Ensuring the quality and safety of nursing home care has been a focus of considerable congressional attention since 1998. Titles XVIII and XIX of the Social Security Act establish minimum requirements in statute that all nursing homes must meet to participate in the Medicare and Medicaid programs, respectively. With the Omnibus Budget Reconciliation Act of 1987 (OBRA 87), Congress focused the requirements on the quality of care actually provided by a home. To help ensure that homes maintained compliance with the new requirements, OBRA 87 also established the range of available sanctions, to include CMPs, DPNAs, and termination. CMS contracts with state survey agencies to assess whether homes meet federal quality requirements through routine inspections, known as standard surveys, and complaint investigations. The requirements are intended to ensure that residents receive the care needed to protect their health and safety, such as preventing avoidable pressure sores, weight loss, and accidents. While a standard survey involves a comprehensive assessment of federal quality requirements, a complaint investigation generally focuses on a specific allegation regarding resident care or safety; complaints can be lodged by a resident, family member, or nursing home employee. Deficiencies identified during either standard surveys or complaint investigations are classified in 1 of 12 categories according to their scope (i.e., the number of residents potentially or actually affected) and severity. An A-level deficiency is the least serious and is isolated in scope, while an L-level deficiency is the most serious and is considered to be widespread in the nursing home (see table 2). When state surveyors identify and cite B-level or higher deficiencies, the home is required to prepare a plan of correction and, depending on the severity of the deficiency, surveyors conduct revisits to ensure that the home actually implemented its plan and corrected the deficiencies. Homes with deficiencies at the A, B, or C levels are considered to be in substantial compliance with federal quality requirements, while homes with D-level or higher deficiencies are considered noncompliant. A noncompliance period begins when a survey finds noncompliance and ends when the home either achieves substantial compliance by correcting the deficiencies or when the home is terminated from Medicare and Medicaid. Since 1998, the deficiencies cited during standard surveys have been summarized on CMS’s Nursing Home Compare Web site, and CMS subsequently added data on the results of complaint investigations. These data are intended to help consumers select a nursing home that takes into account the quality of care provided to residents. CMS and the states can use a variety of federal sanctions to help encourage compliance with quality requirements ranging from less severe sanctions, such as indicating the specific actions needed to address a deficiency and providing an implementation time frame, to those that can affect a home’s revenues and provide financial incentives to return to and maintain compliance (see table 3). Overall, two sanctions—CMPs and DPNAs—accounted for 80 percent of federal sanctions from fiscal years 2000 through 2005. The majority of federal sanctions implemented from fiscal years 2000 through 2005—about 54 percent—were CMPs. 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. The overall amount of the fine increases the longer a home is out of compliance. For example, a home with a per day CMP of $5,000 that is out of compliance for 10 days would accrue a total penalty of $50,000. A per day CMP can be assessed retroactively, starting from the first day of noncompliance, even if that date is prior to the date of the survey that identified the deficiency. Per instance CMPs range from $1,000 to $10,000 per episode of noncompliance. While multiple per instance CMPs can be imposed for deficiencies identified during a survey, the total amount cannot exceed $10,000. Per day and per instance CMPs cannot be imposed as a result of the same survey, but a per day CMP can be added when a deficiency is identified on a subsequent survey if a per instance CMP was the type of CMP initially imposed. Unlike other sanctions, CMPs require no notice period. However, if a home appeals the deficiency, by statute, payment of the CMP—whether received directly from the home or withheld from the home’s Medicare and Medicaid payments—is deferred until the appeal is resolved. DPNAs made up about 26 percent of federal sanctions from fiscal years 2000 through 2005. A DPNA denies a home payments for new admissions until deficiencies are corrected. In contrast to CMPs, CMS regulations require that homes be provided a notice period of at least 15 days for other sanctions, including DPNAs; the notice period is shortened to 2 days in the case of immediate jeopardy. As a result, homes can avoid DPNAs if they are able to correct deficiencies during the notice period, which provides a de facto grace period. Unlike CMPs, DPNAs cannot be imposed retroactively, and payment denial is not deferred until appeals are resolved. Although nursing homes can be terminated involuntarily from participation in Medicare and Medicaid, which can result in a home’s closure, termination is used infrequently. Terminations were less than 1 percent of total sanctions from fiscal years 2000 through 2005. Four of the seven types of sanctions described above were used less frequently than CMPs and DPNAs—directed plan of correction, state monitoring, directed in-service training, and temporary management—these sanctions accounted for about 19 percent of sanctions nationwide from 2000 through 2005. The statute permits and, in some cases, requires that DPNAs or termination be imposed for homes found out of compliance with federal quality requirements. Mandatory termination and DPNA are required, as follows: Termination—Termination is required by regulations under the statute if within 23 days of the end of a survey a home fails to correct immediate jeopardy deficiencies, or within 6 months of the end of a survey the home fails to correct nonimmediate jeopardy deficiencies. DPNA—A DPNA is required by statute if within 3 months of the end of a survey a home fails to correct deficiencies and return to compliance or when a home’s last three standard surveys reveal substandard quality of care. The statute also authorizes CMS to impose discretionary DPNAs and discretionary terminations in situations other than those specified above. Federal regulations further stipulate that such discretionary sanctions may be implemented as long as a facility is given the appropriate notice period. By regulation, the notice period for implementing both discretionary and mandatory DPNAs and terminations is 15 days; in cases of immediate jeopardy, however, the notice period is 2 days. In imposing sanctions, CMS takes into account four factors: (1) the scope and severity of the deficiency, (2) a home’s prior compliance history, (3) desired corrective action and long-term compliance, and (4) the number and severity of all the home’s deficiencies. In general, the severity of the sanction increases with the severity of the deficiency. For example, for immediate jeopardy deficiencies (J, K, and L on CMS’s scope and severity grid) the regulations require that either or both temporary management or termination be imposed, and also permits use of CMPs of from $3,050 to $10,000 per day or $1,000 to $10,000 per instance of noncompliance. Similarly, for deficiencies at the actual harm level (G, H, and I on the scope and severity grid) the regulations require one or a combination of the following sanctions: temporary management, a DPNA, a per day CMP of $50 to $3,000, or a per instance CMP of $1,000 to $10,000 per instance of noncompliance. In addition to these required sanctions, other sanctions can be included; for example, depending on the severity of the deficiency and a home’s compliance history, it could have a combination of state monitoring, a DPNA, and a CMP. Finally, CMS is required to consider the immediacy of sanctions. The statute stipulates that sanctions should be designed to minimize the time between the identification of violations and the final imposition of the sanctions. Enforcement of nursing home quality-of-care requirements is a shared federal-state responsibility. In general, sanctions are (1) initially proposed by the state survey agency 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, usually after a required notice period (see fig. 1). CMS regional offices typically accept state-proposed sanctions but can modify them. The regional office notifies the home by letter that a sanction is being imposed—that is, its intent to implement a sanction—and the date it will be implemented. State surveyors may make follow-up visits to the home to determine whether the deficiencies have been corrected. The CMS regional office implements the sanctions if the deficiencies are not corrected. Homes may appeal the cited deficiency and, if the appeal is successful, the severity of the sanction could be reduced or the sanction could be rescinded. Homes have several avenues of appeal, including informal dispute resolution at the state survey agency level or a hearing before an administrative law judge, as well as before the Department of Health and Human Services Departmental Appeals Board. Under CMS policy, homes automatically receive a 35 percent reduction in the amount of a CMP if they waive their right to appeal before the Departmental Appeals Board. In response to our earlier recommendations, CMS undertook a number of initiatives intended to strengthen enforcement, many of which we reported on in 2005.