Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
External Quality Review of Dialysis Facilities 
A Call For Greater Accountability 
JUNE GIBBS BROWN 
Inspector General 
JUNE 2000 
OEI-01-00050  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 assess external mechanisms the Health Care Financing Administration relies upon to 
monitor the quality of care provided by dialysis facilities to Medicare beneficiaries with 
end-stage renal disease. 
BACKGROUND 
Importance of External Quality Review 
Case files, performance data, and marketplace realities underscore the importance of 
external quality review of 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 
variation 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 containing 
costs 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 external reviews of dialysis facilities: 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 improvement in the quality 
of care and to respond to complaints lodged by patients, staff, and others.  HCFA funds 
the State agencies, typically within departments of public health, to perform a more 
regulatory role: to conduct Medicare certification surveys of facilities and to investigate 
complaints, both in accordance with the Medicare Conditions for Coverage for dialysis 
facilities. 
This Inquiry 
In our inquiry, we relied on a rich variety of data sources.  We reviewed and analyzed 
HCFAs database on State survey agencies; conducted a survey of all 18 Networks; 
1 
External Review: A Call for Greater Accountability  OEI-01-99-00050  visited 5 Networks; held extensive telephone discussions with representatives of another 
8; reviewed the complaint logs of 9 Networks; observed a State survey of a dialysis 
facility; interviewed staff at 5 State survey agencies; interviewed many stakeholders 
representing national organizations; and reviewed Federal documents and pertinent 
literature. 
FINDINGS 
The major strength of the external oversight system is the use of standardized 
performance measures to encourage improvements in the quality of care. 
<	 HCFA-generated data show measurable improvements in clinical outcomes at the national 
and regional levels. 
<	 Network quality improvement projects show improvements at the regional level and, in 
some cases, at the facility level. 
Yet, that system of oversight falls short in several respects. 
Standardized performance measures are rarely used to hold individual facilities 
accountable. 
<	 HCFA does not require the collection of a core set of facility-specific clinical 
performance measures. 
<	 Without such a set, Networks and States have limited means of identifying poorly 
performing facilities. 
<	 A few Networks do collect facility-specific performance measures, but have limited 
authority to use them to correct poor performance. 
<  Networks and State agencies rarely share facility-specific data with one another. 
<  Facility-specific performance measures are not publicly disclosed. 
The complaint systems serve as unreliable means for identifying and resolving 
quality-of-care concerns. 
<	 Both patients and staff tend to be reluctant to lodge complaints because of concerns 
about the possible consequences for them. 
<	 States and Networks conduct few investigations of complaints concerning the quality 
of care.  In 1998, State survey agencies conducted about 250 on-site investigations; 
the Networks, about 35. 
2 
External Review: A Call for Greater Accountability  OEI-01-99-00050  <	 States and Networks rarely conduct joint complaint investigations or share 
information on their own investigations. 
Medicare certification surveys play a limited role in ensuring dialysis facilities meet 
minimum standards. 
<	 The elapsed time between Medicare certification surveys conducted by the State 
survey agencies is increasing.  In 1995, 20 percent of all facilities were not surveyed 
within 3 years; by 1998, that increased to 44 percent. 
<	 Medicare Conditions for Coverage for dialysis facilities provide an inadequate 
foundation for accountability. 
<	 State survey agencies have difficulty maintaining the expertise of surveyors, largely 
due to the infrequency of surveys. 
Medical injuries are not systematically monitored.  HCFA does not require the 
Networks, the State agencies, or facilities to identify and analyze medical injuries 
attributable to the care provided to the patient as opposed to the patients underlying 
condition. 
HCFA does little to hold the Networks and State survey agencies accountable for 
their effectiveness. 
Minimal assessment of Networks performance.  Although HCFA receives regular 
information from Networks, it provides little substantive evaluation and feedback to 
them.  HCFA does not hold Networks accountable for how facilities fare on performance 
measures. 
Minimal assessment of State survey agencies performance.  HCFA has few means to 
evaluate the content or quality of the surveys the State agencies conduct on behalf of 
Medicare.  HCFA no longer validates surveys and rarely observes surveys in action. 
Minimal public disclosure.  HCFA, the Networks, and the States disclose little 
information to the public on actions taken to protect dialysis patients. 
RECOMMENDATIONS 
Our review indicates that the external review system carried out on HCFAs behalf by the 
Networks and the State agencies has major shortcomings.  It is imbalanced, in that it 
stresses improving overall quality more than enforcing minimum requirements that 
protect patients from harm.  It is fragmented, in that Networks and State agencies rarely 
coordinate their efforts.  And it lacks sufficient accountability on the part of the 
Networks, the State agencies, and, most of all, the facilities. 
3 
External Review: A Call for Greater Accountability  OEI-01-99-00050  As HCFA provides leadership to address these shortcomings, we suggest that it (1) steer 
external oversight of the quality of dialysis facilities so that it reflects a balance between 
collegial and regulatory modes of oversight, and (2) foster greater collaboration between 
the Networks and State survey agencies.  Specifically, we offer the following 
recommendations. 
RECOMMENDATION 1.  HCFA should hold individual dialysis facilities more fully 
accountable for the quality of care they provide. 
<	 Revise the Medicare Conditions for Coverage for dialysis facilities so that they serve as a 
more effective foundation for accountability. 
<	 Use facility-specific standardized performance measures to encourage facilities to improve 
the quality of care and to help ensure facilities meet minimum standards.  Regularly issue 
reports incorporating comparative performance data and make them available to the 
facilities, the Networks, the State agencies, and the public. 
<<	 Strengthen the complaint system for dialysis patients and staff.  Work with Networks and 
State agencies to develop an integrated complaint system that incorporates the following 
elements: accessibility, objectivity, investigative capacity, timeliness, responsiveness to 
complainants, enforcement authority and follow-up, improvement orientation, and public 
accountability. 
<	 Enhance the role of Medicare on-site certification surveys by determining an appropriate 
minimum cycle for conducting the surveys and conduct pilot tests to determine the 
potential of Network and State joint initial certification visits of dialysis facilities. 
<	 Facilitate the development of publicly accountable means for identifying serious medical 
injuries and analyzing their causes.  Work with the Networks to establish pilot projects. 
RECOMMENDATION 2.  HCFA should hold the Networks and State survey 
agencies more fully accountable for their performance in overseeing the quality 
of care provided by dialysis facilities. 
<	 Issue policy guidance delineating the distinctive roles of the Networks and State survey 
agencies and providing direction on how they should collaborate. 
<	 Foster greater accountability of the Networks by developing a performance-based system 
for evaluating them and by increasing public disclosure of information on them. 
<	 Foster greater accountability of the State survey agencies by establishing better means for 
assessing State surveys and by increasing public disclosure of information on the extent, 
nature, and results of the surveys. 
4 
External Review: A Call for Greater Accountability  OEI-01-99-00050  COMMENTS ON THE DRAFT REPORT 
We received written comments on the draft report from the Health Care Financing 
Administration, the Forum of End Stage Renal Disease Networks (the Forum), the 
Association of Health Facility Survey Agencies (AHFSA), and the American Association 
of Kidney Patients (AAKP).  Overall, the reports received wide support.  In the body of 
the report we summarize the major comments and offer our responses.  Based on the 
comments, we changed one recommendation and made several technical changes. 
HCFAs Comments 
HCFA largely agreed with our recommendations.  In response, HCFA offered a detailed 
action plan that addresses each of our recommendations.  The plan demonstrates HCFAs 
commitment to publicly releasing facility-specific performance data, revising the 
complaint process, increasing on-site surveys, holding Networks more accountable for 
performance of their facilities, and assessing the performance of State surveys agencies. 
HCFA did take issue with our recommendation calling for Networks and State agencies 
to conduct joint surveys for initial certification visits. 
HCFAs action plan is a positive step toward implementing our recommendations and 
we urge HCFA to give it a high priority.  In response to HCFAs concern about joint 
surveys, we changed our prior recommendation from one requiring such surveys to one 
urging that they be conducted on a pilot basis. 
External Organizations Comments 
The external organizations supported the majority of findings and recommendations but 
also raised some concerns.  The Forum expressed concern that some of our 
recommendations, especially the public release of facility-specific performance data , 
threaten patient confidentiality and undermine the collegial nature of the Networks. 
AHFSA expressed concern about the lack of funding for State survey agencies and 
AAKP urged that funding for strengthening oversight not come at the cost of patient 
activities. 
We recognize patient confidentiality is critical, but we believe that mechanisms can be 
devised to ensure patient confidentiality.  We want to emphasize that the Networks 
should not only take a collegial approach with facilities, but also must be willing to take 
more regulatory actions when warranted or to inform others, such as the State, that can 
take such actions.  Finally, we recognize the significance of the concerns about funding. 
We address AHFSA concerns about the funding for State agencies by calling for HCFA 
to determine an appropriate minimum cycle for conducting surveys and we underscore 
AAKPs point that funding for oversight activities should not jeopardize patient care. 
5 
External Review: A Call for Greater Accountability  OEI-01-99-00050  T A B L E   O F   C O N T E N T S  
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

INTRODUCTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7

PRIMER ON DIALYSIS TREATMENT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10

THE IMPORTANCE OF EXTERNAL QUALITY REVIEW . . . . . . . . . . . . . . . . . . . . . . .  11

FINDINGS

Use of performance data to encourage improvements . . . . . . . . . . . . . . . . . . . . . . . . .  13

Performance data rarely used to hold facilities accountable . . . . . . . . . . . . . . . . . . . . .  13

Unreliable means for identifying and resolving complaints  . . . . . . . . . . . . . . . . . . . . .  15

Limited role of Medicare surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17

Medical injuries are not systematically monitored . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20

Lack of accountability of the Networks and State survey agencies  . . . . . . . . . . . . . . .  20

RECOMMENDATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22

COMMENTS ON THE DRAFT REPORT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35

APPENDICES

A:  Methodology  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38

B:  Major sources of clinical performance data for ESRD . . . . . . . . . . . . . . . . . . . . . .  40

C:  Comments on the draft report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42

