United States General Accounting Office

GAO Report to the Special Committee on

Aging, U.S. Senate

November 1999 NURSING HOME

CARE

Enhanced HCFA

Oversight of State

Programs Would Better

Ensure Quality

GAO/HEHS-00-6

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-281759 

November 4, 1999

The Honorable Charles E. Grassley

Chairman

The Honorable John B. Breaux

Ranking Minority Member

Special Committee on Aging

United States Senate

The federal government and the states are jointly responsible for ensuring

that the nation’s more than 17,000 nursing homes provide adequate care to

their highly vulnerable 1.6 million elderly and disabled residents. The

Health Care Financing Administration (HCFA), within the Department of

Health and Human Services, is responsible for ensuring that each state

establishes and maintains a survey capability that effectively identifies and

resolves problems in nursing homes that receive Medicare or Medicaid

payments. Under contract with HCFA, state agencies conduct surveys at

nursing homes to ensure that the homes provide quality care to residents.

On the basis of their surveys, these agencies certify to the federal

government that each home is in compliance with federal nursing home

standards, which enables the home to receive federal payments. Federal

payments to these nursing homes under the Medicare and Medicaid

programs are expected to total $39 billion in 1999.

In previous reports to you, we found that residents received an

unacceptably poor quality of care in some nursing homes and that the

federal and state programs designed to identify and correct these

problems had significant weaknesses. For example, we reported that

• nearly a third of the 1,370 homes in California had been cited for care

violations classified as serious under federal or state deficiency

categories;1

• one-fourth of the nation’s nursing homes had serious deficiencies that

caused actual harm to residents or that placed them at risk of death or

serious injury and that 40 percent of these homes had repeated serious

deficiencies;2

• serious complaints alleging that nursing home residents are being harmed

can remain uninvestigated for weeks or months, prolonging situations in

1

California Nursing Homes: Care Problems Persist Despite Federal and State Oversight

(GAO/HEHS-98-202, July 27, 1998).

2

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

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

Page 1 GAO/HEHS-00-6 Federal Nursing Home Oversight
B-281759 

which residents may be subject to abuse, neglect resulting in serious care

problems like malnutrition and dehydration, preventable accidents, and

medication errors;3

 and

• when serious deficiencies are identified, federal and state enforcement

policies have not been effective in ensuring that the deficiencies are

corrected and remain corrected.4

In response to these problems and our recommendations, HCFA has

developed about 30 initiatives to strengthen federal standards, oversight,

and enforcement for nursing homes.5

 One of these initiatives is to enhance

federal oversight of the state survey agencies to help ensure that the states

are adequately protecting the health and safety of nursing home residents.

When it is determined that a state agency is not adequately performing its

survey responsibilities, HCFA has indicated it would develop appropriate

sanctions to penalize the state agency, including terminating its contract.

HCFA’s initiatives are fundamental to its ability to hold states accountable

for reliably and consistently performing their contractual responsibilities

for certifying that nursing homes meet Medicare and Medicaid standards

and provide quality care for nursing home residents.

Because an effective oversight program is critical to HCFA’s ability to gauge

the states’ success in implementing HCFA’s many initiatives, you asked us

to evaluate HCFA’s oversight programs of state agencies’ nursing home

survey process. Specifically, we assessed (1) the effectiveness of HCFA’s

approaches to assessing state agency performance, (2) the extent to which

HCFA’s regional offices vary in their application of these approaches, and

(3) the corrective actions available to HCFA when it identifies poor state

agency performance. To do this work, we contacted HCFA’s 10 regional

offices to obtain data about each region’s oversight programs from 1996 to

the present; interviewed officials at HCFA’s headquarters in Baltimore as

well as federal surveyors and their managers in HCFA’s regional offices;

interviewed HCFA officials from the Atlanta, Kansas City, and Seattle

regions and met with state surveyors and their managers in four states

from these three regions—Florida, Missouri, Tennessee, and Washington;

and reviewed data provided by HCFA and its regional offices regarding the

number and types of oversight reviews conducted during the past 3 years.

We conducted our work between March and September 1999 in

accordance with generally accepted government auditing standards.

3

Nursing Homes: Complaint Investigation Processes Often Inadequate to Protect Residents

(GAO/HEHS-99-80, Mar. 22, 1999).

4

GAO/HEHS-99-46, Mar. 18, 1999.

5

A list of related GAO products is included at the end of this report.

Page 2 GAO/HEHS-00-6 Federal Nursing Home Oversight
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Results in Brief Since last year, HCFA has undertaken a series of initiatives intended to

address quality problems facing the nation’s nursing home residents,

including redesigning its program for overseeing state agencies that survey

nursing homes to ensure quality care. The objective of HCFA’s oversight

program is to evaluate the adequacy of each state agency’s performance in

ensuring quality care in nursing homes, but the mechanisms it has created

to do so are limited in their scope and effectiveness. In addition, HCFA’s

oversight mechanisms are not applied consistently across each of its 10

regional offices. As a result, HCFA does not have sufficient, consistent, and

reliable data to evaluate the effectiveness of state agency performance or

the success of its recent initiatives to improve nursing home care. Given

the wide range in the frequencies with which states identify serious

deficiencies, HCFA cannot be certain whether some states are failing to

identify serious deficiencies that harm nursing home residents.

Furthermore, HCFA does not have an adequate array of effective sanctions

to encourage a state agency to correct serious or widespread problems

with its survey process.

HCFA’s primary mechanism to monitor state survey performance stems

from its statutory requirement to survey annually at least 5 percent of the

nation’s 17,000 nursing homes that states have certified as eligible for

Medicare or Medicaid funds.6

 But HCFA’s approach to these federal

monitoring surveys does not produce sufficient information to assess the

adequacy of state agency performance. To fulfill its 5 percent monitoring

mandate, HCFA makes negligible use of its most effective technique—an

independent survey done by HCFA surveyors following completion of a

state’s survey—for assessing state agencies’ abilities to identify serious

deficiencies in nursing homes. For the vast majority of states, HCFA

requires only one or two of these comparative surveys per state, per year.

Yet, in the 64 comparative surveys conducted from October 1998 to

August 1999, HCFA found deficiencies that were more serious than those

the state found in about two-thirds of the surveys, which suggests that

some state surveyors miss some serious deficiencies. But because of

elapsed time between the federal and state surveys, HCFA cannot tell

whether the differences between its survey results and those of the state

are attributable to poor state performance, such as underreporting by state

surveyors, or to conditions in the nursing home that changed since the

state survey. Rather than making extensive use of comparative surveys,

HCFA focuses 90 percent of its own survey efforts on “observational

6

The Omnibus Budget Reconciliation Act of 1987 refers to the surveys HCFA must conduct as

“validation surveys.” HCFA’s broad term for validation surveys is “federal monitoring surveys,” which

consist of comparative and observational surveys. Under HCFA’s current federal monitoring surveys,

observational surveys are technically referred to as Federal Oversight and Support Surveys.

Page 3 GAO/HEHS-00-6 Federal Nursing Home Oversight
B-281759 

surveys,” in which it relies on its regional surveyors to observe state

surveyors as they conduct at least a portion of their surveys. While this

approach is useful in many respects, including identifying training needs

for state surveyors, it also has a serious limitation as a way to evaluate

state performance. HCFA’s presence may make state surveyors more

attentive to their survey tasks than when they are not being observed (the

Hawthorne effect); therefore, this approach does not necessarily provide a

valid assessment of typical performance.

A second HCFA oversight mechanism also has significant shortcomings.

About 3 years ago, HCFA implemented the State Agency Quality

Improvement Program (SAQIP), a program under which the state agency

does a self-assessment to inform HCFA, at least once a year, whether the

state is in compliance with seven standard requirements. For instance, all

states are expected to evaluate their surveyors’ ability to correctly

document deficiencies in nursing homes and to conduct complaint

investigations effectively. SAQIP is limited as an oversight program,

however, because HCFA (1) does not independently validate the

information that the states provide, so it is uncertain whether all serious

problems are identified or whether identified problems are being

corrected, and (2) has no policy regarding consequences for states that do

not comply. For example, in our prior work, we found that some states

were not promptly reviewing complaints filed against nursing homes and

that these states had not identified this problem in their SAQIP reports to

HCFA.

7 SAQIP also includes four indicators of state performance that HCFA,

rather than the states, assesses. SAQIP specifies, for example, that HCFA will

determine whether states conduct nursing home surveys within specific

time frames and enter the survey results into HCFA’s database. However,

the four indicators do not address some important aspects of a state

agency’s performance, such as the predictability of the timing of state

surveys.

