oversight

Problems in Providing Proper Care to Medicaid and Medicare Patients in Skilled Nursing Homes

Published by the Government Accountability Office on 1971-05-28.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                   --




               ;        I




    REPORT TO THE CONGRESS




    Problems In Providing Proper Care
    To Medicaid ‘And Medicare Patients
    In Skilled Nursing Homes B-764037f3j!
                                      P
    Department of Health, Education,
      and Welfare




    BY THE COMPTROLLER    GENERAL
    OF THE UNITED  STATES
.
                   COMPTROLLER     GENERAL      0;        1 HE    CNiTED     STATES
                                 WASHINGTON          DC      20548




B- 164031(    3)




To the    President        of the Senate     and the
Speaker     of the      House    of Representatives

         This 1s our report       on problems       m providing       proper      care
to Medicaid       and Medicare      patients    m skilled     nursmg       homes.
 These    programs       are admmlstered        at the Federal       level    by the
Social    and Rehabllltatlon      Service     (Medicaid)      and the Social
Security     Admmlstratlon       (Medlcare),       Department       of Health,      Ed-
ucation,     and Welfare.

        Our review   was made pursuant    to the                               Budget   and Accountmg
Act,   1921 (31 U.S C. 53), and the Accounting                                  and Auditing   Act of
1950   (31 U.S.C.  67)

       Copies   of this report               are being  sent to the                   Darector,     Office
of Management      and Budget,               and to the Seqetary                      of Health,    Educa-
tlon, and Welfare.




                                                                         Comptroller      General
                                                                         of the Unxted    States




                   -      50TH   ANNIVERSARY                     1921-     1971
COMPTROLLER GENERAL ‘S                             PROBLEMSIN PROVIDING PROPERCARE TO MEDICAID
REPORT TO THE CONGRESS                             AND MEDICARE PATIENTS IN SKILLED NURSING
                                                   HOMES
                                                   Department of Health, Education, and Welfare
                                                   B-164031(3)


DIGEST
---m-e

WHY THE REVIEW WAS MADE

          America's "age 65 and over" population has Increased from 9 million   in
          1940 to 20 million   in 1970. As persons become older their need for care
          lncreasesp and, for those requiring more intensive   care, this means in-
          stitutional  care in hospitals or nursing homes. Nursing-home care 1s
          generally classlfled   as:
                Skilled   nursing care (Medicaid) and extended care
                IMedicare)--Periodic   medical and dally nursing care without                   hospltal-
                ization.

                Intermediate  care--Care over and above that             classified    as room and
                board but less than skilled  care.

                Supervised        care--Prtmanly    room and board with      some supervision.

          Because the cost of such care has increased beyond the financial      capa-
          bility  of State and local governments, Federal financial   assistance has
          been made available   through the Medicaid and Medicare programs adminis-
          tered by the Department of Health, Education, and Welfare (HEW). For
          example, under these two programs the Federal Government expended in
          1969 about $1 billion    for skilled nursing care and extended care--pn-
          marily for the elderly.

          The Congress 1s interested               in answers to questions      about skilled       nurs-
          ing homes, such as:

                --Are   skilled      nursing   homes provldlng     proper care to patients?

                --Are patients        being provided    with   levels   of care more intensive         than
                   needed?

          The States of Michigan, New York, and Oklahoma have about 1,200 nursing
          homes certified  as skilled   In 1969 these States expended $336 million
          of Federal, State, and local funds to care for Medicaid patients ln
          these homes, about half of the expenditures represented the Federal
          share.

 Tear
 --     Sheet




                                                                          MAY28,1971
                                 t-
    The General Accountlng Office Y GAO) vlslted    90 nursing homes (30 ln
    each State) having 5,581 Medlcald patients and examined into whether
    the homes were adhering to the requirements established     by HEW for par-
    tlclpatlon  ln the Medlcald program as skilled    nursing homes. For those
    homes which also served Medlcare patients,     GAO examined into whether
    the homes were adhering also to Medicare requirements.

    GAO examined also into whether tt appeared that        a less lntenslve    level
    of care would sattsfactorlly meet the patients'        needs.


FINDINGSANDCONCLUSIONS
    Many of the skilled  nursing homes GAO visited may not have provided
    proper care and treatment for their Medicaid and Medicare patients.
    (See p 9.)

    Many patients in the nursing homes GAO visited may not have needed
    skilled    care and should have been provided with less lntenslve--and         less
    costly--care      (See p. 25 )

    Care and treatment gqzvento
    n.urs%q-home patcents

    Many nursing homes partlclpatlng        in the Medicaid program--and in some
    cases the Medicare program--were not adhering to Federal requirements
    for participation      As a result,     the health and safety of the patients
    may have been Jeopardized, since the homes' providing proper skllled-
    nursing-home care 1s directly       related to their meeting established re-
    quirements for skilled    nursing homes.

    This problem resulted primarily       from weaknesses ln State procedures for
    certifying   ellglblllty   of nursing homes and from ineffective   State and
    HKWenforcement of Federal re ulrements which include State licensing
*   requirements       (See pp. 9 to !4*)

    Following are examples of deficiencies  by nursing homes in meeting re-
    quirements for partlclpatlon  ln the Medicaid and Medicare programs
    found by GAO

      --Patients  were not receiving required attention  by physlclans.     HEW
         requires that Medicaid and Medicare patients ln skilled    nursing
         homes be seen by physicians at least once every 30 days. Neverthe-
         less, 47 of the 90 homes were not complying with this requirement.               I
         Of the 47 homes, 12 were approved also for Medicare

      --Patients   were not receiving    required nursing attention.      Of the 90
         nursing homes vlslted,    16 did not have a full-time    registered    nurse
         ln charge of nursing service, 27 did not have a quallfled?nurse          in
         charge of each B-hour shift,     and 20 did not meet State licensing      re-
         quirements for nurse-patient     ratios.   In total,  48 homes accounted