D:  Endnotes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  61

6 
External Review: A Call for Greater Accountability  OEI-01-99-00050  I N T R O D U C T I O N  
PURPOSE 
To assess external mechanisms the Health Care Financing Administration relies upon to 
monitor the quality of care provided by dialysis facilities to Medicare beneficiaries with 
end-stage renal disease. 
BACKGROUND 
About 3,200 dialysis facilities provide ongoing, life-sustaining dialysis treatments to about 
230,000 patients with end-stage renal disease, or permanent kidney failure.  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 an additional safeguard. 
External Review Bodies 
The Health Care Financing Administration (HCFA) has the primary responsibility of 
ensuring beneficiaries receive appropriate care in dialysis facilities.  To carry out the bulk 
of the oversight activities for dialysis facilities, HCFA relies upon two entities, End-Stage 
Renal Disease (ESRD) Networks and State survey agencies. 
ESRD Networks.  The 18 regional Networks are HCFAs main contractors for 
monitoring dialysis facilities, as they are the only entities created for and entirely devoted 
to the ESRD program.  Federal statute requires Networks to assure the effective and 
efficient administration of the benefits provided under the ESRD program.1  Network 
staff, typically 7 to 10 people, work closely with their board membership made up of 
local renal professionals.  HCFA requires the Networks to conduct at least one HCFA-
approved quality improvement project a year, to collect HCFA forms from facilities, and 
to resolve patient complaints.  Networks also assist and educate facilities on issues 
related to quality improvement. 
State Survey Agencies.  HCFA relies upon State survey agencies, typically within 
departments of public health, to conduct Federal certification surveys and investigate 
complaints, both in accordance with the Medicare Conditions for Coverage.  The 
Conditions for Coverage dictate the obligations of facilities under the Medicare program 
and are used by State surveyors to certify facilities.2  Some State agencies have additional 
functions under their own State licensure program.3 
7 
External Review: A Call for Greater Accountability  OEI-01-99-00050  External Quality Review Framework 
We have identified four key elements that can be applied to any external quality review 
system for health care facilities.  This framework is meant to be used by purchasers, such 
as Medicare, to ensure that dialysis facilities provide quality care, and by consumers, such 
as ESRD beneficiaries, concerned about the quality of care they receive in their facility. 
Each element in the framework provides a different perspective on the quality of care. 
For a comprehensive and effective external quality review system, all components need to 
be adequately addressed.  Throughout our inquiry we relied on this framework to assess 
the overall effectiveness of the external review system for dialysis facilities. 
Table 1. External Quality Review Framework for Dialysis Facilities 
Element  Description 
Use of standardized  Standardized performance measures allow purchasers, consumers, and overseers to 
performance  compare the performance of facilities or physicians. The comparison can examine a 
measures  single facility over time or one facility against another. Such measures can be used for 
quality improvement activities and to enforce minimum standards. 
Response to  Complaints can come from patients, staff, and other interested parties. They can be of 
complaints  a particular instance of care or about broader matters concerning a facilitys 
performance. The response to complaints can range from an off-site follow-up to an 
on-site investigation. The process can trigger corrective actions and system 
improvements. 
On-site  On-site surveys can be either announced or unannounced. Surveyors observe the 
surveys  conditions of the facility and equipment and interview patients and staff. The process 
can trigger corrective actions and system improvements. 
Response to medical  Medical injuries are adverse events attributable to medical management and unrelated 
injuries  to the patients illness or underlying condition. The response to such events can range 
from minimal to thorough and can trigger corrective actions and system 
improvements. 
Medicare Coverage of ESRD 
In 1972, Medicare began providing coverage to individuals with ESRD making it the 
only entitlement criteria for Medicare based solely on a disease category.4  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.)  Medicare covers dialysis services performed by hospital-based and 
free-standing facilities.  Hospital-based facilities are financially and organizationally 
integrated with a hospital whereas free-standing facilities are not.5 
8 
External Review: A Call for Greater Accountability  OEI-01-99-00050  Our Inquiry 
Our report focuses on the two main entities the Federal Government relies upon to 
oversee dialysis facilities: the State survey agencies and the Networks.  We did not 
evaluate the activities of any one Network or State, rather, we assessed if the activities of 
the Networks and States overall create an effective external review system for dialysis 
facilities.  Also, we did not evaluate the adequacy of the Medicare on-site survey process. 
This report is one of two from our overall inquiry.  Our companion report, External 
Quality Review of Dialysis Facilities: Two Promising Approaches, presents two 
innovative initiatives used to monitor facilities. 
We surveyed all 18 Networks, reviewed their annual reports for 1997 and 1998, and 
reviewed their responses to complainants for 1998.  With eight Networks we held 
telephone interviews and reviewed their complaint logs for 1998.  We also visited an 
additional five Networks.  Over the course of these visits we spoke with patients, 
Network staff, and renal professionals (e.g., administrators, nephrologists, social 
workers, dieticians, nurses, and technicians.)  We also analyzed data on the frequency of 
Medicare surveys, interviewed staff at 5 State survey agencies, and observed a survey in 
a dialysis facility. 
Throughout our inquiry we interviewed HCFA personnel, including the project officers 
for the Networks.  We also spoke with several renal professional organizations and 
patient advocacy groups.  Finally, we conducted a review of scientific literature and 
Federal documents.  (See appendix A.) 
In the next section, we provide a brief overview underscoring why external quality review 
is so important as a patient protection mechanism.  Then we present our findings and 
recommendations. 
We conducted this study in accordance with the Quality Standards for Inspections issued 
by the Presidents Council on Integrity and Efficiency. 
9 
External Review: A Call for Greater Accountability  OEI-01-99-00050  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. 
urea
Creatine clearance measures the removal of creatine and Kt/V measures the removal of urea. DOQI 
urea 
recommends a 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. 
10 
External Review: A Call for Greater Accountability  OEI-01-99-00050  THE  IMPORTANCE  OF  EXTERNAL  REVIEW 
Many dialysis facilities and corporations conduct their own internal quality monitoring 
and improvement projects.  However, in order to protect patient safety, it is essential that 
an external oversight system exists to provide objectivity and public accountability that 
internal quality reviews lack.  Below we present four key factors that underscore the need 
for external oversight in dialysis facilities. 
Instances of Poor Care 
Although dialysis treatment and patient outcomes have improved since the ESRD 
program began, much can and has gone wrong in facilities.  Several well-publicized 
events in the media and in letters from patient advocates have documented cases of 
patient harm and have questioned the systems in place to protect patients.6  In the course 
of our review of documents we came across several examples where patients were put at 
risk due to inappropriate treatment.  In our review of documents from the States and 
Networks we learned of cases where a patient received another patients hemodialyzer, 
putting him at risk for blood-borne diseases; a patient in cardiac arrest was put at risk as 
facility staff searched for a misplaced code cart; a patient was exposed to a toxic 
disinfectant through his bloodstream when hooked up to a reused hemodialyzer that had 
not been rinsed properly;7 a patient received a drug overdose that resulted in prolonged 
bleeding and subsequent hospitalization; several patients received blood transfusions 
when a facility ran out of the appropriate medicine to treat anemia; and a patients 
infected catheter was not removed in time, causing the patient to die of infection. 
Vulnerable Patient Population 
Dialysis patients are a vulnerable patient population that is growing.  Many dialysis 
patients are elderly and suffering from other complicated illnesses such as diabetes and 
hypertension.  Overall, the ESRD population is growing at a rate of 7 percent a year and 
for some of the more vulnerable types of patients, the growth rate is even higher.8  More 
importantly, dialysis patients depend on regular dialysis treatments for survival.  In the 
words of one physician, dialysis is intermittent, ambulatory life support. 
Variation in the Quality of Care 
HCFAs data indicate that a significant portion of dialysis patients fail to meet clinical 
practice guidelines developed by the National Kidney Foundation Dialysis Outcomes 
Quality Initiative.  For the last quarter of 1998, 20 percent of a national sample of 
hemodialysis patients did not meet the guidelines recommendation for the minimum dose 
of dialysis as measured by the Kt/V ratio.9  For the same period, 41 percent of 
hemodialysis patients failed to achieve a hemoglobin level that met or exceeded the target 
range recommended by the guidelines.10 
11 
External Review: A Call for Greater Accountability  OEI-01-99-00050  Scientific literature also suggests variation in the quality of care dialysis patients receive. 
Several studies have shown that mortality rates vary significantly among facilities, even 
after adjusting for patient characteristics such as age and diabetes.11  Other studies have 
shown variation at the patient and facility level in the delivered dose of dialysis.12  One 
recent study found that higher mortality rates at facilities were associated with lower 
delivered doses of dialysis, after adjusting for patient characteristics.13  This same study 
also found that free-standing facilities, as opposed to hospital-based facilities, and lower 
amounts of physician supervision were associated with increased mortality rates. 
Another study found that patients treated in for-profit versus non-profit facilities had a 20 
percent higher mortality rate and 26 percent lower rate of enrollment on a waiting list for 
a kidney transplant.14  The investigators of this study concluded, Greater oversight or 
competing incentives to improve quality may be necessary to ensure that cost 
containment is not so extensive that it affects patient outcomes adversely.15 
Marketplace Pressures 
The dialysis industry has grown significantly in recent years.  The number of dialysis 
patients grew from about 160,000 in 1992 to 230,000 in 1997, the number of dialysis 
facilities increased from about 2,000 to over 3,000  averaging about 200 new facilities 
each year.16  Most of this increase in facilities occurred among free-standing as opposed 
to the more traditional hospital-based facilities that receive an additional layer of 
oversight as part of the hospital.  About 78 percent of dialysis patients receive treatment 
in free-standing facilities.17  Moreover, through a series of mergers and acquisitions, there 
has been increased consolidation in the ownership of the facilities.  About 54 percent of 
dialysis patients receive treatment in facilities owned by one of three multi-national for-
profit corporations.18 
Along with growth and consolidation, the dialysis treatment environment is characterized 
by at least three other increasingly prominent forces: (1) increased competition for 
patients, (2) heightened concerns to contain costs,19 and (3) increased difficulty in finding 
and retaining experienced nurses and technicians in an increasingly competitive 
marketplace.  Individually and cumulatively, these forces have caused service disruptions 
that can and have jeopardized patient care. 
12 
External Review: A Call for Greater Accountability  OEI-01-99-00050  F I N D I N G S  
The major strength of the external oversight system is the use of 
standardized performance measures to encourage improvements in 
the quality of care. 
HCFAs performance data show improvements. 
HCFAs Clinical Performance Measures Project collects a set of performance measures 
annually on a national sample of dialysis patients.20  HCFA disseminates data to facilities 
that show national trends and Network variation.  These data can serve as a stimulus for 
facilities to examine their own performance and to assess how it can be improved.  The 
data show consistent improvements nationwide in patient outcomes since the project 
began in 1994.  The percentage of patients achieving a mean urea reduction ratio $65 
percent has increased from 43 percent in 1993 to 74 percent in 1998.  Similarly, the 
percentage of patients achieving a mean hematocrit >30 percent has increased from 46 
percent in 1993 to 83 percent in 1998.21  Even though these data are not facility-specific, 
Networks have drawn on these performance data to assess the overall performance of 
facilities in their region and to identify topics for regional quality improvement activities. 
Networks performance data also show improvements. 
Networks through quality improvement projects and ongoing initiatives, collect 
performance data from facilities to help stimulate improvements.  For example, one 
Network quality improvement project resulted in a 20 percent increase in the number of 
patients receiving the hepatitis B vaccine.22  Another Network project helped decrease 
the percentage of patients with inadequate peritoneal dialysis from 31 percent to 20 
percent.23  Several Networks have shown similar improvements by collecting and 
disseminating regularly a set of facility-specific measures; one Network even disseminates 
physician-specific reports.24 
Yet, the current system of oversight falls short in several respects. 
Standardized performance data are rarely used to hold individual facilities 
accountable. 
No requirement to collect a core set of facility-specific performance measures. 
Several entities, including HCFA, collect facility-specific performance data.  (See 
appendix B.)  However, these measures are housed across several databases, collected 
using different methodologies, and designed for different purposes.  Networks have some 
access to these measures.  States have almost no access.  HCFA has not 
13 
External Review: A Call for Greater Accountability  OEI-01-99-00050  established a facility-specific core data set that all facilities must report to one central 
location directly under HCFAs control.  The closest that HCFA has come is the Clinical 
Performance Measures Project, but it is not facility-specific.  On their own a few 
Networks collect facility-specific data, but this effort is limited to the facilities in their 
region. 
The two main barriers reported by Networks to collecting facility-specific data are limited 
resources and no HCFA requirement.  Networks are funded through statute.  Statute 
requires that 50 cents of the composite rate facilities receive for each treatment goes 
towards the Networks.25  Networks are not appropriated funds.  Many Networks may not 
have the resources to collect and analyze additional data.  Also, without a HCFA 
requirement, Networks do not think facilities will submit facility-specific data regularly. 
Difficulty identifying poor performers.  Without a national facility-specific core data 
set, most Networks and States are left with limited means of assessing the performance of 
individual facilities within their regions.  In the few instances where Networks collect 
their own set of facility-specific data, they are left without comparable national data. 
Facility-specific data are necessary to identify facilities that are well below the regional 
mean or the accepted standard of care.  Few Networks take full advantage of existing 
facility-specific data that they have access to and few Networks have a formal process for 
identifying outliers.  HCFA does not require Networks to establish quantitative criteria to 
identify poor performers using existing facility-specific data.  Networks complain that 
existing facility-specific data are limited, because they are too old, inaccurate, and not 
designed for performance assessment. 
Limited Network authority to correct poor performers.  Networks lack the authority 
to impose sanctions directly on facilities.  In the cases where facilities are not cooperative 
or fail to make improvements, Networks must rely on either HCFA or the State survey 
agencies to take enforcement actions.  Networks either can recommend to HCFA that it 
sanction a facility, or Networks can recommend to a State survey agency that it conduct 
a review of a facility.  However, we found that some Networks are reluctant to make 
recommendations to HCFA or the State survey agencies for several reasons.26  First, 
problems identified by the Networks may not fall directly under the Conditions for 
Coverage that HCFA and the States must rely upon when sanctioning a facility.  Second, 
HCFA and the States are limited in the types of enforcement actions they can take.27 
Finally, Networks reported cases where HCFA and the States did not adequately follow-
up with the Networks recommendations, leaving some Networks to conclude that 
referrals are futile.28 
Instead Networks typically seek to work with the facility collegially to correct the 
problem.  Such efforts are likely to involve a meeting with key staff to discuss the 
facilitys performance data and brainstorm about potential causes and solutions.  In some 
cases, the Network will ask a facility to prepare a corrective action plan and will then 
14 
External Review: A Call for Greater Accountability  OEI-01-99-00050  monitor adherence to that plan.  Networks reported that, in most instances, this approach 
is successful. 
Little sharing of data between Networks and State survey agencies.  The Networks, 
as we noted, tend to have little facility-specific data to share.  But even in cases where 
they have such data, they are not inclined to share it with the State agencies.  In response 
to our survey of Networks, only 3 of the 18 reported that they routinely share facility-
specific data with the States. 
We identified two major barriers to Networks sharing data with the States.  First, 
Networks fall under confidentiality laws that exempt them from Federal disclosure laws.29 
As such, Networks are reluctant to share data with the States because of concerns about 
eventual public disclosure.  Second, Networks are concerned about the States using the 
data to take punitive actions.  Networks officials fear that if the data are used in this way 
they will undermine their quality improvement efforts and their trusting relationships with 
facilities. 
With respect to State agencies, information they collect as a result of their surveys of 
dialysis facilities could be useful to the Networks.  But, even though much of this is 
public information, it does not tend to be shared with the Networks on a regular or timely 
basis. 
Minimal public disclosure.  Currently, neither HCFA nor the Networks make any 
facility-specific performance measures readily available to the public.  HCFA does 
disclose facility-specific cost reports on its website, but this information requires some 
manipulation before it can provide useful performance data.30  Networks, as we have 
previously mentioned, are exempt from public disclosure by statute.  HCFA and others 
do disclose to the public data aggregated at the Network and national level, and in some 
cases, at the State level.  Networks are especially reluctant to release facility-specific data 
to the public for fear of misinterpretation and of undermining internal quality 
improvement efforts.  Most States will disclose survey results upon request. 
The complaint systems serve as unreliable means for identifying and resolving 
quality-of-care concerns. 
Throughout this report we use the term complaints generically to include concerns 
brought forth by patients, staff, or other individuals. 
Barriers to lodging complaints.  Two basic barriers inhibit patient complaints about the 
quality of care.  First, dialysis patients find it difficult to complain about an individual or 
facility providing treatment that their lives depend upon.  Network officials, other renal 
professionals, and patient representatives stressed that fear of retribution deters patients 
from complaining.  The second major barrier is limited patient information and 
understanding about the technical aspects of their care.  For example, a previous Office 
of Inspector General study found that although 73 percent of all patients reported 
15 
External Review: A Call for Greater Accountability  OEI-01-99-00050  knowing there was a recommended level of adequate dialysis, only 36 percent could 
correctly identify the urea reduction ratio or the Kt/V as the test used to measure 
adequacy.31 
In many respects, the staff in dialysis facilities are in the best position to lodge complaints 
about continuing problems with the quality of care in a facility.  But as we were often 
reminded, staff also face significant deterrents to lodging complaints; such actions could 
put their jobs at risk and brand them as a trouble-makers, thereby jeopardizing future 
employment in the field. 
Network officials are aware of and often sympathetic to these barriers.  But, in general, 
their policies and practices make the barriers even more imposing.  First, they tend to 
discourage confidential complaints by stopping investigations short if complainants are 
unwilling to allow their name to be disclosed to the facility in question.  Networks 
reported that it is difficult for them to investigate complaints fully without disclosing the 
complainants name to the facility.  (Neither Networks nor States will release a 
complainants name without consent.)  Second, about half of the Networks require 
grievances to be in writing, before they take any action, unless it involves a life-
threatening situation even though HCFA policy states that it is not necessary.32  Finally, 
Networks, and even more so the States, conduct little outreach to inform, let alone 
encourage, patients or staff to use the complaint system.  The information that the 
Networks provide tends to be limited to posters sent to facilities and information packets 
sent to new patients.  We found little evidence that Networks or States convey to patients 
that the complaint system is an important safeguard. 
Limited investigations.  HCFA looks to the State survey agencies to investigate 
complaints that involve life-threatening situations or possible violations of the Medicare 
Conditions for Coverage.  The States conduct investigations on site that focus on the 
specific Medicare Conditions for which compliance is in question.  If State surveyors 
believe it is warranted, they can extend the complaint investigation into a complete 
Medicare certification survey.  Although HCFA has established complaints investigations 
as a top priority for States, the number of complaint investigations States conduct each 
year is minimal.33  In 1997 and 1998, when about 230,000 dialysis patients received 
treatment under the auspices of about 3,200 dialysis facilities, we found that the States 
conducted only about 260 complaint investigations each year. 
HCFA looks to the Networks to play a broader and a more front-line role in responding 
to complaints.  Networks receive complaints covering a wide range of issues related to 
patient care and sometimes refer complaints to the States involving life-threatening 
situations or possible violations of the Medicare Conditions.34  States also receive 
complaints directly. 
Little national information is available on how many and what kind of complaints the 
Networks handle.35  In an effort to gain some understanding of Network complaints, we 
conducted our own analysis of nine Network complaint logs for 1998.  We found that 
16 
External Review: A Call for Greater Accountability  OEI-01-99-00050  these nine Networks combined received over 700 complaints.  However, the majority of 
these complaints did not involve quality-of-care concerns.  About 45 percent were 
actually requests for information and 13 percent involved concerns expressed (typically 
by staff) about disruptive patients.  Of all the complaints, 25 percent concerned service 
quality (e.g. temperature of facility, waiting times, friendliness of the staff) and 15 percent 
technical quality (e.g., clinical care, adequacy of equipment).36 
In response to our survey, the 18 Networks reported that they investigated 170 
complaints in 1998, only 34 of which involved a site visit.  Most Networks encompass 
many States and have limited resources for in-depth complaint investigations.  Network 
investigations, in accord with HCFA instructions, typically facilitate quick resolution 
between the complainants and the facilities.  Networks address most problems by 
working collegially with facilities.  We also found that Networks rarely conduct (or have 
the resources to conduct) pattern analyses to identify trends in complaints with the intent 
of identifying and correcting systematic problems. 
Fragmented process for responding to complaints.  Working single-handedly, neither 
the States nor the Networks can tap the full potential of a complaint system that 
effectively addresses quality-of-care concerns.  Through their board membership, 
Networks have important clinical expertise in nephrology that gives them substantial 
ability to assess and follow up complaints regarding the adequacy of the clinical care 
being provided.  But the Networks have little authority to enforce corrective actions. 
The States, on the other hand, have enforcement authority for violations of the Medicare 
Conditions for Coverage, but tend to lack the clinical expertise concerning renal care. 
Little coordination occurs between States and Network.  The Networks do refer to the 
State agencies complaints which concern the Medicare Conditions.  We found that in 
1998 each Network referred, on average, three complaints to the States.  But, the 
Networks report that the State agencies do not routinely inform them of the results of 
complaint investigations or even whether they conducted an investigation.  Similarly, 
Networks themselves do not tend to be any more forthcoming in informing the States of 
their own investigations.  In the same vein, Networks and State agencies seldom 
undertake combined investigations in response to complaints about the quality of care.37 
Medicare certification surveys play a limited role in ensuring facilities meet 
minimum standards. 
HCFA relies solely upon the State survey agencies to conduct on-site certification 
surveys to ensure a facilitys compliance with the Medicare Conditions for Coverage.38 
States conduct an initial survey of all newly established facilities to ensure that they meet 
minimum standards.  Thereafter, States conduct recertification surveys to ensure ongoing 
compliance.  Both surveys, particulary the recertification surveys, provide an opportunity 
to examine the actual day-to-day practices of the facility.  Some of the major components 
of a dialysis facility survey include: examining the reuse of hemodialyzers and water 
treatment areas, interviewing patients and staff, observing personnel, and reviewing 
patient medical records and personnel files. 
17 
External Review: A Call for Greater Accountability  OEI-01-99-00050  The elapsed time between Medicare surveys is increasing.  In 1995, 20 percent of

