United States General Accounting Office

GAO Report to the Ranking Minority Member,

Subcommittee on Post Office and Civil

Service, Committee on Governmental

Affairs, and the Honorable Ron Wyden,

U.S. Senate

September 1996 MEDICAID

Oversight of

Institutions for the

Mentally Retarded

Should Be

Strengthened

G O A

years

1921 - 1996

GAO/HEHS-96-131

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-265994 

September 6, 1996

The Honorable David Pryor

Ranking Minority Member

Subcommittee on Post Office and Civil Service

Committee on Governmental Affairs

United States Senate

The Honorable Ron Wyden

United States Senate

Persons with mental retardation or other developmental disabilities who

live in large public institutions are often vulnerable to abuse and neglect.

Such individuals’ mental status can affect their ability to communicate

concerns, and many lack family members to advocate on their behalf. As

of 1994, more than 62,000 developmentally disabled people lived in 434

large public institutions certified to participate in Medicaid as intermediate

care facilities for the mentally retarded (ICF/MR). These facilities received

more than $5.3 billion in Medicaid funds in 1994.1

Advocacy organizations, the Department of Justice, and others have

identified continuing problems with quality of care and protection of

residents’ rights in some large public institutions for people with

developmental disabilities. Justice investigations have identified serious

injuries and deaths resulting from physical abuse of residents, inadequate

supervision, and failure to evaluate and treat behavioral disorders. Since

1990, Justice investigations have identified dangerous conditions in 17

large public institutions in 10 states, all of which were certified to

participate in Medicaid.

Because ICFs/MR are financed mostly with Medicaid funds, the states and

the Health Care Financing Administration (HCFA) have primary oversight

responsibility for quality of care in these institutions. State agencies

conduct annual inspections, called surveys, to assess the quality of care

provided and to certify that the institutions continue to meet federal

standards. HCFA develops quality standards and monitors state survey

efforts to ensure that residents of certified institutions receive adequate

protection and care.

1

Although Medicaid also pays for ICF/MR care in small public facilities and private institutions, the

majority of Medicaid funding to support individuals in ICFs/MR goes to large public facilities with at least

16 beds.

Page 1 GAO/HEHS-96-131 Oversight of ICFs/MR
B-265994 

Because of your concern that developmentally disabled individuals are at

risk of mistreatment in large public ICFs/MR, you asked that we examine the

role of HCFA, state survey agencies, and Justice in overseeing quality of

care in these public institutions. This report discusses (1) deficient care

practices occurring in large ICFs/MR, (2) whether state survey agencies

identify all serious deficiencies in these institutions, and (3) weaknesses in

HCFA and state oversight of quality of care.

To obtain this information, we interviewed HCFA officials, provider

representatives, advocates, researchers, and other experts in the field and

reviewed the relevant literature. We analyzed HCFA data on deficiencies in

large public ICFs/MR and reviewed a sample of state ICF/MR survey reports.

We also interviewed Justice officials and reviewed Justice Department

investigation reports and other documentation. We conducted our work

between May 1995 and July 1996 in accordance with generally accepted

government auditing standards. A more detailed description of our scope

and methodology appears in appendix I.

Results in Brief Despite federal standards, HCFA and state agency oversight, and continuing

Justice Department investigations, serious quality-of-care deficiencies

continue to occur in some large public ICFs/MR. Insufficient staffing, lack of

active treatment needed to enhance independence and prevent loss of

functional ability, and deficient medical and psychiatric care are among

those deficiencies that have been frequently cited. In a few instances,

these practices have led to serious harm to residents, including injury,

illness, physical degeneration, and death.

States, which are the key players in ensuring that these institutions meet

federal standards, do not always identify all serious deficiencies nor use

sufficient enforcement actions to prevent the recurrence of deficient care.

Direct federal surveys conducted by HCFA and Justice Department

investigations have identified more numerous and more serious

deficiencies in public institutions than have state surveys. Furthermore,

even when serious deficiencies have been identified, state agencies’

enforcement actions have not always been sufficient to ensure that these

problems did not recur. Some institutions have been cited repeatedly for

the same serious violations.

Although HCFA has recently taken steps to improve the process for

identifying serious deficiencies in these institutions and to more efficiently

use limited federal and state resources, several oversight weaknesses

Page 2 GAO/HEHS-96-131 Oversight of ICFs/MR
B-265994 

remain. Moreover, state surveys may lack independence because states

are responsible for surveying their own institutions. The effects of this

potential conflict of interest raise concern given the decline in direct

federal oversight of both the care in these facilities and the performance of

state survey agencies.

Background Most people with mental retardation, cerebral palsy, epilepsy, or other

developmental disabilities who reside in large public institutions have

many cognitive, physical, and functional impairments. Because their

impairments often limit their ability to communicate concerns and many

lack family members to advocate on their behalf, they are highly

vulnerable to abuse, neglect, or other forms of mistreatment.

As of 1994, more than 80 percent of residents in large public institutions

were diagnosed as either severely or profoundly retarded. More than half

of all residents cannot communicate verbally and require help with such

basic activities as eating, dressing, and using the toilet. In addition, nearly

half of all residents have behavioral disorders and require special staff

attention, and almost one-third require the attention of psychiatric

specialists.

