Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

External Quality Review of Dialysis Facilities 

Two Promising Approaches 

JUNE GIBBS BROWN 

Inspector General 

JUNE 2000 

OEI-01-00051 
OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 

protect the integrity of the Department of Health and Human Services programs as well as the 

health and welfare of beneficiaries served by them. This statutory mission is carried out through a 

nationwide program of audits, investigations, inspections, sanctions, and fraud alerts. The 

Inspector General informs the Secretary of program and management problems and recommends 

legislative, regulatory, and operational approaches to correct them. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 

Inspector General. It conducts short-term management and program evaluations (called 

inspections) that focus on issues of concern to the Department, the Congress, and the public. The 

inspection reports provide findings and recommendations on the efficiency, vulnerability, and 

effectiveness of departmental programs. 

OEI's Boston regional office prepared this report under the direction of Mark R. Yessian, Ph.D., 

Regional Inspector General and Joyce M. Greenleaf, M.B.A., Assistant Regional Inspector 

General. Russell W. Hereford, Ph.D., also contributed to this report. Principal OEI staff 

included: 

BOSTON HEADQUARTERS 

Aimee L. Kasenga, Program Analyst Bambi D. Straw, Program Specialist 

Lynne G. Dugan, Program Analyst 

To obtain copies of this report, please call the Boston Regional Office at 617-565-1050. 

Reports are also available on the World Wide Web at our home page address: 

http://www.dhhs.gov/progorg/oei 
EXECUTIVE SUMMARY 

PURPOSE 

To describe two promising approaches to hold dialysis facilities more fully accountable for 

their quality of care. 

BACKGROUND 

Importance of External Quality Review 

Case files, performance data, and marketplace realities underscore the importance of 

external quality review for dialysis facilities. Case files reveal numerous instances of poor 

care. In one instance we found that a patient received a drug overdose that resulted in 

prolonged bleeding and subsequent hospitalization. Performance data collected from 

dialysis facilities reveal that a substantial portion of patients do not achieve the outcomes 

recommended by clinical practice guidelines. Similarly, scientific studies suggest 

widespread variations in the quality of care patients receive. Of particular note is one that 

revealed higher mortality rates at facilities providing lower doses of dialysis. Finally, 

marketplace pressures triggered by growth, consolidation, competition, and concerns 

about cost have caused service disruptions that can and have jeopardized patient care. 

External Review Bodies 

The Health Care Financing Administration (HCFA) relies upon two major entities to 

conduct such external reviews: the End-Stage Renal Disease (ESRD) Networks 

established under the Social Security Act and the State survey agencies. HCFA contracts 

with the 18 Network organizations, which are governed primarily by renal professionals 

associated with facilities in the Network’s region, to perform multiple functions, mostly 

oriented around collegial efforts to promote improvements in the quality of care, and to 

respond to complaints lodged by patients, facility staff, or others. HCFA funds the State 

agencies, typically within departments of public health, to perform a more regulatory role: 

to conduct on-site Medicare certification surveys of facilities and to investigate 

complaints, both in accordance with Medicare Conditions for Coverage for dialysis 

facilities. 

Our Companion Report 

In our companion report, External Quality Review of Dialysis Facilities: A Call for 

Greater Accountability, we identified major shortcomings in the external quality review 

system upon which HCFA relies. We indicated that it was overly collegial in nature, that 

it reflected little collaboration between the Networks and the State agencies, and that in 

many respects it lacked accountability. One of our major recommendations to HCFA was 

External Review: Two Promising Approaches 1 OEI-01-99-00051 
to hold dialysis facilities more fully accountable for the quality of care they provide. We 

elaborated on steps that could be taken toward that end by (1) revising the Medicare 

Conditions for Coverage, (2) using facility-specific performance measures both to help 

facilities improve the quality of care and to ensure that they meet minimum standards, (3) 

enhancing the role of Medicare certification surveys conducted by the State agencies, and 

(4) facilitating the development of publicly accountable mechanisms for identifying 

medical injuries. 

This Report 

During the course of our inquiry into the external review system, we learned of two 

initiatives that are particularly instructive to how facilities can be held more fully 

accountable. One was a State-initiated effort intended to revitalize the on-site survey 

process through issuing tougher standards, conducting more frequent surveys, and 

developing close collaboration between the State survey agency and the Network. The 

other was a Network-initiated effort to develop facility-specific performance measures 

and to apply them in ways that both foster improvement for all facilities and target 

corrective interventions for poorly performing facilities. Because these initiatives are so 

pertinent to our recommendations, we devote this report to describing them. 

INITIATIVES 

Initiative 1. Collaborative enforcement of more stringent State standards. 

In 1995, in the aftermath of an outbreak of hepatitis B in a Houston dialysis facility, the 

Texas legislature passed a law calling for the licensure of all dialysis facilities in the State. 

This in itself was a step that many States had previously taken. What distinguished the 

Texas action was that it involved developing more rigorous standards, close collaboration 

of the Texas Network and the State survey agency, and additional State funding. 

