United States General Accounting Office 

GAO Report to the Chairman, Committee on 

Finance, U.S. Senate 

October 2003 DIALYSIS FACILITIES 

Problems Remain in 

Ensuring Compliance 

with Medicare Quality 

Standards 

GAO-04-63

Highlights of GAO-04-63, a report to the 

Chairman, Committee on Finance, U.S. 

Senate 

Most patients with end-stage renal 

disease (ESRD) must rely on 

dialysis treatments to compensate 

for kidney failure. Currently, over 

222,000 ESRD patients visit dialysis 

centers several times a week to 

have toxins removed from their 

bloodstreams. While dialysis care 

has improved overall, questions 

remain regarding the quality of care 

provided by some of the nation’s 

roughly 4,000 ESRD facilities. We 

examined (1) the extent and nature 

of quality of care problems 

identified at dialysis facilities, 

(2) the effectiveness of state survey 

agencies in ensuring that quality 

issues are uncovered, corrected, 

and stay corrected, and (3) the 

extent to which the Centers for 

Medicare & Medicaid Services 

(CMS) funds, monitors, and assists 

state survey activities related to 

dialysis care. 

GAO suggests that Congress 

consider authorizing CMS to 

impose immediate sanctions, such 

as monetary penalties or denying 

payment for new Medicare 

patients, on dialysis facilities cited 

with serious deficiencies in 

consecutive surveys. GAO 

recommends that the CMS 

Administrator create incentives for 

facilities to maintain compliance 

with quality standards, increase use 

of expert staff in conducting ESRD 

facility surveys, and enhance the 

support and monitoring of state 

survey agencies. CMS did not 

indicate an intention to implement 

five of our six recommendations. 

www.gao.gov/cgi-bin/getrpt?GAO-04-63. 

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Leslie G. 

Aronovitz at (312) 220-7600. 

October 2003 

DIALYSIS FACILITIES 

Problems Remain in Ensuring 

Compliance with Medicare Quality 

Standards 

A substantial number of ESRD facilities do not achieve minimum patient 

outcomes specified in clinical practice guidelines, with significant 

proportions of their patients receiving inadequate dialysis or treatment for 

anemia. Similarly, inspections of dialysis facilities by state survey agencies 

have uncovered numerous problems that put patient health at risk. Between 

fiscal years 1998 and 2002, these inspections, commonly called surveys, 

revealed that 15 percent of facilities surveyed had serious quality problems 

that, if left uncorrected, would warrant termination from the Medicare 

program. Serious deficiencies commonly found during surveys included 

medication errors, contamination of water used for dialysis, and insufficient 

physician involvement in patient care. 

Infrequent, poorly targeted, and inadequate inspections allow facilities’ 

quality of care problems to go undetected or remain uncorrected. 

Specifically: 

• 	 Although ESRD survey activity has increased in recent years, only nine 

state survey agencies consistently met CMS’s goal to inspect 33 percent 

of ESRD facilities annually. 

• 	 A substantial number of facilities go many years between inspections. In 

fiscal year 2002, 216 facilities nationwide went 9 or more years without 

an inspection. 

• 	 Deficiencies may not have been detected during an inspection if the 

surveyors had little experience in assessing dialysis quality. 

Even when deficiencies are identified and facilities take corrective action, 

little incentive exists for these facilities to remain in compliance. Data show 

a pattern of repeated serious deficiencies in successive inspections of an 

individual facility. No effective sanctions are available to enforce 

compliance, short of terminating the facility from the Medicare program, 

which is rarely done. 

Federal monitoring of state agencies’ performance of surveys and technical 

assistance provided is uneven across CMS regions. CMS substantially 

increased its funding for ESRD surveys from an estimated $3.1 million in 

fiscal year 1998 to $8.2 million in fiscal year 2002. At the same time, several 

CMS regional offices in our study did not actively oversee how the state 

agencies used these funds to improve survey activities. CMS has not taken 

steps needed to facilitate information sharing between federally funded 

ESRD networks and state agencies on the performance of individual dialysis 

facilities—information that could help states to target their inspection 

resources. In addition, CMS has not offered adequate training opportunities 

for surveyors inspecting ESRD facilities. 
Contents 


Letter 


Results in Brief 


Background


Quality Problems Prevalent among Dialysis Facilities and Put 


Patient Health at Risk 


Limitations in the ESRD Survey Process Leave Quality Problems 


Undetected or Inadequately Addressed 


CMS Has Increased Funding for State Surveys, but Monitoring and 


Technical Support Are Uneven


Conclusions 


Matter for Congressional Consideration 


Recommendations for Executive Action 


Agency Comments and Our Evaluation


1 

3 

5 

9 

15 

24 

33 

35 

35 

36 

Appendix I Scope and Methodology 

Appendix II 	 Medicare Conditions for Coverage for Dialysis 

Facilities 

Appendix III 	 State Agencies’ Progress toward Meeting CMS 

Survey Goals 

Appendix IV 	 Comments from the Centers for Medicare & 

Medicaid Services 

Appendix V GAO Contact and Staff Acknowledgments 56 


GAO Contact 56


Acknowledgments 56


Related GAO Products 
 57 

Page i GAO-04-63 Dialysis Facility Compliance 

40 

44 

45 

49 
Tables 

Table 1: Proportion of ESRD Facilities Recertified Within 3, 6, 9, or 

More Years, Fiscal Years 1998 to 2002 

Table 2: Association between Surveyor Specialization and Rate of 

Condition- and Standard-Level Deficiencies Cited in Fiscal 

Years 2001 and 2002 

Table 3: Rates of Repeated Deficiencies in Consecutive Surveys 

Conducted from Fiscal Years 1998 through 2002 

Table 4: Federal Support for Provider Surveys, Fiscal Years 1998 to 

2001 

Table 5: ESRD Facilities Recertified Annually by State, Fiscal Years 

1998 to 2002 

Table 6: Facilities to Be Recertified to Meet CMS 3-Year Goal, by 

State 

18 

20 

22 

26 

45 

47 

Figures 

Figure 1: Projected Growth in the ESRD Population and Medicare 

Costs 6 

Figure 2: Number of Facilities Where Some Patients Receive 

Inadequate Dialysis Treatment and Anemia Management, 

2000 10 

Figure 3: State Variation in the Rate of Condition-Level 

Deficiencies Cited in Recertification Surveys Conducted 

from Fiscal Year 1998 through 2002 12 

Figure 4: ESRD Facility Survey Rate Compared to CMS Goal, Fiscal 

Years 1998 to 2002 16 

Figure 5: State Variation in the Proportion of Dialysis Facilities 

Surveyed for Recertification, Fiscal Year 2002 17 

Page ii GAO-04-63 Dialysis Facility Compliance 
Abbreviations 

CMS Centers for Medicare & Medicaid Services 


DFC Dialysis Facility Compare Web site 


EPO erythropoietin 


ESRD end-stage renal disease


ICF/MR intermediate care facilities for the mentally retarded 


LTC long-term care 


OSCAR Online Survey Certification and Reporting system


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Page iii GAO-04-63 Dialysis Facility Compliance 
United States General Accounting Office 

Washington, DC 20548 

October 8, 2003 


The Honorable Charles E. Grassley 


Chairman 


Committee on Finance 


United States Senate 


Dear Mr. Chairman: 


Most patients with end-stage renal disease (ESRD)—a life-shortening, 


chronic illness—must rely on dialysis treatments to compensate for kidney 


failure. Currently, over 222,000 ESRD patients spend 3 to 5 hours at 


dialysis centers three times a week, where dialysis machines remove 


toxins from their bloodstreams. In addition to having permanent kidney 


failure, ESRD patients are likely to suffer from diabetes or heart disease 


and are at risk for developing illnesses during their course on dialysis. 


Therefore, the care of ESRD patients requires expertise in both the 


medical and technical aspects of maintaining patients on dialysis. 


While dialysis care has improved overall, according to a 2002 Department 


of Health and Human Services report, questions remain regarding the 


quality of care provided to Medicare beneficiaries by some of the nation’s 


roughly 4,000 dialysis facilities. The HHS report noted that many ESRD 


patients do not receive treatment meeting the minimum standards 


established in the National Kidney Foundation’s clinical practice 


guidelines, which, when not met, have documented adverse effects on 


patient outcomes. In 2001, 16 percent of dialysis patients did not have an 


adequate amount of toxins removed from their blood, 24 percent had 


anemia that was not brought under control, and 19 percent of patients 


were dialyzed for extended periods using catheters, the least effective and 


most risky method for connecting patients to dialysis machines.1


ESRD is the one medical condition that confers eligibility regardless of age 


to the Medicare program, which otherwise pays for health care provided 


1

Department of Health and Human Services, Centers for Medicare & Medicaid Services, 

2002 Annual Report: End Stage Renal Disease Clinical Performance Measures Project 

(Baltimore, Md.: December 2002). These assessments are based on the clinical 

performance measures developed by CMS, building on the National Kidney Foundation’s 

1997 Dialysis Outcome Quality Initiative Clinical Practice Guidelines. 

Page 1 GAO-04-63 Dialysis Facility Compliance 
to people who are over 65 years of age or to those with disabilities. The 

Centers for Medicare & Medicaid Services (CMS), which oversees the 

Medicare program, has responsibility for ensuring that dialysis patients 

receive quality care. For this purpose, CMS contracts with state survey 

agencies that conduct onsite inspections. Following up on a report we 

issued in June 2000,2

 you asked us to review CMS’s system for enforcing 

Medicare’s minimum quality and safety standards for ESRD facilities and 

to assess whether and how it might be strengthened. Specifically, we 

examined (1) the extent and nature of quality of care problems identified 

at dialysis facilities, (2) the effectiveness of state survey agencies in 

ensuring that quality issues are uncovered, corrected, and stay corrected, 

and (3) the extent to which CMS funds, monitors, and assists state survey 

activities related to dialysis care. 

To address these issues, we obtained data from existing national 

databases and original data from 10 states. We analyzed facility-specific 

information about quality measures reported on CMS’s Dialysis Facility 

Compare, a consumer guide available on the Internet. For the nation as a 

whole and each of the states,3

 we also analyzed data from CMS’s Online 

Survey Certification and Reporting (OSCAR) system for the last 5 fiscal 

years, 1998 through 2002. This database provides information on the dates 

when surveys took place, the deficiencies cited, and the time spent 

conducting various survey activities. In addition, we interviewed cognizant 

officials at CMS’s central office and reviewed changes in the CMS budget 

devoted to survey activities from fiscal years 1998 to 2002. 

To supplement available national data, we obtained additional information 

from 10 states—Alabama, California, Florida, Kansas, Maryland, 

Mississippi, Missouri, Nevada, New York, and Pennsylvania—which 

together accounted for more than one-third of all facilities in fiscal year 

2001. They were selected to provide variation across a range of 

dimensions, including the proportion of ESRD facilities surveyed and 

deficiencies cited, number of ESRD facilities, and geographic diversity. We 

interviewed state surveyors and administrators, representatives from 

2

U.S. General Accounting Office, Medicare Quality of Care: Oversight of Kidney Dialysis 

Facilities Needs Improvement, GAO/HEHS-00-114 (Washington, D.C.: June 23, 2000). This 

report highlighted the need for additional enforcement tools to ensure that corrections of 

quality problems identified in surveys of ESRD facilities would be sustained over time. It 

also urged improved cooperation and data sharing between state survey agencies and 

ESRD networks to improve targeting of facilities selected for inspection. 

3

In this report, “states” refers to the 50 states and the District of Columbia. 

Page 2 GAO-04-63 Dialysis Facility Compliance 
Results in Brief 

ESRD networks (organizations that promote quality improvement in ESRD 

services), and federal regional office officials responsible for monitoring 

ESRD facility surveys. In addition, we collected detailed information on 

several states’ corps of ESRD surveyors, including their background, 

training, and experience. We also examined the written reports from 

numerous facility surveys conducted within the last 2 years. (App. I 

contains more detail on our scope and methodology.) Our work was 

conducted from August 2002 to September 2003 in accordance with 

generally accepted government auditing standards. 

A substantial number of dialysis facilities do not achieve the minimum 

patient outcomes specified in clinical practice guidelines for a significant 

proportion of their patients. Data reported on Dialysis Facility Compare 

show that, in 2000, 512 facilities had 20 percent or more of their patients 

receiving inadequate dialysis treatment, and nearly 1,700 facilities had 20 

percent or more of their patients receiving inadequate care for anemia. In 

addition, the CMS-funded system of on-site inspections of facility 

conditions, equipment, and staffing has uncovered numerous problems 

that put patient health at risk. From fiscal year 1998 through 2002, these 

inspections, generally called surveys, revealed that 15 percent of facility 

surveys identified serious quality problems that, if left uncorrected, would 

warrant termination from the Medicare program. Serious deficiencies 

commonly found during surveys included medication errors, 

contamination of water used for dialysis, and insufficient physician 

involvement in patient care. 