The Congress established the ICF/MR program as an optional Medicaid

benefit in 1971 to respond to evidence of widespread neglect of the

developmentally disabled in state institutions, many of which provided

little more than custodial care. The program provides federal Medicaid

funds to states in exchange for their institutions’ meeting minimum federal

requirements for a safe environment, appropriate active treatment, and

qualified professional staff.

In 1994, more than 62,000 developmentally disabled individuals lived in

434 large public institutions certified as ICFs/MR for participation in

Medicaid.2

 States operated 392 of these institutions; county and city

governments operated 42. The average number of beds in each facility was

170, though facilities range in size from 16 beds to more than 1,000 beds.

These institutions provided services on a 24-hour basis as needed. Services

included medical and nursing services, physical and occupational therapy,

psychological services, recreational and social services, and speech and

audiology services.

2

Some of these ICFs/MR are collocated on a single campus and may be identified as a single institution

for other than Medicaid purposes.

Page 3 GAO/HEHS-96-131 Oversight of ICFs/MR
B-265994 

Compared with residents in years past, those in large public institutions

today are older and more medically fragile and have more complex

behavioral and psychiatric disorders. In recent years, states have reduced

the number of people living in these large public ICFs/MR by housing them

in smaller, mostly private ICFs/MR and other community residential settings.

Large public institutions generally are not accepting many new

admissions, and many states have been closing or downsizing their large

institutions.

HCFA and State Agency

Oversight

HCFA published final regulations for quality of care in ICFs/MR in 1974 and

revised them in 1988.3

 To be certified to participate in Medicaid, ICFs/MR

must meet eight conditions of participation (CoP) contained in federal

regulations. The regulations are designed to protect the health and safety

of residents and ensure that they are receiving active treatment for their

disability and not merely custodial care.4 Each CoP encompasses a broad

range of discrete standards that HCFA determined were essential to a

well-run facility. The CoPs cover most areas of facility operation, including

administration, minimum staffing requirements, provision of active

treatment services, health care services, and physical plant requirements.

(See app. II for a more detailed description of the ICF/MR CoPs.) The eight

CoPs comprise 378 specific standards and elements.

HCFA requires that states conduct annual on-site inspections of ICFs/MR to

assess the quality of care provided and to certify that they continue to

meet federal standards for Medicaid participation. The state health

department usually serves as the survey agency. These agencies may also

conduct complaint surveys at any time during the year in response to

specific allegations of unsafe conditions or deficient care.

If the surveyors identify deficiencies, the institution must submit a plan of

correction to the survey agency and correct—or show substantial progress

toward correcting—any deficiency within a specified time period. For

serious deficiencies, those cited as violating the CoPs, HCFA requires that the

institution be terminated from Medicaid participation within 90 days

unless corrections are made and verified by the survey agency during a

3

The current regulations were based in part on standards for institutional care for the developmentally

disabled developed by the Accreditation Council on Services for Persons With Developmental

Disabilities in the early 1980s.

4

Medicaid regulations define active treatment as training, treatment, and health and related services

that are directed toward (1) the individual’s acquiring behaviors necessary for functioning with as

much independence as possible and (2) preventing loss of current function.

Page 4 GAO/HEHS-96-131 Oversight of ICFs/MR
B-265994 

follow-up visit.5 If a facility meets all eight CoPs but has deficiencies in one

or more of the standards or elements, it may have up to 12 months to

achieve compliance as long as the deficiency does not immediately

jeopardize residents’ health and safety.

HCFA’s 10 regional offices oversee state implementation of Medicaid ICF/MR

regulations by monitoring state efforts to ensure that ICFs/MR comply with

the regulations. HCFA regional office staff directly survey some

ICFs/MR—primarily to monitor the performance of state survey agencies. In

addition, regional office staff provide training, support, and consultation to

state agency surveyors.

Department of Justice

Oversight

The Department of Justice also has a role in overseeing public institutions

for people with developmental disabilities. The Civil Rights of

Institutionalized Persons Act (CRIPA) authorizes Justice to investigate

allegations of unsafe conditions and deficient care and to file suit to

protect the civil rights of individuals living in institutions operated by or

on behalf of state or local governments.6

 Justice Department investigations

are conducted on site by Justice attorneys and expert consultants who

interview facility staff and residents, review records, and inspect the

physical environment.

The Justice Department seeks to determine whether a deviation from

current standards of practice exists and, if so, whether the deviation

violates an individual’s civil rights. Unlike HCFA, Justice has no written

standards or guidelines for its investigations. Justice Department officials

told us that the standards they apply are generally accepted professional

practice standards as defined in current professional literature and applied

by the experts they retain to inspect these institutions.

Since the enactment of CRIPA in 1980, Justice has been involved in

investigations and enforcement actions in 38 cases involving large public

institutions for the developmentally disabled in 20 states and Puerto Rico.

As of July 1996, 13 of these investigations remained ongoing, 17 had been

closed or resolved as a result of corrections being made, 7 continued to be

monitored, and 1 litigated case was on appeal.

5

In addition, HCFA requires that a facility be terminated from Medicaid participation within 23 days for

any deficiency judged to immediately jeopardize residents’ health and safety.

6

These rights include the right to shelter, clothing, and medical care; the right to be free from harm; the

right to freedom from undue restraint; and the right to minimally adequate treatment.

