GAO

United States General Accounting Office

Report to the Special Committee on

Aging, U.S. Senate

June 2000 MEDICARE QUALITY

OF CARE

Oversight of Kidney

Dialysis Facilities

Needs Improvement

GAO/HEHS-00-114

Page 1 GAO/HEHS-00-114 Medicare Quality of Care

Contents

Letter 3

Appendixes Appendix I: Scope and Methodology 28

Appendix II: Comparison of New ESRD Patients by Age and Primary

Diagnosis, 1989, 1993, and 1997 30

Appendix III: Medicare Conditions of Participation for Dialysis

Facilities 31

Appendix IV: Comments From the Health Care Financing

Administration 32

Tables Table 1: Number and Percentage of Dialysis Facilities Resurveyed,

1993-99 10

Table 2: Top Five Conditions of Participation Identified as Deficient

and Their Potential Adverse Effects, 1993-99 12

Table 3: Overview of Enforcement Tools Available to HCFA 17

Abbreviations

ESRD end-stage renal disease

HCFA Health Care Financing Administration

NIH National Institutes of Health

OSCAR On-Line Survey, Certification, and Reporting

USRDS United States Renal Data System
Page 2 GAO/HEHS-00-114 Medicare Quality of Care
Page 3 GAO/HEHS-00-114 Medicare Quality of Care

United States General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-284615 Letr

June 23, 2000

The Honorable Charles E. Grassley

Chairman

The Honorable John B. Breaux

Ranking Minority Member

Special Committee on Aging

United States Senate

More than 288,000 people suffering from kidney failure depend on

Medicare to cover the cost of the life-sustaining kidney dialysis treatments

they receive several times each week. These end-stage renal disease

(ESRD) beneficiaries are among Medicare’s sickest and most vulnerable

patients, costing Medicare about $10 billion in 1998. Dialysis is a technically

complicated process, and mistakes or poor procedures can cause patients

serious injury or even death. The quality of care that these Medicare

beneficiaries receive at some of the nation’s 3,817 dialysis facilities is in

dispute. On the positive side, death and hospitalization rates related to

dialysis appear to have declined over time. But at the same time, concerns

have been raised about reduced staffing levels at ESRD facilities and the

greater use of potentially less skilled technicians rather than nursing

personnel to administer dialysis treatments.

The Health Care Financing Administration (HCFA), the agency that

administers Medicare, is responsible for overseeing adherence to its

quality-of-care standards and promoting quality improvement among ESRD

facilities. HCFA pays state agencies to perform on-site inspections of these

facilities and contracts with 18 organizations, called ESRD networks, to

gather data about dialysis treatments and conduct activities to improve the

quality of care patients receive. You asked us to evaluate HCFA’s processes

to ensure that ESRD facilities meet quality-of-care standards. We focused

our work on determining (1) the extent to which on-site inspections of

dialysis facilities are performed and problems are identified, (2) whether an

effective process exists to ensure that dialysis facilities correct problems,

and (3) what steps are being taken to use available monitoring resources as

effectively as possible.

Our report is based in part on analysis of information from national

databases compiled by HCFA, state survey agencies, and ESRD networks.

For a more in-depth review of actual monitoring and enforcement
B-284615

Page 4 GAO/HEHS-00-114 Medicare Quality of Care

activities, we focused on work being done by state agencies in California,

New Jersey, Texas, Oregon, and Washington, and at the four HCFA regional

offices and the four ESRD networks that oversee dialysis facilities in those

states. We conducted our work between November 1999 and May 2000 in

accordance with generally accepted government auditing standards.

Appendix I contains a more detailed explanation of our scope and

methodology.

Results in Brief Over the past 7 years, the number of HCFA-funded inspections of dialysis

facilities has declined significantly. These unannounced inspections,

commonly called surveys, which are HCFA’s primary tool for ensuring that

facilities meet standards protecting patients’ health and safety, were

conducted at only 11 percent of the dialysis facilities eligible for

recertification in 1999, compared with 52 percent in 1993. When such

surveys were conducted, they showed that noncompliance is a problem.

For example, in 1999, 15 percent of the surveyed facilities had deficiencies

severe enough, if uncorrected, to warrant terminating their participation in

Medicare. To enable more frequent surveys, HCFA has requested a

threefold increase in funding for on-site inspections in its budget request

for fiscal year 2001. This funding level would support a survey of all dialysis

facilities every 3 years.

While increasing on-site surveys will likely encourage more facilities to

improve conditions, the enforcement system provides little assurance that

corrections will be sustained. Essentially, HCFA’s only current enforcement

tool is to terminate a facility from the Medicare program if it does not

correct its deficiencies. The threat of termination brings nearly all facilities

into compliance for a while, but they do not necessarily stay that way. In

every state we visited, we found instances in which facilities that had

corrected their problems were found to have serious problems shortly

afterward. The Congress has authorized HCFA to use other enforcement

tools, such as the denial of payment for Medicare services, but HCFA

maintains that this authority would have limited effectiveness and

applicability. For example, HCFA has not taken steps to use denial of

payments because, like termination from the program, this sanction could

be applied only if the facility failed to return to compliance.

HCFA is planning to use clinical and outcome data (such as patient death

rates) more extensively in deciding which facilities to survey and monitor

more closely. Although the information HCFA intends to use may help in

that regard, it has limitations as well. These data are designed to give a
B-284615

Page 5 GAO/HEHS-00-114 Medicare Quality of Care

picture of the care being provided to ESRD patients generally, but they are

often not current, detailed, or reliable enough to detect specific facilities

that are providing substandard services. For example, we found instances

in which facilities had above-average clinical outcome scores but were

found to have serious deficiencies during on-site surveys. HCFA’s ESRD

networks already collect considerable facility-specific information, such as

patient complaints, that is more timely, but they do not necessarily share it

with state survey agencies. One state where such sharing had occurred

showed positive results.

To give facilities a greater incentive to remain in compliance, we suggest

that the Congress consider strengthening HCFA’s authority to impose

monetary penalties on dialysis facilities that have the most severe or

repeated serious deficiencies. We are also recommending that HCFA

strengthen its systems for targeting on-site surveys and make use of

additional available enforcement tools.

Background

Kidney Dialysis Services The Medicare program covers dialysis services for patients suffering from

ESRD, the stage of kidney impairment that is considered irreversible and

requires either regular dialysis treatments or a kidney transplant to

maintain life. Kidney failure can result not only directly from kidney

disease but also indirectly from other diseases, such as diabetes and

hypertension. Dialysis is a technically complicated process that is

individualized to accommodate each patient’s needs. There are two general

modes of dialysis treatment: hemodialysis and peritoneal dialysis, both of

which can be performed at a dialysis facility or at home. During

hemodialysis, the patient’s blood is filtered through a dialysis machine that

withdraws fluid and toxic materials before returning cleansed blood to the

patient. In peritoneal dialysis, the removal of fluid and toxic materials takes

place within the abdominal cavity by means of cleansing fluid and drainage.

The vast majority of ESRD patients (86 percent) receive hemodialysis.

Generally, an ESRD patient has three dialysis sessions per week, lasting 3

to 4 hours each, usually provided on an outpatient basis.

