Long-Term Care: Federal Oversight of Growing Medicaid Home and Community-Based Waivers Should Be Strengthened
Published: 2003-06-20T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Home and community-based settings have become a growing part of states' Medicaid long-term care programs, serving as an alternative to care in institutional settings, such as nursing homes. To cover such services, however, states often obtain waivers from certain federal statutory requirements. GAO was asked to review (1) trends in states' use of Medicaid home and community-based service (HCBS) waivers, particularly for the elderly, (2) state quality assurance approaches, including available data on the quality of care provided to elderly individuals through waivers, and (3) the adequacy of federal oversight of state waivers. GAO is recommending that the Administrator of CMS take steps to (1) better ensure that state quality assurance efforts are adequate to protect the health and welfare of HCBS waiver beneficiaries, and (2) strengthen federal oversight of the growing HCBS waiver programs. Although CMS raised certain concerns about aspects of the report, such as the respective state and federal roles in quality assurance and the potential need for additional federal oversight resources, CMS generally concurred with the recommendations.
section_title: What GAO Found
paragraphs: From 1991 through 2001, Medicaid long-term care spending more than doubled to over $75 billion, while the proportion spent on institutional care declined. Over a similar time period, HCBS waivers grew from 5 percent to 19 percent of such expenditures--from $1.6 billion to $14.4 billion--and the number of waivers, participants, and average state per capita spending also grew significantly. Since 1992, the number of waivers increased by almost 70 percent to 263 in June 2002, and the number of beneficiaries, as of 1999, had nearly tripled to almost 700,000, of which 55 percent were elderly. In the absence of specific federal requirements for HCBS quality assurance systems, states provide limited information to the Centers for Medicare & Medicaid Services (CMS), the federal agency that administers the Medicaid program, on how they assure quality of care in their waiver programs for the elderly. States' waiver applications and annual reports for waivers for the elderly often contained little or no information on state mechanisms for assuring quality in waivers, thus limiting information available to CMS that should be considered before approving or renewing waivers. GAO's analysis of available CMS and state waiver oversight reports for waivers serving the elderly identified oversight weaknesses and quality of care problems. More than 70 percent of the waivers for the elderly that GAO reviewed documented one or more quality-of-care problems. The most common problems included failure to provide necessary services, weaknesses in plans of care, and inadequate case management. The full extent of such problems is unknown because many state waivers lacked a recent CMS review, as required, or the annual state waiver report lacked the relevant information. CMS has not developed detailed state guidance on appropriate quality assurance approaches as part of initial waiver approval. Although CMS oversight has identified some quality problems in waivers, CMS does not adequately monitor state waivers and the quality of beneficiary care. The 10 CMS regional offices are responsible for ongoing monitoring for HCBS waivers. However, CMS does not hold these offices accountable for completing periodic waiver reviews, nor does it hold states accountable for submitting annual reports on the status of waiver quality. Consequently, CMS is not fully complying with statutory and regulatory requirements when it renews waivers. As of June 2002, almost one-fifth of waivers in place for 3 years or more had either never been reviewed or were renewed without a review; for an additional 16 percent of waivers, reports detailing the review results were never finalized. Regional office personnel explained that limited staff resources and travel funds often impede the timing and scope of reviews. While regional office reviews include record reviews for a sample of waiver beneficiaries, they do not always include beneficiary interviews. The reviews also varied considerably in the number of beneficiary records reviewed and their method of determining the sample.

section_title: Letter
paragraphs: Over the last decade, states have increased their support for long-term  care services in individuals’ homes or in other community-based settings— such as adult day care, adult foster care homes, and assisted living  facilities—as an alternative to care in nursing homes and other  institutions. For many vulnerable elderly and nonelderly individuals with  physical, developmental, or cognitive disabilities, these alternative settings  and services are seen as preferable to institutional care. Most state funding  of long-term care is through Medicaid, the federal-state health care  program for certain low-income individuals. Medicaid home and  community-based services (HCBS) waivers, authorized under section  1915(c) of the Social Security Act, are the primary means by which states  provide noninstitutional long-term care. Waivers allow states to limit the  availability of services geographically, target specific populations or  conditions, control the number of individuals served, and cap overall  expenditures—actions not usually allowed under the Medicaid statute.  The Centers for Medicare & Medicaid Services (CMS)—the federal agency  that manages Medicaid—reviews and approves states’ requests for these  waivers and also is responsible for ensuring that states have necessary  safeguards to protect the health and welfare of individuals receiving  services through waiver programs.
Despite the growing use of HCBS waivers, concerns have been raised  about the quality of care provided through waivers serving both elderly  and nonelderly populations. Newspaper exposés and some state audit  reports have chronicled serious health and welfare concerns in waiver  programs across the country. Because of continued growth in the numbers  of people served through HCBS waiver programs and concerns about the  quality of care, you asked us to review (1) trends in states’ use of such  waivers, particularly for the elderly, (2) state quality assurance approaches  for waivers serving the elderly, including available data on the quality of  care provided to beneficiaries, and (3) the adequacy of CMS’s oversight of  state waiver programs for the elderly as well as those for other target  populations.
To identify trends in states’ use of waivers, we analyzed CMS and state  reports that contained data on waiver beneficiaries, expenditures, and  services. To identify those waivers that serve the elderly, we compiled a  list of HCBS waivers with “the aged” or “aged and disabled” as their target  populations. Throughout this report, we refer to this universe of waivers  as those “serving the elderly.” To assess state quality assurance activities  for waivers serving the elderly, we analyzed (1) data on quality assurance  approaches from state waiver applications and their most recent annual  reports to CMS, (2) the oversight findings reported by states in their  annual waiver reports, and (3) CMS regional office waiver reviews and  state audits of waivers completed from October 1998 through May 2002.  For a more in-depth perspective on states’ quality assurance approaches  for waivers serving the elderly, we conducted structured interviews with  state officials and staff in South Carolina, Texas, and Washington. We  selected these states because they operate some of the largest HCBS  waivers for the elderly that have been in effect for 5 years or longer. We  did not attempt to assess the effectiveness of their quality assurance  approaches. To determine the adequacy of CMS oversight of state waiver  programs for the elderly as well as those for other target populations, we  obtained relevant data from officials at CMS headquarters and conducted  structured interviews with all 10 CMS regional offices on their waiver  review activities and staffing as of June 2002. See appendix I for a detailed  discussion of our scope and methodology. We conducted our review from  November 2001 through June 2003 in accordance with generally accepted  government auditing standards.
subsections: section_title: Background
paragraphs: The jointly funded federal-state Medicaid program is the primary source of  financing for long-term care services. About one-third of the total   $228 billion in Medicaid spending in fiscal year 2001 was for long-term  care in both institutional and community-based settings. States administer  this program within broad federal rules and according to a state plan  approved by CMS, the federal agency that oversees and administers  Medicaid. Some services, such as nursing home care and home health  care, are mandatory services that must be covered in any state that  participates in Medicaid. Other services, such as personal care, are  optional, which a state may choose to include in its state Medicaid plan  but which then must be offered to all individuals statewide who meet its  Medicaid eligibility criteria. States may also apply to CMS for a section  1915(c) waiver to provide home and community-based services as an  alternative to institutional care in a hospital, nursing home, or  intermediate care facility for the mentally retarded (ICF/MR). If approved,  HCBS waivers allow states to limit the availability of services  geographically, to target services to specific populations or conditions, or  to limit the number of persons served, actions not generally allowed for  state plan services. States often operate multiple waivers serving different  population groups, such as the elderly, persons with mental retardation or  developmental disabilities, persons with physical disabilities, and children  with special care needs.
States determine the types of long-term care services they wish to offer  under an HCBS waiver. Waivers may offer a variety of skilled services to  only a few individuals with a particular condition, such as persons with  traumatic brain injury, or they may offer only a few unskilled services to a  large number of people, such as the aged or disabled. The wide variety of  services that may be available under waivers includes home modification,  such as installing a wheelchair ramp, transportation, chore services,  respite care, nursing services, personal care services, and caregiver  training for family members. CMS’s waiver application form for states  includes a list of home and community-based services with suggested  definitions. States are free to include as many or as few of these as they  wish, to include additional services, or to include different definitions of  services from those supplied with the form. See appendix II for a list of  services provided through the HCBS waivers serving the elderly and CMS’s  suggested definitions of these services.