Page 5 GAO/HEHS-96-131 Oversight of ICFs/MR
B-265994 

Deficient Care

Practices Continue to

Occur in Large Public

ICFs/MR

State Medicaid surveys and Justice Department investigations continue to

identify serious deficient care practices in large public ICFs/MR. A few of

these practices have resulted in serious harm to residents, including

injury, illness, physical degeneration, and death.

Large Public ICFs/MR

Violate Medicaid CoPs

As of August 1995, 28 of the 434 large public institutions were out of

compliance with at least one CoP at the time of their most recent annual

state survey. On the last four annual surveys, 122 of these institutions had

at least one CoP violation. (See table 1.) These serious violations of

Medicaid regulations commonly included inadequate staffing to protect

individuals from harm, failure to provide residents with treatment needed

to prevent degeneration, and insufficient protection of residents’ rights.

Table 1: CoP Violations in Large Public

Institutions Annual surveys

Condition of participation Last four Most recent

Complaint

surveys 1991-94a

Governing body and

management 53 10 5

Client protections 35 6 22

Facility staffing 53 6 11

Active treatment services 115 18 6

Client behavior/facility

practices 10 1 3

Health care services 8 0 1

Physical environment 3 0 0

Dietetic services 5 1 0

 Total CoP violations in

facilitiesb 282 42 48

aIn response to specific complaints, state survey agencies may conduct full or partial surveys in

ICFs/MR in addition to the required annual survey.

bSome institutions were cited for CoP violations more than once during the 4-year period.

Sources: Annual survey data based on our analysis of HCFA’s Online Survey, Certification and

Reporting System database containing the results of the most recent and three prior annual

surveys of each ICF/MR. These were conducted between December 1990 and May 1995.

Complaint survey data for 1991 to 1994 provided by HCFA, Health Standards and Quality Bureau.

Lack of adequate active treatment was the most common CoP violation

cited in large public ICFs/MR. Serious active treatment deficiencies were

cited 115 times in 84 institutions on the past four annual surveys.7

7

Some institutions were cited for CoP violations more than once during the 4-year period.

Page 6 GAO/HEHS-96-131 Oversight of ICFs/MR
B-265994 

Eighteen institutions were cited for this CoP deficiency on their most

recent annual survey. Serious active treatment deficiencies cited on the

survey reports included, for example, staff’s failure to prevent dangerous

aggressive behavior, failure to ensure that a resident with a seizure

disorder and a history of injuries wore prescribed protective equipment,

and failure to implement recommended therapy and treatment to maintain

a resident’s ability to function and communicate.

State surveyors also frequently found other CoP violations. They found, for

example, residents of one state institution who had suffered severe

hypothermia, pneumonia, and other serious illnesses and injuries as a

consequence of physical plant deterioration, inadequate training and

deployment of professional staff, failure to provide needed medical

treatment, drug administration errors, and insufficient supervision of

residents. Surveyors determined that the state had failed to provide

sufficient management, organization, and support to meet the health care

needs of residents and cited the facility for violating the governing body

and management CoP.

Other CoP violations found during this period include serious staffing

deficiencies and client protection violations. Surveyors of one state

institution reported deficiencies such as excessive turnover, insufficient

staff deployment, frequent caseload changes, and lack of staff training. In

this institution, surveyors also found residents vulnerable to abuse and

mistreatment by staff and staff who failed to report allegations of

mistreatment, abuse, and neglect in a timely manner. Other staff who were

known to abuse residents in the past continued to work with residents and

did not receive required human rights training.

State agencies also conduct complaint surveys in large public ICFs/MR in

response to alleged deficiencies reported by employees, advocates, family

members, providers, or others. State agencies’ complaint surveys found 48

serious CoP violations from 1991 through 1994. The most frequently cited

CoP violations were client protections, cited 22 times, and facility staffing,

cited 11 times. (See table 1.)

State survey agencies generally certify that facilities have sufficiently

improved to come back into compliance with federal CoPs. When survey

agencies find noncompliance with CoPs, they may revisit the facility several

times before certifying that a violation has been corrected. On average, it

takes about 60 days for this to occur.

Page 7 GAO/HEHS-96-131 Oversight of ICFs/MR
B-265994 

Deficient Care Can Result

in Civil Rights Violations

Since 1990, the Justice Department has found seriously deficient care that

violated residents’ civil rights in 17 large public institutions for the

mentally retarded or developmentally disabled in 10 states. Its

investigations have identified instances of residents’ dying, suffering

serious injury, or having been subjected to irreversible physical

degeneration from abuse by staff and other residents, deficient medical

and psychiatric care, inadequate supervision, and failure to evaluate and

treat serious behavioral disorders.

Justice found, for example, that a resident died of internal injuries in 1995

after an alleged beating by a staff member in one state institution that had

a pattern of unexplained physical injuries to residents. In addition, the

Department found that in the same facility a few years earlier, a

moderately retarded resident suffered massive brain damage and lost the

ability to walk and talk due to staff failure to provide emergency care in

response to a life-threatening seizure. In another state institution, Justice

found facility incident reports from 1992 and 1993 documenting that some

residents were covered with ants and one resident was found with an

infestation of maggots and bloody drainage from her ear. In another

facility, Justice found that a resident was strangled to death in an

incorrectly applied restraint in 1989.

We reviewed Justice’s findings letters issued since 1990 for 15 institutions.