Program Has Grown

Dramatically

Almost all dialysis patients, regardless of their age, are Medicare-eligible,

making Medicare the main payer of dialysis services. Total expenditures for
B-284615

Page 6 GAO/HEHS-00-114 Medicare Quality of Care

the Medicare ESRD program, authorized in 1972, have grown steadily from

$229 million in 1974 to over $11.4 billion in 1998. A major reason for the

increase in program costs is the dramatic rise in enrollment: total

enrollment for those beneficiaries requiring dialysis or transplants has

risen from approximately 16,000 in 1974 to over 360,000 in 1998. The

increase in enrollment has been fueled by expansion of the criteria that

determine who is an acceptable candidate for dialysis. For example,

physicians are recommending dialysis for older patients—the number of

patients in the ESRD program who are 65 or older increased from 5 percent

in 1973 to 50 percent in 1997. In addition, the program is admitting more

patients with hypertension and severe diabetes (see app. II for additional

information on the changing demographics of dialysis patients). The

number of dialysis facilities has grown in step with the growth in the

number of dialysis patients. Since 1993, the number of facilities has

increased at an average rate of 6 percent annually, reaching 3,817

participating facilities in 1999.

Medicare payments, which are based primarily on a fixed rate per

treatment, have essentially remained unchanged since program inception.

For facilities that aim to maximize profits, such fixed payment rates can

create incentives for efficiencies, but they can also be an incentive for

underservice. This movement toward greater efficiencies has spurred

considerable industry consolidation into for-profit facilities and chain

providers. The Medicare Payment Advisory Commission reported that in

1997, 68 percent of the non-hospital-based facilities were for-profit. And

three-quarters of all for-profit dialysis facilities were affiliated with a chain.

In 1998, dialysis facilities used about 12 percent fewer staff to administer

dialysis than in 1993. Furthermore, they increasingly rely on lower-cost

technicians rather than nursing personnel to monitor dialysis treatments.

HCFA Relies on State

Agencies and ESRD

Networks for Oversight

HCFA has established a set of quality-of-care standards, called “conditions

of participation,” that dialysis facilities are required to meet before they can

receive Medicare payments. The conditions of participation are regulatory

standards, first established in 1976, designed to ensure that dialysis

facilities are capable of furnishing quality care in a safe environment. There

are 11 conditions of participation covering areas such as the physical

environment of the facility, the adequacy of patient care plans, and the

management of the facility (see app. III for a more detailed description of

the 11 conditions of participation).
B-284615

Page 7 GAO/HEHS-00-114 Medicare Quality of Care

Oversight of the program falls primarily on state survey agencies and ESRD

networks working under contract with HCFA. Each plays a separate

oversight role. State survey agencies—generally state departments of

health—are responsible for verifying that dialysis facilities comply with

conditions of participation. They do so primarily through unannounced site

surveys of dialysis facilities. These agencies, which have expertise in health

and safety issues, are frequently responsible for surveying other types of

health care facilities that require certification for participation in the

Medicare program, including nursing homes and home health agencies. No

statutory requirements exist for the frequency of state surveys of dialysis

facilities; rather, the frequency is determined mainly by the funding

available. For fiscal year 2000, state agencies are expected to receive about

$2 million for survey and certification of dialysis facilities.

State agencies, with HCFA’s concurrence, determine whether problems

identified during a survey are serious enough to warrant finding a facility

out of compliance with a condition of participation. If a facility is found to

be out of compliance and the deficiencies are not corrected—generally

within 90 days—the facility is subject to termination from the Medicare

program. If deficiencies are so severe that they put patients’ health and

safety in immediate jeopardy, the facility has only 23 days to make

corrections (this is called the “fast track” for termination). To determine

whether deficiencies have been adequately addressed, the agency conducts

another on-site survey. If the facility is still out of compliance, the state

agency refers the facility to HCFA, which is responsible for prescribing and

reviewing additional corrective actions and, if these additional steps are

insufficient, proceeding with the termination process. If deficiencies are

corrected or plans for correction are developed at any time during this

process, the process to terminate is stopped.

ESRD networks are organizations that contract with HCFA to help ensure

effective and efficient administration of the ESRD program and improve

program performance. The 18 networks are funded through a fifty-cent

charge on each Medicare dialysis treatment, which for fiscal year 2001 is

expected to total about $18 million. ESRD networks have medical staff

with experience in dialysis, and their boards of directors and medical

review boards are composed of dialysis facility representatives, physicians,

and dialysis patients. As a result, they tend to have more clinical expertise

specifically on dialysis than do state survey agencies.
B-284615

Page 8 GAO/HEHS-00-114 Medicare Quality of Care

In contrast to state agencies, which check for adherence to conditions of

participation, the networks are responsible for quality improvement, which

focuses on improving the clinical outcomes of dialysis facilities. Network

activities include identifying and collecting data on key clinical indicators

and furnishing individual facilities with regional performance data on

clinical indicators so a facility can compare its performance with that of

other facilities. The networks also provide technical support to help

facilities improve their performance on the key indicators. In the aggregate,

these indicators show that the quality of dialysis care nationwide has been

improving. As evidence, HCFA’s 1999 data report cited first-year patient

death rates, which, after adjustments for some patient conditions, declined

from more than 30 per 100 patient years in 1986 to slightly more than 21 in

1996.1 The data also showed that in 1997, 72 percent of the sampled

patients received adequate dialysis as measured by urea reduction, an

increase from 59 percent in 1995. The use of clinical outcome data has

evolved from a tool to assess the overall quality of dialysis services at the

patient level to being considered by HCFA as a method to assess the quality

of services at individual facilities.

In addition, networks conduct specific quality improvement projects with

dialysis facilities, handle grievances regarding patient care, and assist

patients in finding dialysis providers. Networks also conduct on-site

inspections at facilities to assess procedures and assist facilities in

improving the quality of care they provide. To participate in Medicare,

facilities must cooperate with network data collection efforts and quality

improvement projects.

Oversight of state survey agencies is coordinated by HCFA’s Center for

Medicaid and State Operations in its central office and its 10 regional

offices. Oversight of the 18 ESRD networks and their activities is

coordinated by HCFA’s Office of Clinical Standards and Quality and

regional offices in Boston, Dallas, Kansas City, and Seattle.

1

National Institutes of Health (NIH), United States Renal Data System (USRDS), USRDS

1999 Annual Data Report (Bethesda, Md.: NIH, Apr. 1999), p. 76.
B-284615

Page 9 GAO/HEHS-00-114 Medicare Quality of Care

On-Site Monitoring

Program Surveys a

Limited Number of

Dialysis Facilities

On-site inspections by state survey agencies are HCFA’s primary oversight

tool to ensure that ESRD facilities meet Medicare conditions of

participation. An effective monitoring program should ensure that

deficiencies are identified and corrected at surveyed facilities and that

facilities are surveyed often and with enough randomness to give facilities

an incentive to remain in compliance with standards. However, the number

of recertification surveys performed each year is decreasing and has

reached the point that only a small fraction of the facilities are surveyed.

This is a matter for concern because we found ample evidence that serious

health and safety problems exist in a number of dialysis facilities.

Recognizing that dwindling surveys presents a serious risk to effective

monitoring, HCFA has requested a nearly threefold increase in funding for

ESRD surveys in its 2001 budget.

Most Facilities Go Many

Years Between Surveys

Inspections are required (1) when a facility begins to participate in

Medicare, (2) when a facility changes or expands services, such as starting

a dialyzer reuse program,2 and (3) when a facility relocates. Aside from

these requirements, there is no provision in law or regulation that sets a

maximum period between surveys. Rather, the interval between a facility’s

initial survey and subsequent recertification surveys depends on HCFA’s

survey goals; indications that additional surveys are needed because of a

complaint or a grievance; and the extent of the survey resources made

available through HCFA’s contract payments to the states and through

other funding sources, such as state appropriations. Generally, states

determine which facilities to survey with only limited input from HCFA or

ESRD networks. State agency officials told us that they use criteria such as

the date of the last survey and the volume and type of complaints received

to set their survey agendas.