In addition to these weaknesses in its oversight programs, HCFA regions are

uneven in the way they implement them, resulting in limited assurance

that states are being held equally accountable to federal standards,

including the recent initiatives. Although HCFA established the current

federal monitoring surveys to develop a uniform national approach for

regions to follow in conducting federal oversight surveys, the regions use

different methods for selecting oversight reviews and conducting them.

Some regions, for instance, comply with HCFA guidance to select homes

with no established pattern of deficiencies, while other regions focus on

7

GAO/HEHS-99-80, Mar. 22, 1999.

Page 4 GAO/HEHS-00-6 Federal Nursing Home Oversight
B-281759 

homes that the state has already identified as having serious deficiencies.

Regions that take the latter approach are unlikely to identify situations in

which state surveyors underreport serious deficiencies. The regions also,

on average, spend very different amounts of time on observational

surveys. While the average time spent on these surveys is 52 hours, the

regions range from about 27 hours to about 71 hours to complete these

surveys, thus raising questions about the level of effort some regions

devote to gauging state performance. In addition, HCFA regional officials

have varying views about SAQIP’s effectiveness as an oversight program. As

a result, some regions supplement SAQIP information by extensively

analyzing available survey performance data, while other regions do not

believe there is a need to use these supplemental data to assess state

survey performance.

Even if HCFA identifies inadequate state agency performance, it currently

does not have a sufficient array of effective remedies or sanctions at its

disposal to ensure adequate state performance. When HCFA identifies poor

state agency survey performance, it can employ one or more of several

remedies, such as requiring the state to submit a plan of correction or

providing special training to the state surveyors. If these remedies do not

bring the state agency into compliance with survey standards, HCFA has

two sanctions available—reducing a state’s survey and certification

funding or terminating the agency’s survey contract. Because of the

extreme nature of these sanctions, HCFA has only once reduced state

funding and has never terminated a state agency’s contract. Although HCFA

is considering additional sanctions, on the basis of our review of them, we

believe that their potential to compel a state to improve its performance is

doubtful.

To assist HCFA in effectively overseeing state agencies and achieving the

goals of its broader initiatives, we are recommending that HCFA improve

the scope and rigor of its state oversight mechanisms, improve the

consistency of its oversight across its regions, and further explore the

feasibility of additional remedies and sanctions for states that prove

unable or unwilling to meet HCFA’s performance standards.

Background HCFA is required by statute to establish an oversight program for evaluating

the adequacy and effectiveness of each state’s nursing home survey

process.8

 If HCFA determines that a state agency’s survey performance is

inadequate, it is authorized to impose appropriate remedies or sanctions

8

See sections 1819 (g)(3) and 1919 (g)(3) of the Social Security Act.

Page 5 GAO/HEHS-00-6 Federal Nursing Home Oversight
B-281759 

against the state agency. Among HCFA’s remedies and sanctions are

requiring the state to submit a written plan of correction explaining how it

plans to eliminate the identified deficiencies; reducing federal funds for

state survey and certification activities; and, ultimately, terminating HCFA’s

contract with the state. HCFA surveyors in its 10 regional offices carry out

the oversight of state agencies.

Every nursing home that receives Medicare or Medicaid funding must

undergo a standard survey conducted by the state agency no less than

every 15 months. This survey entails a team of state surveyors spending

several days on-site conducting a broad review of whether the care and

services delivered meet the assessed needs of the residents.9

 The Omnibus

Budget Reconciliation Act of 1987 (OBRA 87) requires HCFA surveyors to

conduct federal oversight surveys in at least 5 percent of the nursing

homes in each state each year within 2 months of the state’s completion of

its survey.10 The following table shows the number of nursing homes per

HCFA region, the number of federal monitoring surveys each region is

required to conduct in fiscal year 1999, and the number of federal

surveyors who conduct nursing home monitoring surveys as of

August 1999.

Table 1: Nursing Homes, Required

Federal Surveys, and Federal

Surveyors Available, by HCFA Region

Regional office

Nursing

homes

Federal monitoring

surveys required to

meet 5% requirement in

fiscal year 1999

Federal nursing

home surveyors

available as of

August 1999

Boston 1,170 63 12

New York 1,020 56 7

Philadelphia 1,526 84 12

Atlanta 2,772 139 18

Chicago 3,784 189 22

Dallas 2,398 122 11

Kansas City 1,693 84 12

Denver 666 37 8

San Francisco 1,681 89 11

Seattle 497 32 9

Total 17,207 895 122

9

The standard survey is used to meet HCFA’s requirement to certify homes for Medicare and Medicaid

participation.

10A minimum of five reviews must be conducted in each state each year, even if this brings the total

number of required reviews to more than 5 percent.

Page 6 GAO/HEHS-00-6 Federal Nursing Home Oversight
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HCFA’s recent initiatives relating to assessing state agency performance are

the latest in a series of approaches HCFA has used since OBRA 87 was

enacted. Until 1992, HCFA conducted only comparative surveys, in which

federal surveyors performed an independent survey of a home and

compared their results with the state’s. Since 1992, HCFA has used a mix of

comparative and different variations of observational surveys. For

instance, from 1992 until July 1995, the regions used surveys in which they

directly observed individual state surveyors as they performed a survey,

but did not communicate with them until the last day of the survey.

Starting in 1995, HCFA regional surveyors observed the state surveyors and

actively communicated with them during the survey. Under this approach,

federal surveyors provided on-the-spot training to the state surveyors.

Starting in July 1996, HCFA allowed the regions to develop variations of this

approach, and by 1998, multiple regional variations existed. Among these

were partial observational surveys that focused on only parts of the

survey, and participatory surveys in which federal surveyors became

members of the state agency teams.

As part of its broader nursing home initiatives, in October 1998 HCFA

introduced its current program of overseeing state survey agency

performance, referred to as the federal monitoring survey. This program

modified HCFA’s prior oversight programs and has two components. The

first component is a comparative survey, in which a team of federal

surveyors conducts a complete, independent survey of a nursing home

after the state has completed its survey, and then compares the results

with the state’s.11 The second component, which is HCFA’s primary

monitoring technique, is an observational survey, in which generally one

or two federal surveyors accompany state surveyors to a nursing home

either as part of the home’s annual standard survey or as part of a revisit

or a complaint investigation.12 During these observational surveys, federal

surveyors watch the state surveyors perform a variety of tasks, give the

surveyors verbal feedback, and later provide a written rating of the state

surveyors’ performance to state managers. Basically, the current

observational surveys represent an extension of the several types of

observational surveys that HCFA’s regions have used over the previous 6

years. However, unlike earlier observational surveys, the revised surveys

are intended to have a national standard protocol, a national focal point

11In conducting these surveys, state and federal surveyors must use the survey protocol (that is, the set

of survey procedures) as set out in HCFA’s regulations.

12Revisits are surveys that are required after a nursing home has been found to have certain

deficiencies, in order to determine whether the home has corrected the deficiencies. A complaint

investigation is made when a complaint has been filed against the home.

Page 7 GAO/HEHS-00-6 Federal Nursing Home Oversight
B-281759 

for collecting data about the surveys, and a single national database for

tracking survey results.

In addition to the formal review activities required under the federal

monitoring surveys, HCFA has other sources of information available for

evaluating state agency performance. One such source, SAQIP, initiated in

1996, requires states, in partnership and collaboration with HCFA, to

develop and implement quality improvement action plans to address

deficiencies in the state’s survey process that either the state or HCFA has

identified. In addition to SAQIP, a few regions also use information from

HCFA’s database on survey results to assess state performance in areas

such as timeliness of providing information to nursing homes regarding

identified deficiencies and the timeliness of enforcement actions.

Limitations Hinder

HCFA Oversight

Programs’

Effectiveness in

Assessing State

Survey Performance

HCFA’s current strategy for assessing state agency survey performance has

limitations that prevent HCFA from developing accurate and reliable

assessments. The number of comparative surveys required to be

completed each year is negligible in that only one or two are required in

most of the states, and over half of the comparative surveys are started

more than a month after the state completes its survey. Observational

surveys are also limited in their effectiveness because these tend to cause

state surveyors to perform their survey tasks more attentively than they

would if federal surveyors were not present (the Hawthorne effect), thus

masking a state’s typical performance. Observational surveys have also

had other problems during their first year of implementation, such as the

fact that federal surveyors are not required to observe state surveyors

performing most survey tasks, the lack of an effective data system for

recording results, and the slowness of written feedback to state surveyors.