                                          2


                                                                                          i
              for the 63 nursing deflclencles.     Eight   of the 48 homes were ap-
              proved also for Medicare.                     a

             --Many nursing homes did not have complete fire protection     programs.
               Of the 90 homes vlslted,  44 did not comply with HEWregulations
               which require that simulated fire drills   be held at least three
                times a year for each 8-hour shift in each home participating     in
                the Medicaid and Medicare programs.   Seven of the 44 homes were ap-
                proved also for Medicare

        LeveZ of care needed by
        nwwmg-home patzents

         Patients have been placed ln skilled    nursing homes even though their
         needs are for less intensive and less costly care which should be
         provided ln other facllltles,   however, alternative  facllltles     in which
         less intensive   levels of care could be provided were limited.       This
         not only could result ln unnecessary costs but also--and perhaps more
         important--could   make unnecessary demands on professional      care avall-
         able for patients who are in need of such care.

         GAObelieves that the primary cause of this problem        1s that HEWhas not
         developed a yardstick   o,r cntena  for measuring the     need for skilled
         care under the Medicaid program.    In the absence of     such criteria,   each
         State follows its own procedures for determining the       need for skllled-
         nursing-home care.    (See pp. 25 to 37 )


         The Social Security Admlnlstratton  has developed criteria      defining
         skilled  nursing care under the Medicare program.

         In the absence of Medicaid criteria,   the State of Mlchlgan--to    assist
         those persons who normally evaluate patient needs--has expllcltly       de-
         fined the medical and nursing-care   characterlstlcs   that it believes
         that patients should have to qualify for skilled-nursing-home      care,

         In Michigan--the  only one of the three States ln GAO's review that
         had developed such critena--  the State's evaluators accompanied GAO
         to selected nursing homes and, at GAO's request, evaluated patient
         needs.

         The evaluators concluded that, of the 378 patients whose needs were
         evaluated, 297, or about 79 percent, did not require skllled-nurslng-
         home care.    (See p. 28.)

         GAO could not have similar   evaluations made ln New York and Oklahoma
         since these States had not developed such criteria     The evaluators ad-
         vised GAO, however, that lf, ln a limited   test, the medical and
         nursing-care characterlstlcs   of New York and Oklahoma patients were

Tear Sheet
     measured against the Michigan     cr-rterla, a similar hrgh percentage (71
     and 85 percent, respectively)     of the patients would not require skilled
     care.  (See pp 26 and 34 )
     Further, recent reviews of patlent needs by professional   health teams
     of voluntary areawide health planning agencies In 10 counties in New
     York, using crlterla  established by the agencies' staffs,  showed that
     25 to 35 percent of the patlents in skilled  nursing homes did not re-
     quire the level of care provided In those homes. (See p. 30.)

    GAO did not Judge the reasonableness of any criteria,       Including Mlchl-
    gan's, because of the medical expertise and Judgments involved          GAO IS
    of the opinion that criten a developed by HEWwould help plnpolnt more
    precisely  the extent to which skilled     or less costly nursing care 1s
    needed and, as a result,      l~mlted human resources could be allocated   to
    meet more effectively     the most critIca   nursing-care  needs. Under the
    exlstlng,  unreallstlc    procedures, decisIonmakers often are confronted
    with two choices--skilled      nursing care or no care at all.


RECOiWdENDATIONS
             OR SUGGESTIONS
    The Secretary of HEW should instruct   the Social and RehabtlitatIon Ser-
    vice and the HEWAudit Agency to continue and increase their monitoring
    of States' adherence to HEW'S requirements for nursing homes' partlcipa-
    bon In the MedIcaId program as skllled    nursing homes (See p. 22 )

    The Secretary of HEW, to assist the States in determlnlng whether Medl-
    cald patients are In need of skilled     care, should Issue crltena   set-
    ting forth the medlcal and nursing care required for patients to be
    classified   as being in need of skilled-nursing-home    care.  GAO suggests
    that conslderatlon   be given to the experience with the criteria    already
    developed for the Medicare program.       (See p. 36.)

    The Secretary of HEWshould instruct       the Social and RehabIlltatlon      Ser-
    vice and the HEWAudit Agency to continue and Increase their monitoring
    to ensure that States are following      exlstlng    HEWMedicaid regulations
    relating     to the admlsslon of patients to skilled     nursing homes and are
    periodically     determining whether patients admitted to skilled     nursing
    homes are still      in need of skalled care.     (See p. 36.)


AGENCY
     ACTIONSANDUNRESOLVED
                       ISSUES
    HEW stated

      --That the Social and Rehabllltation      Service had implemented a new           I
         monitoring and liaison   program In each regional office that re-
         quired the regional offices    to maintain closer relationshIps    with
         State agencies     It required also that regional officials     make more
         frequent vlslts  and make deta7led revlews of State MedIcaid




                                        4
               operations,  which should aid in the reduction of such deflclencles
               as those discussed in this report.   (See p 22.)
             --That the     Social and Rehabilitation       Service planned to issue, within
                6 months,    guidelines    to assist the States in evaluating     a patient's
                need for    skilled   nursing care and services under the Medicaid pro-
                gram and    that, where applicable,      these guIdelines would consider
                areas of    common interest,    as outlined in criteria    developed for the
                Medicare    program.    (See p. 37.)

       The actions taken or promised by HEW should strengthen administration       of
       the Medicaid and Medicare programs.   In view of the  substantial    Federal
       and State expenditures under these programs, prompt attention     should be
       given to the rmplementatron of the promised admlnlstratlve    actions.


