facilities subject to a recertification 
survey: 1999 (n=3,462): 2.1; Percentage of facilities subject to a 
recertification survey: 2000 (n=3,679): 3.2; Percentage of facilities 
subject to a recertification survey: 2001 (n=3,882): 4.4; Percentage of 
facilities subject to a recertification survey: 2002 (n=4,011): 5.4.

Source: GAO analysis of CMS OSCAR data.

[End of table]

State agencies have to balance their efforts to meet survey workload 
goals for ESRD facilities against the demands on inspection staff to 
meet other CMS survey requirements. In particular, state agencies are 
required to inspect nursing homes every 15 months,[Footnote 17] 
intermediate care facilities for the mentally retarded (ICF/MR) at 
least annually, and home health agencies at least once every 3 years. 
In its letter to state agencies on fiscal year 2003 program 
requirements and budget guidelines for survey activities, CMS made 
inspections of dialysis facilities and nine other types of providers 
lower in inspection priority, behind nursing homes, ICF/MRs, and home 
health agencies.[Footnote 18] ESRD recertifications also received lower 
priority than investigation of complaints filed against all types of 
providers.[Footnote 19] CMS officials asserted that they provide the 
state survey agencies with sufficient resources to fulfill expectations 
across all provider types. Nonetheless, several state officials we 
spoke with reported difficulty in meeting all of these expectations, 
especially those experiencing substantial growth in ESRD facilities in 
their states. They indicated that, given the relatively low priority 
assigned to ESRD recertifications, they would most likely cope by 
adjusting the number of dialysis facilities inspected.

Lack of Surveyor Specialization May Contribute to Less Effective 
Surveys:

Even when facilities are inspected, some surveyors may be more adept 
than others at identifying quality problems. Because dialysis treatment 
is technically complex, surveyors who focus on ESRD surveys say that 
they become more proficient in detecting and properly documenting 
quality of care problems as a result. However, state agencies may be 
reluctant to designate a subset of surveyors who specialize in 
performing ESRD inspections as it limits their flexibility in 
scheduling inspections of nursing homes, home health agencies, and 
other provider types. Moreover, such specialization is less feasible 
for states with few ESRD facilities overall. In states without a 
specialist approach to facility inspections, many surveyors are likely 
to conduct no more than a few ESRD surveys each year. Among the nine 
state survey agencies from which we collected workload data, six 
typically assigned ESRD inspections to surveyors who spent most of 
their time surveying other provider types.[Footnote 20] The other three 
assigned most ESRD inspections to surveyors who often performed surveys 
of dialysis facilities.

A comparison of survey results between states that had a designated 
corps of ESRD surveyors and those that did not suggested that surveyors 
who frequently conduct ESRD inspections may be more effective in 
detecting and reporting deficiencies. Table 2 shows that the more 
specialized group of states was almost three times as likely to find a 
condition-level deficiency. Surveyors from these states cited a 
substantially larger number of deficiencies at the less serious 
"standard-level" as well. While other factors could have also 
influenced the number of deficiencies reported by surveyors in various 
states, the magnitude of the difference observed between states that 
did and did not specialize suggests that specialization has a major 
impact.[Footnote 21]

Table 2: Association between Surveyor Specialization and Rate of 
Condition-and Standard-Level Deficiencies Cited in Fiscal Years 2001 
and 2002:

Surveys with condition-level deficiencies; State surveyor 
specialization in ESRD[A]: Percentage of surveys in nonspecialized 
states (n=367): 8.4; State surveyor specialization in ESRD[A]: 
Percentage of surveys in specialized states (n=261): 24.1.

Surveys with standard-level deficiencies numbering: 0; State surveyor 
specialization in ESRD[A]: Percentage of surveys in 
nonspecialized states (n=367): 26.4; State surveyor specialization in 
ESRD[A]: Percentage of surveys in specialized states (n=261): 6.9.

Surveys with standard-level deficiencies numbering: 1 to 5; State 
surveyor specialization in ESRD[A]: Percentage of surveys 
in nonspecialized states (n=367): 45.8; State surveyor specialization 
in ESRD[A]: Percentage of surveys in specialized states (n=261): 21.1.

Surveys with standard-level deficiencies numbering: 6 to 10; State 
surveyor specialization in ESRD[A]: Percentage of 
surveys in nonspecialized states (n=367): 14.2; State surveyor 
specialization in ESRD[A]: Percentage of surveys in specialized states 
(n=261): 31.0.

Surveys with standard-level deficiencies numbering: 11 to 20; State 
surveyor specialization in ESRD[A]: Percentage of 
surveys in nonspecialized states (n=367): 11.4; State surveyor 
specialization in ESRD[A]: Percentage of surveys in specialized states 
(n=261): 28.4.

Surveys with standard-level deficiencies numbering: 21 or more; State 
surveyor specialization in ESRD[A]: Percentage of 
surveys in nonspecialized states (n=367): 2.2; State surveyor 
specialization in ESRD[A]: Percentage of surveys in specialized states 
(n=261): 12.6.

Source: GAO analysis of state-provided workload data and CMS OSCAR 
data.

[A] Nonspecialized states include Pennsylvania, Missouri, Alabama, 
Florida, Kansas, and Nevada. Specialized states include, California, 
Maryland, and New York.

[End of table]

The importance of surveyor specialization for inspection results may be 
stronger for ESRD facilities than other types of providers. Although 
some general surveying skills apply across provider types, much of the 
content of ESRD standards is highly specialized, reflecting both the 
technological complexity of the dialysis process and the clinical 
complexity and vulnerability of the ESRD patient population. In a 184-
page appendix devoted to ESRD surveys, CMS's State Operations Manual 
lays out the specific steps that surveyors are expected to follow. 
Presumably, surveyors who have the opportunity to focus on mastering 
this material develop greater proficiency in identifying quality of 
care problems, including proficiency in identifying indications of 
adverse patient outcomes and appropriate facility responses.

Facilities with Prior Deficiencies Are Likely to Be Cited for Problems 
in Subsequent Surveys:

Our June 2000 ESRD report described the inability of Medicare's survey 
and certification system to ensure that problems identified in surveys 
and addressed by a facility's plan of correction will stay corrected 
for the long term. Once a facility has been recertified, it faces no 
adverse consequences should it fail to remain in compliance in the 
future. When the next survey takes place--usually several years later-
-the process will start over with deficiencies identified and a new 
opportunity for the facility to correct them. This allows facilities to 
cycle in and out of compliance with Medicare's quality standards.

The results of surveys conducted from fiscal year 1998 through 2002 
showed that a pattern of persistent noncompliance with quality 
standards was not uncommon. First, facilities cited for deficiencies in 
previous surveys were substantially more likely than other facilities 
to have deficiencies when surveyed again. Of surveys involving 
facilities that had a condition-level deficiency in their most recent 
prior survey, 29 percent had a condition-level deficiency in the 
subsequent survey as well, compared with 16 percent for those with only 
standard-level deficiencies in the prior survey and 12 percent for 
those with no prior deficiencies.

Similarly, we found that repeated citations for the same deficiency 
occurred frequently. From fiscal year 1998 through 2002, 2,073 
recertification surveys (57 percent of the total) involved facilities 
that had received deficiencies in their most recent prior survey. Of 
those, a third found deficiencies that repeated one or more specific 
condition-or standard-level deficiency codes cited in that prior 
survey. Moreover, 18 percent of the facilities with a condition-level 
deficiency on the prior survey were cited again for the same condition-
level deficiency. (See table 3.) Another 44 percent repeated one or 
more standard-level deficiencies.

Table 3: Rates of Repeated Deficiencies in Consecutive Surveys 
Conducted from Fiscal Years 1998 through 2002:

Prior survey with both condition-and standard-level deficiencies 
(n=271); Percentage of subsequent surveys identifying the same 
deficiencies: Condition-level: 18.1; Percentage of subsequent surveys 
identifying the same deficiencies: Standard-level only: 43.9; 
Percentage of subsequent surveys not identifying the same deficiencies: 
38.0.

Prior survey with only standard-level deficiencies (n=1,802); 
Percentage of subsequent surveys identifying the same deficiencies: 
Condition-level: n/a; Percentage of subsequent surveys identifying the 
same deficiencies: Standard-level only: 28.6; Percentage of subsequent 
surveys not identifying the same deficiencies: 71.4.

n/a = not applicable:

Source: GAO analysis of CMS OSCAR data.

[End of table]

ESRD surveyors in 6 of the 10 states in our study stated that they try 
to reduce the occurrence of persistent noncompliance by taking a 
facility's previous survey results into account when deciding which 
facilities to survey. Following this policy, facilities doing poorly on 
one survey should undergo a recertification survey more frequently. 
However, CMS's current goals for ESRD surveys, because they focus 
solely on the frequency of survey performance and not on the 
effectiveness of survey targeting, create a disincentive for states to 
give greater attention to previously noncompliant facilities. In 
particular, CMS's mandate to survey every facility within a 3-year 
period tends to discourage survey agencies from revisiting poorly 
performing facilities until all other facilities have been inspected.

An analysis of survey activity from fiscal year 1998 through 2002 
indicates that targeting of facilities based on their past survey 
results occurred to only a limited extent in recent years. Only 5.9 
percent of facilities surveyed from fiscal year 1998 through 2001 with 
condition-level deficiencies were resurveyed within a year, compared to 
3.9 percent of facilities that had no condition-level deficiencies that 
also were resurveyed within a year. The difference was somewhat greater 
over a 2-year period, with 20.8 percent of facilities having condition-
level deficiencies in fiscal year 1998 through 2000 being resurveyed 
compared to 12.6 percent of facilities that had no condition-level 
deficiencies. Nonetheless, the large majority of facilities with 
condition-level deficiencies were not resurveyed on an accelerated 1-or 
2-year schedule.

CMS Has Few Options to Sanction Noncompliant Facilities:

State agencies are hampered in their ability to induce facilities to 
comply fully and consistently with Medicare quality standards by the 
paucity of sanctions available for cases of noncompliance. At present, 
the only penalty that CMS can impose on ESRD facilities that do not 
comply with these requirements is revoking their eligibility to 
participate in the Medicare program. However, facilities typically are 
given a grace period--usually 3 months--in which to correct any 
problems identified in a survey. As long as these deficiencies have 
been addressed when surveyors revisit the facility, the provider 
suffers no adverse consequences from having failed to maintain 
compliance with Medicare quality standards.[Footnote 22] Consequently, 
very few ESRD facilities are terminated from Medicare, and those that 
are can apply for readmission to the program. From fiscal years 1998 
through 2002, only one dialysis facility was terminated from the 
Medicare program and stayed out of business.[Footnote 23]

Moreover, state survey agencies are often reluctant to press for the 
termination of dialysis facilities because such closures would force 
patients to find another provider and, in general, reduce patient 
access to care. Many surveyors expressed a need to have additional 
sanctions available to deal with poorly performing ESRD facilities. A 
number of such alternatives already exist for nursing homes, including 
a denial of payment sanction for new patients and civil monetary 
penalties. Denying Medicare payments for new patients would curb the 
facility's major source of revenue without eliminating, as a 
termination does, its ability to serve existing patients. However, the 
lost revenue from potential new patients, while the sanction is in 
effect, creates a concrete incentive for the facility to resolve its 
quality problems quickly and to stay in compliance thereafter. In 
addition, CMS requires states to refer for immediate sanctions nursing 
homes found to have actually harmed one or more residents or exposed 
them to potential serious injury on successive surveys. In this 
situation, no grace period is granted to the facility. Having multiple 
sanctions available means that surveyors can recommend the one that 
best fits a given set of circumstances, taking into account the likely 
impact on both the facility and the patients it serves.