To be eligible for waiver services, an individual must meet the state’s  criteria for needing the level of care provided in an institution, such as a  nursing home, and be able to receive care in the community at a cost  generally not exceeding the cost of institutional care. States are  responsible for determining the specific financial and functional eligibility  criteria used, conducting the necessary screening and assessment, and  arranging for services to be provided. Factors that states use in assessing  functional eligibility for nursing home care and for waiver services include  the individuals’ medical condition and their degree of physical or mental  impairment. Other factors that states generally consider, and which may  affect the states’ ability to provide care in the community at a cost not  exceeding that of institutional care or to adequately protect beneficiaries’  health and welfare, include the mix of services needed by the individual,  the availability of needed services, the cost of services, the need for home  modification, and the availability of family members or other caregivers.
In order to receive federal funds for waiver services, a state must submit  an application to the Secretary of Health and Human Services (HHS) that  identifies the target population, specifies the number of persons that will  be served, and lists the services to be included. In addition, states are  required to provide certain assurances that necessary safeguards have  been taken to assure financial accountability and to protect the health and  welfare of beneficiaries under the waiver. Federal regulations specify that  the state’s safeguards for the health and welfare of beneficiaries must  include (1) adequate standards for all providers of waiver services and   (2) assurance that any state licensure or certification requirements for  providers of waiver services are met. CMS requires that a state’s waiver  application include documentation regarding the standards applicable for  each service provider. If the only requirement for a particular provider is  licensure or certification, the state must provide a citation to the  applicable state statute or regulation. If other requirements apply, the state  must specify the applicable standards that providers must meet and  explain how the provider standards will ensure beneficiaries’ welfare.  Finally, states must annually report on, among other things, how they  implement, monitor, and enforce their health and welfare standards and  the waiver’s impact on the health and welfare of beneficiaries.
Initial waiver applications and amendments to initial waivers are reviewed  and approved by CMS headquarters. CMS’s 10 regional offices have  primary responsibility for reviewing and approving applications to renew  waivers and amendments to renewed waivers. If CMS determines that a  waiver application meets program requirements, including sufficient  documentation to indicate that necessary safeguards are in place to  protect the health and welfare of waiver beneficiaries, it will approve an  initial waiver for a 3-year period. Subsequently, waivers may be extended  for additional 5-year periods.
Section 1915(c)(3) of the Social Security Act provides that, upon request  of a state, HCBS waivers may be extended, unless the Secretary of HHS  determines that the assurances provided during the preceding term have  not been met. Among the assurances that the state makes are that  necessary safeguards have been taken to protect the health and welfare of  waiver participants and that the state will submit annual reports on the  impact of the waiver on the type and amount of medical assistance  provided under the state Medicaid plan and on the health and welfare of  recipients. Regulations implementing section 1915(c) provide that an  extension of a waiver will be granted unless (1) CMS’s review of the prior  waiver period shows that the assurances the state made were not met and  (2) the state fails to provide adequate documentation and assurances to  justify an extension. In its explanation of this regulation, HCFA indicated  that a review of the prior period is an indispensable part of the renewal  process.
Reviews of waiver programs for which a renewal has been requested are,  therefore, expected to occur at some point during the initial 3-year period,  and at least once during each renewal cycle. CMS guidance on the reviews  calls for on-site visits that include an examination of beneficiary and  provider records as well as interviews with state officials. If a state’s  efforts to protect the health and welfare of waiver beneficiaries are  determined to be inadequate, CMS officials told us that the agency can  either bar the state from enrolling any new waiver beneficiaries until  corrective actions are taken or terminate the waiver.
According to a recent CMS-sponsored review, oversight of waivers is often  decentralized and fragmented among a variety of agencies and levels of  government, and rarely does a single entity have accountability for the  overall quality of care provided to waiver beneficiaries. Some waiver  service providers are regulated by state licensing agencies, some are  certified by private accreditation organizations, and others operate under  terms of a contract or other agreement with a state agency. While the state  Medicaid agency is ultimately accountable to the federal government for  compliance with the requirements of the waivers, it may delegate  administration of the waivers to state units on aging, mental health  departments, or other departments or agencies with jurisdiction over a  specific population or service. About one-third of waivers for the elderly  are administered by an agency or department other than the Medicaid  agency, most often the state unit on aging. These agencies may then  contract with local networks, agencies, or providers to provide or arrange  for beneficiary services.
section_title: Waivers Are Vehicle for Dramatic Growth in Medicaid Home and Community-Based Services
paragraphs: Medicaid-covered HCBS services have become a growing component of  state long-term care systems, with most of the growth accounted for by  substantial increases in the number of HCBS waivers and the beneficiaries  served through waivers. In a few states, these waivers are beginning to  replace nursing homes as the dominant means for providing long-term  care to the elderly under Medicaid. Over the past 10 years, total Medicaid  long-term care spending has more than doubled—from $33.8 billion in  fiscal year 1991 to $75.3 billion in fiscal year 2001. However, the share of  spending for institutional care declined from 86 to 71 percent, while the  share spent for home and community-based care grew from 14 to 29  percent.
Most of the growth in home and community-based care spending under  Medicaid can be accounted for by HCBS waivers. Total Medicaid home  and community-based care spending grew from $4.8 billion in fiscal year  1991 to $22.2 billion in fiscal year 2001, while spending for waiver services  grew from $1.6 billion in fiscal year 1991 to $14.4 billion in fiscal year 2001.  As shown in figure 1, waiver spending grew from 5 percent of all Medicaid  long-term care spending in fiscal year 1991 to 19 percent in fiscal year  2001. In all but two states—California and New York—and the District of  Columbia, over one-half of Medicaid home and community-based services  spending in fiscal year 2001 was through waivers, with a much smaller  portion going to nonwaiver mandatory home health care or state plan  optional personal care services. See appendix III for a summary of  Medicaid long-term care expenditures by type and state.
Both the number and size of HCBS waivers have grown considerably over  the past 20 years. Every state except Arizona operates at least one such  waiver for the elderly. In 1982, the first year of the waiver program, 6  states operated HCBS waivers. By 1992, 48 states operated a total of 155  HCBS waivers. As of June 2002, 49 states and the District of Columbia  operated a total of 263 HCBS waivers, with 77 serving the elderly. The  average waiver for the elderly served 3,305 Medicaid beneficiaries in 1992  and 5,892 beneficiaries in 1999. In 1999, 15 states served more than 10,000  persons in their waivers for the elderly, an increase from only 4 states in  1992.
The total number of HCBS waiver beneficiaries—elderly and nonelderly— nationwide nearly tripled from 235,580 in 1992 to 688,152 in 1999, the most  recent year for which data were available. The number of beneficiaries  served in waivers for the elderly more than doubled from 155,349 in 1992  to 377,083 in 1999. Over this same period, the number of Medicaid  beneficiaries who used some nursing home care during the year grew by  only 2.5 percent from 1.57 million to 1.61 million beneficiaries. By 1999,  waivers for the elderly were serving 19 percent of all Medicaid  beneficiaries served either in a nursing home or through an HCBS waiver  for the elderly, an increase from 9 percent in 1992. In two states, Oregon  and Washington, more elderly and disabled Medicaid beneficiaries were  served in HCBS waivers in 1999 than were served in nursing homes.  Appendix IV includes the number of Medicaid beneficiaries served by  HCBS waivers for the elderly and in nursing homes in each state.