Since 1993, the number of HCFA-funded dialysis facility surveys has

declined substantially. At the same time, the number of new facilities

entering the program annually has increased. These new facilities—each

requiring a survey—along with a decrease in funding from HCFA, have led

to a substantial drop in the percentage of existing facilities surveyed (see

table 1). In 1993, 52 percent of facilities in the program prior to 1993

2

A dialyzer is a filter that is used to clean waste material from the patient’s blood. Dialyzers

can be used multiple times on the same patient if dialysis facilities establish procedures—

that comply with Medicare standards—to clean and disinfect dialyzers after each use.
B-284615

Page 10 GAO/HEHS-00-114 Medicare Quality of Care

received a recertification survey. By 1999, only 11 percent of the facilities

subject to a recertification survey were resurveyed. At the current survey

rate, once a dialysis facility receives its initial certification survey, it is not

likely to be resurveyed for about 9 years. Currently, 772 active dialysis

facilities have not been resurveyed in the last 5 years.

Table 1: Number and Percentage of Dialysis Facilities Resurveyed, 1993−99

Note: Our analysis starts with 1993 because it represents the point where the downward trend in

resurvey activity starts. In addition, data from prior years are less complete and likely understate the

true level of survey activity. Nevertheless, the prior-year data show that the number of existing facilities

resurveyed in prior years was comparable to 1993 levels.

Source: GAO analysis based on data from HCFA.

Percentage of Surveyed

Facilities With Condition-ofParticipation Deficiencies Is

Rising

The infrequency of surveys makes it impossible to determine the exact

extent to which dialysis facilities are currently in compliance with the

conditions of participation. However, data indicate that the percentage of

inspected facilities found to be out of compliance has increased

significantly during the 1990s. In 1993, 6 percent of facilities surveyed were

cited for a condition-of-participation deficiency; that number rose to 15

percent in 1999.3 In two states we visited, state survey officials have

conducted more frequent on-site inspections. They were able to do this

either by reallocating survey resources from other types of health care

facilities, like rural health clinics, to dialysis facilities or by using additional

funding from their state governments to fulfill their role in state dialysis

Year of

survey

Total number of facilities

participating in Medicare

Total number of facilities

that could be resurveyed

(existing facilities only—

excludes new facilities)

Total number of facilities

resurveyed Percentage resurveyed

1993 2,559 2,334 1,216 52

1994 2,741 2,517 727 29

1995 3,000 2,697 389 14

1996 3,209 2,942 476 16

1997 3,448 3,148 469 15

1998 3,659 3,370 398 12

1999 3,817 3,589 409 11

3

These data are based on our analysis of recertification surveys only.
B-284615

Page 11 GAO/HEHS-00-114 Medicare Quality of Care

facility licensing laws. In these states, inspectors found facilities out of

compliance at high rates.

• Oregon. During a 20-month period from June 1998 to March 2000,

Oregon’s state agency conducted 41 surveys spread across the state’s 39

dialysis facilities.4 Eleven facilities (26 percent) were found to be out of

compliance with the Medicare conditions of participation. Had the state

not stepped up its efforts, it would have taken 4 to 10 years to identify

these seriously deficient facilities.5

• Texas. The passage of a state dialysis licensing requirement in 1996 led

to a dramatic increase in the number of dialysis facility surveys in Texas.

In 1996, in order to license the facilities, the agency surveyed all 244 in

the state and found that 33 (14 percent) were out of compliance with

Medicare conditions of participation, compared with a national average

at the time of about 9 percent.

The five conditions of participation most commonly cited as deficient

accounted for 75 percent of all deficiencies reported during 1993 through

1999. Table 2 lists these conditions of participation as well as describes

examples of the potential for harm resulting from these deficiencies.

4

These inspections included initial surveys, recertification surveys, and surveys required

before the facility can initiate a dialyzer reuse program.

5

Both the minimum and maximum estimates assume that the state would survey 10 percent

of its facilities each year (the HCFA goal at the time). The minimum estimate assumes that

the 11 out-of-compliance facilities were surveyed first, and the maximum estimate assumes

they were surveyed last.
B-284615

Page 12 GAO/HEHS-00-114 Medicare Quality of Care

Table 2: Top Five Conditions of Participation Identified as Deficient and Their Potential Adverse Effects, 1993−99

Source: GAO analysis of HCFA data.

HCFA Is Seeking Funding

for More Surveys

In its 2001 budget submission to the Congress, HCFA requested a nearly

threefold increase in the funding for dialysis facility surveys—from $2.2

million in fiscal year 2000 to $6.3 million in 2001. This increase, according

to HCFA, will ensure that ESRD facilities are surveyed at least every 3

years. HCFA is seeking this additional funding in response to the declining

survey frequency and the rising number of deficiencies identified, as well

as information from states regarding complaints about dialysis facilities.

Nationwide, complaints to state survey agencies rose 22 percent from 1998

to 1999. As a case in point, the Oregon Department of Health received just 2

complaints in 1997, 6 in 1998, and 19 in 1999.

Percentage of

total

deficiencies,

1993-99 Condition of participation Example of potential adverse effects of noncompliance

23 The facility’s governing body should adopt and enforce

written rules and regulations, including operational rules

and patient care policies, to safeguard the health and

safety of patients.

Certain procedures are associated with dialysis for which

failure to follow established protocols could result in serious

injury. For instance, inadequate medication delivery system

policies and procedures can lead to medication errors and

adverse drug events that increase a patient’s risk of

complications or death.

19 The facility’s physical environment should be functional,

sanitary, safe, and comfortable for patients, staff, and the

public.

Deficient equipment could lead to life-threatening

complications. For instance, if a dialysis pump is not

inspected and calibrated properly, the patient may

experience blood loss, receive an air bubble, or sustain

other serious injury during dialysis.

13 The reuse of hemodialyzers and supplies should occur

only in facilities that meet certification standards.

Deficient reuse practices can expose patients to chemical

or infectious hazards by means of direct introduction into

their circulatory systems. ESRD patients are more

susceptible to infection, and close attention to infection

control is a critical prevention measure.

12 The long-term program and patient care plans should

show that a professional, multidisciplinary health care

team developed a written long-term-care plan to ensure

each patient receives individualized care and the

appropriate type of dialysis treatment.

Deficient patient care planning can result in ineffective

treatment. For instance, an inadequate patient care plan

could fail to identify and refer a patient who is eligible for

kidney transplant. Or the care plan could fail to include

monitoring alerts for patients with cardiac conditions such

as arrhythmia, which can be a life-threatening complication

during dialysis.

9 The director of the renal dialysis facility should be a

Board-certified physician and trained in the care of

ESRD patients. The director, among other things, is also

responsible for ensuring the proper training of staff.

If dialysis staffs are not properly trained, they cannot be

expected to respond quickly and effectively to the range of

complications that can arise during dialysis treatment.
B-284615

Page 13 GAO/HEHS-00-114 Medicare Quality of Care

Enforcement Process

Gives Facilities Little

Incentive to Sustain

Compliance

Even if the frequency of state on-site inspections increases, HCFA’s

enforcement actions against noncomplying facilities provide little incentive

for facilities to make more than temporary improvements. The

effectiveness of HCFA’s enforcement of condition-of-participation

requirements is limited because HCFA relies on termination from

Medicare—or, in reality, the threat of termination—as its sole enforcement

tool. To escape termination from the program, facilities almost always

bring themselves back into compliance, but they face minimal

consequences if they again slip out of compliance. For a variety of reasons,

HCFA has not developed or used other sanctions that would give facilities

more of an incentive to maintain compliance with conditions of

participation.6 In combination with the decreasing frequency of state

surveys, these factors severely limit HCFA’s ability to promote long-term

compliance.