In our June 2000 ESRD report, we noted that CMS had the authority to 
expand the enforcement tools available for addressing quality problems 
with ESRD facilities, but had not issued regulations and procedures to 
implement alternative sanctions. Other sanctions, notably civil 
monetary penalties, would require legislative changes by Congress. At 
that time, we recommended that CMS act to expand available penalties 
where permitted under its existing authority and that Congress consider 
authorizing civil monetary penalties for dialysis facilities comparable 
to those already in place for nursing homes. Since then, there have 
been no regulatory or legislative actions to expand available 
enforcement tools for ESRD facilities.

The publication of survey results could provide another incentive for 
facilities to maintain compliance with Medicare quality standards. If 
ESRD patients were able to readily compare the outcomes of surveys for 
facilities in their area, they could choose to seek care from 
facilities with more favorable inspection results. CMS has not taken 
any steps to make survey results publicly available. By contrast, CMS 
routinely posts survey results for nursing homes on an Internet Web 
site called Nursing Home Compare. In 2001, when CMS created a 
comparable Web site covering ESRD facilities, Dialysis Facility 
Compare, it chose not to make survey results accessible.

CMS Has Increased Funding for State Surveys, but Monitoring and 
Technical Support Are Uneven:

The limitations inherent in state survey processes have been compounded 
by inconsistent CMS oversight. On the one hand, CMS has substantially 
increased funding for ESRD surveys in line with its expectation that 
states survey a higher proportion of facilities each year. On the other 
hand, survey agencies do not always receive the monitoring and 
technical support that could enhance ESRD survey effectiveness. CMS 
regional offices vary widely in the extent to which they examine 
states' ESRD survey activities and provide related assistance. In 
addition, many state agencies do not routinely have access to 
information from ESRD networks that could assist them in selecting 
facilities to survey. Finally, the limited number of CMS courses has 
made it difficult for many state surveyors to obtain the training 
considered necessary to conduct ESRD surveys.

Funding Has Increased to Support CMS's ESRD Survey Goals:

In recent years, financial support for state survey activities overall 
has grown substantially. According to the Director of CMS's Survey and 
Certification Group, the increases responded to concerns that financial 
support for survey activities was not keeping pace with the growth in 
facilities and was putting Medicare beneficiaries at risk. From fiscal 
year 1998 to 2002, total federal expenditures for state surveys 
increased about 60 percent, with spending for long-term care (LTC) and 
non-LTC facility survey activities growing 61 and 56 percent, 
respectively.[Footnote 24] Non-LTC facility survey activities are 
supported almost entirely by federal funds, which must be allocated by 
states among home health agencies, hospices, ambulatory surgical 
centers, rehabilitation facilities, and other types of providers, as 
well as ESRD facilities--within a set of guidelines established by CMS. 
ESRD survey activities, therefore, must compete for funding with other 
non-LTC survey activities, including statutorily-required surveys for 
home health agencies that receive a higher priority. However, survey 
goals for ESRD facilities are more ambitious than those for hospices, 
ambulatory surgical centers, and many other non-LTC providers as CMS 
expects the agencies to survey ESRD facilities more frequently.

Notwithstanding the competing survey priorities, the expansion in 
financial support allowed state survey agencies to increase funding for 
ESRD surveys to help meet higher survey goals. We estimated that 
federal expenditures for ESRD survey activities nearly tripled from 
fiscal year 1998 to 2002, from $3.1 million to $8.2 million.[Footnote 
25] Most of the increase occurred between fiscal years 2000 and 2001, 
when the ESRD survey goal almost doubled from 17 to 33 percent of a 
state's facilities each year. (See table 4.) Increased spending for 
ESRD survey activities was evident across nearly all states. From 
fiscal year 1998 to 2002, 42 states had an increase in spending for 
ESRD survey activities, and the median state experienced a 144 percent 
increase.

Table 4: Federal Support for Provider Surveys, Fiscal Years 1998 to 
2001:

Dollars in millions.

1998; Total: $ 253.2; Long-term care provider surveys: $ 209.2[A]; 
Non-long-term care provider surveys: Non-ESRD surveys (estimated): 
$41.0[A]; Non-long-term care provider surveys: ESRD surveys 
(estimated): $3.1[A].

1999; Total: 265.1; Long-term care provider surveys: 217.2[B]; Non-
long-term care provider surveys: Non-ESRD surveys (estimated): 44.5
[B,C]; Non-long-term care provider surveys: ESRD surveys (estimated): 
3.3[B,C].

2000; Total: 312.1; Long-term care provider surveys: 260.3; Non-long-
term care provider surveys: Non-ESRD surveys (estimated): 47.3[D]; 
Non-long-term care provider surveys: ESRD surveys (estimated): 4.6[D].

2001; Total: 350.6; Long-term care provider surveys: 288.9[E]; Non-
long-term care provider surveys: Non-ESRD surveys (estimated): 
53.7[E]; Non-long-term care provider surveys: ESRD surveys 
(estimated): 8.1[E].

2002; Total: 405.2; Long-term care provider surveys: 336.6; Non-long-
term care provider surveys: Non-ESRD surveys (estimated): 60.5; Non-
long-term care provider surveys: ESRD surveys (estimated): 8.2.

Source: CMS aggregate budget data for Medicare and Medicaid survey 
activities.

Note: GAO estimates are based on the ESRD share of non-LTC survey hours 
reported to CMS. The three budgetary subcomponents do not sum to totals 
because of rounding.

[A] Excludes Nebraska.

[B] Excludes Tennessee.

[C] Excludes Washington.

[D] Excludes Arkansas.

[E] Excludes Vermont and Virginia.

[End of table]

In most states, the increase in ESRD spending outpaced the growth in 
spending for all non-LTC survey activities. As a result, the ESRD share 
of non-LTC expenditures also increased, from about 7 percent of non-LTC 
survey expenditures in fiscal year 1998 to about 12 percent in fiscal 
year 2002. For fiscal year 2002, we estimated that the ESRD share of 
non-LTC survey expenditures across states ranged from about 0 to 35 
percent. For the states with the largest number of dialysis facilities, 
the ESRD share ranged from 6 percent in Virginia to 25 percent in 
Georgia.

Regional Office Monitoring and Assistance to State Agencies Are Highly 
Inconsistent:

Regional offices' review of agency surveys, referred to as federal 
monitoring surveys, are conducted by CMS to monitor state agency 
performance in interpreting and applying federal standards as well as 
to identify training or technical assistance needs of surveyors. 
Although CMS is required to conduct monitoring surveys that assess the 
adequacy of the state's survey for nursing homes, no similar 
legislative requirements apply to ESRD facilities.[Footnote 26] As 
such, CMS has used monitoring surveys for dialysis facilities that are 
observational in nature--regional office staff accompany state 
surveyors on inspections of dialysis facilities, observe them as the 
surveyors identify and document facility deficiencies, and provide 
feedback on the surveyors' performance. CMS has not specified the 
number of ESRD monitoring surveys that regional offices should conduct. 
Perhaps as a consequence, representatives for six regional offices that 
we contacted--responsible for 29 states--told us they have conducted 
very few such surveys over the last 2 fiscal years. In fiscal year 
2001, the number of monitoring surveys each regional office performed 
ranged from 3 to 11; in fiscal year 2002, they ranged from 2 to 6. None 
of the regional offices in either year conducted a monitoring survey 
for every state in its jurisdiction.

Even for the few monitoring surveys conducted, most CMS regional 
offices in our study provided little feedback to the states. At 3 of 
the 10 state survey agencies we contacted, representatives reported 
receiving only one monitoring survey in 5 years and were provided no 
feedback. Other survey agency representatives stated that regional 
offices provided verbal feedback on their monitoring surveys. In 
contrast, two CMS regional offices also provided written feedback that 
included evaluations of surveyors' decisions regarding specific 
conditions and standards.

The regional offices in our study also have not taken full advantage of 
available data to monitor state agencies' survey performance for ESRD 
activities. CMS has instructed regional offices to use data from its 
OSCAR system as an integral tool to assess and compare state agency 
performance, particularly differences in the time required to conduct 
surveys and the types of deficiencies cited. According to CMS, such 
analyses can provide the information necessary to help state agencies 
improve their efficiency in conducting ESRD surveys and achieve 
consistency in their quality. For example, because OSCAR contains data 
on the number of hours spent on each ESRD survey, regional offices 
could use a benchmark to compare and assess survey times across their 
state agencies. CMS has indicated that similar analyses could be 
performed for the types of deficiencies cited by surveyors to determine 
whether there were any differences in state agencies' application of 
quality standards.[Footnote 27] Despite such potential uses of data to 
monitor state agency performance, most of the regional offices analyzed 
their available data on a more limited basis. They checked on past 
survey results for certain ESRD facilities and relied extensively on 
quarterly workload reports from each state agency to determine the 
number of recertification surveys conducted.

In addition to monitoring and tracking ESRD survey activities, CMS 
requires regional offices to assist state agencies in fulfilling their 
survey responsibilities. Such assistance includes alerting the agencies 
to CMS policies and goals, coordinating communications with the CMS 
central office, helping surveyors obtain ESRD training, and consulting 
on a regular basis on program activities and achievement of survey 
goals. The performance of regional offices in our study varied from 
little contact with their state agencies to extensive collaboration. 
One CMS regional office had almost no contact with its state survey 
agencies or network and was not sure of the state agencies' performance 
in meeting ESRD survey goals. A survey agency representative in that 
region stated that contact with the regional office consisted primarily 
of a few calls the agency made to obtain clarification on a policy or 
procedure. In contrast, most of the regional offices included in our 
study, at a minimum, contacted state survey agencies to discuss CMS 
policies and goals, provided technical information or training on ESRD 
issues, and offered assistance in conducting select surveys.

Among the most active regional offices in providing support on ESRD 
surveys was Region 9.[Footnote 28] Its efforts to improve state agency 
survey performance included a range of activities:

* The office collaborated with state agencies and networks to provide 
ESRD training to state surveyors in addition to that provided by the 
CMS central office.

* Through conference calls, the office contacted its state agencies 
monthly (including their district offices) to discuss current ESRD 
survey issues, relevant federal bulletins or alerts, instructions for 
more consistent coding of deficiencies, updates on training needs and 
slots available, and surveyor decisions related to inspection findings. 
The conference calls provided a mechanism for surveyors to pose 
questions directly to CMS officials and often receive an immediate 
response.

* The office conducted quarterly conferences that included 
representatives from the networks and state survey agencies to provide 
updates on quality improvement programs underway by the networks, 
general issues related to ESRD, and issues specific to certain 
facilities.

* The office joined state agencies and networks in a campaign to 
educate facility managers about ESRD regulations and the survey 
process.

Disparities in regional office performance--not unlike the disparities 
in state survey agency performance--may reflect their ability to cope 
with CMS's survey priorities. Officials representing several regional 
offices noted that CMS's focus has been on nursing homes and other 
types of facilities that are a higher survey priority than ESRD 
facilities. Some of these officials indicated that, as a consequence, 
needed attention in monitoring state agencies and providing technical 
assistance for ESRD survey activities has lagged.