Finally, SAQIP does not require independent verification of states’

self-reported performance, and its standards do not address all important

aspects of the state survey process.

HCFA’s Use of

Comparative Surveys Is

Negligible

Although comparative surveys are the only oversight tool that furnishes an

independent federal survey where results can be compared with those of

the states, HCFA’s use of them is negligible. Conducting a sufficient number

of these comparisons is important because of concern that some state

survey agencies miss significant problems. For example, HCFA surveyors

found deficiencies that were more serious than those found by the state

surveyors in about two-thirds of the comparative surveys they conducted

between October 1998 and July 1999.

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As we reported in July 1998, state agency surveyors can miss problems

that affect the health and safety of residents.13 In addition, HCFA data show

significant variation in the extent to which state surveyors identify serious

deficiencies. For example, state survey agencies in Idaho, Kansas, North

Dakota, and Washington identified serious deficiencies in more than half

of their surveys. On the other hand, state surveyors in Maine, Colorado,

Tennessee, and Oklahoma identified such problems in only 8 to 13 percent

of their surveys.14 With such a range in identified serious deficiencies in

nursing homes, HCFA needs to know to what extent such data accurately

portray the quality of care provided or the adequacy of state survey agency

performance.

Of the 64 comparative surveys that HCFA completed between October 1998

and July 1999, 44 (69 percent) identified a more serious deficiency than

had the state surveyors. For example, during a comparative survey

conducted at a nursing home in Missouri in November 1998, HCFA found 24

deficiencies that it believes state surveyors should have, but did not,

identify during their review about 6 weeks earlier. One of these

deficiencies identified six residents whose nutritional status was not being

adequately assessed by the nursing home, resulting in significant weight

loss to several of them. One resident lost 19 percent of his weight between

June and October 1998. His weight at the time of HCFA’s survey was 93

pounds, which HCFA indicated was significantly below the resident’s

minimally acceptable body weight of 108 pounds. Less than 4 months after

this resident’s admission to the home, he had also developed two

moderately severe pressure sores, which the nursing home was

inappropriately treating with a cream that its manufacturer stated was not

intended to heal pressure sores but rather to prevent irritation to the skin.

Until 1992, comparative surveys were the sole method HCFA used to carry

out state agency oversight responsibilities. According to HCFA documents,

the agency began to decrease its reliance on comparative surveys in 1992

because (1) it was difficult to adjust for changes in the nursing home that

may have arisen between the dates of the state and the federal surveys,

(2) two separate surveys during a short time period created a strain on the

nursing home, (3) too much time had passed between the completion of

the state survey and the time the state received feedback from federal

surveyors for the state surveyors to recall the details of the survey, and

(4) comparative surveys were resource-intensive.

13GAO/HEHS-98-202, July 27, 1998.

14Based on standard surveys conducted between January 1997 and April 1999.

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Under the revised federal monitoring surveys, started in October 1998,

HCFA acknowledged the need to do more comparative surveys than the 21

that had been done over the previous 2 years. Nevertheless, under this

program, only about 10 percent of the federal monitoring surveys

completed each year must be comparative surveys, and the remaining

90 percent may be observational surveys. Specifically, HCFA now requires a

minimum of one comparative survey in states having fewer than 200

nursing homes, two in states with 200 to 599 nursing homes, and three in

states with 600 or more homes. Table 2 shows the minimum number of

comparative surveys to be completed in each state and the District of

Columbia.

Table 2: Minimum Number of

Comparative Surveys Required Yearly,

by State

Number of homes

in state (as of May

1999)

Minimum

number of

comparative

surveys

required each

year

Number of

states States

Fewer than 200 1 20 Alaska, Arizona, Delaware,

District of Columbia, Hawaii,

Idaho, Maine, Montana, Nevada,

New Hampshire, New Mexico,

North Dakota, Oregon, Rhode

Island, South Carolina, South

Dakota, Utah, Vermont, West

Virginia, Wyoming

200 to 599 2 24 Alabama, Arkansas, Colorado,

Connecticut, Georgia, Indiana,

Iowa, Kansas, Kentucky,

Louisiana, Maryland,

Massachusetts, Michigan,

Minnesota, Mississippi, Missouri,

Nebraska, New Jersey, North

Carolina, Oklahoma, Tennessee,

Virginia, Washington, Wisconsin

600 or more 3 7 California, Florida, Illinois, New

York, Ohio, Pennsylvania, Texas

While providing important information, the low number of comparative

surveys will not permit HCFA to determine how representative these one to

three surveys per state are of overall state performance.

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Gap in Time Between State

Survey and HCFA

Comparative Survey Makes

Assessment of State

Performance Difficult

HCFA reestablished the comparative survey as part of its oversight survey

process in 1998, but it has not adequately addressed the earlier concern

about the time that elapses between the end of the state’s survey and the

start of the federal survey. We found that 33 days on average passed

between these dates for comparative surveys completed from October

1998 through July 1999. Although this meets the requirements of OBRA 87,

the gap in time between the two surveys raises the possibility that changes

at the nursing home between the two surveys were responsible for

differences, thus calling into question the extent to which federal results

can be used to assess state performance.

OBRA 87 requires HCFA to start a comparative survey in a nursing home

within 2 months of the completion of the state’s survey. HCFA’s conclusions

about the state’s survey effectiveness are supposed to take into account

the difference in time. Because aspects of a nursing home, such as

residents, staffing, and ownership, can change in a short period of time,

developing a fair and accurate assessment of state surveyor performance

after a lapse in time can be difficult. Several state and HCFA surveyors we

interviewed told us that the time lag between the surveys continues to be a

problem. Our analysis shows that for the 64 comparative surveys that HCFA

completed between October 1998 and July 1999, 33 days, on average, had

passed from the time the state completed its survey until HCFA started its

comparative survey. Sixty-three of these comparative surveys started

within the 2-month time frame mandated by OBRA 87, while only one, which

started 68 days after the state’s survey, did not.15 Four regions averaged

fewer than 30 days, with the Dallas and Denver regions averaging 17 days.

At the other end of the scale, the Atlanta and New York regions averaged

43 days, while the Philadelphia region averaged 47 days. Table 3 shows the

number and time frames of comparative surveys conducted between

October 1998 and July 1999.

15The median time for the start of the 64 comparative surveys was 32 days.

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Table 3: Time Frames for the Start of

the 64 Comparative Surveys HCFA

Conducted Between October 1998 and

July 1999

Days from end of state survey to start

of comparative survey

Number of comparative

surveys

0 to 10 7

11 to 20 10

21 to 30 12

31 to 40 12

41 to 50 10

51 to 60 8

Over 60 5

To avoid the problems presented by gaps in time between the state and

federal surveys, in August 1999 HCFA instructed its regions to start

comparative surveys within 2 to 4 weeks after the state’s survey, because

the less time that elapses between the two surveys, the less likely it will be

that a home’s environment, staff, or residents will have changed. While this

is an improvement, a delay of several weeks in the comparative survey

could still result in problems. State and federal surveyors told us that

comparative surveys are more effective and reliable in assessing state

performance if they start immediately after the state has completed its

survey, even as soon as the day after the state’s exit from the home.

Observational Surveys’

Effectiveness Hindered by

Systemic and Transitional

Problems

HCFA relies on observational surveys as its primary federal monitoring

technique. Observational surveys may help HCFA to identify state agency

training needs on a real-time basis, but several problems inhibit these

surveys from getting a clear and accurate picture of a state’s survey

capability. As designed, the surveys have a systemic weakness in that they

require federal surveyors to observe state surveyors as they conduct a

survey. Because they know they are being observed, state surveyors may

be more attentive to survey tasks than they would normally be. In addition

to this weakness, HCFA has encountered several specific problems as it

transitions from its previous types of observational surveys to those now

being conducted. For example, the surveys (1) cannot identify all

significant deficiencies that state surveyors miss, in part because HCFA

surveyors are not required to observe most of the tasks state surveyors

perform; (2) necessitate that one HCFA surveyor must oversee the efforts of

as many as three state surveyors at one time; (3) rate state surveyors for

some survey activities that are not required by federal survey regulations;

and (4) have had serious data system problems that prevent HCFA from

assessing the results of observational surveys conducted since

October 1998. In addition, HCFA surveyors have not always given timely

Page 12 GAO/HEHS-00-6 Federal Nursing Home Oversight
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written feedback to state agencies with respect to state surveyors’

performance so that corrective action can be implemented promptly.

