Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
External Quality Review of Dialysis Facilities 
Two Promising Approaches 
JUNE GIBBS BROWN 
Inspector General 
JUNE 2000 
OEI-01-00051  OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 
protect the integrity of the Department of Health and Human Services programs as well as the 
health and welfare of beneficiaries served by them.  This statutory mission is carried out through a 
nationwide program of audits, investigations, inspections, sanctions, and fraud alerts.  The 
Inspector General informs the Secretary of program and management problems and recommends 
legislative, regulatory, and operational approaches to correct them. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 
Inspector General.  It conducts short-term management and program evaluations (called 
inspections) that focus on issues of concern to the Department, the Congress, and the public.  The 
inspection reports provide findings and recommendations on the efficiency, vulnerability, and 
effectiveness of departmental programs. 
OEI's Boston regional office prepared this report under the direction of Mark R. Yessian, Ph.D., 
Regional Inspector General and Joyce M. Greenleaf, M.B.A., Assistant Regional Inspector 
General.  Russell W. Hereford, Ph.D., also contributed to this report.  Principal OEI staff 
included: 
BOSTON  HEADQUARTERS 
Aimee L. Kasenga, Program Analyst  Bambi D. Straw, Program Specialist 
Lynne G. Dugan, Program Analyst 
To obtain copies of this report, please call the Boston Regional Office at 617-565-1050. 
Reports are also available on the World Wide Web at our home page address: 
http://www.dhhs.gov/progorg/oei  E X E C U T I V E   S U M M A R Y  
PURPOSE 
To describe two promising approaches to hold dialysis facilities more fully accountable for 
their quality of care. 
BACKGROUND 
Importance of External Quality Review 
Case files, performance data, and marketplace realities underscore the importance of 
external quality review for dialysis facilities.  Case files reveal numerous instances of poor 
care.  In one instance we found that a patient received a drug overdose that resulted in 
prolonged bleeding and subsequent hospitalization.  Performance data collected from 
dialysis facilities reveal that a substantial portion of patients do not achieve the outcomes 
recommended by clinical practice guidelines.  Similarly, scientific studies suggest 
widespread variations in the quality of care patients receive.  Of particular note is one that 
revealed higher mortality rates at facilities providing lower doses of dialysis.  Finally, 
marketplace pressures triggered by growth, consolidation, competition, and concerns 
about cost have caused service disruptions that can and have jeopardized patient care. 
External Review Bodies 
The Health Care Financing Administration (HCFA) relies upon two major entities to 
conduct such external reviews: the End-Stage Renal Disease (ESRD) Networks 
established under the Social Security Act and the State survey agencies.  HCFA contracts 
with the 18 Network organizations, which are governed primarily by renal professionals 
associated with facilities in the Networks region, to perform multiple functions, mostly 
oriented around collegial efforts to promote improvements in the quality of care, and to 
respond to complaints lodged by patients, facility staff, or others.  HCFA funds the State 
agencies, typically within departments of public health, to perform a more regulatory role: 
to conduct on-site Medicare certification surveys of facilities and to investigate 
complaints, both in accordance with Medicare Conditions for Coverage for dialysis 
facilities. 
Our Companion Report 
In our companion report, External Quality Review of Dialysis Facilities: A Call for 
Greater Accountability, we identified major shortcomings in the external quality review 
system upon which HCFA relies.  We indicated that it was overly collegial in nature, that 
it reflected little collaboration between the Networks and the State agencies, and that in 
many respects it lacked accountability.  One of our major recommendations to HCFA was 
1 
External Review: Two Promising Approaches  OEI-01-99-00051  to hold dialysis facilities more fully accountable for the quality of care they provide.  We 
elaborated on steps that could be taken toward that end by (1) revising the Medicare 
Conditions for Coverage, (2) using facility-specific performance measures both to help 
facilities improve the quality of care and to ensure that they meet minimum standards,  (3) 
enhancing the role of Medicare certification surveys conducted by the State agencies, and 
(4) facilitating the development of publicly accountable mechanisms for identifying 
medical injuries. 
This Report 
During the course of our inquiry into the external review system, we learned of two 
initiatives that are particularly instructive to how facilities can be held more fully 
accountable.  One was a State-initiated effort intended to revitalize the on-site survey 
process through issuing tougher standards, conducting more frequent surveys, and 
developing close collaboration between the State survey agency and the Network.  The 
other was a Network-initiated effort to develop facility-specific performance measures 
and to apply them in ways that both foster improvement for all facilities and target 
corrective interventions for poorly performing facilities.  Because these initiatives are so 
pertinent to our recommendations, we devote this report to describing them. 
INITIATIVES 
Initiative 1.  Collaborative enforcement of more stringent State standards. 
In 1995, in the aftermath of an outbreak of hepatitis B in a Houston dialysis facility, the 
Texas legislature passed a law calling for the licensure of all dialysis facilities in the State. 
This in itself was a step that many States had previously taken.  What distinguished the 
Texas action was that it involved developing more rigorous standards, close collaboration 
of the Texas Network and the State survey agency, and additional State funding. 
Additional minimum standards.  The Texas Department of Health (the State survey 
agency), with input from the Texas Networks medical review board, established minimum 
standards for facilities that exceed the Medicare Conditions for Coverage.  The standards 
call for facilities to report adverse events, maintain minimum staffing ratios, and provide 
formal training to all technicians. 
Required reporting on a set of performance measures.  Texas licensure law requires 
facilities to report annually on a set of clinical performance measures.  The Network and 
the State agency both review the performance measures. 
More frequent on-site surveys.  In the first year of operation (1996/97), the State 
surveyed all 237 dialysis facilities in the State.  In each of the subsequent two years, it has 
surveyed about one-half of all facilities.  By contrast, only about 17 percent of dialysis 
facilities in the country received a Medicare survey in 1998. 
2 
External Review: Two Promising Approaches  OEI-01-99-00051  Ongoing and pervasive Network-State agency collaboration.  The Network medical 
review board serves as a source of clinical expertise that contributes to the State agencys 
enforcement efforts.  It advises on how the State should address problems concerning 
clinical outcomes that the surveyors come across during their site visits.  It helps monitor 
facilities put on corrective action plans by the State. 
Initiative 2.  Use of facility-specific performance measures 
The Renal Network, covering Indiana, Kentucky, Ohio, and Illinois, uses facility-specific 
performance data in a balanced fashion: to foster improvements in the overall level of care 
as well as to identify poor performers for further review.  This Network, which has the 
largest number of patients of the 18 Networks, conducts this initiative without additional 
Federal funds. 
Electronic data system.  The Network developed software to track patients and their 
care.  Facilities use the software to submit data electronically to the Network on multiple 
clinical performance measures, throughout the year on all dialysis patients. 
Facility-specific and physician-specific report cards.  The Network disseminates 
confidential, facility-specific performance reports three times a year to all facilities in its 
region.  The report compares the performance of an individual facility to its own past 
performance as well as to its peers.  The Network also disseminates confidential 
physician-specific reports three times a year to all physicians, which compares their 
performance to their peers. 
Targeted interventions of poor performers.  The Network analyzes the facility-specific 
performance data to identify particular facilities as well as corporate entities in need of 
interventions. 
CONCLUSION 
Better collaboration between State survey agencies and Networks and better use of 
facility-specific performance measures are two important paths to improve the oversight of 
dialysis facilities.  These two initiatives demonstrate what can be accomplished given 
innovative leadership and adequate resources.  In both cases, the Networks play central 
roles promoting continuous quality improvement and enforcing minimum standards of 
care.  Although we did not evaluate the results achieved by each, we find both initiatives 
to be promising enough in their conception and early implementation to warrant careful 
consideration by other Networks and States, and by HCFA, as it seeks to develop 
effective mechanisms for holding facilities more fully accountable for the quality of care 
they provide. 
3 
External Review: Two Promising Approaches  OEI-01-99-00051  COMMENTS 
Within the Department of Health and Human Services, we received comments from 
HCFA.  We also solicited and received comments from the following external parties: the 
Forum of End Stage Renal Disease Networks, the Association of Health Facility Survey 
Agencies, and the American Association of Kidney Patients.  We include the detailed text 
of all these comments and our responses to them in the our report, External Quality 
Review of Dialysis Facilities: A Call for Greater Accountability (OEI-01-99-00050). 
4 
External Review: Two Promising Approaches  OEI-01-99-00051  T A B L E   O F   C O N T E N T S  
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

INTRODUCTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

PRIMER ON DIALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

INITIATIVES

Collaborative enforcement of more stringent State standards. . . . . . . . . . . . . . . . . . . . .  10

Use of facility-specific performance measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15

CONCLUSION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19

APPENDICES

Appendix A:  Facility-specific report  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Appendix B:  Physician-specific report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Appendix C:  Endnotes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

5 
External Review: Two Promising Approaches  OEI-01-99-00051  I N T R O D U C T I O N  
PURPOSE 
To describe two promising approaches to hold dialysis facilities more fully accountable for 
their quality of care. 
BACKGROUND 
Importance of External Quality Review 
About 3,200 dialysis facilities provide ongoing, life-sustaining dialysis treatments to about 
230,000 patients.  Many of these patients are suffering from other complicated diseases 
such as diabetes and hypertension, and nearly all of them are Medicare beneficiaries.  To 
foster improved care and minimize risks to patients, dialysis facilities conduct their own 
internal monitoring efforts.  External review provides a vital additional safeguard. 
Case files, performance data, and marketplace realities underscore the importance of 
external review.  Case files reveal numerous instances of poor care.  In one instance we 
found that a patient received a drug overdose that resulted in prolonged bleeding and 
subsequent hospitalization.  Performance data collected from dialysis facilities reveal that a 
substantial portion of patients do not achieve the outcomes recommended by clinical 
practice guidelines.  Similarly, scientific studies suggest widespread variations in the 
quality of care patients receive.  Of particular note is one that revealed higher mortality 
rates at facilities providing lower doses of dialysis.  Finally, marketplace pressures 
triggered by growth, consolidation, competition, and concerns about cost have caused 
service disruptions that can and have jeopardized patient care.  (See our companion 
report, External Quality Review of Dialysis Facilities: A Call for Greater 
Accountability.) 
HCFAs Oversight through Networks and State survey agencies 
The Health Care Financing Administration (HCFA) is responsible for ensuring that all 
beneficiaries who undergo dialysis treatment receive proper care in dialysis facilities. 
HCFA contracts with two groups, the End-Stage Renal Disease (ESRD) Networks1 and 
the State survey agencies, to oversee the quality of care that dialysis facilities provide. 
HCFA requires the 18 regional Networks to collect data from facilities, conduct annual 
quality improvement projects, and evaluate and resolve complaints.  HCFA contracts with 
the State agencies, typically within departments of public health, to conduct on-site 
Medicare certification surveys of facilities and to investigate complaints, both in 
accordance with Medicare Conditions for Coverage for dialysis facilities. 
6 
External Review: Two Promising Approaches  OEI-01-99-00051  Medicare Coverage of ESRD 
In 1972, Medicare began providing coverage to individuals with ESRD, or permanent 
kidney failure, making it the only entitlement criteria for Medicare based solely on a 
disease category.2  Medicare covers all treatment methods for patients: hemodialysis, 
peritoneal dialysis, and renal transplants.  Patients receiving hemodialysis, the most 
common method, typically receive treatment in outpatient facilities three times a week. 
Peritoneal patients typically perform daily treatments at home and rely on outpatient 
facilities for ongoing support.  (See Primer on Dialysis.) 
Our Inquiry 
In our companion report, External Quality Review of Dialysis Facilities: A Call for 
Greater Accountability, we identified major shortcomings in the external quality review 
system that HCFA relies upon.  We indicated that it was overly collegial in nature, that it 
reflected little collaboration between the Networks and the State agencies, and that in 
many respects it lacked accountability.  One of our major recommendations to HCFA was 
to hold dialysis facilities more fully accountable for the quality of care they provide.  We 
elaborated on steps that could be taken toward that end by (1) revising the Medicare 
Conditions for Coverage, (2) using facility-specific performance measures both to help 
facilities improve the quality of care and to ensure that they meet minimum standards, (3) 
enhancing the role of Medicare certification survey conducted by the State agencies, and 
(4) facilitating the development of publicly accountable mechanisms for identifying 
medical injuries. 
During the course of our inquiry into the external review system, we learned of two 
initiatives that are particularly instructive to how facilities can be held more fully 
accountable.  One was a State-initiated effort intended to revitalize the on-site survey 
process through issuing tougher standards, conducting more frequent surveys, and 
developing close collaboration between the State survey agency and the Network.  The 
other was a Network-initiated effort to develop facility-specific performance measures 
and to apply them in ways that both foster improvement for all facilities and target 
corrective interventions for poorly performing facilities.  Because these initiatives are so 
pertinent to our recommendations, we devote this report to explain them further. 
The promising approaches presented here appear to have wider applicability, although we 
recognize that what works well in one part of the country may not necessarily work well 
elsewhere.  We also recognize that our highlighting of these two approaches does not 
necessarily mean that other important initiatives are not taking place.  In fact, in our 
companion report we reference a number of such initiatives. 
7 
External Review: Two Promising Approaches  OEI-01-99-00051  Our understanding of the two promising approaches addressed in this report draws on site 
visits, interviews with State surveyors, Network staff, HCFA personnel, and renal 
professionals, and a review of relevant documents. 
We conducted this study in accordance with the Quality Standards for Inspections issued 
by the Presidents Council on Integrity and Efficiency. 
8 