Networks Do Not Routinely Share Facility Data with State Agencies:

State survey agencies are not routinely receiving information from ESRD 
networks--organizations authorized by statute to collect information on 
patient complaints, quality improvement projects, and clinical 
performance. The networks operate under contracts with CMS which, in 
fiscal year 2002, totaled $24.7 million, approximately three times the 
amount of federal funds we estimate were spent on state survey and 
certification activities for dialysis facilities.[Footnote 29] 
Networks use the information they collect to perform a wide range of 
quality improvement activities and to identify and address any quality 
issues that may arise with individual facilities. Under the terms of 
their CMS contract, they are to cooperate with state survey agencies by 
providing them facility-specific information upon request. However, our 
June 2000 study found that most CMS regional offices had restricted 
networks from sharing facility-specific information, contending that 
federal confidentiality regulations prohibited such exchanges. In 
response, we recommended that CMS establish procedures to facilitate 
routine cooperation and information sharing between networks and state 
agencies. The HHS Inspector General made similar recommendations in 
June 2002.[Footnote 30] However, most of the states in our current 
review reported that they have seen little evidence of increased 
information sharing by ESRD networks.

Most of the state agencies included in our study did not receive 
facility-specific information from networks on a regular basis. State 
agency officials indicated that the networks typically provided summary 
data for facilities, and that access to facility-specific information 
occurred on a case-by-case basis. Much of the information that was 
shared by networks came in response to inquiries from state agencies 
regarding specific providers. In addition, networks rarely identified 
facilities as candidates for inspection. For example, one state agency 
official noted that the area ESRD network rarely shared information on 
complaints and made only one recommendation over the last 5 years that 
identified a facility for inspection.

Several state agency officials attributed the limited disclosure of 
facility-specific information to confusion in the ESRD community about 
requirements pertaining to safeguarding this information. The Social 
Security Act prohibits the disclosure of facility-specific information 
to any person subject to several exceptions, for example, where federal 
regulation authorizes the disclosure in order to protect the rights and 
interests of patients.[Footnote 31] Although their contracts with CMS 
indicated that the agency wanted them to share facility-specific 
information with state survey agencies, the networks are hesitant to 
follow this directive because the agency regulations do not identify 
such disclosure as a specific exemption from the general statutory 
prohibition. Reportedly, network officials are concerned that the 
release of such information could undermine their quality improvement 
efforts and collaborative relationships with facilities.[Footnote 32] 
CMS acknowledged that confusion exists in this area and convened a 
workshop to promote more understanding and cooperation between the 
networks and the state agencies.[Footnote 33] However, CMS has not 
required networks to routinely share facility-specific information.

The potential benefits that can be achieved from increased sharing of 
network information are well illustrated by the recent experience of 
the California state survey agency. The state agency routinely receives 
facility-specific information from its two corresponding networks 
verbally--no facility-specific data are sent to the state agency in 
written form. Regardless of the method, the networks and the state 
agency agreed that they need to be able to share such information, 
considering its potential benefits in improving facilities' quality of 
care, and have conveyed this to the ESRD facilities' managers. 
Consequently, the networks regularly contact the state agency to share 
different types of quality of care information on individual 
facilities, including complaints the network received and the results 
of related investigations. The networks now routinely make suggestions 
regarding potential facilities for the state agency's attention. This 
relationship improved markedly after years of little communication 
between the state agency and the networks, largely as the result of 
increased trust derived from working together on a series of joint 
projects.[Footnote 34]

States Report Insufficient ESRD Training Opportunities:

According to state officials, scarcity of ESRD training opportunities 
has impeded state agencies' efforts to improve surveyor performance. 
Because most surveyors do not have prior training or experience in 
dialysis, state survey agencies have for years relied on the courses 
that CMS has organized to train ESRD surveyors in the technical aspects 
of dialysis and the application of ESRD quality standards. The need for 
specialized training is consistent with the highly technical nature of 
ESRD surveys relative to surveys of other provider types. CMS offers 
basic ESRD training for surveyors who are not experienced with ESRD 
surveys and advanced training for others. Officials at the state 
agencies in our study generally commended these courses, noting that 
they provided surveyors with the knowledge and skills needed to conduct 
ESRD surveys effectively.

Three of the state agencies we reviewed require that surveyors complete 
CMS's basic ESRD training before they are allowed to perform surveys 
unassisted. State agency officials emphasized that they try to get 
surveyors trained as quickly as possible after they have been assigned 
ESRD survey responsibilities. This not only permits the surveyors to 
gain expertise in conducting ESRD surveys at the appropriate time, but 
it also allows them to begin conducting surveys unassisted in a timely 
fashion. Delays in getting surveyors scheduled for basic training 
delays their readiness to conduct surveys unassisted, which in turn has 
an impact on a state agency's performance in the number of surveys it 
conducts during the year.

For most of the state agencies in our study, the limited number of CMS 
training classes offered has been problematic. In particular, the 
infrequency of classes at the introductory level for ESRD training has 
had the greatest impact on state agency operations. From fiscal year 
1999 to 2002, CMS offered only one course each year for basic training, 
always given at the same time of year, and since fiscal year 2000, 
always in Denver. In light of this schedule, state agencies were 
particularly concerned about the delay in training surveyors who were 
new to ESRD. At times, state agencies sent these surveyors to take 
advanced courses when openings in the basic course were unavailable. 
However, these courses dealt largely with selected topics and did not 
explain the core technical and regulatory concepts covered in the basic 
course. As a result, surveyors who had previously taken basic training 
and had some experience in conducting ESRD surveys found the advanced 
courses most informative and useful. Officials of several state 
agencies also indicated that CMS could help accommodate surveyors by 
offering basic ESRD training at multiple sites, taking into 
consideration the location of class enrollees. Some officials added 
that this would provide the additional benefit of helping their 
agencies save funds used for travel.

CMS has highlighted the value to surveyors of attending its basic ESRD 
training course by instituting a new policy that requires all newly 
appointed ESRD surveyors to complete it. Effective fiscal year 2003, 
all newly hired ESRD surveyors, or surveyors who have not previously 
performed ESRD surveys, must complete the course before they can serve 
in a capacity other than a trainee. However, CMS has chosen not to fill 
this gap for surveyors who took advanced courses as a substitute for 
the basic course in years past. For surveyors who performed ESRD 
surveys prior to fiscal year 2003, other CMS ESRD training courses are 
considered equivalent. Experienced ESRD surveyors who have not received 
any ESRD training from CMS have until fiscal year 2004 to complete 
either ESRD basic or advanced training.

CMS fielded a questionnaire to state agencies to determine current 
training needs in light of the new training requirement. Although the 
results of this survey are still being reviewed and analyzed by CMS, 
preliminary tabulations indicate that at least 21 percent of 
experienced ESRD surveyors met the training requirement through one of 
the presumed equivalent courses and had never taken the CMS basic 
course. In at least six states fewer than half the surveyors had taken 
the basic ESRD training. The extent to which experience in conducting 
ESRD surveys compensates for a lack of formal training is an open 
question. Until that process is complete, the scarcity of training 
opportunities in the past could continue to constrain the effectiveness 
of many ESRD surveyors.

Conclusions:

As a result of critical weaknesses in the system established to monitor 
and enforce compliance with Medicare's quality standards for ESRD 
facilities, full and consistent compliance with these standards has 
become more the exception than the rule. Despite increased surveying 
goals recently set by CMS, many facilities continue to escape the 
attention of state surveyors for long periods of time. This is 
especially problematic for facilities that have performed poorly in the 
past and are therefore relatively more likely to reveal deficiencies 
when surveyed again. In addition, there are few if any negative 
consequences for facilities if they are surveyed and found out of 
compliance with Medicare's quality standards. Currently, facilities can 
escape negative publicity from having multiple deficiencies, despite 
the fact that the statement of deficiencies prepared by state surveyors 
is a public document.

The wide variation across states in the number of condition-level 
deficiencies found indicates in part that some surveyors are more 
proficient than others in detecting quality problems. ESRD survey 
expertise can be enhanced through training and experience. Promoting 
surveyor specialization should lead to more thorough ESRD inspections 
and more accurate documentation of deficiencies. Similarly, were CMS to 
offer more basic level ESRD courses, at different locations and times, 
surveyors newly assigned to ESRD facilities could more quickly obtain 
the training they need to conduct effective inspections. In addition, a 
comparable expansion in advanced course offerings would enable a larger 
proportion of experienced surveyors to catch up with technical 
developments in dialysis treatments.

State survey agencies could better target their survey activities if 
they had access to information from ESRD networks on the extent of 
serious quality problems at individual facilities. However, CMS 
regulations that require networks to safeguard the confidentiality of 
data that they obtain from dialysis facilities has generated confusion 
among the networks as to what facility-specific information they 
legitimately can and should share with state survey agencies. CMS could 
remove this long-standing impediment by revising those regulations to 
clearly make such data sharing with state agencies mandatory.

Moreover, the magnitude of variation across states in the level of 
survey activity and survey results underlines the need for more 
intensive monitoring of, and support to, the individual state agencies. 
However, CMS has not addressed the enormous variation among its own 
regional offices in the extent to which they undertake these 
activities. The highly inconsistent performance in the number of ESRD 
surveys conducted by state agencies and surveyors' detection of 
deficiencies may reflect uneven monitoring and support provided to them 
by CMS regional offices--some of which devoted considerable attention 
to ESRD survey activities, and others, virtually none.

Ultimately, no quality assurance system can be effective unless 
providers face real consequences when they are cited repeatedly for 
deficiencies. Because they are routinely given multiple opportunities 
to demonstrate that they have corrected any problems found, ESRD 
facilities have no strong incentive to adhere to those standards until 
a survey takes place. Facilities are likely to continue cycling in and 
out of compliance until state agencies have a broader range of 
enforcement tools, especially ones that take effect even if 
deficiencies are subsequently corrected. CMS could implement some 
additional sanctions by regulation. However, as we noted in our June 
2000 report, CMS did not have the authority to expand to ESRD 
facilities the range of alternative sanctions available for use against 
noncompliant nursing homes. We therefore suggested at that time that 
Congress consider authorizing CMS to impose civil monetary penalties on 
dialysis facilities. Our current work supports consideration of this 
suggestion.

Moreover, the effectiveness of alternative sanctions would be greatly 
strengthened if they could also be imposed promptly, without allowing 
facilities a grace period to correct identified deficiencies. Such 
immediate sanctions could be applied when facilities are found to have 
condition-level deficiencies in successive surveys. For instance, 
immediate denial of payments for new patients could create a strong 
incentive to maintain compliance because the facility loses income from 
Medicare, which usually represents a substantial part of operating 
revenues.

Matter for Congressional Consideration:

To encourage ESRD facilities to sustain their compliance with Medicare 
quality standards, Congress should consider authorizing CMS to 
immediately impose a sanction when a dialysis facility has condition-
level deficiencies in successive surveys without providing the facility 
a grace period before the sanction takes effect. The immediate sanction 
options available to CMS should include denial of Medicare payments for 
new patients and civil monetary penalties.

Recommendations for Executive Action:

We recommend that:

To create incentives for facilities to maintain compliance with 
Medicare quality standards, the Administrator of CMS should:

* establish a goal for state agencies to reduce the time between 
surveys for facilities with condition-level deficiencies and:

* publish facilities' survey results on its Dialysis Facility Compare 
Web site.