Infrequent, poorly targeted, and inadequate inspections by state survey 

agencies allow facilities’ quality of care problems to go undetected or 

remain uncorrected. Specifically: 

• 	 Although ESRD survey activity has increased in recent years, state 

compliance with CMS’s goal to resurvey 33 percent of ESRD facilities 

annually has been inconsistent. While 33 states met the goal in at least 1 of 

the last 2 fiscal years, only 9 of the 33 states surveyed a third or more of 

their facilities in both years. Eighteen states failed to meet the goal in 

either fiscal year 2001 or 2002. 

• 	 A substantial number of facilities go many years between inspections. In 

fiscal year 2002, 216 facilities nationwide (5.4 percent) went 9 or more 

years without an inspection, up from 53 facilities (1.6 percent) in fiscal 

year 1998. 

• 	 Deficiencies may not have been detected during a survey if the surveyors 

who inspected the facilities had little experience in assessing dialysis 

Page 3 GAO-04-63 Dialysis Facility Compliance 
quality. Data from several states showed that survey agencies where 

designated staff specialized in performing ESRD surveys uncovered a 

substantially larger number of deficiencies than agencies without such 

staff expertise. 

Even when deficiencies are identified and facilities take corrective action, 

little incentive exists for these facilities to remain in compliance with 

Medicare’s minimum quality standards on a continuing basis. As shown in 

nationwide data, when quality problems were cited, the problems were 

corrected but often did not stay corrected. For example, from fiscal years 

1998 through 2002, 18 percent of facilities found to have serious 

deficiencies were cited again for the same deficiencies in successive 

inspections. At present, there is no effective sanction to encourage a 

facility to avoid repeating prior deficiencies, short of terminating the 

facility from the Medicare program, which is rarely done. 

CMS has expanded funding to support state ESRD survey activities, but its 

monitoring of state agencies’ performance of surveys and providing 

technical assistance is uneven across CMS regions. CMS substantially 

increased its aggregate funding for ESRD surveys from an estimated 

$3.1 million in fiscal year 1998 to $8.2 million in fiscal year 2002. At the 

same time, several regional offices in our study did not actively oversee or 

assist in improving ESRD survey activities. In addition, CMS has not 

removed barriers between federally funded ESRD networks and state 

agencies that inhibit the sharing of information on the performance of 

individual dialysis facilities—information that could assist states in 

targeting their inspection resources. Furthermore, surveyors in several 

states reported that CMS has not offered adequate training opportunities 

for surveyors inspecting ESRD facilities. 

To encourage ESRD facilities to adhere to Medicare quality standards, we 

suggest that Congress consider authorizing CMS to impose immediate 

sanctions, such as monetary penalties or denying payment for new 

Medicare patients, on dialysis facilities cited with serious deficiencies in 

consecutive surveys. We are also recommending that CMS: conduct more 

frequent surveys of facilities with serious deficiencies; publicize facilities’ 

survey results; encourage state agencies to use ESRD-specialized 

surveyors; expand ESRD surveyor training opportunities; require periodic, 

routine sharing of information between ESRD networks and state survey 

agencies; and enhance oversight of state agency performance. 

Page 4 GAO-04-63 Dialysis Facility Compliance 
Background 

In its comments on a draft of this report, CMS affirmed its commitment to 

strengthening oversight of dialysis facilities and state survey agencies, but 

did not indicate an intention to implement five of our six 

recommendations. Instead, the agency highlighted its efforts to develop 

tools to assist states in selecting facilities for inspection and to make the 

survey process more uniform. We continue to believe that more focused 

efforts to evaluate compliance with Medicare requirements and stronger 

actions against poor performers are needed to ensure an effective, 

consistent, and timely ESRD survey and certification program. 

Individuals with ESRD, characterized by permanent kidney failure, must 

undergo either regular dialysis treatment or a kidney transplant to stay 

alive. In 2000, about 248,000 individuals received one of two modes of 

dialysis treatment—hemodialysis or peritoneal dialysis—both of which 

can be performed at a facility or at home.4

 Most ESRD patients undergo 

hemodialysis.5

 The number of hemodialysis patients enrolled in Medicare 

has risen sharply, from about 118,000 in 1991 to over 222,000 in 2000. With 

anticipated annual growth of over 7 percent, the dialysis population is 

projected to reach more than 520,000 by 2010.6

 (See fig. 1.) This growth in 

enrollment has been attributed largely to improvements in the survival rate 

for people with ESRD and an increase in the number of Americans with 

conditions, such as diabetes or high blood pressure, that often lead to 

kidney failure. 

4

In hemodialysis, a patient’s blood is filtered through an external machine that acts as an 

artificial kidney to withdraw excess fluids and toxic materials before returning cleansed 

blood to the patient. The machine uses a semipermeable membrane, called a hemodialyzer, 

to filter out the toxins. In peritoneal dialysis, the patient’s peritoneal membrane, located 

within the abdominal cavity, is used to remove excess fluids and toxins. 

5

In 2000, about 222,300 patients received hemodialysis, 21,400 underwent peritoneal 

dialysis, and 4,400 underwent dialysis of an unspecified mode. In addition, approximately 

74,700 beneficiaries were recipients of kidney transplants, for a total of approximately 

322,800 individuals that received Medicare benefits as of December 31, 2000. 

6

Projections are based on data for 1982 to 1997. See J.L. Xue, J.Z. Ma, T.A. Louis, and A.J. 

Collins, “Forecast of the Number of Patients With End-Stage Renal Disease in the United 

States to the Year 2010,” Journal of the American Society of Nephrology, vol. 12 (2001): 

2753-2758. 

Page 5 GAO-04-63 Dialysis Facility Compliance 
Figure 1: Projected Growth in the ESRD Population and Medicare Costs 

Growth in the ESRD population has been matched by growth in the 

number of dialysis facilities. In the decade between 1991 and 2001, the 

number of outpatient dialysis facilities doubled from about 2,000 to more 

than 4,000 facilities. In 2001, 83 percent of all facilities were freestanding 

(nonhospital-based) and 79 percent of all facilities were for-profit. In 2001, 

the four largest for-profit dialysis chains accounted for about two-thirds of 

all freestanding facilities. 

The rise in the ESRD population has been accompanied by an even more 

rapid increase in program spending. Medicare not only provides coverage 

Page 6 GAO-04-63 Dialysis Facility Compliance 
to most beneficiaries with ESRD for all ESRD-related services but for their 

other health care needs as well.7

 From 1990 to 2001, Medicare 

expenditures for beneficiaries with ESRD rose from about $5 billion to 

over $15 billion, and are forecast to grow to $28 billion in 2010. Spending 

growth has been fueled by an expansion of enrollees with greater medical 

needs—older beneficiaries and those with chronic comorbidities8—and 

the program’s inclusion of new treatments, particularly erythropoietin 

(EPO)—a synthetic hormone widely used to manage anemia—and other 

injectable medications. While Medicare pays ESRD providers a set 

amount—a composite rate—including the nursing services provided and 

supplies used in each dialysis treatment, it pays separately for injectable 

drugs.9

 The composite rate for dialysis services has remained virtually 

unchanged since the program’s inception. However, payments to 

freestanding dialysis facilities for injectable drugs have grown 

considerably in recent years, increasing from 33 percent of total payments 

in 1997 to 40 percent in 2001. 

In 1976, CMS established minimum requirements that dialysis facilities 

must meet in order to receive Medicare payments. The regulations, 

referred to as “conditions for coverage,” address 11 general areas, 

including the facility’s physical environment and overall management by a 

governing body, as well as the adequacy of patient treatment plans.10 (See 

app. II.) One condition covers the detailed procedures that facilities must 

follow if they choose to reuse certain supplies, such as dialyzers, rather 

than replace them for each treatment.

11 Under each condition are related 

“standards.” For example, under the condition “physical environment,” 

7

For individuals eligible for Medicare only because of permanent kidney failure, Medicare 

coverage starts on the fourth month of dialysis. Medicare will not pay for services during 

the first 3 months of dialysis unless the patient already has Medicare because of age or 

disability. After that, Medicare is the secondary payer for 30 months. During this period, 

private insurance or Medicaid pays first on health care bills and Medicare pays second. Full 

Medicare coverage begins with the 34th month of dialysis and any private insurer becomes 

the secondary payer. For those who are uninsured, Medicare is the primary payer. 

8

The proportion of new ESRD patients 75 or older grew from 18 percent in 1991 to about 25 

percent in 2001, while the proportion of new ESRD patients with diabetes grew from 36 

percent of all new patients to 46 percent during the same period. 

9

In 2002, the average composite rate was approximately $130 for freestanding dialysis 

facilities. Payments for injectable drugs averaged about $80 per treatment in 2001. 

10See 42 C.F.R. Part 405 Subpart U (2002). 

11These requirements include appropriate methods for disinfection and steps to ensure that 

such supplies are only reused by the same patient. 

Page 7 GAO-04-63 Dialysis Facility Compliance 
there are specific standards to maintain the purity of water used for 

dialysis. Even deficiencies found solely at the standard level indicate 

potential harm to patients. But, deficiencies cited at the condition level are 

the most egregious, as they indicate a problem that is widespread at a 

facility or serious in terms of its harm, or potential to harm patients. 

Typically, they are accompanied by multiple standard-level deficiencies 

under that condition. 

To ensure provider compliance with dialysis quality standards, Medicare 

contracts with state survey agencies.12 These agencies conduct initial onsite surveys of dialysis facilities when providers seek enrollment in the 

Medicare program. Subsequently, state agencies periodically conduct 

unannounced inspections, referred to as recertification surveys, to ensure 

that facilities are maintaining compliance with Medicare standards. 

Although no statutory or regulatory requirements exist regarding the 

frequency of recertification surveys, CMS has established goals for state 

survey agencies to ensure that facilities are surveyed within certain 

intervals. States are expected to survey 33 percent of their dialysis 

facilities annually, and each facility every 3 years. In addition, state survey 

agencies must respond to complaints that they receive concerning dialysis 

facilities and, when warranted, conduct on-site investigations. 

If the state agency determines that a facility is out of compliance with any 

condition or standard, CMS requires that the facility develop a plan to 

correct the deficiency. The state agency is then responsible for 

determining if the plan of correction is adequate to address the quality 

problems identified. Facilities that do not correct condition-level 

deficiencies within a reasonable amount of time, generally within 90 days, 

are subject to termination from the program. A much shorter time frame 

for termination applies in situations where a facility’s noncompliance 

poses an immediate and serious threat to patient health or safety. 

CMS also contracts with 18 ESRD network organizations that are 

responsible for helping providers improve the quality of care patients 

receive in dialysis facilities. Rather than enforcing compliance with federal 

quality regulations, the networks recruit facility participation in national 

and regional quality improvement projects that focus on enhancing 

12These agencies are typically part of state health departments and are responsible for 

monitoring compliance with quality standards associated with several types of facilities, 

including nursing homes and home health agencies. 

Page 8 GAO-04-63 Dialysis Facility Compliance 
specific clinical outcomes of dialysis patients. Networks collect data from 

individual facilities on numerous clinical indicators and provide them 

feedback on their performance. The networks also provide technical 

assistance to facilities and handle grievances concerning patient care. 

Each network has a medical review board composed of dialysis facility 

representatives, physicians, and dialysis patients, that oversees network 

operations. 

To assist beneficiaries with ESRD in deciding where to get dialysis 

services, CMS reports certain information on Dialysis Facility Compare, an 

Internet Web site. Initiated in 2001, the site provides information on 

specific characteristics—such as the location, operating hours, and size— 

of all Medicare-certified facilities. It also provides data on clinical 

outcomes related to several quality measures, but does not contain the 

results of state agency surveys. In contrast, CMS routinely posts survey 

results for nursing homes on a similar but separate Internet Web site 

called Nursing Home Compare. 

Data made public by CMS reveals that poor care is a problem at many 

facilities, with large numbers of patients receiving inadequate hemodialyis 

or treatment for anemia. Similarly, inspections of ESRD facilities continue 

to find evidence that serious health and safety problems exist for dialysis 

patients. From fiscal year 1998 through 2002, as many as one out of seven 

surveys identified problems sufficiently severe to initiate the process of 

terminating the facility from the Medicare program. These deficiencies, 

such as medication errors and contamination of water used for dialysis, 

put the health of patients at risk. 

Quality Problems 

Prevalent among 

Dialysis Facilities and 

Put Patient Health at 

Risk 

Many Facilities Do Not 

Provide Adequate Care to 

Their Hemodialysis 

Patients 

Data reported on the Dialysis Facility Compare Web site provides evidence 

that the care delivered at many facilities is substandard. The most recent 

information available indicates that, in 2000, a substantial number of 

facilities did not provide all of their Medicare patients with a level of care 

that meets minimum clinical practice guidelines. Figure 2 shows the extent 

to which facilities did not achieve two commonly accepted quality 

benchmarks based on the National Kidney Foundation guidelines: (1) the 

percent of the facility’s patients not receiving adequate hemodialysis and 

(2) the percent of the facility’s patients receiving EPO whose anemia was 

not adequately managed.

13 Despite some measurement limitations, both of 

13EPO is used for the treatment of anemia for nearly all dialysis patients. 