MATTERS
      FORCOA'SIDER4T'IoN
                      BY THECONGRESS
       This report contains no recommendations requiring           legislative      action by
       the Congress.    It does contain lnformatlon       on weaknesses In HEW's admln-
       tstratlon   of MedIcaid and Medicare programs for nursing homes, sugges-
       tions for their correction    or improvement, and corrective            actions taken
       or promised by HEW. This lnformatlon         should be of assistance to commit-
       tees and individual    members of the Congress in connection with their
       leglslatlve   and oversight responslbllltles       relating    to the Medicaid and
       Medicare programs.




Tear Sheet




                                                5
                           Contents
                                                                       Page

DIGEST                                                                   1

CHAPTER

   1      INTRODUCTION                                                   6
              MedIcaid nursing homes                                     7
              Other nursing or related  care for el-
                derly                                                    7
              Medicaid programs in States reviewed                       8

   2      ARE SKILLED NURSING HOMESPROVIDING PROPER
          CARE TO PATIENTS?                                              9
              Inadequate nursing services                               10
              Lack of required         physician   visits               12
              Absence of social and dietary             services        12
              Deficrencies      in meeting requirements          re-
                 latlng     to patient    safety                        14
              Factors contributing          to nursing-home      de-
                 ficlencies                                             16
              Recent HEW actions                                        21
              Conclusions                                               21
              Recommendation to the Secretary              of
                 Health, Education,         and Welfare                 22
              Agency comments and actions                               22

   3      ARE PATIENTS BEING PROVIDED WITH LEVELS
          OF CARE MORE INTENSIVE THAN NEEDED?                           25
              Michigan                                                  27
              New York                                                  30
              Oklahoma                                                  32
              Evaluation   of patient  needs using Michi-
                gan's criteraa                                          34
              Recent HEW actions                                        35
              Conclusions                                               36
              Recommendations to the Secretary     of
                Health, Education,    and Welfare                       36
              Agency comments and actions                               37

   4      SCOPE OF REVIEW                                               38
APPENDIX                                                                Page
       I   Nursing homes not fully            in compliance with
             Medicaid requrrements            including   State lx-
             tensing requirements                                       41

  II       Letter dated March 23, 1971, from the As-
              sistant   Secretary,  Comptroller,     Department
              of Health, Education,      and Welfare,   to the
             General Accounting     Office                              42

III        Principal      officials     of the Department of
              Health, Education,         and Welfare having re-
              sponslbillty        for the matters discussed in
              this report                                               49

                                ABBREVIATIONS

GAO        General    Accounting     Office

HEW        Department     of Health,      Education,      and Welfare

SRS        Social    and Rehabllltation         Service

SSA        Social    Security    Administration
COMPTROLLER
          GENERAL'S                       PROBLEMSIN PROVIDINGPROPERCARE TO MEDICAID
REPORT
     TO THECONGRESS                       AND MEDICARE PATIENTSIN SKILLEDNURSING
                                          HOMES
                                          Department of Health, Education, and Welfare
                                          B-164031(3)


DIGEST
_--e-m

WHYTHEREVIEWWASMADE
     America's "age 65 and over" population has increased from 9 mllllon  In
     1940 to 20 million   in 1970 As persons become older their need for care
     increases, and, for those requiring more intensive  care, this means in-
     stltutlonal  care in hospitals or nursing homes Nursing-home care 1s
     generally classlfled   as:
          Skilled  nursing care (MedIcaid) and extended care
          (Medicare)--Perlodlc  medical and dally nursing care wlthout             hospltal-
          ization

           Intermediate  care--Care over and above that         classified   as room and
           board but less than skilled  care.

           Supervised    care--Pnmanly      room and board with     some supervision

     Because the cost of such care has lnc.reased beyond the financial      capa-
     bility  of State and local governments, Federal financial    assistance has
     been made avallable   through the Medicaid and Medicare programs adminis-
     tered by the Department of Health, Education, and Welfare (HEW). For
     example, under these two programs the Federal Government expended in
     1969 about $1 billion    for skilled nursing care and extended care--prl-
     marlly for the elderly.

         The Congress 1s interested       in answers to questions      about skilled    nurs-
         ing homes, such as*

           --Are   skilled   nursing   homes providing   proper care to patients?

           --Are patients     being provided   with   levels   of care more intensive     than
              needed?

         The States of Michigan, New York, and Oklahoma have about 1,200 nursing
         homes certified  as skilled.  In 1969 these States expended $336 million
         of Federal, State, and local funds to care for Medicaid patients in
         these homes, about half of the expenditures represented the Federal
         share
     The General Accounting Offlce (GAO) vlslted     90 nurs-rng homes (30 in
     each State) having 5,581 MedIcaId patients and examined into whether
     the homes were adhering to the requirements established      by HEW for par-
     tlclpatlon  in the MedicaId program as skilled    nursing homes. For those
     homes which also served Medicare patients,     GAO examined into whether
     the homes were adhering also to Medicare requirements.

     GAO examined also Into whether it appeared that       a less lntenslve    level
     of care would satisfactorily meet the patients'       needs.


FINDINGSAND CONCLUSIONS
     Many of the skilled  nursing homes GAO vlslted may not have provided
     proper care and treatment for their Medicaid and Medicare patients.
     (See p 9 )
     Many patients in the nursing homes GAO visited may not have needed
     skilled    care and should have been provided with less tntenslve--and        less
     costly--care.     (See p 25 >

    dare and treatment pven to
    nurswq-home pa-bents
    Many nursing homes partlclpatlng        in the Medicaid program--and in some
    cases the Medicare program--were not adhering to Federal requirements
    for participation.     As a result,     the health and safety of the patients
    may have been Jeopardized, since the homes' provldlng proper skllled-
    nursing-home care 7s directly       related to their meeting established re-
    qulrements for skilled    nursing homes.