In 1999, the average per beneficiary expenditure in HCBS waivers serving  the elderly was $5,567, an increase from $3,622 in 1992. However, the  average per beneficiary expenditure for such waivers varied widely across  states, reflecting differences in the type, number, and amount of services  provided under waivers in different states. As shown in table 1, among  those states with waivers serving the elderly in 1999, per beneficiary  expenditures ranged from an average of $15,065 in Hawaii to $1,208 in  New York. In Hawaii, one such waiver that provided an average of 85  hours of personal assistance services per month to 91 percent of  beneficiaries of that waiver had an average cost of $10,893 per beneficiary.  A second Hawaii waiver that provided adult foster care, residential care,  or assisted living for waiver beneficiaries had an average cost of $16,958  per beneficiary. In contrast, New York’s waiver for the elderly did not  include personal care or residential services; the primary benefits included  social work services, personal emergency response systems, and home- delivered meals. Appendix V provides summary information on states’  HCBS waivers for the elderly, including per beneficiary expenditures.
section_title: Information on State Quality Assurance Approaches for Waivers Serving the Elderly Is Limited, but Quality Concerns Have Been Identified
paragraphs: No comprehensive nationwide data are available on states’ quality  assurance systems for or the quality of care provided through HCBS  waivers, including those serving the elderly. In the absence of detailed  federal requirements for HCBS quality assurance systems, states’ waiver  applications and annual reports often contained little or no information on  the mechanisms used to ensure quality, raising a question as to whether  CMS had adequate information to approve or renew some waivers. More  than half of the waivers serving the elderly for which we were able to  obtain a CMS waiver oversight report, an annual state waiver report, or a  state audit report identified oversight weaknesses and quality-of-care  problems. Frequently cited quality-of-care problems included (1) failure to  provide authorized or necessary services, (2) inadequate assessment or  documentation of beneficiaries’ care needs in the plan of care, and   (3) inadequate case management. We were unable to analyze over one- third of waivers serving the elderly because they lacked a recent regional  office review, the annual state waiver report lacked the relevant  information, or they were too new to have annual state reports.
subsections: section_title: States Use a Variety of Waiver Quality Assurance Approaches in Waivers Serving the Elderly, Yet Some States Provide Limited or Incomplete Information to CMS
paragraphs: Although the state waiver applications and annual waiver reports we  reviewed for waivers serving the elderly identified more than a dozen  quality assurance approaches, many contained little or no information  about how states ensure quality. For example, 11 applications for the 15  largest waivers serving the elderly identified three or fewer quality  assurance mechanisms and none of these 11 waivers mentioned important  approaches, including complaint systems or sanctions. Eighteen of 52  state annual waiver reports that we reviewed contained no information on  the mechanisms used to help ensure quality. Moreover, when waiver  applications and annual waiver reports did contain some information, the  information was often incomplete. Our work in South Carolina, Texas, and  Washington identified additional quality assurance mechanisms that were  not listed in their waiver applications or annual reports, suggesting that  such documents may understate the nature and extent of their oversight  approaches. As a result, CMS’s understanding of how these states ensure  quality in the waivers may be incomplete.
subsections: section_title: States Use a Variety of Quality Assurance Mechanisms
paragraphs: Information provided to CMS in state waiver applications and annual  reports identified a variety of mechanisms used to protect the health and  welfare of beneficiaries in waivers serving the elderly. Table 2 describes 14  quality assurance approaches that states reported using in HCBS waivers  for the elderly. Some of these approaches focus on the waiver beneficiary,  such as case management or beneficiary satisfaction surveys. Other  approaches are focused on providers, including licensure and inspections,  corrective action plans, sanctions, and program manuals. States may  require that certain providers be licensed or certified or meet other  requirements contained in state laws or regulations. Such providers are  generally subject to periodic inspections that may include a review of  beneficiary records to determine whether the records meet program  standards. A third set of quality assurance approaches focuses on waiver  program operations, including internal or external evaluations of the  waiver program, supervisory reviews of waiver beneficiary assessments  and plans of care, and audits or reviews of case management agencies.
Because CMS has not provided detailed guidance to states on federal  requirements for HCBS quality assurance systems, the waiver applications  and annual reports submitted by states to CMS for waivers serving the  elderly often contained little or no information on state mechanisms for  ensuring quality, raising a question as to whether CMS had adequate  information to approve or renew some waivers.
Waiver applications. Our review of the most current waiver applications  for the 15 largest waivers serving the elderly found that many states  provided CMS limited information about how they plan to protect the  health and welfare of beneficiaries. Eleven of the 15 states cited three or  fewer quality assurance mechanisms. For example, New York’s application  only contained information about the state licensure and certification  requirements for its waiver services. None of these 11 applications  included well-recognized quality assurance tools such as complaint  systems, corrective action plans, sanctions, or beneficiary satisfaction  surveys. The remaining 4 states each identified six to eight quality  assurance approaches, including at least one of these four important tools.  As shown in table 3, the two mechanisms most frequently cited by states  were (1) licensure for some HCBS waiver providers, such as home health  agencies and residential care providers, and (2) case management.
Annual waiver reports. Compared to waiver applications, annual state  waiver reports identified more quality assurance mechanisms for waivers  serving the elderly. The quality assurance mechanisms states’ annual  reports cited most frequently included (1) audits of case management  agencies, (2) reviews of provider or direct-care staff, (3) licensure and  certification of providers, (4) beneficiary satisfaction surveys or  interviews, (5) case management, and (6) training and technical  assistance. As shown in table 3, these six mechanisms were mentioned by  at least half of the 40 states that provided such information. However, as  was the case with most of the 15 waiver applications we reviewed,  complaint systems, corrective action plans, and sanctions were identified  less frequently. For example, only 13 of the 40 states identified complaint  systems for waivers serving elderly beneficiaries as a monitoring tool in  their annual waiver reports. Responding to beneficiary complaints is a  key element in protecting vulnerable nursing home residents and home  health beneficiaries. Moreover, 18 of the elderly waiver reports (26  percent) from 12 states did not include a description of the process for  monitoring the standards and safeguards under the waiver, as required on  the reporting form.
State officials in South Carolina, Texas, and Washington informed us they  use a wider range of quality assurance mechanisms in their waiver  programs than were described in either their waiver application or their  annual state waiver report. Officials in Washington informed us they use  12 of the 14 mechanisms identified in table 3, yet they included only 2 of  these on their application and 3 in their most recent annual report. For  example, Washington operates a complaint system for waiver providers  but did not refer to this approach in its waiver application or annual  report. On the other hand, only Washington included reviews or audits of  case managers or case management agencies in its application or annual  report, yet all three states provided information on their use of this quality  assurance tool during our interviews. States’ formal reports to CMS on  their quality assurance mechanisms may therefore understate the nature  and extent of their oversight approaches.
section_title: State Oversight and Quality Issues in Waivers Serving the Elderly Have Been Identified by CMS Regional Offices and States
paragraphs: Although information on the quality of care provided in the 79 waiver  programs serving the elderly is limited, state oversight problems were  identified by CMS regional offices or states in 15 of 23 waivers and quality- of-care problems in 36 of 51waivers that we were able to examine. We  were unable to analyze findings related to 28 waivers serving the elderly  for various reasons: they lacked a current regional office review or a  waiver review report was never finalized, the annual state waiver report  lacked the relevant information, or the waivers were too new to have an  annual state report. Because of incomplete information and the absence of  current reviews for many of the active waivers, the extent of quality-of- care problems is unknown.
subsections: section_title: State Oversight Weaknesses
paragraphs: CMS regional office reviews or state audits identified weaknesses in state  oversight for waivers serving the elderly in 15 of the 23 waivers we  examined. In some cases, the waiver programs did not have essential  oversight systems or processes in place. For example, in the case of a  Virginia assisted living waiver that had over 1,250 beneficiaries, the  Philadelphia regional office found several state oversight problems,  including (1) no system in place to track the completion of the required  annual resident assessments, (2) insufficient monitoring to ensure that  beneficiaries were cared for in settings able to meet their needs,   (3) insufficient monitoring to ensure that state standards were met for  basic facility safety and hygiene, and (4) failure to inspect medication  administration records sufficiently to ensure that medication was being  dispensed safely and by qualified staff. The regional office identified  serious lapses in Virginia’s oversight of the waiver and the protection of  beneficiaries, resulting in both medical and physical neglect of waiver  beneficiaries. On the basis of the regional office review findings, HCFA  allowed the waiver to expire in March 2000. In other cases, states may  have had an oversight system or process in place, but they were  determined to be inadequate. Five state audit agency reports we reviewed  identified inadequate monitoring systems in state waiver programs. For  example, Connecticut had a policy in place for monitoring and evaluating  its HCBS waiver program, but, from January 2000 through March 2001 it  conducted no quality assurance reviews of the agencies it contracted with  to coordinate and manage services for waiver beneficiaries.
section_title: Quality-of-Care Related Problems
paragraphs: CMS regional office reviews and states’ annual waiver reports identified  quality-of-care related problems in 36 of 51 HCBS waiver programs for the  elderly that we were able to examine. Specifically, they found weaknesses  in the delivery of key elements of home and community-based services  that could affect waiver beneficiaries’ health and welfare (see table 4).  Typically, the reports did not provide sufficient detail to demonstrate the  impact of these weaknesses on waiver beneficiaries. Consequently, few, if  any, specific cases of beneficiary harm were identified.