The most common serious problems identified were deficient medical and

psychiatric care practices, such as inadequate diagnosis and treatment of

illness; inappropriate use of psychotropic medications; excessive or

inappropriate use of restraints; inadequate staffing and supervision of

residents; inadequate or insufficient training programs for residents and

staff; inadequate therapy services; deficient medical record keeping; and

inadequate feeding practices.

States rarely contest Justice’s findings in court. Only two CRIPA cases

involving large public ICFs/MR have been litigated. Department officials told

us that the prospect of litigation usually prompts states to negotiate with

Justice and to initiate corrective actions. The Department resolved 11

CRIPA cases without having to take legal action beyond issuing the findings

letter because the states corrected the deficiencies. In another 12 cases

involving large public ICFs/MR, states agreed to enter into a consent decree

with the Department.8

 About half of these latter cases required a civil

contempt motion or other legal action to enforce the terms of the decree.

8

Consent decrees are judicially sanctioned agreements between parties in dispute. In these cases, they

generally specify the actions that the state agrees to take, the time frames for implementing them, and

the type and form of follow-up monitoring to take place.

Page 8 GAO/HEHS-96-131 Oversight of ICFs/MR
B-265994 

State Survey Agencies

Have Not Identified

All Serious

Deficiencies

State survey agencies may be certifying some large public ICFs/MR that do

not meet federal standards. Although state survey agencies have the

primary responsibility for monitoring the care in ICFs/MR on an ongoing

basis, HCFA surveyors and Justice Department investigators have identified

more deficiencies—and more serious deficiencies—than have state survey

agencies.

Federal monitoring surveys conducted by HCFA regional office staff

identified more numerous or more serious problems in some large public

ICFs/MR than did state agency surveys of the same institutions. According to

HCFA, federal surveyors noted significant differences between their

findings and those of the state survey agencies in 12 percent of federal

monitoring surveys conducted in large public ICFs/MR between 1991 and

1994. HCFA surveyors determine that significant differences exist when, in

their judgment, they have identified serious violations that existed at the

time of the state agency survey that the state surveyors did not identify.

When conducting monitoring surveys, HCFA regional office staff use the

same standards and guidelines as state agency surveyors. These federal

surveys are designed to assess the adequacy of state certification efforts in

ensuring that ICFs/MR meet federal standards, and, for public facilities, the

effectiveness of delegating to states the responsibility for surveying and

monitoring the care provided in their own institutions.

Justice also identified more deficiencies—and more serious

deficiencies—in some large public ICFs/MR than did state survey agencies.

Although some deficient care practices found by Justice were also noted

on state agency surveys of the same institutions, others were not noted by

state surveyors. For example, Justice found seriously deficient care that

violated residents’ civil rights in 11 state institutions it investigated

between 1991 and 1995. Of these 11, state agency surveys cited only 2 for a

CoP deficiency even though the state surveys were conducted within a year

of Justice’s inspection. The types of serious deficiencies often cited in

Justice reports but not in state agency surveys of the same institution

included deficiencies in medical practices and psychiatric care,

inappropriate use of psychotropic medications, and excessive use of

restraints.

Page 9 GAO/HEHS-96-131 Oversight of ICFs/MR
B-265994 

Several Factors

Weaken HCFA and

State Oversight

Efforts

Several factors have contributed to the inability or failure of HCFA and state

survey agencies to identify and prevent recurring quality-of-care

deficiencies in some large public ICFs/MR. First, states have not identified

all important quality-of-care concerns because of the limited approach and

resources of Medicaid surveys. Second, enforcement efforts have not been

sufficient to ensure that deficient care practices do not recur. Third,

because states are responsible for both delivering and monitoring the care

provided in most public institutions, state agency surveys of these

institutions may lack the necessary independence to avoid conflicts of

interest. Finally, a decline in direct HCFA oversight has reduced HCFA’s

ability to monitor problems and help correct them. Although HCFA has

recently begun to implement several initiatives to address some of these

weaknesses, others remain unresolved.

Medicaid Surveys’

Approach and Resources

May Hinder Problem

Identification

Differences between the approach and resources of Medicaid surveys and

Justice Department investigations may explain why Medicaid surveys have

not always identified the serious deficiencies that Justice investigations

have. State surveyors examine a broad range of facility practices,

environmental conditions, and client outcomes to ensure minimum

compliance with HCFA standards. Surveys are generally limited to a review

of the current care provided to a sample of residents in an institution, are

conducted annually, and may last 1 to 2 weeks at a large public institution.

In contrast, Justice Department investigations are intended to determine

whether civil rights violations exist. They generally focus on deficient care

practices about which Justice has received specific allegations, often

related to medical and psychiatric care. Such investigations may include a

review of care provided to all individuals in a facility, extend over several

months, and include an examination of client and facility records covering

several years to assess patterns of professional practice.

The professional qualifications and expertise of individuals conducting

state agency surveys and Justice’s investigations also differ. State

surveyors are usually nurses, social workers, or generalists in a health or

health-related field. Not all have expertise in developmental disabilities.

Although HCFA recommends that at least one member of a state survey

team be a qualified mental retardation professional (QMRP), 17 states had

no QMRPs on their survey agency staffs as of March 1996.9

 Justice’s

9

Medicaid regulations define a QMRP as an individual who (1) has at least 1 year of experience

working directly with people with mental retardation or other developmental disabilities and (2) is a

physician, registered nurse, or an individual with a bachelor’s degree in a health or human

services-related discipline.