Unlike comparative surveys, observational surveys do not require HCFA

surveyors to perform an independent review of a nursing home. Instead,

HCFA surveyors observe state surveyors as they perform portions of a

survey and rate them on one or more of eight possible survey tasks.16 As a

result of observing only a portion of the survey, HCFA surveyors cannot

determine whether state surveyors identify all significant deficiencies.

HCFA officials told us that observational surveys were not designed to

identify all deficiencies. They also said that of the 631 observational

surveys completed between October 1998 and August 1999, only 8

(1 percent) identified deficiencies that were more serious than those

identified by the state.17 During our interviews, nine of the regions

indicated that observational surveys allow them to help state surveyors

identify deficiencies that may otherwise be missed but that the surveys do

not ensure that HCFA surveyors identify all serious deficiencies. The Kansas

City region agreed with the other regions but also indicated that federal

surveyors can identify deficiencies missed by state surveyors if they

perform all eight survey tasks, as this region says it does, during an

observational survey.

During an observational survey, federal surveyors are generally required to

observe only two of the eight tasks—the preparation of the statement of

deficiencies and the resident review and quality-of-life assessments.18 As a

result, during any given survey, federal surveyors are not required to

observe most of the survey tasks that state surveyors perform.

Furthermore, some federal surveyors told us that even observing only the

required tasks can be a problem because a single federal surveyor has

sometimes been required to observe as many as three state surveyors at a

time. Although HCFA guidance to the regions suggests that one federal

surveyor should be able to observe the work of two or three state

16The tasks are to determine how well state surveyors perform (1) the off-site preparation activities,

(2) the entrance conference, (3) the initial tour of the home, (4) the selection of a sample of residents

for review, (5) the analysis of information they developed to determine deficiencies, (6) the exit

conference, and (7) the preparation of the statement of deficiencies. An eighth task, with six subtasks,

includes how well state surveyors observe general conditions of the home, kitchen and food service

activities, care and treatment of several sampled residents, quality of life for selected sampled

residents, administration of medications, and the adequacy of the home’s internal quality assurance

program.

17These eight surveys were all from the Kansas City region.

18Each region must address three of the eight tasks in a given percentage of yearly observational

surveys. For instance, the sample selection task must be reviewed in at least 40 percent of the

observational surveys completed in a state during the year.

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surveyors, federal surveyors we interviewed indicated that, in their

experience, it is generally not possible for one federal surveyor to

adequately observe more than two state surveyors at a time.

Several state surveyors expressed concern to us that some of the criteria

HCFA used to assess their performance are inconsistent with the survey

tasks required in federal guidelines. For example, although federal

guidelines do not require an employee of the nursing home to accompany

the state surveyors during the required tour of the home, a state surveyor

in Florida told us that he was criticized for conducting the tour without an

employee present. Officials from one HCFA region confirmed that such

situations have occurred and attributed them to a flaw in the federal

survey’s protocol that does not distinguish between optional and required

survey activities.

Inconsistencies between the federal guidelines and survey protocol

increased when HCFA issued a revision to the guidelines on July 1, 1999.

Some of these changes introduced significantly different survey

requirements, such as a new methodology for state surveyors to use in

selecting a sample of nursing home residents to review. A HCFA official

acknowledged that inconsistencies have existed since revised

observational surveys started in October 1998 and that the revision to the

federal guidelines has added to the inconsistencies. She told us that one of

several HCFA work groups now reviewing observational surveys is working

to identify and eliminate the inconsistencies.

In addition, the data system developed to support the observational

surveys has not been able to produce usable management reports.

Because of technical problems with the system, HCFA regions were not able

to enter survey results in the database for several months. As a result, HCFA

has been unable to use the database to identify poorly performing state

agencies or to determine needed corrective actions. The Dallas regional

office found these problems particularly troublesome and told us that its

surveyors are extremely frustrated with the database because it requires

too much time to input data and does not allow easy access to the data

that have been entered. As a result, the region has not been able to use the

database to analyze the results of its surveys.

HCFA officials told us that problems with the data system occurred because

HCFA rushed its development in order to meet the program implementation

date of October 1998 and thus did not follow standard systems

development practices. For example, a requirements analysis was not

Page 14 GAO/HEHS-00-6 Federal Nursing Home Oversight
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completed to ensure that the system would provide all the information

HCFA would need to assess state performance. HCFA entered into a contract

in June 1999 to address these problems and to add additional capabilities,

including the creation of a new database for surveys conducted after

October 1, 1999. However, the results of surveys conducted in fiscal year

1999 will not be included in the new database. Although a HCFA official told

us that it would be unacceptable for regions not to consider survey results

from the first year of the revised surveys in determining a state survey

agency’s performance, there has been no guidance from HCFA requiring the

regions to consider information in both databases when assessing state

performance. Moreover, the observational survey database is now

maintained separately from the database that HCFA uses to track identified

deficiencies in nursing homes. Although HCFA plans to include the results

of observational surveys in its redesigned central database, this redesign

will not take place for several more years, according to HCFA officials.

Finally, although formal written feedback is not required as part of

observational surveys, the regions we visited provide feedback in this way

to state agencies. To be useful, this feedback should be provided in a

timely manner to both the state surveyors who performed the survey and

their managers so that any needed corrective action can be taken.

Nevertheless, in three of the four states we visited, the surveyors and their

managers sometimes did not receive the written feedback for 3 to 5

months after the survey was completed. Furthermore, in some cases, state

surveyors were surprised at the content of the written feedback because it

was much more critical of their performance than the initial verbal

feedback they received from HCFA surveyors during the survey. Although

the revised surveys started in most states in October 1998, an official of

the Association of Health Facility Survey Agencies testified that as of late

June 1999, state agency managers from a majority of states had received

no formal feedback. She further indicated that oversight without feedback

is not effective in improving quality.19

Some state agency officials told us that HCFA’s delays in providing written

feedback have prevented the agencies from initiating important corrective

actions when problems with state surveyor performance were identified.

For example, for an observational survey conducted in Florida in October

1998, HCFA did not give feedback to the state until February 1999. This

survey found, among other things, that the state surveyors did not

correctly select the resident sample and that HCFA surveyors had to

intervene to ensure that the sample was appropriate. For another survey

19Testimony before the Senate Special Committee on Aging, June 30, 1999.

Page 15 GAO/HEHS-00-6 Federal Nursing Home Oversight
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conducted in Florida in March 1999, HCFA gave feedback to the director of

the state’s survey program in early April 1999, but the state surveyors who

participated in the review and their manager did not receive the written

results until May 1999. In this survey, HCFA found that the state surveyors

were too quick to accept explanations of apparent deficient practices by

the nursing home’s staff, thus permitting potentially deficient practices to

continue.

SAQIP Does Not Provide

HCFA With Complete State

Agency Performance Data

In addition to the federal monitoring surveys that are required by statute,

HCFA instructs its regions to use SAQIP to improve and monitor certain state

agency survey-related activities. When a state is not in compliance with a

SAQIP standard, HCFA is expected to help the state develop a corrective

action plan and to work with the state as a partner to correct the problem.

However, SAQIP cannot ensure that HCFA knows of significant problems in a

state agency’s activities because SAQIP relies on the state agency to self

certify to HCFA whether it is in compliance with particular requirements

associated with its performance. Because HCFA does not independently

verify the information the states provide, it has no assurance that states

surface all serious problems or that they correct the problems they have

identified. Although SAQIP also includes some indicators of state

performance that HCFA itself assesses, these indicators do not address all

the important aspects of a state agency’s activities.

SAQIP replaced HCFA’s State Agency Evaluation Program in 1996.20 Under

the previous program, HCFA’s regions analyzed data maintained in HCFA’s

databases to evaluate some indicators of state performance and conducted

on-site reviews at state survey agencies of state documentation to assess

compliance with other indicators. For example, to assess a state’s

complaint process, regional surveyors visited the state to review state

documentation from a sample of complaints filed against nursing homes

and determine whether the state responded appropriately to the

complaints. Each region was required to follow the same procedures in

reviewing all state agencies, the states were rated on specific activities,

and the results of each state’s rating were compiled in a single report.

In essence, SAQIP includes nearly all of the same broad standards that the

previous program included, but it shifts the responsibility for assessing

compliance with seven standards from the regions to the states. SAQIP does

not require that HCFA independently verify the state’s assertion.

20Both the State Agency Evaluation Program and SAQIP apply to all types of providers, including home

health agencies, kidney dialysis facilities, nursing homes, and others.

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Compliance with the other four standards for nursing homes is determined

by HCFA (see table 4).

