Oversight of nursing homes is a shared federal-state responsibility. Based on statutory requirements, CMS (1) defines quality standards that nursing homes must meet to participate in the Medicare and Medicaid programs and (2) contracts with state survey agencies to assess whether homes meet those standards through annual surveys and complaint investigations. Although CMS has issued extensive guidance to states on determining compliance with federal quality requirements, we have found that some state surveys understate quality problems at nursing homes. Federal nursing home quality standards focus on the delivery of care, resident outcomes, and facility conditions. These standards, totaling approximately 200, are grouped into 15 categories, such as Resident Rights, Quality of Life, Resident Assessment, Quality of Care, Pharmacy Services, and Administration. For example, there are 23 standards within the Quality of Care category ranging from “promote the prevention of pressure development” to “the resident environment remains as free of accident hazards as is possible.” CMS has also developed detailed investigative protocols to assist state survey agencies in determining whether nursing homes are in compliance with federal quality standards. This guidance is intended to ensure the thoroughness and consistency of state surveys and complaint investigations. Every nursing home receiving Medicare or Medicaid payment must undergo a standard state survey not less than once every 15 months, and the statewide average interval for these surveys must not exceed 12 months. During a standard survey, teams of state surveyors—generally consisting of registered nurses, social workers, dieticians, or other specialists—evaluate compliance with federal quality standards. Based on the care provided to a sample of residents, the survey team (1) determines whether the care and services provided meet the assessed needs of the residents and (2) measures resident outcomes, such as the incidence of preventable pressure sores, weight loss, and accidents. In contrast to a standard survey, a complaint investigation generally focuses on a specific allegation regarding a resident’s care or safety and provides an opportunity for state surveyors to intervene promptly if problems arise between standard surveys. Surveyors generally follow state procedures when investigating complaints, but must comply with certain federal guidelines and time frames. When deficiencies are identified, federal sanctions can be imposed to help encourage homes to correct them. Sanctions are generally reserved for serious deficiencies—those at the G through L levels—which constitute actual harm and immediate jeopardy. Sanctions for such serious quality problems can affect a home’s revenues and provide financial incentives to return to and maintain compliance. Such sanctions include fines known as civil money penalties, denial of payment for new Medicare or Medicaid admissions, or termination from the Medicare and Medicaid programs. State surveys that miss serious deficiencies or cite deficiencies at too low a scope and severity level have enforcement implications because a nursing home may escape sanctions intended to discourage repeated noncompliance. For example, facilities that receive at least one G through L level deficiency on successive standard surveys or complaint investigations must be referred for immediate sanctions. In addition, CMS guidance calls for higher fines when a home has a poor compliance history and requires that state survey teams revisit a home to verify that serious deficiencies have actually been corrected (such revisits are not required for most deficiencies cited below the actual harm level—A through F). Statutorily required federal monitoring surveys, which are conducted annually in at least 5 percent of state-surveyed Medicare and Medicaid nursing homes in each state, are a key CMS oversight tool in ensuring the adequacy of state surveys. CMS headquarters—specifically, CMS’s Survey and Certification Group—is responsible for the management of the federal monitoring survey database and for oversight of the 10 CMS regional offices’ implementation of the federal monitoring survey program. Federal surveyors located in regional offices conduct federal monitoring surveys. The surveys can be either comparative or observational, with each offering unique advantages and disadvantages as an oversight tool. For example, an advantage of comparative surveys is that they are an independent evaluation of a nursing home recently surveyed by a state survey agency team. A disadvantage is that the time lag between the two surveys can make analysis of differences difficult. Comparative survey. A federal survey team conducts an independent survey of a home recently surveyed by a state survey agency in order to compare and contrast the findings. This comparison takes place after completion of the federal survey. When federal surveyors identify a deficiency not cited by state surveyors, they assess whether the deficiency existed at the time of the state survey and should have been cited by entering either yes or no to the question, “Based on the evidence available to the , should the team have cited this ?” This assessment is critical in determining whether understatement occurred because some deficiencies cited by federal surveyors may not have existed at the time of the state survey. For example, a deficiency identified during a federal survey could involve a resident who was not in the nursing home at the time of the earlier state survey. By statute, comparative surveys must be conducted within 2 months of the completion of the state survey. However, differences in timing, resident sample selection, and staffing can make analysis of differences between the state and federal comparative surveys