To help surveyors identify and systematically document deficiencies, 
the Administrator of CMS should:

* strongly encourage states to assign ESRD inspections to a designated 
subset of surveyors who specialize in conducting ESRD surveys and:

* make ESRD training courses more available to state surveyors, which 
may include increasing the number of classes and slots available as 
well as varying class location.

To enhance the support and monitoring of state survey agencies, the 
Administrator of CMS should:

* amend its regulations to require that networks share facility-
specific data with state agencies on a routine basis and:

* ensure that regional offices both adequately monitor state 
performance and provide state agencies ongoing assistance on policy and 
technical issues through regularly scheduled contacts with state 
surveyors.

Agency Comments and Our Evaluation:

In its written comments, CMS did not indicate an intention to implement 
five of our six recommendations. Nevertheless, it affirmed its 
commitment to ensuring adequate oversight of dialysis facilities and 
state survey agencies, and described a number of measures that it has 
initiated to strengthen this process. (CMS's comments are reprinted in 
app. IV.) However, two of these initiatives--a proposed survey of ESRD 
beneficiaries and the automation of data reporting by facilities to 
CMS--will only indirectly affect the survey and certification program 
that was the focus of our report. In our report, we identified several 
key limitations in the structure and implementation of this program 
that constrain its effectiveness in enforcing Medicare's quality 
standards for ESRD facilities. In addition to comments on each of our 
recommendations, CMS also provided technical comments that we 
incorporated where appropriate.

With respect to our matter for congressional consideration, CMS 
affirmed its commitment to take action against ESRD facilities with 
serious quality problems. It also acknowledged that the agency needed 
to create strong incentives for facilities to provide quality care. The 
agency proposed to address this issue by initiating an evaluation of 
the effectiveness of sanctions on improving nursing home care. Although 
such an evaluation may produce useful information about nursing homes, 
it will have limited relevance for the quality of care provided to ESRD 
patients. We continue to believe that Federal oversight of dialysis 
facilities could be improved by strengthening the enforcement process. 
Therefore, Congress should consider authorizing CMS to impose immediate 
sanctions on dialysis facilities cited with serious deficiencies in 
consecutive surveys.

CMS's response to the first of our recommendations for executive 
action--that it set a goal for more frequent surveys of facilities with 
a history of condition-level deficiencies--acknowledged the value of 
targeting surveys on poorly performing providers. Though it expressed a 
strong commitment to increased oversight of such facilities, CMS did 
not indicate a willingness to set this additional goal. Instead, CMS 
relies on the states to use the flexibility that it has built into its 
budget call letter to target their surveys on ESRD providers most 
likely to have quality problems. However, we found that the budget call 
letter placed ESRD facilities in a lower priority category, behind both 
nursing homes and home health agencies. Without a change in the 
priorities that CMS has communicated to the state agencies, it is 
unrealistic to expect most states to go beyond the goals currently set 
by CMS for ESRD survey activity.

In its comment, CMS also highlighted its efforts to develop tools to 
help state agencies identify facilities that are most likely to exhibit 
quality problems. These include reports on individual facilities--
produced from claims data and other administrative data files by CMS 
contractors--that describe their practice patterns and outcomes. CMS 
also stated that it distributes to the states an Outcomes List that 
ranks facilities for surveying priority based on their performance on 
dialysis adequacy, anemia management, and adjusted mortality rates. 
However, CMS's surveying goals for the states, as they are currently 
structured, do not focus on targeting of any sort. Our analysis of 
state survey activity found scant evidence that state agencies were 
conducting more frequent surveys of even the most obvious candidates--
facilities that had condition-level deficiencies in their most recent 
prior survey. Our evidence and CMS's response indicates a need for CMS 
to go beyond its current efforts to developing inspection goals on 
poorly performing facilities.

CMS did not directly respond to our second recommendation, that CMS 
publish survey results on its Dialysis Facility Compare Web site. 
Instead, the agency described various studies it has underway to 
develop better information for consumers, including efforts to make 
survey results more uniform across the country. While greater 
uniformity in survey results is a laudable objective, we would note 
that the results of surveys currently conducted are the basis for the 
agency's decisions to either recertify or (potentially) terminate ESRD 
facilities as Medicare providers. Therefore, the information we have 
recommended that CMS share with the public does not represent an 
abstract quality indicator of unknown validity. Rather, it conveys the 
actual status of the facility in terms of fulfilling its basic 
obligation to meet Medicare's conditions for coverage. In our opinion, 
these nominally public, but heretofore undisseminated, survey outcomes 
would convey useful information to interested ESRD patients trying to 
decide among alternative facilities.

Our third recommendation was that CMS encourage state agencies to 
identify a subset of surveyors who would specialize in conducting ESRD 
facility inspections. In its comment CMS did not address our 
recommendation but responded that, in general, it encouraged states to 
have specialized surveyors when possible. However, the agency did not 
describe what specifically it had done to promote this practice. CMS 
did highlight other initiatives it has taken to enhance surveyor skills 
and improve the survey process more generally. These include its 
development of a new software system to help guide surveyors as they 
conduct surveys, the reports on practice patterns and outcomes of 
individual facilities, and increases in the surveyor training that CMS 
provides. CMS concluded that these steps were the most appropriate use 
of limited resources. We would note, however, that to the extent that 
states do not concentrate their ESRD surveys on a subset of specialist 
surveyors, more surveyors will need to receive CMS training in 
conducting ESRD surveys. That represents a less efficient use of CMS 
training resources. We continue to believe that surveyor specialization 
contributes to more thorough and effective inspections, in addition to 
whatever benefits accrue from other improvements such as expanded 
training and customized software.

Our fourth recommendation was that CMS expand the number and slots 
available in training courses for ESRD inspections, as well as vary 
their locations. CMS responded that it has arranged to increase its 
offerings to a minimum of two basic ESRD training classes annually, 
with one course conducted in Denver and one in Minneapolis. According 
to CMS, more advanced ESRD training may also be increased, depending on 
demand. This expansion should lessen considerably the difficulty that 
state survey agencies have experienced obtaining the necessary training 
for their ESRD surveyors on a timely basis.

In our fifth recommendation, we urged CMS to amend its regulations to 
require that ESRD networks share facility-specific data with state 
agencies on a routine basis. CMS responded that networks are currently 
required to share data with CMS, which can then provide appropriate 
information, such as the previously mentioned Outcomes List, to state 
agencies. CMS also stated that information that networks obtain through 
their quality improvement efforts has limited utility for quality 
assurance because it is not standardized (that is, the specific 
information collected will vary across networks and projects). On the 
contrary, we found that the networks' quality improvement projects 
collect new information directly from dialysis facilities which helps 
identify those facilities that perform poorly on one or more quality 
dimensions. As the experience of California has shown, such data can 
provide valuable guidance to state surveyors in their selection of 
facilities to inspect, regardless of whether identical information is 
collected by every network across the country.

Our last recommendation stated that CMS should ensure that its regional 
offices provide adequate oversight of, and assistance to, state agency 
monitoring of ESRD facilities. As with several previous 
recommendations, the agency reaffirmed its commitment to the overall 
goal, but did not address the weaknesses that we found in its 
implementation. CMS's comment describes the resources available to the 
regional offices, including assigned ESRD specialists, regional data 
reports, and monthly conference calls with state agency officials. 
However, CMS did not address the large variation across regions in the 
extent to which they use these tools, and refers to no specific 
measures intended to stimulate greater effort in regions that have been 
less active to date. CMS stated that it is working hard to clarify its 
expectations for both state agencies and its own regional offices, but 
in its comment provides no explanation or examples of what this might 
entail.

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution of it until 30 
days from its date. At that time, we will send copies of this report to 
the Administrator of CMS and to other interested parties. In addition, 
this report will be available at no charge on GAO's Web site at http:/
/www.gao.gov. We will also make copies available to others upon 
request.

If you or your staff have any questions about this report, please call 
me at (312) 220-7600. An additional GAO contact and other staff members 
who prepared this report are listed in appendix V.

Sincerely yours,

Signed by: 

Leslie G. Aronovitz 
Director, Health Care--Program Administration and Integrity Issues:

[End of section]

Appendix I: Scope and Methodology:

Quality of Care:

To analyze variation in the clinical performance of individual 
facilities, we downloaded information available from CMS's Web site, 
Dialysis Facility Compare (DFC)--http://www.medicare.gov/Dialysis/
Home.asp.[Footnote 35] DFC provides information on two clinical 
performance measures: the proportion of patients with adequate 
hemodialysis--defined as a Urea Reduction Ratio of at least 65--and the 
proportion of patients with adequate anemia control--defined as a 
hematocrit of 33 or better. DFC has data on the latter measure for 
patients taking the drug erythropoietin (EPO)--the therapy generally 
used to treat anemia among ESRD patients. The most currently available 
data for both measures came from information provided on Medicare 
claims submitted for treatment furnished in 2000. DFC reports the 
proportion of patients at each ESRD facility who achieved the 
designated threshold for these two measures.

To provide a more concrete sense of the types of quality problems 
encountered by state surveyors, we selected five survey reports, known 
formally as a "statement of deficiencies" (Form 2567), that described 
in detail the deficiencies cited in inspections of individual 
facilities in five states. We abstracted from each survey report the 
justification written by the surveyor for one deficiency citation. The 
episodes we chose involved deficiency codes that are widely cited among 
survey reports nationwide. In the data we assembled from CMS's Online 
Survey Certification and Reporting (OSCAR) system, at least one of 
these six specific deficiency codes--111, 112, 118, 240, 264, and 423-
-was cited in 35 percent of all recertification surveys conducted in 
fiscal years 1998 through 2002.

To more fully appreciate the clinical consequences of these 
deficiencies for patients, we shared our abstracted citations with 
three ESRD surveyors, each with at least 5 years of ESRD survey 
experience, whom we had previously interviewed in conjunction with our 
site visits to three different states. All were registered nurses. The 
three surveyors commented on each of the six vignettes that we sent 
them by describing the potential impact of these situations on patient 
health and well-being. Their analyses encompassed expected symptoms, 
such as fatigue, swelling, and shortness of breath, medical conditions 
that could result, such as heart failure and ruptured red blood cells, 
and related outcomes, such as shortened life expectancy.

Survey Frequency and Results:

To analyze the frequency and results of surveys conducted in the 50 
states plus the District of Columbia, we obtained all the data stored 
on CMS's OSCAR system relating to standard surveys of ESRD facilities. 
Standard surveys include initial surveys--conducted when a facility 
first applies for Medicare certification--and recertification surveys-
-conducted at intervals subsequent to the initial survey for that 
facility.[Footnote 36] The OSCAR database is continuously updated and 
retains data for the four most recent surveys for each facility. Our 
analysis was not adversely affected by the potential loss of data if a 
given facility had more than four standard surveys conducted, because 
less than 1 percent of ESRD facilities had as many as four surveys from 
fiscal year 1998 through 2002, the period of our review.

When state survey agencies complete their work on these surveys, CMS 
requires them to record in OSCAR information about the inspection 
including the dates that the surveys took place and the specific 
deficiency codes for each standard-level and condition-level deficiency 
cited. OSCAR also contains Provider of Service file information on ESRD 
facilities, including their name, address, chain ownership, date of 
Medicare enrollment, and the date of, and reason for, termination (if 
any).

