Titles XVIII and XIX of the Social Security Act establish minimum standards that all nursing homes must meet to participate in the Medicare and Medicaid programs, respectively. Provisions added by the Omnibus Budget Reconciliation Act of 1987 focused the standards on the quality of care actually provided by a home. To encourage improvement at nursing homes that demonstrate chronic noncompliance with these quality of care standards, CMS initiated the SFF Program in 1998 and subsequently expanded and strengthened the program in December 2004. To assess whether nursing homes meet federal quality of care standards, state survey agencies conduct standard surveys, which occur on average once a year, and complaint investigations as needed. A standard survey involves a comprehensive assessment of federal quality standards. In contrast, complaint investigations generally focus on a specific allegation regarding resident care or safety made by a resident, family member, or nursing home staff member. Deficiencies identified during either standard surveys or complaint investigations are classified in 1 of 12 categories labeled A through L according to their scope (i.e., the number of residents potentially or actually affected) and severity (i.e., the potential for or occurrence of harm to residents). (See table 1.) An A-level deficiency is the least serious and is isolated in scope, while an L-level deficiency is the most serious and is widespread throughout the nursing home. Nursing homes with deficiencies at the A, B, or C levels are considered to be in substantial compliance with quality standards; homes with D-level or higher deficiencies are considered noncompliant. For most deficiencies, a home is required to prepare a plan of correction, and, depending on the severity of the deficiency, surveyors may conduct a revisit to ensure that the nursing home has implemented its plan and corrected the deficiency. Nursing homes that fail to meet federal quality standards may be subject to federal enforcement actions known as sanctions. Sanctions can affect a home’s revenues and therefore provide financial incentives to return to and maintain compliance. Enforcement of nursing home quality of care standards is a shared federal-state responsibility. In general, sanctions are (1) initially proposed by the state based on a cited deficiency, (2) reviewed and imposed by CMS regional offices, and (3) implemented—that is, put into effect—by the same CMS regional office. Homes may have an opportunity to correct deficiencies after the imposition of a sanction, which can result in the sanction being rescinded, that is, not implemented. At state and regional office discretion, sanctions may be imposed immediately without giving homes an opportunity to correct deficiencies after a required notice period. Sanctions are generally reserved for serious deficiencies—those at the G through L levels—that constitute actual harm and immediate jeopardy to residents. Sanctions include fines known as civil money penalties (CMP), denial of payment for new Medicare or Medicaid admissions (DPNA), and termination from the Medicare and Medicaid programs. Overall, two sanctions—CMPs and DPNAs—accounted for about 75 percent of federal sanctions from 2005 through 2008, while terminations were less than 1 percent. By statute, DPNA and termination are mandatory sanctions in certain circumstances, but discretionary DPNA and termination may also be imposed. CMP. Unlike most other sanctions, CMPs require no notice period; in addition, they can be applied retroactively to the first date of noncompliance. CMPs may be either per day or per instance. CMS regulations specify a per day CMP range from $50 to $10,000 for each day a home is noncompliant—from $50 to $3,000 for nonimmediate jeopardy and $3,050 to $10,000 for immediate jeopardy. Per instance CMPs range from $1,000 to $10,000 per episode of noncompliance. In 2007, CMS issued guidance to states and regional offices to encourage consistency in CMP amounts. DPNA. A DPNA denies a home payments for new admissions until deficiencies are corrected. A DPNA is required by statute within 3 months of the end of a survey if, for example, a home fails to correct deficiencies and return to compliance. In contrast, discretionary DNPAs can go into effect much sooner—after a 15-day notice period, which is shortened to 2 days in the case of immediate jeopardy. Unlike CMPs, DPNAs cannot be imposed retroactively. Termination. CMS can terminate a nursing home by implementing either a mandatory or a discretionary termination. Mandatory termination is required by regulation if within 23 days of the end of a survey a home fails to correct immediate jeopardy deficiencies or within 6 months if it fails to correct nonimmediate jeopardy deficiencies. CMS may also impose discretionary terminations in situations other than those specified above, which require the same notice period applicable to discretionary DPNAs. In addition, nursing homes can and do terminate voluntarily, which may be related to the fact that the home is at risk of involuntary termination. The objective of the