ESRD facilities had not been

surveyed in the past three years.39

By the end of 1998, that number

had grown substantially to 44

percent of facilities not receiving a

survey in the past three years. 

(See figure 2.)  Ten percent of

facilities had not been surveyed in

6 years or more by the end of

1998.  The average elapsed time

between surveys had doubled

between 1994 and 1998, from

once every 1.7 years in to once

every 3.4 years40  In fact, during

1998, States surveyed only 17

percent of facilities.  This is a

dramatic decrease compared to

1993 when over 50 percent of

facilities received a survey.41

A major reason for the decline in

ESRD surveys is competing

Source: HCFAs OSCAR data 
budget demands.42  Nursing homes

and home health agencies both

have mandatory survey cycles established by Congress.43  As a result, nursing homes and

home health agencies receive funding priority over ESRD facilities, which lack such a

mandate.  In addition, ESRD facilities are included under the category of non-long term

care providers, which also includes non-accredited hospitals, psychiatric hospitals,

ambulatory surgical centers, and hospices.  All of these providers compete for the same

pool of resources allocated by HCFA.  Currently, non-long term care facilities appear

tenth on a list of 12 HCFA workload priorities for State agencies.44

Medicare Conditions for Coverage for dialysis facilities provide an inadequate

foundation for accountability.  Established in 1976, the Conditions fail to reflect major

changes in the delivery of dialysis services, in the organizational auspices of dialysis

facilities, and in the concepts of quality oversight and quality improvement.  During our

inquiry, the following emerged as particularly notable shortcomings:

<<	 The facility governing body is insufficiently accountable for the quality of care 
facilities provide.  The Conditions do not explicitly hold the governing body 
accountable for overall patient care and outcomes.45  In practice, responsibility is 
often diffused among administrators and distant parent corporations.  At times, this 
makes it difficult for the Networks and State survey agencies to get timely 
information and sustained attention to corrective actions. 
18 
External Review: A Call for Greater Accountability  OEI-01-99-00050  <<	 The medical director has limited authority and as such is inadequately 
accountable for the quality of care.  Medical directors and Network officials often 
stressed to us that medical directors tend to exert little influence over the day-to-day 
care offered in dialysis facilities and have little authority to do so.  They are 
particularly frustrated when attending nephrologists do not engage in quality 
improvement efforts or address situations where medical directors thought patients 
were receiving inadequate care.  These are serious limitations addressed only 
indirectly in the existing Medicare Conditions.46 
<<	 Facilities are not required to report electronically on standardized performance 
measures determined by HCFA.  The limited capacity of some facilities to provide 
electronic submission of data has inhibited Network initiatives to collect facility-
specific data.  Under HCFAs plans for collecting and using clinical performance 
data in the years ahead, it will be essential for facilities to meet standard 
specifications for electronic reporting. 
<<	 Facilities are not required to conduct their own quality improvement program. 
The Medicare Conditions only require facilities to monitor specific events and do not 
explicitly require facilities to continually improve care and/or to identify trends in 
care.  Without such a mandate, and in facility settings where the pressures of 
providing adequate day-to-day care are considerable, it is often difficult to devote 
much attention to deliberative efforts that would identify improvement needs, to 
collect and analyze data concerning those needs, and then to determine and monitor 
changes in facility practices. 
<<	 Facilities are not required to monitor patient satisfaction.  Patient satisfaction is an 
important, often overlooked dimension of quality.  The Medicare Conditions do not 
require facilities to routinely monitor patient satisfaction.  Some Networks have 
taken the initiative to develop and encourage the use of patient satisfaction surveys. 
Similarly some dialysis facilities and corporations have developed patient satisfaction 
surveys. 
State survey agencies have difficultly maintaining the expertise of surveyors. 
Facility, Network, and State agency staff view the Medicare surveys as an important part 
of external oversight.  However, they raise concerns about the skills of the surveyors. 
They stressed that dialysis surveys are highly technical, requiring knowledge not only of 
water treatment processes but also of the complexities of dialysis treatment.  As dialysis 
surveys become less frequent, surveyors are increasingly hard pressed to maintain their 
familiarity with dialysis facilities, let alone keep pace with technological advances. 
HCFA does require all surveyors to attend a basic training course specific to dialysis 
facilities before they can conduct dialysis surveys.47  HCFA also provides advanced 
training courses regularly.48  However, lessons learned in these courses may be forgotten 
if surveyors do not have the opportunity to use these skills regularly. 
19 
External Review: A Call for Greater Accountability  OEI-01-99-00050  Medical injuries are not systematically monitored. 
Medical injuries are attributable to the care provided to the patient, not to the patients 
underlying conditions.  Such injuries can happen even in the best of health care facilities.49 
Some dialysis corporations may have internal systems for addressing medical injuries, but, 
if they do, little is known about their scope and effectiveness.  Some States have adverse 
event reporting requirements, but they appear to be of little overall consequence to 
dialysis facilities.50  Facilities that are associated with hospitals accredited by the Joint 
Commission for Accreditation of Healthcare Organizations are subject to the 
Commissions Sentinel Event program for reporting adverse events, but as we have 
shown in a prior report, this system is still in an early stage of development.51  HCFA 
lacks any requirement that facilities establish their own, internal systems for identifying 
and analyzing adverse events or that they report such events to Networks or States.52 
HCFA Does Little to Hold Networks and State Survey Agencies 
Accountable for Their Effectiveness. 
Minimal assessment of Networks performance. 
Project officers in four regional offices are HCFAs main operational contacts with the 
Networks.  These project officers receive considerable information from the Networks. 
They get regular updates on the quality improvement projects that Networks are 
mandated to conduct.  They conduct periodic site visits, receive quarterly reports 
providing detailed updates on the Networks activities, and receive annual reports with a 
comprehensive summary of the years activities. 
However, this regular flow of information results in little substantive evaluation and 
feedback on the effectiveness of the Networks.  How effective are the Networks in using 
standardized performance data to foster overall improvement across facilities and, in 
particular, in poorly performing facilities?  How successful are they in operating a 
complaint system that is accessible, fair, and responsive to complainants?  We found few 
signs of probing, independent assessments of these and other such basic questions.  Nor 
does HCFA call for the Networks themselves to address such evaluative questions in 
more than a passing way. 
HCFAs most formal mechanism for evaluating the Networks is the year-end evaluation 
questionnaire that the project officers complete and send to the central office.  This is a 
three-page form that poses 13 performance-related questions, and in each case, calls for 
the project officer to indicate satisfactory, unsatisfactory, or comments attached.53 
In our review of the completed questionnaires for all 18 Networks in 1998, we found that 
in the total inventory of 234 questions, all but 2 were checked satisfactory.54 
20 
External Review: A Call for Greater Accountability  OEI-01-99-00050  Further HCFA does not hold the Networks accountable for how the facilities in their 
regions fare on HCFAs Clinical Performance Measures Project.  There are notable 
differences from Network to Network.  For example, across all 18 Network regions, the 
percentage of hemodialysis patients with a Kt/V $1.2 ranged from 74 percent to 87 
percent for the last quarter of 1998.  Similarly, the percentage of hemodialysis patients 
with hemoglobin levels >10 gm/dL ranged from 72 to 85 percent among the Networks.55 
In this context, it is important to note that HCFA gives the Networks little discretion to 
undertake a range of quality improvement activities targeted to the distinctive needs of 
their region.  Instead, HCFA requires them to conduct formal quality improvement 
projects that can take years to complete and that must follow a prescribed format. 
Minimal assessment of State survey agencies performance. 
HCFAs assessment of the performance of the State survey agencies is even less exacting 
than that for the Networks.  In the past, HCFA would conduct validation surveys, 
through which HCFA staff would review dialysis facilities shortly after a State 
certification survey.56  Recently, HCFA eliminated these in favor of periodically observing 
State surveyors performance and offering advice and assistance as applicable.  While the 
latter approach has potential and may well involve some useful informal assessment and 
feedback to the State surveyors, we found no evidence of substantive evaluation and 
feedback to the States on such key matters as the effectiveness of the surveys, the skill of 
the surveyors, and the adequacy of collaboration with the Networks. 
HCFA relies on State agencies to assess their own performance and, by working with the 
HCFA regional offices, to develop and implement their own quality improvement plans. 
This process is called the State Agency Quality Improvement Program (SAQIP). The 
program addresses State survey activities generally, and fails to specifically assess dialysis 
surveys.  The summary report that HCFA issues on SAQIP activities provides few 
meaningful insights into the challenges or successes of any one State.57 
Minimal public disclosure. 
HCFA offers no readily accessible public information (e.g, on the Internet) on any 
Network or State actions taken by either Networks or States to protect the public.  All 
Networks have websites, but they vary significantly in the amount and type of 
information that they post.  None publishes any information on complaints received and 
investigated at a particular facility or on any corrective actions pending against a 
particular facility.  Similarly, little information is readily available on the performance of 
States.  Survey results are available only upon request and are difficult to interpret. 
Results are not routinely posted on the Internet or in facilities. 
21 
External Review: A Call for Greater Accountability  OEI-01-99-00050  RR EE CC OO MM MM EE NN DD AA TT II OO NN SS  
The 230,000 patients receiving life-sustaining dialysis treatments rely upon the 
professionalism of their caregivers and the internal monitoring efforts of their facilities to 
provide high quality care and minimize risks.  Yet, documented variations in the quality 
of dialysis care and reported incidents of poor care reinforce the need for an external 
quality review system to serve as a safety valve for patients. 
As we have indicated, the quality oversight system carried out on HCFAs behalf by the 
Networks and State agencies has major shortcomings.  It is imbalanced, in that it stresses 
improving overall quality more than enforcing minimum requirements that protect 
patients from harm.  It is fragmented, in that Networks and State agencies rarely 
coordinate their efforts to foster patient protections.  And, fundamentally, it lacks 
sufficient accountability on the part of the Networks, the State agencies, and, most of all, 
the facilities themselves. 
HCFA should exert leadership to address these shortcomings.  In this section, we present 
two guiding principles and two recommendations that address how HCFA can provide 
this leadership.  In doing so, we stress that while HCFA has authority and leverage, it 
must approach the Networks and State agencies as partners who contribute to and share 
a commitment to high-quality dialysis care.  We also stress that external oversight must 
be conducted in ways that minimize the regulatory burden on dialysis facilities and seek 
to complement the facilities own internal quality review efforts.  In some cases HCFA 
has already undertaken initiatives that move in the directions we call for. 
We present our recommendations in the context of the current oversight system in which 
HCFA relies upon the Networks and State survey agencies.  We believe that this system 
has the potential to provide effective oversight.  Yet, we recognize and suggest that 
HCFA take into account that a system for private accreditation of dialysis facilities, if 
held properly accountable, can be a valuable complement  particularly because it can 
readily adapt state-of-the art standards that respond to changes in dialysis delivery and 
evaluation methodology.58 
In making our recommendations, we must stress that our focus is on the external quality 
oversight of dialysis facilities and not on the Medicare payment policies concerning 
dialysis treatment.  We note that because in the course of our interviews and in the 
professional literature many parties have expressed concern that the fragmented nature of 
the payment system and the current rate of reimbursement for dialysis treatment are 
themselves factors that may adversely effect the quality of dialysis care.  We offer no such 
evidence in this report, but recognize that they are factors warranting attention, as has 
been pointed out by the Institute of Medicine and the Medicare Payment Advisory 
Commission.59 
22 
External Review: A Call for Greater Accountability  OEI-01-99-00050  Finally, we recognize that our findings and recommendations suggest a sense of urgency 
in improving the quality oversight of dialysis facilities.  At the same time, we recognize 
that in an environment of limited resources and competing priorities, all the actions we 
call for cannot readily be taken.  We present them as a blueprint for actions that can be 
carried out over a reasonable period of time. 
GUIDING PRINCIPLE 1.  HCFA should steer external oversight of the 
quality of dialysis facilities so that it reflects a balance between 
collegial and regulatory modes of oversight. 
In our work on external quality oversight of various kinds of health care providers, we 
have found it helpful to consider oversight efforts in terms of a continuum, characterized 
by a collegial approach on one side and a regulatory approach on the other.  External 
reviewers in the collegial mode focus on educating and improving performance; those in a 
regulatory mode focus on investigating and enforcing of minimum requirements.  In the 
continuum below, we present the major characteristics we associate with each mode. 
Figure 2. A Continuum of External Review 
Collegial Mode  Regulatory Mode 
(Educate and Elevate)  (Investigate and Enforce) 
Cooperative  Challenging

