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 
EXECUTIVE SUMMARY 

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 Network’s 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 

HCFA’s database on State survey agencies; conducted a survey of all 18 Networks; 

External Review: A Call for Greater Accountability 1 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. 

External Review: A Call for Greater Accountability 2 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 patient’s 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 HCFA’s 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. 

External Review: A Call for Greater Accountability 3 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. 

External Review: A Call for Greater Accountability 4 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. 

HCFA’s Comments 

HCFA largely agreed with our recommendations. In response, HCFA offered a detailed 

action plan that addresses each of our recommendations. The plan demonstrates HCFA’s 

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. 

HCFA’s action plan is a positive step toward implementing our recommendations and 

we urge HCFA to give it a high priority. In response to HCFA’s 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 

AAKP’s point that funding for oversight activities should not jeopardize patient care. 

External Review: A Call for Greater Accountability 5 OEI-01-99-00050 
TABLE OF CONTENTS 

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

External Review: A Call for Greater Accountability 6 OEI-01-99-00050 
INTRODUCTION 

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 HCFA’s 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 HCFAapproved 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 

External Review: A Call for Greater Accountability 7 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 

performance 

measures 

Standardized performance measures allow purchasers, consumers, and overseers to 

compare the performance of facilities or physicians. The comparison can examine a 

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 

Complaints can come from patients, staff, and other interested parties. They can be of 

a particular instance of care or about broader matters concerning a facility’s 

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 

surveys 

On-site surveys can be either announced or unannounced. Surveyors observe the 

conditions of the facility and equipment and interview patients and staff. The process 

can trigger corrective actions and system improvements. 

Response to medical 

injuries 

Medical injuries are adverse events attributable to medical management and unrelated 

to the patient’s 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 

External Review: A Call for Greater Accountability 8 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 President’s Council on Integrity and Efficiency. 

External Review: A Call for Greater Accountability 9 OEI-01-99-00050 
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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 patient’s blood stream, requiring direct access to the 

bloodstream. The patient’s 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 patient’s 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 Foundation’s 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/Vurea. Two measures used to measure adequacy in peritoneal patients. 

Creatine clearance measures the removal of creatine and Kt/Vurea measures the removal of urea. DOQI 

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 patient’s 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 patient’s 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. 

External Review: A Call for Greater Accountability 10 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 patient’s 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 patient’s 

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 

HCFA’s 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 

External Review: A Call for Greater Accountability 11 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 forprofit 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. 

External Review: A Call for Greater Accountability 12 OEI-01-99-00050 
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’s performance data show improvements. 

HCFA’s 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 

External Review: A Call for Greater Accountability 13 OEI-01-99-00050 
established a facility-specific core data set that all facilities must report to one central 

location directly under HCFA’s 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 followup 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 

facility’s 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 

External Review: A Call for Greater Accountability 14 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 facilityspecific 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 

External Review: A Call for Greater Accountability 15 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 

complainant’s name without consent.) Second, about half of the Networks require 

grievances to be in writing, before they take any action, unless it involves a lifethreatening 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 

External Review: A Call for Greater Accountability 16 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 facility’s 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. 

External Review: A Call for Greater Accountability 17 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

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

Source: HCFA’s OSCAR data 

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. 

External Review: A Call for Greater Accountability 18 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 facilityspecific data. Under HCFA’s 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. 

External Review: A Call for Greater Accountability 19 OEI-01-99-00050 
Medical injuries are not systematically monitored. 

Medical injuries are attributable to the care provided to the patient, not to the patient’s 

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 

Commission’s “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 HCFA’s 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 year’s 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. 

HCFA’s 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 

External Review: A Call for Greater Accountability 20 OEI-01-99-00050 
Further HCFA does not hold the Networks accountable for how the facilities in their 

regions fare on HCFA’s 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. 

HCFA’s 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. 

External Review: A Call for Greater Accountability 21 OEI-01-99-00050 
RECOMMENDATIONS RECOMMENDATIONS 

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 HCFA’s 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 

External Review: A Call for Greater Accountability 22 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 HCFA’s agents perform on-site 

surveys that can serve as the basis for regulatory actions. But as we have shown, the 

External Review: A Call for Greater Accountability 23 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 HCFA’s 

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.) 

External Review: A Call for Greater Accountability 24 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 facility’s designated governing authority.64 

< Require facilities to report electronically on standardized performance measures 

determined by HCFA. HCFA must make clear a facility’s 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 networkwide 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 

External Review: A Call for Greater Accountability 25 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 patient’s 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. 