The data used in our OSCAR analyses was downloaded on April 2, 2003, 
providing a 6-month period following the end of fiscal year 2002 for 
state agencies to complete the process of data entry. To assess the 
completeness of the data, we compared the number of surveys we found in 
OSCAR for fiscal years 1998 through 2002 with the number of surveys 
that state agencies indicated that they completed in annual workload 
reports submitted to CMS. Although complete workload data were not 
always available, where they were, the numbers of ESRD surveys reported 
for most states matched the number recorded in OSCAR either exactly or 
nearly (plus or minus 3) in each of the 5 fiscal years.

In analyzing the proportion of ESRD facilities resurveyed in fiscal 
years 1998 through 2002, we determined the facilities that were 
available for recertification in each year. We excluded those 
facilities that were subject to an initial survey, and any that had 
either dropped out of Medicare prior to that year or that did not begin 
participating in the program until later.

Surveyor Specialization:

To assess the effect of surveyor specialization, we analyzed the 
relationship of survey results statewide with the degree of surveyor 
specialization in that state. We defined specialization as assigning 
ESRD facility inspections to a subset of surveyors who spend much of 
their time focused on ESRD quality issues. We knew from our state site 
visits and interviews that some states promoted specialization while 
other states distributed ESRD assignments roughly equally among 
surveyors who spent most of their time inspecting nursing homes and 
home health agencies. From 9 of the 10 states that we examined most 
closely, we obtained data on the number of ESRD and non-ESRD surveys 
conducted by each surveyor during fiscal year 2002. (We were not able 
to obtain this information from Mississippi.) From those data we 
calculated the proportion of total surveys that were of ESRD 
facilities, first for each individual surveyor, and then for the state 
as a whole. The statewide ratio combined the individual surveyor 
ratios, with each individual's ratio weighted by the proportion of ESRD 
surveys in fiscal year 2002 accounted for by that individual. The 
result was a state specialization score that had a possible range from 
almost 0 to 1. (A state would get a score of 1.0 if all of its ESRD 
surveys were done by surveyors who never inspected any other provider 
types.) This approach was designed to gauge the relative likelihood 
that any given ESRD survey in the state would be conducted by a 
surveyor whose survey activities focused on ESRD facilities.

We assessed the strength of the relationship of surveyor specialization 
to survey results by comparing the aggregate results of states with low 
specialization scores with states that had relatively high scores. 
Specifically, we compared the proportion of surveys with condition-
level deficiencies and the number of standard-level deficiencies cited 
in surveys. We applied chi-square tests to determine if observed 
differences between the two groups were likely to have occurred by 
chance, using the conventional 95 percent confidence interval. We were 
not able to link the results of individual surveys to the experience 
level of the surveyors who conducted them. Therefore, our analysis 
compared aggregate survey outcomes across two groups of states, 
distinguished by their overall level of surveyor specialization.

Surveyor Training:

To assess the extent of state surveyor training to perform ESRD 
facility inspections, we drew on the results of a survey conducted by 
CMS of the state survey agencies. CMS solicited data on the titles and 
dates of all CMS-sponsored training on ESRD completed by each of the 
states' individual surveyors who had performed ESRD inspections prior 
to fiscal year 2003. It initially collected these data in January and 
February of 2003 and continued obtaining updated and corrected 
information through May 2003. We analyzed the most recent data supplied 
to us by CMS at that time.

Federal Funding for ESRD Surveys:

To assess federal funding for ESRD and other survey activities, we 
reviewed quarterly and annual expenditure reports submitted to CMS by 
state survey agencies for fiscal years 1998 to 2002. These reports 
specify the funds spent by state agencies for both long-term care (LTC) 
and non-LTC survey activities under the Medicare and Medicaid programs. 
However, because the reports aggregate expenditures for all non-LTC 
survey activities, we had to estimate the expenditures related to ESRD 
surveys. We developed our estimates based on additional CMS data that 
indicated the number of hours each state agency reported was spent on 
activities related to ESRD surveys, as well as activities related to 
non-LTC surveys overall. We then calculated the ESRD-related share of 
non-LTC survey hours and applied that percentage to the total non-LTC 
survey expenditures each state agency indicated on its annual 
expenditure report.

[End of section]

Appendix II: Medicare Conditions for Coverage for Dialysis Facilities:

Condition for coverage: Compliance with federal, state, and local laws 
and regulations; Description: The facility and personnel employed by 
the facility must be licensed as required by federal, state, or local 
laws. This includes compliance with all public safety laws and 
requirements.

Condition for coverage: Governing body and management; Description: The 
facility must be under the control of an identifiable body that adopts 
and enforces rules and regulations, including operational rules and 
patient care policies to safeguard the health and safety of 
individuals.

Condition for coverage: Patient long-term-care program and patient care 
plan; Description: A professional, multidisciplinary health care team 
and the patient must develop a written long-term-care plan to ensure 
each patient receives the appropriate type of dialysis and care. 
Patient care plans, which have shorter time lines, must be personalized 
for each patient to address their specific medical, psychological, 
social, and functional needs. Both plans are to be regularly reviewed 
and updated to respond to changing patient needs.

Condition for coverage: Patients' rights and responsibilities; 
Description: Dialysis facilities must have written policies describing 
the rights of the patients in order to ensure patients are fully 
informed about the services available, their medical condition, whether 
the facility reuses dialysis supplies, and whether the patient is a 
candidate for transplantation and home dialysis.

Condition for coverage: Medical records; Description: Patient medical 
records must be maintained to document patient assessments, diagnosis, 
and treatment, and medical and nursing histories.

Condition for coverage: Physical environment; Description: Dialysis 
services are to be provided in a setting that is functional, sanitary, 
safe, and comfortable for patients, staff, and the public.

Condition for coverage: Reuse of hemodialyzers and other dialysis 
supplies; Description: Facilities that reuse hemodialyzers and other 
dialysis supplies must follow established protocols and standards to 
ensure patient and staff safety.

Condition for coverage: Affiliation agreement or arrangement; 
Description: Agreements between dialysis facilities and inpatient 
dialysis centers must be in writing to ensure inpatient care and other 
hospital services are promptly available to dialysis patients.

Condition for coverage: Director of renal dialysis facility; 
Description: Dialysis treatments must be under the general supervision 
of a qualified director, who is responsible for planning, organizing, 
conducting, and directing professional services.

Condition for coverage: Staff of a renal dialysis facility or center; 
Description: Properly trained and qualified personnel must be present 
in adequate numbers to meet the needs of patients, including needs 
arising in emergencies.

Condition for coverage: Minimal service requirements; Description: 
Dialysis facilities must provide dialysis services as well as 
laboratory, social, and dietetic services needed to address ESRD 
patient needs.

Source: 42 C.F.R. Part 405 Subpart U (2002).

[End of table]

[End of section]

Appendix III: State Agencies' Progress toward Meeting CMS Survey Goals:

The table below shows the percentage of facilities surveyed, by state, 
in fiscal years 1998 to 2002. It indicates how the individual states 
responded to the increases in the goal for annual ESRD recertification 
rates set by CMS, from 10 to 17 percent per year in fiscal year 2000 
and then to 33 percent each year starting in fiscal year 2001.

Table 5: ESRD Facilities Recertified Annually by State, Fiscal Years 
1998 to 2002:

CMS goal; Percentage: 1998: 10; Percentage: 1999: 10; Percentage: 2000: 
17; Percentage: 2001: 33; Percentage: 2002: 33.

State recertification survey rates:

Alabama; Percentage: 1998: 12; Percentage: 1999: 15; Percentage: 2000: 
17; Percentage: 2001: 9; Percentage: 2002: 2.

Alaska; Percentage: 1998: 50; Percentage: 1999: 0; Percentage: 2000: 
100; Percentage: 2001: 100; Percentage: 2002: 0.

Arizona; Percentage: 1998: 8; Percentage: 1999: 13; Percentage: 2000: 
11; Percentage: 2001: 28; Percentage: 2002: 23.

Arkansas; Percentage: 1998: 11; Percentage: 1999: 50; Percentage: 2000: 
16; Percentage: 2001: 32; Percentage: 2002: 37.

California[A]; Percentage: 1998: 2; Percentage: 1999: 4; Percentage: 
2000: 12; Percentage: 2001: 12; Percentage: 2002: 11.

Colorado; Percentage: 1998: 7; Percentage: 1999: 6; Percentage: 2000: 
24; Percentage: 2001: 6; Percentage: 2002: 27.

Connecticut; Percentage: 1998: 17; Percentage: 1999: 28; Percentage: 
2000: 27; Percentage: 2001: 39; Percentage: 2002: 39.

Delaware; Percentage: 1998: 0; Percentage: 1999: 9; Percentage: 2000: 
0; Percentage: 2001: 15; Percentage: 2002: 36.

District of Columbia; Percentage: 1998: 8; Percentage: 1999: 4; 
Percentage: 2000: 28; Percentage: 2001: 22; Percentage: 2002: 28.

Florida[A]; Percentage: 1998: 10; Percentage: 1999: 14; Percentage: 
2000: 22; Percentage: 2001: 37; Percentage: 2002: 40.

Georgia[A]; Percentage: 1998: 12; Percentage: 1999: 12; Percentage: 
2000: 17; Percentage: 2001: 37; Percentage: 2002: 36.

Hawaii; Percentage: 1998: 21; Percentage: 1999: 13; Percentage: 2000: 
6; Percentage: 2001: 25; Percentage: 2002: 22.

Idaho; Percentage: 1998: 17; Percentage: 1999: 13; Percentage: 2000: 
14; Percentage: 2001: 14; Percentage: 2002: 14.

Illinois[A]; Percentage: 1998: 29; Percentage: 1999: 21; Percentage: 
2000: 22; Percentage: 2001: 41; Percentage: 2002: 32.

Indiana; Percentage: 1998: 5; Percentage: 1999: 19; Percentage: 2000: 
16; Percentage: 2001: 33; Percentage: 2002: 31.

Iowa; Percentage: 1998: 9; Percentage: 1999: 11; Percentage: 2000: 17; 
Percentage: 2001: 26; Percentage: 2002: 27.

Kansas; Percentage: 1998: 14; Percentage: 1999: 24; Percentage: 2000: 
21; Percentage: 2001: 44; Percentage: 2002: 33.

Kentucky; Percentage: 1998: 63; Percentage: 1999: 54; Percentage: 2000: 
70; Percentage: 2001: 83; Percentage: 2002: 89.

Louisiana[A]; Percentage: 1998: 10; Percentage: 1999: 18; Percentage: 
2000: 17; Percentage: 2001: 32; Percentage: 2002: 31.

Maine; Percentage: 1998: 38; Percentage: 1999: 38; Percentage: 2000: 8; 
Percentage: 2001: 33; Percentage: 2002: 25.

Maryland; Percentage: 1998: 17; Percentage: 1999: 16; Percentage: 2000: 
5; Percentage: 2001: 26; Percentage: 2002: 28.

Massachusetts; Percentage: 1998: 8; Percentage: 1999: 13; Percentage: 
2000: 14; Percentage: 2001: 37; Percentage: 2002: 31.

Michigan[A]; Percentage: 1998: 31; Percentage: 1999: 28; Percentage: 
2000: 11; Percentage: 2001: 18; Percentage: 2002: 10.