External Review: Two Promising Approaches  OEI-01-99-00051  PRIMER  ON  DIALYSIS 
TYPES OF TREATMENT 
Dialysis is the process of removing toxins from the body by diffusion across a semipermeable membrane, thereby 
compensating for kidney failure. There are two types of dialysis: 
Hemodialysis. Removal of toxins directly from the patients blood stream, requiring direct access to the 
bloodstream. The patients blood is cycled through an artificial kidney, an external machine, that 
removes the toxins and excess fluids from the blood. The artificial kidney machine uses a semipermeable 
membrane, called a hemodialyzer, to filter out the toxins from the blood. 
Peritoneal dialysis. Utilizes the patients natural peritoneal membrane, located in the abdominal cavity, 
to remove toxins and excess fluids. 
COMMONLY USED PERFORMANCE MEASURES 
Adequacy. Refers to the amount of toxins, such as urea and creatinine, removed from the body during dialysis. 
<<	 Urea reduction ratio (URR) and Kt/V. Two measures used to measure adequacy in hemodialysis patients 
based on the removal of urea. The URR is a function of the amount of urea removed during dialysis, as 
determined by the pre- and post-dialysis blood urea nitrogen levels. The Kt/V is a function of the amount of 
urea removed multiplied by the time on dialysis, divided by the volume of urea distribution, or approximately 
the amount of water in the body. The National Kidney Foundations Dialysis Outcomes Quality Initiative 
(DOQI) practice guidelines recommend a Kt/V of at least 1.2, or an average URR of at least 65 percent for the 
minimum delivered dose of hemodialysis. 
<<	 Creatinine clearance and Kt/V .  Two measures used to measure adequacy in peritoneal patients. Creatine 
urea
clearance measures the removal of creatine and Kt/V measures the removal of urea. DOQI recommends a 
urea 
weekly dose of continuous ambulatory peritoneal dialysis of at least 2.0 per week and a creatine clearance of at 
least 60L/week/1.73 m2. 
Anemia management. Anemia, or inadequate red blood cells, is a common concern among dialysis patients. 
<<	 Hematocrit and hemoglobin. Two measures of the severity of anemia. Hematocrit measures the ratio of red 
blood cells to the plasma volume, and hemoglobin measures the amount of a specific protein in red blood cells 
that carries oxygen. DOQI recommends a target range of 33 percent to 36 percent for hematocrit and between 
11 g/dL to 12 g/dL for hemoglobin. 
<<	 Ferritin level and transferrin saturation (TSAT). Two measures used to monitor the level of iron. Ferritin 
is a measure of the level of iron stored within the body and TSAT is a measure of iron immediately available to 
produce red blood cells. DOQI recommends a ferritin level of $100 ng/mL and a TSAT $20 percent. 
Vascular access. The point of direct access to the blood stream for hemodialysis. There are three types: 
<<  Catheter. A tube is placed in a blood vessel, primarily used for temporary access to the blood stream. 
<<	 Native arteriovenous fistula. A patients own artery and vein are joined surgically to allow arterial blood to 
flow through a vein, usually placed in the forearm and takes several weeks to mature. DOQI guidelines 
recommend that primary fistulas be placed in at least 50 percent of new patients. 
<<	 Synthetic arteriovenous graft. A synthetic blood vessel is used to surgically join the patients artery and vein, 
usually placed in the forearm and takes several weeks to mature. 
Nutrition. Inadequate nutrition is a common concern among dialysis patients. 
<<  Serum albumin level. A measure of the level of proteins in the blood. 
9 
External Review: Two Promising Approaches  OEI-01-99-00051  I N I T I A T I V E S  
Initiative 1.  Collaborative enforcement of more stringent State 
standards. 
Through its licensure program, the Texas Department of Health has increased its 
regulatory presence by requiring facilities to meet standards that exceed Medicares and by 
enforcing them through frequent on-site surveys.  The program has also established a 
formal working relationship between the Department (the State survey agency) and the 
End-Stage Renal Network of Texas, Inc. (Network #14).  This collaboration is facilitated 
in part by the fact that the Network covers only the State of Texas, whereas most other 
Networks cover several States. 
History of the Texas licensure program 
The Texas initiative to license dialysis facilities grew out of concerns for patient safety 
precipitated by several well- publicized events.  In 1994, 14 patients contracted hepatitis B 
in a Houston dialysis facility that failed to take the appropriate precautions to prevent the 
spread of infectious diseases.  As a result, the city of Houstons Health Department alerted 
the State agency.  Upon its investigation, the State found the facility out of compliance 
with several Medicare Conditions for Coverage related to infection control and it placed 
the facility on a 23-day Medicare termination track.  Shortly thereafter another complaint 
investigation at the same facility identified continuing problems with infection control and 
the facility was placed on a second 23-day termination track.  The facility received no 
monetary or administrative penalty such as exclusion from the Medicare program for the 
harm it caused patients.  The lack of any substantiative corrective action led concerns 
about the ability of the Federal oversight system to protect patients from harm in dialysis 
facilities. 
Thus, the State legislature in 1995 enacted a law requiring all dialysis facilities to be 
licensed in order to operate in the State.3  The legislation established a formal relationship 
between the Department of Health and the Networks medical review board, which 
comprises local renal professionals with clinical expertise as well as patient 
representatives.4 
The State legislature established licensing fees for 250 dialysis facilities in the State. 
Facilities pay an initial licensing fee of $2,000 and an annual licensing fee that ranges from 
$1,500 - $2,500 depending on the number of dialysis treatments at the facility.  Licensure 
fees are not directly funneled to the program.  Fees go into the State general fund and 
program funding is appropriated every two years.  Recently, due to budget cuts to the 
Department of Health as a whole, the future operations of the program may be reduced.5 
10 
External Review: Two Promising Approaches  OEI-01-99-00051  Texas standards for dialysis facilities 
The Texas Department of Health, with input from the Networks medical review board