Page 9 GAO-04-63 Dialysis Facility Compliance 
these indicators are considered characteristics of patient care that reflect 

dialysis facility quality. 

Figure 2: Number of Facilities Where Some Patients Receive Inadequate Dialysis 

Treatment and Anemia Management, 2000 

1000 Number of facilities 

800 

600 

400 

200 

0 

Less than 5 5 to 9 10 to14 15 to19 20 to 24 25 or more 

Percentage of the facility's patients with inadequate hemodialysis 

1200 Number of facilities 

1000 

800 

600 

400 

200 

0 

Less than 10 10 to 19 20 to 29 30 to 39 40 to 49 50 or more 

Percentage of the facility's patients with inadequate anemia control 

Source: CMS, Dialysis Facility Compare Web site. 

Notes: Adequacy of dialysis is measured as the percentage of the facility’s hemodialysis patients that 

had the minimum recommended urea reduction ratio—a measure of the waste products removed 

from the blood—of 65 or more. Data were reported for 3,158 facilities. 

Anemia management is measured as the percentage of the facility’s patients who received EPO that 

had a hematocrit level—a measure of low red blood count—of 33 or greater. Data were reported for 

3,325 facilities. 

Page 10 GAO-04-63 Dialysis Facility Compliance 
Relatively few dialysis facilities reported meeting these two national 

guidelines for 100 percent of their patients. At about half of the facilities, 

fewer than 10 percent of their patients fell short of the hemodialysis 

guideline, but at 512 facilities, 20 percent or more of their patients received 

inadequate hemodialysis. Results for anemia treatment were less favorable 

overall. Nearly 1,700 facilities fell short of meeting the guideline for 

anemia management for 20 percent or more of the patients in their care; at 

135 facilities, more than 50 percent of patients received inadequate 

treatment for anemia. Research has shown that variation in such patient 

outcomes as dialysis adequacy is largely attributable to factors at the 

facility—its policies governing dialysis care, associated practice patterns, 

and attention to individual patient problems—as opposed to patientspecific causes.14 

Facility Inspections 

Identify an Unacceptable 

Level of Serious Quality 

Problems 

The cumulative results of surveys conducted from fiscal years 1998 

through 2002 suggest that condition-level deficiencies—quality problems 

severe enough to warrant termination from the Medicare program unless 

corrected within 90 days—are still far from rare. Fifteen percent of 

recertification surveys conducted nationwide from fiscal year 1998 

through 2002 reported one or more condition-level deficiencies. The 

distribution across states of condition-level deficiencies cited was 

substantially uneven. Several states reported no condition-level 

deficiencies during that 5-year period, whereas other states found such 

deficiencies in roughly 60 percent of their surveys. As shown in figure 3, 

most states were at the lower end of the range, with 39 states citing 

condition-level deficiencies in fewer than 20 percent of their surveys, and 

21 states, in fewer than 10 percent of their surveys. 

14J.C. Fink, S.A. Blahut, A.E. Briglia, and others, “Effect of Center- Versus Patient-Specific 

Factors on Variation in Dialysis Adequacy,” Journal of the American Society of Nephrology, 

vol. 12 (2001): 164-169. 

Page 11 GAO-04-63 Dialysis Facility Compliance 
Figure 3: State Variation in the Rate of Condition-Level Deficiencies Cited in 

Recertification Surveys Conducted from Fiscal Year 1998 through 2002 

20 Number of states 

18 18 

6 

15 

6 6 

Our review of recertification survey reports from fiscal years 2001 and 

2002, collected from the 10 states in our study, identified condition-level 

deficiencies that were commonly cited among noncompliant facilities. 

Multiple instances were found of inadequate clinical management, 

medication errors, improper use of reusable dialysis equipment, 

contamination of water used for dialysis, and insufficient professional 

medical involvement in the dialysis patients’ care. State surveyors 

documented these problems after reviewing facility personnel files, 

policies, procedures, and the facility’s overall environment. In addition, 

surveyors reviewed a random sample of medical records from 10 percent 

of the facility’s patients.15 The vignettes presented below—which illustrate 

the types of problems found in 35 percent of all surveys conducted from 

fiscal year 1998 through 2002—were extracted from surveyors’ findings 

15A patient’s medical record contains required information on identified problems, a plan of 

care, and documentation tracking the treatments actually provided. The record must show 

ongoing assessments of patient needs as well as evidence that patients participate in 

developing their treatment plans and are informed of outcomes. 

16 

14 

12 

10 

8 

6 

4 

2 

0 

0 1 to 9 10 to 19 20 to 29 30 or more 

Percentage of the state's surveys that found condition-level deficiencies 

Source: GAO analysis of CMS OSCAR data. 

Problems Cited at ESRD 

Facilities Create the 

Potential for Harm to 

Patients 

Page 12 GAO-04-63 Dialysis Facility Compliance 
reports. Registered nurses with substantial ESRD survey experience, who 

we asked to comment on the clinical implications of these findings, 

indicated that the deficiencies could lead in some cases to severely 

adverse patient outcomes. 

• 	 Failure to monitor laboratory values and medication supply. A Maryland 

surveyor found that for 31 days, one facility did not provide any of its 

patients with EPO, a medication routinely used to stimulate the 

production of red blood cells that are compromised by chronic kidney 

disease. Upon reviewing patients’ medical records, 8 out of 10 sampled 

records indicated that the patient’s red blood cell count was below 

normal, thus requiring EPO. In addition, 5 of these records showed that 

the patient’s red blood cell level decreased over a 4-month period. The 

facility’s head nurse did not monitor and report the patients’ abnormal 

laboratory values to the physicians and did not respond to the patients’ 

complaints of feeling tired and lacking energy. 

According to our nurse reviewers, patients who have a diminished red 

blood cell count for an extended period of time can develop health-related 

complications, including heart irregularities and a decrease in brain 

function. 

• 	 Failure to administer medication as prescribed. A California surveyor cited 

a condition-level deficiency when she found that physician orders were 

not being followed. One patient’s medical record documented that 6,000 

units of EPO were prescribed for each dialysis treatment but that the 

patient received only 600 units at each treatment for 20 treatments. Staff 

confirmed that the patient was receiving the wrong dose, and when 

questioned by the surveyors, could not provide an explanation. Another 

patient’s medical record revealed that, despite a physician-ordered 

increase in EPO, the patient received an incorrect dosage of the 

medication for almost 2 months. Again, staff acknowledged that the order 

to increase the dosage was not carried out. A review of two more patients’ 

medical records showed written orders for Venofer, a medication to treat 

iron deficiency. The records documented that both patients failed to 

receive this medication for a week or more. Staff acknowledged that there 

was a period of time during which the facility ran out of the medication. 

Our nurse reviewers reported that a reduction of Venofer or EPO could 

increase the dialysis patients’ risk for anemia, a condition that, as noted 

above, can cause a patient to experience extreme fatigue and eventually 

clinical impairments to the heart and brain. 

Page 13 GAO-04-63 Dialysis Facility Compliance 
• 	 Failure to administer dialysis treatments as prescribed. A recertification 

survey in Pennsylvania discovered that, for over half of the medical 

records reviewed, the facility did not ensure that diagnostic and 

therapeutic orders were followed. Specifically, documentation in patients’ 

medical records revealed that the duration of dialysis treatments deviated 

from the amount of time prescribed by a physician. One patient’s medical 

record indicated that dialysis treatments were ordered for 3.5 hours in 

duration. However, actual treatment periods were all less than the 

prescribed amount—by 20 to 90 minutes. Similarly, another patient’s 

record indicated that dialysis treatments were ordered for a duration of 3 

hours and 45 minutes but most treatments were for shorter duration—as 

much as an hour less. 

Nurse reviewers indicated that when the dialysis treatment period is 

reduced, the patient retains toxins and other fluids that have not been 

removed adequately from the blood stream. This condition can adversely 

affect the patient’s overall general health and lead to loss of appetite, 

swelling, fatigue, shortness of breath, and possibly heart failure. 

• 	 Failure to monitor concentration of chemicals in the water system. A New 

York surveyor found that a facility did not monitor the purity of water 

used for dialysis. The water used to prepare dialysate, a solution that 

removes wastes from the blood during dialysis, contained chemical 

contaminates in excess of allowed concentrations. For at least 8 months, 

fluoride levels were 1.0—five times greater than the maximum allowable 

limit of 0.2. In addition, two water tests showed that calcium levels were 

above 5.25, well above the maximum allowable limit for calcium of 2.0. 

The facility medical director did not monitor the results of water tests 

conducted and did not ensure that the facility’s staff took appropriate 

action, such as reporting abnormal values or resampling the water. 

Nurse reviewers told us that excessive amounts of fluoride could cause a 

dialysis patient’s red blood cells to rupture and clot and that excessive 

amounts of calcium in the blood could increase the incidence of bone 

disease. 

• 	 Failure to involve a transplant surgeon in the review of patients’ long-term 

care plans. A recertification survey in Mississippi revealed that the facility 

did not involve a transplant surgeon, as required, in the review of patients’ 

long-term care plans. All of the medical records reviewed in that facility 

had long-term care plans that were not updated within the required 6-

month time frame. The surveyor interview with the facility’s medical 

director confirmed that a transplant surgeon or his designee had not 

examined patients’ long-term care plans. 

Page 14 GAO-04-63 Dialysis Facility Compliance 
Limitations in the 

ESRD Survey Process 

Leave Quality 

Problems Undetected 

or Inadequately 

Addressed 

Nurse reviewers commented that, until screened by a transplant surgeon, 

the dialysis patient’s potential for kidney transplantation cannot be 

properly assessed. 

Infrequent or poorly targeted inspections allow facilities’ quality of care 

problems to go undetected or remain uncorrected. Although state survey 

activity increased from fiscal year 1998 to 2002, numerous state agencies 

did not meet the goal currently set by CMS to survey 33 percent of all 

ESRD facilities annually. An increasing number of facilities continued to 

operate 9 or more years between inspections. In addition, states that relied 

primarily on surveyors with limited experience in conducting inspections 

of ESRD facilities tended to report substantially fewer deficiencies than 

states using more experienced surveyors, suggesting that surveyors in the 

first group of states may have missed some quality problems. We also 

found patterns of repeated condition-level deficiencies, and particularly, 

citations for the same problem in successive inspections of an individual 

facility. Finally, facilities had little incentive to ensure continued 

adherence to Medicare’s minimum quality standards in the absence of 

sanctions for noncompliance other than termination from the Medicare 

program—which, historically, has been rarely used. 

Increased CMS Goals Have 

Led to Greater Survey 

Activity, but Many States 

Fall Short 

In recent years, CMS has underscored the importance of conducting 

recertification surveys of ESRD facilities by raising its expectations for the 

state agencies regarding the frequency with which such surveys should 

take place. In fiscal year 2001, CMS increased the recertification goal for 

states to 33 percent of facilities each year, up from 10 percent in fiscal year 

1999 and 17 percent in fiscal year 2000. Moreover, since fiscal year 2001, 

there has been a parallel goal for states to survey every dialysis facility 

within a 3-year period. Thus, by the end of fiscal year 2003, no dialysis 

facility should have gone more than 3 years since its last recertification 

survey. 

In response to CMS’s heightened expectations, state agencies surveyed 

more ESRD facilities, but not enough to fully meet CMS’s current goals. As 

shown in figure 4, the percentage of ESRD facilities undergoing 

recertification surveys annually grew substantially from fiscal year 1998 to 

2001. However, collectively, state agencies did not achieve the current 

goal, effective in 2001, of surveying 33 percent of all ESRD facilities each 

year. In fact, after increasing to over 28 percent in fiscal year 2001, the 

survey frequency rate declined to about 27 percent in fiscal year 2002. 

Page 15 GAO-04-63 Dialysis Facility Compliance 
Figure 4: ESRD Facility Survey Rate Compared to CMS Goal, Fiscal Years 1998 to 

2002 

Percent 

35 

33 33 

30 

25 

20 

15 

10 

5 

0 

1998 1999 2000 2001 2002 

10 10 

17 

12 

14 

16 

28 

27 

CMS annual survey goal 

Facilities surveyed 

Source: GAO analysis of CMS OSCAR data. 

Underlying this aggregate trend are wide disparities in survey frequency 

rates across the individual state agencies, as shown in figure 5. State 

recertification survey rates ranged from zero to 89 percent in fiscal year 

2002. Even among the 13 states with the largest number of ESRD 

facilities,16 recertification survey rates varied widely—from 10 percent to 

40 percent. 

16This top quartile of states represents 60 percent of all ESRD facilities and 64 percent of all 

dialysis patients. 

Page 16 GAO-04-63 Dialysis Facility Compliance 
Figure 5: State Variation in the Proportion of Dialysis Facilities Surveyed for 

Recertification, Fiscal Year 2002 

15 15 

10 

5 

0 

0 to 4 5 to 9 10 to 14 15 to 19 20 to 24 25 to 29 30 to 34 35 to 39 40 or more 

Number of states 

3 

2 

5 

1 

7 

10 

4 4 

Percentage of the state's facilities surveyed 

Source: GAO analysis of CMS OSCAR data. 