Threat of Termination

Brings Facilities Into

Compliance but Does Not

Necessarily Keep Them

There

HCFA uses the threat of termination as its primary enforcement tool. When

state agencies identify problems that are sufficiently serious to put the

facility out of compliance with a condition of participation, they begin a

process, through HCFA, by which the facility either corrects its deficiencies

or is terminated from the Medicare program. Before a facility can be

terminated, it has an opportunity to correct its deficiencies or develop an

acceptable plan of correction. Actions and plans may include establishing

new procedures and policies, documenting and clarifying roles and

responsibilities of facility staff and managers, recruiting qualified staff, and

conducting in-service training of personnel. Once the state agency

determines, normally by a revisit, that the deficiency has been corrected

and has reasonable assurance that it will not recur, the termination process

is stopped.

6

We use the term “sanctions” in this report to refer to all of the penalties available for

noncompliance, including denial of Medicare payments and termination from the Medicare

program.
B-284615

Page 14 GAO/HEHS-00-114 Medicare Quality of Care

In practice, facilities nearly always correct such deficiencies and are rarely

terminated. For example, 481 of the surveys conducted since 1993 resulted

in at least one condition-of-participation deficiency,7 but only three

facilities have been terminated for not correcting a deficiency.8 According

to HCFA officials, the goal of the monitoring and enforcement program is

to bring problem facilities back into compliance with conditions of

participation, not to punish them. They stated that the threat of termination

from Medicare is an effective method to bring about compliance.

Although the threat of termination is effective in bringing a facility into

compliance, it provides little assurance that a facility, once recertified, will

not immediately slip out of compliance again. For one thing, while facilities

are correcting their deficiencies, they are allowed to continue to receive

full Medicare payments, and they do not have to reimburse Medicare for

payments they received when the services and care they provided were not

at the level required for payment. Moreover, if they slip out of compliance

again and face termination, they can avoid it by returning to compliance

during the grace period.

The length of time between surveys makes it difficult to determine how

quickly and how often facilities fall out of compliance. However, analysis of

the survey deficiency database suggests a pattern of repeated deficiencies.

For example, of facilities with four or more surveys,9 38 percent of those

that had deficiencies on their most recent survey were also deficient on at

least one of the same requirements on their last prior survey. More than half

of them had two or more such repeat deficiencies.

In some situations, termination is not used even when a facility fails to take

appropriate corrective action after the termination process has begun.

State, network, and HCFA officials told us that termination is not always an

option because it could create serious access problems for patients using

that particular facility. In fact, to avoid such access problems, throughout

the termination and corrective action process—which can last 90 days or

7

This figure includes both recertification surveys and complaint surveys.

8

One additional facility voluntarily withdrew from Medicare because of the threat of

termination. While HCFA’s deficiency data identified 12 facilities involuntarily terminated,

we excluded those terminations that were not linked with a facility’s failure to correct

condition-of-participation deficiencies.

9

Only a facility’s four most recent surveys are included in HCFA’s survey database.
B-284615

Page 15 GAO/HEHS-00-114 Medicare Quality of Care

more—noncomplying facilities continue to receive Medicare payments and

may continue to accept new Medicare patients.

During our state visits, we also identified cases in which facilities returned

to compliance only to be found out of compliance again a short time later.

Three examples follow.

• Washington. On March 24, 1999, a facility was cited for noncompliance

with such requirements as following physician orders, following anemia

management protocols, and following up on adverse incidents at the

facility. The state accepted a corrective action plan on July 21. However,

on October 13, a lengthy complaint was filed alleging that the same

types of deficiencies found during the survey were still occurring and

that the facility’s management was not correcting the problems. The

complaint also included a long list of incidents that allegedly occurred

over a 6-month period, including the months the facility was reported to

be taking corrective actions. Many of the allegations and incidents in the

complaint were substantiated during the state investigation, including

problems that were also cited on the prior survey: for example, not

writing reports for serious incidents, such as medication errors, in

which patients did not receive prescribed medication and in which other

patients received medications that had not been prescribed for them.

During this same investigation, the state found poor patient care

practices, such as leaving a patient on a bedpan throughout the 3-hour

dialysis treatment, causing blisters. Overall, the deficiencies found were

so severe that they posed immediate jeopardy to patient health and

safety, and the facility was placed on a fast track to termination. The

facility again took corrective actions that were acceptable to the state

and HCFA, and at the time of our work, continued to dialyze Medicare

patients.
B-284615

Page 16 GAO/HEHS-00-114 Medicare Quality of Care

• New Jersey. A facility’s initial certification survey on February 26, 1996,

found numerous deficiencies, including having untrained personnel

responsible for water treatment, not testing chloramine levels of water

daily, not having a quality assurance plan, and poor patient care

planning. After developing an acceptable plan of correction, the facility

was certified to operate six dialysis stations, treating 35 patients. Over

the next 18 months, the ESRD network conducted several on-site visits

at the facility and each time found serious and continuing problems. For

example, patients were placed at serious risk because dialysate (the

fluid used to extract toxins from the blood) was prepared using

untreated water. Furthermore, the facility’s treated water, dialysate, and

dialysis machines had bacterial contamination that exceeded acceptable

levels.10 In 1998, the state agency resurveyed the facility and found the

problems identified by the network as well as the same deficiencies

found earlier by the state. In response, the facility again developed an

acceptable plan for corrections. Since then, the facility has continued to

treat Medicare patients and has not been resurveyed in more than 2

years.

• Texas. A facility cycled in and out of compliance over a 9-year period

while developing numerous plans of correction at the direction of both

the state and the ESRD network. On many occasions, the deficiencies

were so severe they put the health and safety of the facility’s 227

patients in immediate jeopardy. For example, the facility had repeated

problems regarding providing adequate levels of dialysis, managing

patient anemia, and planning patient care. In 1999 HCFA put the facility

on a fast track to termination, citing such deficiencies as not providing

care necessary to address patients’ medical needs, not complying with

physicians’ orders, lack of physician planning of and supervision over

patient care, and not following up on adverse incidents. It took more

than 4 months and two revisits from the state before the facility came

back into compliance. However, when the state conducted a survey 4

months later, the facility was again out of compliance. At the time of our

review, state agency officials were exploring enforcement options under

state licensing authority.

10Federal surveyors from the HCFA regional office accompanied the network surveyors on

one of the facility visits and observed many of these problems.
B-284615

Page 17 GAO/HEHS-00-114 Medicare Quality of Care

Other Enforcement Tools

Are Not Being Used

Termination is one of several enforcement tools available to HCFA, but it is

the only one in use (see table 3). HCFA maintains that the other tools have

varying limitations that have prevented them from being used as effective

alternatives. The following sections discuss each enforcement tool for

dialysis facilities and the limitations that might be affecting its use.