The most frequently identified quality-of-care problems in waivers serving  the elderly involved failure to provide authorized or necessary services,  inadequate assessment or documentation of beneficiaries’ care needs in  the plan of care, and inadequate case management.
Provision of authorized or necessary services. Identified problems  included (1) services identified in plans of care not rendered,   (2) inadequate nutrition provided to waiver beneficiaries, and   (3) discontinuation of services without adequate notice to beneficiaries.  For example, CMS’s Dallas regional office found that significant numbers  of Oklahoma waiver beneficiaries did not receive personal care services  from their direct-care provider—4,303 beneficiaries (27 percent) received  none of their authorized personal care services and 7,773 beneficiaries (49  percent) received only half of their authorized services. While the  consequences for beneficiaries were not identified in this review, failure to  provide authorized needed services may result in harm and could affect  the continued ability of beneficiaries to be cared for at home.
Plan of care. Issues included plans of care that (1) insufficiently addressed  the needs of waiver beneficiaries, (2) were not completed or updated  appropriately, and (3) were missing from beneficiaries’ files. In the review  of one of the Florida waivers, CMS’s Atlanta regional office staff found  several instances where needs identified through individual assessments,  including significant changes in waiver beneficiaries’ conditions, were not  addressed in the plan of care, a situation that could lead to beneficiaries  not receiving the necessary services. Without an appropriate plan of care  to direct the type and amount of services to be delivered, the waiver  beneficiary may not receive an adequate level of care.
Case management. Examples of case management problems included case  managers who (1) were unaware of beneficiaries having lapses in delivery  of care, (2) were not always aware of procedures or protocols for  reporting abuse, neglect, or exploitation, (3) failed to complete resident  assessments—service plans were either incomplete or inappropriate, and  updates to plans of care were late, or (4) did not always appear to have a  clear understanding of service definitions or requirements of the waiver or  Medicaid program.
section_title: CMS Guidance to States and Oversight Of HCBS Waivers Are Inadequate to Ensure Quality Care
paragraphs: CMS has not developed detailed guidance for states on appropriate quality  assurance approaches as part of the initial waiver approval process.  Moreover, although CMS oversight has identified some quality problems, it  does not adequately monitor HCBS waiver programs or the quality of care  provided to waiver beneficiaries for waivers serving the elderly as well as  those serving other target populations. CMS does not hold its regional  offices accountable for conducting and documenting periodic waiver  reviews, nor does CMS hold states accountable for submitting annual  reports on the status of quality in their waivers. As of June 2002, about  one-fifth of the 228 waivers in place for 3 years or more had either never  been reviewed or were renewed without a review. We found that the  reviews varied considerably in the number of beneficiary records  examined and the method of determining the sample, potentially limiting  the generalizability of findings. According to CMS regional office staff, the  allocation of staff resources and travel funding levels have at times  impeded the scope and timing of their reviews. In addition, some regional  office staff told us that limited travel funds have resulted in the  substitution of more limited desk reviews for on-site visits and in the  conduct of reviews with one staff member when two would have been  preferable.
subsections: section_title: CMS Lacks Detailed Guidance for States on the Necessary Components of a Quality Assurance System
paragraphs: CMS has a number of initiatives under way to generate information and  dialogue on quality assurance approaches, but the agency’s initiatives stop  short of (1) requiring states to submit detailed information on their quality  assurance approaches when applying for a waiver or (2) stipulating the  necessary components for an acceptable quality assurance system. CMS  recognizes that insufficient attention has been given to the various  mechanisms that states could and should use to monitor quality in their  waiver programs. As described in appendix VI, the initiatives CMS has  under way include identification of strategies that states are currently  using to monitor and improve quality in home and community-based care,  distribution of a guide on quality improvement and assessment  mechanisms for states and regional offices, and provision of a variety of  technical assistance and resources to states. The agency also has  implemented a new HCBS waiver quality review protocol for use by  regional offices in assessing whether state waivers should be renewed.  Regional office staff told us that some states have begun to modify their  approaches to quality assurance in HCBS waivers based on the use of the  new waiver review protocol. For example, Washington officials  established a new quality assurance unit within the agency that oversees  its waiver for the elderly. In May 2002, CMS also introduced a voluntary  application template for its new consumer-directed HCBS waiver that asks  for a detailed description of states’ quality assurance and improvement  programs, including (1) the frequency of quality assurance activities,   (2) the dimensions monitored, (3) the qualifications of quality assurance  staff, (4) the process for identifying problems, including sampling  methodologies, (5) provisions for addressing problems in a timely manner,  and (6) the system for handling critical incidents or events. While these  CMS activities are intended to facilitate the development of HCBS-related  quality assurance approaches, they do not constitute a consistent set of  minimum requirements and guidance for states’ use to obtain approval for  their HCBS programs.
section_title: CMS Is Not Holding Regional Offices or States Accountable for Oversight of HCBS Waiver Quality
paragraphs: In addition to the lack of detailed guidance for states, CMS is not holding  its own regional offices or states accountable for oversight of the quality of  care provided to individuals served under HCBS waivers. CMS regional  offices are expected to conduct periodic waiver reviews to determine  whether states are protecting the health and welfare of waiver  beneficiaries. Annual state reports are required by statute, and CMS  regulations indicate that they are intended to play a key role in  determining whether a waiver should be renewed. We found that regional  offices are neither conducting waiver reviews prior to renewal nor  obtaining complete annual state reports in a timely manner. As a result,  CMS has not fully complied with the statutory and regulatory requirements  that condition the renewal of HCBS waivers on states fulfilling their  assurances that necessary safeguards are in place to protect the health and  welfare of waiver beneficiaries.
subsections: section_title: CMS Regional Offices Often Are Not Conducting Timely Reviews of State HCBS Waivers
paragraphs: Most CMS regional offices have not conducted timely reviews of the state  agencies administering waivers serving the elderly and other target  populations or completed reports to document the results of their reviews.  Periodic on-site reviews are used to determine, among other things,  whether a state is ensuring the health and welfare of waiver beneficiaries.  Guidance from CMS headquarters instructs the regional offices to conduct  reviews before the first renewal of a waiver at the end of 3 years and  within 5 years for subsequent waiver renewals.
Eighteen percent of all HCBS waivers (42 of 228) that have been in place  for 3 years or more as of June 2002 either have never been reviewed by the  regional offices or had not been reviewed prior to their last waiver  renewal. Approximately 132,000 beneficiaries were served by these 42  waivers in 1999. Fourteen of the 42 waivers—serving approximately 37,000  waiver beneficiaries in 1999—have had 10 or more years elapse without a  regional office review (see table 5). CMS’s Dallas regional office was  responsible for 9 of these 14 waivers. Over a 10-year period, a regional  office should have conducted at least two reviews for each waiver. The  New Mexico AIDS Waiver, initially approved in June 1987, has been in  place the longest without ever being reviewed—15 years. CMS officials  were aware that regional offices had not reviewed some waivers but were  unaware of the extent of the problem.
