Testimony before the
Subcommittee on Oversight and Investigations
Committee on Energy and Commerce
U.S. House of Representatives
"In the Hands of Strangers:
Are Nursing Home Safeguards
Working?"
Testimony of
Lewis Morris
Chief Counsel to the
Inspector General
Office of Inspector General
Department of Health and Human Services
May 15, 2008
10:00 a.m.
2123 Rayburn House Office Building
('77
~~~ --~
'l1t"d3a~
Daniel R. Levinson,
Inspector General
Department of Health and Human Services Testimony of:
Lewis Morris
Chief Counsel to the Inspector General
Health and Human Services
U.S. Department of 
Good morning, Chainnan Stupak and distinguished members of the Committee. I am Lewis
Health and Human
Morrs, Chief  Counsel to the Inspector General of  the Deparment of 
Services. I "appreciate the opportnity to appear before you today to discuss our work related to
nursing home quality issues. The Office ofInspector General (OIG) shares your commitment to
ensuring the well-being of nursing home residents and the proper oversight of programs designed
to serve this vulnerable population. I look forward to discussing with you today some of the
ways OIG seeks to fulfill these goals.
nursing homes is aimed at identifying and
A large portion ofOIG's work in the area of 
recommending methods to reduce inappropriate payments, close programmatic loopholes, and
evaluate payment and pricing methods to ensure that Medicare and Medicaid receive value for
program expenditures. Ensuring that nursing homes receive appropriate payment for quality
taxpayers, but also protects nursing home residents.
services not only promotes the interest of 
Fraudulently biled services drain the Medicare and Medicaid program funds, as well as
residents' personal savings in the fonn of excessive copayments and deductibles.
In addition to promoting financial integrty, Inspector General Daniel Levinson has made
improving the quality of care a top priority for OIG, because behind every claim for
reimbursement is a program beneficiary. In particular, OIG has long been concerned with the
quality of care rendered in nursing facilities. OIG's efforts to improve quality of care in nursing
homes involve three strategies: (1) the evaluation of the systems used to oversee quality of care,
(2) the investigation and prosecution of cases of egregiously substandard care, and (3) the
provision of guidance to the long tenn care industry in order to encourage program compliance
and high quality care.
In my testimony today, I will describe the studies, enforcement actions, initiatives, and
Governent-industry collaboration that OIG has undertaken to identify ways to improve the
quality of care provided to our beneficiaries. I wil conclude my testimony by offering several
recommendations that we believe wil advance this objective.
Care
DIG's Assessment of  the Programs and Systems for Ensuring Quality of 
the
Nursing homes have been a particular focus for OIG over the past decade because of 
beneficiaries living in long-tenn care facilities and the unique
increasing number of 
vulnerabilities associated with this population. Nursing home residents not only rely on facilities
to provide them with proper medical care, but also depend on them to provide the basic life
necessities, such as proper nutrition, safe living environments, and any assistance with their
House Energy and Commerce
Subcommittee on Oversight and Investigations
Hearing: May 15, 2008
Page 1 activities of daily living. Unfortunately not all nursing homes consistently provide the level and
amount of care, support, and assistance necessary to adequately promote and sustain their
residents' health and quality oflife.
The oversight and regulation of nursing homes that participate in the Medicare and Medicaid
the Centers for Medicare & Medicaid Services
programs are primarily the responsibility of 
(CMS) and State agencies through their survey and certification efforts. However, OIG work has
detennined that CMS and State mechanisms to identify and correct quality-of-care problems in
nursing homes do not always function as designed. In addition, OIG has identified shortcomings
in the methods used by nursing homes to screen prospective employees to ensure thatpotentially
abusive care workers are not hired. Such shortcomings can result in quality-of-care problems not
being detected timely, the continued Governent payment to poorly perfonning nursing homes,
and the hiring of staff with a history of mistreating residents.
Nursing Homes
Effectiveness of CMS and State Oversight of 
CMS establishes quality-of-care standards and conditions of participation for the Medicare and
Medicaid programs. Through a system of periodic facility inspections and individual complaint
nursing home perfonnance and detennine
investigations, CMS and the State agencies assess 
whether to certify, or recertify, facilities for participation in Medicare and Medicaid. As part of
this process, surveyors identify whether facilities are falling short in certain quality-of-care
measures, such as providing proper treatment to prevent or treat pressure sores, appropriate
treatment for mental or psychosocial functioning, adequate supervision and/or devices to prevent
accidents, proper nutrition and fluid intake, and appropriate levels and types of medication.
Nursing facility standard surveys are required by statute to be conducted at least every
15 months, and the statewide average interval between surveys of facilities canot exceed
12 months.
When facilities are found to be out of compliance for designated time periods or have
deficiencies that put residents in immediate jeopardy, States are required to refer the case to
CMS for enforcement action. In paricularly egregious cases of noncompliance, enforcement
actions are mandatory. Such actions can include corrective action plans, civil monetary penalties
(CMP), required changes in management, denial of payment for new admissions, or tennination
these processes
of a facility's Medicare and/or Medicaid contract. OIG reviews of  the use of 
indicate that CMS and States do not always effectively or fully use existing tools and authorities
to identify, monitor, or bring back into compliance nursing homes that do not meet required
quality standards.