and the renal community, developed and implemented minimum standards for dialysis

facilities.  The licensure standards are similar to the Medicare Conditions for Coverage but

also include additional standards.  One of the more significant standards under Texas

licensure is the requirement for facilities to conduct their own internal quality assurance

programs led by the facilitys governing body.  This program must include data analysis

and implementation of their own improvement plans.  Other Texas standards that exceed

Medicare Conditions include annual reporting on a set of standardized performance

measures, required staffing ratios, required training of technicians, and specific

requirements for water treatment.

Another important

licensure standard is the
 Table 1. Dialysis Facility Accident Reports 
requirement to report

adverse events. 

Occurrence  1996-1997  1997-1998  1998-1999* 
Facilities must report all

events involving a
 Death  32  28  6 
patient death or

Hospitalization  275  565  543 
hospitalization,

Conversions to  10 patients  6 patients  14 patients 
conversions of staff or

hepatitis B+  1 staff** 
patients to hepatitis B+

status, fire, or a natural
 Fire  1  1  3 
disaster.  These reports

* As of June 18, 1999 
must be submitted

** Staff found to be hepatitis B+ at hire 
within 10 working days

Source: 1999 ESRD Facility Annual Report, Texas Department of Health 
to the Department of

Health.  The State

surveyors review the reports and, if warranted, conduct a survey.  Since the program

began, the greatest majority of adverse events reported have been those involving a

hospitalization.  (See table 1.) 

Network-State collaboration around on-site surveys 
The Department of Health enforces its minimum standards for dialysis facilities primarily 
through unannounced on-site surveys.  With its additional funds from licensure fees, Texas 
is able to conduct surveys more frequently than the national average.  In the first year of 
the program, the State surveyed all of its approximately 250 facilities.  Subsequently, the 
State has surveyed about half of all facilities annually.6  By contrast in 1998, only 17 
percent of existing facilities nationwide received a Medicare survey.  (See our companion 
study entitled External Quality Review of Dialysis Facilities: A Call for Greater 
Accountability.)  Also due to additional funds, Texas has been able to maintain surveyors 
that specialize in surveying dialysis facilities. 
11 
External Review: Two Promising Approaches  OEI-01-99-00051  A unique aspect of the Texas survey process is the involvement of the Networks medical 
review board.  When a surveyor identifies a facility problem that is related or potentially 
related to negative patient 
outcomes, it refers the 
Figure 1. Examples of survey deficiencies that led the State 
facility to the medical review 
to refer a facility to the Networks medical review board. 
board for review.  The 
medical review board 
Facility failure to: 
reviews a short, blinded 
narrative prepared by the  <  assess patient status before beginning treatment