    This problem resulted primarily       from weaknesses in State procedures for
    certifying    elIglblllty   of nursing homes and from Ineffective  State and
    HEWenforcement of Federal re uirements which include State llcenslng
    requirements.       (See pp. 9 to g4.1

    Following are examples of deflclencIes  by nursing homes In meeting re-
    quirements for participation  in the Medicaid and Medicare programs
    found by GAO

      --Patients  were not receiving required attention  by physlclans.     HEW
         requires that Medicaid and Medicare patients in skilled    nursing
         homes be seen by physicians at least once every 30 days. Neverthe-
         less, 47 of the 90 homes were not complying with this requirement.
         Of the 47 homes, 12 were approved also for Medicare

      --Patients   were not recelvlng    required nursing attention,      Of the 90
         nursing homes vlslted,    16 did not have a full-time    registered   nurse
         in charge of nursing service, 27 did not have a quallf-red nurse in
         charge of each 8-hour shift,     and 20 did not meet State llcenslng      re-
         quirements for nurse-patient     ratios.   In total,  48 homes accounted



                                          2
    for the 63 nursing deflclencles,      Eight   of the 48 homes were ap-
    proved also for Medicare.

  --Many nursing homes did not have complete fire protection     programs.
     Of the 90 homes visIted,  44 did not comply with HEW regulations
     which require that simulated fire drills   be held at least three
     times a year for each 8-hour shift In each home participating     in
     the Medlcatd and Medicare programs     Seven of the 44 homes were ap-
     proved also for Medlcare

Leve2 of cure needed by
nurswq-home pcrtzents
Patients have been placed In skllled     nursing homes even though their
needs are for less lntenslve    and less costly care which should be
provided In other facllItles,    however, alternative  facllltles     in which
less intensive   levels of care could be provided were lImIted         This
not only could result in unnecessary costs but also--and perhaps more
important--could    make unnecessary demands on professional      care avall-
able for patients who are in need of such care

GAO believes that the primary cause of this problem        1s that HEWhas not
developed a yardstick   or criteria for measuring the      need for skilled
care under the Medicaid program     In the absence of      such crlterla,   each
State follows its own procedures for determining the        need for skllled-
nursing-home care.    (See pp. 25 to 37.)


The Social Security AdminIstration  has developed      criteria   defining
skilled  nursing care under the Medicare program.

In the absence of MedicaId criteria,   the State of Michigan--to    assist
those persons who normally evaluate patlent needs--has explicitly        de-
fIned the medical and nursing-care   characterlstlcs   that It believes
that patients should have to qualify for skilled-nursing-home      care.

In Michigan--the  only one of the three States In GAO's review that
had developed such cntena--   the State's evaluators accompanied GAO
to selected nursing homes and, at GAO's request, evaluated patient
needs

The evaluators concluded that, of the 378 patients whose needs were
evaluated, 297, or about 79 percent, did not require skilled-nursing-
home care     (See p. 28 )

GAO could not have slmllar   evaluations   made In New York and Oklahoma
since these States had not developed such crltena        The evaluators ad-
vised GAO, however, that if,   in a limited   test, the medical and
nursing-care characteristics   of New York and Oklahoma patients were
     measured against the Mlchlgan      criteria , a similar high percentage (71
     and 85 percent, respectively)      of the patients would not require skilled
     care.   (See pp. 26 and 34.)
     Further, recent reviews of patient needs by professional   health teams
     of voluntary areawlde health planning agencies in 10 counties in New
     York, using criteria  establlshed by the agencies' staffs,  showed that
     25 to 35 percent of the patients in skilled  nursln   homes did not re-
     quire the level of care provided in those homes. aSee p. 30.)

     GAO did not Judge the reasonableness of any criteria,        including Michi-
     gan's, because of the medlcal expertise and Judgments involved.         GAO IS
     of the opln~on that criteria        developed by HEWwould help plnpolnt more
     precisely  the extent to which skllled       or less costly nursing care 1s
     needed and, as a result,      limited human resources could be allocated to
     meet more effectively     the most critical    nursing-care needs. Under the
     existing, unrealistic     procedures, declslonmakers often are confronted
     with two choices--skilled       nursing care or no care at all.


RECOWENDATIONS
            ORSUGGESTIONS
     The Secretary of HEWshould instruct     the Social and Rehabllltation Ser-
     vice and the HEWAudit Agency to continue and Increase their monitoring
     of States' adherence to HEW's requirements for nursing homes' partlclpa-
     tlon in the MedicaId program as skilled    nursing homes. (See p. 22 )

     The Secretary of HEW, to assist the States In determining whether Medl-
     cald patients are In need of skilled     care, should Issue crltena   set-
     ting forth the medical and nursing care required for patients to be
     classlfled   as being in need of skilled-nurstng-home    care.  GAO suggests
     that consideration   be given to the experience with the criteria    already
     developed for the Medicare program.       (See p. 36.)

     The Secretary of HEWshould instruct        the Social and Rehabllitatlon      Ser-
     vice and the HEWAudit Agency to continue and Increase their monitoring
     to ensure that States are following       existing    HEWMedicaid regulations
     relating     to the admission of patients to skilled      nursing homes and are
     periodically     determining whether patients admitted to skilled      nursing
     homes are still      In need of skilled  care.     (See p. 36.)


AGENCY
     ACTIONSAND UNRESOLVED
                        ISSUES
    HEWstated.

       --That the Social and Rehabllltatlon     Service had implemented a new
          monitoring  and liaison   program In each regional office that re-
          quired the regional offices to maintain closer relationships     with
          State agencies.     It required also that regIona offlclals   make more
          frequent visits   and make detailed reviews of State Medicaid



                                          4
        operations,  which should aid in the reduction of such deflclencles
        as those discussed in this report.   (See p. 22.)