As of June 2002, based on an analysis of the most recent regional office  review that occurred prior to October 2001 for each of the waivers, we  found that 23 percent of the review reports (36 of 158) in over half of the  regional offices had not been finalized. CMS requires its regional offices  to prepare a final report on each HCBS review to document their findings,  recommendations, and the state response. Without such a final report,  there is no formal document to indicate whether a state has fulfilled the  required assurances, including those related to the health and welfare of  waiver beneficiaries. The New York regional office did not finalize 11 of its  12 reviews, dating back to 1998, and the San Francisco regional office did  not finalize 7 of its 13 reviews, 1 of which was for a review that occurred in  1990. Without a final report documenting the review results, CMS cannot  be assured that, if problems were identified, they were appropriately  addressed.
section_title: CMS Does Not Obtain Timely and Complete State Annual Waiver Reports
paragraphs: Many state annual waiver reports submitted to CMS regional offices are  neither timely nor complete. During the interval between regional office  reviews, the required annual state waiver reports provide key information  on how states monitor beneficiaries’ quality of care and on any quality-of- care related problems. According to regional office officials, states  routinely fail to submit these annual reports within the required time  frame—within 6 months after the period covered. In August 2000, officials  in CMS’s Philadelphia regional office reported that they had current  annual state reports for less than half (11 of 28) of the waiver programs in  their region. Our review of the most recent annual state reports for 70 of  79 HCBS waivers serving the elderly confirmed that producing these  reports remains a problem: (1) reports for more than a third of the waivers  were at least 1 year late—the most recent report from one of Louisiana’s  HCBS waivers was for calendar year 1997, (2) reports for approximately  one-fourth of the waivers provided no information on whether deficiencies  had been identified through the monitoring processes, and (3) five  reports indicated that deficiencies had been identified but provided no  additional information about the nature of or response to the problems.   CMS headquarters has no central repository for annual state reports but is  in the process of establishing a centralized database for state report  information sometime in 2003, a development that could facilitate ongoing  monitoring of the timeliness and completeness of these reports.
section_title: Extent of Oversight Weaknesses Evident in 15 Largest Waivers Serving the Elderly
paragraphs: Our analysis of CMS’s oversight activities for the 15 largest HCBS waivers  serving the elderly demonstrates the extent of oversight weaknesses.  Overall, 8 of the 10 CMS regional offices provided inadequate oversight for  13 of these 15 largest state waivers for the elderly, which, in 1999, served  about 215,000 beneficiaries—over half (57 percent) of the total elderly  waiver beneficiary population at that time (see table 6). We found that    Four of the 15 HCBS waivers were not reviewed in a timely manner by the  CMS regional office—none of the 4 had reviews for 8 or more years and  yet were renewed.
Four of the 15 waivers had no waiver review final report completed by the  regional office. Two of the reviews occurred in 1999, and for the remaining  2 waivers the regional office could not tell us the date of the reviews or  whether a final report was available.
Four of the 15 waivers lacked a timely annual state report to the regional  office. As of April 2002, the most recent annual report for these 4 waivers  was either for the waiver period ending August 1999 (1 waiver) or  September 2000 (3 waivers).
Seven of the 15 waivers had annual state reports that were incomplete  because they either lacked information on their quality assurance  mechanisms or on whether deficiencies had been identified.
section_title: Scope and Duration of Regional Office Waiver Reviews Are Limited
paragraphs: The limited scope and duration of periodic regional office waiver reviews  raise a question about the confidence that can be placed in findings about  the health and welfare of waiver beneficiaries. CMS regional offices  conduct reviews using guidance provided by headquarters. The guidance  instructs regional office staff to review beneficiary records; interview  waiver beneficiaries, primary direct-care staff of waiver providers, and  case managers; and observe waiver beneficiaries and the interaction  between the beneficiary and direct-care staff. This guidance was updated  in January 2001 when use of the new HCBS waiver quality review protocol  became mandatory. However, the new protocol does not address  important operational issues such as    an adequate sample size or sampling methodology for the beneficiary  record reviews and interviews to provide a basis for generalizing the  review findings;    whether the sample should be stratified according to the different groups  served under the waiver (i.e., for a waiver serving both the elderly and the  disabled, selecting a stratified sample based on the proportion of persons  aged 65 and over and those aged 18 to 64 with disabilities); and  the appropriate duration of an on-site review, taking into consideration the  number of sites and beneficiaries covered in the waiver.
Our analysis of regional office review reports for 21 HCBS waivers serving  the elderly found that the reviews varied considerably in the number of  beneficiary records evaluated and their method of determining the sample,  potentially limiting their ability to generalize findings from the sample to  the universe of waiver beneficiaries. Specifically, we found a wide range  of sample sizes in 15 of the 21 regional office reviews that included such  information. The sample sizes for record reviews ranged from 14  beneficiaries (of 73 served) in the Boston regional office review of the  Vermont waiver to 100 beneficiaries (of 24,000 served) in the Seattle  regional office review of the Washington waiver. (See app. VII for a  summary of the sample sizes in the regional office reviews.) Eleven of the  15 CMS waiver review reports included information on the specific  number of beneficiaries interviewed or observed during the review;  however, we could not determine whether beneficiary interviews or  observations had been conducted in other waiver reviews. The method by  which the beneficiary record review samples were selected varied, with  some regional offices using randomized sampling methods, some basing  their sample on geographic location, and others reporting no method of  sample selection.
For most of these same 15 waivers serving the elderly, we found that the  regional staff typically spent 5 days conducting the waiver review— regardless of the number of waiver beneficiary records sampled or the  overall size of the waiver. However, the Seattle regional office staff  conducted only three reviews in the past 4 years, targeting its largest  HCBS waivers. For example, the regional office has spent 3 to 4 weeks per  waiver for the on-site portion of the review and another week for state  agency interviews and review of documents. Generally, the number of  beneficiary records reviewed and beneficiaries interviewed is dependent  on (1) the number of days allocated to the waiver review by a regional  office and (2) the number of regional office staff members available.
section_title: Limited Regional Office Resources Available for Oversight of HCBS Waivers
paragraphs: The limited number of assigned staff and available clinical specialists,  coupled with insufficient travel funds allocated to regional office oversight  of HCBS waivers, have contributed to the timeliness and scope problems  we identified. According to regional offices, the level of attention given to  HCBS waiver oversight, including periodic reviews when waivers come up  for renewal, is at the discretion of regional office management and  competes with other workload priorities. In August 2000, some regional  office officials formally communicated to HCFA headquarters their  concern that the agency was not devoting sufficient resources to properly  monitor the quality of HCBS waiver programs. Regional office officials  responsible for waiver oversight told us that the number of staff available  for waiver oversight has not kept pace with the growth in the number of  waivers and beneficiaries served and that resource issues remain a key  challenge for waiver oversight.
We found that CMS regional offices differed substantially in the number of  staff assigned to waiver oversight and the extent to which staff with  clinical or program expertise were assigned to waiver oversight.  According to Dallas, Denver, and Philadelphia regional office staff, the  level of resources allocated by the regional offices for such reviews  dictated the number of waiver beneficiary records reviewed or beneficiary  interviews conducted. Six of the 10 regional offices had two or fewer full- time-equivalent (FTE) staff assigned to monitoring HCBS waivers (see  table 7). Moreover, we found that the number of regional office staff  assigned to monitoring HCBS waivers bore little relationship to the waiver  workload. For example, the Chicago regional office had six FTE staff to  monitor 34 HCBS waivers with 131,902 waiver beneficiaries, while the  Dallas regional office had one-and-a-half FTE staff for 28 HCBS waivers  with 63,614 waiver beneficiaries. Until a few years ago, one person in the  Philadelphia regional office was assigned to oversee HCBS waivers— despite growth in the number and size of the region’s HCBS waivers over  the past decade.
As shown in table 7, 3 of the 10 regional offices had specialists assigned to  waiver oversight, such as registered nurses or qualified mental retardation  professionals. When asked to identify one of the greatest improvements  that could be made in federal waiver oversight, 3 of the 10 regional offices  identified the direct assignment of specialist staff. CMS’s waiver review  protocol specifies that the participation of clinical and other specialist  staff is important to assessing issues related to beneficiaries’ health and  welfare. However, many regional offices indicated that they had to  “borrow” specialist staff from other departments within the region in order  to conduct their waiver reviews. The Seattle and Boston regional offices  provide contrasting examples of the role played by regional office  management in obtaining clinical staff to conduct reviews. According to  Seattle regional office staff, it has been a challenge to obtain specialist  staff on the waiver review teams. For 4 to 5 years, the region did not  conduct any HCBS waiver reviews. In the past 4 years, it has only  conducted three reviews—regardless of the number of waivers due for  review. The region has four waivers that have never been reviewed, two  dating back to 1989. According to the staff, the prior regional  administrator did not target resources for HCBS waiver reviews, and it  was difficult to obtain clinical and other specialist staff from other  departments to assist in conducting reviews. Although it has no specialist  staff assigned to waivers, Boston regional office officials informed us that  conducting HCBS waiver reviews has been a management priority, as  evidenced by the fact that the region always includes a registered nurse or  other relevant specialist on the review team. We noted that the Boston  regional office has conducted timely reviews of all of its waivers.