For instance, both OIG and Governent Accountability Office (GAO) work identified inaccurate
and inconsistent deficiency citations as well as .delayed responses to complaints. To illustrate, in
a March 2003 report, OIG reviewed trends in survey and certification deficiencies, as well as the
effectiveness and consistency of the survey and certification process. This work identified
i::consistencies in the manner in which deficiencies were cited by the various State survey
agencies. These inconsistencies resulted ftom variations in survey focus, unclear guidelines,
turnover of surveyor staff. In
lack of a common review process for draft surey reports, and high 
State surveys sometimes understate the extent of serious care
a 2007 report, GAO found that 
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Subcommittee on Oversight and Investigations
Hearing: May 15, 2008
Page 2 problems that cause actual hann or place residents in immediate jeopardy, that there continued to
these types of deficiencies, and that there
be significant variation across States in their citation of 
continue to be weaknesses in Federal oversight of State survey activities.
abuse- and neglect-reporting
OIG has also assessed the implementation of  States' oversight of 
requirements. The Omnibus Budget Reconciliation Act of 1987 requires States to provide timely
reviews of complaints and to promptly investigate allegations of neglect, abuse, and
resident property. In a July 2006 evaluation, OIG found that State agencies
misappropriation of 
did not investigate some of the most serious nursing home complaints within the required
timeftame and that CMS' s oversight of nursing home complaint investigations is limited. CMS
has since updated the State Perfonnance Standard, which it uses to hold State agencies
their complaint investigations, to make the timeftame consistent
accountable for the timeliness of 
with the 1 a-day requirement in its "State Operations ManuaL."
When facilities are found to be out of compliance with quality standards, CMPs are an important
element of an effective enforcement strategy, especially in cases when nursing homes are out of
compliance for designated time periods or have deficiencies that put residents in immediate
jeopardy. Unfortnately, this tool has not been used to its full potentiaL. For example, in an
2005 report, OIG found that although $81.7 million in CMPs were imposed during 2000
April 
and 200l, CMS had collected only $34.6 milion (42 percent) by the end of2002. The unpaid
portion included reductions resulting from compromises with nursing homes waiving their right
to appeal, settlements and reductions resulting ftom appeals, payment delays caused by appeals
or banptcy proceedings, and nonpayment of collectible CMPs. We found that CMS did not
utilize the full dollar range allowed for CMPs and that impositions were ftequently at the lower
the allowed ranges. Low imposition rates and slow and/or difficult collection efforts may
end of 
minimize the coercive remedial effect that CMPs ultimately have on noncompliant facilities.
Denying payment for new admissions is another powerfl tool that CMS can use to protect
beneficiaries while bringing nursing homes into compliance. CMS must impose this sanction, or
a more severe penalty, on homes that remain out of compliance with Federal standards forilore
than 3 months or when three consecutive surveys detect substandard quality of care. When
properly implemented, the sanction works to divert new patients to more suitable facilities until
such time as the deficient nursing home improves. OIG recently completed a study that found
in which CMS attempted to impose the
processing errors in nearly three quarters of  the instances 
sanction on substandard nursing facilities. In rooting out the cause of these errors, we identified
numerous communication breakdowns between CMS and the contractors that process Medicare
claims. We proposed several solutions to improve communication and accountability, and CMS
indicated that it wil implement changes to ensure more effective use of this remedy.
In the most egregious cases, tennination of the nursing home may be the only effective means of
protecting nursing home residents ftom danger. When a facility either fails to correct an
immediate jeopardy situation, an instance involving actual or potential for death or serious
injury, or fails for two successive surveys to correct deficiencies that involve any level of actual
hann to residents, tennination ftom the Federal heath care programs is mandatory. In a report
issued in May 2006, OIG found that for the majority of cases requiring mandatory tennination of
House Energy and Commerce
Subcommittee on Oversight and Investigations
Hearig: May 15, 2008 Page 3 both late case referrals by States
nursing facilities, CMS failed to apply this sanction because of 
and CMS staffs reluctance to impose this severe remedy. Significantly, OIG found that all of
the facilities that failed to implement the tennination remedy in a timely manner were
subsequently cited for noncompliance that was serious enough to require referral to CMS for
the 29 facilities that CMS failed to tenninate were cited with
enforcement action. Ten of 
immediate jeopardy deficiencies and 1 facility was cited with an immediate jeopardy deficiency
the 29 facilities reviewed had deficiencies that were
four times in consecutive years. Fourteen of 
sufficiently serious to warrant referral to CMS for enforcement in three or more subsequent
surveys. To address these problems, CMS has committed to taking a number  of actions,
including implementing both case- and incident-tracking systems, which should help to ensure
that enforcement actions are properly taken when warranted and implemented more timely:
Moving forward, OIG is continuing its oversight reviews of issues such as the use of
antipsychotic drugs in nursing homes, the appropriateness of psychotherapy services provided to
Medicare beneficiaries in nursing homes, the impact of transitioning into Part D on nursing home
residents' ability to obtain needed drugs, the nature and extent of survey and certification
repeated noncompliance with Federal quality
deficiencies in nursing homes and patterns of 
standards, and whether States are correctly applying civil monetary funds to programs that
protect the health or property of nursing home residents.