Table 4: SAQIP Nursing Home

Performance Standards for State

Agencies

Responsible entity Performance standards

State — Properly document deficiencies discovered in a nursing home 

— Ensure that nursing homes’ plans of correction accepted by the

state agency reflect appropriate actions and time frames to correct

cited deficiencies

— Conduct all surveys with qualified individuals

— Ensure consistency in survey performance

— Measure the accuracy and improve the consistency in applying

enforcement actions against nursing homes

— Effectively investigate and process complaints filed against

nursing homes

— Monitor expenditures and support charges to federal programs

in accordance with regulations

HCFA — Ensure that each nursing home is subject to a standard survey

not more than 15 months after its previous survey and that the

statewide average between standard surveys does not exceed 12

months

— Ensure that all surveys, including complaint investigations, are

conducted unannounced or are announced consistent with HCFA

instructions

— Ensure that the state agency’s annual budget request, activity

plan, and expenditure reports are prepared and submitted in

accordance with federal instructions and accurately reflect the

allocation of costs between state and federal programs

— Ensure that the state agency effectively maintains the database

HCFA uses to record survey results

As a result of this change in SAQIP’s design, HCFA has no assurance that a

state is in compliance with the first seven standards. For instance, for the

standard that requires states to “effectively investigate and process

complaints filed against nursing homes,” our March 22, 1999, report noted

that Michigan’s SAQIP acknowledged the state had not determined whether

it was investigating and processing complaints in accordance with state

time frames; yet, the state indicated that it believed it was doing so. When

we reviewed the state documentation, we found that more than 100

pending complaints filed against Michigan nursing homes remained

uninvestigated weeks and even months after their receipt, and that

complaints that were investigated had not been investigated within

Michigan’s required time frames.21 The Atlanta regional office staff also

told us that it identified more significant problems in a state when it used

the previous evaluation program than it does using SAQIP. From this

region’s perspective, SAQIP does not provide for an in-depth evaluation of a

21GAO/HEHS-99-80, Mar. 22, 1999.

Page 17 GAO/HEHS-00-6 Federal Nursing Home Oversight
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state agency’s survey or operational performance because it depends on a

state’s willingness to devote adequate resources for assessment and to be

candid in identifying problems to HCFA.

In addition to removing HCFA’s direct responsibility for verifying state

compliance with the seven standards, SAQIP does not set national

performance thresholds. For instance, under the previous evaluation

program, HCFA reviewed a sample of deficiencies identified by the state

survey agency to determine whether at least 90 percent of them were

properly documented. If a state met this 90-percent threshold, its

performance for this standard was acceptable. SAQIP leaves the

determination of such thresholds to each state, and we found wide

differences among states in the percentages they use. For example, in

1998, Oklahoma’s goal was 75 percent, Louisiana’s goal was 90 percent,

and Wyoming’s goal was 100 percent.

Regions Are

Inconsistent in How

They Conduct

Oversight Activities

One of HCFA’s goals in revising its federal monitoring surveys was to

establish consistency among the regions in the process used to assess

state performance. However, differences still exist among the regions in

how they select and conduct oversight surveys. Although regions may

need some flexibility in selecting surveys for review, conducting them

requires a high level of consistency among the regions to ensure that states

are being held equally accountable to federal standards. Additionally, HCFA

regions differ in their view of SAQIP’s effectiveness as an oversight tool, and

some supplement HCFA’s federal monitoring surveys and SAQIP by analyzing

other available survey data to assess state agency performance. Finally,

the regions spend very different amounts of time, on average, conducting

observational surveys, which raises questions about the scope and quality

of their reviews.

Regions Use Different

Criteria and Methods for

Selecting and Conducting

Surveys for Review

When HCFA established the new federal monitoring survey in October 1998,

it suggested that, for comparative surveys, the regions select homes for

which the state did not find deficiencies categorized as “immediate

jeopardy,” “actual harm,” or “substandard quality of care” (see app. I for

definitions of these deficiency categories).22 However, only the Dallas,

Denver, San Francisco, and Seattle regions indicated that they routinely

follow this guidance. Other regions generally used a variety of other

criteria, including selecting homes for which the state has identified

22In commenting on a draft of this report, HCFA indicated that the focus of its comparative surveys for

the next year will be on deficiency-free nursing homes.

Page 18 GAO/HEHS-00-6 Federal Nursing Home Oversight
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continuing serious problems or homes located in diverse geographic areas.

Some regions also indicated that when conducting comparative surveys,

they specifically select homes designated by HCFA for special focus

because of the homes’ poor performance histories.23 By focusing on homes

that were identified by state surveyors as having serious problems, HCFA’s

surveyors are less likely to identify situations in which state surveyors

underreported serious deficiencies.

Another significant difference we found among the regions in conducting

comparative surveys is the way they select a sample of nursing home

residents for review. State surveyors select a sample of a home’s residents

as part of their procedures for evaluating the care and treatment given to

the residents. For this sample, the surveyors may review a resident’s

medical record, interview residents and their relatives, and observe the

environment and care practices of the home. Sample selection is a key

survey task for determining whether a nursing home is in compliance with

federal survey regulations and is providing appropriate care to its

residents. In conducting a comparative survey, federal surveyors

determine whether the state surveyors selected an appropriate sample of

residents, and then also select a sample of residents as part of the

comparative survey.

The regions vary in how they select resident samples, with some regions

selecting a sample that includes some overlap with the state sample and

other regions making no attempt to do so. For example, the Kansas City

region tries to include in its sample one-half of the residents who were

included in the state’s sample, believing that this practice allows it to more

closely duplicate the state’s survey and thus obtain a more valid

assessment of the state’s performance. On the other hand, the Atlanta

region makes no attempt to include any of the same residents in its

samples, believing that if systemic care problems exist in a home, any

sample will disclose these problems. We believe that, to better determine

the reasons for discrepancies between comparative and state surveys,

federal surveyors should sample as many of the same residents as the state

sampled in cases in which federal surveyors determine that the state

sample was appropriate. Federal and state surveyors we interviewed

agreed that reviewing the same sample would improve the consistency of

comparative surveys among HCFA’s regions. However, they also noted that

reviewing the same sample would require the comparative surveys to start

much sooner than 2 months after the state’s survey.

23Homes selected by HCFA for special focus are those that continually have serious problems and

require intense state agency monitoring as part of HCFA’s nursing home initiatives. HCFA has

designated two special-focus nursing homes in each state.

Page 19 GAO/HEHS-00-6 Federal Nursing Home Oversight
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Each of the regions also uses a variety of criteria to select nursing homes

for observational surveys. HCFA’s guidance for selecting homes instructs

the regions to use type, size, and geographic location of a nursing home, as

well as to consider other criteria, including the performance differences

among state survey offices in the region. Although observational surveys

give HCFA an opportunity to provide on-site training to state surveyors,

HCFA’s guidance does not ensure that the regions will observe as many

state surveyors as possible. For example, the Atlanta and Seattle regions

indicated that surveys are often selected primarily on the basis of the

characteristics of the nursing home and not in order to assess a broad

range of state surveyors. At the time of our visit to the Atlanta region, it

had completed seven observational surveys in two of Tennessee’s three

districts, but none in the third district. Furthermore, 7 of the 20 state

surveyors reviewed during these surveys had been reviewed two or three

times, while over two-thirds of Tennessee’s surveyors had not been

reviewed at all. The Atlanta region did not indicate any particular problem

with the performance of these surveyors that would require repeated

review of their performance.

Regions Differ in Their

View and Use of SAQIP

and Other Available Data

HCFA regions also vary in how valuable they believe SAQIP is as an oversight

program. Some regions believe that SAQIP is effective, while others believe

some SAQIP standards encourage states to improve the quality of their

survey programs but other standards do not surface all serious problems.

The Atlanta regional office told us that it does not believe SAQIP is an

effective method for tracking and reporting operational problems in a

state agency. Believing that SAQIP has limitations, some regions supplement

it by analyzing data included in HCFA’s databases to evaluate state agency

performance in areas such as survey predictability.

The Seattle region, which played a major role in developing SAQIP, believes

SAQIP is an effective oversight tool because it allows state agencies to

identify survey performance problems unique to a state and permits the

state agency to develop corrective action plans. The Philadelphia, Dallas,

and Denver regions believe that some of the seven SAQIP quality

improvement standards the states assess themselves are effective in

encouraging states to improve their survey processes, but they also believe

that the four remaining standards for which HCFA assesses performance

are incomplete. For example, although one standard requires regions to

review data to determine whether a state performs its surveys within

statutory time frames, it does not require the regions to assess the same

data to determine whether a state’s survey schedule allows nursing homes

Page 20 GAO/HEHS-00-6 Federal Nursing Home Oversight
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to predict the date of their next survey. Avoiding predictability is

important because the extent of care problems in a nursing home can be

hidden if nursing homes can predict when their next survey will occur.