Table 3: Overview of Enforcement Tools Available to HCFA

Denial of Payment for New

Medicare Patients

In 1987 the Congress gave HCFA the authority to develop regulations

allowing the agency to deny Medicare payments for new patients at

facilities that are not in compliance with the conditions of participation. At

that time, the Congress noted that HCFA may be reluctant to use

termination, even in cases of serious deficiencies, but that persuasion or

technical assistance alone may not be sufficient to bring facilities into

compliance. However, HCFA has not promulgated regulations for denying

Type of

noncompliance Enforcement tool Extent used Concerns or limitations

Failure to comply with

Medicare conditions of

participation for

dialysis facilities

Termination from the Medicare

program

Invoked when a facility is not in

compliance with a condition of

participation

Successful in bringing facilities back into

compliance, but not necessarily at

keeping them in compliance

Denial of payment for new

Medicare patients

Not implemented into regulation

by HCFA

Like termination, facilities can avoid this

sanction by returning to compliance

Failure to follow

industry standards and

practices for reusing

hemodialyzers

Retroactive denial of payments for

services provided when the facility

was out of compliance

Not implemented into HCFA

procedures

HCFA maintains that applying this

sanction would be cumbersome

Failure to participate in

ESRD network qualityof-care initiatives, or to

pursue quality-of-care

goals

Termination from the Medicare

program

Never levied against a facility Only option available if the deficiency is

serious

Denial of payment for new patients

admitted after the effective date of

the sanction

Never levied against a facility Limited applicability—can be used only

for nonserious deficiencies

Reduction of a facility’s payment

rate by 20 percent for each 30-day

period that the facility continues to

not participate or pursue goals

after being directed to do so

Never levied against a facility Limited applicability—can be used only

for nonserious deficiencies

Withholding all payments, without

interest, for all ESRD services

Never levied against a facility Limited applicability—can be used only

for nonserious deficiencies
B-284615

Page 18 GAO/HEHS-00-114 Medicare Quality of Care

payments. HCFA officials told us that denying payments would offer no

advantages over termination because, under the law, facilities can avoid the

penalty by returning to compliance within the grace period. In that sense,

denial of payments would operate the same as termination—it would occur

only if the facility did not comply.

Retroactive Denial of Payment

for Improper Dialyzer Reuse

The Congress provided HCFA additional and broader authority to address

facilities not complying with standards and requirements for reprocessing

and reusing dialyzers. Compliance with accepted standards is important to

prevent the weakened immune systems of dialysis patients from being

exposed to microbial contamination and dangerous levels of the germicide

used to clean the dialyzers. HCFA was authorized to impose sanctions

retroactively when a facility failed to follow industry guidelines on

appropriate reuse procedures, even if the facility had corrected its deficient

practices. Unlike termination, this tool also can be used for deficiencies

that are not considered severe enough to constitute a violation of the

applicable condition of participation. HCFA has not incorporated this

authority into its procedures, believing that it would be too cumbersome to

do so. HCFA officials explained that it is administratively difficult to use

this sanction because it is hard to identify which specific dialysis

treatments are actually affected by a facility’s deficient process for reusing

dialyzers.

We disagree that this authority would necessarily be cumbersome to

implement—at least not in all instances. Many of the important reuse

standards relate to processes and procedures that affect almost all patients

in a facility. As a result, if a deficiency is cited that affects all or most of a

facility’s patients, determining which payments should be denied may not

be as difficult as HCFA assumes. Our state-level reviews showed instances

in which such conditions applied. That is, many of the deficiencies affected

all patients that were dialyzed during the period examined, and surveyors

were able to identify specific days of noncompliance. Payments made for

services provided during the period of the deficiency would thus be subject

to recoupment under current regulations, requiring relatively little effort on

the part of claims processing contractors to establish the appropriate

amounts.

Penalties for Noncompliance

With ESRD Network Activities or

Initiatives

HCFA has several financial sanctions at its disposal if facilities do not

cooperate with ESRD network activities or pursue the network’s quality

goals and initiatives. After providing notice to chronically deficient

facilities, HCFA can deny payment for new patients, reduce payments for

services provided, or withhold payments altogether. However, the law only
B-284615

Page 19 GAO/HEHS-00-114 Medicare Quality of Care

authorizes use of these financial sanctions if the deficiency does not

“jeopardize patient health and safety.” This, in practice, creates an

enforcement paradox. Networks are inclined to refer only facilities with

serious deficiencies to HCFA for sanction, but only the nonserious

deficiencies would be subject to the financial sanction. For serious

deficiencies, termination is the only sanction available.

In practice, the networks try to educate, provide technical assistance,

require corrective action plans and progress reports, and generally use

more collegial means to change the behavior of noncomplying facilities.

Since 1993, only two facilities nationwide have been recommended for

alternative sanctions by ESRD networks.11 Each involved a situation in

which the network determined that patient health and safety were being

jeopardized because of a lack of fundamental processes and systems, but

the facility did not respond to the network’s efforts to address the

problems. In both cases, HCFA did not proceed with sanctions but instead

relied on surveys to document problems and on the threat of termination to

bring about needed changes.

Enforcement Tools

Available for Dialysis

Facilities Are More Limited

Than Those Available for

Nursing Homes

HCFA does not have the same tools to create strong incentives for ESRD

facilities to maintain compliance that it does for nursing homes. In 1987,

largely in response to studies showing that many nursing homes tended to

cycle in and out of compliance with standards, the Congress authorized

HCFA to levy civil monetary penalties of up to $10,000 per day on homes

that do not meet Medicare requirements of participation. The Congress

intended these penalties to create a strong incentive to maintain

compliance. In July 1995 HCFA established in regulation that nursing

homes are subject to these financial sanctions on the basis of the severity

of their deficiencies and can also face financial sanctions if they have

repeated serious deficiencies. These latter penalties can be levied without

allowing a grace period to correct the deficiencies, and they can be applied

even if a nursing home corrects the deficiencies. In our previous review of

11Two other facilities voluntarily withdrew from Medicare before HCFA could consider

network recommendations. In one case, a facility failed to improve and sustain

improvement in removing an adequate amount of contaminants from patients’ blood. After

considerable monitoring and various approaches to improving the facility’s performance

over an 8-month period, the network recommended that HCFA impose an alternative

sanction. Although the facility withdrew from Medicare before the recommendation could

be considered, the HCFA project officer stated that because the issues involved patient

health and safety, HCFA could not pursue alternative sanctions.
B-284615

Page 20 GAO/HEHS-00-114 Medicare Quality of Care

enforcement of nursing home standards, we reported that while

administrative problems with appeals had not yet been resolved, civil

monetary penalties may provide a strong deterrence to severe or sustained

noncompliance.12

Steps Under Way to

Target Survey

Resources Have

Limitations

HCFA has been working on a pilot project that will use available facilityspecific data to help state surveyors select facilities for review. While this

idea has merit, for such a screening process to be effective, the data must

be more timely and reliable than what HCFA currently has at its disposal.

Moreover, the extent to which outcome measures, which would be

included, would accurately predict the presence of serious health and

safety deficiencies that would be identified through on-site inspections is

unclear. In contrast, opportunities exist to better target resources through

improved communication between the ESRD networks and state survey

agencies. Thus far, HCFA’s efforts to facilitate the exchange of information

between networks and survey agencies have been inconsistent.

HCFA Is Pilot Testing Data

Profiles of Individual

Facilities to Help Target

Surveys

In May 2000, as part of a pilot project, HCFA sent individual dialysis facility

profiles created using available facility-specific data to the seven state

survey agencies participating in the pilot. These profiles are designed to

help state agencies determine which facilities to select for on-site

inspections. The information focuses on the adequacy of dialysis provided,

the frequency of some dialysis-associated complications and diseases, and

the types of practices used by the facilities in administering dialysis and

reusing dialyzers. This information comes from a number of sources. Part

of it is data currently used to prepare annual reports on renal care, such as

standardized mortality and hospitalization rates. HCFA obtains other data

through claims for payment that facilities file with intermediaries. These

claims include information on the adequacy of dialysis treatments (the

urea-reduction ratio) and an assessment of anemia in patients

(hematocrit). HCFA is also using data on patient infections collected by the

Centers for Disease Control and Prevention.

HCFA plans to collect feedback from the seven pilot states in the fall of

2000 and to begin training surveyors in the use of the profiles in early 2001.

12Nursing Homes: Additional Steps Needed to Strengthen Enforcement of Federal Quality

Standards (GAO/HEHS-99-46, Mar. 18, 1999).
B-284615

Page 21 GAO/HEHS-00-114 Medicare Quality of Care

The evaluation of the pilot project is scheduled to be completed in early

2001, but at the time of our review, the evaluation plan and criteria had not

been set.