<  train and supervise dialysis technicians

surveyor indicating the 
<  monitor patients during treatment

reason for the referral, 
<  provide adequate dialysis

comparative data on the 
<  provide effective treatment of anemia

facilitys performance, and  <  ensure water is safe for dialysis

the facilitys history.  Based  <  provide a sanitary environment for dialysis

on its review, the medical  <  provide adequate infection control practices

<  provide sufficient qualified staff

review board makes 
recommendations to the 
State for the appropriate 
corrective action plan the 
State should impose.  The State made 33 referrals to the Network in the first year of the 
program, 11 in the second year, and 21 in the third year.  (See figure 1.) 
The State usually agrees with the Networks recommendations and informs the facility of 
the corrective action(s) the State is requiring the facility to take.7  The State can require a 
facility to develop and implement one of three levels of corrective action plans.  A level 
one corrective action plan involves little monitoring by the State and none by the 
Network.  Level two and level three plans involve more monitoring that can include the 
appointment of an on-site monitor or manager, subject to the approval of the State and the 
medical review board.  In addition, the State can take enforcement actions against a 
facility that range from fines to revoking licenses. 
Once the State requires a facility to develop and implement a corrective action plan, the 
medical review board continues to play an important role.  The medical review board, at 
the request of the facility, can provide important technical assistance on corrective action 
plans.  For more serious problems the medical review board and the State jointly monitor 
the facility for up to 6 months.  During this time, the medical review board and the State 
review key facility documents, including policies, educational programs for staff, practice 
audits, and quality improvement meetings. 
If the State requires the facility to appoint a monitor, the medical review board and the 
State receive regular updates directly from him or her.  When the medical review board 
determines that the facility has made sufficient progress towards correcting the problem, it 
recommends to the State that the facility be released from its monitoring requirements. 
The medical review board can also recommends follow-up surveys.  The State reviews the 
medical review boards recommendation and makes the final decision. 
12 
External Review: Two Promising Approaches  OEI-01-99-00051  Additional collaboration sometimes occurs in complaint investigations when the State 
finds it needs some additional clinical expertise.  The State may consult the Network when 
it receives a complaint that requires the expertise of the medical review board such as 
complaints involving questionable medical practice and patient behavior.  The State 
surveyors may consult with the Network staff or its medical review board prior to going 
on-site and sometimes invite Network staff or medical review board members to assist on 
the actual survey depending on the complexity of the issue.  Once the surveyors perform a 
complaint survey, the process is similar to the one described above for any survey process. 
In addition, the Network can refer complaints to the State, which most other Networks 
routinely do as well. 
The renal professionals we interviewed in Texas felt that an increase in on-site surveys and 
the collaboration between the State and the Network in monitoring facilities has resulted 
in greater accountability of facilities.  Surveyors and renal professionals agreed the 
frequent surveys help enforce minimum standards.  Surveyors also indicated that they now 
have greater credibility when they are on-site because they are backed by the Networks 
medical review board that has clinical expertise.  As a result, the State surveyors are able 
to more easily cite facilities for quality of care problems.  Facility staff also reported that 
surveys now are more valuable and substantive due to the new standards. 
Network-State collaboration around standardized performance measures 
Another major aspect of the Texas licensure program involves the sharing of standardized 
performance measures between the State and the Network  a practice that rarely occurs 
in other States.  Beginning in 1997, the State contracted with the Network to collect a 
core set of performance measures on a sample of 30 patients at each facility from the last 
quarter of 1996.  Under its contract with the State, the Network collects data on the 
adequacy of dialysis (urea reduction ratio and Kt/V), the management of anemia 
(hematocrit level), and the rate of peritonitis episodes (a bacterial infection that commonly 
afflicts patients undergoing peritoneal dialysis).  The Network also collects on its own 
patient demographic information and mortality data.  Facilities report the data to the 
Network either by filling out paper forms or by saving the data on a computer diskette for 
electronic transmission.  Most facilities use the paper method. 
The Network uses the data it collects on behalf of the State to produce annual 
facility-specific reports called Quality of Care Indicator Reports.  These reports compare 
a facilitys performance to itself over time and to other facilities in the State on each 
performance measure required by the State.  In addition, national comparative data and 
clinical guidelines are included where available.  The Network uses the additional data it 
collects on its own to produce annual facility-specific reports entitled, Facility Trends and 
Profiles.  These reports compare a facilitys mortality rate and patient demographic to 
other facilities in the State.  The Network disseminates both reports to the individual 
facilities and to the State.  The facility-specific reports are not released to the public; the 
data are protected under the licensure law.  However, some aggregate information is 
13 
External Review: Two Promising Approaches  OEI-01-99-00051  available to the public.  The Network also uses the data to identify future quality 
improvement activities. 
Surveyors use both reports as they conduct surveys.  Prior to going on site, surveyors 
review a facilitys reports to note areas that warrant further probing.  While on site, 
surveyors carefully walk through the reports with the head nursing staff and explain how 
to interpret the information.  Also, surveyors probe areas of poor performance.  If a 
facility cannot provide an adequate explanation for its poor performance, surveyors will 
discuss possible improvement activities.  Because licensure standards require facilities to 
conduct their own quality assurance program, surveyors will cite a facility if they 
determine that the facility was not making efforts to conduct its own internal monitoring 
of the performance measures and take corrective action as needed. 
Texas licensure also requires the Networks medical review board to review the 
facility-specific reports annually and to refer poor performers to the State.  To meet this 
task, the medical review board developed criteria to identify facilities for a referral.  For 
1999, the medical review board used the following criteria: (1) any two indicators that 
were one standard deviation below the State mean, (2) any one indicator that was two 
standard deviations below the State mean, or (3) any statistically significant, high 3-year 
aggregate standard mortality rate.  Facilities referred by the Network receive a high 
priority for a survey.8  The Network referred 39 facilities in 1999, 31 facilities in 1998, and 
47 facilities in 1997. 
Network staff and medical review board members stated that the data were helpful for 
their quality improvement activities.  Without a licensure law requiring facilities to report 
and ensuring confidentiality, as well as providing additional funding, the Network felt it 
would be difficult for them to collect and analyze facility-specific data of this scale. 
Facility staff we spoke with found the facility-specific report helpful for internal quality 
improvement activities.  Facilities also reported that without the Network data many 
would not have comparative information on their performance.  The performance data 