Additional minimum standards. The Texas Department of Health (the State survey 

agency), with input from the Texas Network’s medical review board, established minimum 

standards for facilities that exceed the Medicare Conditions for Coverage. The standards 

call for facilities to report adverse events, maintain minimum staffing ratios, and provide 

formal training to all technicians. 

Required reporting on a set of performance measures. Texas licensure law requires 

facilities to report annually on a set of clinical performance measures. The Network and 

the State agency both review the performance measures. 

More frequent on-site surveys. In the first year of operation (1996/97), the State 

surveyed all 237 dialysis facilities in the State. In each of the subsequent two years, it has 

surveyed about one-half of all facilities. By contrast, only about 17 percent of dialysis 

facilities in the country received a Medicare survey in 1998. 

External Review: Two Promising Approaches 2 OEI-01-99-00051 
Ongoing and pervasive Network-State agency collaboration. The Network medical 

review board serves as a source of clinical expertise that contributes to the State agency’s 

enforcement efforts. It advises on how the State should address problems concerning 

clinical outcomes that the surveyors come across during their site visits. It helps monitor 

facilities put on corrective action plans by the State. 

Initiative 2. Use of facility-specific performance measures 

The Renal Network, covering Indiana, Kentucky, Ohio, and Illinois, uses facility-specific 

performance data in a balanced fashion: to foster improvements in the overall level of care 

as well as to identify poor performers for further review. This Network, which has the 

largest number of patients of the 18 Networks, conducts this initiative without additional 

Federal funds. 

Electronic data system. The Network developed software to track patients and their 

care. Facilities use the software to submit data electronically to the Network on multiple 

clinical performance measures, throughout the year on all dialysis patients. 

Facility-specific and physician-specific report cards. The Network disseminates 

confidential, facility-specific performance reports three times a year to all facilities in its 

region. The report compares the performance of an individual facility to its own past 

performance as well as to its peers. The Network also disseminates confidential 

physician-specific reports three times a year to all physicians, which compares their 

performance to their peers. 

Targeted interventions of poor performers. The Network analyzes the facility-specific 

performance data to identify particular facilities as well as corporate entities in need of 

interventions. 

CONCLUSION 

Better collaboration between State survey agencies and Networks and better use of 

facility-specific performance measures are two important paths to improve the oversight of 

dialysis facilities. These two initiatives demonstrate what can be accomplished given 

innovative leadership and adequate resources. In both cases, the Networks play central 

roles promoting continuous quality improvement and enforcing minimum standards of 

care. Although we did not evaluate the results achieved by each, we find both initiatives 

to be promising enough in their conception and early implementation to warrant careful 

consideration by other Networks and States, and by HCFA, as it seeks to develop 

effective mechanisms for holding facilities more fully accountable for the quality of care 

they provide. 

External Review: Two Promising Approaches 3 OEI-01-99-00051 
COMMENTS 

Within the Department of Health and Human Services, we received comments from 

HCFA. We also solicited and received comments from the following external parties: the 

Forum of End Stage Renal Disease Networks, the Association of Health Facility Survey 

Agencies, and the American Association of Kidney Patients. We include the detailed text 

of all these comments and our responses to them in the our report, External Quality 

Review of Dialysis Facilities: A Call for Greater Accountability (OEI-01-99-00050). 

External Review: Two Promising Approaches 4 OEI-01-99-00051 
TABLE OF CONTENTS 

EXECUTIVE SUMMARY .................................................... 1

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

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

INITIATIVES

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

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

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

APPENDICES

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

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

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

External Review: Two Promising Approaches 5 OEI-01-99-00051 
INTRODUCTION 

PURPOSE 

To describe two promising approaches to hold dialysis facilities more fully accountable for 

their quality of care. 

BACKGROUND 

Importance of External Quality Review 

About 3,200 dialysis facilities provide ongoing, life-sustaining dialysis treatments to about 

230,000 patients. Many of these patients are suffering from other complicated diseases 

such as diabetes and hypertension, and nearly all of them are Medicare beneficiaries. To 

foster improved care and minimize risks to patients, dialysis facilities conduct their own 

internal monitoring efforts. External review provides a vital additional safeguard. 

Case files, performance data, and marketplace realities underscore the importance of 

external review. Case files reveal numerous instances of poor care. In one instance we 

found that a patient received a drug overdose that resulted in prolonged bleeding and 

subsequent hospitalization. Performance data collected from dialysis facilities reveal that a 

substantial portion of patients do not achieve the outcomes recommended by clinical 

practice guidelines. Similarly, scientific studies suggest widespread variations in the 

quality of care patients receive. Of particular note is one that revealed higher mortality 

rates at facilities providing lower doses of dialysis. Finally, marketplace pressures 

triggered by growth, consolidation, competition, and concerns about cost have caused 

service disruptions that can and have jeopardized patient care. (See our companion 

report, External Quality Review of Dialysis Facilities: A Call for Greater 

Accountability.) 

HCFA’s Oversight through Networks and State survey agencies 

The Health Care Financing Administration (HCFA) is responsible for ensuring that all 

beneficiaries who undergo dialysis treatment receive proper care in dialysis facilities. 