The Atlanta regional office recently started a program to conduct in-depth

analyses of each state agency in its region by using available survey data.

Through these analyses, the region recently determined that the annual

state surveys of nursing homes in four of the region’s eight states (South

Carolina, Kentucky, Tennessee, and Mississippi) are highly predictable,

contrary to HCFA policy. It also found that in most of the states where it has

completed reviews, state surveyors were not conducting revisits of nursing

homes to determine whether identified deficiencies have been corrected

within HCFA’s recommended time frame. Although HCFA recommends that a

state wait no longer than 55 days to conduct its first revisit to a nursing

home, four of the six states for which the Atlanta region completed

reviews did not meet this time frame more than half of the time.24 Table 5

presents the results of the Atlanta region’s analysis of state time frames

related to this requirement. The Atlanta region also found several

problems with Florida’s timeliness in conducting revisits, including one

case in which state surveyors did not conduct a revisit until about 10

months after the home’s original survey.

Table 5: Percentage of Surveys in

Which First Revisit Was Not Made

Within HCFA’s Recommended Time

Frame

State

Number of

revisits conducted

Percentage of

surveys in which

first revisit was

not made within

HCFA’s

recommended

time frame

Alabama (through Jan. 20, 1999) 21 76

Georgia (through Mar. 31. 1999) 105 77

Kentucky (through June 1, 1999) 108 22

Mississippi (through June 16, 1999) 69 61

North Carolina (through Apr. 20, 1999) 60 53

Tennessee (through Mar. 3, 1999) 84 10

After identifying problems with state performance, Atlanta officials meet

with top-level survey and certification management officials in each state

to discuss the results and present the data used to develop the findings.

They then follow up this meeting with a formal letter to the state

24The Atlanta region had not completed comparable analyses of Florida or South Carolina at the time

of our visit.

Page 21 GAO/HEHS-00-6 Federal Nursing Home Oversight
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summarizing the results of the meeting and identifying actions the region

expects the state to take to correct identified problems. These

management reports, which the Atlanta region plans to begin issuing

quarterly, are expected to provide the region with a documented history of

a state agency’s performance over time, making it possible to more readily

identify patterns of poor state performance.

Variation in Resources,

Survey Time Across

Regions

In addition to the variations among regions in the methods they use to

conduct reviews, variations exist in the level of oversight resources

available to them. Table 6 contains the ratio of state to federal surveyors,

the ratio of observational surveys to be completed in fiscal year 1999, and

the number of federal surveyors available to complete them. It also shows

the average number of hours each region spent conducting surveys from

October 1998 through July 1999.

Table 6: Variation in Resources

Available for and Time to Complete

Observational Surveys

Region

Number of

federal nursing

home

surveyors (as

of August 1999)

Ratio of

state to

federal

surveyors

Ratio of

observational

surveys

required in

1999 to federal

surveyors

Average no. of

hours per

observational

survey (Oct.

1998 - July

1999

Boston 12 14.4 to 1 4.6 to 1 26.9

New York 7 33.3 to 1 7.1 to 1 31.0

Philadelphia 12 15.8 to 1 6.2 to 1 48.7

Atlanta 18 32.8 to 1 6.8 to 1 60.9

Chicago 22 30.7 to 1 8.0 to 1 70.6

Dallas 11 59.8 to 1 10.2 to 1 37.5

Kansas City 12 29.8 to 1 6.3 to 1 50.6

Denver 8 17.6 to 1 3.8 to 1 58.8

San Francisco 11 26.5 to 1 7.5 to 1 53.6

Seattle 9 15.7 to 1 3.0 to 1 51.6

Nationwide 122 28.3 to 1 6.6 to 1 52.2

Table 6 illustrates that federal surveyors in some regions must conduct

significantly more observational surveys than surveyors in other regions.

For example, at one extreme, Seattle surveyors are required to complete

an average of 3 observational surveys per surveyor per year, while at the

other extreme, Dallas surveyors must perform more than 10. Officials from

the Dallas region told us that they did not have the resources available to

complete the required review of 5 percent of state surveys in fiscal year

Page 22 GAO/HEHS-00-6 Federal Nursing Home Oversight
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1998 and indicated that the shortage would likely prevent them from

meeting their survey requirements again in fiscal year 1999 unless they

received help from other regions. The region attributed this shortage to

the retirement of several surveyors at the end of the prior year, who had

not yet been replaced, and the need to focus on other, higher-profile

projects. A Dallas region official told us that the region plans to hire two

more surveyors this year, but it will nevertheless need an additional four

or five surveyors to meet its oversight requirements.

As shown in the last column of table 6, there are also large differences in

the average time that regions have invested to complete observational

surveys since October 1998, ranging from about 27 hours in the Boston

region to nearly 71 in the Chicago region. HCFA officials could not explain

the reasons for such variation. One official theorized that the variations

might be due simply to differences in how the regions account for the time

they spend conducting these surveys but also said that the variations could

signify a difference in the content and quality of the surveys being

performed.

HCFA’s Options for

Addressing Poorly

Performing State

Agencies Are

Inadequate

Although HCFA has authority under the Social Security Act to take

corrective action against a state agency that performs inadequately in

conducting surveys, HCFA does not now have an adequate array of effective

sanctions. HCFA may use several remedies to encourage a state to improve

performance. When remedies fail, HCFA may impose either of two

sanctions—reducing the state’s funding for survey and certification

activities or terminating the state’s survey contract. However, HCFA has

only once reduced a state’s survey and certification funding for failure to

conduct surveys in accordance with HCFA regulations, and it has never

terminated a state’s contract.25 HCFA is considering regulations to authorize

two additional actions that it classifies as sanctions, but, on the basis of

our review of the proposed regulations, we believe their effectiveness is

doubtful.

HCFA’s Criteria for

Applying Present

Sanctions Limits Their Use

HCFA has the authority to take certain actions against a state agency that

performs poorly.26 Currently, HCFA defines inadequate state agency

performance to include a state’s failure to identify an instance in which

25HCFA reduced survey and certification funding to the California state agency for its refusal to

conduct surveys of nursing homes in 1990 and 1991 in accordance with OBRA 87.

26See, for example, sections 1819 (g)(3)(C) and 1919 (g)(3)(C) of the Social Security Act.

Page 23 GAO/HEHS-00-6 Federal Nursing Home Oversight
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nursing home residents are placed in immediate jeopardy, or if a state

agency demonstrates a pattern of other problems, including failure to

• identify deficiencies when the failure cannot be explained by changed

conditions in the home;

• cite only valid deficiencies; and

• conduct surveys in accordance with federal requirements.

When HCFA identifies inadequate state performance, its first step is to

impose one or more of several remedies against the state, with the

objective of improving the state’s performance. The most commonly used

remedy has been to provide training for individual state surveyors or

survey teams. A HCFA official indicated that other remedies are

occasionally used but that training is viewed as the preferred approach.

When remedies fail to improve state performance, HCFA can impose

sanctions, which are intended to penalize a state agency for failing to

improve performance. See table 7 for the remedies and sanctions now

available to HCFA.

Table 7: Remedies and Sanctions

Available to HCFA in Response to

Poor State Agency Performance

Tool Action

Remedies — Provide training to survey teams

— Provide technical assistance to the state with respect to

scheduling surveys and following survey procedures

— Require the state agency to implement improvements identified

in the state’s plan of correction

— Assume responsibility for developing survey schedules for the

state agency

Sanctions — Reduce the state’s Medicaid funding for survey and certification

activities

— Terminate the state’s survey contract

Note: Remedies and sanctions are shown in the order they appear in HCFA documentation.

To reduce a state’s survey and certification funding, HCFA must

demonstrate that the state displays a pattern of failure to identify

deficiencies in nursing homes.27 To develop this information, HCFA

compares the deficiencies it identifies through its surveys of nursing

homes with those found by state surveyors. When HCFA determines that the

quarterly disparity rate between the deficiencies it identified and those the

state agency identified is greater than 20 percent in at least three of the

27HCFA cannot reduce survey and certification funding to a state or terminate the state’s contract

based on a single instance of a state’s failure to identify a situation that places the health or safety of a

resident in immediate jeopardy.