While 33 state survey agencies met the expanded CMS survey frequency 

goal in at least 1 of the last 2 fiscal years—sometimes by substantial 

margins—only 9 of those states met the 33 percent goal in both years. (See 

table 5 in app. III.) By contrast, 18 state agencies failed to reach 33 percent 

in either of the two most recent fiscal years, including some of the largest 

ESRD states, such as California, Michigan, Pennsylvania, and Virginia. 

As a result, many states may have difficulty meeting CMS’s second goal for 

state recertification activity, to survey all their ESRD facilities within a 3-

year period. Because this goal was established in fiscal year 2001, the first 

test of state compliance will come at the end of fiscal year 2003. Based on 

the facilities surveyed in fiscal year 2001 and 2002, 35 states will have to 

inspect more than a third of their ESRD facilities in fiscal year 2003 if they 

are to meet the 3-year goal. (See table 6 in app. III.) About one in five 

states has more than 60 percent of facilities left to survey. Alabama has the 

most facilities—89 percent—that need to be surveyed in the current fiscal 

year. Among the largest states, California and Virginia have the largest 

backlogs to overcome—around 76 percent. 

Despite improvement in the overall rate of ESRD facility surveys, a 

significant proportion of dialysis facilities continue to operate for long 

periods without inspections. For example, as of September 30, 2002, 466 

facilities had not been surveyed for 6 or more years, of which 216 had not 

been inspected for recertification in 9 or more years. Most of the effort to 

shorten the interval between recertification surveys has focused on 

Page 17 GAO-04-63 Dialysis Facility Compliance 
reducing the number of facilities surveyed within 3 to 6 years. (See table 

1.) From fiscal year 1998 to 2000, the proportion of facilities not surveyed 

for more than 6 years rose sharply (from 9.8 to 17.4 percent) and then 

declined (to 11.6 percent). Those that operated 9 or more years without a 

recertification survey steadily increased from 1.6 percent (53 facilities) in 

fiscal year 1998 to 5.4 percent (216 facilities) in fiscal year 2002. This 

aggregate result reflected highly variable survey rates across states. Four 

states—California, Texas, New York, and Missouri—accounted for 174 

facilities that had not been surveyed within 9 years by the end of fiscal 

year 2002. 

Table 1: Proportion of ESRD Facilities Recertified Within 3, 6, 9, or More Years, 

Fiscal Years 1998 to 2002 

Percentage of facilities subject to a recertification survey 

Length of time since 


last recertification 1998 1999 2000 2001 2002


survey (n=3,250) (n=3,462) (n=3,679) (n=3,882) (n=4,011)


Less than 3 years 51.6 51.2 49.8 62.5 72.4 

3 to <6 years 38.6 32.8 32.8 22.9 16.0 

6 to <9 years 8.2 13.9 14.2 10.1 6.2 

9 or more years 1.6 2.1 3.2 4.4 5.4 

Source: GAO analysis of CMS OSCAR data. 

State agencies have to balance their efforts to meet survey workload goals 

for ESRD facilities against the demands on inspection staff to meet other 

CMS survey requirements. In particular, state agencies are required to 

inspect nursing homes every 15 months,17 intermediate care facilities for 

the mentally retarded (ICF/MR) at least annually, and home health 

agencies at least once every 3 years. In its letter to state agencies on fiscal 

year 2003 program requirements and budget guidelines for survey 

activities, CMS made inspections of dialysis facilities and nine other types 

of providers lower in inspection priority, behind nursing homes, ICF/MRs, 

and home health agencies.18 ESRD recertifications also received lower 

17The statewide average interval between standard surveys must be 12 months or less. See 

42 C.F.R. § 488.308(b). 

18Department of Health and Human Services, CMS, memorandum from the Director, Survey 

and Certification Group, “Fiscal Year (FY) 2003 State Survey and Certification Budget Call 

Letter — ACTION,” July 2, 2002. 

Page 18 GAO-04-63 Dialysis Facility Compliance 
priority than investigation of complaints filed against all types of 

providers.19 CMS officials asserted that they provide the state survey 

agencies with sufficient resources to fulfill expectations across all 

provider types. Nonetheless, several state officials we spoke with reported 

difficulty in meeting all of these expectations, especially those 

experiencing substantial growth in ESRD facilities in their states. They 

indicated that, given the relatively low priority assigned to ESRD 

recertifications, they would most likely cope by adjusting the number of 

dialysis facilities inspected. 

Lack of Surveyor 

Specialization May 

Contribute to Less 

Effective Surveys 

Even when facilities are inspected, some surveyors may be more adept 

than others at identifying quality problems. Because dialysis treatment is 

technically complex, surveyors who focus on ESRD surveys say that they 

become more proficient in detecting and properly documenting quality of 

care problems as a result. However, state agencies may be reluctant to 

designate a subset of surveyors who specialize in performing ESRD 

inspections as it limits their flexibility in scheduling inspections of nursing 

homes, home health agencies, and other provider types. Moreover, such 

specialization is less feasible for states with few ESRD facilities overall. In 

states without a specialist approach to facility inspections, many surveyors 

are likely to conduct no more than a few ESRD surveys each year. Among 

the nine state survey agencies from which we collected workload data, six 

typically assigned ESRD inspections to surveyors who spent most of their 

time surveying other provider types.20 The other three assigned most ESRD 

inspections to surveyors who often performed surveys of dialysis facilities. 

19CMS requires every state to establish a screening mechanism to evaluate complaints as 

they come in, and to apply explicit criteria to determine which ones need to be followed up 

with a survey as well as the time frame within which that survey must take place. Surveys 

prompted by complaints are intended to address a particular issue raised in the complaint, 

which often does not involve clinical issues. If during the course of the complaint 

investigation the surveyor discovers systemic quality problems, the inspection is usually 

converted into a recertification survey. 

20For each state, we calculated a specialization ratio that indicated the likelihood that any 

given ESRD survey would be conducted by a surveyor who frequently conducted surveys 

of dialysis facilities. (See app. I.) On a scale of zero to one, the values of the specialization 

ratio clustered into two groupings: the states with specialized ESRD staff included New 

York (0.68), California (0.63), and Maryland (0.57); the states without ESRD specialized 

staff included Pennsylvania (0.36), Missouri (0.27), Alabama (0.21), Florida (0.17), Kansas 

(0.14), and Nevada (0.11). 

Page 19 GAO-04-63 Dialysis Facility Compliance 
A comparison of survey results between states that had a designated corps 

of ESRD surveyors and those that did not suggested that surveyors who 

frequently conduct ESRD inspections may be more effective in detecting 

and reporting deficiencies. Table 2 shows that the more specialized group 

of states was almost three times as likely to find a condition-level 

deficiency. Surveyors from these states cited a substantially larger number 

of deficiencies at the less serious “standard-level” as well. While other 

factors could have also influenced the number of deficiencies reported by 

surveyors in various states, the magnitude of the difference observed 

between states that did and did not specialize suggests that specialization 

has a major impact.21 

Table 2: Association between Surveyor Specialization and Rate of Condition- and 

Standard-Level Deficiencies Cited in Fiscal Years 2001 and 2002 

State surveyor specialization in ESRDa 

Percentage of Percentage of 

surveys in surveys in 

nonspecialized states specialized states 

(n=367) (n=261) 

Surveys with condition-level 


deficiencies 8.4 24.1


Surveys with standard-level 

deficiencies numbering 

26.4 6.9 

1 to 5 45.8 21.1 

6 to 10 14.2 31.0 

11 to 20 11.4 28.4 

21 or more 2.2 12.6 

Source: GAO analysis of state-provided workload data and CMS OSCAR data. 

a

Nonspecialized states include Pennsylvania, Missouri, Alabama, Florida, Kansas, and Nevada. 

Specialized states include, California, Maryland, and New York. 

The importance of surveyor specialization for inspection results may be 

stronger for ESRD facilities than other types of providers. Although some 

general surveying skills apply across provider types, much of the content 

of ESRD standards is highly specialized, reflecting both the technological 

21Statistical tests (chi square) indicate that the difference in outcomes between these two 

groupings of states is highly significant (p=0.000). Thus, it is very unlikely that these 

differences could have occurred simply by chance. 

Page 20 GAO-04-63 Dialysis Facility Compliance 

0 
complexity of the dialysis process and the clinical complexity and 

vulnerability of the ESRD patient population. In a 184-page appendix 

devoted to ESRD surveys, CMS’s State Operations Manual lays out the 

specific steps that surveyors are expected to follow. Presumably, 

surveyors who have the opportunity to focus on mastering this material 

develop greater proficiency in identifying quality of care problems, 

including proficiency in identifying indications of adverse patient 

outcomes and appropriate facility responses. 

Facilities with Prior 

Deficiencies Are Likely to 

Be Cited for Problems in 

Subsequent Surveys 

Our June 2000 ESRD report described the inability of Medicare’s survey 

and certification system to ensure that problems identified in surveys and 

addressed by a facility’s plan of correction will stay corrected for the long 

term. Once a facility has been recertified, it faces no adverse 

consequences should it fail to remain in compliance in the future. When 

the next survey takes place—usually several years later—the process will 

start over with deficiencies identified and a new opportunity for the 

facility to correct them. This allows facilities to cycle in and out of 

compliance with Medicare’s quality standards. 

The results of surveys conducted from fiscal year 1998 through 2002 

showed that a pattern of persistent noncompliance with quality standards 

was not uncommon. First, facilities cited for deficiencies in previous 

surveys were substantially more likely than other facilities to have 

deficiencies when surveyed again. Of surveys involving facilities that had a 

condition-level deficiency in their most recent prior survey, 29 percent had 

a condition-level deficiency in the subsequent survey as well, compared 

with 16 percent for those with only standard-level deficiencies in the prior 

survey and 12 percent for those with no prior deficiencies. 

Similarly, we found that repeated citations for the same deficiency 

occurred frequently. From fiscal year 1998 through 2002, 2,073 

recertification surveys (57 percent of the total) involved facilities that had 

received deficiencies in their most recent prior survey. Of those, a third 

found deficiencies that repeated one or more specific condition- or 

standard-level deficiency codes cited in that prior survey. Moreover, 18 

percent of the facilities with a condition-level deficiency on the prior 

survey were cited again for the same condition-level deficiency. (See table 

3.) Another 44 percent repeated one or more standard-level deficiencies. 

Page 21 GAO-04-63 Dialysis Facility Compliance 
Table 3: Rates of Repeated Deficiencies in Consecutive Surveys Conducted from 

Fiscal Years 1998 through 2002 

Percentage of subsequent surveys 

identifying the same deficiencies 

Condition-level 

Standardlevel only 

Percentage of 

subsequent 

surveys not 

identifying 

the same 

deficiencies 

Prior survey with both 


condition- and 


standard-level 


deficiencies (n=271) 18.1 43.9 38.0


Prior survey with only 


standard-level 


deficiencies (n=1,802) n/a 28.6 71.4


n/a = not applicable 

Source: GAO analysis of CMS OSCAR data. 

ESRD surveyors in 6 of the 10 states in our study stated that they try to 

reduce the occurrence of persistent noncompliance by taking a facility’s 

previous survey results into account when deciding which facilities to 

survey. Following this policy, facilities doing poorly on one survey should 

undergo a recertification survey more frequently. However, CMS’s current 

goals for ESRD surveys, because they focus solely on the frequency of 

survey performance and not on the effectiveness of survey targeting, 

create a disincentive for states to give greater attention to previously 

noncompliant facilities. In particular, CMS’s mandate to survey every 

facility within a 3-year period tends to discourage survey agencies from 

revisiting poorly performing facilities until all other facilities have been 

inspected. 

An analysis of survey activity from fiscal year 1998 through 2002 indicates 

that targeting of facilities based on their past survey results occurred to 

only a limited extent in recent years. Only 5.9 percent of facilities surveyed 

from fiscal year 1998 through 2001 with condition-level deficiencies were 

resurveyed within a year, compared to 3.9 percent of facilities that had no 

condition-level deficiencies that also were resurveyed within a year. The 

difference was somewhat greater over a 2-year period, with 20.8 percent of 

facilities having condition-level deficiencies in fiscal year 1998 through 

2000 being resurveyed compared to 12.6 percent of facilities that had no 

condition-level deficiencies. Nonetheless, the large majority of facilities 

with condition-level deficiencies were not resurveyed on an accelerated 1-

or 2-year schedule. 

Page 22 GAO-04-63 Dialysis Facility Compliance 
CMS Has Few Options to 

Sanction Noncompliant 

Facilities 

State agencies are hampered in their ability to induce facilities to comply 

fully and consistently with Medicare quality standards by the paucity of 

sanctions available for cases of noncompliance. At present, the only 

penalty that CMS can impose on ESRD facilities that do not comply with 

these requirements is revoking their eligibility to participate in the 

Medicare program. However, facilities typically are given a grace period— 

usually 3 months—in which to correct any problems identified in a survey. 