      --That the     Social and Rehabilitation      Service planned to issue, within
         6 months,    guidelines    to assist the States in evaluating a patient's
         need for    skilled   nursing care and services under the Medicaid pro-
         gram and    that, where applicable,      these guldellnes would consider
         areas of    common interest,    as outllned in crlterla   developed for the
         Medicare    program     (See p. 37 )

    The actions taken or promised by HEW should strengthen admlnlstratlon        of
    the Medlcald and Medicare programs.    In view of the  substantial    Federal
    and State expenditures under these programs, prompt attention      should be
    given to the implementation  of the promised admlnlstratlve    actiohs.


MATTERS
      FORCOh'SIDERATIOil'
                     BY THECONGRESS
    This report contains no recommendations requiring           legislative      action by
    the Congress.    It does contain information       on weaknesses in HEW's admln-
    lstratlon   of Medicaid and Medicare programs for nursing homes, sugges-
    tions for their correction    or improvement, and corrective            actions taken
    or promised by HEW. This information         should be of assistance to comet-
    tees and lndlvldual    members of the Congress in connection with their
    leglslatlve   and oversight responslbllitles       relating    to the Medicaid and
    Medicare programs.




                                         5
                          CHAPTER1

                        INTRODUCTION

      Medicaid, authorized in July 1965 as title XIX of the
Social Security Act (42 U.S.C. 13961, is a grant-in-aid   pro-
gram in which the Federal Government participates   in costs
incurred by the States in providing medical care to welfare
recipients and other persons who are unable to pay for such
care.
       Medicaid is administered at the Federal level by the
Social and Rehabilitation    Service (SRS) of the Department of
Health, Education, and Welfare. Authority to approve grants
for State Medicaid programs has been further delegated to
the regional commissioners of the SRSwho administer field
activities   through 10 HEWregional offices.
       Under the Social Security Act, the States have the pri-
mary responsibility    for their Medicaid programs. A State's
program is described in its plan which, after approval by a
regional commissioner, provides the basis for Federal grants
to the State. The regional commissioner is responsible for
determining whether a State is operating its program in ac-
cordance with its approved plan, Federal requirements in
supplement D of HEW's Handbook of Public Assistance Adminis-
tration,  and SRSprogram regulations.
      State Medicaid programs are required to provide inpa-
tient hospital services, outpatient hospital services, lab-
oratory and X-ray services, skilled-nursing-home   care, and
physician services.   Additional items, such as dental care
and prescribed drugs, may be included if a State so chooses.
      Depending on a State's per capita income, the Federal
Government pays from 50 to 83 percent of the costs for Med-
icaid services.   For calendar year 1969, the District  of
Columbia, Guam, Puerto Rico, the Virgin Islands, and the 41
States then having Medicaid programs spent about $4.3 bil-
lion, of which about $2.2 billion,  or about 50 percent, rep-
resented the Federal share.



                             6
       In our examination of HEW's administration  of the
skilled-nursing-home    segment of the Medicaid program, we
sought answers to two questions:
     --Are skilled   nursing homes providing   proper care to pa-
        tients?
     --Are patients being provided with levels      of care more
        intensive than needed?
     Where nursing homes provided care also under the Medi-
care program--authorized in July 1965 as title XVIII of the
Social Security Act (42 U.S.C. 1395)--we ascertained whether
Medicare requirements had been met. Our review was made at
90 selected nursing homes, 30 each in Michigan, New York,
and Oklahoma.
MEDICAIDNURSINGHOMES
      Nursing homes are generally defined as medical facLli-
ties which provide convalescent or inpatient care to pa-
tients who do not require hospital care but who are in need
of certain medical care and services that cannot be pro-
vided in the patients' homes or in intermediate-care,      resi-
dential, or custodial facilities.    To participate    in the Med-
icaid program, nursing homes must meet State licensing re-
quirements and Federal requirements.    Skilled-nursing-home
care is prosed    to all eligible patients; however, about
80 percent of the patients being provided with such care
are over 65 years of age.
      During calendar year 1969, Medicaid payments for
nursing-home care totaled about $1.2 billion,    or 27 percent
of all Medicaid costs.   HEW paid about half  of  these costs.
OTHERNURSINGOR RELATEDCAREFORELDERLY
       Medicare --administered by the Social Security Adminis-
tration (SSA) of HEW--authorizes skilled nursing care to be
provided In extended-care facilities      to persons 65 years of
age or older after they no longer need the intensive care
available in hospitals.       Depending on their financial   cir-
cumstances, Medicare patients may be eligible       for services--
including skilled nursing care--also under the Medicaid