HCFA contracts with two groups, the End-Stage Renal Disease (ESRD) Networks1 and 

the State survey agencies, to oversee the quality of care that dialysis facilities provide. 

HCFA requires the 18 regional Networks to collect data from facilities, conduct annual 

quality improvement projects, and evaluate and resolve complaints. HCFA contracts with 

the State agencies, typically within departments of public health, to conduct on-site 

Medicare certification surveys of facilities and to investigate complaints, both in 

accordance with Medicare Conditions for Coverage for dialysis facilities. 

External Review: Two Promising Approaches 6 OEI-01-99-00051 
Medicare Coverage of ESRD 

In 1972, Medicare began providing coverage to individuals with ESRD, or permanent 

kidney failure, making it the only entitlement criteria for Medicare based solely on a 

disease category.2 Medicare covers all treatment methods for patients: hemodialysis, 

peritoneal dialysis, and renal transplants. Patients receiving hemodialysis, the most 

common method, typically receive treatment in outpatient facilities three times a week. 

Peritoneal patients typically perform daily treatments at home and rely on outpatient 

facilities for ongoing support. (See Primer on Dialysis.) 

Our Inquiry 

In our companion report, External Quality Review of Dialysis Facilities: A Call for 

Greater Accountability, we identified major shortcomings in the external quality review 

system that HCFA relies upon. We indicated that it was overly collegial in nature, that it 

reflected little collaboration between the Networks and the State agencies, and that in 

many respects it lacked accountability. One of our major recommendations to HCFA was 

to hold dialysis facilities more fully accountable for the quality of care they provide. We 

elaborated on steps that could be taken toward that end by (1) revising the Medicare 

Conditions for Coverage, (2) using facility-specific performance measures both to help 

facilities improve the quality of care and to ensure that they meet minimum standards, (3) 

enhancing the role of Medicare certification survey conducted by the State agencies, and 

(4) facilitating the development of publicly accountable mechanisms for identifying 

medical injuries. 

During the course of our inquiry into the external review system, we learned of two 

initiatives that are particularly instructive to how facilities can be held more fully 

accountable. One was a State-initiated effort intended to revitalize the on-site survey 

process through issuing tougher standards, conducting more frequent surveys, and 

developing close collaboration between the State survey agency and the Network. The 

other was a Network-initiated effort to develop facility-specific performance measures 

and to apply them in ways that both foster improvement for all facilities and target 

corrective interventions for poorly performing facilities. Because these initiatives are so 

pertinent to our recommendations, we devote this report to explain them further. 

The promising approaches presented here appear to have wider applicability, although we 

recognize that what works well in one part of the country may not necessarily work well 

elsewhere. We also recognize that our highlighting of these two approaches does not 

necessarily mean that other important initiatives are not taking place. In fact, in our 

companion report we reference a number of such initiatives. 

External Review: Two Promising Approaches 7 OEI-01-99-00051 
Our understanding of the two promising approaches addressed in this report draws on site 

visits, interviews with State surveyors, Network staff, HCFA personnel, and renal 

professionals, and a review of relevant documents. 

We conducted this study in accordance with the Quality Standards for Inspections issued 

by the President’s Council on Integrity and Efficiency. 

External Review: Two Promising Approaches 8 OEI-01-99-00051 
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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: Two Promising Approaches 9 OEI-01-99-00051 
INITIATIVES 

Initiative 1. Collaborative enforcement of more stringent State 

standards. 

Through its licensure program, the Texas Department of Health has increased its 

regulatory presence by requiring facilities to meet standards that exceed Medicare’s and by 

enforcing them through frequent on-site surveys. The program has also established a 

formal working relationship between the Department (the State survey agency) and the 

End-Stage Renal Network of Texas, Inc. (Network #14). This collaboration is facilitated 

in part by the fact that the Network covers only the State of Texas, whereas most other 

Networks cover several States. 

History of the Texas licensure program 

The Texas initiative to license dialysis facilities grew out of concerns for patient safety 

precipitated by several well- publicized events. In 1994, 14 patients contracted hepatitis B 

in a Houston dialysis facility that failed to take the appropriate precautions to prevent the 

spread of infectious diseases. As a result, the city of Houston’s Health Department alerted 

the State agency. Upon its investigation, the State found the facility out of compliance 

with several Medicare Conditions for Coverage related to infection control and it placed 

the facility on a 23-day Medicare termination track. Shortly thereafter another complaint 

investigation at the same facility identified continuing problems with infection control and 

the facility was placed on a second 23-day termination track. The facility received no 

monetary or administrative penalty such as exclusion from the Medicare program for the 

harm it caused patients. The lack of any substantiative corrective action led concerns 

about the ability of the Federal oversight system to protect patients from harm in dialysis 

facilities. 

Thus, the State legislature in 1995 enacted a law requiring all dialysis facilities to be 

licensed in order to operate in the State.3 The legislation established a formal relationship 

between the Department of Health and the Network’s medical review board, which 

comprises local renal professionals with clinical expertise as well as patient 

representatives.4 

The State legislature established licensing fees for 250 dialysis facilities in the State. 