suggest that improvements have been made.  The percent of patients receiving adequate 
dialysis, as measured by a urea reduction ratio >65 percent, has increased from 77.5 
percent in 1996 to 84 percent in 1997.9 
14 
External Review: Two Promising Approaches  OEI-01-99-00051  Initiative 2.  Use of facility-specific performance measures. 
The Renal Network, Inc. collects and uses facility-specific performance data involving all 
patients at all facilities in its region.  It uses these data in a balanced fashion: to foster 
improvements in the overall level of care as well as to identify poor performers for further 
review. 
The Renal Network is a consolidation of two Networks.  In 1996, HCFA awarded the 
Tri-State Renal Network (#9) covering the State of Indiana, Kentucky, and Ohio the 
contract for Network #10 covering the State of Illinois to become The Renal Network, 
Inc. (#9/10).  The Network covers over 390 facilities that serve an estimated 28,000 
patients.  Based on the number of patients undergoing treatment in the Network, it is the 
largest of the 18 Networks.  The Network has not received additional funds from HCFA 
to perform this project.10 
Collecting performance measures 
The Network collects performance measures from facilities on all their patients.  The 
selected performance measures cover 
the following treatment areas: 
adequacy of dialysis, anemia  Figure 2. Performance Measures Collected by 
The Renal Network 
management, and nutrition.  The 
Network collects the measures at 
For all hemodialysis patients for five months each 
various times throughout the year 
year, the Network collects: urea reduction ratio, 
depending on the measure itself and  Kt/V, hematocrit, ferritin levels, transferrin 
the treatment modality of the patient.  saturation, and type of vascular access, serum 
albumin. 
The Network also routinely collects 
and updates patient demographic and 
For all peritoneal patients on six months each year, 
medical history information, such as a 
the Network collects: Kt/V, serum creatinine, 
patients physician, type of vascular  hemoglobin, ferritin levels, transferrin saturation, 
access, progress towards a transplant,  blood pressure, and serum albumin. 
and mortality.  The Networks 
For all patients the Network updates monthly: date 
patient-specific data provides greater 
of birth, sex, race, date of first dialysis, primary 
analytical possibilities.  On facilities 
diagnosis, co-morbidities, insurer, physician, type of 
themselves, the Network collects key 
dialysis, transplant status, and mortality data. 
descriptive information such as 
location, number of shifts, chain 
affiliation, and names of key personnel.  (See figure 2.) 
To facilitate the collection of performance measures, the Network developed, and has 
since revised, a software program for facilities to enter and electronically submit their data 
to the Network on a computer diskette.  The Network downloads the data from the 
diskettes into its own database for analysis.  This type of electronic submission greatly 
reduces the costs and errors associated with data entry and allows for more timely 
15 
External Review: Two Promising Approaches  OEI-01-99-00051  analysis.  The data are only about three months old when the Network feeds it back to 
facilities. 
Using performance measures to improve the quality of care 
Facility-specific reports.  Since 1996, the Network has created and disseminated 
facility-specific performance reports to all facilities.  Facilities receive their own individual 
Clinical Performance Measures Feedback Report three times a year.  (See appendix A.) 
The Networks report is similar in format to HCFAs national reports on the quality of 
care in dialysis facilities.  However, HCFAs report makes comparisons of performance 
measures at the Network level only and does not provide any information on the 
performance of individual facilities.11  In contrast, the Networks reports compare an 
individual facility to its own past performance and to other facilities in its region, State, 
and Network on each performance measure.12  The Clinical Performance Measures 
Feedback Report also contains the number of patients, mean, and standard deviation for 
each measure.  In addition, the report contains a comparison of a facilitys patient 
demographics compared to the region, State, and Network to help address case mix 
issues. 
The facilitys administrator, medical director, and all attending physicians receive a copy 
of the report.  The Network does not routinely share these reports with the State survey 
agencies.  However, some State surveyors review a facilitys reports when on site.  The 
Network also does not share the facility-specific reports with the public.  Instead, it 
releases reports to the public presenting aggregate trends at the State and Network level. 
Since 1991, the Network also has disseminated the Patient Demographic Report.  This 
annual report compares a facilitys patient population to its State and Network and 
provides an analysis of facility-specific mortality rates.  These reports also are not 
routinely shared with the State and are not disclosed to the public. 
The Networks data suggest that the percentage of hemodialysis patients with adequate 
dialysis, as measured by a urea reduction ratio of >65 percent, has increased from 71 
percent in 4th quarter 1997 to 76 percent in 4th quarter 1998.  Network data also suggest 
that anemia management has improved as measured by higher patient hematocrit levels. 
The percentage of hemodialysis patients with a hematocrit >31 percent has increased from 
72 to 79 percent over the same time period.13  The nurses and technicians we interviewed 
indicated that the facility-specific reports are the most important activity the Network 
performs.  Without the Network data, nurses stated they would have no idea how their 
facilitys performance compared to others in the area.  These reports were a motivator for 
improvement, according to these nurses.  The nurses also stated that the benefits of having 
the reports outweighed the burden on the facility to report the data. 
Physician-specific reports.  The Renal Network is the only Network that provides 
physician-specific reports.  In 1997, the Network created a Physician Activity Sheet, that 
compares the performance of individual physicians to their peers at the facility, State, and 
16 
External Review: Two Promising Approaches  OEI-01-99-00051  Network level and to clinical guidelines on the performance measures collected by the 
Network.  (See appendix B.)  The Network disseminates the physician reports three times 
a year.  Only individual physicians receive their report unless a physician group requests to 
have an aggregate analysis of its physicians.  Physicians are provided the opportunity to 
verify the patients assigned to them. 
The Networks analysis suggests that physician-specific reports have been influential in 
improving the quality of care.  A recent Network survey showed that 55 percent of 
physicians use the reports for internal quality improvement activities and over 40 percent 
review them as part of dialysis facility meetings and/or to assess their overall patient 
population.  Another Network analysis showed that even as the patient/physician ratio has 
increased from 45.9 to 51.4 between 1997 and 1998, physician performance has improved. 
Between 1997 and 1998 the percentage of patients with Kt/V $1.2 increased from 77 
percent to 80 percent and the percentage of patients with hematocrits $31 increased from 
71 to 77.  The Network concluded that these physician report cards have helped fostered 
improvements by encouraging physicians to better follow clinical guidelines.14 
Identifying topics for improvement activities.  The Network also conducts additional 
analyses of the performance measures to identify trends.  This helps the Network choose 
topic areas for future improvement activities that will have the greatest impact on 
improving quality.  The Network is flexible in the types of analyses it performs.  It tries to 
incorporate suggestions from the renal community as well as address timely issues.  In the 
past, the Network has conducted special analyses looking at the comparative performance 