                                 7
program. Patients eligible under both programs, however,
must first exhaust their Medicare benefits.   During calendar
year 1969, payments for extended care totaled about $317 mil-
lion.
       A type of related care available to individuals      is in-
termediate care.     Authorized in 1967 under title  XI  of   the
Social Security Act (42 U.S.C. 132Oa), the intermediate-care
program provides Federal funds for care of eligible individ-
uals not in need of skilled nursing care but in need of more
intensive care than that provided in residential     facilities.
The intermediate care was designed as an alternative       to
skilled care and is not part of the Medicaid and Medicare
programs. The major users of intermediate care also are the
elderly.
MEDICAIDPROGRAMS
               IN STATESREVIEWED
       The State Departments of Social Services are respon-
 sible for administering Medicaid programs in Michigan and
New York and the State Department of Public Welfare is re-
 sponsible in Oklahoma. Responsibility    for certifying that
nursing homes meet the Federal requirements for participa-
tion in the Medicaid program has been delegated to the State
Departments of Health. In Michigan and New York the health
departments have responsibility   also for determining the
level-of-care   needs of patients butt in Oklahoma the State
Department of Public Welfare has kept this responsibility.
Information on Medicaid and nursing-home programs in these
States follows.
                                                             State
                                       Mxhlgan             New York           Oklahoma       Total
HEX?Regional Office                  Chicago, Ill     New York, N Y        Dallas, Tex
                                       (covers six      (covers      two     (covers five
                                       States)         States, Puerto        States)
                                                       Rxp, and the
                                                       V1rgx.n Islands)
Medacald programs
     Started                           Ott     1966        May 1966          Jan. 1966
     1969 expenditures
          Amount (millions)                  $205            swp;                 $72       $1,311
          Federal share (millions)           $102                                 $50         $669
Skilled nursrng care
     1969 expenditures
          Amount (millrons)                  $100                 $199            $37         $336
          Percent of total Pled-
             scald expenditures               49                    19             51           26
Skxlled nursing homes
     Nxnnber                                211                  614               388       1,213
     Available beds                     21,000               49,000            23,000       93,000
                                CHAPTER2

               ARE SKILLED NURSING HOMESPROVIDING

                      PROPERCARE TO PATIENTS?

        Many nursmg homes participating            in the MedIcaId pro-
gram--and in some cases the Medicare program--were                not ad-
hering to Federal requirements            for participation.      As a re-
suit,    the health and safety of the patients             may have been
jeopardized,        since proper skilled-nursing-home         care &"di-
rectly     related     to meeting established     requfrements    for
skilled      nursing homes. The nonadherence to requirements               re-
sulted primarily           from weaknesses In State procedures        for
certifying       ellglbility     of homes and from ineffectlve        State
and HEW enforcement of Federal requirements.

       To participate       in the Medicaid and Medicare programs as
providers   of skilled       nursing care, nursing homes must meet
and maintain      Federal requirements          which incorporate    the in-
dividual   State's    licensing      requirements.        The requLrementss< "
are designed to ensure that nursing homes are capable of
providing   skilled     care and relate         to such things as physical
structure,    nursing-staff        qualifications,      food preparation,
physlclan   services,      and drug controls.
       Our review at 90 nursing homes in Michigan,           New York,
and Oklahoma during the period October 1969 to April 1970
showed that numerous homes were not adhering to Medicaid re-
quirements    (including   State licensing    requirements).      Since
33 of the homes were also participating          in the Medicare pro-
gram, we ascertained      whether Medicare requirements        had been
met.    The most significant     deficiencies    that we noted are
discussed below, and all deficiencies         that we noted are
listed   in appendix I.1


1These deficiencies        in each State should       not be compared be-
cause of differing       licensing  requirements.
IN-ADEQUATENURSING SERVICES

      HEW--under the skilled-nursing-care          portion      of its Med-
icard and Medicare programs     --requires    that   nursing      services
be provided under the direction        of a registered        nurse and
supervnsed 24 hours a day by a registered           nurse or a li-
tensed practical    nurse and that nursing-home          staffs    be com-
posed of sufficient     nursmg and auxiliary        employees to pro-
vide adequate services      for patients   at all times.

       Praor to our review, HEW had not specified             the number
of nurses m relation         to patients    (nurse-patient      ratio)     that
a skilled    nursing home must have to be eligible           under Medl-
cald or Medicare,       but on April 29, 1970, HEW issued regula-
tions requirrng      SRS to establish      nurse-patient    ratios     for
Medicaid.      Prior to our review, Michigan,          New York, and
Oklahoma had established        nurse-patient     ratios   as part of
their   licensing    requirements.

       As summarized below, we found 63 nursing-service       defl-
ciencies   in 48 of the 90 nursing homes providing     services     to
Medicaid patients    in Michigan, New York, and Oklahoma.       Eight
of the homes in which these deficiences     existed also were
Medicare providers.

                                       Number of deficiencies
      Deficiency              Michigan    New York Oklahoma             Total

No full-time     regis-
   tered nurse in
   charge of nursing
   service                          1            5           10            16
Qualified    nurse not
   in charge of each
  8-hour shift                      5                        22            27
State nurse-patient
  ratio not met                   -10           -10          -            -20
     Total   deficiencies         &g            15           32           63
     Total homes having
       deficiencies               12



                                        10
       In a letter    dated March 23, 1971, from the Assistant
Secretary,     Comptroller,      HEW (see app. II),        commenting on a
draft    of this report,      SSA expressed concern that our report
implied that the absence of a nurse-patient                 ratio for Medi-
care was inherently        bad and would attenuate          the quality      of
care rendered.      SSA stated that under the Medicare program
the adequacy of nursing services was determined                    on the
basis of the Judgment of a survey team as It viewed the
needs of a particular         facility     and the placing and composi-
tion of Its patient        load.       Also an individualized        determina-
tion was made on the basis of the type of care furnished,
the needs of the patients,             and other related      factors.
         SSA commented further    that this view--which        It consid-
ered the most desirable        approach to ensurmg the quality          of
nursing care rendered to Medicare patients--was               shared by
the American Nursing Association         and by the Public Health
Service,     HEW, SSA stated also that there were some inherent
dangers in the use of arithmetic         ratios,    including    the pos-
sibility     that the minimum ratios     established     might gain ac-
ceptance as the maximum ratios         by providers     and surveying
agencies.
       The nurse-patient  ratios    in Mxhigan,   New York, and
Oklahoma were established      by these States as licensing      re-
quirements   and thus--in   these States--became    Medicare and
Medicaid requirements.      It is not our intention     to imply
that these ratios --or any other ratios--are       good or bad,
We note, however, that the establishment        of nurse-patient
ratios   was recommended by an SRS task force on skilled         nurs-
ing homes in August 1969.
       The task force reported           that it had received many rec-
ommendations to assist          States by developing       some type of
formula,    standard,      or ratio    in the determination       of the
proper sizes and kinds of staff              necessary to give quality          '
care under the Medicaid program.               The task force stated
that the terms "adequate"           and "sufficient"      nursing service
as contained      in the Federal regulations          "are difficult      terms
to deal with and must be clarified              and defined."       The task
force recommended that pertinent              agencies of HEW--including
SSA--combine their efforts           to establish     a standard or ratio
for inclusion       in Federal regulations.          As stated on page 10,
regulations     issued by HEW in April 1970 require              SRS to carry
out this recommendation;           by April 1971 SRS had not issued
implementing      regulations.