As long as these deficiencies have been addressed when surveyors revisit 

the facility, the provider suffers no adverse consequences from having 

failed to maintain compliance with Medicare quality standards.22 

Consequently, very few ESRD facilities are terminated from Medicare, and 

those that are can apply for readmission to the program. From fiscal years 

1998 through 2002, only one dialysis facility was terminated from the 

Medicare program and stayed out of business.23 

Moreover, state survey agencies are often reluctant to press for the 

termination of dialysis facilities because such closures would force 

patients to find another provider and, in general, reduce patient access to 

care. Many surveyors expressed a need to have additional sanctions 

available to deal with poorly performing ESRD facilities. A number of such 

alternatives already exist for nursing homes, including a denial of payment 

sanction for new patients and civil monetary penalties. Denying Medicare 

payments for new patients would curb the facility’s major source of 

revenue without eliminating, as a termination does, its ability to serve 

existing patients. However, the lost revenue from potential new patients, 

while the sanction is in effect, creates a concrete incentive for the facility 

to resolve its quality problems quickly and to stay in compliance 

thereafter. In addition, CMS requires states to refer for immediate 

sanctions nursing homes found to have actually harmed one or more 

residents or exposed them to potential serious injury on successive 

surveys. In this situation, no grace period is granted to the facility. Having 

22If surveyors find that the facility is still out of compliance at the first revisit, additional 

revisits are usually scheduled. Some facilities get as many as four or five separate 

opportunities to demonstrate that they have achieved compliance with Medicare’s 

minimum quality requirements. 

23Adverse results on surveys could contribute to a provider’s decision to close a facility, 

even without a termination from Medicare. An examination of OSCAR data for fiscal years 

1998 though 2002 revealed six instances where facilities closed voluntarily within 6 months 

of a survey that had condition-level deficiencies. Five different facilities were recorded as 

voluntary terminations, but remained open at the same addresses, sometimes under new 

names and sometimes not. 

Page 23 GAO-04-63 Dialysis Facility Compliance 
multiple sanctions available means that surveyors can recommend the one 

that best fits a given set of circumstances, taking into account the likely 

impact on both the facility and the patients it serves. 

In our June 2000 ESRD report, we noted that CMS had the authority to 

expand the enforcement tools available for addressing quality problems 

with ESRD facilities, but had not issued regulations and procedures to 

implement alternative sanctions. Other sanctions, notably civil monetary 

penalties, would require legislative changes by Congress. At that time, we 

recommended that CMS act to expand available penalties where permitted 

under its existing authority and that Congress consider authorizing civil 

monetary penalties for dialysis facilities comparable to those already in 

place for nursing homes. Since then, there have been no regulatory or 

legislative actions to expand available enforcement tools for ESRD 

facilities. 

The publication of survey results could provide another incentive for 

facilities to maintain compliance with Medicare quality standards. If ESRD 

patients were able to readily compare the outcomes of surveys for 

facilities in their area, they could choose to seek care from facilities with 

more favorable inspection results. CMS has not taken any steps to make 

survey results publicly available. By contrast, CMS routinely posts survey 

results for nursing homes on an Internet Web site called Nursing Home 

Compare. In 2001, when CMS created a comparable Web site covering 

ESRD facilities, Dialysis Facility Compare, it chose not to make survey 

results accessible. 

The limitations inherent in state survey processes have been compounded 

by inconsistent CMS oversight. On the one hand, CMS has substantially 

increased funding for ESRD surveys in line with its expectation that states 

survey a higher proportion of facilities each year. On the other hand, 

survey agencies do not always receive the monitoring and technical 

support that could enhance ESRD survey effectiveness. CMS regional 

offices vary widely in the extent to which they examine states’ ESRD 

survey activities and provide related assistance. In addition, many state 

agencies do not routinely have access to information from ESRD networks 

that could assist them in selecting facilities to survey. Finally, the limited 

number of CMS courses has made it difficult for many state surveyors to 

obtain the training considered necessary to conduct ESRD surveys. 

CMS Has Increased 

Funding for State 

Surveys, but 

Monitoring and 

Technical Support Are 

Uneven 

Page 24 GAO-04-63 Dialysis Facility Compliance 
Funding Has Increased to 

Support CMS’s ESRD 

Survey Goals 

In recent years, financial support for state survey activities overall has 

grown substantially. According to the Director of CMS’s Survey and 

Certification Group, the increases responded to concerns that financial 

support for survey activities was not keeping pace with the growth in 

facilities and was putting Medicare beneficiaries at risk. From fiscal year 

1998 to 2002, total federal expenditures for state surveys increased about 

60 percent, with spending for long-term care (LTC) and non-LTC facility 

survey activities growing 61 and 56 percent, respectively.24 Non-LTC 

facility survey activities are supported almost entirely by federal funds, 

which must be allocated by states among home health agencies, hospices, 

ambulatory surgical centers, rehabilitation facilities, and other types of 

providers, as well as ESRD facilities—within a set of guidelines 

established by CMS. ESRD survey activities, therefore, must compete for 

funding with other non-LTC survey activities, including statutorilyrequired surveys for home health agencies that receive a higher priority. 

However, survey goals for ESRD facilities are more ambitious than those 

for hospices, ambulatory surgical centers, and many other non-LTC 

providers as CMS expects the agencies to survey ESRD facilities more 

frequently. 

Notwithstanding the competing survey priorities, the expansion in 

financial support allowed state survey agencies to increase funding for 

ESRD surveys to help meet higher survey goals. We estimated that federal 

expenditures for ESRD survey activities nearly tripled from fiscal year 

1998 to 2002, from $3.1 million to $8.2 million.25 Most of the increase 

occurred between fiscal years 2000 and 2001, when the ESRD survey goal 

almost doubled from 17 to 33 percent of a state’s facilities each year. (See 

table 4.) Increased spending for ESRD survey activities was evident across 

nearly all states. From fiscal year 1998 to 2002, 42 states had an increase in 

spending for ESRD survey activities, and the median state experienced a 

144 percent increase. 

24CMS allocates most funding for state survey activities by LTC and non-LTC categories. 

LTC funding covers surveys of nursing homes and ICF/MRs. Non-LTC funding supports 

surveys of dialysis facilities, home health agencies, accredited and nonaccredited hospitals, 

hospices, ambulatory surgical centers, outpatient physical therapy providers, rural health 

clinics, comprehensive outpatient rehabilitation facilities, portable x-ray suppliers, 

psychiatric residential treatment facilities, and psychiatric hospitals. 

25These estimates are based on workload and expenditure reports provided annually to 

CMS by state survey agencies, which combine all non-LTC survey activities. Several state 

governments also fund provider survey and certification activities for non-LTC providers. 

In fiscal year 2001, state support accounted for approximately 6 percent of total spending 

on non-LTC activities. 

Page 25 GAO-04-63 Dialysis Facility Compliance 
Table 4: Federal Support for Provider Surveys, Fiscal Years 1998 to 2001 

Dollars in millions 

Non-long-term care provider 

surveys 

Total 

Long-term care 

provider 

surveys 

Non-ESRD 

surveys 

(estimated) 

ESRD surveys 

(estimated) 

1998 $ 253.2 $ 209.2a $ 41.0a $ 3.1a 

1999 265.1 217.2b 44.5b,c 3.3b,c 

2000 312.1 260.3 47.3d 4.6d 

2001 350.6 288.9e 53.7e 8.1e 

2002 405.2 336.6 60.5 

Source: CMS aggregate budget data for Medicare and Medicaid survey activities. 

Note: GAO estimates are based on the ESRD share of non-LTC survey hours reported to CMS. The 

three budgetary subcomponents do not sum to totals because of rounding. 

a

Excludes Nebraska. 

b

Excludes Tennessee. 

c

Excludes Washington. 

d

Excludes Arkansas. 

e

Excludes Vermont and Virginia. 

In most states, the increase in ESRD spending outpaced the growth in 

spending for all non-LTC survey activities. As a result, the ESRD share of 

non-LTC expenditures also increased, from about 7 percent of non-LTC 

survey expenditures in fiscal year 1998 to about 12 percent in fiscal year 

2002. For fiscal year 2002, we estimated that the ESRD share of non-LTC 

survey expenditures across states ranged from about 0 to 35 percent. For 

the states with the largest number of dialysis facilities, the ESRD share 

ranged from 6 percent in Virginia to 25 percent in Georgia. 

Regional Office Monitoring Regional offices’ review of agency surveys, referred to as federal 

and Assistance to State monitoring surveys, are conducted by CMS to monitor state agency 

Agencies Are Highly performance in interpreting and applying federal standards as well as to 

Inconsistent identify training or technical assistance needs of surveyors. Although CMS 

is required to conduct monitoring surveys that assess the adequacy of the 

state’s survey for nursing homes, no similar legislative requirements apply 

Page 26 GAO-04-63 Dialysis Facility Compliance 

8.2 
to ESRD facilities.26 As such, CMS has used monitoring surveys for dialysis 

facilities that are observational in nature—regional office staff accompany 

state surveyors on inspections of dialysis facilities, observe them as the 

surveyors identify and document facility deficiencies, and provide 

feedback on the surveyors’ performance. CMS has not specified the 

number of ESRD monitoring surveys that regional offices should conduct. 

Perhaps as a consequence, representatives for six regional offices that we 

contacted—responsible for 29 states—told us they have conducted very 

few such surveys over the last 2 fiscal years. In fiscal year 2001, the 

number of monitoring surveys each regional office performed ranged from 

3 to 11; in fiscal year 2002, they ranged from 2 to 6. None of the regional 

offices in either year conducted a monitoring survey for every state in its 

jurisdiction. 

Even for the few monitoring surveys conducted, most CMS regional 

offices in our study provided little feedback to the states. At 3 of the 10 

state survey agencies we contacted, representatives reported receiving 

only one monitoring survey in 5 years and were provided no feedback. 

Other survey agency representatives stated that regional offices provided 

verbal feedback on their monitoring surveys. In contrast, two CMS 

regional offices also provided written feedback that included evaluations 

of surveyors’ decisions regarding specific conditions and standards. 

The regional offices in our study also have not taken full advantage of 

available data to monitor state agencies’ survey performance for ESRD 

activities. CMS has instructed regional offices to use data from its OSCAR 

system as an integral tool to assess and compare state agency 

performance, particularly differences in the time required to conduct 

surveys and the types of deficiencies cited. According to CMS, such 

analyses can provide the information necessary to help state agencies 

improve their efficiency in conducting ESRD surveys and achieve 

consistency in their quality. For example, because OSCAR contains data 

on the number of hours spent on each ESRD survey, regional offices could 

use a benchmark to compare and assess survey times across their state 

agencies. CMS has indicated that similar analyses could be performed for 

the types of deficiencies cited by surveyors to determine whether there 

26For each state, CMS is required to perform validation surveys—on-site inspections of 

facilities, separate from those conducted by the state agency—for at least 5 percent of the 

nursing home surveys conducted annually, but no fewer than five homes in each state. See 

42 U.S.C. § 1395i-3 (g) (3) (B) (2000). 

Page 27 GAO-04-63 Dialysis Facility Compliance 
were any differences in state agencies’ application of quality standards.27 

Despite such potential uses of data to monitor state agency performance, 

most of the regional offices analyzed their available data on a more limited 

basis. They checked on past survey results for certain ESRD facilities and 

relied extensively on quarterly workload reports from each state agency to 

determine the number of recertification surveys conducted. 

In addition to monitoring and tracking ESRD survey activities, CMS 

requires regional offices to assist state agencies in fulfilling their survey 

responsibilities. Such assistance includes alerting the agencies to CMS 

policies and goals, coordinating communications with the CMS central 

office, helping surveyors obtain ESRD training, and consulting on a regular 

basis on program activities and achievement of survey goals. The 

performance of regional offices in our study varied from little contact with 

their state agencies to extensive collaboration. One CMS regional office 

had almost no contact with its state survey agencies or network and was 

not sure of the state agencies’ performance in meeting ESRD survey goals. 

A survey agency representative in that region stated that contact with the 

regional office consisted primarily of a few calls the agency made to obtain 

clarification on a policy or procedure. In contrast, most of the regional 

offices included in our study, at a minimum, contacted state survey 

agencies to discuss CMS policies and goals, provided technical 

information or training on ESRD issues, and offered assistance in 

conducting select surveys. 

Among the most active regional offices in providing support on ESRD 

surveys was Region 9.28 Its efforts to improve state agency survey 

performance included a range of activities: 

• 	 The office collaborated with state agencies and networks to provide ESRD 

training to state surveyors in addition to that provided by the CMS central 

office. 

• 	 Through conference calls, the office contacted its state agencies monthly 

(including their district offices) to discuss current ESRD survey issues, 

relevant federal bulletins or alerts, instructions for more consistent coding 

of deficiencies, updates on training needs and slots available, and surveyor 

27Regional offices have used OSCAR data to prepare tracking reports on areas related to 

state and regional office performance for nursing home surveys, including facility 

terminations, number of surveys without deficiencies, and analyses of most-frequently 

cited deficiencies across states. 

28Region 9 includes state survey agencies for Arizona, California, Hawaii, and Nevada. 

