Medicare’s home health benefit includes skilled nursing and home health aide services, physical and occupational therapy, speech pathology services, medical social services, and the provision of certain medical supplies and equipment. To qualify for services, beneficiaries must be confined to their homes; have a plan of care signed by a physician; and need intermittent skilled nursing care (other than solely venipuncture for the purpose of obtaining a blood sample), physical therapy, speech- language pathology services, or have a continuing need for occupational therapy services. Intermittent means that the skilled care is either provided or needed fewer than 7 days each week, or less than 8 hours of each day for periods of 21 days or less, with extensions in exceptional circumstances when the need for additional care is finite and predictable. HHAs may serve Medicare beneficiaries from a parent office or expand their coverage by delivering services from affiliated branches or subunits. Branch locations provide services in the same geographic area as the parent and share administration, supervision, and services with the parent. Subunits are semiautonomous entities and provide services in a geographic area different from the parent HHA. To participate in Medicare, parent offices as well as subunits must generally serve a minimum of 10 patients prior to undergoing an initial survey that certifies compliance with Medicare COPs. In other words, a subunit must meet the Medicare COPs independent of its parent office. In contrast, a branch location is not subject to an initial survey. In approving a branch location, CMS requires a parent HHA to demonstrate that it provides adequate day-to-day supervision to prove that the branch is not autonomous and should not independently meet Medicare COPs. As of mid-2001, there were approximately 6,900 HHAs and subunits and approximately 2,600 separate branch offices, for a total of about 9,500 service locations. Sixty-eight percent of HHAs were freestanding agencies (not associated with a hospital), and nearly 50 percent were for-profit. CMS and its 10 regional offices are responsible for overseeing the quality of care delivered by HHAs. CMS fulfills this responsibility by contracting with states to examine compliance with Medicare requirements, known as COPs, through periodic surveys generally conducted every 12 to 36 months, depending on an HHA’s compliance history. Focusing on care processes, Medicare’s 15 COPs cover broad areas such as patient rights, adherence to the physician-prescribed patient plan of care, the provision and supervision of skilled nursing and home health aide services, and the maintenance of medical records. All but two COPs are further subdivided into more detailed standards. For example, the “skilled nursing services” COP covers the duties of both a registered nurse and a licensed practical nurse as further defined by 15 specific standards. Two of the 15 COPs, added in 1999, cover patient assessments using the Outcome and Assessment Information Set (OASIS). OASIS is used to collect standardized information on patient conditions in order to monitor changes over time and help identify potential quality-of-care problems. In general, assessments are required no less frequently than at the start of care, every 60 days following admission, and when the patient is discharged by the HHA. HHAs were required to begin collecting and reporting OASIS data in July 1999. OASIS data are also an integral part of the new HHA prospective payment system implemented in October 2000, which provides HHAs a fixed, predetermined payment for each 60-day “episode of care.” The amount of the payment is adjusted for the severity of the patient’s condition using OASIS data. While encouraging efficiency, the new prospective payment system also provides HHAs an incentive to reduce services in order to increase net revenues. Prior to October 1997, HHAs were paid on the basis of their costs, up to preestablished per-visit limits. There were no incentives to control the volume of services delivered, and as a result, HHAs could enhance their revenues by providing more beneficiaries with more visits. According to CMS requirements, state surveyors must routinely conduct a “standard survey” to test compliance with about half of the 15 COPs (see app. II). CMS deems these COPs to be those most closely associated with the quality of care provided by HHAs. If an HHA is found to be out of compliance with at least one of these COPs, surveyors are required to extend the standard survey and review the remaining COPs. Typically, state surveyors are registered nurses. CMS offers a basic course that focuses on HHA regulations and survey methodology but it is not mandatory for HHA surveyors to take this course. However, every surveyor must complete one of the basic training courses, such as the course on surveying nursing homes, end-stage renal facilities, or hospitals. In addition to focusing on the regulations specific to a provider, each of these courses also covers generic skills such as observation, interviewing, and documentation. The core of the statutorily defined standard survey is the review of a case- mix