Nursing Home Screening of Employees
Residents of nursing homes have a right to live in safe and secure environments, ftee from abuse
their caregivers. OIG has found, however, that States and nursing facilities
at the hands of 
patchwork of data sources to identify persons posing possible threats of
currently depend on a 
elder abuse in nursing homes and to minimize and prevent such abuse.
For instance, nursing homes should screen their staff and prospective staff against the OIG's List
Excluded Individuals and Entities (LEIE). Under a congressional mandate (sections 1128 and
of 
the Social Security Act), OIG established a program to exclude individuals and entities
1156 of 
affected by these authorities. Once a person is excluded, Federal health care programs wil not
pay for items or services furnished by that person. Screening staff against the LEIE helps ensure
that a nursing home does not employ an excluded person and that it does not bil Federal health
care programs for any excluded person's work.
Exclusions related to quality of care arse in the following situations; therefore, checking against
the LEIE wil help nursing facilities to ensure that the following types of individuals are not
employed:
.
OIG must exclude any person convicted of an offense related to the abuse or neglect of a
patient in connection with the delivery of  health care;
.
OIG may exclude any person whose license to practice health care has been revoked or
suspended for reasons bearing on the person's professional competence or professional
perfonnance;
Energy and Commerce
House 
Subcommittee on Oversight and Investigations
Hearng: May 15, 2008
Page 4 .
OIG may exclude any person who has furnished items or services to patients: (1) that are
substantially in excess of the needs of such patients or (2) that fail to meet professionally
recognized standards of care; and
.
OIG may exclude anyone who has caused the submission of  false or fraudulent claims to
a Federal health care program. i
In addition to using the LEIE, nursing facilities should screen prospective nurse aides and other
the State nurse aide registries. Federal
nonlicensed direct care staff  through the use of 
regulations prohibit facilities ftom employing individuals who have been found guilty by a court
oflaw or who have had findings entered into the registry for abuse, neglect, or mistreatment of
their property. Each State is required to establish and maintain a
residents or misappropriation of 
registry of nurse aides, which includes infonnation on any finding by the State certification
agency of abuse, neglect, or misappropriation of property belonging to the elderly.
In a July 2005 report, OIG found that although most facilities check their State nurse aide
registries prior to employing an individual, they do not routinely check registries in other States,
their residents. Additionally, while most States
thereby potentially jeopardizing the safety of 
these checks varies widely. Although some of
require criminal background checks, the scope of 
the nursing facilities in our sample conducted more comprehensive checks than required by their
the background checks perfonned were limited in scope, e.g., limited to
State laws, about half of 
one State. Additionally, in a February 2005 report, OIG examined the accuracy of  nurse aide
registries maintained by States and found that some States failed to adequately update registries
with infonnation on substantiated adverse findings against nurse aides. In fact, some individuals
with criminal records in one State were certified in other States and therefore still able to have
access to residents.
Without accurate nurse aide registry infonnation, nursing homes may inadvertently hire aides
who have committed criminal offenses, such as abuse, neglect, and theft, which place residents at
considerable risk. To reduce the potential risk to residents, OIG recommended that CMS seek
legislative authority to create a national nurse aide registry and to consider developing a Federal
requirement for comprehensive criminal background checks.
Pursuant to section 307 ofthe Medicare Prescription Drug, Improvement, and Modernization Act
of2003, CMS implemented a seven-State criminal background check pilot program. The
purpose ofthis pilot is to detennine effective and efficient methods for conducting State and
national background checks and searches of relevant registries for screening prospective direct
care employees in nursing homes and other long-tenn care facilities. Funding for the program
ended in September 2007 and an evaluation of the pilot is expected to be completed in the near
future.
i This provision parallels the False Claims Act and is implicated in any case in which the Governent is
asserting a failure-of-care theory in a civil case.
House Energy and Commerce
Subcommittee on Oversight and Investigations
Hearing: May 15, 2008
Page 5 DIG Quality-of-Care Investigations and Enforcement
As previously described, the survey and certification process provides several mechanisms for
the identification of quality-of-care deficiencies and the enforcement of nursing home standards
through the use of remedies such as corrective action plans, CMPs, suspension of intake of new
Medicare and Medicaid patients, and required changes in management. However, in some cases,
the quality of care is so deplorable that these types of remedies are not suffcient. In such
instances, the Department of Justice (DOJ), OIG, State Medicaid Fraud Control Units (MFCU),
and other law enforcement partners have used the criminal and civil fraud statutes to pursue
cases of substandard care. Under the False Claims Act, the Governent is authorized to collect
substantial penalties against anyone who has knowingly caused the submission of false or
ftaudulent claims to the Federal Governent. .