Page 10 GAO/HEHS-96-131 Oversight of ICFs/MR
B-265994 

investigators are usually physicians, psychiatrists, therapists, and others

with special expertise in working with the developmentally disabled.

According to HCFA and Justice officials, Justice Department investigators

generally can better challenge the judgment of professionals in the

institution regarding the care provided to individual residents than can

state surveyors.

HCFA officials acknowledged that the differences between Medicaid

surveys and Justice investigations could explain some of the differences

between their findings. They told us, however, that they have begun to

implement several changes to the survey process to increase the likelihood

that state surveys will identify all serious deficiencies. These include new

instructions to surveyors for assessing the seriousness of deficiencies,

increased training for surveyors and providers, and implementation of a

new survey protocol intended to focus more attention on critical

quality-of-care elements and client outcomes.

The new survey protocol reduces the number of items that must be

assessed each year and places greatest emphasis on client protections,

active treatment, client behavior and facility practices, and health care

services. The new protocol gives surveyors latitude, however, to expand

the scope of a facility’s survey if they find specific problems. HCFA’s pilot

test of the new protocol showed that although surveyors identified fewer

deficiencies overall than with the standard protocol, they issued more

citations for the most serious CoP violations. HCFA is conducting training for

state surveyors and providers on this new protocol and plans to monitor

certain aspects of its implementation.

Medicaid Enforcement

Efforts Are Insufficient

Even when state survey agencies identify deficiencies in large public

ICFs/MR, state enforcement efforts do not always ensure that facilities’

corrections are sufficient to prevent the recurrence of the same serious

deficiencies. Although state survey agencies almost always certify that

serious deficiencies have been corrected, they subsequently cite many

institutions for the same violations. For example, between December 1990

and May 1995, state survey agencies cited 33 large public institutions for

violating the same CoP on at least one subsequent survey within the next 3

years. Moreover, 25 were cited for violating the same CoP on one or more

consecutive surveys.

HCFA officials told us that the sanctions available to the states under

Medicaid have not always been effective in preventing recurring violations

Page 11 GAO/HEHS-96-131 Oversight of ICFs/MR
B-265994 

and are rarely used against large public ICFs/MR. Only two possible

sanctions are available under the regulations for CoP violations:

suspension—that is, denial of Medicaid reimbursement for new

admissions—or termination from the program.10 Medicaid regulations do

not contain a penalty for repeat violations that occur after corrective

action.

Denying reimbursement to large public institutions for new admissions is

not a very relevant sanction because many of these institutions are

downsizing or closing and are not generally accepting many new

admissions. Furthermore, terminating a large institution from the Medicaid

program is counterproductive because denying federal funds may further

compromise the care of those in the institution. No large public

institutions were terminated from Medicaid for reasons of deficient care

and not reinstated from 1990 through 1994, the period for which data were

readily available.

HCFA officials told us that they were particularly concerned about

institutions where surveyors found repeat violations of the same CoPs.

Although the officials have not explored the usefulness of other sanctions

or approaches to enforcement for large public ICFs/MR, they told us that the

newly implemented survey procedure was intended to better identify the

underlying causes of facility deficiencies, possibly reducing repeat

violations.

State Oversight of ICFs/MR

Lacks Independence

A potential conflict of interest exists because states both operate large

public ICFs/MR and certify that these institutions meet federal standards for

Medicaid participation. States can lose substantial funds if care is found to

be seriously deficient and their institutions lose Medicaid certification.

The state survey agency, usually a part of a state’s department of health,

conducts surveys to determine whether ICFs/MR are in compliance with

quality standards. It reports and makes its recommendation to the state

Medicaid agency, which makes the final determination of provider

certification. Medicaid rules do not require any independent federal or

other outside review for a state’s ICF/MR to remain certified.

HCFA officials, provider representatives, and advocates have expressed

concern that this lack of independence compromises the integrity of the

survey process. HCFA regional officials told us of instances in which state

10Termination includes not renewing an annual provider agreement or discontinuing an agreement

before its expiration date.

Page 12 GAO/HEHS-96-131 Oversight of ICFs/MR
B-265994 

surveyors were pressured by officials from their own and other state

agencies to overlook problems or downplay the seriousness of deficient

care in large state institutions. Of concern to the state officials in these

instances was the imposition of sanctions that would have cost the state

federal Medicaid funds. HCFA regional office staff may mitigate the effects

of potential conflicts of interest by training surveyors, accompanying state

surveyors during their inspections, or directly surveying the institutions

themselves.

Federal Oversight Has

Declined Dramatically

Direct federal oversight has declined dramatically in recent years despite

its importance for independent monitoring of the care provided in large

public institutions and the performance of state survey agencies. HCFA’s

primary oversight mechanism has been the federal monitoring survey,

which assesses state agency determinations of provider compliance. As

shown in figure 1, the number of federal monitoring surveys conducted in

large public ICFs/MR has declined from 31 in 1990 to only 5 in 1995.

Figure 1: Federal Monitoring Surveys

in Large Public ICFs/MR, 1990-95 Number of Federal Surveys

0

5

10

15

20

25

30

35

1990 1991 1992 1993 1994 1995

31

25

15

13 14

5

Source: HCFA’s Online Surveys Certification and Reporting System.