Page 28 GAO-04-63 Dialysis Facility Compliance 
decisions related to inspection findings. The conference calls provided a 

mechanism for surveyors to pose questions directly to CMS officials and 

often receive an immediate response. 

• 	 The office conducted quarterly conferences that included representatives 

from the networks and state survey agencies to provide updates on quality 

improvement programs underway by the networks, general issues related 

to ESRD, and issues specific to certain facilities. 

• 	 The office joined state agencies and networks in a campaign to educate 

facility managers about ESRD regulations and the survey process. 

Disparities in regional office performance—not unlike the disparities in 

state survey agency performance—may reflect their ability to cope with 

CMS’s survey priorities. Officials representing several regional offices 

noted that CMS’s focus has been on nursing homes and other types of 

facilities that are a higher survey priority than ESRD facilities. Some of 

these officials indicated that, as a consequence, needed attention in 

monitoring state agencies and providing technical assistance for ESRD 

survey activities has lagged. 

Networks Do Not 

Routinely Share Facility 

Data with State Agencies 

State survey agencies are not routinely receiving information from ESRD 

networks—organizations authorized by statute to collect information on 

patient complaints, quality improvement projects, and clinical 

performance. The networks operate under contracts with CMS which, in 

fiscal year 2002, totaled $24.7 million, approximately three times the 

amount of federal funds we estimate were spent on state survey and 

certification activities for dialysis facilities.29 Networks use the information 

they collect to perform a wide range of quality improvement activities and 

to identify and address any quality issues that may arise with individual 

facilities. Under the terms of their CMS contract, they are to cooperate 

with state survey agencies by providing them facility-specific information 

upon request. However, our June 2000 study found that most CMS regional 

offices had restricted networks from sharing facility-specific information, 

contending that federal confidentiality regulations prohibited such 

exchanges. In response, we recommended that CMS establish procedures 

29Network responsibilities are established by the Social Security Act, which also authorizes 

the Secretary to prescribe other network duties and functions. See § 1320c-9(b)(1) and § 

1395rr(c)(2). Current network responsibilities are set forth in contract: ESRD Network 

Organizations, Statement of Work, FY 1999-2003, Section C.4.F, Cooperative Activities With 

State Survey Agencies and Quality Improvement Organizations, CMS. The networks are 

funded through a fifty-cent charge on each Medicare dialysis treatment. 

Page 29 GAO-04-63 Dialysis Facility Compliance 
to facilitate routine cooperation and information sharing between 

networks and state agencies. The HHS Inspector General made similar 

recommendations in June 2002.30 However, most of the states in our 

current review reported that they have seen little evidence of increased 

information sharing by ESRD networks. 

Most of the state agencies included in our study did not receive facilityspecific information from networks on a regular basis. State agency 

officials indicated that the networks typically provided summary data for 

facilities, and that access to facility–specific information occurred on a 

case-by-case basis. Much of the information that was shared by networks 

came in response to inquiries from state agencies regarding specific 

providers. In addition, networks rarely identified facilities as candidates 

for inspection. For example, one state agency official noted that the area 

ESRD network rarely shared information on complaints and made only 

one recommendation over the last 5 years that identified a facility for 

inspection. 

Several state agency officials attributed the limited disclosure of facilityspecific information to confusion in the ESRD community about 

requirements pertaining to safeguarding this information. The Social 

Security Act prohibits the disclosure of facility-specific information to any 

person subject to several exceptions, for example, where federal 

regulation authorizes the disclosure in order to protect the rights and 

interests of patients.31 Although their contracts with CMS indicated that 

the agency wanted them to share facility-specific information with state 

survey agencies, the networks are hesitant to follow this directive because 

the agency regulations do not identify such disclosure as a specific 

exemption from the general statutory prohibition. Reportedly, network 

officials are concerned that the release of such information could 

undermine their quality improvement efforts and collaborative 

relationships with facilities.32 CMS acknowledged that confusion exists in 

this area and convened a workshop to promote more understanding and 

30Department of Health and Human Services, Office of Inspector General, External Quality 

Review of Dialysis Facilities: A Call for Greater Accountability, OEI-01-00050 (Washington, 

D.C.: June 2000). 

31See 42 U.S.C. §§ 1320c-9(a) and (b). 

32CMS policy stipulates that state agencies may not release confidential information that 

they receive from ESRD networks to third parties, even under subpoena. 

Page 30 GAO-04-63 Dialysis Facility Compliance 
cooperation between the networks and the state agencies.33 However, CMS 

has not required networks to routinely share facility-specific information. 

The potential benefits that can be achieved from increased sharing of 

network information are well illustrated by the recent experience of the 

California state survey agency. The state agency routinely receives facilityspecific information from its two corresponding networks verbally—no 

facility-specific data are sent to the state agency in written form. 

Regardless of the method, the networks and the state agency agreed that 

they need to be able to share such information, considering its potential 

benefits in improving facilities’ quality of care, and have conveyed this to 

the ESRD facilities’ managers. Consequently, the networks regularly 

contact the state agency to share different types of quality of care 

information on individual facilities, including complaints the network 

received and the results of related investigations. The networks now 

routinely make suggestions regarding potential facilities for the state 

agency’s attention. This relationship improved markedly after years of 

little communication between the state agency and the networks, largely 

as the result of increased trust derived from working together on a series 

of joint projects.34 

States Report Insufficient 

ESRD Training 

Opportunities 

According to state officials, scarcity of ESRD training opportunities has 

impeded state agencies’ efforts to improve surveyor performance. Because 

most surveyors do not have prior training or experience in dialysis, state 

survey agencies have for years relied on the courses that CMS has 

organized to train ESRD surveyors in the technical aspects of dialysis and 

the application of ESRD quality standards. The need for specialized 

training is consistent with the highly technical nature of ESRD surveys 

relative to surveys of other provider types. CMS offers basic ESRD training 

for surveyors who are not experienced with ESRD surveys and advanced 

training for others. Officials at the state agencies in our study generally 

33To encourage data sharing, CMS has begun work on a draft Memorandum of 

Understanding that the state agencies and ESRD networks could adopt. 

34In 2000, the state agency and the network participated in a special project intended to 

increase the number and quality of ESRD surveys. The networks, along with the state 

agency and the CMS regional office, jointly provided ESRD training to surveyors who had 

limited experienc with ESRD surveys. All three then worked together to help facilities 

correct deficiencies and have since collaborated on educating facility managers about 

ESRD standards and the survey process. 

Page 31 GAO-04-63 Dialysis Facility Compliance 
commended these courses, noting that they provided surveyors with the 

knowledge and skills needed to conduct ESRD surveys effectively. 

Three of the state agencies we reviewed require that surveyors complete 

CMS’s basic ESRD training before they are allowed to perform surveys 

unassisted. State agency officials emphasized that they try to get surveyors 

trained as quickly as possible after they have been assigned ESRD survey 

responsibilities. This not only permits the surveyors to gain expertise in 

conducting ESRD surveys at the appropriate time, but it also allows them 

to begin conducting surveys unassisted in a timely fashion. Delays in 

getting surveyors scheduled for basic training delays their readiness to 

conduct surveys unassisted, which in turn has an impact on a state 

agency’s performance in the number of surveys it conducts during the 

year. 

For most of the state agencies in our study, the limited number of CMS 

training classes offered has been problematic. In particular, the 

infrequency of classes at the introductory level for ESRD training has had 

the greatest impact on state agency operations. From fiscal year 1999 to 

2002, CMS offered only one course each year for basic training, always 

given at the same time of year, and since fiscal year 2000, always in 

Denver. In light of this schedule, state agencies were particularly 

concerned about the delay in training surveyors who were new to ESRD. 

At times, state agencies sent these surveyors to take advanced courses 

when openings in the basic course were unavailable. However, these 

courses dealt largely with selected topics and did not explain the core 

technical and regulatory concepts covered in the basic course. As a result, 

surveyors who had previously taken basic training and had some 

experience in conducting ESRD surveys found the advanced courses most 

informative and useful. Officials of several state agencies also indicated 

that CMS could help accommodate surveyors by offering basic ESRD 

training at multiple sites, taking into consideration the location of class 

enrollees. Some officials added that this would provide the additional 

benefit of helping their agencies save funds used for travel. 

CMS has highlighted the value to surveyors of attending its basic ESRD 

training course by instituting a new policy that requires all newly 

appointed ESRD surveyors to complete it. Effective fiscal year 2003, all 

newly hired ESRD surveyors, or surveyors who have not previously 

performed ESRD surveys, must complete the course before they can serve 

in a capacity other than a trainee. However, CMS has chosen not to fill this 

gap for surveyors who took advanced courses as a substitute for the basic 

course in years past. For surveyors who performed ESRD surveys prior to 

Page 32 GAO-04-63 Dialysis Facility Compliance 
Conclusions 

fiscal year 2003, other CMS ESRD training courses are considered 

equivalent. Experienced ESRD surveyors who have not received any 

ESRD training from CMS have until fiscal year 2004 to complete either 

ESRD basic or advanced training. 

CMS fielded a questionnaire to state agencies to determine current training 

needs in light of the new training requirement. Although the results of this 

survey are still being reviewed and analyzed by CMS, preliminary 

tabulations indicate that at least 21 percent of experienced ESRD 

surveyors met the training requirement through one of the presumed 

equivalent courses and had never taken the CMS basic course. In at least 

six states fewer than half the surveyors had taken the basic ESRD training. 

The extent to which experience in conducting ESRD surveys compensates 

for a lack of formal training is an open question. Until that process is 

complete, the scarcity of training opportunities in the past could continue 

to constrain the effectiveness of many ESRD surveyors. 

As a result of critical weaknesses in the system established to monitor and 

enforce compliance with Medicare’s quality standards for ESRD facilities, 

full and consistent compliance with these standards has become more the 

exception than the rule. Despite increased surveying goals recently set by 

CMS, many facilities continue to escape the attention of state surveyors 

for long periods of time. This is especially problematic for facilities that 

have performed poorly in the past and are therefore relatively more likely 

to reveal deficiencies when surveyed again. In addition, there are few if 

any negative consequences for facilities if they are surveyed and found out 

of compliance with Medicare’s quality standards. Currently, facilities can 

escape negative publicity from having multiple deficiencies, despite the 

fact that the statement of deficiencies prepared by state surveyors is a 

public document. 

The wide variation across states in the number of condition-level 

deficiencies found indicates in part that some surveyors are more 

proficient than others in detecting quality problems. ESRD survey 

expertise can be enhanced through training and experience. Promoting 

surveyor specialization should lead to more thorough ESRD inspections 

and more accurate documentation of deficiencies. Similarly, were CMS to 

offer more basic level ESRD courses, at different locations and times, 

surveyors newly assigned to ESRD facilities could more quickly obtain the 

training they need to conduct effective inspections. In addition, a 

comparable expansion in advanced course offerings would enable a larger 

Page 33 GAO-04-63 Dialysis Facility Compliance 
proportion of experienced surveyors to catch up with technical 

developments in dialysis treatments. 

State survey agencies could better target their survey activities if they had 

access to information from ESRD networks on the extent of serious 

quality problems at individual facilities. However, CMS regulations that 

require networks to safeguard the confidentiality of data that they obtain 

from dialysis facilities has generated confusion among the networks as to 

what facility-specific information they legitimately can and should share 

with state survey agencies. CMS could remove this long-standing 

impediment by revising those regulations to clearly make such data 

sharing with state agencies mandatory. 

Moreover, the magnitude of variation across states in the level of survey 

activity and survey results underlines the need for more intensive 

monitoring of, and support to, the individual state agencies. However, 

CMS has not addressed the enormous variation among its own regional 

offices in the extent to which they undertake these activities. The highly 

inconsistent performance in the number of ESRD surveys conducted by 

state agencies and surveyors’ detection of deficiencies may reflect uneven 

monitoring and support provided to them by CMS regional offices—some 

of which devoted considerable attention to ESRD survey activities, and 

others, virtually none. 

Ultimately, no quality assurance system can be effective unless providers 

face real consequences when they are cited repeatedly for deficiencies. 

Because they are routinely given multiple opportunities to demonstrate 

that they have corrected any problems found, ESRD facilities have no 

strong incentive to adhere to those standards until a survey takes place. 

Facilities are likely to continue cycling in and out of compliance until state 

agencies have a broader range of enforcement tools, especially ones that 

take effect even if deficiencies are subsequently corrected. CMS could 

implement some additional sanctions by regulation. However, as we noted 

in our June 2000 report, CMS did not have the authority to expand to 

ESRD facilities the range of alternative sanctions available for use against 

noncompliant nursing homes. We therefore suggested at that time that 

Congress consider authorizing CMS to impose civil monetary penalties on 

dialysis facilities. Our current work supports consideration of this 

suggestion. 

Moreover, the effectiveness of alternative sanctions would be greatly 

strengthened if they could also be imposed promptly, without allowing 

facilities a grace period to correct identified deficiencies. Such immediate 

Page 34 GAO-04-63 Dialysis Facility Compliance 
sanctions could be applied when facilities are found to have conditionlevel deficiencies in successive surveys. For instance, immediate denial of 

payments for new patients could create a strong incentive to maintain 

compliance because the facility loses income from Medicare, which 

usually represents a substantial part of operating revenues. 