The predominant criminal and civil ftaud theories-medically unnecessary services and "failure
of care"-rely on the submission of a claim for reimbursement to the Governent to establish
jurisdiction over the provider. The first theory is based on the fact that Medicare and Medicaid
cover only costs that are reasonable and necessary for the diagnosis or treatment of illness or
injury. When medically unnecessary services are provided and billed to Federal health care
programs, the claims are fraudulent, the patient is unnecessarily exposed to risks of a medical
procedure, and the Federal health care programs incur needless costs. The second theory of
liability involves the provision of care that is so deficient that it amounts to no care at all. This
theory derives from the concept commonly applied in the financial fraud context, which subjects
providers to liability for biling Governent programs for services that were not actually
rendered as claimed. The Governent has pursued this civil cause of action only in cases that
involve systemic and widespread problems of quality or significant hann to patients.
Prosecuting Providers of Substandard Care
Pursuant to the Deficit Reduction Act of2005, OIG has heightened its collaborative efforts with
law enforcement entities. For example, in 2007, OIG worked 534 cases jointly
State and local 
with State MFCUs. We also continue our close work with DOJ pursuing failure-of-care cases
under the Federal False Claims Act. For example, during 2007, we settled cases with two
nursing home chains resulting in quality-of-care CIAs covering all of the facilities within those
chains. Both cases involved OIG attorneys and special agents, Assistant United States
Attorneys, trial attorneys ftom DOJ, and attorneys and investigators ftom State MFCUs. This
level of coordination has become the standard for quality-of-care work.
The 2007 settlement with Ciena Healthcare Management, Inc., a provider of management
Michigan, provides a
services to 32 skilled nursing facilities located throughout the State of 
recent example of a failure-of-care case. In this case, the United States and the State of
Michigan alleged that the defendants violated the False Claims Act by submitting claims to
Medicare and Medicaid for services at four Ciena facilities that failed to meet the following
resident needs: (1) resident nutrition and hydration, (2) assessment and evaluation, (3) care
planning and nursing interventions, (4) medication management, (5) fall prevention and
management, and (6) pressure ulcer care. Under the settlement agreement, the defendants agreed
House Energy and Commerce
Subcommittee on Oversight and Investigations
Hearig: May 15,2008 Page 6 to pay the United States $1.25 million and enter into a chain-wide quality-of-care Corporate
Integrity Agreement (CIA) that covers all 32 Ciena facilities.2
In another example, in 2005, the Governent settled a False Claims Act case with Life Care of
the problems at Life Care of
Lawrencevile, a Georgia nursing home, for $2.5 million. Many of 
Lawrenceville were related to chronic understaffing. Among the examples of poor care alleged
toxic
by the Government, a resident on coumadin, a blood-thinning medication, died of 
poisoning because the facility staff failed to check his blood-clotting times. Another resident
allegedly fell four times during her 4-month stay and ftactured and reftactured her hip. Stil
another resident allegedly developed maggots in her mouth and died oflarvae infestation
because the facility staff failed to provide basic oral hygiene care. Life Care and OIG entered
into a quality-of-care CIA for the Lawrencevile facility.
Missouri charged American Healthcare Management
To further illustrate, Federal prosecutors in 
Executive Officer, and three
(AHM), a long-tenn care facility management company, its Chief 
nursing homes with criminal conspiracy and health care fraud based on their imposition of
budgetary constraints that prevented the facilities from providing adequate care to residents. The
investigation found that numerous residents suffered ftom dehydration and malnutrition, went for
extended periods oftime without cleaning or bathing, and contracted preventable pressure sores.
In 2005, the corporate defendants were convicted and fined, entered into a False Claims Act
settlement of $1.25 million, and agreed to be excluded. The primary owner was convicted of a
false statement misdemeanor offense, was sentenced to 2 months incarceration, and agreed to be
excluded for 20 years. Finally, in February 2007, AHM's fonner CEO was sentenced to 18
incarceration and fined $29,000. .
months of 
In a final example, Ronald Reagan Atrium Nursing Home, a Pennsylvania nursing home, and its
health care fraud and false statements after a 6-week
owner/operator were convicted in 2007 of 
trial in which evidence showed that employees were directed to falsify medical records to
the scheme, the nursing home bi1ed
conceal the nursing home's deficiencies. As a result of 
whom suffered ftom
Medicare and Medicaid for services provided to residents, most of 
Alzheimer's disease, that either were not provided or were substandard. The nursing home,
which is now closed, was ordered to pay a $490,000 fine. The owner/operator was sentenced to
5 years in prison and ordered to pay a $50,000 fine. The investigation also revealed, that
although the nursing home claimed that it did not have the ability to pay food and pharaceutical
vendors, it donated $1 milion to another nonprofit company, which, in turn, paid the
owner/operator an exorbitant salary.