Flexible  Rigid

Foster Process Improvements  Enforce Minimums

Guidance  Directive

Trusting  Skeptical

Professional Accountability  Public Accountability

Confidentiality  Public Disclosure

Systems Focus  Outlier Focus

Improve Patient Outcomes  Minimize Preventable Harm

Both approaches have value and ardent supporters.  But, as the National Roundtable on 
Health Care Quality and others have found, neither approach is backed with sufficient 
data to warrant concentrating on one at the expense of the other.60  A credible system of 
external review must, therefore, reflect a reasonable balance between the two. 
In the current system of oversight, the State agencies clearly operate on the regulatory 
side of the continuum.  They are public bodies that as HCFAs agents perform on-site 
surveys that can serve as the basis for regulatory actions.  But as we have shown, the 
23 
External Review: A Call for Greater Accountability  OEI-01-99-00050  frequency of those surveys has declined markedly, resulting in only 17 percent of all 
dialysis facilities being surveyed in 1998. 
In contrast to the State agencies, the Networks function on the collegial side of the 
continuum.  They are governed primarily by physicians who are associated with 
individual facilities, who have expertise on dialysis treatments that State agency 
representatives lack, and who stress education and improvement objectives.  As we have 
shown, their collegial orientation, which can often be effective, is apparent in how they 
use standardized performance data and respond to complaints.  Some Networks do 
reflect a greater readiness to take a more challenging approach to facilities, but their 
limited authorities, resources, and mandate from HCFA preclude them from moving very 
far in this direction.  In working with the Networks, HCFA in recent years has reinforced 
their collegial role, viewing them increasingly as functioning in a penalty free 
environment, while the State agencies serve as the regulators. 
The Networks have much to offer in using collegial approaches to foster improvements in 
the quality of care.  Given their greater expertise on dialysis matters and their closer 
relationships with dialysis facilities, it would seem to be desirable for HCFA to look to 
them to tilt toward the collegial end of the continuum.  But it is not feasible for a Federal 
oversight entity not to have some clear requirements for enforcing minimum standards of 
performance.  HCFA, we believe, should exert a steering role that, over time, achieves a 
reasonable balance between the two approaches to oversight.  In our recommendations, 
we offer specific suggestions on how that can be done. 
GUIDING PRINCIPLE 2.  HCFA should steer the external oversight of 
dialysis facilities so that Networks and State survey agencies 
collaborate more effectively. 
As we have shown, the Networks and State agencies operate in two separate realms and 
rarely interact.  Given the crucial and often interrelated roles that both play as HCFAs 
agents, it is vital that HCFA provide direction that facilitates better collaboration. 
Through a clear delineation of their mutual roles, specific operational mandates, support 
for demonstration efforts, sharing of information about promising approaches, and 
perhaps other ways, HCFA can steer the efforts of the Networks and State agencies in 
ways that foster more frequent and effective collaboration.  The joint efforts taking place 
in Texas illustrate some of the potential that exists.  (See our companion report, External 
Quality Review of Dialysis Facilities: Two Promising Approaches.) 
24 
External Review: A Call for Greater Accountability  OEI-01-99-00050  RECOMMENDATION 1.  HCFA should hold individual dialysis facilities 
more fully accountable for the quality of care. 
1a.  HCFA should revise the Medicare Conditions for Coverage for dialysis 
facilities so that they serve as a more effective foundation for accountability. 
The current Conditions are close to a quarter century old.61  It is time for HCFA to 
update and reinforce them as a tool for holding dialysis facilities accountable for the 
quality of care they provide.  A number of years ago, HCFA proposed a set of revisions 
that reflected some progress in this direction.  But that effort stalled.  We recommend 
that HCFA revise the current Conditions so that, at a minimum, they: 
<<	 Strengthen the accountability of the dialysis facility governing body.  The 
governing body should be held clearly accountable for the overall quality outcomes 
provided by the facility.62  Moreover, since most dialysis facilities are now part of 
national or multi-national corporations, the governing bodies should ensure that 
authoritative representatives are readily available to respond to queries and/or visits 
by State survey agencies or Networks.63 
<<	 Reinforce the accountability of the dialysis facility medical director for patient 
care.  While the governing body of the facility is the basic source of accountability, 
the medical director should clearly be empowered as the on-site agent most directly 
responsible for the quality of care being delivered.  In this capacity, the medical 
director should clearly have the authority to develop and monitor quality 
improvement efforts, to serve as an educational resource for medical and nursing 
staff, and, where individual care staff are not performing adequately, to bring that to 
the attention of the facilitys designated governing authority.64 
<<	 Require facilities to report electronically on standardized performance measures 
determined by HCFA.  HCFA must make clear a facilitys obligation to report 
facility-specific patient outcome data to a designated entity or entities on a national 
set of performance measures.65  As HCFA continues to focus more on performance 
measures, facilities must submit their data electronically in order to make this task 
feasible and allow for timely analysis and dissemination of the data. 
<<	 Require dialysis facilities to conduct their own quality improvement program.  An 
internal quality improvement program serves as a valuable complement to network-
wide or national improvement efforts.  It is a mechanism for addressing the 
distinctive needs of a facility and of fostering a culture of continuous improvement.66 
25 
External Review: A Call for Greater Accountability  OEI-01-99-00050  <<	 Require dialysis facilities to establish internal systems for identifying and 
analyzing the causes of medical injuries and medical errors.  Injuries associated 
with patient care will happen from time to time and a facility must be alert to 
spotting them and learning from them.  Such internal systems help protect patients 
from harm. 
<<	 Require dialysis facilities to monitor patient satisfaction.  Over the past 25 years, 
patients have come to play an increasingly important role in their own health care, 
and techniques of assessing patient satisfaction have become increasingly 
sophisticated.  Given that, it is reasonable to expect dialysis facilities to integrate 
patient satisfaction as an element in their own quality improvement efforts. 
Moreover, an ongoing mechanism for monitoring patient satisfaction can serve can 
serve as a way of surfacing patient concerns that complaint systems do not.67 
1b.  HCFA should use facility-specific performance measures to encourage 
facilities to improve the quality of care and to help ensure facilities meet 
minimum standards. 
We recommend that HCFA move in the direction of collecting and disseminating 
facility-specific performance data and of using such data in a balanced fashion  for 
both improvement and enforcement purposes.  HCFA has made progress in developing 
and using performance measures that provide the basis for assessing the quality of dialysis 
care.  But, thus far, HCFA has focused on using performance measures almost 
completely for improvement purposes by focusing on national and regional trends.  It is 
time, we believe, to build on this progress by using performance measures as a key 
mechanism for holding individual facilities more accountable for the care they provide. 
Identify a core set of performance indicators to collect regularly on all patients 
from facilities.  HCFA, with input from the professional community and from patients 
and patient advocates, should determine a core set of clinical indicators that will be used 
to help facilities, Networks, State survey agencies, and the public assess the quality of 
care at a facility while ensuring patient confidentiality.  Once established, this core data 
set should be continually examined and revised so that it includes the most pertinent, 
reliable measures.  HCFA has already implemented core data sets for other providers, 
such as nursing homes and home health agencies, which serve vulnerable patient 
populations.  It is time to do the same for dialysis facilities.  In the interest of accuracy 
and timeliness, HCFA should develop a system that collects the performance data on a 
regular basis directly from patients medical records.  At a minimum HCFA should collect 
these measures annually and work towards quarterly reporting. 
HCFA has already begun to take significant steps toward the goal of facility-specific data. 
Namely, HCFA has invested in an extensive computer infrastructure for electronically 
linking facilities, Networks, and HCFA together. This system will make a data collection 
of this size more feasible.68  HCFA has also created the National ESRD Core Data Set 
Initiative to begin to develop a core data set for dialysis facilities. 
26 
External Review: A Call for Greater Accountability  OEI-01-99-00050  Already, HCFA has funded the creation of three facility-specific reports.  One facility-
specific report is to be used by Networks and the facilities for quality improvement 
purposes.69  HCFA has also developed two other facility-specific reports that will contain 
performance data, one for State survey agencies and one for consumers.70  These three 
reports rely largely on HCFA billing data for clinical indicators such as urea reduction 
ratios, hematocrit levels, and patient mortality. 
Disseminate comparative facility-specific reports to facilities, Networks, State 
survey agencies, and the public containing all the performance indicators in the 
core set.  Once HCFA has a data collection system in place, it should generate quarterly, 
facility-specific reports that compare facilities to their own past performance and to their 
peers at the State, Network, and national levels for each of the performance indicators in 
the core set.  Where possible, HCFA should account for case mix differences among 
facilities.  At a minimum, this should include patient demographic information. 
Eventually, HCFA should generate similar reports at the physician level. 
The data in these reports should be 
Figure 3. The core set of facility-specific 
made readily available to all parties: 
performance measures should be available to: 
the facilities, the Networks, the State 
agencies, and, through Internet 
<<	 facilities to support internal quality 
websites (and perhaps even postings  improvement activities, 
in facilities), the general public.  Such 
an effort will require HCFA to ensure  <<	 Networks to support regional quality 
improvement activities and to identify outliers 
patient confidentiality and may call 
for further review, 
for statutory changes.  As we 
previously mentioned, HCFA already 
<<	 State survey agencies to help guide and 
has an effort underway to develop a  inform the survey process, and 
core data set, the National ESRD 
Core Data Set Initiative.  However,  <<  the public to foster public accountability. 
HCFA has not yet determined 
specifically how this data set will be 
used by all the various parties. 
We also recognize the sensitivities associated with such widespread release of this 
information.  The data, many note, can be misleading.  For instance, some patients may 
not choose to have optimum dialysis treatments because they wish to spend less time on 
dialysis.  To help foster the responsible use of the performance data, we suggest that all 
quarterly performance reports include a prominent statement up front noting the 
limitations of the data and emphasizing that performance data are indicators, not absolute 
markers of quality. 
At the core, the performance data can help reviewers ask better, more targeted questions 
about quality.  If a facilitys performance on a measure or a cluster of measures has been 
declining over time or is consistently less than that of other facilities with a similar patient 
mix, then it is reasonable to ask why and to do so in a public forum.  The answers 
27 
External Review: A Call for Greater Accountability  OEI-01-99-00050  might well indicate that such a facility is actually a top-quality one, with sound reasons 
for its statistical ranking.  Or, they could indicate that the facility does have problems 
warranting attention. 
<<	 Facilities.  Perhaps the most compelling reason for distributing facility-specific 
standardized performance data is to spur internal improvements by the facilities 
themselves.  Such data can help leadership in the facilities gain a better sense of how 
the facility is performing and can provide the leadership with valuable leverage for 
initiating change.  This would appear particularly true in competitive markets. 
<<	 Networks.  Once equipped with facility-specific performance data, Networks will 
have a valuable additional tool to guide their external oversight of facilities.  HCFA 
should require that Networks use these data for both improvement and enforcement 
purposes.  It should look to the Networks to take the lead in identifying best 
practices, conducting educational and technical assistance efforts, and other 
initiatives that foster continuous improvement in the quality of care provided at 
dialysis facilities.  At the same time, HCFA should look to the Networks to work 
with outlier facilities that have continued poor performance that cannot be explained 
by extenuating circumstances.  HCFA should also make clear that this may well call 
for imposing corrective actions, or perhaps, referrals to the State survey agencies or 
HCFA itself. 
<<	 State survey agencies.  The professional renal community is concerned about the 
potential use of performance data to trigger State surveys.  Their concern centers 
around the credibility of such information in identifying problem facilities and in the 
use of performance data for regulatory as opposed to improvement purposes.  We 
recognize the danger of drawing upon performance data too literally as an alarm-call 
for a regulatory-focused State survey.  Yet, we see no basis for not regularly sharing 
such data with the State surveyors.  Together with other information that the State 
may have on a facility, it can help guide the surveyors when they do survey a facility 
or, in cases when the information seems compelling enough, influence when they 
decide to conduct a survey.71 
<<	 The public.  With the rapid advances taking place in information and medical 
technology, patients and consumers, in general, are becoming increasingly active 
partners in their own health care.72  Even though many dialysis patients may not be 
inclined to draw on facility performance data, many of them and many family 
members, surely would be interested in such data.  Moreover, the influence of public 
release would likely contribute to how seriously facilities respond to the data.  HCFA 
has moved in this direction in providing data on the performance of nursing homes 
and managed care organizations.73  It should do the same for dialysis facilities. 
HCFAs posture toward performance data should be that if they are worth 
collecting, they are worth disclosing. 
28 
External Review: A Call for Greater Accountability  OEI-01-99-00050  1c.  HCFA should strengthen the complaint system for dialysis patients and 
staff. 
Work with the Networks and the State survey agencies to establish an effective 
complaint system.  On the basis of this inquiry and our prior inquiries of external quality 
oversight of health care providers, we have developed a template for an effective 
complaint system.  Below, we identify and explain the eight key elements of that 
template.  We present it here as a frame of reference for the kind of system that HCFA 
should seek to establish in the dialysis field. 
Table 2. Template for an Effective Complaint System 
Element  Description 
Accessibility  Makes efforts to inform potential users of the system and is easy to use. 
Objectivity  Respects the rights of all parties involved. Conducts unbiased investigations. 
Investigative Capacity  Has access to clinical expertise and has sufficient resources and authority to 
thoroughly review and evaluate complaints, including the ability to go on-site 
whenever necessary. 
Timeliness  Complaint investigations conclude within a reasonable time frame. 
Responsiveness to  Complainants receive substantive information about the process and any 
Complainants  resulting actions. 
Enforcement Authority and  Has the authority to hold facilities and individuals accountable when 
Follow-up  complaints are substantiated. Follows up with appropriate corrective actions. 
Improvement Orientation  Uses complaints to help identify opportunities for improvement and 
prevention. 
Public Accountability  Facility-specific complaint information is available to the public so that they 
can be aware of any disciplinary actions or any past problems at a particular 
facility. 
Conduct pilot projects to test ways in which the Networks and the State survey 
agencies could work together to create an integrated complaint system.  Given the 
fragmented nature of the current complaint systems, we recognize that even at best it is 
likely to take some time to develop a system that as a whole reflects the characteristics of 
the above template.  Thus, we urge HCFA first to convene representatives from the 
Networks and State survey agencies to identify ways in which these two entities can 
work together most constructively, drawing on their respective strengths.  Secondly, we 
urge HCFA to conduct pilot efforts through which Networks and State agencies 
implement a unified complaint system based on our template.  The results of such pilots 
could help guide the efforts of other Networks and States and, over time, could provide 
the basis for explicit expectations incorporated in HCFA contracts with both the 
Networks and States. 
29 
External Review: A Call for Greater Accountability  OEI-01-99-00050  Develop a common instrument that facilities and others could use to assess patient 
satisfaction.  For many patients, an anonymous response to a patient satisfaction survey 
may serve as a safer vehicle for expressing concern than a formal complaint to a facility, 
Network, or State agency.  We have already called for HCFA to revise the Medicare 
Conditions for Coverage so that facilities are required to conduct their own assessments 
of patient satisfaction.  Given the importance of this kind of effort, we also call upon 
HCFA to exert national leadership to facilitate the development of a common instrument 
that dialysis facilities could use to assess patient satisfaction.  This could draw upon the 
instruments that some dialysis corporations have already developed and use for their own 
internal monitoring efforts.  HCFA could make such an instrument available to facilities 
for their own use.  HCFA could also test such an instrument on a national, Network, or 
even facility-specific basis.  Recently, the Medicare Payment Advisory Commission made 
a similar recommendation.74 
1d.  HCFA should enhance the role of Medicare on-site certification surveys. 
Determine an appropriate minimum cycle for conducting Medicare certification 
surveys of dialysis facilities.  Routine on-site surveys of dialysis facilities are important 
to help ensure that facilities comply with minimum standards outlined in the Medicare 
Conditions for Coverage.75  But, as we have shown, the elapsed time between the State 
surveys has been growing, with the result that close to half of all facilities have not been 