External Review: A Call for Greater Accountability 26 OEI-01-99-00050 
<

<

<

<

Already, HCFA has funded the creation of three facility-specific reports. One facilityspecific 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 

made readily available to all parties: 

the facilities, the Networks, the State 

agencies, and, through Internet 

websites (and perhaps even postings 

in facilities), the general public. Such 

an effort will require HCFA to ensure 

patient confidentiality and may call 

for statutory changes. As we 

previously mentioned, HCFA already 

has an effort underway to develop a 

core data set, the National ESRD 

Core Data Set Initiative. However, 

HCFA has not yet determined 

specifically how this data set will be 

used by all the various parties. 

Figure 3. The core set of facility-specific 

performance measures should be available to: 

< facilities to support internal quality 

improvement activities, 

< Networks to support regional quality 

improvement activities and to identify outliers 

for further review, 

< State survey agencies to help guide and 

inform the survey process, and 

< the public to foster public accountability. 

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 facility’s 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 

External Review: A Call for Greater Accountability 27 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. 

HCFA’s posture toward performance data should be that if they are worth 

collecting, they are worth disclosing. 

External Review: A Call for Greater Accountability 28 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 

Complainants receive substantive information about the process and any 

resulting actions. 

Enforcement Authority and 

Follow-up 

Has the authority to hold facilities and individuals accountable when 

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. 

External Review: A Call for Greater Accountability 29 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, 

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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 HCFA’s 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 

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<

<

<

<

regulatory powers of the State agencies. HCFA can convey this in two ways. For 

Networks, their contracts, particularly in the section explaining HCFA’s 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 selfimprovement. 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 

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<

<

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 HCFA’s 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 

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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 

External Review: A Call for Greater Accountability 34 OEI-01-99-00050 
COMMENTS ON THE DRAFT REPORT 

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 HCFA’s 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 HCFA’s 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 HCFA’s 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 

External Review: A Call for Greater Accountability 35 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 facilityspecific 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 President’s 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. 

External Review: A Call for Greater Accountability 36 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 HCFA’s 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 HCFA’s effort to release 

performance data to the public and we believe it is a step in the right direction. 

Furthermore, we underscore AKKP’s point that funding for oversight activities should 

not jeopardize patient care. 

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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 HCFA’s 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. 

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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. 

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APPENDIX B 

Major Sources of Clinical Performance Data for ESRD

Below we highlight several of the major sources of performance data for dialysis 

facilities. 

HCFA’s 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, 

External Review: A Call for Greater Accountability 40 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 facilityspecific reports to facilities. Network data is not regularly available to HCFA, States, or 

the public. 

External Review: A Call for Greater Accountability 41 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: 

HCFA 

Forum of the End Stage Renal Disease Networks 

Association of Health Facility Survey Agencies 

American Association of Kidney Patients 

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APPENDIX C 

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APPENDIX C 

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APPENDIX C 

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APPENDIX C 

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APPENDIX D 

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 

O’Neill, “Complaints lead to look at dialysis centers, Portland Oregonian, October 19, 1998, B1; 

Patrick O’Neill, “Patients Get Wrong Mixture in Dialysis,” Portland Oregonian, February 13, 

1999, D1; Patrick O’Neill, “Dialysis problems increasing, official says,” Portland Oregonian, 

February 17, 1999, A1; Patrick O’Neill, “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. 

External Review: A Call for Greater Accountability 61 OEI-01-99-00050 
APPENDIX D 

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 InCenter 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 Kidney’s 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. 

External Review: A Call for Greater Accountability 62 OEI-01-99-00050 
APPENDIX D 

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 Network’s 

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. 

External Review: A Call for Greater Accountability 63 OEI-01-99-00050 
APPENDIX D 

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 onsite 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 hospitalbased 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 

External Review: A Call for Greater Accountability 64 OEI-01-99-00050 
APPENDIX D 

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. HCFA’s 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. 

External Review: A Call for Greater Accountability 65 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 officer’s 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 reexamine 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. 

External Review: A Call for Greater Accountability 66 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 patient’s 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, “Medicare’s 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 

External Review: A Call for Greater Accountability 67 OEI-01-99-00050 
APPENDIX D 

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. 

External Review: A Call for Greater Accountability 68 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 facility’s organization and 

services (including those services provided under arrangement). The dialysis facility must take 

actions that result in improvements in the facility’s 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 HCFA’s 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 facilityspecific 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 

External Review: A Call for Greater Accountability 69 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 patient’s 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 HCFA’s 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 President’s 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. 

External Review: A Call for Greater Accountability 70 OEI-01-99-00050 
APPENDIX D 

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 facility’s response and the State’s evaluation. 

See http://www/hfd.cdphe.state.co.us/info.asp. 

External Review: A Call for Greater Accountability 71 OEI-01-99-00050