Available Information

Reflects Problems in

Capturing Conditions at

Individual Facilities

Because the facility profile project is now being tested, we did not

comprehensively evaluate it. However, we did identify several issues that

need to be considered before the data are used to significantly influence

the survey selection process. The major concern is whether the data are a

strong predictor of noncompliance with Medicare standards. In the states

we visited, we found cases in which facilities had good clinical outcome

scores but were identified in on-site surveys as seriously out of compliance

with Medicare standards. For instance, during a complaint investigation,

state surveyors and network quality assurance staff found serious, lifethreatening deficiencies, such as a lack of knowledge of basic medical and

dialysis practices like anemia management, infection control, and water

purity. However, when network officials reviewed the facility’s clinical

outcomes, the facility had better-than-average scores.

Available Data Are Neither

Timely nor Necessarily Reliable

Whether the data come from Medicare claims or through collection by

ESRD networks, the process by which HCFA collects and aggregates data

on ESRD patients and services takes time. Much of the data for the facilityspecific profiles is at least 2 years old. For example, the facility profiles for

the year 2000 report hospitalization and mortality data from 1996 through

1998. The Centers for Disease Control and Prevention surveillance data

included in these profiles were collected through a 1997 survey. The

screening tool proposed in the HCFA pilot would thus reflect conditions at

the facility that were at least 2 years old. It is reasonable to assume that,

given the dynamic nature of the industry, such a screen would not reflect

current conditions.

Although clinical outcome measures, such as hematocrit levels and the

urea-reduction ratio, are generally accepted as good measures of dialysis

service quality, the assessment of the reliability of the measures reported to

fiscal intermediaries yielded mixed results. For example, an initial internal

study found differences between the clinical measures facilities reported to

fiscal intermediaries and the information collected by ESRD networks.

Preliminary results of a later HCFA study found the two data sets to be

more closely correlated. A primary concern that remains is the lack of

assurance that a single set of procedures to collect, store, assay, and report

laboratory values is being followed consistently.
B-284615

Page 22 GAO/HEHS-00-114 Medicare Quality of Care

Predictive Power of Outcome

Measures Is Unclear

Another significant issue involved in using clinical outcome data in

conjunction with the facility selection process is whether outcome

measures are a reasonable predictor of a facility’s level of compliance with

Medicare standards. Although a limited analysis found outcome measures

can have a predictive power,13 there is disagreement on the extent to which

outcome measures currently available to HCFA are strong predictors of

compliance with Medicare standards. Moreover, concerns exist that using

outcome measures to inform the survey selection process may complicate

the process of collecting accurate data.

For example, clinical outcome measures like urea-reduction ratios were

designed to estimate the extent to which health care providers conformed

with clinical practice guidelines, and not necessarily to reflect the extent to

which facilities complied with important condition-of-participation

standards. As a result, ESRD network and state agency staff told us that

dialysis providers could have clinical outcome scores within the average

range for the region and still have serious deficiencies, often in such critical

areas as water purity, staff competence, and infection control.

The experience of the Texas network shows the difficulty of using outcome

measures as the key tool to predict which facilities do not comply with

Medicare conditions of participation. The network compared clinical

outcome data with the results of state surveys for 179 facilities for 1996.14

An analysis of the data found that using outcome measures would have

been an improvement over the random chance that selected facilities

would have condition-of-participation deficiencies. However, network

officials cited methodological difficulties that, in their view, would have

limited the usefulness of these results for targeting surveys. For example,

clinical outcome data are not current enough and would not have been

available in the same year as the surveys. Network officials also pointed

out that the data did not account for the severity of the deficiencies, in that

some facilities with the most severe noncompliance problems had

acceptable outcome measures. As a result of these and other concerns, the

network’s medical review board reported that its analysis was inconclusive

13Robert Wolfe, Facility Statistics, Patient Care and Science: A Re-evaluation of Network 14

State Surveyor Data, a presentation to the HCFA Dialysis Facility-Specific Reporting

Workgroup, Aug./Sept. 1999.

14ESRD Network 14 Medical Review Board, Position Paper on the Use of Outcomes Data for

Survey Selection Purposes (Dallas, Tx.: June 2, 2000).
B-284615

Page 23 GAO/HEHS-00-114 Medicare Quality of Care

about the merits of using clinical outcome data as a controlling factor in

targeting state survey resources.

Over time, the process of using clinical performance measures to score

facilities and then conduct surveys on the basis of these scores could, in

itself, complicate efforts to improve the accuracy of the facility-reported

data. In the long term, the use of facility-specific data to inform the

regulatory oversight process creates an incentive for facilities to report

data that indicate acceptable performance whether they are providing an

acceptable level of service or not. HCFA quality assurance specialists

reported in 1999 that clinical performance data were to be used primarily

for population-based quality improvement rather than for evaluating

facilities’ care of specific patients or compliance with quality assurance

standards. The report noted considerable concern that, if inappropriately

used (particularly by regulators), the clinical performance measures could

potentially have a deleterious effect on the care of dialysis patients,

presumably by creating incentives for facilities to “game the reporting

system.”15 Such incentives are particularly problematic with the ESRD

program because currently most of the data are self-reported. Verification

of the data is limited to a review for transcription errors.

Lack of Communication Has

Hindered Monitoring

Effectiveness

By building stronger cooperation between ESRD networks and state survey

agencies, HCFA has an opportunity to improve the quality of facilityspecific performance data used in selecting facilities to survey. ESRD

networks collect a variety of data from individual dialysis facilities and in

some cases have facility performance information that is available on a

real-time basis, rather than after a lag of several years. However, HCFA has

not consistently encouraged this coordination, and, in some cases, through

conflicting policy interpretations, has actually impeded it. As a result, the

level of coordination and information sharing varies dramatically across

the nation, and in most cases little of it takes place.

HCFA has not been clear on the type of relationship and coordination it

expects between networks and states. HCFA’s current policy is that

networks may readily share facility-specific information with state survey

agencies to aid in the certification process. This stance reinforces HCFA

contract requirements with networks from prior years, in which networks

15PRO-West, Developing Clinical Performance Measures for the Care of Patients With End

Stage Renal Disease, final report to HCFA (Seattle, Wash.: PRO-West, Jan. 1999).
B-284615

Page 24 GAO/HEHS-00-114 Medicare Quality of Care

were instructed to achieve a working relationship with state agencies and

HCFA regional offices that would assist each in improving the quality of

care provided to ESRD patients. Activities the networks are to undertake

with state agencies include sharing information and data reports,

communicating on patient quality-of-care issues, providing facility-specific

data to the state agency, and working to support their survey activities.

HCFA regional offices that oversee network and survey agency activities

have not applied this policy consistently. In fact, most HCFA regional

offices restrict networks from sharing facility-specific information and

support ESRD networks when they deny requests by state survey agencies

for such information, saying that federal confidentiality restrictions

prohibit this sort of exchange. In contrast, with the knowledge of the HCFA

regional office, the ESRD network in Texas began providing facilityspecific information to the Texas Department of Health after the state

passed a licensure law for dialysis facilities in 1996. More recently, in early

2000, some HCFA regional offices have begun efforts to facilitate the

communication and exchange of information, including facility-specific

performance information, between ESRD networks and state agencies.

By sharing information and knowledge, ESRD networks and state agencies

can effect a more complete picture of ESRD facilities. Each has different

information and knowledge about a facility that together provide a more

accurate overall assessment of the quality of care a facility provides. ESRD

networks work solely with ESRD facilities; have information on the clinical

aspects of the care in facilities; and also may be more aware of staffing and

management changes, patient complaints, and the results of network

quality improvement initiatives, which can have a major impact on the

quality of care provided. In contrast, networks do not have detailed

information about facilities’ systems and processes that are key to quality

of care, such as the quality of water used, infection control procedures,

reprocessing of dialyzers, and care planning. This type of information can

be provided by state survey agencies.