surveyed within a 3-year period.  As a result, surveyors have difficulty maintaining their 
skills.76  By contrast, nursing homes and home health agencies, which also serve 
vulnerable populations, are surveyed according to a congressionally mandated cycle.  By 
determining an appropriate minimum cycle for dialysis facilities, HCFA will increase the 
attention that dialysis quality issues receive and will enable surveyors to better maintain 
their competencies. 
Conduct pilot tests to determine the potential of Network and State joint initial 
certification visits of dialysis facilities.  All new facilities must undergo an initial 
certification visit by the State survey agency.  We suggest that this initial review presents 
a major opportunity for State agencies and Networks to bring together their respective 
strengths and ensure that the facilities have in place the necessary elements to provide 
top-quality dialysis care.  We recognize that at the time of initial reviews few patients are 
receiving treatment at the facility and therefore major problems rarely are uncovered.  We 
think that initial reviews provide an opportunity for the Networks and States to work 
together cooperatively without the pressures associated with a for-cause investigation. 
Such a joint effort would get the two entities more accustomed to working together and 
could therefore have residual benefits for their other oversight functions. 
1e.  HCFA should facilitate the development of publicly accountable means for 
identifying serious medical injuries and analyzing their causes. 
We have already recommended that HCFA require facilities to develop their own, 
internal mechanisms for addressing medical injuries and medical errors.  It is essential, 
30 
External Review: A Call for Greater Accountability  OEI-01-99-00050  we believe, for this internal safeguard to be complemented with an external, publicly 
accountable means for addressing adverse events resulting in death or serious harm while 
ensuring patient confidentiality.  The Institute of Medicine recently called for a mandatory 
national system for reporting of such adverse events in hospitals and other health care 
facilities.77  Given that dialysis treatments are paid for primarily by Medicare funds, and 
that HCFA has the major responsibility for the external quality oversight of the facilities, 
dialysis facilities are an ideal candidate for testing this kind of reporting system.  The 
system should provide for the analysis of adverse events and for any necessary corrective 
actions at the facilities involved.  It should also involve the maintenance and regular 
analysis of a data base of such events in order to identify injury-prevention strategies that 
could be shared across facilities. 
In particular, we suggest that HCFA work with the Networks to establish pilot efforts to 
conduct such monitoring.  Those pilots should test ways to identify major adverse events 
occurring in dialysis facilities that trigger subsequent analyses that shed light on (1) the 
causes of the events in those facilities and (2) the broader prevention strategies that can 
be taken across facilities. In any such pilot effort, HCFA should require that collaborative 
arrangements be made with the State survey agencies.78 
RECOMMENDATION 2.  HCFA should hold the Networks and State 
survey agencies more fully accountable for their performance in 
overseeing the quality of care provided by dialysis facilities. 
The Networks are private, federally funded contractors accountable to HCFA for their 
performance.  The State survey agencies are public bodies accountable to their States 
governors and legislatures, but also to HCFA for the services they are providing on 
behalf of Medicare beneficiaries.  If HCFA is to hold the facilities more accountable as 
we called for in the prior recommendations and if it is to continue to rely upon the 
Networks and State agencies as its main agents toward that end, then it must also find 
ways to hold those agents more accountable.  Below, we set forth specific actions HCFA 
can take. 
2a.  HCFA should issue policy guidance delineating the distinctive roles of the 
Networks and State survey agencies in quality oversight and providing direction 
on how they should collaborate. 
HCFA should clearly state that the Networks serve as its primary agents in fostering 
continuous quality improvement in the care provided to dialysis patients, but yet must 
also support enforcement efforts.  Similarly, it would be helpful for HCFA to clearly state 
that the State survey agencies serve as HCFAs primary agents in enforcing compliance 
with the Medicare Conditions for Coverage, but also must support improvement 
opportunities.  With the two entities having a mutual appreciation of these distinctions, 
the stage is more effectively set for effective joint efforts  for a more effective 
oversight process that marries the clinical expertise of the Networks with the 
31 
External Review: A Call for Greater Accountability  OEI-01-99-00050  regulatory powers of the State agencies.  HCFA can convey this in two ways.  For 
Networks, their contracts, particularly in the section explaining HCFAs Health Care 
Quality Improvement Program, would seem to be a particularly appropriate vehicle.  For 
the State agencies, the annual budget call letter would appear to be the most appropriate 
forum. 
We recognize that there are significant barriers to achieving collaboration between the 
Networks and the States.  As we have already mentioned, Networks and States take 
markedly different approaches to oversight.  Also limited resources make it difficult for 
the States and the Networks to have face-to-face meetings.  This may be even more 
difficult for the Networks because most Networks cover multi-state regions.  Finally, 
HCFA needs to address the issue of confidentiality and if necessary request statutory 
changes so that the Networks and the States can disclose information to one another and 
to the public. 
HCFA should also target, for both the Networks and State agencies, particular spheres of 
activity in which collaborative arrangements are not only desirable, but also necessary. 
HCFA should go beyond the general statements on coordination, as now appear in the 
Network contracts, and offer firm direction.  HCFA should then hold both parties 
accountable for adhering to that direction.  At a minimum, the Networks and State 
agencies should be held accountable for collaboration in the following four areas: 
<<	 Sharing facility-specific data.  Such data are important vehicles for facility self-
improvement.  But they also can be useful (if not necessarily determinative) in 
informing State on-site surveys. 
<<	 Sharing State survey results.  Similarly, results of the State surveys can be helpful 
to the Networks as they carry out their quality improvement efforts and as they 
address specific complaints involving individual facilities. 
<<	 Working together in addressing complaints.  To help protect patients, the 
Networks, and State agencies should agree on when to make referrals to one another 
involving complaints.  The pilot efforts we called for earlier can be helpful here. 
<<	 Consulting one another on areas of expertise.  States and Networks both need to 
be valued for their perspective and expertise.  Networks could help surveyors target 
facilities for surveys and help monitor and correct deficiencies involving the quality 
of care.  Similarly, States could help Networks enforce minimums and identify 
regional trends.  To make sure this occurs, HCFA should establish guidelines for 
when Networks and States should solicit the advice or assistance of the other. 
One way in which HCFA can facilitate collaboration between the Networks and States is 
to convene forums in which HCFA, Network, and State officials come together to 
discuss the approaches to collaboration, the barriers that inhibit them, and actions that 
might be taken to overcome such barriers.  The forums could also provide a good venue 
32 
External Review: A Call for Greater Accountability  OEI-01-99-00050  to showcase promising approaches to collaboration that some Networks and States have 
already undertaken. 
2b.  HCFA should foster greater accountability of the Networks. 
Develop, with input from the Networks, a system for performance-based 
evaluations of the Networks.  This system would have to be established from the 
ground up since no such system is in place now.  The current evaluations of Network are 
rudimentary, more of an accounting of activities than an evaluation of performance.  We 
call for a reinvention of this entire approach in a way that minimizes routine annual 
reporting burdens and maximizes opportunities for substantive assessment and 
continuous improvement. 
We suggest that, at least at the start, this reinventing effort focus on two central 
questions: 
<<	 How effectively are Networks drawing on standardized performance data to 
improve the overall clinical performance of facilities in their region and to ensure 
that poor performers meet minimum standards of care?  Given the development of 
increasingly sophisticated clinical performance measures for facilities, it is reasonable 
to use them as key references in assessing the Networks own performance.  HCFA 
has moved in this direction with the Medicare Peer Review Program.  It would 
appear to be timely to do the same for Networks. 
<<	 How effectively are Networks using a complaint system as a quality-of-care 
safeguard?  The template we developed offers eight specific elements that can be 
examined to help answer this question. 
As HCFA puts in place a performance-based evaluation system, it should give the 
Networks increased flexibility in how they use their resources.  Such flexibility 
should enable Networks to develop improvement projects, intervention strategies, 
educational efforts, and other initiatives that are most pertinent to their region. 
The aim should be to find reasonable ways of holding Networks more 
accountable for results that make a difference in patient care while giving them 
added discretion in tailoring their efforts to the needs and characteristics of their 
regions.  Providing Networks with the added flexibility we call for need not 
preclude developing a nationwide quality improvement project that all Networks 
participate in, if the rationale for that effort were sufficiently compelling. 
Increase public disclosure of information on the Networks.  As HCFA proceeds in 
developing an evaluation system as we call for above, it should also develop a core set of 
information on Network activities and performance that would be readily available to the 
public, preferably on the Internet  either on HCFAs own web site or on the Networks 
web sites or posted in facilities.  Such disclosure can be particularly important in helping 
the media, advocates, patients, and other interested parties understand how Networks use 
33 
External Review: A Call for Greater Accountability  OEI-01-99-00050  performance data to improve dialysis care and of how they handle complaints.  In the 
process, it reinforces the point that publicly-funded Networks are accountable to the 
general public as well as to HCFA. 
2c.  HCFA should foster greater accountability of the State survey agencies. 
Establish a means to periodically assess the State surveys.  One way HCFA could 
better assess the State surveyors is to observe more State surveys.  This provides HCFA 
with the opportunity to provide direct feedback to surveyors and can be more instructive 
and timely than validation surveys.  However, because of the technical nature of these 
surveys, it may be difficult for HCFA personnel to develop and maintain the expertise to 
constructively assess State surveys.  In this regard, HCFA should consider developing a 
small group of contracted, experienced dialysis surveyors that it could draw upon to 
periodically observe State surveys as well as to investigate complaints as needed.  For 
years, HCFA has relied upon a panel of contracted psychiatric surveyors to survey 
psychiatric hospitals.  A similar mechanism could be used for the oversight of dialysis 
facilities. 
Increase public disclosure of information on the State survey agencies.  Disclosing 
information about the activities and performance of the State survey agencies is just as 
important as for the Networks.  Particularly relevant would be information on the number 
of surveys conducted, the specific facilities surveyed, the type of deficiencies found, and 
the corrective actions taken.  As with the Networks, HCFA could post this and other 
pertinent information on its own website or call for the States to post it on their own or 
even post it within the facilities as is the case for nursing homes.79 
34 
External Review: A Call for Greater Accountability  OEI-01-99-00050  C O M M E N T S   O N   T H E   D R A F T  R E P O R T  
We received comments on the two draft reports from HCFA and three additional outside 
parties: the Forum of the End Stage Renal Disease Networks, the Association of Health 
Facility Survey Agencies, and the American Association of Kidney Patients.  Based on 
the comments we changed one recommendation and made several technical changes to 
the report.  We include the complete text of the comments in appendix C.  Below we 
summarize the comments and, in italics, we offer our responses. 
HCFA Comments 
HCFA generally supported our findings and recommendations and responded by 
submitting a detailed action plan.  The action plan outlines HCFAs commitment to 
collect and disclose facility-specific performance data, increase on-site surveys, revise the 
Conditions for Coverage, strengthen the complaint process, and explore ways to 
implement a system to monitor adverse events.  HCFA indicated that it intends to 
establish minimum performance standards for some clinical outcomes.  HCFA did take 
issue with our recommendation to require joint Network-State initial certification surveys 
of facilities.  HCFA also expressed concerns with assessing patient satisfaction, given a 
likely low response rate. 
We find HCFAs detailed action plan to be a positive step toward strengthening the 
system of oversight for dialysis facilities.  We caution HCFA not to include specific 
performance measures or minimum thresholds within the Conditions for Coverage.  This 
will prevent timely updates as scientific knowledge advances.  We believe that measures 
with minimum thresholds would be more aptly laid out in provider agreements with 
facilities.  With regards to HCFAs concern about joint Network-State surveys, we 
revised the recommendation to state that HCFA should first conduct pilot tests to 
determine the effectiveness of this approach rather than requiring it.  We recognize the 
shortcomings of such an approach, but we maintain that initial certification surveys 
offer a less threatening environment compared to a for-cause survey.  Thus, Networks 
and States may find it easier to work together.  We also think initial certification surveys 
are a good opportunity for the facility to meet both the Networks and the States before a 
problem arises.  We encourage HCFA to move forward with assessing patient 
satisfaction even given the likelihood of low response rate.  Finally, we want to further 
stress that HCFA release any and all facility-specific data that it collects to the public. 
Forum of the End Stage Renal Disease Networks Comments 
The Forum agreed with the majority of our findings but expressed concerns over several 
of our recommendations.  The Network took issue with our finding that Networks rarely 
target poor performing facilities.  It emphasized that Networks and States approach such 
facilities in different ways and both approaches are valuable.  It cautioned against 
35 
External Review: A Call for Greater Accountability  OEI-01-99-00050  specifying outcome targets in the Conditions for Coverage.  The Forum raised concerns 
that efforts to monitor adverse events, patient satisfaction, and the public release of 
performance data may undermine the collegial role of the Networks.  It suggested that 
initial certification surveys may not provide the best opportunity for joint Network and 
State surveys and suggested instead joint surveys of poor performers.  It also took issue 
with our recommendation for developing a performance-based evaluation mechanism for 
the Network without a similar requirement for the States.  Finally, it pointed out the 
Networks role in monitoring transplant centers was not addressed. 
We recognize that some Networks are targeting poor performing facilities, but our 
evidence shows that many Networks are not and that many do not have reliable facility-
specific data to identify such facilities.  We want to reiterate that the Networks and 
States both have responsibilities to ensure minimums and to improve the overall 
performance.  It is not feasible at this time for the Networks to work exclusively in a 
non-punitive manner.  We believe that the Texas example presented in our second report 
demonstrates that Networks and States can work in both realms, each with their 
respective emphases.  We agree that joint Network-State surveys of poor performers may 
be valuable and may be an option that HCFA would want to test along with joint initial 
certification surveys.  Given the emphasis of the Networks on quality improvement and 
the States emphasis on enforcing minimums, we think that it is feasible to hold the 
Networks accountable for improving the performance of their facilities.  We call for 
States to be held accountable for their role in enforcing minimums.  Finally, we agree 
that the oversight of renal transplant centers is important, but that issue was beyond the 
scope of this inquiry. 
Association of Health Facility Survey Agencies Comments 
The Association of Health Facility Survey Agencies (AHFSA) agreed with the majority 
of our findings and recommendations, but indicated that we failed to provide any 
discussion of funding issues.  Specifically, it called for additional funding for States to 
conduct more surveys.  AHFSA also offered several additional recommendations that 
provide more operational approaches to our recommendations.  It supported the notion 
of greater collaboration between the Networks and the States, the public release of 
facility-specific outcome data, and called for the Conditions for Coverage to require 
reporting of adverse events to the States. 
We acknowledge in the report that competing budget demands is a major reason for the 
lack of surveys and recognize that many of recommendations will require additional 
funds.  We address the concern about funding of the State agencies by calling for HCFA 
to determine an appropriate minimum cycle for conducting surveys.  HCFA itself 
addressed this issue in its comments by noting that the Presidents Budget for FY 2001 
calls for a substantial increase in funding for ESRD surveys.  However, our 
recommendations require more than just additional funding  they also require strong 
leadership on the part of HCFA. 
36 
External Review: A Call for Greater Accountability  OEI-01-99-00050  American Association of Kidney Patients Comments 
The American Association of Kidney Patients (AAKP) strongly agreed with our 
recommendations and believed that our recommendations could result in better care for 
patients.  AAKP pointed out its own concerns with the variability among Networks and 
States.  It believes that the greater accountability we call for will lead to more consistent 
performance across Networks and States.  AAKP also highlighted HCFAs current 
efforts underway to release performance data publicly and asked us to ensure that funding 
to implement our recommendations does not come at the cost of funding patient 
activities. 
We are pleased to receive such strong support from AAKP which represents the patients 
that we aim to protect.  In our report we acknowledge HCFAs effort to release 
performance data to the public and we believe it is a step in the right direction. 
Furthermore, we underscore AKKPs point that funding for oversight activities should 
not jeopardize patient care. 
37 
External Review: A Call for Greater Accountability  OEI-01-99-00050  APPENDIX A 
Methodology