When asked to identify the greatest challenges related to HCBS waiver  oversight, 4 of the 10 CMS regional offices identified insufficient travel  funding. Regional office staff indicated that there appears to be no  correlation between the amount of travel dollars made available by the  regional offices for the reviews and the review schedule set forth by CMS  headquarters. Moreover, they told us that they had to compete for limited  travel resources with the regional office staff responsible for overseeing  nursing homes. Regional office responses to inadequate travel funds have  included (1) conducting a “desk review” without visiting state agency  officials, providers, and waiver beneficiaries, (2) limiting the number of  days allotted for the review, (3) reducing the number of staff assigned to  conduct the review, or (4) not reviewing a particular waiver at all. In the  New York regional office, a lack of travel funds led to desk reviews for 9 of  15 waivers. According to the Philadelphia regional office’s final report for  a Virginia HCBS waiver, some cases that should have been pursued were  not reviewed because only 1 week had been allotted for fieldwork, and 2  of the 18 cases selected for field review were dropped because there was  insufficient time to conduct the review. In 2001, the Chicago regional  office conducted a limited on-site review of a Michigan HCBS waiver  serving over 6,000 beneficiaries. During the review, three case files were  examined and one beneficiary was interviewed. According to Denver  regional office officials, travel budget problems have meant that the  reviews are conducted by one staff member when two would be  preferable.
section_title: Conclusions
paragraphs: HCBS waivers give states considerable flexibility to establish customized  programs offering long-term care services for specific populations, such as  elderly persons, persons with mental retardation, or children with special  needs. While maintaining this flexibility is important, insufficient emphasis  has been placed on balancing flexibility with measures to ensure  accountability. At present, states may obtain a waiver serving the elderly  with a limited explanation of how they plan to monitor quality, and CMS  has not held states accountable for submitting complete and timely annual  waiver reports detailing their quality assurance activities. Moreover, CMS  has not fully complied with the statutory and regulatory requirements that  condition the renewal of HCBS waivers on whether the state has fulfilled  its assurances that necessary safeguards are in place to protect the health  and welfare of waiver beneficiaries. The current size and likely future  growth in HCBS waiver programs that serve a vulnerable population— particularly elderly individuals eligible for nursing home placement—make  it even more essential for states to have appropriate mechanisms in place  to monitor the quality of care.
While CMS requires periodic reviews of state waiver programs to help  ensure that beneficiaries’ health and welfare are adequately protected,  many have been renewed without such a review. In addition, guidance on  how these waiver reviews should be conducted does not address  important operational issues such as sample size and sampling  methodology. Consequently, there is little relationship among the amount  of time spent on-site conducting waiver reviews, the number of beneficiary  records reviewed, and the number of beneficiaries served. CMS expects its  regional offices to interview and observe waiver beneficiaries to obtain a  first-hand perspective on care delivery and the adequacy of case  management, but beneficiary interviews are not a component of all  regional office reviews. Moreover, staff resources and travel funds  currently allocated to conduct waiver reviews are insufficient. Without  necessary attention from CMS, these guidance and resource issues will  only be exacerbated by the expected future growth in the number of  persons served through HCBS waiver programs. CMS has a number of  initiatives directed towards improving quality and quality assurance for  home and community-based waiver programs. They do not, however,  address the specific oversight weaknesses we have identified in this  report, such as the lack of detailed criteria or guidance for states regarding  the necessary components of a quality assurance system to help ensure  the health and welfare of waiver beneficiaries.
section_title: Recommendations for Executive Action
paragraphs: To ensure that state quality assurance efforts are adequate to protect the  health and welfare of HCBS waiver beneficiaries, we recommend that the  Administrator of CMS    develop and provide states with more detailed criteria regarding the  necessary components of an HCBS waiver quality assurance system,  require states to submit more specific information about their quality  assurance approaches prior to waiver approval, and    ensure that states provide sufficient and timely information in their annual  waiver reports on their efforts to monitor quality.
To strengthen federal oversight of the growing HCBS waiver programs and  to ensure the health and welfare of HCBS waiver beneficiaries, we  recommend that the Administrator    ensure allocation of sufficient resources and hold regional offices  accountable for conducting thorough and timely reviews of the status of  quality in HCBS waiver programs, and    develop guidance on the scope and methodology for federal reviews of  state waiver programs, including a sampling methodology that provides  confidence in the generalizability of the review results.
section_title: Agency and State Comments and Our Evaluation
paragraphs: We provided a draft of this report to CMS and South Carolina, Texas, and  Washington, the three states in which we obtained a more in-depth  perspective on states’ quality assurance approaches. (CMS’s comments are  reproduced in app. VIII.) CMS affirmed its commitment to its ongoing  responsibility, in partnership with the states, to ensure and improve  quality in HCBS waivers. The agency stated that the federal focus should  be on assisting states in the design of HCBS programs, respecting the  assurances made by states, improving the ability of states to remedy  identified problems, providing assistance to states to improve the quality  of services, and thereby assisting people to live in their own homes in  communities of their choice. CMS generally concurred with our  recommendations to improve state and federal accountability for quality  assurance in HCBS waivers but raised concerns about our definition of  quality, how best to ensure quality in state waiver programs, the  appropriate state and federal oversight roles, and the resources and  guidance required to carry out federal quality oversight.
subsections: section_title: Definition of Quality
paragraphs: CMS stated that the draft report’s definition of quality in waivers was too  narrow because it ignored a wide variety of activities used to promote  quality. Furthermore, CMS cited the availability of a broad array of waiver  services with choice over how, where, and by whom services are delivered  as important to beneficiaries’ quality of life. According to CMS, growth in  the number of persons served by HCBS waivers was evidence of  beneficiary satisfaction. (See CMS’s “General Comments,” 2 and 3.)
Rather than defining quality ourselves, we reported the approaches states  used to assure quality in their waiver programs. By analyzing state  applications for waivers serving the elderly and state annual waiver  reports, we identified a broad array of state quality assurance activities,  including licensing and certification of providers and beneficiary  satisfaction surveys (see tables 2 and 3). We disagree with CMS’s assertion  that beneficiaries’ preference for services that allow them to remain in the  community can be equated with satisfaction for the services delivered.  Even assuming that beneficiary satisfaction alone is a reliable indicator of  quality, CMS offered no empirical evidence to support its position. Only  about half of the state annual waiver reports we reviewed indicated that  states measured beneficiary satisfaction with services. Moreover, our  review of quality-of-care problems identified in waiver programs serving  the elderly demonstrated that failure to provide needed or authorized  services was a frequently cited problem. For example, as we noted in the  draft report, a CMS review found that 27 percent of beneficiaries served by  one state’s HCBS waiver for the elderly did not receive any of their  authorized personal care services, and 49 percent received only half.
section_title: Quality Assurance Approaches
paragraphs: CMS commented that the draft report failed to recognize that HCBS  programs require a different approach to quality than their institutional  alternatives and “leaves the distinct impression that the most effective way  to assure and improve quality is through the process of inspection and  monitoring.” CMS asserted that design of an HCBS waiver, as opposed to  monitoring its implementation, is the most important contributor to  quality, and the agency’s recent efforts have focused on working with  states to improve design decisions and design options. (See CMS’s  “General Comments,” 4 and 7.)
We disagree with CMS’s characterization of our findings. Our report  recognizes the importance of maintaining states’ considerable flexibility in  ensuring quality in HCBS waivers but concludes that insufficient emphasis  has been placed on balancing this flexibility with measures to ensure the  accountability called for by both statute and regulations. Contrary to  CMS’s comments, we did not recommend an additional or increased  federal oversight role or the adoption of oversight systems such as those  used for institutional providers. Our analysis and conclusions were based  on the criteria established in both statute and regulations that entail  federal oversight of waivers and that condition federal approval and  renewal of waivers on states’ demonstrating to CMS that they have  established and are fulfilling assurances to protect the health and welfare  of waiver beneficiaries. We found that CMS currently receives too little  information from states about their quality assurance approaches to hold  them accountable, raising a question as to whether the agency has  adequate information to approve or renew some waivers. While we agree  that waiver design is important to ensuring quality, a state’s  implementation of its quality assurance approaches is equally, if not more,  important. In its protocol for reviewing states’ HCBS waivers, CMS gives  equal emphasis to both the design and implementation of quality  assurance mechanisms. Despite its concerns, CMS generally concurred  with our recommendation to develop and provide states with more  detailed criteria regarding the necessary components of an HCBS waiver  quality assurance system. CMS cited its current effort to provide such  guidance and indicated that it would work to more clearly define its  criteria and expectations for quality.
section_title: State and Federal Roles in Ensuring Quality
paragraphs: CMS commented that “the report lends itself to the conclusion that the  federal government ought to be the primary source of quality monitoring  and improvement, and fails to recognize that the federal statutes convey  respect for state authority and competence in the administration of HCBS  programs.” (See CMS’s “General Comments,” 6.) We agree that the states  and the federal government have distinct quality monitoring roles but  believe that CMS has mischaracterized our description of those roles as  defined in statute and regulations. In addition, we believe that CMS has  understated the importance of federal oversight.