Conclusions Oversight of ESRD facilities needs improvement. While many facilities may

be conscientiously and consistently providing quality care, some do not,

and current oversight efforts are not enough to find and correct the

problems in a timely manner. HCFA’s request for a threefold budget

increase for inspecting ESRD facilities is a sign that the agency realizes

additional oversight is necessary.
B-284615

Page 25 GAO/HEHS-00-114 Medicare Quality of Care

While increasing the number of inspections should help improve oversight,

other things can be done as well. One is to put some teeth into the

enforcement process. Currently, when condition-of-participation violations

are found, even on a recurring basis, ESRD facilities essentially face no

actual penalty as long as they correct any problems identified. Part of the

reason is that HCFA has chosen not to exercise its authority to levy certain

sanctions. HCFA has not instituted procedures to deny Medicare payments

for dialysis if a facility does not meet dialyzer reuse standards. However, in

practice, other sanctions now available to HCFA have little application

because either they are restricted to less serious deficiencies or, in the case

of more serious deficiencies, facilities can take corrective action, even

temporarily, and avoid them altogether.

One way to give facilities more of an incentive to stay in compliance is to

have available the kinds of monetary penalties that can be used when

nursing homes are found to have severe or repeated serious deficiencies.

For example, HCFA can fine nursing homes, and the fines are not forgiven

when the facility corrects its problems. We have previously reported that

such penalties can give nursing homes a strong incentive to remain in

compliance with Medicare standards. Making such financial penalties more

applicable to ESRD facilities would require action by the Congress.

Another way to strengthen oversight is for state agencies and the ESRD

networks to share information on complaints and known quality-of-care

problems at specific facilities. Doing so would help target inspection

resources where they are most needed. HCFA’s efforts to use available

outcome data for targeting its survey efforts may also eventually help in

this regard, but more testing and evaluation are needed to ensure that the

data used are sufficient to predict noncompliance with Medicare quality

standards.

Recommendations to

HCFA

We recommend that the Administrator of HCFA take the following actions

to strengthen oversight of ESRD facilities:

• Develop procedures on how and when to use HCFA’s existing authority

to impose partial or complete payment reductions for ESRD facilities

that do not meet Medicare quality standards for dialyzer reuse.

• Establish procedures to facilitate better and more routine cooperation

and information sharing between ESRD networks and state survey

agencies, particularly in targeting facilities for on-site surveys.
B-284615

Page 26 GAO/HEHS-00-114 Medicare Quality of Care

• Evaluate the results of HCFA’s project for using clinical outcome data to

select facilities for on-site review before it recommends that states use

such data as a key factor in the selection process. A central component

of the evaluation should be determining the extent to which the data are

sufficient to predict which facilities have a higher likelihood of not

complying with Medicare’s conditions of participation.

Matter for

Congressional

Consideration

To improve ESRD facilities’ incentives to maintain compliance with

Medicare’s conditions of participation, the Congress should consider

authorizing HCFA to assess monetary penalties on ESRD facilities like

those it is authorized to assess on nursing homes that have severe or

repeated serious deficiencies.

Agency Comments In commenting on the report, HCFA agreed with the report’s findings and

expressed overall agreement with its recommendations. HCFA cited a

number of steps it intends to take or that are already under way to address

our recommendations. HCFA also pointed to a variety of patient outcome

measures over the last several years as evidence of improved overall

quality of ESRD treatment. While these data are encouraging about

nationwide quality, they do not mean that particular facilities are not

problematic. This is evidenced by the fact that the number of facilities

found to be out of compliance with Medicare conditions of participation

increased from 6 percent in 1993 to 15 percent in 1999.

Regarding the recommendation about sanctions for inappropriate dialyzer

reuse, HCFA stated that it would develop necessary regulations and

procedures to implement such sanctions. In response to our

recommendation to facilitate cooperation among state agencies and ESRD

networks, HCFA stated that it is now taking steps to clearly delineate

responsibilities of state survey agencies and ESRD networks that would

encourage cooperative information-sharing to help identify poorperforming facilities.

Regarding our recommendation to evaluate whether outcome data are an

appropriate means of selecting facilities for on-site surveys, HCFA stated

that this process is already under way. HCFA cited an analysis of recent

data on facilities in Texas that indicated a strong relationship between state

survey results and outcome measures. We have included information in the

report about this analysis. However, we believe additional testing and
B-284615

Page 27 GAO/HEHS-00-114 Medicare Quality of Care

evaluation are needed before outcome measures are used as a significant

factor in selecting ESRD facilities for survey. HCFA stated its intention to

continue studying this issue.

HCFA did not specifically comment on our suggestion that the Congress

consider authorizing it to assess monetary penalties on ESRD facilities

similar to those authorized for nursing homes. However, HCFA did state

that it was pursuing a legislative strategy to consolidate and clarify current

alternative or intermediate sanctions and possibly establish new

authorities across all provider types.

HCFA also provided detailed technical comments, which we incorporated

in the report where appropriate. HCFA’s comments are in appendix IV.

As agreed with your offices, we will make no further distribution of this

report until 4 days after its issue date. At that time, we will send copies to

the appropriate authorizing committees; the Honorable Nancy-Ann Min

DeParle, Administrator of HCFA; and interested congressional committees.

We will also make copies available to other interested parties.

Please contact me at (202) 512-7119 if you have any questions about this

report. Major contributors included Margaret Buddeke, Timothy Bushfield,

and Mark Ulanowicz, under the direction of Frank Pasquier.

Janet Heinrich

Associate Director, Health Financing and

Public Health Issues
Page 28 GAO/HEHS-00-114 Medicare Quality of Care

Appendix I

Scope and Methodology ApApenednxidexiIs

In order to evaluate the procedures and processes employed by HCFA,

state survey agencies, and ESRD networks to monitor dialysis facilities, we

interviewed (1) HCFA officials at its central office and four regional offices;

(2) state survey officials in California, New Jersey, Texas, Oregon, and

Washington; (3) ESRD network officials in five networks; and (4) officials

from the Network Forum, which is the organization that represents all of

the ESRD networks. We also collected data on the policies and procedures

used by HCFA, state survey agencies, and ESRD networks to monitor

dialysis facilities. We judgmentally selected these five states because they

appeared to be typical based on available data on clinical outcome

measures for each ESRD network and HCFA data on the number of

condition-of-participation deficiencies. We also considered other factors,

such as networks with larger states and more surveys, networks in which

innovative monitoring practices were being employed, and networks with a

mix of geographic oversight responsibility (networks with small

geographic areas, large geographic areas, and multistate coverage). Within

each network we selected and visited state survey agencies in the largest

states. We reviewed and obtained documentation on facility surveys from

HCFA and state agencies and clinical performance data collected by ESRD

networks. We also analyzed data on the results of state surveys and the

clinical outcomes of dialysis treatments from national databases.

To determine the extent to which on-site inspections of dialysis facilities

are done to ensure compliance with Medicare quality standards, we

analyzed HCFA’s nationwide database of health care facility inspection

results—the On-Line Survey, Certification, and Reporting (OSCAR) system.

This data system records state survey results in a standard format. We

analyzed data to identify the level of survey activity over time and to

determine the extent that survey resources are spent on recertification

surveys or initial surveys. We analyzed the frequency of citation of

condition-of-participation deficiencies, which, unless corrected, are severe

enough to warrant a facility’s termination from the Medicare program.