Excluding Caregivers and Owners
Exclusion actions fall under two broad categories: (1) derivative (based on an action by another
Governent agency or tribunal) and (2) affnnative (initiated independently by OIG). OIG uses
these exclusion authorities to build upon and supplement enforcement actions taken by States,
CMS, and DOJ. To provide protection to Federal health care program beneficiaries, OIG
imposes derivative exclusions of persons who have been convicted of patient abuse or neglect or
2 Quality-of-care CIAs are described in further detail on page 11 of this statement.
House Energy and Commerce
Subcommittee on Oversight and Investigations
Hearing: May 15, 2008
Page 7 who have lost medical, nursing, or other health care licenses for reasons related to abuse or
neglect of patients or professional competence. In fiscal year 2006, OIG excluded 295 persons
bhaseed ona conlvicttionsh of p atiecnt aabuser or enegl ect alnd 1i,86c7 peersonns bassed eon rsevoc.atio n or. loss of
In addition to imposing these large numbers of derivative exclusions, OIG initiates affinnative
exclusions to address serious quality-of-care problems that have not been addressed through
this affinnative strategy, we can exclude direct caregivers
other enforcement actions. As part of 
who pose a risk to patients, the owners and managers who are responsible for allowing the abuse
of patients or provision of substandard care, as well as entities that have demonstrable, systemic
poor quality of care. For example, OIG excluded a nursing home owner for causing the
provision of substandard care in his facilities as a result of providing insufficient Staffing and
financial support. Because the owner was not a licensed health care professional (or nursing
home administrator), the exclusion was the most effective way to bar him from involvement in
Federal health care programs.
Establishing Accountability
In investigating and resolving cases such as those described above, law enforcement often
struggles to detennine who in the organization's management should be heldresponsible for the
egregiously poor care. Federal and State law enforcement have therefore resorted to resource
intensive and time-consuming investigative and auditing techniques to detennine the roles and
various management companies that are affiliated with a single nursing
responsibilities of 
facility.
Establishing accountability is a challenge, in part, because of the sometimes Byzantine structures
that are intentionally constructed around the long-tenn care facilities. The Service Employees
International Union has reported, and OIG's law enforcement experiences confinn, a growing
trend in the corporate restructuring of nursing home chains and other long-tenn care facilities to
obfuscate the ownership and control of nursing homes. We have seen a variety of methods that
have been used to hide the true owners that often involve the following steps: (1) creating a
holding corporation to own the entire chain of nursing homes; (2) creating limited liability
the individual homes; (3) creating LLCs for the
companies (LLCs) to manage the operations of 
real estate holdings (the facility and the grounds), usually referred to as Real Estate Investment
the properties ftom the
Trusts (REITs); and (4) creating an affiliated corporation to lease all of 
REITs and then sublease those properties to the facility-specific entity, usually an LLC, which
operates the individual homes.
any assets and is authorized to use the
The entity that acts as the facility operator does not own 
facility under a sublease. The operating entity usually contracts with a management or
administrative services company to perfonn the day-to-day operations ofthe facility. During
ongoing investigations of nursing homes for the provision of substandard care, OIG has
encountered nursing facilities that have as many as 17 LLCs that playa role in the operations of
the facility. Such complex structures dilute accountability, greatly complicate law enforcement
investigations, and delay implementation of essential corrective actions required to protect
residents.
House Energy and Commerce
Subcommittee on Oversight and Investigations
Hearing: May 15, 2008
Page 8 DIG Efforts To Promote and Ensure Quality of Care in Nursing Homes
The numerous oversight mechanisms used by States and CMS are primarily designed to identify
and correct quality-of-care problems after they have occurred. By themselves, these mechanisms
are insufficient to ensure that nursing home residents receive proper care. OIG has therefore
undertaken numerous initiatives and worked closely with the nursing home industry to identify
additional strategies to promote and ensure quality of care.
Voluntary Compliance Programs
Encouraging Adoption of 
OIG ftequently provides nonbinding guidance to health care providers regarding how to establish
systems and controls to promote and monitor compliance with Federal health care program
requirements. Much of this voluntary guidance focuses on the importance of providing high
quality health care to patients. The suggestions made in these compliance program guidances
(CPG) are not mandatory, nor should they be construed as model compliance programs. Rather
they offer a set of guidelines that providers should consider when developing and implementing
new compliance programs or evaluating existing ones.
OIG originally published a CPG for nursing facilities in 2000, in which we provided guidance
and resources to assist nursing home providers to voluntarily build systems of care and oversight.
Since that time, there have been significant changes in the way nursing facilities deliver, and are
reimbursed for, health care services, as well as significant changes in the Federal enforcement
environment and increased concerns about quality of care in nursing facilities. In response to
these developments, in April 2008, OIG published draft supplemental compliance program
guidance for nursing facilities. Weare currently soliciting public comments on this draft.