Facilities pay an initial licensing fee of $2,000 and an annual licensing fee that ranges from 

$1,500 - $2,500 depending on the number of dialysis treatments at the facility. Licensure 

fees are not directly funneled to the program. Fees go into the State general fund and 

program funding is appropriated every two years. Recently, due to budget cuts to the 

Department of Health as a whole, the future operations of the program may be reduced.5 

External Review: Two Promising Approaches 10 OEI-01-99-00051 
Texas standards for dialysis facilities 

The Texas Department of Health, with input from the Network’s medical review board

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

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

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

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

programs led by the facility’s governing body. This program must include data analysis

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

Medicare Conditions include annual reporting on a set of standardized performance

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

requirements for water treatment.

Another important

licensure standard is the

requirement to report

adverse events. 

Facilities must report all

events involving a

patient death or

hospitalization,

conversions of staff or

patients to hepatitis B+

status, fire, or a natural

disaster. These reports

must be submitted

within 10 working days

to the Department of

Health. The State

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

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

hospitalization. (See table 1.) 

Network-State collaboration around on-site surveys 

The Department of Health enforces its minimum standards for dialysis facilities primarily 

through unannounced on-site surveys. With its additional funds from licensure fees, Texas 

is able to conduct surveys more frequently than the national average. In the first year of 

the program, the State surveyed all of its approximately 250 facilities. Subsequently, the 

State has surveyed about half of all facilities annually.6 By contrast in 1998, only 17 

percent of existing facilities nationwide received a Medicare survey. (See our companion 

study entitled External Quality Review of Dialysis Facilities: A Call for Greater 

Accountability.) Also due to additional funds, Texas has been able to maintain surveyors 

that specialize in surveying dialysis facilities. 

Table 1. Dialysis Facility Accident Reports 

Occurrence 1996-1997 1997-1998 1998-1999* 

Death 32 28 6 

Hospitalization 275 565 543 

Conversions to 

hepatitis B+ 

10 patients 6 patients 

1 staff** 

14 patients 

Fire 1 1 3 

* As of June 18, 1999 

** Staff found to be hepatitis B+ at hire 

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

External Review: Two Promising Approaches 11 OEI-01-99-00051 
A unique aspect of the Texas survey process is the involvement of the Network’s medical 

review board. When a surveyor identifies a facility problem that is related or potentially 

related to negative patient 

outcomes, it refers the 

facility to the medical review 

board for review. The 

medical review board 

reviews a short, blinded 

narrative prepared by the 

surveyor indicating the 

reason for the referral, 

comparative data on the 

facility’s performance, and 

the facility’s history. Based 

on its review, the medical 

review board makes 

recommendations to the 

State for the appropriate 

corrective action plan the 

Figure 1. Examples of survey deficiencies that led the State 

to refer a facility to the Network’s medical review board. 

Facility failure to: 

< assess patient status before beginning treatment

< train and supervise dialysis technicians

< monitor patients during treatment

< provide adequate dialysis

< provide effective treatment of anemia

< ensure water is safe for dialysis

< provide a sanitary environment for dialysis

< provide adequate infection control practices

< provide sufficient qualified staff

State should impose. The State made 33 referrals to the Network in the first year of the 

program, 11 in the second year, and 21 in the third year. (See figure 1.) 

The State usually agrees with the Network’s recommendations and informs the facility of 

the corrective action(s) the State is requiring the facility to take.7 The State can require a 

facility to develop and implement one of three levels of corrective action plans. A level 

one corrective action plan involves little monitoring by the State and none by the 

Network. Level two and level three plans involve more monitoring that can include the 

appointment of an on-site monitor or manager, subject to the approval of the State and the 

medical review board. In addition, the State can take enforcement actions against a 

facility that range from fines to revoking licenses. 

Once the State requires a facility to develop and implement a corrective action plan, the 

medical review board continues to play an important role. The medical review board, at 

the request of the facility, can provide important technical assistance on corrective action 

plans. For more serious problems the medical review board and the State jointly monitor 

the facility for up to 6 months. During this time, the medical review board and the State 

review key facility documents, including policies, educational programs for staff, practice 

audits, and quality improvement meetings. 

If the State requires the facility to appoint a monitor, the medical review board and the 

State receive regular updates directly from him or her. When the medical review board 

determines that the facility has made sufficient progress towards correcting the problem, it 

recommends to the State that the facility be released from its monitoring requirements. 

The medical review board can also recommends follow-up surveys. The State reviews the 

medical review board’s recommendation and makes the final decision. 

External Review: Two Promising Approaches 12 OEI-01-99-00051 
Additional collaboration sometimes occurs in complaint investigations when the State 

finds it needs some additional clinical expertise. The State may consult the Network when 

it receives a complaint that requires the expertise of the medical review board such as 

complaints involving questionable medical practice and patient behavior. The State 

surveyors may consult with the Network staff or its medical review board prior to going 

on-site and sometimes invite Network staff or medical review board members to assist on 

the actual survey depending on the complexity of the issue. Once the surveyors perform a 

complaint survey, the process is similar to the one described above for any survey process. 