HCFA 
We interviewed HCFA officials responsible for the ESRD program at both the Central 
Office and the four lead ESRD regional offices (Boston, Kansas City, Dallas, and 
Seattle.)  This included all the project officers for the Networks and HCFA officials 
involved with the State survey and certification programs.  We gathered information on 
how HCFA evaluates the Networks and State agencies, their perceptions on the strengths 
and weaknesses of the program, and any recommendations they had for improving the 
oversight of dialysis facilities. 
ESRD Networks 
We conducted a mail survey of all 18 Networks to gather information on the types of 
performance data Networks use and collect, on how they handle complaints and adverse 
events, and how often they conduct on-site surveys.  All 18 Networks responded.  In 
addition to our survey, we received and analyzed the following documents from all the 
Networks: 1997 annual reports, 1998 annual reports, and 1998 responses to 
complainants. 
We selected nine Networks to participate in telephone interviews. We chose at least two 
Networks from each of the four lead HCFA regions.  Network staff and board members 
participated in the interviews, which covered topics related to the oversight of facilities 
such as quality improvement projects and other sources of performance data, complaint 
procedures and trends, and their relationships with HCFA and State agencies. We also 
selected two Networks for site visits lasting several days.  These visits included 
interviews with staff, board members, patients, and renal professionals.  While on-site we 
examined their complaint files.  Three additional Networks received site visits that 
involved discussions with Network leadership about oversight in general. 
State Survey Agencies 
In order to gain information on the State agencies we analyzed HCFAs On-line Survey, 
Certification and Reporting System (OSCAR) to determine the frequency with which 
State agencies conduct Medicare certification and complaint surveys of ESRD facilities 
which includes both transplant facilities and dialysis facilities.  We pulled two data sets 
from the system: one in May 1999 and one in August 1999.  We analyzed these data sets 
using SAS and Excel software programs.  In addition, we interviewed five State survey 
agencies.  We also observed a dialysis facility survey. 
38 
External Review: A Call for Greater Accountability  OEI-01-99-00050  APPENDIX A 
Stakeholder Interviews 
We interviewed several representative of organizations involved with dialysis issues. 
These organizations included professional groups, consumer groups, Federal agencies, 
and Federal contractors. 
Literature Review 
Throughout our evaluation, we reviewed various documents including statutes and 
regulations, Federal agency documents, policy reports, media articles, and scientific 
journal articles. 
39 
External Review: A Call for Greater Accountability  OEI-01-99-00050  APPENDIX B 
Major Sources of Clinical Performance Data for ESRD

Below we highlight several of the major sources of performance data for dialysis 
facilities. 
HCFAs Clinical Performance Measures Project.  Since 1994, with the help of the 
Networks and facilities, HCFA has collected a set of measures on a national sample of 
patients.  In 1999, the set included 16 measures such as urea reduction ratio, Kt/V, 
hematocrit, hemoglobin, and type of vascular access.  Facilities abstract the measures 
from patient medical records and Networks validate a sample of the data.  HCFA 
disseminates aggregate measures at the national and Network level to the renal 
community and the public.  The sample does not allow facility-specific analysis. 
Medicare Billing and Enrollment Data.  HCFA claim and administrative forms are a 
rich source of information on patients and facilities, such as patient hematocrit levels, 
urea reduction ratios, and mortality.  Since 1996, HCFA has used this data to generate 
confidential facility-specific reports on anemia management for its National Anemia 
Cooperative Project.  A few Networks reported using the anemia data to monitor facility 
performance and to identify facilities in need of interventions.  HCFA currently uses these 
data to generate various facility-specific reports for facilities, Networks, States, and the 
public. 
United States Renal Data System.  Funded by the National Institutes of Health and 
partially funded by HCFA, this database compiles numerous data sources on renal 
patients, most of which come from Medicare billing data.  Each year, an annual data 
report is disseminated to the public that provides trend information at the Network and 
national level.  Previously, the USRDS generated confidential, facility-specific 
standardized ratios for mortality, hospitalization, and transplantation for facilities, which 
have been helpful in identifying regional problems in the quality of care.  These reports 
are now being generated by HCFA.  Most Networks reported that they use the USRDS 
methodology, or one based on it, to calculate their own standardized mortality ratios for 
facilities.  A few Networks reported that they use the facility-specific ratios generated by 
USRDS to identify poor performers. 
National Surveillance of Dialysis Associated Disease.  This voluntary survey, started in 
the early 1970s by the Centers for Disease Control and Prevention, monitors infectious 
disease rates, such as hepatitis B, within facilities.  It also collects facility-specific 
information on vaccination rates, vascular access, staffing ratios, and reuse of 
hemodialyzers.  The data are disseminated to the public showing trends at the Network 
and national level.  Every Network, except one, reported that they use these data to help 
determine future topic areas for quality improvement projects, to provide baseline data, 
40 
External Review: A Call for Greater Accountability  OEI-01-99-00050  APPENDIX B 
and/or to identify poor performers.  These data are not readily available to the public or 
the States. 
Network Databases.  Networks maintain their own databases that vary from Network to 
Network.  Some of the elements Networks collect on their own and some they obtain 
from the databases listed above.  A few Networks disseminate confidential facility-
specific reports to facilities.  Network data is not regularly available to HCFA, States, or 
the public. 
41 
External Review: A Call for Greater Accountability  OEI-01-99-00050  APPENDIX C 
Comments