Page 24 GAO/HEHS-00-6 Federal Nursing Home Oversight
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last four quarters and the state fails to correct the disparity within the next

two quarters, it may impose this sanction.

Currently, the only way HCFA can develop the specific quantitative

evidence it needs to identify disparity rates is through comparative

surveys. However, as previously discussed, the regions conduct too few

such surveys to establish a pattern of inadequate state agency

performance. For instance, 43 states and the District of Columbia will have

only one or two comparative surveys per year. A HCFA official

acknowledged that conducting so few comparative surveys is insufficient

to establish a pattern of poor performance in any state. Therefore, this

official told us, HCFA attempts to rely on observational surveys to obtain

the needed quantitative evidence, but the official agreed that the present

observational surveys are not designed to provide this information. As

noted, 69 percent of the comparative surveys completed as of August 1999

identified deficiencies that were more serious than those found by state

surveyors, but only in 1 percent of their observational surveys did the

regions identify deficiencies that were more serious. This is largely

because the goal of observational surveys is not to identify all deficiencies

but rather to observe state survey performance. Thus, it does not appear

that either the comparative or the observational surveys can provide the

basis HCFA needs to use the sanction of reducing a state’s Medicaid survey

and certification funding for failing to properly identify deficiencies in

nursing homes.

Terminating a contract with a state agency would require HCFA to find a

replacement for the state surveyors. HCFA officials indicated to us that

three alternatives exist: (1) use federal surveyors to conduct surveys in a

state, (2) contract with another state agency in the same state, or

(3) contract with a state agency from another state. According to HCFA and

state survey agency officials, HCFA does not have a sufficient number of

surveyors to conduct surveys in states that have a large number of nursing

homes. Texas alone has 402 state surveyors, while HCFA has 122 surveyors

nationwide. Six other states also have more surveyors than HCFA.

Furthermore, even in smaller states, the use of federal surveyors for an

extended period could become a problem because they would not be able

to perform their normal monitoring duties and other responsibilities. With

regard to the second alternative, the President of the Association of Health

Facility Survey Agencies told us that contracting with another agency

within the state is unrealistic given the negative atmosphere created

between HCFA and the state if the state agency’s contract has been

terminated. The third alternative, contracting with another state, would be

Page 25 GAO/HEHS-00-6 Federal Nursing Home Oversight
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feasible only if the contracting state had or could hire a sufficient number

of surveyors to conduct surveys in both states.

Potential Effectiveness of

Proposed Sanctions Is

Doubtful

As part of its nursing home initiatives, HCFA established a task force in late

1998 to expand and clarify the definition of inadequate state survey

performance and to suggest additional remedies and sanctions that HCFA

could take against state agencies that perform poorly. HCFA indicated to us

that new instructions should be issued sometime in the fall of 1999.

However, on the basis of our review of the proposed changes, it is

uncertain whether the additional sanctions HCFA is considering will be

strong enough to compel a state agency to improve its performance.

Under its proposed guidelines, HCFA would add seven situations to its

definition of inadequate state performance. These seven include situations

in which a state agency has a pattern of failure to

• conduct surveys within required time frames;

• use proper enforcement actions against a nursing home;

• respond to complaints in accordance with requirements;

• enter nursing home deficiency data into HCFA’s database timely and

accurately;

• follow federal standards, protocols, forms, methods, procedures, policies,

and systems specified in HCFA’s instructions;

• ensure that nursing homes maintain specific resident information; and

• enter nursing home resident assessment data into federal data systems.

The proposed changes include a new remedy that would require HCFA to

develop a plan of correction for the state to implement. In addition, two

new sanctions are proposed to penalize a poorly performing state agency:

(1) placing the state agency on notice that it is not in compliance with its

Medicaid plan regarding nursing home survey performance and

(2) requiring HCFA officials to meet with the state governor and other

high-level state officials.

Although HCFA refers to the proposed two new actions as sanctions, they

are not as severe as what is normally thought of as sanctions and may not

be enough to compel a state to improve its performance. When we

discussed placing the state agency on notice, we were told by a HCFA

official that, under this sanction, HCFA expects the regions to work

collaboratively with state agencies to comply with the requirements in

their state Medicaid plan. The proposed sanction requiring HCFA officials to

Page 26 GAO/HEHS-00-6 Federal Nursing Home Oversight
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meet with the governor or other state officials can raise problems to a

higher level in state government and possibly secure greater state support

to improve performance. Nevertheless, it is not clear what impact either of

these sanctions would have on a state agency to effect the desired

performance.

Conclusions HCFA has recently demonstrated the desire and initiative to confront and

respond to various quality problems facing the nation’s nursing homes and

their residents. Some of the methods HCFA currently uses and is

developing, to ensure that state agencies develop effective survey

programs capable of identifying survey deficiencies in nursing homes, can

contribute useful information for assessing the overall effectiveness of its

many nursing home quality improvement initiatives. However, the limited

scope and rigor of its various state performance monitoring mechanisms,

and the uneven application of the mechanisms across the regions, do not

provide HCFA with a systematic, consistent means of assessing the

sufficiency of state survey performance. Additionally, HCFA’s approach to

conducting federal monitoring surveys is not adequate to establish a

pattern of inadequate state performance, which is needed before imposing

any sanction. Specifically,

• the negligible use of comparative surveys, combined with delays in

scheduling them to closely follow state surveys, does not provide HCFA

with sufficient evidence to establish whether states are appropriately

assessing nursing homes’ compliance with federal standards.

• systems development problems for reporting results of observational

surveys and delays in giving states written feedback have hindered HCFA’s

ability to effectively use survey results as a management tool.

• inconsistencies among HCFA regional offices in how they target their

federal monitoring surveys within each state and select resident samples

for comparative surveys further hamper HCFA’s ability to ensure that these

reviews effectively and equitably assess state survey performance.

Even if HCFA strengthens its oversight programs to be able to establish any

pattern of unacceptable state survey performance, it has yet to develop

effective alternatives for compelling the state to come into compliance

with nursing home survey standards, short of cutting off federal funds.

Being able to accurately and consistently assess state agency performance

and hold states accountable for meeting HCFA standards is essential to the

success of HCFA’s recent initiatives to improve the quality of care for the

nation’s nursing home residents.

Page 27 GAO/HEHS-00-6 Federal Nursing Home Oversight
B-281759 

Recommendations To ensure that states effectively meet federal standards for certifying

nursing homes and to consistently implement the more stringent

requirements of HCFA’s recent initiatives, HCFA needs to strengthen its

oversight of state survey agencies’ activities. To accomplish this, we

recommend that the Administrator of HCFA take the following actions:

1. Improve the scope and rigor of HCFA’s oversight process by

• increasing the proportion of federal monitoring surveys conducted as

comparative surveys to ensure that a sufficient number are completed in

each state to assess whether the state appropriately identifies serious

deficiencies,

• ensuring that comparative surveys are initiated closer to the time the state

agency completes the home’s annual standard survey,

• requiring regions to provide more timely written feedback to the states

after the completion of federal monitoring surveys, and

• improving the data system for observational surveys so that it is an

effective management tool for HCFA to properly assess the findings of

observational surveys.

2. Improve the consistency in how HCFA holds state survey agencies

accountable by standardizing procedures for selecting state surveys and

conducting federal monitoring surveys, including

• ensuring that the regions target surveys for review that will provide a

comprehensive assessment of state surveyor performance, and

• requiring federal surveyors to include as many of the same residents as

possible in their comparative survey sample as the state included in its

sample (where HCFA surveyors have determined that the state sample

selection process was appropriate).

3. Further explore the feasibility of appropriate alternative remedies or

sanctions for those states that prove unable or unwilling to meet HCFA’s

performance standards.

Agency Comments In its comments on our draft report, HCFA noted that enhanced oversight of

state programs is critical to improving the quality of care in nursing homes

and generally agreed with our recommendations.

HCFA commented, and we agree, that a mix of comparative and

observational surveys is a prudent approach to overseeing state survey

Page 28 GAO/HEHS-00-6 Federal Nursing Home Oversight
B-281759 

agencies’ performance. It did not agree to immediately increase the

number of comparative surveys it requires the regions to undertake but

stated that it is reviewing the issue of the appropriate balance between the

two types of monitoring surveys. While we agree that a mix is beneficial,

an adequate number of comparative surveys is critical to assess the

performance of state agencies. Furthermore, these surveys can help

improve the effectiveness of resources devoted to observational surveys

by focusing more of them on areas of poorer performance. We believe that

the results of the comparative surveys conducted in the past year indicate

that these surveys have been more effective than observational surveys in

identifying serious deficiencies affecting the health and safety of residents

that state agencies’ survey processes miss. While we agree that

observational surveys can serve as an effective training tool for state

surveyors, in our view, they do not provide an accurate representation of

typical state surveyor performance because of the likelihood that state

surveyors modify their performance when they are aware that they are

being observed.