Minnesota; Percentage: 1998: 21; Percentage: 1999: 4; Percentage: 2000: 
5; Percentage: 2001: 27; Percentage: 2002: 33.

Mississippi; Percentage: 1998: 8; Percentage: 1999: 9; Percentage: 
2000: 36; Percentage: 2001: 69; Percentage: 2002: 9.

Missouri; Percentage: 1998: 5; Percentage: 1999: 7; Percentage: 2000: 
12; Percentage: 2001: 19; Percentage: 2002: 22.

Montana; Percentage: 1998: 64; Percentage: 1999: 36; Percentage: 2000: 
21; Percentage: 2001: 36; Percentage: 2002: 33.

Nebraska; Percentage: 1998: 10; Percentage: 1999: 11; Percentage: 2000: 
25; Percentage: 2001: 36; Percentage: 2002: 33.

Nevada; Percentage: 1998: 20; Percentage: 1999: 0; Percentage: 2000: 8; 
Percentage: 2001: 38; Percentage: 2002: 16.

New Hampshire; Percentage: 1998: 11; Percentage: 1999: 22; Percentage: 
2000: 0; Percentage: 2001: 40; Percentage: 2002: 50.

New Jersey; Percentage: 1998: 8; Percentage: 1999: 12; Percentage: 
2000: 15; Percentage: 2001: 34; Percentage: 2002: 22.

New Mexico; Percentage: 1998: 16; Percentage: 1999: 0; Percentage: 
2000: 29; Percentage: 2001: 14; Percentage: 2002: 10.

New York[A]; Percentage: 1998: 4; Percentage: 1999: 6; Percentage: 
2000: 10; Percentage: 2001: 33; Percentage: 2002: 29.

North Carolina[A]; Percentage: 1998: 16; Percentage: 1999: 15; 
Percentage: 2000: 21; Percentage: 2001: 23; Percentage: 2002: 31.

North Dakota; Percentage: 1998: 21; Percentage: 1999: 31; Percentage: 
2000: 31; Percentage: 2001: 46; Percentage: 2002: 42.

Ohio[A]; Percentage: 1998: 13; Percentage: 1999: 11; Percentage: 2000: 
17; Percentage: 2001: 38; Percentage: 2002: 26.

Oklahoma; Percentage: 1998: 13; Percentage: 1999: 22; Percentage: 2000: 
16; Percentage: 2001: 41; Percentage: 2002: 21.

Oregon; Percentage: 1998: 22; Percentage: 1999: 65; Percentage: 2000: 
19; Percentage: 2001: 33; Percentage: 2002: 31.

Pennsylvania[A]; Percentage: 1998: 5; Percentage: 1999: 10; Percentage: 
2000: 10; Percentage: 2001: 11; Percentage: 2002: 28.

Rhode Island; Percentage: 1998: 10; Percentage: 1999: 0; Percentage: 
2000: 0; Percentage: 2001: 15; Percentage: 2002: 8.

South Carolina; Percentage: 1998: 18; Percentage: 1999: 16; Percentage: 
2000: 17; Percentage: 2001: 32; Percentage: 2002: 34.

South Dakota; Percentage: 1998: 13; Percentage: 1999: 19; Percentage: 
2000: 18; Percentage: 2001: 42; Percentage: 2002: 22.

Tennessee[A]; Percentage: 1998: 11; Percentage: 1999: 9; Percentage: 
2000: 23; Percentage: 2001: 47; Percentage: 2002: 29.

Texas[A]; Percentage: 1998: 2; Percentage: 1999: 7; Percentage: 2000: 
3; Percentage: 2001: 21; Percentage: 2002: 34.

Utah; Percentage: 1998: 35; Percentage: 1999: 30; Percentage: 2000: 30; 
Percentage: 2001: 19; Percentage: 2002: 33.

Vermont; Percentage: 1998: 00; Percentage: 1999: 25; Percentage: 2000: 
0; Percentage: 2001: 33; Percentage: 2002: 0.

Virginia[A]; Percentage: 1998: 31; Percentage: 1999: 13; Percentage: 
2000: 12; Percentage: 2001: 12; Percentage: 2002: 13.

Washington; Percentage: 1998: 26; Percentage: 1999: 18; Percentage: 
2000: 42; Percentage: 2001: 33; Percentage: 2002: 32.

West Virginia; Percentage: 1998: 14; Percentage: 1999: 17; Percentage: 
2000: 13; Percentage: 2001: 33; Percentage: 2002: 26.

Wisconsin; Percentage: 1998: 10; Percentage: 1999: 16; Percentage: 
2000: 21; Percentage: 2001: 28; Percentage: 2002: 30.

Wyoming; Percentage: 1998: 14; Percentage: 1999: 0; Percentage: 2000: 
0; Percentage: 2001: 33; Percentage: 2002: 22.

Source: GAO analysis of CMS OSCAR data.

[A] Indicates the 13 states with the greatest number of dialysis 
facilities in 2002.

[End of table]

Starting in fiscal year 2001, CMS also set a goal for states to survey 
all ESRD facilities every 3 fiscal years. The initial 3-year cycle will 
be completed at the end of fiscal year 2003. Table 6 shows the number 
of facilities available for recertification in each state at the start 
of fiscal year 2001 (and not terminated since then) and the percentage 
that remained to be surveyed in fiscal year 2003. In fiscal year 2003, 
35 out of 50 states, plus the District of Columbia, need to survey over 
a third of their ESRD facilities to meet the cycle goal.

Table 6: Facilities to Be Recertified to Meet CMS 3-Year Goal, by 
State:

1; State: Alabama; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 92; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 89.

2; State: Rhode Island; ESRD facilities needing recertification in 
fiscal years 2001 through 2003 (number): 13; Share of facilities that 
need to be surveyed in fiscal year 2003 to meet CMS goal (percentage): 
77.

3; State: California; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 347; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 76.

4; State: New Mexico; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 29; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 76.

5; State: Virginia; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 119; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 76.

6; State: Idaho; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 7; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 71.

7; State: Michigan; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 104; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 71.

8; State: Vermont; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 6; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 67.

9; State: Colorado; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 35; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 66.

10; State: Missouri; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 102; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 64.

11; State: Pennsylvania; ESRD facilities needing recertification in 
fiscal years 2001 through 2003 (number): 216; Share of facilities that 
need to be surveyed in fiscal year 2003 to meet CMS goal (percentage): 
62.

12; State: District of Columbia; ESRD facilities needing 
recertification in fiscal years 2001 through 2003 (number): 23; Share 
of facilities that need to be surveyed in fiscal year 2003 to meet CMS 
goal (percentage): 52.

13; State: Hawaii; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 16; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 50.

14; State: Utah; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 20; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 50.

15; State: Arizona; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 78; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 49.

16; State: North Carolina; ESRD facilities needing recertification in 
fiscal years 2001 through 2003 (number): 111; Share of facilities that 
need to be surveyed in fiscal year 2003 to meet CMS goal (percentage): 
49.

17; State: Maryland; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 95; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 47.

18; State: Iowa; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 47; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 47.

19; State: Delaware; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 13; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 46.

20; State: Texas; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 285; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 45.

21; State: Wyoming; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 9; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 44.

22; State: Nevada; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 16; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 44.

23; State: Wisconsin; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 76; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 43.

24; State: New Jersey; ESRD facilities needing recertification in 
fiscal years 2001 through 2003 (number): 87; Share of facilities that 
need to be surveyed in fiscal year 2003 to meet CMS goal (percentage): 
43.

25; State: Maine; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 12; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 42.

26; State: Oklahoma; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 57; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 40.

27; State: New York; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 205; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 40.

28; State: West Virginia; ESRD facilities needing recertification in 
fiscal years 2001 through 2003 (number): 23; Share of facilities that 
need to be surveyed in fiscal year 2003 to meet CMS goal (percentage): 
39.

29; State: Washington; ESRD facilities needing recertification in 
fiscal years 2001 through 2003 (number): 43; Share of facilities that 
need to be surveyed in fiscal year 2003 to meet CMS goal (percentage): 
37.

30; State: Indiana; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 78; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 37.

31; State: Minnesota; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 61; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 36.

32; State: Louisiana; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 115; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 36.

33; State: South Dakota; ESRD facilities needing recertification in 
fiscal years 2001 through 2003 (number): 17; Share of facilities that 
need to be surveyed in fiscal year 2003 to meet CMS goal (percentage): 
35.

34; State: Oregon; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 40; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 35.

35; State: Ohio; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 149; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 35.

36; State: South Carolina; ESRD facilities needing recertification in 
fiscal years 2001 through 2003 (number): 75; Share of facilities that 
need to be surveyed in fiscal year 2003 to meet CMS goal (percentage): 
33.

37; State: Massachusetts; ESRD facilities needing recertification in 
fiscal years 2001 through 2003 (number): 61; Share of facilities that 
need to be surveyed in fiscal year 2003 to meet CMS goal (percentage): 
33.

38; State: Arkansas; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 52; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 29.

39; State: Montana; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 14; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 29.

40; State: Nebraska; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 21; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 29.

41; State: Illinois; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 126; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 26.

42; State: Mississippi; ESRD facilities needing recertification in 
fiscal years 2001 through 2003 (number): 62; Share of facilities that 
need to be surveyed in fiscal year 2003 to meet CMS goal (percentage): 
26.

43; State: Kansas; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 39; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 26.

44; State: Georgia; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 168; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 24.

45; State: Tennessee; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 106; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 23.

46; State: New Hampshire; ESRD facilities needing recertification in 
fiscal years 2001 through 2003 (number): 9; Share of facilities that 
need to be surveyed in fiscal year 2003 to meet CMS goal (percentage): 
22.

47; State: Florida; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 237; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 22.

48; State: Connecticut; ESRD facilities needing recertification in 
fiscal years 2001 through 2003 (number): 26; Share of facilities that 
need to be surveyed in fiscal year 2003 to meet CMS goal (percentage): 
19.

49; State: North Dakota; ESRD facilities needing recertification in 
fiscal years 2001 through 2003 (number): 12; Share of facilities that 
need to be surveyed in fiscal year 2003 to meet CMS goal (percentage): 
17.

50; State: Alaska; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 2; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 0.

51; State: Kentucky; ESRD facilities needing recertification in fiscal 
years 2001 through 2003 (number): 45; Share of facilities that need to 
be surveyed in fiscal year 2003 to meet CMS goal (percentage): 0.

Source: GAO analysis of CMS OSCAR data.

[End of table]

[End of section]

Appendix IV: Comments from the Centers for Medicare & Medicaid Services:

DEPARTMENT OF HEALTH & HUMAN SERVICES	
Centers for Medicare & Medicaid Services:

Administrator 
Washington, DC 20201:

SEP 24 2003:

Leslie G. Aronovitz:

Director, Health Care - Program Administration & Integrity Issues:

FROM:	Thomas A. Scully, ---Administrator:

Signed by Thomas A. Scully: 

General Accounting Office (GAO) Draft Report: DIALYSIS FACILITIES: 
Problems Remain in Ensuring Compliance with Medicare ity Standards, 
(GAO-03-882):

Thank you for the opportunity to review and comment on the above 
referenced report.