In this appendix we include the full text of comments of the parties that responded to our 
two draft reports.  We present them in the following order: 
C  HCFA 
C  Forum of the End Stage Renal Disease Networks 
C  Association of Health Facility Survey Agencies 
C  American Association of Kidney Patients 
42 
External Review: A Call for Greater Accountability  OEI-01-99-00050  APPENDIX C 
43 
External Review: A Call for Greater Accountability  OEI-01-99-00050  APPENDIX C 
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External Review: A Call for Greater Accountability  OEI-01-99-00050  APPENDIX C 
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Endnotes

1.  Section 1881(c) of the Social Security Act. 
2.  42 C.F.R. sec. 405 subpart U. 
3.  Currently, there are about 19 States with licensure laws.  Glenda M. Payne, Licensed, 
Certified, Accredited: What are the Differences for the Dialysis Unit?  Nephrology News and 
Issues, September 1999, 47. 
4.  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. 
5.  42 C.F.R. sec. 413.174. 
6.  For media accounts see:  Kurt Eichenwald, Death and Deficiency in Kidney Treatment, The 
New York Times,  December 4, 1995, 1;  K. Eichenwald, At Big Kidney Chain, Deals for 
Doctors, Ruin for Rivals, The New York Times,  December 5, 1995, 1;  K. Eichenwald, Making 
the System Work in Kidney Patients Favor, The New York Times,  December 6, 1995, 1; 
Wayne Woolley, Dialysis Clinic Accused of Fraud: Ex-administrator Says Sinai Facility Had too 
Many Patient Deaths, Safety Infractions, The Detroit News, January 1, 1998, C1;  Patrick 
ONeill, Complaints lead to look at dialysis centers, Portland Oregonian, October 19, 1998, B1; 
Patrick ONeill, Patients Get Wrong Mixture in Dialysis, Portland Oregonian, February 13, 
1999, D1;  Patrick ONeill, Dialysis problems increasing, official says, Portland Oregonian, 
February 17, 1999, A1;  Patrick ONeill, Nerves Fray for Dialysis patients Cost-Cutting and 
Ownership Changes Highlight a New Breed of Treatment Centers, Portland Oregonian, 
February 23, 1999, B1. 
7.  It is a common practice for facilities to reuse hemodialyzers.  Facilities that reuse must adhere 
to special protocols to prevent the spread of blood borne diseases. 
8.  U.S. Renal Data System, USRDS 1999 Annual Data Report, National Institutes of Health, 
National Institutes of Diabetes and Digestive and Kidney Diseases, Bethesda, MD, April 1999: 
26. 
9.  Health Care Financing Administration, Department of Health and Human Services, Highlights 
from the 1999 Clinical Performance Measures Project, http://www.hcfa.gov/quality/3m.htm, 
printed February 7, 2000. 
10.  Ibid. 
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11.  William M. McClellan et al., Variable Mortality Rate Among Dialysis Treatment Centers, 
Annals of Internal Medicine 117 (1992): 332-336;  William M. McClellan et al., Facility 
Mortality Rates for New End-Stage Renal Disease Patients Implications for Quality 
Improvement, American Journal of Kidney Diseases 24 (August 1994) 2: 280-289. 
12.  Jeffrey C. Fink et al., Hemodialysis Adequacy in Network 5: Disparity Between the States 
and the Role of Center Effects, American Journal of Kidney Diseases 33 (January 1999) 1: 97-
104;  Steven D. Helgerson et al., Improvement in Adequacy of Delivered Dialysis for Adult In-
Center Hemodialysis Patients in the United States, 1993 to 1995, American Journal of Kidney 
Diseases 39 (June 1997) 6: 851-861; James A. Delmez et al., Hemodialysis Prescription and 
Delivery in a Metropolitan Community, Kidney International 41 (April 1992) 4: 1023-1028. 
13.  William M. McClellan et al., Mortality in End-Stage Renal Disease Is Associated with 
Facility-to-Facility Differences in Adequacy of Hemodialysis, Journal of the American Society of 
Nephrology 9 (October 1998) 10: 1940-1947. 
14.  Pushkal P. Garg et al., Effect of the Ownership of Dialysis Facilities on Patients Survival 
and Referral for Transplantation, The New England Journal of Medicine 341 (November 25, 
1999) 22: 1653-1660. 
15.  Ibid, 1659. 
16.  USRDS Annual Data Report: 165-167. 
17.  USRDS Annual Data Report: Reference Tables, Table I.13. 
18.  Mark E. Neumann, A Buying Slowdown? Nephrology News and Issues July 1999, 30-31. 
19.  The composite rate is not routinely updated like the rest of Medicare payments.  The 
composite rate was established in 1983.  It was reduced by $2 in 1986 and increased by $1 in 
1991. Recent legislation increased it by 1.2 percent in January of 2000, and another 1.2 percent 
increase will occur in January 2001. 
20.  This project was previously called the ESRD Core Indicators Project.  In 1998, HCFA 
contracted with PRO-West, a professional review organization, to develop performance measures 
based on the National Kidneys Foundation Dialysis Outcome Quality Initiative clinical practice 
guidelines.  As a result, the previous clinical indicators under the Core Indicators Project were 
replaced with new but similar clinical performance measures. 
21.  Highlights from the 1999 Clinical Performance Measures Project. 
22.  ESRD Network of Florida (#7), 1998 Annual Report. 
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23.  ESRD Network of Texas (#14), 1998 Annual Report. 
24.  For examples of Networks that collect facility-specific data see 1998 Annual Reports for: The 
ESRD Network of New England (#1), Southeastern Kidney Council (#6), The Renal Network 
(#9/10), and ESRD Network of Texas (#14). 
25.  Social Security Act 1881(b). 
26.  In all of 1997 and 1998, Networks made only two recommendations to HCFA to sanction 
facilities. 
27.  If a patient health and safety issue is involved the only sanction that HCFA or the States can 
take is to terminate the facility from the Medicare program.  Other types of sanctions, such as 
denial of payments or reduction of payments, can only be taken when the problem identified does 
not jeopardize patient health and safety.  See 42 C.F.R. sec. 405.2180 and 405.2181. 
28.  Networks reported that HCFA, in one case in particular, did not support a Networks 
recommendation for sanction.  As a result the Network felt powerless to resolve future problems 
because facilities in the area perceived that HCFA would not support the Networks.  Another 
Network recently tried to avoid this situation by successfully encouraging a facility to voluntarily 
withdraw from the Medicare program rather than recommend sanctions to HCFA.  However, 
HCFA reported that they viewed this approach as the Network trying to protect the facility since 
the provider can still run another facility elsewhere.  Many Networks are now reluctant to take 
this approach, leaving the Networks with little they can do to enforce standards beyond applying 
peer pressure. 
29.  Social Security Act 1881(b) (8). 
30.  See http://www.hcfa.gov/stats/pufiles.htm 
31.  Office of Inspector General, Know Your Number Brochure: Perspectives of Dialysis 
Patients, OEI-06-95-00320, January 1997: 7. 
32.  HCFA, Network Manual, section 755.2. 
33.  HCFA has established complaints as a top priority for the State survey agencies; it lists 
complaints third out of 12 workload priorities for the States.  Fiscal year 2000 State Survey and 
Certification Budget Call Letter, July 7, 1999. 
34.  In response to our survey, the 18 Networks reported referring 49 complaints to the State 
survey agencies in 1998. 
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35.  Until recently there was no national database for Networks to log their complaint activity. 
HCFA recently developed a central database system for the Networks, the Standard Information 
Management System (SIMS), that should help standardize complaint information across all 
Networks and provide national information in the future.  Most Networks publish data on their 
own complaints in their annual reports and some Networks even provide a breakdown by type. 
The Forum of ESRD Networks conducted a national analysis on complaints in its 1997 summary 
report that contains data from all 18 Networks.  See Forum of ESRD Networks, End Stage Renal 
Disease Network Program Annual Report Summary 1997: 20-21. 
36.  In order to conduct this review, we grouped complaints into five categories.  1) technical 
issues involving clinical expertise of staff and/or water treatment etc., 2) service quality issues 
involving patient comfort such as temperature, waiting times, friendliness of staff, the number of 
staff available, etc., 3) educational/informational issues involving calls where individual are 
looking for answers to specific questions, 4) disruptive patient issues involving violent or 
misbehaving patients, and 5) unknown issues involving contacts that we could not discern their 
nature from the documents we reviewed.  Some complaints fit into multiple categories and were 
counted as such.  It is also important to note that the comprehensiveness of the complaint logs we 
received varied substantially.  We do not intend for this analysis to provide concrete numbers but 
rather to demonstrate an overall trend. 
37.  One Network wrote a letter to HCFA documenting the lack of collaboration between the 
State and the Network.  Northwest Renal Network (# 17), Recommendations for Improvements 
in the States of DHS and ESRD Networks Cooperative Relationship, September 1999. 
38.  Networks occasionally visit facilities to provide technical assistance, look into specific 
problems, or investigate complaints.  However, HCFA does not fund them to perform routine on-
site surveys. 
39.  Our analysis is of ESRD facilities that includes both dialysis facilities and renal transplant 
centers.  According to USRDS 1999 Annual Data Report p. 165, there were 241 centers 
providing renal transplants in 1997.  This number has been relatively stable over recent years.  Our 
analysis also includes both initial surveys and recertification surveys. 
40.  The data shows that as of the May 1999, the average time since the last survey was 3.2 years 
for free-standing facilities and 4.2 years for hospital-based facilities.  This suggests surveyors may 
be targeting free-standing facilities, which may be subject to less external oversight than hospital-
based facilities. 
41.  An unpublished HCFA-funded study found a similar trend.  The study showed that in 1993, 
59.4 percent of free-standing facilities received a certification survey; in 1994 36.1 percent; and in 
1995, 22.6 percent.  The Lewin Group, Inc. and Johns Hopkins University, Facility 
Accreditation and Certification for ESRD Study: Evaluation of the Effectiveness of the Current 
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End-Stage Renal Disease Survey and Certification and the Potential of Integrating Private 
Accreditation, unpublished draft May 30, 1997, for the Health Care Financing Administration. 
42.  Although we were unable from the data set we pulled from HCFA to determine the number 
of initial versus certification surveys, HCFA did provide us with the actual number of initial 
surveys conducted each year.  We used the numbers of initial surveys provided by HCFA to 
calculate the number of recertification surveys and found that this backlog cannot be solely 
attributed to the recent growth in ESRD facilities.  The number of initial surveys conducted each 
year increased only 24 percent since 1993, from 221 initials in 1993 to 273 initials in 1998.  But 
we have seen a 72 percent decrease in the number of recertification surveys conducted each year 
since 1993.  In 1993, over half of all facilities received a recertification survey.  By the end of 
1998, only 10 percent of all facilities received a recertification survey.  At this rate of 10 percent a 
year, facilities will receive a recertification survey once every 10 years. 
43.  By statute, States must survey nursing homes once every 12 months and home health 
agencies once every 36 months.  Sections 1819, 1919, and 1891 of the Social Security Act. 
44.  Fiscal year 2000 State Survey and Certification Budget Call Letter, July 7, 1999. 
45.  See 42 C.F. R., sec. 405.2136. 
46.  The Conditions do not give the medical director the authority to intervene in the care of a 
patient under another attending physician, although some facilities or corporations may give such 
authority.  In a recent letter to a Network, HCFA stated, Significantly, the end-stage renal 
disease regulations do not explicitly empower a physician-director with the authority to take 
independent action with respect to patients attended by other physicians.  Correspondence to 
Glenda Harbert, Executive Director of Network 14, from Kay Hall, Project Officer, Division 
Clinical Standards and Quality, Health Care Financing Administration, on November 9, 1998. 
47.  HCFA, State Operations Manual, Section 4009. 
48.  HCFA offers basic and advanced training programs for surveyors regularly throughout the 
year.  In fact, for fiscal year 2000 HCFA has four training classes scheduled specific to dialysis 
facilities.  HCFAs basic training covers general topics related to the survey process in general, as 
well as, important technical information specifically related to dialysis facilities. 
49.  The most comprehensive study undertaken of medical injuries was the Harvard medical 
practice study.  In that effort, the study team reviewed the records of about 30,000 patients 
hospitalized in New York State during 1984.  It found that adverse events occurred in about 4 
percent of the hospitalizations and negligent adverse events in about 1 percent of the cases.  See 
Troyen A. Brennan et al, Incidence of Adverse Events and Negligence in Hospitalized Patients, 
The New England Journal of Medicine 324 (February 7, 1991) 6: 370-76. 
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External Review: A Call for Greater Accountability  OEI-01-99-00050  APPENDIX D 
A more recent study focusing on a large teaching hospital affiliated with a medical school and 
using a somewhat different methodology came up with even more disturbing results.  It found that 
17.7 percent of the 1,047 hospitalized patients reviewed received inappropriate care resulting in 
serious adverse events  ranging from temporary disability to death.  See Lori B. Andrews et al, 
An Alternative Strategy for Studying Adverse Events in Medical Care, The Lancet 349 
(February 1, 1997) 309-313. 
50.  Some States licensure laws, such as Texas, require facilities to report adverse events to the 
State survey agency. 
51.  For more information see Department of Health and Human Services, Office of Inspector 
General, External Review of Hospital Quality: The Role of Accreditation, OEI-01-97-00051, July 
1999. 
52.  Facilities do report events involving medical devices to the Food and Drug Administration 
and report outbreaks of infectious diseases to the Center for Disease Control and Prevention. 