SFF Program is to decrease the number of persistently poorly performing nursing homes by focusing more attention on a small number of nursing homes in each state with a record of poor quality performance. Since the program’s inception, CMS has changed the SFF Program’s scope and methodology to enhance the agency’s goal of improving nursing home performance. CMS uses its SFF methodology to identify a list of the 15 worst performing nursing homes in each state. The SFF methodology assigns points to deficiencies on standard surveys and complaint investigations, and to revisits associated with deficiencies cited on standard surveys.19, 20 More points are assigned to deficiencies that are higher in scope and severity, and additional points are assigned to deficiencies classified as substandard quality of care (SQC). (See table 2.) For every nursing home, CMS sums the points associated with the deficiencies (including SQC) and the revisits to create a cycle score for each of the last three cycles. CMS then creates the total score by weighting the more recent cycle scores more heavily. Nursing homes with the highest number of points are the worst performing homes. To avoid potential double-counting, deficiencies that appear on complaint surveys conducted within 15 days of a standard survey (either prior to or after the standard survey) are counted only once. If the scope or severity differs on the two surveys, the highest scope and severity combination is used. From 1999 to 2004, the SFF methodology assigned a different number of points to deficiencies using only about 1 year of deficiency data. In 2005, CMS altered the number of points assigned to deficiencies and based a nursing home’s numeric score on about 3 years of deficiency data, weighted equally. In 2007, CMS removed fire safety deficiencies from the SFF methodology, to provide an increased focus on quality of care deficiencies. CMS refers to the resulting list of the 15-worst performing homes in each state as the SFF candidate list. The list is generally distributed quarterly to CMS’s regional offices, which then distribute it to states as necessary. Except for Alaska, each state and the District of Columbia have between one and six SFFs at any time, depending on the total number of nursing homes in the state. (See fig. 1.) If there is an opening in the state’s program because an SFF has graduated from the program or been terminated from Medicare and Medicaid, the state selects a new SFF from its candidate list. CMS allows states discretion in determining which of the candidates to choose for the program, and the CMS regional office concurs with the states’ selections. In addition to specifying that states select SFFs from a list of candidate nursing homes, figure 2 shows that CMS’s guidance to states on the operation of the SFF Program includes two other key requirements: States are instructed to increase scrutiny of SFFs in the following ways: Survey frequency. States provide additional scrutiny of SFFs by conducting two surveys per fiscal year for each SFF, which is twice as frequent as at other nursing homes. CMS measures each state’s compliance with this requirement annually through state performance reviews. The state performance reviews emphasize three aspects of the survey program: survey timeliness, survey quality, and the enforcement and remedy of problems found during surveys. If a regional office determines that a state has not conducted two surveys for every SFF allotted to the state per fiscal year, the state must develop a corrective action plan. Enforcement. States are required to impose sanctions that increase in severity and are more immediate when SFFs do not improve. For example, a state should propose a CMP or a DPNA with the minimum notice period. After three standard surveys (approximately 18 months) in the SFF Program, one of the following three outcomes are expected: Graduation. States determine if the SFF is eligible to “graduate” from the program by meeting CMS’s criteria for improved performance: two consecutive standard surveys and any intervening complaint investigations must have no deficiencies at the F level or higher. In addition, an SFF cannot have a deficiency higher than the F level on the fire safety portion of its most recent standard survey. Retention. States keep the SFF in the program if it does not meet the graduation criteria but is showing improvement. Termination. States recommend that the SFF be terminated from participation in Medicare and Medicaid if it fails to make significant progress. CMS made several key changes to the SFF Program in 2007 and 2008 to increase both provider and public awareness of the program. In 2007, CMS began requiring states to notify the governing bodies, owners, operators, and administrators that a facility had been designated an SFF. CMS also issued a press release in 2007 listing those SFFs that had failed to significantly improve their care; previously, the identity of SFFs was not provided to the public. In an effort to increase transparency, CMS added the identity of all SFFs to its Nursing Home Compare Web site during 2008.