                                       11
LACK OF REQUIRED PHYSICIAN VISITS

        HI37 requires that a Medicaid or Medicare patient           In a
skilled     nursing home be seen by a physiclan      lnitlally      and
at least once every 30 days, to evaluate the patient's               im-
mediate and long-term      needs , prescribe  a  planned      program   of
medical care, and plan for continuing        care and/or discharge.

        We found that in 47 of the 90 nursing homes In Michi-
gan, New York, and Oklahoma physician         visits    were not al-
ways made every 30 days.        For example, physician      visits
were made regularly     in only 18 of the 30 nursing homes we
visited    in Michigan,   physician visits    in the remaining 12
homes were made irregularly        ranging from 35 to 210 days
apart.     Of the 47 homes, 12 were certified        also to provide
Medicare services.



       In his letter    the Assistant     Secretary,   Comptroller,
pointed out that,     although     the requirement   for   physlclan
visits   at least once every 30 days was, to some extent,              be-
yond the control     of a facility,      State agencies were working
closely with facllltles       to have them take whatever steps
were necessary to ensure that these requisite            vlslts    were
berng made.

ABSENCEOF SOCIAL AND DIETARY SERVICES

Social   services

       HEW requires   that nursing homes partlclpatlng       in the
Medicaid and Medicare programs recognize and seek help in
solving social and emotional problems related          to patients'
illnesses,    to their response to treatments,      and to their ad-
Justment to care in the facilities.

       Officials     of 26 of the 90 nursing homes we visited     ad-
vised us that no one had been designated        in their homes to
identify      social or emotional problems of patients.       (Of the
26 homes, five were Medicare homes.)         The importance of at-
tentlon     to such problems is illustrated    by the following     re-
marks from a June 29, 1970, HEW task force report on Medlc-
aid and related       programs.

                                   12
      *'Some 30 to 35 percent of all reclplent-patients
      In nursing homes have no lmmedlate relatives,
      and except for the welfare     agency visit,  most of
      them have no contact with the world outside the
      institution.   No one outslde the lnstltutron     1s
      concerned with whether or not their needs are
      being met. The agency 1s out of personal
      touch with the patient   and may be unaware of
      changes In his condltaon    that might indicate
      changes In the care which he needs ***.I'

The task force report      stated that    the social content of the
Medicaid and Medicare      regulations    were not adequate and rec-
ommended that:

      "Each skilled    nursing home should be required          to
      include on Its staff     (or have the part-time         ser-
      vices of) a capable person to develop and direct
      a plan or program lndlvldually        tailored    to the
      psycho-social    needs of each resident.         This staff
      person would have responslblllty          for marshalling
      communrty and lnstltutlonal      resources     to serve
      the needs and interests      of residents.       The reg-
      ulatlons   should set forth.the     nature and pur-
      pose of such a program rather than prescribe
      a standardized    set of procedures.11

We believe that adherence to such a procedure            would   correct
the condltlons  found during our review.

Dietary   services

       HEW requires   also that professional        consultations  be
available    rn Medicaid and Medicare provider         facllltles  to
ensure that nutrltlonal      standards are good and that the
dietary   needs of patients     are met.    Offlclals     of 19 of the
90 nursing homes we visited        said that they were not avall-
lng themselves of such consultations.            None of the 19 homes
served Medicare patients.




                                    13
DEFICIENCIES IN MEETING RXQUIPEMFNTS
RELATING TO PATIENT SAFETY

       To ensure that Medicaid and Medicare patients       will be
properly   cared for in case of emergency, HEW requires          that
nursing homes adhere to certain       laws and regulations     relat-
lng to patlent   safety.    We found that numerous nursxng
homes were deflclent     in meeting safety regulations     relating
to fire drills,    emergency electrical    service,   and nurses'
call systems.

Fire   drills

       With respect to fire safety,    HEW requires--among other
things-- that simulated    frre drills  be held for each 8-hour
shift    at least three times a year in all nursing homes
partlclpatlng     In the Medicaid and Medicare programs.

      In Michigan, New York, and Oklahoma, we found that, of
the 90 nursing homes we vlslted,      44 (seven of which also
were Medicare provrders)   were not complying with the re-
quirement for simulated  fire drills,     as follows:

                                     Number of fire
                                       drills   In the
                                     1 Z-month period
                    Number of             preceding
                deficient  homes          our visit

                         27                  2
                          7                  1
                         &Q                  -



Emergency electrical     service

       HEW requires   that nursrng homes have emergency elec-
trical   service.   This requirement    for both the Medicaid
and Medicare programs can be waived by the States if (1) the
requirement    will result  in unreasonable    hardship on the
home and (2) the waiver will      not adversely    affect  the
health and safety of patients.       Although Michigan,     New York,
and Oklahoma had not waived this requirement          for any of the
90 homes we vlslted,  52 did not have adequate emergency
electrical service.   Of the 52 homes, 10 were also certified
to serve Medicare pataents.