In addition, the Network can refer complaints to the State, which most other Networks 

routinely do as well. 

The renal professionals we interviewed in Texas felt that an increase in on-site surveys and 

the collaboration between the State and the Network in monitoring facilities has resulted 

in greater accountability of facilities. Surveyors and renal professionals agreed the 

frequent surveys help enforce minimum standards. Surveyors also indicated that they now 

have greater credibility when they are on-site because they are backed by the Network’s 

medical review board that has clinical expertise. As a result, the State surveyors are able 

to more easily cite facilities for quality of care problems. Facility staff also reported that 

surveys now are more valuable and substantive due to the new standards. 

Network-State collaboration around standardized performance measures 

Another major aspect of the Texas licensure program involves the sharing of standardized 

performance measures between the State and the Network — a practice that rarely occurs 

in other States. Beginning in 1997, the State contracted with the Network to collect a 

core set of performance measures on a sample of 30 patients at each facility from the last 

quarter of 1996. Under its contract with the State, the Network collects data on the 

adequacy of dialysis (urea reduction ratio and Kt/V), the management of anemia 

(hematocrit level), and the rate of peritonitis episodes (a bacterial infection that commonly 

afflicts patients undergoing peritoneal dialysis). The Network also collects on its own 

patient demographic information and mortality data. Facilities report the data to the 

Network either by filling out paper forms or by saving the data on a computer diskette for 

electronic transmission. Most facilities use the paper method. 

The Network uses the data it collects on behalf of the State to produce annual 

facility-specific reports called Quality of Care Indicator Reports. These reports compare 

a facility’s performance to itself over time and to other facilities in the State on each 

performance measure required by the State. In addition, national comparative data and 

clinical guidelines are included where available. The Network uses the additional data it 

collects on its own to produce annual facility-specific reports entitled, Facility Trends and 

Profiles. These reports compare a facility’s mortality rate and patient demographic to 

other facilities in the State. The Network disseminates both reports to the individual 

facilities and to the State. The facility-specific reports are not released to the public; the 

data are protected under the licensure law. However, some aggregate information is 

External Review: Two Promising Approaches 13 OEI-01-99-00051 
available to the public. The Network also uses the data to identify future quality 

improvement activities. 

Surveyors use both reports as they conduct surveys. Prior to going on site, surveyors 

review a facility’s reports to note areas that warrant further probing. While on site, 

surveyors carefully walk through the reports with the head nursing staff and explain how 

to interpret the information. Also, surveyors probe areas of poor performance. If a 

facility cannot provide an adequate explanation for its poor performance, surveyors will 

discuss possible improvement activities. Because licensure standards require facilities to 

conduct their own quality assurance program, surveyors will cite a facility if they 

determine that the facility was not making efforts to conduct its own internal monitoring 

of the performance measures and take corrective action as needed. 

Texas licensure also requires the Network’s medical review board to review the 

facility-specific reports annually and to refer poor performers to the State. To meet this 

task, the medical review board developed criteria to identify facilities for a referral. For 

1999, the medical review board used the following criteria: (1) any two indicators that 

were one standard deviation below the State mean, (2) any one indicator that was two 

standard deviations below the State mean, or (3) any statistically significant, high 3-year 

aggregate standard mortality rate. Facilities referred by the Network receive a high 

priority for a survey.8 The Network referred 39 facilities in 1999, 31 facilities in 1998, and 

47 facilities in 1997. 

Network staff and medical review board members stated that the data were helpful for 

their quality improvement activities. Without a licensure law requiring facilities to report 

and ensuring confidentiality, as well as providing additional funding, the Network felt it 

would be difficult for them to collect and analyze facility-specific data of this scale. 

Facility staff we spoke with found the facility-specific report helpful for internal quality 

improvement activities. Facilities also reported that without the Network data many 

would not have comparative information on their performance. The performance data 

suggest that improvements have been made. The percent of patients receiving adequate 

dialysis, as measured by a urea reduction ratio >65 percent, has increased from 77.5 

percent in 1996 to 84 percent in 1997.9 

External Review: Two Promising Approaches 14 OEI-01-99-00051 
Initiative 2. Use of facility-specific performance measures. 

The Renal Network, Inc. collects and uses facility-specific performance data involving all 

patients at all facilities in its region. It uses these data in a balanced fashion: to foster 

improvements in the overall level of care as well as to identify poor performers for further 

review. 

The Renal Network is a consolidation of two Networks. In 1996, HCFA awarded the 

Tri-State Renal Network (#9) covering the State of Indiana, Kentucky, and Ohio the 

contract for Network #10 covering the State of Illinois to become The Renal Network, 

Inc. (#9/10). The Network covers over 390 facilities that serve an estimated 28,000 

patients. Based on the number of patients undergoing treatment in the Network, it is the 

largest of the 18 Networks. The Network has not received additional funds from HCFA 

to perform this project.10 

Collecting performance measures 

The Network collects performance measures from facilities on all their patients. The 

selected performance measures cover 

the following treatment areas: 

adequacy of dialysis, anemia 

management, and nutrition. The 

Network collects the measures at 

various times throughout the year 

depending on the measure itself and 

the treatment modality of the patient. 