To encourage ESRD facilities to sustain their compliance with Medicare 

quality standards, Congress should consider authorizing CMS to 

immediately impose a sanction when a dialysis facility has condition-level 

deficiencies in successive surveys without providing the facility a grace 

period before the sanction takes effect. The immediate sanction options 

available to CMS should include denial of Medicare payments for new 

patients and civil monetary penalties. 

Matter for 


Congressional 


Consideration 


Recommendations for We recommend that: 

Executive Action 	 To create incentives for facilities to maintain compliance with Medicare 

quality standards, the Administrator of CMS should 

• 	 establish a goal for state agencies to reduce the time between surveys for 

facilities with condition-level deficiencies and 

• publish facilities’ survey results on its Dialysis Facility Compare Web site. 

To help surveyors identify and systematically document deficiencies, the 

Administrator of CMS should 

• 	 strongly encourage states to assign ESRD inspections to a designated 

subset of surveyors who specialize in conducting ESRD surveys and 

• 	 make ESRD training courses more available to state surveyors, which may 

include increasing the number of classes and slots available as well as 

varying class location. 

To enhance the support and monitoring of state survey agencies, the 

Administrator of CMS should 

• 	 amend its regulations to require that networks share facility-specific data 

with state agencies on a routine basis and 

• 	 ensure that regional offices both adequately monitor state performance 

and provide state agencies ongoing assistance on policy and technical 

issues through regularly scheduled contacts with state surveyors. 

Page 35 GAO-04-63 Dialysis Facility Compliance 
Agency Comments 


and Our Evaluation 


In its written comments, CMS did not indicate an intention to implement 

five of our six recommendations. Nevertheless, it affirmed its commitment 

to ensuring adequate oversight of dialysis facilities and state survey 

agencies, and described a number of measures that it has initiated to 

strengthen this process. (CMS’s comments are reprinted in app. IV.) 

However, two of these initiatives—a proposed survey of ESRD 

beneficiaries and the automation of data reporting by facilities to CMS— 

will only indirectly affect the survey and certification program that was the 

focus of our report. In our report, we identified several key limitations in 

the structure and implementation of this program that constrain its 

effectiveness in enforcing Medicare’s quality standards for ESRD facilities. 

In addition to comments on each of our recommendations, CMS also 

provided technical comments that we incorporated where appropriate. 

With respect to our matter for congressional consideration, CMS affirmed 

its commitment to take action against ESRD facilities with serious quality 

problems. It also acknowledged that the agency needed to create strong 

incentives for facilities to provide quality care. The agency proposed to 

address this issue by initiating an evaluation of the effectiveness of 

sanctions on improving nursing home care. Although such an evaluation 

may produce useful information about nursing homes, it will have limited 

relevance for the quality of care provided to ESRD patients. We continue 

to believe that Federal oversight of dialysis facilities could be improved by 

strengthening the enforcement process. Therefore, Congress should 

consider authorizing CMS to impose immediate sanctions on dialysis 

facilities cited with serious deficiencies in consecutive surveys. 

CMS’s response to the first of our recommendations for executive action— 

that it set a goal for more frequent surveys of facilities with a history of 

condition-level deficiencies—acknowledged the value of targeting surveys 

on poorly performing providers. Though it expressed a strong 

commitment to increased oversight of such facilities, CMS did not indicate 

a willingness to set this additional goal. Instead, CMS relies on the states 

to use the flexibility that it has built into its budget call letter to target their 

surveys on ESRD providers most likely to have quality problems. 

However, we found that the budget call letter placed ESRD facilities in a 

lower priority category, behind both nursing homes and home health 

agencies. Without a change in the priorities that CMS has communicated 

to the state agencies, it is unrealistic to expect most states to go beyond 

the goals currently set by CMS for ESRD survey activity. 

In its comment, CMS also highlighted its efforts to develop tools to help 

state agencies identify facilities that are most likely to exhibit quality 

Page 36 GAO-04-63 Dialysis Facility Compliance 
problems. These include reports on individual facilities—produced from 

claims data and other administrative data files by CMS contractors—that 

describe their practice patterns and outcomes. CMS also stated that it 

distributes to the states an Outcomes List that ranks facilities for 

surveying priority based on their performance on dialysis adequacy, 

anemia management, and adjusted mortality rates. However, CMS’s 

surveying goals for the states, as they are currently structured, do not 

focus on targeting of any sort. Our analysis of state survey activity found 

scant evidence that state agencies were conducting more frequent surveys 

of even the most obvious candidates—facilities that had condition-level 

deficiencies in their most recent prior survey. Our evidence and CMS’s 

response indicates a need for CMS to go beyond its current efforts to 

developing inspection goals on poorly performing facilities. 

CMS did not directly respond to our second recommendation, that CMS 

publish survey results on its Dialysis Facility Compare Web site. Instead, 

the agency described various studies it has underway to develop better 

information for consumers, including efforts to make survey results more 

uniform across the country. While greater uniformity in survey results is a 

laudable objective, we would note that the results of surveys currently 

conducted are the basis for the agency’s decisions to either recertify or 

(potentially) terminate ESRD facilities as Medicare providers. Therefore, 

the information we have recommended that CMS share with the public 

does not represent an abstract quality indicator of unknown validity. 

Rather, it conveys the actual status of the facility in terms of fulfilling its 

basic obligation to meet Medicare’s conditions for coverage. In our 

opinion, these nominally public, but heretofore undisseminated, survey 

outcomes would convey useful information to interested ESRD patients 

trying to decide among alternative facilities. 

Our third recommendation was that CMS encourage state agencies to 

identify a subset of surveyors who would specialize in conducting ESRD 

facility inspections. In its comment CMS did not address our 

recommendation but responded that, in general, it encouraged states to 

have specialized surveyors when possible. However, the agency did not 

describe what specifically it had done to promote this practice. CMS did 

highlight other initiatives it has taken to enhance surveyor skills and 

improve the survey process more generally. These include its development 

of a new software system to help guide surveyors as they conduct surveys, 

the reports on practice patterns and outcomes of individual facilities, and 

increases in the surveyor training that CMS provides. CMS concluded that 

these steps were the most appropriate use of limited resources. We would 

note, however, that to the extent that states do not concentrate their ESRD 

Page 37 GAO-04-63 Dialysis Facility Compliance 
surveys on a subset of specialist surveyors, more surveyors will need to 

receive CMS training in conducting ESRD surveys. That represents a less 

efficient use of CMS training resources. We continue to believe that 

surveyor specialization contributes to more thorough and effective 

inspections, in addition to whatever benefits accrue from other 

improvements such as expanded training and customized software. 

Our fourth recommendation was that CMS expand the number and slots 

available in training courses for ESRD inspections, as well as vary their 

locations. CMS responded that it has arranged to increase its offerings to a 

minimum of two basic ESRD training classes annually, with one course 

conducted in Denver and one in Minneapolis. According to CMS, more 

advanced ESRD training may also be increased, depending on demand. 

This expansion should lessen considerably the difficulty that state survey 

agencies have experienced obtaining the necessary training for their ESRD 

surveyors on a timely basis. 

In our fifth recommendation, we urged CMS to amend its regulations to 

require that ESRD networks share facility-specific data with state agencies 

on a routine basis. CMS responded that networks are currently required to 

share data with CMS, which can then provide appropriate information, 

such as the previously mentioned Outcomes List, to state agencies. CMS 

also stated that information that networks obtain through their quality 

improvement efforts has limited utility for quality assurance because it is 

not standardized (that is, the specific information collected will vary 

across networks and projects). On the contrary, we found that the 

networks’ quality improvement projects collect new information directly 

from dialysis facilities which helps identify those facilities that perform 

poorly on one or more quality dimensions. As the experience of California 

has shown, such data can provide valuable guidance to state surveyors in 

their selection of facilities to inspect, regardless of whether identical 

information is collected by every network across the country. 

Our last recommendation stated that CMS should ensure that its regional 

offices provide adequate oversight of, and assistance to, state agency 

monitoring of ESRD facilities. As with several previous recommendations, 

the agency reaffirmed its commitment to the overall goal, but did not 

address the weaknesses that we found in its implementation. CMS’s 

comment describes the resources available to the regional offices, 

including assigned ESRD specialists, regional data reports, and monthly 

conference calls with state agency officials. However, CMS did not address 

the large variation across regions in the extent to which they use these 

tools, and refers to no specific measures intended to stimulate greater 

Page 38 GAO-04-63 Dialysis Facility Compliance 
effort in regions that have been less active to date. CMS stated that it is 

working hard to clarify its expectations for both state agencies and its own 

regional offices, but in its comment provides no explanation or examples 

of what this might entail. 

As agreed with your office, unless you publicly announce the contents of


this report earlier, we plan no further distribution of it until 30 days from 


its date. At that time, we will send copies of this report to the 


Administrator of CMS and to other interested parties. In addition, this 


report will be available at no charge on GAO’s Web site at 


http://www.gao.gov. We will also make copies available to others upon 


request. 


If you or your staff have any questions about this report, please call me at 


(312) 220-7600. An additional GAO contact and other staff members who 


prepared this report are listed in appendix V. 


Sincerely yours, 


Leslie G. Aronovitz 


Director, Health Care—Program


Administration and Integrity Issues 


Page 39 GAO-04-63 Dialysis Facility Compliance 
Appendix I: Scope and Methodology 


Quality of Care To analyze variation in the clinical performance of individual facilities, we 

downloaded information available from CMS’s Web site, Dialysis Facility 

Compare (DFC)—http://www.medicare.gov/Dialysis/Home.asp.1

 DFC 

provides information on two clinical performance measures: the 

proportion of patients with adequate hemodialysis—defined as a Urea 

Reduction Ratio of at least 65—and the proportion of patients with 

adequate anemia control—defined as a hematocrit of 33 or better. DFC has 

data on the latter measure for patients taking the drug erythropoietin 

(EPO)—the therapy generally used to treat anemia among ESRD patients. 

The most currently available data for both measures came from 

information provided on Medicare claims submitted for treatment 

furnished in 2000. DFC reports the proportion of patients at each ESRD 

facility who achieved the designated threshold for these two measures. 

To provide a more concrete sense of the types of quality problems 

encountered by state surveyors, we selected five survey reports, known 

formally as a “statement of deficiencies” (Form 2567), that described in 

detail the deficiencies cited in inspections of individual facilities in five 

states. We abstracted from each survey report the justification written by 

the surveyor for one deficiency citation. The episodes we chose involved 

deficiency codes that are widely cited among survey reports nationwide. 

In the data we assembled from CMS’s Online Survey Certification and 

Reporting (OSCAR) system, at least one of these six specific deficiency 

codes—111, 112, 118, 240, 264, and 423—was cited in 35 percent of all 

recertification surveys conducted in fiscal years 1998 through 2002. 

To more fully appreciate the clinical consequences of these deficiencies 

for patients, we shared our abstracted citations with three ESRD 

surveyors, each with at least 5 years of ESRD survey experience, whom we 

had previously interviewed in conjunction with our site visits to three 

different states. All were registered nurses. The three surveyors 

commented on each of the six vignettes that we sent them by describing 

the potential impact of these situations on patient health and well-being. 

Their analyses encompassed expected symptoms, such as fatigue, 

swelling, and shortness of breath, medical conditions that could result, 

such as heart failure and ruptured red blood cells, and related outcomes, 

such as shortened life expectancy. 

1

Other clinical performance measures have only been reported from samples of patients, 

providing data on national and regional trends but without the ability to compare results 

across individual dialysis facilities. 

Page 40 GAO-04-63 Dialysis Facility Compliance 
Appendix I: Scope and Methodology 

Survey Frequency and 

Results 

To analyze the frequency and results of surveys conducted in the 50 states 

plus the District of Columbia, we obtained all the data stored on CMS’s 

OSCAR system relating to standard surveys of ESRD facilities. Standard 

surveys include initial surveys—conducted when a facility first applies for 

Medicare certification—and recertification surveys—conducted at 

intervals subsequent to the initial survey for that facility.2

 The OSCAR 

database is continuously updated and retains data for the four most recent 

surveys for each facility. Our analysis was not adversely affected by the 

potential loss of data if a given facility had more than four standard 

surveys conducted, because less than 1 percent of ESRD facilities had as 

many as four surveys from fiscal year 1998 through 2002, the period of our 

review. 

When state survey agencies complete their work on these surveys, CMS 

requires them to record in OSCAR information about the inspection 

including the dates that the surveys took place and the specific deficiency 

codes for each standard-level and condition-level deficiency cited. OSCAR 

also contains Provider of Service file information on ESRD facilities, 

including their name, address, chain ownership, date of Medicare 

enrollment, and the date of, and reason for, termination (if any). 