53.  The Network evaluation form covers the 10 topic areas such as quality improvement 
projects, sanctions and referrals, patient grievance, and information management.  The form does 
not contain any objective criteria for the project officer to use but rather leaves the evaluation up 
to the project officers judgement.  For example, C.1 To the satisfaction of the project officer, 
the Network has developed and implemented at least one quality improvement project in option 
year 1, unless it was otherwise directed by HCFA. and C.4.I. Where appropriate to the 
satisfaction of the project officer, the Network has assisted patients and facilities in resolving 
grievances. 
54.  The one Network that received two unsatisfactories involving sanctions and referrals. 
According to the comments attached by the project officer, this Network was not making 
appropriate referrals to HCFA for sanctions, was not sharing requested information with HCFA, 
and was inappropriately counseling a facility to withdraw from the Medicare program. 
55.  Highlights from the 1999 Clinical Performance Measures Project. 
56.  The HCFA name for validation surveys is Federal monitoring surveys. 
57.  In response to our series of reports on hospital quality oversight, HCFA has pledged to re-
examine the SAQIP program and reevaluate its utility as a method for oversight for State survey 
agencies.  In addition, HCFA intends to develop a performance measurement based system for 
evaluating State survey agencies.  This system would provide more direct, timely feedback to 
States on clear criteria for performance.  See the Office of Inspector General, The External 
Review of Hospital Quality: A Call for Greater Accountability, OEI-01-97-00050, July 1999. 
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External Review: A Call for Greater Accountability  OEI-01-99-00050  APPENDIX D 
58.  Of course, the accreditation system has a number of deficiencies of its own.  We addressed 
these in our recent reports on hospital quality oversight.  See Office of Inspector General, The 
External Review of Hospital Quality: A Call for Greater Accountability, OEI-01-97-00050, July 
1999. 
59.  It has been suggested that the current payment policies create disincentives for facilities and 
physicians to provide optimal care.  Facilities receive a monthly composite rate regardless of the 
length or the complexity of the dialysis provided.  Similarly, Medicare reimburses nephrologists at 
a monthly, capitated rate regardless of the complexity of the patients condition or the frequency 
of visits.  In addition, physicians may bill separately for inpatient hospital visits the same as other 
inpatient stays, which are not capitated.  This often results in a financial benefit for nephrologists 
when their patients are hospitalized. 
Others have also pointed out that the fragmented payment system makes it difficult to focus 
accountability.  Facilities and nephrologists each receive separate payments from Medicare.  Yet, 
each depends on the other to perform its function.  The nephrologist must determine the 
appropriate treatment regimen and the facility must carry it out correctly in order for the patient 
to receive adequate care.  Yet, Medicare payment policy does not hold the facility or the 
nephrologist accountable for working together. 
In 1991, Congress asked the Institute of Medicine (IOM) to determine the impact that the 
reimbursement rate had had on the quality of care.  Although the IOM found no demonstrative 
evidence that the reimbursement rate was impacting negatively on quality, it did find suggestive 
evidence.  As a result, it recommended that a quality assessment and assurance program should 
be implemented.  In June of 1999, the Medicare Payment Advisory Commission recommended 
an increase in the composite rate in order to improve the quality of dialysis care.  It further 
recommended that nutritional therapies for dialysis patients be under a separate payment in order 
to encourage facilities to provide the appropriate nutritional payments.  More recently, in March 
2000, the Medicare Payment Advisory Commission, again called for an increase in the composite 
rate, as well as to risk adjust payments for patients enrolled in Medicare+Choice. 
For further discussion on this topic, see the following articles:  Alan Hull, Impact of 
Reimbursement Regulations on Patient Management, American Journal of Kidney Diseases 20 
(July 1992) 1 suppl. 1: 8-11; Allen Nissenson and Richard Rettig, Medicares End-Stage Renal 
Disease Program: Current Status and Future Prospects, Health Affairs 18 (January/February 
1999) 1: 161-179; Eli A. Friedman, End-Stage Renal Disease Therapy: An American Success 
Story, Journal of the American Medical Association 275 (April 10, 1996) 14: 1118-1122; Renal 
Physicians Association correspondence to Murray K. Ross, Executive Director of the Medicare 
Payment Advisory Commission, May 10, 1999;  Medicare Payment Advisory Commission, Report 
to the Congress: Selected Medicare Issues, June 1999, 135-148;  Medicare Payment Advisory 
Commission, Report to the Congress: Medicare Payment Policy, March 2000, 129-147;  Institute 
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of Medicine, Kidney Failure and the Federal Government (Washington, D.C.: National Academy 
Press, 1991), 17. 
60.  Mark R. Chassin et. al., The Urgent Need to Improve Health Care Quality: Institute of 
Medicine National Roundtable on Health Care Quality, Journal of the American Medical 
Association 280 (September 16, 1998) 11: 1000-1005. 
61.  In 1995 HCFA did rewrite the interpretive guidelines that offer directions to State surveyors 
to determine compliance with the Medicare Conditions for Coverage.  The new guidelines 
increased the focus on patient-care processes and outcomes. 
62.  The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) standards for 
hospitals articulate the responsibility of the governance body.  The TransPacific Renal Network 
(#17) is actually looking to adapt the JCAHO standards for use for dialysis facilities in its region. 
HCFA proposed Conditions of Participation for hospitals also address this issue. 
63.  The June 17, 1996, draft of the Conditions for Coverage for dialysis facilities moves in this 
direction: Condition: Governance.  The dialysis facility is under the control of an identifiable 
governing body or designated person(s) so functioning, with full legal authority and responsibility 
for the governance and operation of the facility, the management and provision of all dialysis 
services, fiscal operations, relations within the ESRD Networks, the development of policies on 
patient health and safety, and the quality assessment and performance improvement program.  The 
governing body must appoint a qualified administrator who is responsible for the daily operations 
of the facility. 
64.  The draft Conditions for dialysis facilities move toward holding the medical director more 
accountable by inserting, The dialysis facility must have a medical director who is responsible for 
the overall delivery of patient care and outcomes.  The current Conditions of Participation for 
nursing homes have similar language, and concerns have been raised about how to interpret this 
language:  The facility must designate a physician to serve as medical director.  (2) The medical 
director is responsible for--(i) implementation of resident care policies; and (ii) The coordination 
of medical care in the facility.  (42 C.F.R., sec. 483.75(i)) 
65.  The draft Conditions for dialysis facilities address this issue, Standard : Furnishing data and 
information for end-stage renal disease program.  The dialysis facility furnishes data and 
information in the manner and at the intervals specified by the Secretary, pertaining to its patient 
care activities and costs for administration of the program.  This may suffice as long as it is 
interpreted to include patient outcomes.  We do not suggest that HCFA write into the Conditions 
specific outcomes or minimums facilities must meet.  This will not allow for timely updates as 
scientific knowledge advances. 
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External Review: A Call for Greater Accountability  OEI-01-99-00050  APPENDIX D 
66.  The draft Conditions for dialysis facilities also address this issue.  Condition: Quality 
assessment and performance improvement.  The dialysis facility must develop, implement, 
maintain and evaluate an effective, data-drive, quality assessment and performance improvement 
program.  The program must reflect the complexity of the dialysis facilitys organization and 
services (including those services provided under arrangement).  The dialysis facility must take 
actions that result in improvements in the facilitys performance across the spectrum of care. 
67.  Several national corporations collect health status and patient satisfaction data routinely from 
facilities nationwide.  Several Networks also view patient satisfaction as an important measure of 
quality.  For example, The ESRD Network of New England (#1) developed a patient satisfaction 
survey for facilities to use and the ESRD Network of Florida (#7) requires facilities to monitor 
patient satisfaction in its Criteria and Standards for Facilities. 
68.  HCFA currently has three projects underway to develop and implement an extensive 
computer system that will allow the electronic transmission of large quantities of data between 
facilities and Networks, and Networks and HCFA.  The creation of the Renal Management 
Information System (REMIS) is the first project.  This project will establish a new database to 
replace the outdated Renal Beneficiary and Utilization System (REBUS).  REMIS will house all 
HCFA data on ESRD patients in one central database and allow for easier analysis of the data. 
According to HCFAs schedule, it will be up and running sometime during the summer of 2000. 
The Standard Information Management Systems (SIMS) is the second project in this arena. 
SIMS, which is scheduled to be as of December 1999, will connect all Networks with one another 
and HCFA through a computer network.  The third project, the Vital Information System for 
Improvement of Outcomes in Nephrology (VISION), will develop software to electronically link 
facilities with the Network to facilitate electronic data reporting.  HCFA anticipates pilot testing 
VISION early in the year 2000, with roll out to all facilities in 2001.  This entire system will 
electronically connect dialysis facilities to Networks, Networks to other Networks, and Networks 
to HCFA. 
69.  HCFA has funded, through the Colorado Foundation for Medical Care, the University of 
Michigan Kidney Epidemiology and Cost Center to produce facility-specific reports similar to the 
unit-specific reports generated previously by the United States Renal Data System.  See 
www.med.umich.edu/kidney for more information. 
70.  HCFA has contracted with the Colorado Foundation for Medical Care to develop facility-
specific reports for State survey agencies to select facilities for surveys and to use to focus their 
survey when on site.  In the spring of 2000, HCFA plans to pilot test these reports with 8 States. 
HCFA has contracted with PRO-West to develop facility-specific reports for the public.  These 
reports will be available sometime in the year 2000. 
71.  The Institute of Medicine called for HCFA to relate major Conditions for Coverage to 
patient outcomes.  Kidney Failure and the Federal Government, 295.  We are concerned that 
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External Review: A Call for Greater Accountability  OEI-01-99-00050  APPENDIX D 
the current language in draft Conditions may be too explicit.  We suggest that HCFA not include 
in the regulations specific performance measures with specific minimums that facilities must meet. 
Instead, we suggest more flexible language that can allow for quicker revisions as medical 
knowledge progresses.  The draft Conditions state: Standard: Performance expectations.  The 
interdisciplinary team must adjust the care plan and implementation strategies as assessment, 
response, and patient preference information requires.  If the patient is unable to achieve the 
desired health outcomes, the appropriate member of the interdisciplinary team must provide an 
explanation.  If the desired health outcome is achievable but is not being achieve, the 
interdisciplinary team must develop and implement an improvement program to achieve and 
maintain the patients desired level of general health...The interdisciplinary team must assist and 
support the patient in achieving and maintaining a desired dose of dialysis.  The patient must 
receive at least a delivered Kt/V not less than 1.2 (single pool) or a urea reduction ratio of at least 
65 percent for a majority of treatments each hemodialysis patient. 
72.  For an argument in support of the release of mortality information see: John M. Newmann, 
Why Should HCFA Release Center-Specific Mortality Information to Patients?  Nephrology 
News and Issues, November 1999, 13-14. 
73.  See HCFAs Medicare Compare at http://www.medicare.gov/comparison, and Nursing 
Home Compare at http://www.medicare.gov/nursing/home.asp. 
74.  Medicare Payment Advisory Commission, Report to the Congress: Medicare Payment 
Policy, March 2000, p 142. 
75.  The Lewin Group, Inc. and Johns Hopkins University, Facility Accreditation and 
Certification for ESRD Study: Evaluation of the Effectiveness of the Current End-Stage Renal 
Disease Survey and Certification and the Potential of Integrating Private Accreditation, also 
called for a standard survey frequency and recommended it should be once every 1 or 2 years. 
76.  The Presidents proposed budget for fiscal year 2001 for the Department of Health and 
Human Services calls for a 14.4 percent increase over the fiscal year 2000 appropriated budget for 
survey and certification activities.  This funding will HCFA to decrease the survey intervals for 
ESRD facilities and non-accredited hospitals from once every six years to once every three 
years.p 87-88, released February 7, 2000. 
77.  Institute of Medicine, To Err is Human, Building a Safer Health System (Washington, D.C.: 
National Academy Press 1999). 
78.  The Renal Physicians Association and the Forum of ESRD Networks have created a 
workgroup to examine issues of patient safety in dialysis facilities. 
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79.  Colorado publishes on the Internet facility-specific reports on complaint investigations and 
occurrences which include medical injuries.  These reports provide a description of the event 
and the facilitys response and the States evaluation. 
See http://www/hfd.cdphe.state.co.us/info.asp. 
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