The report describes states’ statutory and regulatory responsibility to   (1) include information in their waiver applications on their approaches  for protecting the health and welfare of HCBS beneficiaries and (2) report  annually on state quality assurance approaches and deficiencies identified  through state monitoring. We reported that waiver applications contained  limited information on state quality assurance approaches and that many  state annual waiver reports were neither timely nor complete. Eleven of  the 15 applications for the largest waivers serving the elderly included  none of the following well-recognized quality assurance tools: complaint  systems, corrective action plans, sanctions, or beneficiary satisfaction  surveys. Annual reports for more than a third of 70 waivers serving the  elderly were at least 1 year late, and one-quarter of such reports did not  indicate whether deficiencies had been identified, as required. CMS  acknowledged the need for more comprehensive information from states  at the time of application and at subsequent renewals. Consistent with our  recommendation, CMS agreed to revise and improve the application  process and annual state waiver report to include more information on  states’ quality approaches and activities.
The report also describes CMS’s statutory responsibility for ensuring that  states adequately implement their quality assurance approaches—a  responsibility operationalized in policy guidance to the agency’s regional  offices. Waiver reviews are expected to occur at least once during the  initial 3-year waiver period and during each 5-year renewal cycle. We did  not propose an expanded federal quality assurance role. We reported that,  in some cases, CMS had an insufficient basis for determining that states  had met the required assurances for protecting beneficiaries’ health and  welfare. As of June 2002, almost one-fifth of all HCBS waivers in place for  3 years or more had either never been reviewed or were renewed without  a review; 14 of these waivers had 10 or more years elapse without a  regional office review. Some CMS waiver reviews have uncovered serious  state oversight weaknesses as well as quality-of-care problems. For  example, the review of one state’s waiver found both medical and physical  neglect of beneficiaries because of serious lapses in state oversight,  resulting in a decision to let the waiver expire. The full extent of such  problems is unknown because many state waivers lacked a recent CMS  review. CMS did not comment directly on our conclusion that the agency  is not fully complying with statutory and regulatory requirements when it  renews waivers. The agency suggested it would be far more efficient and  equally effective for federal waiver reviews to focus on only one waiver in  cases where there are multiple waivers in a state serving subsets of the  same target group and using the same quality assurance system; however,  CMS’s own guidance to its regional offices calls for each waiver to receive  at least one full review during a given waiver cycle, with each waiver  receiving at least some level of review.
section_title: Resources and Guidance for Federal Oversight
paragraphs: CMS commented that the draft report’s recommendations to hold regional  offices accountable for conducting thorough and timely reviews of quality  in HCBS waiver programs, including a sampling methodology that  provides confidence in the generalizability of the review results, would  require a huge new investment or redirection of federal resources.  Specifically, CMS commented that the report “does not address the  significant resources that would need to be found or redirected to  implement its recommendations” and “fails to acknowledge the lack of  appropriated funds for HCBS quality.” The agency stated that such funds  would have to come from CMS’s operating budget. CMS also pointed out  that it had already taken steps organizationally to ensure that enough  resources are devoted to quality and that they are appropriately positioned  within CMS. (See CMS’s “General Comments,” 5, 8, and 9.)
CMS’s existing waiver review protocol directs regional offices to select a  sample of waiver beneficiaries for activities such as interviews and  observations, but it does not adequately address sampling methodology.  We found that sample selection methods varied with some regional offices  selecting random samples, some basing their sample on geographic  location, and others reporting no methodology for sample selection. Given  that the regional offices are already generalizing their findings to the  waiver program as a whole, we believe explicit and uniform sample  selection guidance is imperative. At the same time, we believe that, as  CMS suggested, samples may appropriately be targeted to certain types of  participants or services so that, over time, greater assurances are provided  about the quality of care. In response to our recommendation to develop  guidance on the scope and methodology for federal reviews of state  waiver programs, CMS said it is committed to developing additional policy  guidance.
We did not recommend significant increases in appropriated funds for  conducting waiver reviews. Rather, our draft report recommended that  CMS ensure allocation of sufficient resources and hold regional offices  accountable for conducting thorough and timely reviews of the status of  quality in HCBS waiver programs. The CMS Administrator is responsible  for assessing whether existing funding levels are adequate to satisfy  statutory and regulatory requirements, including periodic regional office  review of the states’ assurances. The Administrator may indeed conclude  that, to carry out these oversight responsibilities for the growing numbers  of frail beneficiaries who prefer and rely on these services, there may be a  need to reallocate existing funds or to request additional funds. CMS also  noted that it had recently redeployed and reorganized headquarters staff  to incorporate the quality function into each program area, including the  operational unit that oversees HCBS waivers. Despite CMS’s concerns  about the need for significant funding increases, the agency noted the  importance of further investments to advance both state and federal  capability to assure quality in waiver programs.
section_title: Additional CMS Comments
paragraphs: CMS commented that the draft report had numerous technical  inaccuracies, but cited only one and provided no additional examples or  technical comments to accompany its written response (CMS’s “General  Comments,” 1). Although CMS stated that our characterization of federal  requirements concerning waiver renewals was inaccurate, its suggested  changes and our report language were essentially the same. To avoid any  confusion, however, we have added the statute’s specific language to the  background section of the report. CMS further commented that our report  should recognize that the Congress created an enforcement mechanism  that places great reliance on a system of assurances. Our draft report  made that point while also describing CMS’s responsibility, as specified in  its implementing regulations, to determine that each state has met all the  assurances set forth in its waiver application before renewing a waiver.
CMS stated that the draft report failed to acknowledge the steps it has  already taken to ensure quality. (CMS’s “General Comments,” 10.) To the  contrary, the draft report described each of the efforts CMS referred to as  under way to monitor and improve HCBS quality and addressed each  activity: the waiver review protocol, the HCBS quality framework, the  development of tools to assist states, development of the Independence  Plus template, and the national technical assistance contractor. However,  we found that CMS’s waiver review protocol does not address key issues  relating to the scope and methodology of federal oversight reviews.  Moreover, the use of the Independence Plus template, which requires  more specific information on states’ quality assurance approaches, is  voluntary rather than mandatory.
section_title: State Comments
paragraphs: In its written comments, Texas stated that it supports proper federal  oversight of HCBS waivers but stressed the need to maintain flexibility in  designing waivers to meet the unique needs of residents requiring  community care. The state believes that such flexibility should not be lost  in establishing more specific quality assurance criteria.
As arranged 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 of this report to the  Administrator of the Centers for Medicare & Medicaid Services and  appropriate congressional committees. We also will make copies available  to others upon request. In addition, the report will be available at no  charge on the GAO Web site at http://www.gao.gov.
Please contact me at (202) 512-7118 or Walter Ochinko at (202) 512-7157 if  you have questions about this report. Other contributors to this report  included Eric Anderson, Connie Peebles Barrow, and Kevin Milne.
section_title: Appendix I: Scope and Methodology
paragraphs: This appendix describes our scope and methodology, following the order  that our results are presented in the report.
Data on HCBS Waivers. To identify the universe of state HCBS waivers as  of June 2002, we asked the CMS regional offices to identify each waiver,  including the target population and the waiver start date. The regional  offices identified a total of 263 waivers. Using this information and other  data, we identified 77 waivers serving the elderly. To identify trends in  Medicaid long-term care and Medicaid waiver spending, we analyzed data  covering fiscal years 1991 through 2001 from HCFA reports (HCFA Form  64) compiled by The MEDSTAT Group. To identify trends in the overall  number of Medicaid waiver beneficiaries, number of elderly waiver  beneficiaries, average waiver size, and average per beneficiary  expenditures for waivers serving the elderly, we analyzed data from state  annual waiver reports (HCFA Form 372) covering fiscal years 1992  through 1999 in a database compiled by researchers at the University of  California, San Francisco.