The draft supplemental nursing home CPG addresses major Medicare and Medicaid fraud and
abuse risk areas, including quality of care, accurate claims submission, and kickbacks. The
supplemental CPG focuses particular attention on such quality of care risks as inadequate
staffng, poor care plan development, inappropriate use of psychotropic medications, lack of
proper medication management, and resident neglect and abuse. Examples of measures that
improve resident care that could be incorporated into compliance programs include:
.
Regular assessment of staffing patterns to evaluate whether the facility has sufficient staff
who are competent to care for the unique acuity levels of its residents;
.
ensure an interdisciplinary and comprehensive
Policies and procedures designed to 
approach to developing care plans. These can include requiring such things as
completing all clinical assessments before interdisciplinary team meetings are convened,
opening lines of communication between direct care providers and interdisciplinary team
members, involving the resident and the residents' family members or legal guardian in
discussions, and including the attending physician in the development of the resident's
care plan;
House Energy and Commerce
Subcommittee on Oversight and Investigations
Hearing: May 15, 2008
Page 9 .
Requirements to ensure that there is an adequate indication for the use of psychotropic
medication and to ensure the careful monitoring, documentation, and review of each
resident's use of psychotropic drugs;
.
Commitment to robust training and monitoring on a regular basis of all staff involved in
prescribing, administering, and managing phannaceuticals, and implementation of
policies for maintaining accurate drug records and tracking medications; and
.
Policies and procedures to prevent, investigate, and respond to instances of potential
resident abuse, neglect, or mistreatment resulting from staff-on-resident abuse and
neglect, and resident-on-resident abuse, including a method for staff, contractors,
residents, family members, visitors and others to confidentially report any instances of
abuse.
Encouraging Boards of  Directors' Involvement in Compliance and Quality of  Care 
With a new focus on quality and patient safety, oversight of quality is a core fiduciary
health care organization boards of directors. In exercising his or her fiduciary
responsibility of 
duties, a governing board member of a health care entity can be expected to exercise general
supervision and oversight of quality of care and patient safety issues. Because the support of the
organization's leadership is essential to the success of any compliance program, OIG has worked
collaboratively with health care industry groups to develop resources for boards of directors,
including several recent efforts focusing on the role of the board in the oversight of compliance
and quality of care.
In 2003, OIG and the American Health Lawyers Association (AHLA) produced a resource guide
that highlighted the role that health care boards of directors can play in promoting effective
compliance programs within their organizations. Another resource, published in 2004,
the general counsel in promoting an organization's compliance efforts.
considered the role of 
Most recently, in September of2007, OIG and AHLA issued the third publication in this series,
entitled "Corporate Responsibility and Health Care Quality: A Resource for Health Care Boards
health care boards of directors in responding
of  Directors." This document explores the role of 
to emerging issues related to promoting improved quality of care and patient safety. In it, we
descrbe how compliance departments can play an integral role in aiding boards in fulfilling their
oversight and decision-making obligations relating to quality-of-care issues. Some examples of
possible measures that can be undertaken to strengthen the board's understanding of, and
commitment to, quality of care include: (1) educating the board on emerging legal and
compliance issues related to quality of care, (2) briefing the board on existing compliance
systems equipped to respond to legal and regulatory quality-of-care developments, and
(3) employing compliance mechanisms to implement board initiatives that seek to monitor or
improve quality of care.
and health care quality, in December 2007, OIG
To further awareness of corporate responsibility 
co-sponsored a roundtable with the Health Care Compliance Association called, "Driving for
Directors Dashboard." The roundtable was an
Quality in Long-Tenn Care: A Board of 
opportunity to bring together a diverse and knowledgeable group oflong-tenn care industry and
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Subcommittee on Oversight and Investigations
Hearing: May 15,2008
Page 10 Governent representatives to generate ideas about how to effectively involve boards of
of quality of care in nursing homes. The participants represented a
directors in the oversight 
wide spectrum oflong-tenn care organizations and professionals, including not-for-profit and
for-profit organizations, multi-facility and single facility organizations, nationally and locally
based organizations, clinicians, administrators, compliance officers, outside and corporate
the roundtable
counsel, and monitors involved in OIG quality-of-care CIAs. Another goal of 
was to identify infonnation that could be included on a "Quality of Care Dashboard," a matrix,
used by boards of directors as a tool for monitoring the organization's quality-of-care data.
the roundtable to reach consensus regarding best practices, a
Although it was not the purpose of 
themes ran through the discussions. For example, participants consistently stated that
number of 
boards of directors can demonstrate their commitment to quality resident care by establishing a
forum for board-level discussions about quality; quality outcome data can help the board assess
the organization on identified quality-of-care standards; and, where
the actual perfonnance of 
quality of care problems are identified, the response needs to be coordinated, with board
oversight, to properly address the underlying cause ofthe problem.