of facilities located in metropolitan regions as well as looking at the comparative 
performance of facilities after new patients have been excluded. 
Using performance measures to identify poor performers 
Facility profiling tool to identify poor performers.  In order to help identify poor 
performers, the Networks medical review board is developing a new system that profiles 
facilities based on their performance in several categories.  The profiling tool uses the 
following categories: complaints, data compliance, mortality, hospitalization, the use of 
catheters, facility-specific core indicators, and participation in Network projects.  Each 
category captures a different method of evaluating the quality of care provided at the 
facility.  This tool is based on the notions that quality of care cannot always be captured by 
one or even several performance measures, and a facility that provides poor clinical care is 
probably performing poorly on administrative duties as well, which are easier to measure. 
A facility receives a hit for poor performance or non-compliance in each of the categories 
based on the criteria determined by the medical review board.  For example, if a facilitys 
urea reduction ratio is two standard deviations below the Network average, it would 
receive one hit.  Each hit is multiplied by a weight that is attributed based on its 
correlation to the quality of care in the facility.  For instance, a hit for a mortality rate is 
17 
External Review: Two Promising Approaches  OEI-01-99-00051  multiplied by greater weight than a hit for data compliance.  The hit multiplied by the 
weight equals the number of points the facility receives.  The total sum of a facilitys 
points determines its overall score.  In theory, the higher the score, the poorer the 
performance of the facility. 
The Network plots the final scores of all facilities and identifies facilities in the highest 
decile.  The Network performs a pattern analysis on the highest tenth decile to determine 
any common factors that might help in conducting interventions, such as whether they are 
all in the same metropolitan area.  Once this analysis is complete, the Board determines 
how to proceed with the poor performers.  Interventions are specific to the problems and 
facilities involved and can range from off-site assistance to on-site focused reviews. 
The Network recently intervened with a facility identified through this profiling system. 
In this instance, the Network convened an interdisciplinary team to conduct a formal site 
visit of the facility using a protocol developed by the Network.  Prior to going on site, the 
group reviewed a sample of patient medical records.  While on site, the team conducted 
interviews of the nursing and technical staff, the facility administrator, the medical 
director, and several patients.  Based on its findings, the Network required the facility to 
develop and implement an improvement plan, subject to the medical review boards 
approval, and to submit monthly documentation of its progress.  Since that time, the 
Network has been on site to help the facility implement its plan and has seen signs of 
improvement.  The team plans to revisit the facility six months after its initial site visit to 
verify its progress. 
Comparative analysis to identify a corporate chain for intervention.  Another method 
the Network uses to identify poor performer is comparative analyses.  The Network 
reviews the comparative reports it sends to facilities and performs additional analyses as 
necessary to identify facilities that are lagging behind.  Recently, the Network analyzed the 
comparative performance of facilities by chain affiliation.  The analysis showed that one of 
the three largest corporations in a metropolitan area was lagging significantly behind the 
others on several performance measures.  Due to resource constraints, it was impossible 
for the Network to work with each individual facility; instead, it intervened at the 
corporate level.  The Network shared the data with the regional corporate leaders and 
they agreed to convene their medical directors together for a formal session with the 
Network.  At this session, the Network presented its analysis and provided the medical 
directors with information on how to improve the quality of care at their facilities.  The 
Network has since seen an improvement in the chain's performance.  The Network 
indicated to us that without the quantitative evidence it would have been difficult to get 
the attention and subsequent support of the corporation for quality improvement activities. 
18 
External Review: Two Promising Approaches  OEI-01-99-00051  C O N C L U S I O N  
Better collaboration between State survey agencies and Networks and better use of 
facility-specific standardized performance data are two keys to improving the oversight of 
dialysis facilities.  In our companion report, External Quality Review of Dialysis 
Facilities: A Call for Greater Accountability, we set forth recommendations calling for 
national reforms in these directions.  In this report, we focused on two local initiatives that 
provide models for such reforms and that warrant careful consideration in that context. 
The Texas initiative occurred because the State legislature became concerned about the 
adequacy of dialysis care after some highly publicized reports of poor care.  The 
legislatures interventions led to a significant change in the thrust of external oversight 
conducted on dialysis facilities in the State.  It shifted what was a highly collegial approach 
to oversight to one that was more balanced between collegial and regulatory approaches. 
It also brought clarity to the relationship between the Network and State by establishing 
clear operational parameters.  The infusion of State funds and the establishment of new 
standards for facilities were all keys to its success. 
The Renal Networks initiative occurred because its staff and board members sought, with 
some sense of urgency, to use performance data to hold facilities more accountable for 
their performance.  By collecting a broad range of facility-specific measures from 100 
percent of the patients at those facilities, it set a foundation for using performance data as 
a rigorous tool for oversight.  It emphasized the use of such data to improve overall 
professional care processes and outcomes, but also showed a readiness to use them to 
target and correct poorly performing facilities.  This effort also illustrates the potential that 
such data can have in profiling the performance of individual physicians. 
These two initiatives demonstrate what Networks and States can accomplish given 
innovative leadership and adequate resources.  In both cases, the Networks play central 
roles promoting continuous quality improvement and enforcing minimum standards of 
care.  Although we did not evaluate the results achieved by each, we find both initiatives 
to be promising enough in their conception and early implementation to warrant careful 
consideration by other Networks and States, and by HCFA, as HCFA seeks to develop 
effective mechanisms for holding facilities more fully accountable for the quality of care 
they provide. 
19 
External Review: Two Promising Approaches  OEI-01-99-00051  APPENDIX A 
An Excerpt from a Facility-Specific Report 
The following are highlights of the information provided in The Renal Networks Clinical 
Performance Measures Feedback Report for in-center hemodialysis patients for 4th 
quarter 1998.  The complete report also contains information on Kt/V, hematocrit, 
hemoglobin, Epoetin dosage, ferritin levels, transferrin saturation, and serum albumin. 
20 
External Review: Two Promising Approaches  OEI-01-99-00051  APPENDIX B 
An Excerpt from a Physician-Specific Report 
The following are highlights of the information provided in The Renal Networks 
Physician Activity Report for in-center, hemodialysis patients for November 1999.  The 
complete report also contains information on urea reduction ratio, Kt/V, transferrin 
saturation, and serum albumin. 
Your % pts meeting the criteria 
during July 1999 is 0.19 
std dev below the Network rate 
Your % pts meeting the criteria 
during July 1999 is 0.22 
std dev above the Network rate 
21 
External Review: Two Promising Approaches  OEI-01-99-00051  APPENDIX C 
ENDNOTES