The data used in our OSCAR analyses was downloaded on April 2, 2003, 

providing a 6-month period following the end of fiscal year 2002 for state 

agencies to complete the process of data entry. To assess the 

completeness of the data, we compared the number of surveys we found 

in OSCAR for fiscal years 1998 through 2002 with the number of surveys 

that state agencies indicated that they completed in annual workload 

reports submitted to CMS. Although complete workload data were not 

always available, where they were, the numbers of ESRD surveys reported 

for most states matched the number recorded in OSCAR either exactly or 

nearly (plus or minus 3) in each of the 5 fiscal years. 

In analyzing the proportion of ESRD facilities resurveyed in fiscal years 

1998 through 2002, we determined the facilities that were available for 

recertification in each year. We excluded those facilities that were subject 

to an initial survey, and any that had either dropped out of Medicare prior 

to that year or that did not begin participating in the program until later. 

2

Similar information is collected on complaint surveys but stored in separate data files. 

Page 41 GAO-04-63 Dialysis Facility Compliance 
Appendix I: Scope and Methodology 

Surveyor Specialization To assess the effect of surveyor specialization, we analyzed the 

relationship of survey results statewide with the degree of surveyor 

specialization in that state. We defined specialization as assigning ESRD 

facility inspections to a subset of surveyors who spend much of their time 

focused on ESRD quality issues. We knew from our state site visits and 

interviews that some states promoted specialization while other states 

distributed ESRD assignments roughly equally among surveyors who 

spent most of their time inspecting nursing homes and home health 

agencies. From 9 of the 10 states that we examined most closely, we 

obtained data on the number of ESRD and non-ESRD surveys conducted 

by each surveyor during fiscal year 2002. (We were not able to obtain this 

information from Mississippi.) From those data we calculated the 

proportion of total surveys that were of ESRD facilities, first for each 

individual surveyor, and then for the state as a whole. The statewide ratio 

combined the individual surveyor ratios, with each individual’s ratio 

weighted by the proportion of ESRD surveys in fiscal year 2002 accounted 

for by that individual. The result was a state specialization score that had a 

possible range from almost 0 to 1. (A state would get a score of 1.0 if all of 

its ESRD surveys were done by surveyors who never inspected any other 

provider types.) This approach was designed to gauge the relative 

likelihood that any given ESRD survey in the state would be conducted by 

a surveyor whose survey activities focused on ESRD facilities. 

We assessed the strength of the relationship of surveyor specialization to 

survey results by comparing the aggregate results of states with low 

specialization scores with states that had relatively high scores. 

Specifically, we compared the proportion of surveys with condition-level 

deficiencies and the number of standard-level deficiencies cited in 

surveys. We applied chi-square tests to determine if observed differences 

between the two groups were likely to have occurred by chance, using the 

conventional 95 percent confidence interval. We were not able to link the 

results of individual surveys to the experience level of the surveyors who 

conducted them. Therefore, our analysis compared aggregate survey 

outcomes across two groups of states, distinguished by their overall level 

of surveyor specialization. 

Surveyor Training 	 To assess the extent of state surveyor training to perform ESRD facility 

inspections, we drew on the results of a survey conducted by CMS of the 

state survey agencies. CMS solicited data on the titles and dates of all 

CMS-sponsored training on ESRD completed by each of the states’ 

individual surveyors who had performed ESRD inspections prior to fiscal 

year 2003. It initially collected these data in January and February of 2003 

Page 42 GAO-04-63 Dialysis Facility Compliance 
Appendix I: Scope and Methodology 

and continued obtaining updated and corrected information through May 

2003. We analyzed the most recent data supplied to us by CMS at that time. 

Federal Funding for ESRD 

Surveys 

To assess federal funding for ESRD and other survey activities, we 

reviewed quarterly and annual expenditure reports submitted to CMS by 

state survey agencies for fiscal years 1998 to 2002. These reports specify 

the funds spent by state agencies for both long-term care (LTC) and nonLTC survey activities under the Medicare and Medicaid programs. 

However, because the reports aggregate expenditures for all non-LTC 

survey activities, we had to estimate the expenditures related to ESRD 

surveys. We developed our estimates based on additional CMS data that 

indicated the number of hours each state agency reported was spent on 

activities related to ESRD surveys, as well as activities related to non-LTC 

surveys overall. We then calculated the ESRD-related share of non-LTC 

survey hours and applied that percentage to the total non-LTC survey 

expenditures each state agency indicated on its annual expenditure report. 

Page 43 GAO-04-63 Dialysis Facility Compliance 
Appendix II: Medicare Conditions for 

Coverage for Dialysis Facilities 

Condition for coverage Description 

Compliance with federal, state, and local The facility and personnel employed by the facility must be licensed as required by 

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

requirements. 

Governing body and management 	 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 A professional, multidisciplinary health care team and the patient must develop a written 

patient care plan 	 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 	 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 	 Patient medical records must be maintained to document patient assessments, 

diagnosis, and treatment, and medical and nursing histories. 

Physical environment 	 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 

Facilities that reuse hemodialyzers and other dialysis supplies must follow established 

protocols and standards to ensure patient and staff safety. 

Affiliation agreement or arrangement 	 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 	 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 	 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 	 Dialysis facilities must provide dialysis services as well as laboratory, social, and dietetic 

services needed to address ESRD patient needs. 

Source: 42 C.F.R. Part 405 Subpart U (2002). 

Page 44 GAO-04-63 Dialysis Facility Compliance 
Appendix III: State Agencies’ Progress 

toward Meeting CMS Survey Goals 

The table below shows the percentage of facilities surveyed, by state, in 

fiscal years 1998 to 2002. It indicates how the individual states responded 

to the increases in the goal for annual ESRD recertification rates set by 

CMS, from 10 to 17 percent per year in fiscal year 2000 and then to 33 

percent each year starting in fiscal year 2001. 

Table 5: ESRD Facilities Recertified Annually by State, Fiscal Years 1998 to 2002 

Percentage 

1998 1999 2000 2001 2002 

CMS goal 10 10 17 33 

State recertification survey rates 

Alabama 12 15 17 9 

Alaska 50 0 100 100 

Arizona 8 13 11 28 

Arkansas 11 50 16 32 

Californiaa 2 4 12 12 

Colorado 7 6 24 6 

Connecticut 17 28 27 39 

Delaware 0 9 0 15 

District of Columbia 8 4 28 22 

Floridaa 10 14 22 37 

Georgia a 12 12 17 37 

Hawaii 21 13 6 25 

Idaho 17 13 14 14 

a

Illinois 29 21 22 41 32 

Indiana 5 19 16 33 31 

Iowa 9 11 17 26 27 

Kansas 14 24 21 44 33 

Kentucky 63 54 70 83 89 

a

Louisiana 10 18 17 32 31 

Maine 38 38 8 33 25 

Maryland 17 16 5 26 28 

Massachusetts 8 13 14 37 31 

Michigana 31 28 11 18 10 

Minnesota 21 4 5 27 33 

Mississippi 8 9 36 69 9 

Missouri 5 7 12 19 22 

Montana 64 36 21 36 33 

Page 45 GAO-04-63 Dialysis Facility Compliance 

33 

2 

0 

23 

37 

11 

27 

39 

36 

28 

40 

36 

22 

14 
Appendix III: State Agencies’ Progress toward 

Meeting CMS Survey Goals 

Percentage 

1998 1999 2000 2001 2002 

Nebraska 10 11 25 36 33 

Nevada 20 0 8 38 

New Hampshire 11 22 0 40 

New Jersey 8 12 15 34 

New Mexico 16 0 29 14 

New Yorka 4 6 10 33 

North Carolina a 16 15 21 23 

North Dakota 21 31 31 46 

Ohioa 13 11 17 38 

Oklahoma 13 22 16 41 

Oregon 22 65 19 33 

Pennsylvania a 5 10 10 11 

Rhode Island 10 0 0 15 

South Carolina 18 16 17 32 

South Dakota 13 19 18 42 

a

Tennessee 11 9 23 47 

Texasa 2 7 3 21 34 

Utah 35 30 30 19 33 

Vermont 00 25 0 33 0 

Virginiaa 31 13 12 12 13 

Washington 26 18 42 33 32 

West Virginia 14 17 13 33 26 

Wisconsin 10 16 21 28 30 

Wyoming 14 0 0 33 22 

Source: GAO analysis of CMS OSCAR data. 

a

Indicates the 13 states with the greatest number of dialysis facilities in 2002. 

Starting in fiscal year 2001, CMS also set a goal for states to survey all 

ESRD facilities every 3 fiscal years. The initial 3-year cycle will be 

completed at the end of fiscal year 2003. Table 6 shows the number of 

facilities available for recertification in each state at the start of fiscal year 

2001 (and not terminated since then) and the percentage that remained to 

be surveyed in fiscal year 2003. In fiscal year 2003, 35 out of 50 states, plus 

the District of Columbia, need to survey over a third of their ESRD 

facilities to meet the cycle goal. 

Page 46 GAO-04-63 Dialysis Facility Compliance 

16 

50 

22 

10 

29 

31 

42 

26 

21 

31 

28 

8 

34 

22 

29 
1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

Appendix III: State Agencies’ Progress toward 

Meeting CMS Survey Goals 

Table 6: Facilities to Be Recertified to Meet CMS 3-Year Goal, by State 

ESRD facilities needing Share of facilities that need 


recertification in fiscal to be surveyed in fiscal 


years 2001 through 2003 year 2003 to meet CMS goal 


State (number) (percentage)


Alabama 92 

Rhode Island 13 

California 347 

New Mexico 29 

Virginia 119 

Idaho 7 

Michigan 104 

Vermont 6 

Colorado 35 

Missouri 102 

Pennsylvania 216 

District of Columbia 23 

Hawaii 16 

Utah 20 

Arizona 78 

North Carolina 111 

Maryland 95 47 

Iowa 47 47 

Delaware 13 46 

Texas 285 45 

Wyoming 9 44 

Nevada 16 44 

Wisconsin 76 43 

New Jersey 87 43 

Maine 12 42 

Oklahoma 57 40 

New York 205 40 

West Virginia 23 39 

Washington 43 37 

Indiana 78 37 

Minnesota 61 36 

Louisiana 115 36 

South Dakota 17 35 

Page 47 GAO-04-63 Dialysis Facility Compliance 

89 

77 

76 

76 

76 

71 

71 

67 

66 

64 

62 

52 

50 

50 

49 

49 
Appendix III: State Agencies’ Progress toward 

Meeting CMS Survey Goals 

ESRD facilities needing Share of facilities that need 


recertification in fiscal to be surveyed in fiscal 


years 2001 through 2003 year 2003 to meet CMS goal 


State (number) (percentage)


34 Oregon 40 35 

35 Ohio 149 35 

36 South Carolina 75 33 

37 Massachusetts 61 33 

38 Arkansas 52 29 

39 Montana 14 29 

40 Nebraska 21 29 

41 Illinois 126 26 

42 Mississippi 62 26 

43 Kansas 39 26 

44 Georgia 168 24 

45 Tennessee 106 23 

46 New Hampshire 9 22 

47 Florida 237 22 

48 Connecticut 26 19 

49 North Dakota 12 17 

50 Alaska 2 0 

51 Kentucky 45 0 

Source: GAO analysis of CMS OSCAR data. 

Page 48 GAO-04-63 Dialysis Facility Compliance 
Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

Page 49 GAO-04-63 Dialysis Facility Compliance 
Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

Page 50 GAO-04-63 Dialysis Facility Compliance 
Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

Page 51 GAO-04-63 Dialysis Facility Compliance 
Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

Page 52 GAO-04-63 Dialysis Facility Compliance 
Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

Page 53 GAO-04-63 Dialysis Facility Compliance 
Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

Page 54 GAO-04-63 Dialysis Facility Compliance 
Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

Page 55 GAO-04-63 Dialysis Facility Compliance 
Appendix V: GAO Contact and Staff 

Acknowledgments 

GAO Contact Rosamond Katz, (202) 512-7148 

Acknowledgments 	 Eric Peterson, Joel Hamilton, Loren Lieberman, and Behn Kelly made 

major contributions to this report. 

Page 56 GAO-04-63 Dialysis Facility Compliance 
Related GAO Products 


Nursing Home Quality: Prevalence of Serious Problems, While Declining, 

Reinforces Importance of Enhanced Oversight. GAO-03-561. Washington, 

D.C.: July 15, 2003. 

Major Management Challenges and Program Risks: Department of Health 

and Human Services. GAO-03-101. Washington, D.C.: January 1, 2003. 

Nursing Homes: Public Reporting of Quality Indicators Has Merit, but 

National Implementation Is Premature. GAO-03-187. Washington, D.C.: 

October 31, 2002. 

Medicare Home Health Agencies: Weaknesses in Federal and State 

Oversight Mask Potential Quality Issue. GAO-02-382. Washington, D.C.: 

July 19, 2002. 

Nursing Homes: Sustained Efforts Are Essential to Realize Potential of the 

Quality Initiatives. GAO/HEHS-00-197. Washington, D.C.: September 28, 

2000. 

Medicare Quality of Care: Oversight of Kidney Dialysis Facilities Needs 

Improvement. GAO/HEHS-00-114. Washington, D.C.: June 23, 2000. 

(290211) Page 57 GAO-04-63 Dialysis Facility Compliance 
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