HCFA agreed that its comparative surveys should be initiated in closer

proximity to the state agency’s completion of the nursing home’s annual

standard survey. However, HCFA indicated that because it will focus its

comparative surveys on deficiency-free homes in the future, it does not

believe it would be realistic to start these surveys earlier than 2 weeks

after the state has completed its survey because the results of the state

survey are not often known for 2 weeks. But HCFA’s decision to focus its

comparative surveys on deficiency-free homes would exclude more than

two-thirds of homes nationwide from this review. In addition to

reconsidering the universe of nursing homes for which comparative

surveys are conducted, we believe that HCFA can initiate a comparative

survey more promptly, even if it means that HCFA does not know the

results of the state’s most recent survey before beginning its comparative

survey. HCFA can still achieve its monitoring objective by choosing its

sample on the basis of nursing homes’ prior survey history and could

improve results by having the two surveys more closely coincide. In fact,

not having the results could eliminate any bias associated with having

state survey results.

HCFA also agreed with the importance of ensuring national consistency in

overseeing state survey agencies and establishing definitive and

measurable performance standards to hold states accountable for survey

performance. However, HCFA indicates that it will establish additional

performance standards by the end of 1999. It will evaluate the use of these

Page 29 GAO/HEHS-00-6 Federal Nursing Home Oversight
B-281759 

standards and its process for working with state agencies to improve their

performance for about 18 months before determining whether other

additional remedies or sanctions are needed. In our view, HCFA currently

does not have an adequate array of effective remedies or sanctions at its

disposal to ensure corrections, and it should more immediately consider

expanding the available remedies and sanctions that can be applied to

compel states to improve their performance.

HCFA’s comments are included as appendix II.

As agreed with your offices, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days after its

issue date. At that time, we will send copies to the Honorable Nancy-Ann

Min DeParle, Administrator of HCFA; other interested congressional

committees; and other interested parties upon request.

Please contact me or Kathryn G. Allen, Associate Director, at

(202) 512-7114 if you or your staffs have questions about this report. Jack

Brennan and Mary Ann Curran prepared this report under the direction of

John Dicken.

William J. Scanlon

Director, Health Financing and

 Public Health Issues

Page 30 GAO/HEHS-00-6 Federal Nursing Home Oversight
Page 31 GAO/HEHS-00-6 Federal Nursing Home Oversight
Contents

Letter 1

Appendix I 

HCFA’s Definitions of

Severity of

Deficiencies

34

Appendix II 

Comments From the

Health Care Financing

Administration

36

Related GAO Products 45

Tables Table 1: Nursing Homes, Required Federal Surveys, and Federal

Surveyors Available, by HCFA Region

6

Table 2: Minimum Number of Comparative Surveys Required

Yearly, by State

10

Table 3: Time Frames for the Start of the 64 Comparative Surveys

HCFA Conducted Between October 1998 and July 1999

12

Table 4: SAQIP Nursing Home Performance Standards for State

Agencies

17

Table 5: Percentage of Surveys in Which First Revisit Was Not

Made Within HCFA’s Recommended Time Frame

21

Table 6: Variation in Resources Available for and Time to

Complete Observational Surveys

22

Table 7: Remedies and Sanctions Available to HCFA in Response

to Poor State Agency Performance

24

Table I.1: HCFA Scope and Severity Ratings for Nursing Home

Deficiencies

34

Abbreviations

HCFA Health Care Financing Administration

OBRA 87 Omnibus Budget Reconciliation Act of 1987

SAQIP State Agency Quality Improvement Program

Page 32 GAO/HEHS-00-6 Federal Nursing Home Oversight
Page 33 GAO/HEHS-00-6 Federal Nursing Home Oversight
Appendix I 

HCFA’s Definitions of Severity of

Deficiencies

HCFA’s nursing home regulations established several categories of

deficiencies that state survey agencies may find and record during their

surveys. Each identified deficiency is placed into one of the 12 categories

ranging from “A” to “L,” depending on the extent of resident harm

(severity) and the number of residents adversely affected (scope). The

following table identifies the scope and severity HCFA has assigned to

Medicare and Medicaid compliance deficiencies.

Table I.1: HCFA Scope and Severity

Ratings for Nursing Home Deficiencies Scope of deficiency

Severity category Isolated Pattern Widespread

Actual or potential for

death/serious injury (also

referred to as immediate

jeopardy)

J K L

Other actual harm G H I

Potential for more than

minimal harm

D E F

Potential for minimal harm

(substantial compliance)

A B C

A home is considered to be in “substantial compliance” if any identified

deficiencies are those in which the potential exists for only minimal harm

to occur to residents (levels A, B, and C). Any nursing home with a

deficiency categorized as D through L is considered to be not in

compliance. “Potential for more than minimal harm” is a deficiency for

which no actual harm has occurred to residents but that presents the

potential for more than minimal harm to occur. “Other actual harm”

includes deficiencies that cause actual harm to residents but do not

immediately jeopardize their health or safety. “Immediate jeopardy,” the

most serious deficiency, includes situations that immediately jeopardize

the health or safety of residents.

In addition to the four severity categories shown in the table, HCFA also

uses a fifth deficiency category referred to as “substandard quality of

care.” Deficiencies in this category are those that affect nursing home

residents in the areas of resident behavior and facility practices, quality of

life, and quality of care, and that are in the F, H, I, J, K, or L categories in

the table.

HCFA also classifies deficiencies by their scope or extent as follows:

(1) isolated, defined as affecting a limited number of residents; (2) pattern,

Page 34 GAO/HEHS-00-6 Federal Nursing Home Oversight
Appendix I 

HCFA’s Definitions of Severity of

Deficiencies

defined as affecting more than a limited number of residents; and

(3) widespread, defined as affecting all or almost all residents.

Page 35 GAO/HEHS-00-6 Federal Nursing Home Oversight
Appendix II 

Comments From the Health Care Financing

Administration

Page 36 GAO/HEHS-00-6 Federal Nursing Home Oversight
Appendix II 

Comments From the Health Care Financing

Administration

Page 37 GAO/HEHS-00-6 Federal Nursing Home Oversight
Appendix II 

Comments From the Health Care Financing

Administration

Page 38 GAO/HEHS-00-6 Federal Nursing Home Oversight
Appendix II 

Comments From the Health Care Financing

Administration

Page 39 GAO/HEHS-00-6 Federal Nursing Home Oversight
Appendix II 

Comments From the Health Care Financing

Administration

Page 40 GAO/HEHS-00-6 Federal Nursing Home Oversight
Appendix II 

Comments From the Health Care Financing

Administration

Page 41 GAO/HEHS-00-6 Federal Nursing Home Oversight
Appendix II 

Comments From the Health Care Financing

Administration

Page 42 GAO/HEHS-00-6 Federal Nursing Home Oversight
Appendix II 

Comments From the Health Care Financing

Administration

Page 43 GAO/HEHS-00-6 Federal Nursing Home Oversight
Appendix II 

Comments From the Health Care Financing

Administration

Page 44 GAO/HEHS-00-6 Federal Nursing Home Oversight
Related GAO Products

Nursing Home Oversight: Industry Examples Do Not Demonstrate That

Regulatory Actions Were Unreasonable (GAO/HEHS-99-154R, Aug. 13, 1999).

Nursing Homes: HCFA Initiatives to Improve Care Are Under Way but Will

Require Continued Commitment (GAO/T-HEHS-99-155, June 30, 1999).

Nursing Homes: Proposal to Enhance Oversight of Poorly Performing

Homes Has Merit (GAO/HEHS-99-157, June 30, 1999).

Nursing Homes: Complaint Investigation Processes in Maryland

(GAO/T-HEHS-99-146, June 15, 1999).

Nursing Homes: Complaint Investigation Processes Often Inadequate to

Protect Residents (GAO/HEHS-99-80, Mar. 22, 1999).

Nursing Homes: Additional Steps Needed to Strengthen Enforcement of

Federal Quality Standards (GAO/HEHS-99-46, Mar. 18, 1999).

California Nursing Homes: Care Problems Persist Despite Federal and

State Oversight (GAO/HEHS-98-202, July 27, 1998).

(101779) Page 45 GAO/HEHS-00-6 Federal Nursing Home Oversight
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