The Network also routinely collects 

and updates patient demographic and 

medical history information, such as a 

patient’s physician, type of vascular 

access, progress towards a transplant, 

and mortality. The Network’s 

patient-specific data provides greater 

analytical possibilities. On facilities 

themselves, the Network collects key 

descriptive information such as 

location, number of shifts, chain 

Figure 2. Performance Measures Collected by 

The Renal Network 

For all hemodialysis patients for five months each 

year, the Network collects: urea reduction ratio, 

Kt/V, hematocrit, ferritin levels, transferrin 

saturation, and type of vascular access, serum 

albumin. 

For all peritoneal patients on six months each year, 

the Network collects: Kt/V, serum creatinine, 

hemoglobin, ferritin levels, transferrin saturation, 

blood pressure, and serum albumin. 

For all patients the Network updates monthly: date 

of birth, sex, race, date of first dialysis, primary 

diagnosis, co-morbidities, insurer, physician, type of 

dialysis, transplant status, and mortality data. 

affiliation, and names of key personnel. (See figure 2.) 

To facilitate the collection of performance measures, the Network developed, and has 

since revised, a software program for facilities to enter and electronically submit their data 

to the Network on a computer diskette. The Network downloads the data from the 

diskettes into its own database for analysis. This type of electronic submission greatly 

reduces the costs and errors associated with data entry and allows for more timely 

External Review: Two Promising Approaches 15 OEI-01-99-00051 
analysis. The data are only about three months old when the Network feeds it back to 

facilities. 

Using performance measures to improve the quality of care 

Facility-specific reports. Since 1996, the Network has created and disseminated 

facility-specific performance reports to all facilities. Facilities receive their own individual 

Clinical Performance Measures Feedback Report three times a year. (See appendix A.) 

The Network’s report is similar in format to HCFA’s national reports on the quality of 

care in dialysis facilities. However, HCFA’s report makes comparisons of performance 

measures at the Network level only and does not provide any information on the 

performance of individual facilities.11 In contrast, the Network’s reports compare an 

individual facility to its own past performance and to other facilities in its region, State, 

and Network on each performance measure.12 The Clinical Performance Measures

Feedback Report also contains the number of patients, mean, and standard deviation for 

each measure. In addition, the report contains a comparison of a facility’s patient 

demographics compared to the region, State, and Network to help address case mix 

issues. 

The facility’s administrator, medical director, and all attending physicians receive a copy 

of the report. The Network does not routinely share these reports with the State survey 

agencies. However, some State surveyors review a facility’s reports when on site. The 

Network also does not share the facility-specific reports with the public. Instead, it 

releases reports to the public presenting aggregate trends at the State and Network level. 

Since 1991, the Network also has disseminated the Patient Demographic Report. This 

annual report compares a facility’s patient population to its State and Network and 

provides an analysis of facility-specific mortality rates. These reports also are not 

routinely shared with the State and are not disclosed to the public. 

The Network’s data suggest that the percentage of hemodialysis patients with adequate 

dialysis, as measured by a urea reduction ratio of >65 percent, has increased from 71 

percent in 4th quarter 1997 to 76 percent in 4th quarter 1998. Network data also suggest 

that anemia management has improved as measured by higher patient hematocrit levels. 

The percentage of hemodialysis patients with a hematocrit >31 percent has increased from 

72 to 79 percent over the same time period.13 The nurses and technicians we interviewed 

indicated that the facility-specific reports are the most important activity the Network 

performs. Without the Network data, nurses stated they would have no idea how their 

facility’s performance compared to others in the area. These reports were a motivator for 

improvement, according to these nurses. The nurses also stated that the benefits of having 

the reports outweighed the burden on the facility to report the data. 

Physician-specific reports. The Renal Network is the only Network that provides 

physician-specific reports. In 1997, the Network created a Physician Activity Sheet, that 

compares the performance of individual physicians to their peers at the facility, State, and 

External Review: Two Promising Approaches 16 OEI-01-99-00051 
Network level and to clinical guidelines on the performance measures collected by the 

Network. (See appendix B.) The Network disseminates the physician reports three times 

a year. Only individual physicians receive their report unless a physician group requests to 

have an aggregate analysis of its physicians. Physicians are provided the opportunity to 

verify the patients assigned to them. 

The Network’s analysis suggests that physician-specific reports have been influential in 

improving the quality of care. A recent Network survey showed that 55 percent of 

physicians use the reports for internal quality improvement activities and over 40 percent 

review them as part of dialysis facility meetings and/or to assess their overall patient 

population. Another Network analysis showed that even as the patient/physician ratio has 

increased from 45.9 to 51.4 between 1997 and 1998, physician performance has improved. 