1.  The ESRD Networks, established in 1976, are HCFAs main contractors for monitoring 
dialysis facilities.  The main mission of the Networks as set out in the Statute is to ensure 
effective and efficient administration of the benefits provided under the ESRD program. 
Section 1881(c) of the Social Security Act. 
2.  In order to qualify, individuals must be fully insured under Social Security or be a dependent of 
someone who is.  In 1996, about 8 percent of individuals with ESRD who needed treatment did 
not qualify for Medicare coverage.  U.S. House of Representatives, Committee on Ways and 
Means, 1998 Green Book, (Washington, DC: Government Printing Office), 162. 
3.  Texas Health and Safety Code, Chapter 251, End-Stage Renal Disease Facilities.  In 1996, the 
department implemented the final rules and standards of the program; these were subsequently 
revised in 1999. 
4.  Health Facility Licensing Division, Title 25 Texas Administrative Code, Chapter 117 End-
Stage Renal Disease Facilities Licensing Rules, effective April 11, 1999. 
5.  Due to current budget constraints, the Texas Department of Health reduced the number of 
full-time surveyors.  This reduction in staff will likely have an impact on the frequency of surveys. 
6.  In the first year, (9/l/96 to 10/30/97) the State surveyed all 237 facilities.  In the second year 
(11/l/97 to 9/l/98) the State conducted about 109 surveys and in the third year (9/l/98 to 8/30/99) 
the State conducted about 137 surveys. 
7.  The State and Network each maintain their independent authorities.  If the State disagrees with 
the medical review boards recommendation it can take its own course of action.  Similarly, the 
Network can require facilities under its own authority to develop and implement corrective action 
plans if it disagrees with the State. 
8.  The current priority list for State surveys is as follows: (1) complaints, (2) initial surveys,  (3) 
expansions -- facilities adding additional dialysis stations, (4) facilities referred to the Networks 
medical review board the previous year, (5) referrals from the medical review board based on the 
performance data, (6) facilities chosen by surveyors, and (7) routine  resurveys -- facilities that 
have gone the longest without a survey. 
9.  1998 Quality of Care Indicators Report, Texas Department of Health ESRD Licensing 
Program, July 1998, p 4. 
10.  Under statute Networks are supposed to receive 50 cents per dialysis treatment in their 
region to fund their activities.  Social Security Act 1881(b). 
22 
External Review: Two Promising Approaches  OEI-01-99-00051  APPENDIX C 
11.  HCFA does not collect a large enough sample to analyze the data at the facility level. 
12.  Region for this report is defined as a health service region. 
13.  The Renal Networks, Inc., 1998 Annual Report. 
14.  Emil P. Paganini et. al., "Physician Activity Reporting: Is it Worthwhile?" American Society 
of Nephrology 1999 Program Abstracts On-line from 32nd Annual Meeting, 
http://www.asn-online.coni/ accessed November 23, 1999. 
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External Review: Two Promising Approaches  OEI-01-99-00051