Determinations of such deficiencies are made by state agencies and receive

HCFA’s concurrence. Although we did not thoroughly assess the reliability

of the database for the purpose of analyzing the frequency of recertification

surveys, HCFA officials generally recognize it to be reliable for this

purpose. However, the extent to which the data provide a consistent

measure of quality of care across states is unknown. To make such a

determination would require a review of the consistency of state survey

processes nationally, which was beyond the scope of our work.
Appendix I

Scope and Methodology

Page 29 GAO/HEHS-00-114 Medicare Quality of Care

To determine the effectiveness of the processes used to ensure that

facilities correct identified deficiencies, we reviewed the procedures used

by state agencies and networks to require corrective actions and to

evaluate whether facilities return to compliance. To gain more insight into

the effectiveness of HCFA’s procedures to ensure sustained compliance

with quality-of-care standards, we looked particularly at the cases in which

state agencies and/or ESRD networks knew about facilities that had

serious and recurring problems. We reviewed the enforcement tools HCFA

has available to address noncompliant facilities and assessed the extent to

which these tools are utilized. We also analyzed HCFA data to identify the

number of facilities that were terminated from the program.

In assessing HCFA’s efforts to improve the targeting of facilities to inspect

and monitor, we focused on HCFA’s ongoing pilot project to profile

facilities using a variety of facility-specific data. Because this project is in

process and no strong indicators currently exist that identify facilities with

quality-of-care problems, it is difficult to assess the overall effectiveness of

this approach as a tool to identify noncompliant facilities. Instead, we

assessed the limitations of the data that HCFA is planning to use to target

facilities for on-site inspections. To this end, we reviewed the data HCFA

plans to use and discussed data reliability issues with ESRD networks,

HCFA researchers, noted renal care researchers, and the peer review

organization that has contracted with HCFA to develop the pilot program.

In addition, we discussed with state survey agency, ESRD network, and

HCFA officials the extent to which state agencies and ESRD networks

share information and coordinate their oversight activities.
Page 30 GAO/HEHS-00-114 Medicare Quality of Care

Appendix II

Comparison of New ESRD Patients by Age

and Primary Diagnosis, 1989, 1993, and 1997 ApendxiI

Source: National Institutes of Health (NIH), United States Renal Data System, USRDS 1999 Annual

Data Report (Bethesda, Md.: NIH, Apr. 1999); and HCFA.

1989 1993 1997

Patients

Percentage of

total Patients

Percentage of

total Patients

Percentage of

total

Age

Under 15 430 1.0 475 0.8 583 0.7

15-24 1,309 3.0 1,337 2.3 1,373 1.7

25-34 3,435 7.8 3,652 6.2 3,833 4.8

35-44 4,649 10.6 5,840 10.0 7,080 9.0

45-54 5,850 13.3 7,846 13.4 10,936 13.8

55-64 9,100 20.8 11,383 19.4 15,317 19.4

65-74 11,978 27.3 16,964 28.9 22,056 27.9

75 or older 7,090 16.2 11,127 19.0 17,924 22.7

Total 43,841 100 58,624 100 79,102 100

Primary diagnosis

Diabetes 14,404 32.9 21,319 36.4 33,096 41.8

Hypertension 12,786 29.2 17,333 29.6 20,066 25.4

Glomerulonephritis 5,863 13.4 6,439 11.0 7,390 9.3

Cystic kidney 1,307 3.0 1,624 2.8 1,772 2.2

Other urologic 772 1.8 888 1.5 1,388 1.8

Other cause 4,453 10.2 5,400 9.2 8,284 10.5

Unknown cause 2,209 5.0 2,621 4.5 2,920 3.7

Missing cause 2,047 4.7 3,000 5.1 4,186 5.3

Total 43,841 100.0 58,624 100.0 79,102 100.0
Page 31 GAO/HEHS-00-114 Medicare Quality of Care

Appendix III

Medicare Conditions of Participation for

Dialysis Facilities ApendxiI

Condition of

participation

Number of

standards

and

requirements Description

Compliance with federal,

state, and local laws and

regulations

4 The facility and personnel employed by the facility must be licensed as required by

federal, state, or local laws. This includes compliance with all public safety laws and

requirements.

Governing body and

management

70 The facility must be under the control of an identifiable body that adopts and enforces

rules and regulations, including operational rules and patient care policies to safeguard

the health and safety of individuals.

Patient long-term-care

program and patient care

plan

20 A professional, multidisciplinary health care team and the patient must develop a

written long-term-care plan to ensure each patient receives the appropriate type of

dialysis and care. Patient care plans, which have shorter time lines, must be

personalized for each patient to address their specific medical, psychological, social,

and functional needs. Both plans are to be regularly reviewed and updated to respond

to changing patient needs.

Patients' rights and

responsibilities

12 Dialysis facilities must have written policies describing the rights of the patients in order

to ensure patients are fully informed about the services available, their medical

condition, whether the facility reuses dialysis supplies, and whether the patient is a

candidate for transplantation and home dialysis.

Medical records 21 Patient medical records must be maintained to document patient assessments,

diagnosis, and treatment, and medical and nursing histories.

Physical environment 29 Dialysis services are to be provided in a setting that is functional, sanitary, safe, and

comfortable for patients, staff, and the public.

Reuse of hemodialyzers

and other dialysis

supplies

92 Facilities that reuse hemodialyzers and other dialysis supplies must follow established

protocols and standards to ensure patient and staff safety.

Affiliation agreement or

arrangement

4 Agreements between dialysis facilities and inpatient dialysis centers must be in writing

to ensure inpatient care and other hospital services are promptly available to dialysis

patients.

Director of renal dialysis

facility

6 Dialysis treatments must be under the general supervision of a qualified director, who

is responsible for planning, organizing, conducting, and directing professional services.

Staff of a renal dialysis

facility or center

6 Properly trained and qualified personnel must be present in adequate numbers to meet

the needs of patients, including needs arising in emergencies

Minimal service

requirements

27 Dialysis facilities must provide dialysis services as well as laboratory, social, and

dietetic services needed to address ESRD patient needs.
Page 32 GAO/HEHS-00-114 Medicare Quality of Care

Appendix IV

Comments From the Health Care Financing

Administration ApendxiIV
Appendix IV

Comments From the Health Care Financing

Administration

Page 33 GAO/HEHS-00-114 Medicare Quality of Care
Appendix IV

Comments From the Health Care Financing

Administration

Page 34 GAO/HEHS-00-114 Medicare Quality of Care
Appendix IV

Comments From the Health Care Financing

Administration

Page 35 GAO/HEHS-00-114 Medicare Quality of Care
Appendix IV

Comments From the Health Care Financing

Administration

Page 36 GAO/HEHS-00-114 Medicare Quality of Care

Letr

(101895) Letr
Ordering Information The first copy of each GAO report is free. Additional copies of

reports are $2 each. A check or money order should be made out to

the Superintendent of Documents. VISA and MasterCard credit

cards are accepted, also.

Orders for 100 or more copies to be mailed to a single address are

discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 37050

Washington, DC 20013

Orders by visiting:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders by phone:

(202) 512-6000

fax: (202) 512-6061

TDD (202) 512-2537

Each day, GAO issues a list of newly available reports and

testimony. To receive facsimile copies of the daily list or any list

from the past 30 days, please call (202) 512-6000 using a touchtone

phone. A recorded menu will provide information on how to obtain

these lists.

Orders by Internet:

For information on how to access GAO reports on the Internet,

send an e-mail message with “info” in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web home page at:

http://www.gao.gov

To Report Fraud,

Waste, or Abuse in

Federal Programs

Contact one:

• Web site: http://www.gao.gov/fraudnet/fraudnet.htm

• e-mail: fraudnet@gao.gov

• 1-800-424-5454 (automated answering system)


United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. GI00