Between 1997 and 1998 the percentage of patients with Kt/V 1.2 increased from 77 

percent to 80 percent and the percentage of patients with hematocrits 31 increased from 

71 to 77. The Network concluded that these physician report cards have helped fostered 

improvements by encouraging physicians to better follow clinical guidelines.14 

Identifying topics for improvement activities. The Network also conducts additional 

analyses of the performance measures to identify trends. This helps the Network choose 

topic areas for future improvement activities that will have the greatest impact on 

improving quality. The Network is flexible in the types of analyses it performs. It tries to 

incorporate suggestions from the renal community as well as address timely issues. In the 

past, the Network has conducted special analyses looking at the comparative performance 

of facilities located in metropolitan regions as well as looking at the comparative 

performance of facilities after new patients have been excluded. 

Using performance measures to identify poor performers 

Facility profiling tool to identify poor performers. In order to help identify poor 

performers, the Network’s medical review board is developing a new system that profiles 

facilities based on their performance in several categories. The profiling tool uses the 

following categories: complaints, data compliance, mortality, hospitalization, the use of 

catheters, facility-specific core indicators, and participation in Network projects. Each 

category captures a different method of evaluating the quality of care provided at the 

facility. This tool is based on the notions that quality of care cannot always be captured by 

one or even several performance measures, and a facility that provides poor clinical care is 

probably performing poorly on administrative duties as well, which are easier to measure. 

A facility receives a hit for poor performance or non-compliance in each of the categories 

based on the criteria determined by the medical review board. For example, if a facility’s 

urea reduction ratio is two standard deviations below the Network average, it would 

receive one hit. Each hit is multiplied by a weight that is attributed based on its 

correlation to the quality of care in the facility. For instance, a hit for a mortality rate is 

External Review: Two Promising Approaches 17 OEI-01-99-00051 
multiplied by greater weight than a hit for data compliance. The hit multiplied by the 

weight equals the number of points the facility receives. The total sum of a facility’s 

points determines its overall score. In theory, the higher the score, the poorer the 

performance of the facility. 

The Network plots the final scores of all facilities and identifies facilities in the highest 

decile. The Network performs a pattern analysis on the highest tenth decile to determine 

any common factors that might help in conducting interventions, such as whether they are 

all in the same metropolitan area. Once this analysis is complete, the Board determines 

how to proceed with the poor performers. Interventions are specific to the problems and 

facilities involved and can range from off-site assistance to on-site focused reviews. 

The Network recently intervened with a facility identified through this profiling system. 

In this instance, the Network convened an interdisciplinary team to conduct a formal site 

visit of the facility using a protocol developed by the Network. Prior to going on site, the 

group reviewed a sample of patient medical records. While on site, the team conducted 

interviews of the nursing and technical staff, the facility administrator, the medical 

director, and several patients. Based on its findings, the Network required the facility to 

develop and implement an improvement plan, subject to the medical review board’s 

approval, and to submit monthly documentation of its progress. Since that time, the 

Network has been on site to help the facility implement its plan and has seen signs of 

improvement. The team plans to revisit the facility six months after its initial site visit to 

verify its progress. 

Comparative analysis to identify a corporate chain for intervention. Another method 

the Network uses to identify poor performer is comparative analyses. The Network 

reviews the comparative reports it sends to facilities and performs additional analyses as 

necessary to identify facilities that are lagging behind. Recently, the Network analyzed the 

comparative performance of facilities by chain affiliation. The analysis showed that one of 

the three largest corporations in a metropolitan area was lagging significantly behind the 

others on several performance measures. Due to resource constraints, it was impossible 

for the Network to work with each individual facility; instead, it intervened at the 

corporate level. The Network shared the data with the regional corporate leaders and 

they agreed to convene their medical directors together for a formal session with the 

Network. At this session, the Network presented its analysis and provided the medical 

directors with information on how to improve the quality of care at their facilities. The 

Network has since seen an improvement in the chain's performance. The Network 

indicated to us that without the quantitative evidence it would have been difficult to get 

the attention and subsequent support of the corporation for quality improvement activities. 

External Review: Two Promising Approaches 18 OEI-01-99-00051 
CONCLUSION 

Better collaboration between State survey agencies and Networks and better use of 

facility-specific standardized performance data are two keys to improving the oversight of 

dialysis facilities. In our companion report, External Quality Review of Dialysis

Facilities: A Call for Greater Accountability, we set forth recommendations calling for 

national reforms in these directions. In this report, we focused on two local initiatives that 

provide models for such reforms and that warrant careful consideration in that context. 

The Texas initiative occurred because the State legislature became concerned about the 

adequacy of dialysis care after some highly publicized reports of poor care. The 

legislature’s interventions led to a significant change in the thrust of external oversight 

conducted on dialysis facilities in the State. It shifted what was a highly collegial approach 

to oversight to one that was more balanced between collegial and regulatory approaches. 

It also brought clarity to the relationship between the Network and State by establishing 

clear operational parameters. The infusion of State funds and the establishment of new 

standards for facilities were all keys to its success. 