Page 13 GAO/HEHS-96-131 Oversight of ICFs/MR
B-265994 

HCFA began surveying large public ICFs/MR in response to congressional

hearings in the mid-1980s that detailed many instances of poor quality and

abusive conditions in Medicaid-certified institutions for the

developmentally disabled. In 1985, HCFA hired 45 employees, about half of

whom had special expertise in working with persons with developmental

disabilities, to conduct direct federal surveys. Officials from HCFA and

Justice, providers, and experts told us that this effort helped improve the

quality of care in many institutions and stimulate improvements to the

state survey process.

The recent decline in federal oversight, however, has increased the

potential for abusive and dangerous conditions in these institutions. HCFA

officials told us that regional office staff have neither conducted sufficient

reviews nor acted on facility deficiencies in recent years because of

competing priorities and resource constraints. According to these officials,

resources previously used for federal surveys of ICFs/MR have been diverted

to allow compliance with requirements for increased federal monitoring

surveys of nursing facilities and for other reasons.11 Regional office

officials report that these resource constraints have limited their current

review efforts to mostly private ICFs/MR of six beds or less.

HCFA regional office staff are now less able to identify deficiencies or areas

of weakness and to provide targeted training or other support to state

surveyors. State survey agencies have recently reported a decline in the

number of serious CoP violations in large public ICFs/MR. Yet without direct

monitoring, HCFA cannot determine whether this decline is due to real

improvements in conditions or to decreased vigilance or competence on

the part of state agency surveyors.

Although HCFA officials have expressed concern about the current level of

direct federal oversight of state survey agencies and large public ICFs/MR,

they have no plans to increase resources for these efforts. Instead, HCFA

officials told us they are examining ways to better target their limited

oversight resources. While they are planning to improve their use of

existing data for monitoring purposes, they also plan to develop a system

of quality indicators to provide information on facility conditions on an

ongoing basis. These officials told us that they expect this system of

quality indicators to be operational in about 4 years.

11The Omnibus Budget Reconciliation Act of 1987 required HCFA to conduct federal surveys in

5 percent of nursing facilities annually.

Page 14 GAO/HEHS-96-131 Oversight of ICFs/MR
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Conclusions The ICF/MR program—intended to provide a safe environment with

appropriate treatment by qualified professional staff—serves a particularly

vulnerable population of individuals with mental retardation and other

developmental disabilities in large public ICFs/MR. Most of these institutions

comply with Medicaid quality-of-care standards. Serious deficiencies

continue to occur, however, in some institutions despite federal standards,

oversight by HCFA and state agencies, and continuing investigations by the

Department of Justice.

States are the key players in ensuring that ICFs/MR meet federal standards.

Although their oversight includes annual on-site visits by state survey

agencies to all large public ICFs/MR, these agencies have not identified all

instances of seriously deficient care. HCFA reviews and Justice Department

investigations have identified some instances of deficient care, including

medical care, that were not reported in state surveys. Furthermore,

serious deficiencies continue to recur in some of these institutions.

Effective federal oversight of large public ICFs/MR and the state survey

agencies that inspect them requires that the inspection process be well

defined and include essential elements of health care, active treatment,

and safety; that enforcement efforts prevent the recurrence of problems;

that surveyors be independent; and that HCFA officials have sufficient

information to monitor the performance of institutions and state survey

agencies. The approach and resources of Medicaid surveys, the lack of

effective enforcement mechanisms, the potential conflicts of interest

occurring when states are charged with surveying the facilities they

operate, and the decline in direct federal monitoring efforts have all

weakened oversight of large public ICFs/MR and state survey agencies.

HCFA has begun to implement changes to the structure and process of state

agency surveys of ICFs/MR. The new approach to surveys may result in

identifying more serious deficiencies in large public institutions. This

change, and others that HCFA is implementing to more efficiently use

limited federal and state resources, may also reduce the impact of some of

the other weaknesses we have identified. Nonetheless, the lack of

independence in state surveys coupled with little direct federal monitoring

remains a particular concern. HCFA needs to strengthen the oversight of its

ICF/MR program and collect sufficient information in a timely manner to

assess the effectiveness of the new approach in identifying and ensuring

the correction of deficient care.

Page 15 GAO/HEHS-96-131 Oversight of ICFs/MR
B-265994 

Recommendations To improve HCFA’s oversight of large public ICFs/MR, we recommend that

the Administrator of HCFA

• assess the effectiveness of its new survey approach in ensuring that

serious deficiencies at large public ICFs/MR are identified and corrected;

• take steps, such as enhanced monitoring of state survey agencies or direct

inspection of institutions, to address the potential conflict of interest that

occurs when states are both the operators and inspectors of ICFs/MR; and

• determine whether the application of a wider range of enforcement

mechanisms would more effectively correct serious deficiencies and

prevent their recurrence.

Agency Comments HCFA and the Justice Department reviewed a draft of this report and

provided comments, which are reproduced in appendixes III and IV. Both

agencies generally agreed with the information provided in this report. In

their comments, HCFA and Justice recognized the need for improvements in

government oversight of the ICF/MR program to ensure adequate services

and safe living conditions for residents of large public institutions. HCFA

also provided technical comments, which we have incorporated as

appropriate.