State Quality Assurance Mechanisms. In the absence of comprehensive,  readily available information on HCBS quality assurance mechanisms that  states use, we analyzed the information available in a subset of state  waiver applications and annual state waiver reports for waivers serving  the elderly. Specifically, we analyzed (1) initial and/or renewal  applications for the 15 largest waivers serving the elderly as of 1999 and  (2) annual state waiver reports from 70 of the 79 waivers serving the  elderly. The waiver applications are used by CMS, in part, to assess  whether the quality assurance mechanisms in place warrant waiver  approval. The annual waiver reports are required to provide a description  of the process for monitoring the standards and safeguards under the  waiver and the results of state monitoring. Of the 70 state annual waiver  reports that we analyzed, 52 contained some information about states’  monitoring processes. Eight of the remaining 9 annual waiver reports were  new waivers for which the state had not yet submitted an annual report,  and for 1 waiver, a regional office did not provide a copy of the annual  state report.
State Oversight and Quality of Care. To assess state oversight issues in  waivers serving the elderly, we examined regional office waiver review  reports for 21 waivers and state audit reports related to 5 waivers, the only  reports we were able to analyze, for a total of 23 discrete waivers. To  assess quality-of-care problems in waivers serving the elderly, we reviewed  51 waivers for which we were able to analyze regional office final reports  and annual state reports. Regional office waiver review reports identified  problems in 19 waivers, and annual state reports identified problems in 22  waivers, for a total of 36 discrete waivers. These reports identified no  quality-of-care problems in the remaining 15 waivers. We were unable to  analyze findings from 28 additional waivers because they either (1) lacked  a recent regional office waiver review completed during the period of  October 1998 through May 2002 or an annual state waiver report, (2) the  annual state waiver report did not address whether deficiencies had been  identified, or provided no information on the deficiencies found, or (3) the  waivers were too new to have had a regional office review or to provide an  annual state report.
CMS Oversight. To determine the adequacy of CMS regional office  oversight of states’ waiver programs, we asked all 10 CMS regional offices  to provide the following information for each of the waivers for which  they were responsible, including both waivers for the elderly as well as  those serving other target populations: (1) the waiver start date, (2) the  current waiver time period, (3) the fiscal year the waiver was last  reviewed, and (4) whether or not the waiver review report was finalized.  Of the 263 waivers, 228 had been in place for 3 years or more and therefore  should have had a regional office review. The other 35 waivers were less  than 3 years old and would not have yet qualified for a review as of June  2002. For information on sample sizes and duration of the reviews, we  analyzed CMS’s HCBS waiver review final reports for waivers serving the  elderly that were issued during the period of October 1998 through May  2002. Fifteen of the 21 waiver review reports that we received included  information on the number of waiver beneficiary records reviewed and on  the duration of the reviews. Some review reports also provided the  number of beneficiaries that were interviewed or observed. We also  discussed regional office oversight activities with CMS headquarters’ staff.
section_title: Appendix II: Suggested CMS Definitions of Home and Community-Based Services in Waivers Serving the Elderly
paragraphs: Table 8 contains a list of services provided through the HCBS waivers  serving the elderly and the suggested CMS definitions. However, states  may provide alternative definitions in their waiver applications.
section_title: Appendix III: Medicaid Long-Term Care Expenditures, by Type and State, Fiscal Year 2001
section_title: Appendix IV: Number of Beneficiaries Served by HCBS Waivers for the Elderly and in Nursing Homes, by State, 1999
paragraphs: Percent of beneficiaries   served by waivers  for the elderly  Arizona does not have any HCBS waivers for the elderly as it operates its Medicaid program as a  demonstration project under a section 1115 waiver.
In 1999, the District of Columbia did not have any HCBS waivers for the elderly in operation.
section_title: Appendix V: Number of HCBS Waivers for the Elderly, Beneficiaries, Expenditures, and per Beneficiary Expenditures by State, 1999
paragraphs: Number of beneficiaries  served by waivers for the  elderly  Arizona does not have any HCBS waivers for the elderly as it operates its Medicaid program as a  demonstration project under a section 1115 waiver.
With the exception of the number of waivers for the elderly, the data for this state are based on  author’s estimates. See Harrington, Aug. 2001.
In 1999, the District of Columbia did not have any HCBS waivers for the elderly in operation.
section_title: Appendix VI: CMS HCBS Quality Initiatives
paragraphs: CMS has undertaken a series of initiatives to generate information and  dialogue on existing systems of quality assurance in HCBS waivers and to  provide a range of assistance to states in this area. Approximately $1  million was budgeted for these HCBS quality initiatives in fiscal year 2001  and $3.4 million in fiscal year 2002. Through its HCBS quality initiatives,  CMS intends to more closely assess the status of quality assurance efforts  currently in place and to provide direct assistance to states in this area.  CMS’s initiatives include (1) developing a conceptual framework for  defining and measuring quality, (2) creating tools for states to adapt and  use in assessing quality, such as model consumer experience surveys, and  (3) providing technical assistance and resources for quality assurance and  improvement. These initiatives, while important, do not address the lack  of detailed requirements for states on the necessary components of an  acceptable quality assurance system or the weaknesses in regional office  oversight of state HCBS waivers that we identified elsewhere in this  report.
Quality Framework and Expectations. CMS sponsored the development  of a framework for quality in home and community-based services that  focuses on outcomes in several key areas including beneficiary access to  care, safety, satisfaction, and meeting beneficiary needs and preferences.  The next phase involves identifying strategies that states are currently  using to monitor and improve quality within these key areas. While the  expectations contained in the quality framework have not been specified  in CMS regulations, they are reflected in the application template for  CMS’s new consumer-directed HCBS waiver, Independence Plus. States’  use of the template for the Independence Plus waiver is voluntary. The  template asks states for a detailed description of their quality assurance  and improvement programs—something not currently required as part of  the general HCBS waiver application. Guidance for using the template  notes that the description should include (1) information on the frequency  of quality assurance activities, (2) the dimensions that will be monitored,  (3) the qualifications of persons conducting quality assurance activities,   (4) the process for identifying problems, including sampling  methodologies, (5) provisions for assuring that problems are addressed in  a timely manner, and (6) the system to receive, review, and act on critical  incidents or events.
Quality Assurance Mechanisms. CMS is also developing quality  assessment and improvement mechanisms for states. For example, to  develop a guide for states and CMS regional offices, a contractor reviewed  the literature on quality measurement and improvement in home and  community-based care, convened an expert panel, and conducted  interviews with state officials. As of April 2003, the guide was undergoing  final clearance within CMS. It is expected to include (1) benchmarks for  effective quality assurance programs in home and community-based care,  (2) a discussion of the knowledge and mechanisms needed to design,  implement, and assess quality activities in home and community-based  care, and (3) suggestions for addressing limitations and problems in  assuring quality in home and community-based care. Another contractor  has developed and field-tested consumer experience surveys for use in  waiver programs for the elderly and for persons with developmental  disabilities. This contractor is also developing a set of performance  indicators for states to use in guiding development and assessing quality in  new self-directed HCBS waivers.
Technical Assistance and Resources. Other CMS efforts focus on  providing technical assistance and resources to states. One contractor has  assembled a team of professionals with expertise in home and community- based services that can serve as a resource for both states and the CMS  regional offices. Services available from these teams are expected to  include conducting targeted reviews of waiver programs; providing  suggestions to states regarding their quality assurance activities;  consulting with CMS staff regarding quality aspects of specific waivers;  and providing resource materials on quality assurance monitoring and  improvement tools. This contractor is also assessing the types of data  currently gathered by a sample of states that is, or could be, used for  quality measurement and improvement; compiling information on selected  data-driven state quality efforts; and providing technical assistance to the  states. Finally, CMS sponsored a national conference on HCBS quality   measurement and improvement in May 2002. This day-and-a-half-long  conference—attended by state officials, CMS staff, and others—offered  training and information on strategies and techniques for quality assurance  and improvement in home and community-based care.
section_title: Appendix VII: Beneficiary Samples for and Duration of Regional Office Reviews of 15 State Waivers Serving the Elderly
subsections: section_title: Target population
paragraphs: review (days)
The regional office review contained no information on beneficiary interviews or observations.
This waiver review was conducted at the regional office rather than on-site at the relevant state  agencies.
section_title: Appendix VIII: Comments from the Centers for Medicare & Medicaid Services