difficult. On the basis of our prior recommendations, CMS has taken several steps to ensure that comparative surveys more accurately capture conditions at the time of the state survey. For example, CMS now calls for the length of time between the state and federal surveys to be between 10 and 30 working days and requires federal surveyors conducting a comparative survey in a nursing home to include at least half of the state survey’s sample of residents from that nursing home in the comparative survey sample, making it easier to determine whether state surveyors missed a deficiency. Furthermore, federal comparative survey teams are expected to mimic the number of staff assigned to the state survey. CMS also issued guidance in October 2002 defining the criteria for federal surveyors to consider when selecting facilities for comparative surveys. These selection criteria can generally be categorized as state survey team performance and facility characteristics. Regional offices were given latitude in their use of these criteria and may supplement them with other selection factors unique to their regions. For example, some regions use statistics on the prevalence of pressure sores in a nursing home’s resident population as a comparative survey selection factor. Observational survey. Federal surveyors accompany a state survey team to a nursing home to evaluate the team’s on-site survey performance and ability to document survey deficiencies. State teams are evaluated in six areas—Concern Identification, Sample Selection, General Investigation, Food-Borne Illness Investigation, Medication Investigations, and Deficiency Determination—and are rated in one of five categories for each of the six measures. The rating categories—from highest to lowest—are extremely effective, very effective, satisfactory, less than satisfactory, and much less than satisfactory. CMS annual state performance reviews require that state survey teams achieve an average rating of satisfactory. Observational surveys allow federal surveyors to provide more immediate feedback to state surveyors and to identify state surveyor training needs. However, observational surveys are not independent evaluations of the state survey. Because state surveyors may perform their survey tasks more attentively than they would if federal surveyors were not present, observational surveys may not provide an accurate picture of state surveyors’ typical performance. Since 2001, CMS has also taken steps to strengthen observational surveys. For example, the agency issued written guidance defining a standard process for resolving disagreements and a new manual to increase consistency across observational surveys. The 976 federal comparative surveys conducted from fiscal year 2002 through 2007 ranged from as few as 10 in Vermont, which has about 40 facilities, to as many as 49 in California, which has about 1,300 facilities. Of the 4,023 federal observational surveys conducted during the same period, the number ranged from 16 in New Hampshire to 346 in California. The results of federal monitoring surveys, including information on the corresponding state surveys, are entered in the federal monitoring survey database. In fiscal year 2002, CMS began including information on comparative surveys in the database, and the agency began requiring federal surveyors to determine whether a deficiency cited by federal but not state surveyors had been missed by determining whether state surveyors should have cited the deficiency. Although comparative surveys and the wide variability across states in the proportion of homes with deficiencies at the actual harm and immediate jeopardy levels indicate that state surveyors miss some serious deficiencies, our prior work has also indicated that state surveyors sometimes understate the scope and severity of a deficiency. In 2003, we found widespread understatement of actual harm deficiencies in a sample of surveys from homes with a history of harming residents. Overall, 39 percent of the 76 state surveys we reviewed had documented problems that should have been classified as actual harm instead of as lower-level deficiencies. A substantial proportion of federal comparative surveys identify missed deficiencies at the potential for more than minimal harm level or above. From fiscal year 2002 through 2007, about 15 percent of federal comparative surveys nationwide identified state surveys that failed to cite at least one deficiency at the most serious levels of noncompliance—the actual harm and immediate jeopardy levels (G through L). There was wide variation across states in the proportion of comparative surveys that found at least one missed serious deficiency, from more than 25 percent in nine states to none in seven others. In contrast to missed serious deficiencies, missed deficiencies at the potential for more than minimal harm level (D through F) were considerably more widespread, with such missed deficiencies greater than 40 percent in all but five states. Every state had at least one comparative survey with missed D through F level deficiencies. At both levels of noncompliance, the most frequently missed deficiencies involved Quality of Care standards. Federal observational survey results and prior GAO reports have highlighted several factors that may contribute to the understatement of deficiencies. About 15 percent (142) of the 976 comparative surveys conducted from fiscal year 2002 through 2007 identified state surveys that missed at least one deficiency at the actual harm or immediate jeopardy level (G through L), the most serious levels of noncompliance. This proportion fluctuated from a high of 17.5 percent in fiscal year 2003 to a low of 11.1 percent in fiscal year 2004, but it has remained relatively constant at about 15 percent for the last several fiscal years (see fig.