Imposing Corporate Integrty Agreements
False Claims Act cases, OIG often agrees to not exclude a defendant
As part of  the resolution of 
in exchange for the defendant entering into a CIA with OIG. A CIA is a contract that imposes
systems, monitoring, and reporting requirements on providers. Like all of OIG's CIAs, quality-
of-care CIAs are designed to compel the strengthening of existing, or the development of,
internal systems of quality assurance and communication within the monitored organization.
CIAs are typically entered into for 5-year terms; the intention is that systems will be refonned
and staff competence dramatically improved during the first 3 years and that the monitored
organization wil demonstrate that it can maintain compliance during the last 2 years.
Quality-of-care CIAs typically include the following eight key components:
1. An independent quality monitor authorized with unfettered access to facilities, staff,
residents, documents, and management at every level of the organization;
2. A compliance officer who oversees all compliance systems and coordinates with OIG and
the monitor;
3. Policies and procedures with an interdisciplinary focus;
4. Competency-based training requirements;
5. Internal audit functions that should continue beyond the CIA;
leadership and the compliance
6. A Quality Assurance Committee (including clinical 
offcer) to oversee clinical improvement and compliance issues throughout the
organization;
7. A system of reporting infonnation within the organization without fear of retaliation; and
8. Requirements that the organization report certain events, such as significant
overpayments or serious quality-of-care problems, to the Monitor and OIG within
specific timeftames.
House Energy and Commerce
Subcommittee on Oversight and Investigations
Hearing: May 15,2008
Page 11 Ifthe entity fails to comply with the CIA, OIG may impose stipulated monetary penalties. In
addition, certain violations (e.g., failing to report reportable events or to pay the independent
monitor in a timely manner) may result in a breach of contract, for which exclusion of some or
all of the organization may result.
The appointment of an independent quality monitor has been essential to the success of CIAs and
the nursing homes' development of systems of care and oversight. The monitor is selected by
OIG, or by the monitored entity with OIG's approval, sets its own budget, and is paid for by the
monitored entity. These independent quality monitors effectively build upon and complement
the actions of State surveyors. By using State survey results and other quality-related data, such
Quality Indicators/Quality Measures derived from the Minimum Data Set, the monitors
proactively identify any quality problems or systems issues that could lead to quality problems.
The success of these quality CIAs also has been a result of their access to an aray of quality-of-
care data. The use of a national, historical database that integrates a variety of quality measures
allows the monitors to effectively compare the quality of care provided among facilities in the
same corporation and to compare the quality of care in facilities ftom different nursing home
chains. This analysis allows the monitors to track improvements or deterioration in the entity
under the CIA over time and to identify areas needing a stronger focus and more resources. In
consultation with the provider, the monitor recommends enhancements to systems and controls
to improve quality of care. If the monitor makes a recommendation to the monitored entity, the
entity must either implement the recommendation or explain to OIG its reason for failing to do
so.
Over the last 7 years, many nursing home chains and individual health care facilities have agreed
to operate under CIAs with independent quality monitors. Since 2002, over 1,300 health care
facilities, mostly nursing homes, have operated for some period of time under quality-of-care
CIAs. OIG currently has 11 CIAs with nursing homes and psychiatric facilities (or chains) with
independent quality monitor requirements. These 11 CIAs cover operations in about 400 long-
tenn care and psychiatric facilities across the countr.
Conclusion and Suggestions To Promote Improved Quality of Care in Nursing Homes
Our extensive work has detennined that the current mechanisms used to detect, monitor, and
correct quality-of-care problems in nursing homes are insufficient. The procedural
inefficiencies, communication breakdowns, inconsistent citing of deficiencies and application of
remedies mean that consumers have no guarantee that the nursing home in which they place a
family member provides good care or that it thoroughly screens its staff. Additionally, the
program administrative oversight and enforcement systems are designed largely to identify poor
care after it has already occurred. While these approaches can help to correct existing problems,
they are insuffcient by themselves to prevent these problems ftom occurrng. In spite of existing
horrfic treatment of nursing home
oversight mechanisms, we continue to see examples of 
residents.
House Energy and Commerce
Subcommittee on Oversight and Investigations
Hearing: May 15, 2008
Page 12 Ultimately the responsibility rests with the nursing homes, and their owners and boards of
directors to do everything possible to ensure that the residents in their facilities consistently
receive the best possible care. I have described a number of initiatives that OIG has undertaken
with the nursing home industry to promote and ensure quality of care. However, more must be
done. I offer the following suggestions for consideration.
1. Improve screening of all nursing home staff by creating a nationwide centralized
database that includes information from DIG's exclusions database, State nurse aide
registries, and disciplinary actions by State licensing boards.