In the last year, the Centers for Medicare & Medicaid Services (CMS) 
has worked diligently to strengthen cooperation, coordination, and 
information sharing between:

* the end-stage renal disease (ESRD) Networks and the state survey 
agencies;

* the Agency and our ESRD beneficiaries; and,

* the different parts of the Agency that administer the ESRD Program.

In October 2002, CMS brought together 154 representatives from the 
state survey agencies and the ESRD Networks in order to help them 
understand each other's roles and responsibilities and to either 
continue, or begin, discussions on collaboration and information 
sharing. As a result of these discussions, state survey agencies and 
ESRD Networks have reached a variety of agreements which are mutually 
supportive of each other, in order to increase the effectiveness of 
each organization in both improving the care provided and 
responsiveness to beneficiary concerns.

Through an interagency agreement, CMS and the Agency for Healthcare 
Research and Quality (AHRQ) have jointly set a priority of developing a 
standardized survey that may be used to solicit feedback from ESRD 
beneficiaries, as well as make widely available comparable measurements 
of their experiences with care. On August 25, 2003, a Federal Register 
Notice was published asking for potential measurement instruments and 
protocols. The finalized instrument will bear the CARPS trademark and 
the goal of 
developing the standardized survey and reporting quality data on 
hemodialysis facilities could be reached within the next few years.

Currently, the only facility-specific outcomes data for ESRD that are 
widely available to state survey agencies come from administrative 
data. The CMS also collects standardized Clinical Performance Measures 
(CPM) on a 5 percent sample of ESRD patients annually and Networks 
capture additional information in their quality improvement efforts, 
but because the CPM sample is small and the Network data is not 
standardized, their use in quality assurance is limited. To coordinate 
these efforts and provide one patient-centered data set that can be 
used for program oversight, CMS is working with the ESRD community to 
develop and implement the ESRD Core Data Set and the VISION software 
system, both of which will include the CPMs. These efforts will improve 
the quality, quantity, and timeliness of data and reduce facility 
burden through electronic transmission and elimination of redundant 
data collection.

Attached are our specific comments to the report. We look forward to 
working with GAO on this and other issues in the future.

Attachments:

The Centers for Medicare & Medicaid Services' Continents to GAO's Draft 
Report, DIALYSIS FACILITIES: Problems Remain in Ensuring Compliance 
with Medicare Quality Standards, (GAO-03-882):

Recommendation:

Establish a goal for state agencies to reduce the time between surveys 
for facilities with condition-level deficiencies.

Comment:

The Centers for Medicare & Medicaid Services (CMS) is strongly 
committed to increased oversight of facilities which continue to 
experience quality problems, particularly at the condition level. As 
GAO noted, between 1998 and 2002, we more than doubled the aggregate 
funding for ESRD surveys, as well as reduced the goal for the maximum 
time required between surveys, from six years to three years. In 
addition, any facility that is found to have condition level non-
compliance receives at least one revisit; and more if necessary. We 
believe that it is necessary for facilities to be surveyed at least 
once every three years.

In recognition of the limited state and Federal resources available to 
conduct all necessary survey activity, we have built some flexibility 
into our budget call letter in order to allow states to manage their 
resources and better target facilities with quality issues. The CMS has 
provided a series of tools to assist state agencies with this effort. 
Annually, in conjunction with the University of Michigan, CMS issues an 
outcomes report that includes key patient quality indicators for all 
ESRD providers in their State. The Outcomes List is ordered by facility 
performance on key patient outcomes based upon adherence to the 
National Kidney Foundation's Kidney Dialysis Outcomes Quality 
Initiative (DOQI) guidelines for adequacy of dialysis, hemoglobin/
hematocrit levels, and adjusted mortality rates. The Outcomes List is 
positively correlated with survey deficiencies, making the list a 
supportive tool to be used in conjunction with key survey and 
certification information, such as past survey findings and reports of 
complaints. In conjunction with the University of Michigan and the 
Colorado Foundation for Medical Care, CMS issues facility-specific 
reports to providers, state agencies, and ESRD networks. These 17-page 
reports include comparative data on facility characteristics, practice 
patterns, and outcomes. The reports are used to inform each entity-
provider, state agency, and network-so that each entity can better 
achieve its respective goal(s), whether it is improved care, improved 
monitoring, or improved technical assistance.

Recommendation:

Publish facilities' survey results on its Dialysis Facility Compare Web 
site.

Comment:

The CMS is exploring a variety of options for providing better consumer 
information on the Dialysis Facility Compare Web site. The first step 
we are undertaking is a more thorough analysis of the survey and 
certification data for dialysis facilities. Under a contract with Lewin 
Associates, CMS is developing an automated survey tool, the Surveyor 
Technical Assistant for Renal Disease (STAR). We feel that once STAR is 
in use, the survey data will be more consistent nationally. In 
addition, we are also examining the experience of providing survey and 
certification data through Nursing Home Compare. The Dialysis Facility 
Compare workgroup will then explore user-friendly options available for 
sharing the data.

Recommendation:

To help surveyors identify and systematically document deficiencies, 
the Administrator of CMS should strongly encourage states to assign 
ESRD inspections to a designated subset of surveyors who specialize in 
conducting ESRD surveys.

Comment:

We encourage states to have specialized surveyors when possible. The 
CMS is taking several steps to enhance surveyor skills and improve the 
survey process. We expect to provide greater consistency and 
thoroughness in the survey process and findings with STAR. The STAR 
will use tablet computers loaded with survey software which guides 
surveyors through various investigative techniques based on the answers 
elicited during the survey progresses. As the STAR system guides the 
surveyors through the survey process, the system provides background 
information, clarifications, and a menu of possible citations for 
different observations. The program automatically converts the 
surveyors' findings into a formatted report. That software will be 
pilot tested in five states in the second half of Fiscal Year (FY) 
2004. Through this automated system, CMS expects to collect data and 
information which will assist in CMS's oversight responsibilities, as 
well as each state's and facility's oversight responsibilities.

Under a contract with the University of Michigan, CMS produces Dialysis 
Facility Reports, which include information on patient and facility 
characteristics, directly actionable practice patterns (e.g., dose of 
dialysis, vascular access, and anemia management) as well as general 
outcomes (e.g., mortality, hospital admissions, and transplant) that 
can be used to educate providers about the efficacy of practice 
patterns. These data have consistently shown a strong relationship 
between patient outcomes and practice patterns. These data also show a 
relationship between patient outcomes and survey deficiencies. A guide 
that accompanies the data assists surveyors with the interpretation and 
use of the data. The CMS has also increased the number of basic ESRD 
training courses it holds each year, and now requires that surveyors 
attend basic training before conducting ESRD surveys. The CMS believes 
that these are the right steps to improve surveys generally, and ESRD 
surveys in particular. The CMS has also increased the number of basic 
ESRD training courses it holds each year, and now 
requires that surveyors attend basic training before conducting ESRD 
surveys. The CMS believes that these are the right steps to improve 
surveys generally, and ESRD surveys in particular. At this time we 
believe these steps to be the most appropriate use of limited state 
resources.

Recommendation:

Make ESRD training courses more available to state surveyors, which may 
include increasing the number of classes and slots available as well as 
varying class location.

Comment:

The CMS is committed to ensuring that all surveyors receive the 
necessary training, as feasible under our current budget and workload 
constraints. Until FY 2003, CMS had been limited in the number of 
classes it could hold, however, CMS has recently obtained additional 
access to a training site with dialysis equipment (e.g., a water 
treatment system, a dialyzer reprocessing system, and dialysis 
machines) and "mock" patients. CMS is partnering with two industry 
leaders to provide this training. We have onsite training with all the 
necessary equipment at Gambro in Denver, Colorado and with Minntech in 
Minneapolis, Minnesota. Because of this partnering effort, we will now 
be able to offer a minimum of two basic trainings a year (one at each 
location). We also plan to have an advanced technical training program 
at the Minntech facility in FY 2004. Based on responses to that, we 
will determine whether or not to hold advanced training annually or 
biannually. Another key training opportunity we continue to offer is an 
Annual Update in conjunction with a nephrology professional meeting. 
The FY 2004 Update is scheduled with the National Kidney Foundation 
Spring Clinical Meeting in Chicago in April 2004. We believe our 
partnership with the industry allows surveyors to hone their survey 
skills while also getting the latest industry information.

Recommendation:

To enhance the support and monitoring of state survey agencies, the 
Administrator of CMS should amend its regulations to require that 
networks share facility-specific data with state agencies on a routine 
basis.

Comment:

We believe the current regulations do not prohibit networks from 
sharing data collected under the aegis of CMS. Networks serve not only 
as the quality improvement association for ESRD, but also as the data 
collection vehicle for CMS. As such, we require networks to share data 
with CMS. The CMS can then share appropriate data with the state survey 
agency and the public. These data are useful for structuring the survey 
process and targeting facilities for survey. For example, facilities 
scoring poorest on the Outcomes Lists are more likely to have 
condition-level deficiencies. We will continue to encourage state 
agencies to use this information as well as compliance history in 
choosing and scheduling surveys.

Currently, the only facility-specific outcomes data for ESRD that are 
widely available to state survey agencies come from administrative 
data. The CMS also collects standardized Clinical Performance Measures 
(CPM) on a 5 percent sample of ESRD patients annually and Networks 
capture additional information in their quality improvement efforts but 
because the CPM sample is small and the Network data are not 
standardized, their use in quality assurance is limited.

The ESRD facilities receive feedback on their performance through 
numerous reports that have different purposes and measurements and come 
from different datasets and time periods. For example, a clinic may 
receive the following feedback from CMS over the course of a year:

* reports from the Networks;

* a Facility-Specific Report developed by the University of Michigan;

* the Annual ESRD CPM Project Report if the facility was included in 
the 5 percent sample; and,

* public reporting on the Dialysis Facility Compare Web site.

To coordinate these efforts and provide one patient-centered data set 
that can be sued for program oversight, CMS is working with the ESRD 
community to develop and implement the ESRD Core Data Set and the 
VISION software system, both of which will include the CPMs. These 
efforts will improve the quality, quantity, and timeliness of date and 
reduce facility burden through electronic transmission and elimination 
of redundant data collection.

Recommendation:

Ensure that regional offices both adequately monitor state performance 
and provide state agencies ongoing assistance on policy and technical 
issues through regularly scheduled contacts with state surveyors.

Comment:

The CMS is committed to providing adequate oversight of provider and 
state agency performance. We continue to work hard at clarifying these 
expectations for states and regions. By offering more basic and 
advanced training, we will increase opportunities for regional office 
and state staff to interact. Each of the 10 CMS regional offices (ROs) 
has an ESRD specialist who directly oversees the state survey agencies 
in that respective regional jurisdiction. Tools that the ROs use to 
assist instate oversight are the following: A Regional Data Report that 
summarizes and compares practice patterns and outcomes in the states in 
that specific region's jurisdiction; a monthly conference call where 
regions discuss and coordinate issues and programs; and an annual 
meeting of ESRD RO specialists, which serves as both a training and 
sharing event for these RO specialists. The ESRD surveyors in the ROs 
provide oversight and technical advice to state survey agencies. We 
will also continue exploring ways for ROs to perform more 
collaborative and comparative ESRD monitoring, keeping in mind the 
current budget and staffing constraints.

GAO Matter for Congressional Consideration:

The Congress should consider authorizing CMS to immediately impose a 
sanction when a dialysis facility has condition-level deficiencies in 
successive surveys without providing the facility a grace period before 
the sanction takes effect.