HCFA is implementing a new survey approach and in its comments agreed

with our recommendation that it should assess the effectiveness of this

approach. To monitor the implementation of its new approach, federal

surveyors will accompany state surveyors on a sample of facility surveys,

including a minimum of one large public institution in each state. HCFA

plans to analyze the results of these monitoring surveys to determine,

among other things, whether the new protocol, as designed, is applicable

to large public institutions. These are steps in the right direction. Given the

serious problems we have identified in ICFs/MR and in state survey agency

performance, we believe HCFA must move quickly to determine whether

the new survey process improves the identification of serious deficiencies

at large public institutions and make appropriate adjustments if it does

not.

In its comments, HCFA did not propose specific measures to address our

recommendation on the potential conflict of interest that occurs when

states are both operators and inspectors of ICFs/MR. HCFA stated that

resource constraints have resulted in a significant reduction of on-site

federal oversight of state survey agencies and of care in large public

ICFs/MR. We believe that HCFA’s plan to increase its presence in the field as

Page 16 GAO/HEHS-96-131 Oversight of ICFs/MR
B-265994 

part of monitoring implementation of the new survey protocol may reduce

the impact of potential conflicts of interest at some institutions. However,

HCFA must find a more lasting and comprehensive solution to strengthen

the independence of the survey process by program improvements or

reallocation of existing resources to enhanced monitoring or direct

inspection of institutions.

HCFA agreed with our recommendation that it determine whether a wider

range of enforcement actions would bring about more effective correction

of serious deficiencies and prevent their recurrence. HCFA plans to assess

whether a wider range of mechanisms would be appropriate for the ICF/MR

program on the basis of an evaluation of the impact of alternative

enforcement mechanisms for nursing homes due to the Congress in 1997.

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

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

date of issue. We will then send copies to the Secretary of the Department

of Health and Human Services; the Administrator, Health Care Financing

Administration; the U.S. Attorney General; and other interested parties.

Copies of this report will be made available to others upon request.

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

at (202) 512-7114 or Bruce D. Layton, Assistant Director, at (202) 512-6837.

Other GAO contacts and contributors to this report are listed in appendix V.

William J. Scanlon

Director, Health Financing

 and Systems Issues

Page 17 GAO/HEHS-96-131 Oversight of ICFs/MR
Contents

Letter 1

Appendix I 

Scope and

Methodology

20

Appendix II 

Conditions of

Participation

21

Appendix III 

Comments From the

Health Care Financing

Administration

23

Appendix IV 

Comments From the

Department of Justice

27

Appendix V 

GAO Contacts and

Staff

Acknowledgments

29

Related GAO Products 32

Table Table 1: CoP Violations in Large Public Institutions 6

Figure Figure 1: Federal Monitoring Surveys in Large Public ICFs/MR,

1990-95

13

Page 18 GAO/HEHS-96-131 Oversight of ICFs/MR
Contents

Abbreviations

CoP condition of participation

CRIPA Civil Rights of Institutionalized Persons Act

HCFA Health Care Financing Administration

HHS Department of Health and Human Services

ICF/MR intermediate care facility for the mentally retarded

ICFs/MR intermediate care facility for the mentally retarded

QMRP qualified mental retardation professional

Page 19 GAO/HEHS-96-131 Oversight of ICFs/MR
Appendix I 

Scope and Methodology

To address our study objectives, we (1) conducted a review of the

literature; (2) interviewed federal agency officials, provider and advocacy

group representatives, and national experts on mental retardation and

developmental disabilities; (3) analyzed national data from inspection

surveys of intermediate care facilities for the mentally retarded (ICF/MR);

and (4) collected and reviewed HCFA, state agency, and Justice Department

reports on several state institutions.

We interviewed officials or representatives from the Health Standards and

Quality Bureau of HCFA; HCFA regional offices; the Administration on

Developmental Disabilities; the President’s Committee on Mental

Retardation in HHS; the Civil Rights Division in the Justice Department; the

National Association of State Directors of Developmental Disabilities

Services, Inc.; the National Association of Developmental Disabilities

Councils; the National Association of Protection and Advocacy Systems;

the Accreditation Council on Services for People With Disabilities; and the

Association of Public Developmental Disabilities Administrators.

Data reviewed at HCFA consisted of automated data and reports submitted

by states and regional offices. We analyzed national data from HCFA’s

Online Survey, Certification and Reporting System for state and federal

ICF/MR surveys conducted between December 1990 and May 1995.

Information from surveys conducted before December 1990 was not

available at the time of our review. We limited our analysis of HCFA and

state data on deficiencies to information about institutions participating in

Medicaid as of August 1995. We also reviewed state agency survey reports

for 12 large public ICFs/MR, 5 of which were also the subject of Justice

investigations between 1991 and 1995.

We reviewed Justice’s records since 1990, including findings letters,

consent decrees, court filings and actions, and other supporting

documentation and analyses related to enforcement of the Civil Rights of

Institutionalized Persons Act.

We conducted our work between May 1995 and July 1996 in accordance

with generally accepted government auditing standards.

Page 20 GAO/HEHS-96-131 Oversight of ICFs/MR
Appendix II 

Conditions of Participation

Following are the eight conditions of participation for intermediate care

facilities for the mentally retarded (ICF/MR), as prescribed by the Secretary

and contained in federal regulations.

Governing Body and

Management

The standards that must be addressed under this condition include the

following: the facility must (1) have a governing body that exercises

general control over operations; (2) be in compliance with federal, state,

and local laws pertaining to health, safety, and sanitation; (3) develop and

maintain a comprehensive record keeping system that safeguards client

confidentiality; (4) enter into written agreements with outside resources,

as necessary, to provide needed services to residents; and (5) be licensed

under applicable state and local laws.