Given the dependence of nursing home residents on the nursing facility staff for their health and
well-being, it is vital that providers have access to the most complete personal background
infonnation possible, including data currently residing in OIG's exclusions database and the
multiple employee databases. Without this infonnation, there is a significant risk that potentially
abusive caretakers will be employed to care for this vulnerable population. With so many
different sources of infonnation, however, it can be administratively difficult and costly for a
provider to ensure that it has effectively screened all of its prospective employees against all of
the relevant databases. For this reason, we recommend that consideration be given to the
creation of a single database that aggregates the various Federal and State sources of adverse
information about direct patient access employees. We recognize that although.the initial startp
efforts would be resource intensive, in the long run nursing homes and other health care
providers would have access to a cost-effective means of conducting a more comprehensive
background check on prospective or re-check of current employees. One possible method to
ensure stable funding for the continued maintenance of the centralized database would be to
require that nursing homes and other potential employers check these data prior to hiring direct
care staff, along with charging a user fee for access to this information. The results of the CMS
criminal background check pilot program should also help to infonn how such a database could
be constructed and utilized.
2. Create a demonstration project to establish mandatory compliance programs for
selected nursing homes.
OIG believes that the implementation of a comprehensive compliance program in nursing
facilities can help achieve the goals of reducing ftaud and abuse, enhancing operational functions
and transparency, improving the quality of  health care services, and decreasing the cost of  health
care. The implementation of a compliance program may not entirely eliminate ftaud ftom the
operations of a nursing facility, nor wil it completely remove the specter of poor care and
resident abuse. However, in our experience, an effective compliance program can significantly
unlawful or improper conduct. For example, nursing homes that have operated
reduce the risk of 
under CIAs typically report significant improvements in internal financial controls and care
delivery systems. Simply put, effective compliance systems can promote improvements in
quality of care. Additionally, the widespread implementation of compliance programs levels the
health care organizations, which are honest and law-abiding.
playing field for the majority of 
House Energy and Commerce
Subcommittee on Oversight and Investigations
Hearing: May 15, 2008
Page 13 A number of different approaches can be taken to achieve this objective. For example, New
York now requires providers that participate in its Medicaid program to adopt effective
compliance programs, designed to be compatible with the providers' characteristics. The
Veteran Affairs (VA) also has a robust compliance and business integrty
Department of 
the compliance initiative is on
program (CBI) for its health care systems. Although the focus of 
the VA's own facilities and its employees, the CBI requires VA's independent contractors to
receive fonnal training on compliance awareness, as well as job-specific training for physicians,
clinicians, and anyone involved in the revenue cycle, either through the contractor or at the
facility.
OIG suggests that the Congress work with CMS to establish and provide resources for several
demonstration projects to explore different approaches to the implementation of compliance
programs in nursing homes. As an example, one project could concentrate on the "special focus"
facilities identified by CMS and, where appropriate, on corporations that have more than one
special focus facility with a history of severe deficiencies. These nursing homes have already
been identified as needing significant improvement in their quality inftastructure and would be
an ideal testing ground of mandatory compliance programs. An additional demonstration project
could use the nursing home's existing quality assurance committee as the starting point for
the
building a compliance program. Such projects wil help identify "best practices" and refocus 
priorities of facilities that have in the past placed profit over resident care.
3. Enhance the quality-of-care data made available to the nursing home industry and the
public.
Currently, CMS offers consumers and the nursing home industry a good base of infonnation on
the quality of nursing homes, primarily through its Nursing Home Compare Web site. Nursing
information: (1) inspection results, including
Home Compare includes four categories of 
deficiencies identified by Medicare certification surveys and complaint investigations;
beds and type of ownership; (3) nursing home
(2) facility characteristics, such as number of 
staffing levels; and (4) quality measures which are based on the clinical and functional status of a
nursing home's residents. Information included in Nursing Home Compare can be used by
consumers to select and monitor performance in nursing homes and by providers to serve as the
basis for quality improvement efforts. Additionally, last month, CMS anounced that it had
enhanced Nursing Home Compare to identify the nursing facilities that are or have been on the
CMS Special Focus Facility List. We commend this change. However, we believe that more
can be done to provide critical data to the industry to enable it to better police itself.
Furthennore, we believe that consumers need more detailed infonnation about the operation of a
nursing home chain or its regional components to make an educated choice about where to seek
nursing care.
As described earlier, the quality monitors' oversight of corporations and individual providers
under CIAs demonstrate the value and potential of using a combination of resident assessment
data and survey-based performance measures to provide richer and more detailed infonnation
that corporations can use to better identify quality-related risk areas and to focus their quality
improvement efforts. Until now these vital quality improvement data have been available only
House Energy and Commerce
Subcommittee on Oversight and Investigations
Hearig: May 15, 2008 Page 14 to those corporations that have entered into quality of care CIAs with OIG. We believe that
quality improvement in all nursing facilities can be enhanced well beyond their current
capabilities by providing similar trended, comparative resident-level performance measures that
that would allow facilities to "gauge" how they compare in providing quality care related to
other facilities. Every corporation that OIG has monitored has indicated that its facilities have
regularly used this information and have expressed concern that this comparative infonnation is
not available to them after the CIA had ended.
This concludes my statement. Thank you for the opportunity to testify today. I would be pleased
to answer your questions.
House Energy and Commerce
Subcommittee on Oversight and Investigations
Hearig: May 15, 2008 Page 15