stratified sample of patient medical records and visits to patients’ homes to validate the record review. The medical record review includes determining whether the HHA has a current and appropriate plan of care for each patient as ordered by the patient’s physician, whether the ordered care and services are provided and coordinated by the personnel who furnish them, and whether the patient’s physician is notified of changes in medical condition. The visit to the patient’s home is to ensure the patient is receiving the physician-ordered treatment in accordance with the plan of care and that the care is provided in accordance with Medicare health and safety standards. The number of records reviewed and patients visited is based on the number of unduplicated skilled care patients served by an HHA in the 12 months prior to the survey. For example, an HHA with fewer than 150 patients would have a minimum of 3 to 5 record reviews with patient home visits, while an HHA with 1,251 or more patients would have 25 or more. Because home health patients reside in their own homes and care delivery is not as readily observable, detecting quality-of-care deficiencies—both individual and systemic—is more challenging than it is for nursing home residents. For example, HHA surveyors are typically in each patient’s home for less than an hour to interview the patient and, if possible, to observe care delivery by HHA personnel; in contrast, a nursing home survey lasts several days, giving surveyors a significant opportunity to observe the delivery of care and identify the quality-of-care concerns of a number of residents over a longer period of time. When HHAs fail to meet Medicare quality requirements, surveyors are required to cite deficiencies of either COPs or standards or both. According to CMS’s guidance, COP-level deficiencies are more serious and reflect the existence of a significant problem that “adversely affects or has the potential to adversely affect patients”—that is, harms patients or has the potential to do so. CMS guidance does not specifically define a standard-level deficiency. When a deficiency is cited, HHAs must submit a plan of correction. CMS requires state surveyors to confirm that HHAs with a COP-level deficiency have returned to compliance by making on- site revisits. By statute, each HHA must be surveyed at least once every 36 months, with CMS requirements determining the exact survey frequency based on an HHA’s compliance history and other factors. Generally, CMS requires an HHA without COP-level deficiencies to be surveyed once every 3 years. In contrast, CMS requires annual surveys if HHAs have participated in Medicare for fewer than 3 years; have had a recent change in ownership; have had a COP-level deficiency within the last 24 months; have been reviewed by a state, regional, or national fraud and abuse initiative; or have had a complaint survey with any deficiency citations since the last standard survey. This variable 12- to 36-month survey schedule was implemented in 1996 to focus survey resources on HHAs with compliance problems. The results of HHA surveys are tracked in CMS’s OSCAR database, which permits federal monitoring of state survey activities. State survey agencies are required to conduct timely investigations of reported complaints, and to operate a home health hotline for individuals to register complaints against HHAs. For complaints that involve a possible immediate and serious threat, states must conduct complaint investigations within 2 working days. Additional time frames for investigating other complaints may be set at each state’s discretion. A complaint investigation can trigger a standard survey if surveyors find situations that warrant further review. HHAs that are out of compliance with one or more COPs can be terminated from the Medicare program and thus lose the right to serve Medicare beneficiaries. Termination is the only federal sanction available because CMS has not implemented other sanctions as directed by the Congress in 1987. When a COP-level deficiency poses an “immediate and serious threat” to a patient’s health and safety, HHAs are placed on an accelerated 23-day termination timetable; in less serious situations, CMS uses a 90-day termination timetable. HHAs can avoid termination by implementing plans of correction that bring them back into compliance with Medicare’s COPs. HHAs with one or more standard-level deficiencies—as opposed to having a COP-level deficiency—are not subject to termination but must submit an acceptable plan of correction. In states that license HHAs, other state-specific enforcement actions, including revoking an HHA’s operating license or assessing monetary penalties, may be available. Although the results of HHA surveys conducted since 1998 indicated that few agencies had serious quality problems, the prevalence of reported COP-level deficiencies varied dramatically across states, suggesting that such problems may be understated in many states. In contrast, analysis of adverse events recorded in OASIS data collected by HHAs—incidents that raise a flag about the quality of care delivered—showed they occurred with little variation across states.