The Renal Network’s initiative occurred because its staff and board members sought, with 

some sense of urgency, to use performance data to hold facilities more accountable for 

their performance. By collecting a broad range of facility-specific measures from 100 

percent of the patients at those facilities, it set a foundation for using performance data as 

a rigorous tool for oversight. It emphasized the use of such data to improve overall 

professional care processes and outcomes, but also showed a readiness to use them to 

target and correct poorly performing facilities. This effort also illustrates the potential that 

such data can have in profiling the performance of individual physicians. 

These two initiatives demonstrate what Networks and States can accomplish given 

innovative leadership and adequate resources. In both cases, the Networks play central 

roles promoting continuous quality improvement and enforcing minimum standards of 

care. Although we did not evaluate the results achieved by each, we find both initiatives 

to be promising enough in their conception and early implementation to warrant careful 

consideration by other Networks and States, and by HCFA, as HCFA seeks to develop 

effective mechanisms for holding facilities more fully accountable for the quality of care 

they provide. 

External Review: Two Promising Approaches 19 OEI-01-99-00051 
APPENDIX A 

An Excerpt from a Facility-Specific Report 

The following are highlights of the information provided in The Renal Network’s Clinical

Performance Measures Feedback Report for in-center hemodialysis patients for 4th 

quarter 1998. The complete report also contains information on Kt/V, hematocrit, 

hemoglobin, Epoetin dosage, ferritin levels, transferrin saturation, and serum albumin. 

External Review: Two Promising Approaches 20 OEI-01-99-00051 
APPENDIX B 

An Excerpt from a Physician-Specific Report 

The following are highlights of the information provided in The Renal Network’s 

Physician Activity Report for in-center, hemodialysis patients for November 1999. The 

complete report also contains information on urea reduction ratio, Kt/V, transferrin 

saturation, and serum albumin. 

Your % pts meeting the criteria 

during July 1999 is 0.22 

std dev above the Network rate 

Your % pts meeting the criteria 

during July 1999 is 0.19 

std dev below the Network rate 

External Review: Two Promising Approaches 21 OEI-01-99-00051 
APPENDIX C 

ENDNOTES

1. The ESRD Networks, established in 1976, are HCFA’s main contractors for monitoring 

dialysis facilities. The main mission of the Networks as set out in the Statute is to ensure 

“effective and efficient administration of the benefits” provided under the ESRD program. 

Section 1881(c) of the Social Security Act. 

2. In order to qualify, individuals must be fully insured under Social Security or be a dependent of 

someone who is. In 1996, about 8 percent of individuals with ESRD who needed treatment did 

not qualify for Medicare coverage. U.S. House of Representatives, Committee on Ways and 

Means, 1998 Green Book, (Washington, DC: Government Printing Office), 162. 

3. Texas Health and Safety Code, Chapter 251, End-Stage Renal Disease Facilities. In 1996, the 

department implemented the final rules and standards of the program; these were subsequently 

revised in 1999. 

4. Health Facility Licensing Division, Title 25 Texas Administrative Code, Chapter 117 EndStage Renal Disease Facilities Licensing Rules, effective April 11, 1999. 

5. Due to current budget constraints, the Texas Department of Health reduced the number of 

full-time surveyors. This reduction in staff will likely have an impact on the frequency of surveys. 

6. In the first year, (9/l/96 to 10/30/97) the State surveyed all 237 facilities. In the second year 

(11/l/97 to 9/l/98) the State conducted about 109 surveys and in the third year (9/l/98 to 8/30/99) 

the State conducted about 137 surveys. 

7. The State and Network each maintain their independent authorities. If the State disagrees with 

the medical review board’s recommendation it can take its own course of action. Similarly, the 

Network can require facilities under its own authority to develop and implement corrective action 

plans if it disagrees with the State. 

8. The current priority list for State surveys is as follows: (1) complaints, (2) initial surveys, (3) 

expansions -- facilities adding additional dialysis stations, (4) facilities referred to the Network’s 

medical review board the previous year, (5) referrals from the medical review board based on the 

performance data, (6) facilities chosen by surveyors, and (7) routine resurveys -- facilities that 

have gone the longest without a survey. 

9. 1998 Quality of Care Indicators Report, Texas Department of Health ESRD Licensing 

Program, July 1998, p 4. 

10. Under statute Networks are supposed to receive 50 cents per dialysis treatment in their 

region to fund their activities. Social Security Act 1881(b). 

External Review: Two Promising Approaches 22 OEI-01-99-00051 
APPENDIX C 

11. HCFA does not collect a large enough sample to analyze the data at the facility level. 

12. “Region” for this report is defined as a health service region. 

13. The Renal Network’s, Inc., 1998 Annual Report. 

14. Emil P. Paganini et. al., "Physician Activity Reporting: Is it Worthwhile?" American Society

of Nephrology 1999 Program Abstracts On-line from 32nd Annual Meeting, 

http://www.asn-online.coni/ accessed November 23, 1999. 

External Review: Two Promising Approaches 23 OEI-01-99-00051