Comment:

The CMS is committed to taking appropriate actions against facilities 
that have condition-level problems, especially on an ongoing basis. The 
purpose of our actions must be to provide either a strong incentive for 
the provider to come back into compliance and furnish quality care to 
our beneficiaries, or provide a mechanism to remove the provider from 
the program. To ensure that we achieve the optimum outcome for both 
beneficiaries and providers, we are exploring various information and 
education sources both internally and externally. We are in the process 
of awarding a contract to evaluate the effectiveness of sanctions and 
remedies for improving nursing home resident care. We believe that this 
information will help us better understand what directions to take in 
working with the industry to improve quality outcomes for beneficiaries 
and sustained compliance for providers.

[End of section]

Appendix V: GAO Contact and Staff Acknowledgments:

GAO Contact:

Rosamond Katz, (202) 512-7148:

Acknowledgments:

Eric Peterson, Joel Hamilton, Loren Lieberman, and Behn Kelly made 
major contributions to this report.

[End of section]

Related GAO Products:

Nursing Home Quality: Prevalence of Serious Problems, While Declining, 
Reinforces Importance of Enhanced Oversight. GAO-03-561. Washington, 
D.C.: July 15, 2003.

Major Management Challenges and Program Risks: Department of Health and 
Human Services. GAO-03-101. Washington, D.C.: January 1, 2003.

Nursing Homes: Public Reporting of Quality Indicators Has Merit, but 
National Implementation Is Premature. GAO-03-187. Washington, D.C.: 
October 31, 2002.

Medicare Home Health Agencies: Weaknesses in Federal and State 
Oversight Mask Potential Quality Issue. GAO-02-382. Washington, D.C.: 
July 19, 2002.

Nursing Homes: Sustained Efforts Are Essential to Realize Potential of 
the Quality Initiatives. GAO/HEHS-00-197. Washington, D.C.: September 
28, 2000.

Medicare Quality of Care: Oversight of Kidney Dialysis Facilities Needs 
Improvement. GAO/HEHS-00-114. Washington, D.C.: June 23, 2000.

FOOTNOTES

[1] Department of Health and Human Services, Centers for Medicare & 
Medicaid Services, 2002 Annual Report: End Stage Renal Disease Clinical 
Performance Measures Project (Baltimore, Md.: December 2002). These 
assessments are based on the clinical performance measures developed by 
CMS, building on the National Kidney Foundation's 1997 Dialysis Outcome 
Quality Initiative Clinical Practice Guidelines. 

[2] U.S. General Accounting Office, Medicare Quality of Care: Oversight 
of Kidney Dialysis Facilities Needs Improvement, GAO/HEHS-00-114 
(Washington, D.C.: June 23, 2000). This report highlighted the need for 
additional enforcement tools to ensure that corrections of quality 
problems identified in surveys of ESRD facilities would be sustained 
over time. It also urged improved cooperation and data sharing between 
state survey agencies and ESRD networks to improve targeting of 
facilities selected for inspection. 

[3] In this report, "states" refers to the 50 states and the District 
of Columbia.

[4] In hemodialysis, a patient's blood is filtered through an external 
machine that acts as an artificial kidney to withdraw excess fluids and 
toxic materials before returning cleansed blood to the patient. The 
machine uses a semipermeable membrane, called a hemodialyzer, to filter 
out the toxins. In peritoneal dialysis, the patient's peritoneal 
membrane, located within the abdominal cavity, is used to remove excess 
fluids and toxins. 

[5] In 2000, about 222,300 patients received hemodialysis, 21,400 
underwent peritoneal dialysis, and 4,400 underwent dialysis of an 
unspecified mode. In addition, approximately 74,700 beneficiaries were 
recipients of kidney transplants, for a total of approximately 322,800 
individuals that received Medicare benefits as of December 31, 2000. 

[6] Projections are based on data for 1982 to 1997. See J.L. Xue, J.Z. 
Ma, T.A. Louis, and A.J. Collins, "Forecast of the Number of Patients 
With End-Stage Renal Disease in the United States to the Year 2010," 
Journal of the American Society of Nephrology, vol. 12 (2001): 2753-
2758. 

[7] For individuals eligible for Medicare only because of permanent 
kidney failure, Medicare coverage starts on the fourth month of 
dialysis. Medicare will not pay for services during the first 3 months 
of dialysis unless the patient already has Medicare because of age or 
disability. After that, Medicare is the secondary payer for 30 months. 
During this period, private insurance or Medicaid pays first on health 
care bills and Medicare pays second. Full Medicare coverage begins with 
the 34th month of dialysis and any private insurer becomes the 
secondary payer. For those who are uninsured, Medicare is the primary 
payer. 

[8] The proportion of new ESRD patients 75 or older grew from 18 
percent in 1991 to about 25 percent in 2001, while the proportion of 
new ESRD patients with diabetes grew from 36 percent of all new 
patients to 46 percent during the same period.

[9] In 2002, the average composite rate was approximately $130 for 
freestanding dialysis facilities. Payments for injectable drugs 
averaged about $80 per treatment in 2001. 

[10] See 42 C.F.R. Part 405 Subpart U (2002). 

[11] These requirements include appropriate methods for disinfection 
and steps to ensure that such supplies are only reused by the same 
patient.

[12] These agencies are typically part of state health departments and 
are responsible for monitoring compliance with quality standards 
associated with several types of facilities, including nursing homes 
and home health agencies.

[13] EPO is used for the treatment of anemia for nearly all dialysis 
patients. 

[14] J.C. Fink, S.A. Blahut, A.E. Briglia, and others, "Effect of 
Center-Versus Patient-Specific Factors on Variation in Dialysis 
Adequacy," Journal of the American Society of Nephrology, vol. 12 
(2001): 164-169. 

[15] A patient's medical record contains required information on 
identified problems, a plan of care, and documentation tracking the 
treatments actually provided. The record must show ongoing assessments 
of patient needs as well as evidence that patients participate in 
developing their treatment plans and are informed of outcomes. 

[16] This top quartile of states represents 60 percent of all ESRD 
facilities and 64 percent of all dialysis patients.

[17] The statewide average interval between standard surveys must be 12 
months or less. See 42 C.F.R.  488.308(b). 

[18] Department of Health and Human Services, CMS, memorandum from the 
Director, Survey and Certification Group, "Fiscal Year (FY) 2003 State 
Survey and Certification Budget Call Letter --ACTION," July 2, 2002. 

[19] CMS requires every state to establish a screening mechanism to 
evaluate complaints as they come in, and to apply explicit criteria to 
determine which ones need to be followed up with a survey as well as 
the time frame within which that survey must take place. Surveys 
prompted by complaints are intended to address a particular issue 
raised in the complaint, which often does not involve clinical issues. 
If during the course of the complaint investigation the surveyor 
discovers systemic quality problems, the inspection is usually 
converted into a recertification survey. 

[20] For each state, we calculated a specialization ratio that 
indicated the likelihood that any given ESRD survey would be conducted 
by a surveyor who frequently conducted surveys of dialysis facilities. 
(See app. I.) On a scale of zero to one, the values of the 
specialization ratio clustered into two groupings: the states with 
specialized ESRD staff included New York (0.68), California (0.63), and 
Maryland (0.57); the states without ESRD specialized staff included 
Pennsylvania (0.36), Missouri (0.27), Alabama (0.21), Florida (0.17), 
Kansas (0.14), and Nevada (0.11).

[21] Statistical tests (chi square) indicate that the difference in 
outcomes between these two groupings of states is highly significant 
(p=0.000). Thus, it is very unlikely that these differences could have 
occurred simply by chance.

[22] If surveyors find that the facility is still out of compliance at 
the first revisit, additional revisits are usually scheduled. Some 
facilities get as many as four or five separate opportunities to 
demonstrate that they have achieved compliance with Medicare's minimum 
quality requirements. 

[23] Adverse results on surveys could contribute to a provider's 
decision to close a facility, even without a termination from Medicare. 
An examination of OSCAR data for fiscal years 1998 though 2002 revealed 
six instances where facilities closed voluntarily within 6 months of a 
survey that had condition-level deficiencies. Five different facilities 
were recorded as voluntary terminations, but remained open at the same 
addresses, sometimes under new names and sometimes not.

[24] CMS allocates most funding for state survey activities by LTC and 
non-LTC categories. LTC funding covers surveys of nursing homes and 
ICF/MRs. Non-LTC funding supports surveys of dialysis facilities, home 
health agencies, accredited and nonaccredited hospitals, hospices, 
ambulatory surgical centers, outpatient physical therapy providers, 
rural health clinics, comprehensive outpatient rehabilitation 
facilities, portable x-ray suppliers, psychiatric residential 
treatment facilities, and psychiatric hospitals. 

[25] These estimates are based on workload and expenditure reports 
provided annually to CMS by state survey agencies, which combine all 
non-LTC survey activities. Several state governments also fund provider 
survey and certification activities for non-LTC providers. In fiscal 
year 2001, state support accounted for approximately 6 percent of total 
spending on non-LTC activities. 

[26] For each state, CMS is required to perform validation surveys--on-
site inspections of facilities, separate from those conducted by the 
state agency--for at least 5 percent of the nursing home surveys 
conducted annually, but no fewer than five homes in each state. See 42 
U.S.C.  1395i-3 (g) (3) (B) (2000). 

[27] Regional offices have used OSCAR data to prepare tracking reports 
on areas related to state and regional office performance for nursing 
home surveys, including facility terminations, number of surveys 
without deficiencies, and analyses of most-frequently cited 
deficiencies across states. 

[28] Region 9 includes state survey agencies for Arizona, California, 
Hawaii, and Nevada.

[29] Network responsibilities are established by the Social Security 
Act, which also authorizes the Secretary to prescribe other network 
duties and functions. See  1320c-9(b)(1) and  1395rr(c)(2). Current 
network responsibilities are set forth in contract: ESRD Network 
Organizations, Statement of Work, FY 1999-2003, Section C.4.F, 
Cooperative Activities With State Survey Agencies and Quality 
Improvement Organizations, CMS. The networks are funded through a 
fifty-cent charge on each Medicare dialysis treatment. 

[30] Department of Health and Human Services, Office of Inspector 
General, External Quality Review of Dialysis Facilities: A Call for 
Greater Accountability, OEI-01-00050 (Washington, D.C.: June 2000).

[31] See 42 U.S.C.  1320c-9(a) and (b). 

[32] CMS policy stipulates that state agencies may not release 
confidential information that they receive from ESRD networks to third 
parties, even under subpoena.

[33] To encourage data sharing, CMS has begun work on a draft 
Memorandum of Understanding that the state agencies and ESRD networks 
could adopt.

[34] In 2000, the state agency and the network participated in a 
special project intended to increase the number and quality of ESRD 
surveys. The networks, along with the state agency and the CMS regional 
office, jointly provided ESRD training to surveyors who had limited 
experienc with ESRD surveys. All three then worked together to help 
facilities correct deficiencies and have since collaborated on 
educating facility managers about ESRD standards and the survey 
process. 

[35] Other clinical performance measures have only been reported from 
samples of patients, providing data on national and regional trends but 
without the ability to compare results across individual dialysis 
facilities. 

[36] Similar information is collected on complaint surveys but stored 
in separate data files. 

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