Client Protections To comply with this condition, the facility must (1) undertake certain

actions and provide mechanisms to protect the rights of residents;

(2) adequately account for and safeguard residents’ funds;

(3) communicate with and promote the participation of residents’ parents

or legal guardians in treatment plans and decisions; and (4) have and

implement policies and procedures that prohibit mistreatment, neglect, or

abuse of residents.

Facility Staffing Standards for facility staffing include requirements that (1) each

individual’s active treatment program be coordinated, integrated, and

monitored by a qualified mental retardation professional; (2) sufficient

qualified professional staff be available to implement and monitor

individual treatment programs; (3) the facility not rely upon residents or

volunteers to provide direct care services; (4) minimum direct care

staffing ratios be adhered to; and (5) adequate initial and continuing

training be provided to staff.

Active Treatment Regulations specify that each resident receive a continuous active

treatment program that includes training, treatment, and health and

related services for the resident to function with as much

self-determination and independence as possible. Standards under this

condition include (1) procedures for admission, transfer, and discharge;

(2) requirements that each resident receive appropriate health and

developmental assessments and have an individual program plan

developed by an interdisciplinary team; (3) requirements for program plan

Page 21 GAO/HEHS-96-131 Oversight of ICFs/MR
Appendix II 

Conditions of Participation

implementation; (4) adequate documentation of resident performance in

meeting program plan objectives; and (5) proper monitoring and revision

of individual program plans by qualified professional staff.

Client Behavior and

Facility Practices

Standards under this condition specify that the facility (1) develop and

implement written policies and procedures on the interaction between

staff and residents and (2) develop and implement policies and procedures

for managing inappropriate resident behavior, including those on the use

of restrictive environments, physical restraints, and drugs to control

behavior.

Health Care Services To meet the requirements of this condition, the facility must (1) provide

preventive and general medical care and ensure adequate physician

availability; (2) ensure physician participation in developing and updating

each individual’s program plan; (3) provide adequate licensed nursing staff

to meet the needs of residents; (4) provide or make arrangement for

comprehensive dental care services; (5) ensure that a pharmacist regularly

reviews each resident’s drug regimen; (6) ensure proper administration,

record keeping, storage, and labeling of drugs; and (7) ensure that

laboratory services meet federal requirements.

Physical Environment Requirements under this condition include those governing (1) residents’

living environment, (2) size and furnishing of resident bedrooms,

(3) storage space for resident belongings, (4) bathrooms, (5) heating and

ventilation systems, (6) floors, (7) space and equipment, (8) emergency

plans and procedures, (9) evacuation drills, (10) fire protection, (11) paint,

and (12) infection control.

Dietetic Services Standards under this condition are designed to ensure that (1) each

resident receives a nourishing, well-balanced, and varied diet, modified as

necessary; (2) dietary services are overseen by appropriately qualified

staff; and (3) dining areas be appropriately staffed and equipped to meet

the developmental and assistance needs of residents.

Page 22 GAO/HEHS-96-131 Oversight of ICFs/MR
Appendix III 

Comments From the Health Care Financing

Administration

Page 23 GAO/HEHS-96-131 Oversight of ICFs/MR
Appendix III 

Comments From the Health Care Financing

Administration

Page 24 GAO/HEHS-96-131 Oversight of ICFs/MR
Appendix III 

Comments From the Health Care Financing

Administration

Page 25 GAO/HEHS-96-131 Oversight of ICFs/MR
Appendix III 

Comments From the Health Care Financing

Administration

Page 26 GAO/HEHS-96-131 Oversight of ICFs/MR
Appendix IV 

Comments From the Department of Justice

Page 27 GAO/HEHS-96-131 Oversight of ICFs/MR
Appendix IV 

Comments From the Department of Justice

Page 28 GAO/HEHS-96-131 Oversight of ICFs/MR
Appendix V 

GAO Contacts and Staff Acknowledgments

GAO Contacts Bruce D. Layton, Assistant Director, (202) 512-6837

Eric R. Anderson, Senior Evaluator, (202) 512-7129

Staff

Acknowledgments

In addition to those named above, the following team members made

important contributions to this report: James Musselwhite and Anita Roth,

evaluators; Paula Bonin, computer specialist; Karen Sloan,

communications analyst; George Bogart, attorney-advisor; and Leigh

Thurmond and Jamerson Pender, interns.

Page 29 GAO/HEHS-96-131 Oversight of ICFs/MR
Page 30 GAO/HEHS-96-131 Oversight of ICFs/MR
Page 31 GAO/HEHS-96-131 Oversight of ICFs/MR
Related GAO Products

Medicaid: Waiver Program for Developmentally Disabled Is Promising But

Poses Some Risks (GAO/HEHS-96-120, July 22, 1996).

Financial Management: Oversight of Small Facilities for the Mentally

Retarded and Developmentally Disabled (GAO/AIMD-94-152, Aug. 12, 1994).

Medicaid: Federal Oversight of Kansas Facility for the Retarded

Inadequate (GAO/HRD-89-85, Sept. 29, 1989).

(101342) Page 32 GAO/HEHS-96-131 Oversight of ICFs/MR
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