Nurses'   call   system

      HEW requires    that Medicaid and Medicare nursing homes
have systems that regaster        calls at the nurses'         station,
from each patient     bed, each patient      toilet     room, and each
bathtub or shower.       This requirement,       like the requrrement
for emergency electrical        service,  can be waived; but Michi-
gan, New York, and Oklahoma had not waived it for any of the
90 homes we vrsited.        We found deficiencies         in 43 of the
homes (of which eight were also Medicare providers).                    Of
these 43 homes,    11   had  no  system  and   32   had   incomplete     sys-
tems.



         In his letter,      the Assistant     Secretary, Comptroller,
stated that State agencies had been encouraging                facilltles
lackrng emergency electrical            service and nurses' call sys-
tems to install         them. HEW expressed the view that, when
facilities      simply lacked the funds to do so immedrately
but otherwise       were in compliance with the requirements                and
rendered acceptable          levels of care, rt was preferable            to
allow them to remarn In the program as they tried                 to im-
prove.      This concept, he stated,         would be true in any case
in which correction          of a deficiency     would require    a very
large expenditure          in relation   to the resources of the fa-
c111ty.




                                      15
FACTORS CONTRIBUTING TO
NTJRSING-HOMEDEFICIENCIES

      The primary      causes of nursing-home          deficiencies    were

      --weaknesses   in State procedures         for     certifying    eligi-
         blllty  of nursing homes and

      --ineffective      State   and HEW enforcement         of Federal     re-
         quirements.

Federal   requirements

        Prior to January 1, 1969, eligibility        of a nursing
home to participate       in the Medicaid program was based on
certification    by (1) SSA that the nursing home met the re-
quirements    for participation      as an extended-care     facility
in the Medicare program or (2) an appropriate            State agency
that the nursing home met the Medicaid requirements               pre-
scribed in supplement D of HEW's Handbook of Public Assis-
tance Administration        and SRS's program regulations.          Effec-
tive Janvary 1, 1969, only those nursing homes meeting
Medlcald reqvlrements        were ellglble  to participate      in the
Medicaid program.

       In June 1969 HEW published     in the Federal Register     in-
terim,   but blndlng,  regulations    settzng   forth Medicaid  re-
quirements   in more detail    and clearly    showing that Federal
payments would not be allowed to nursing homes not meeting
the requirements.     States, however, were permitted       to con-
tinue payments for 6 months to such homes, provided:

      --That the deficiencies       did not jeopardize            the health
         and safety of patients      and that written           justifica-
         tions demonstrating    this were on file.

      --That the deficiencies   could        be corrected in 6 months
         and that the homes provided         plans for so doing.

States could continue payments for an additional     6 months
to homes having deficiencies,     provided that the deficiencies
were different   than those for the prior period.    The final
regulations,   published  on April 29, 1970, were generally


                                    16
the same as the interim     regulations    except that the second
6-month extension was also permissible        if there had been
substantial  progress and effort       made In correcting the
prior-period  deficlencles.

Michigan enforcement     of
Federal requirements

        In 1968 the Michigan State Department of Public Health
sent questionnaires        to all State-licensed     nursing homes and,
on the basis of these questionnaires            and wrthout site vlslts,
certified    nursrng homes as eligible        to participate   In the
Medicaid program if they agreed to comply with the Federal
requirements      for partlcipatlon    by January 1, 1969,       Offl-
coals of the State health department advised us that many
of the homes certified         through this process should not have
been certified       because they did not meet the requirements
for participation       in the program,      These officials   advised
us also that they knew that these homes did not meet the re-
quirements.

       Our review of State inspection        reports for 1968 and
1969 for the 30 homes we visited         in Michigan verified   that
the State health department had been aware of nursing-home
defrclencles.      For these 30 homes, State inspectors       had
found 75 deficiencies         similar to those which we found.     For
example, in 11 of these 30 homes they found deflclencles             In
nursing-care     services     and In 11 homes they found no emer-
gency electrical       service.

      Officials     of the State health department informed us
that no action had been taken by them to enforce compliance
with Federal requirements        until January 1970, because re-
vised State licensing       standards for nursing homes--which    in-
corporated      the Federal requirements--had   not been approved
by the State until       August 1969 and because the health de-
partment had allowed the homes a few months to implement
the revised standards.         Thus Federal payments were made
through December 1969 to skilled        nursing homes that may not
have met Federal requirements.

     After we informed State officials        of the deflclencles
we had found In our visits  to nursing       homes, they visited



                                   17
two of the homes and stopped Medicard payments to one home.
As of September 1970, they started  action to stop payments
to the second home,

       In September 1970 State officials      informed us that,  as
a result    of deficiencies  found during State inspectrons     of
nursing homes, the State, after January 1970, had stopped
Medicaid payments to five homes and had started actlons to
stop payments to seven other homes. The officials         sard,
however, that State laws permitting       appeals by nursing homes
prevented the State from always adhering to the HEW require-
ment limiting     the period of extension   for homes not meeting
requirements    to 6 months or 1 year.

        HEW regional officials     responsible   for Federal adminis-
tration    of the Medicaid program in Mrchigan informed us that
they had not reviewed the skilled         nursing care program in
Michigan because of a lack of manpower.            After we advised
them of our findings,       however, they said that they would
work with Michigan officials         to ensure compliance wrth HEW
requirements.

New York enforcement      of
Federal requirements

       The State of New York determined that nursing homes in
the State--except     privately      owned nursing homes In New York
City--met    HEW requirements       as of January 1, 1969, on the
basis that they were licensed by the State.               New York City
made this determination        for the privately       owned homes in
the city.     Since the program was started          In May 1966, mini-
mum Federal requirements         for skilled   nursing homes have been
incorporated    into the State and city licensing           requirements.

        Cur review of State inspection    reports for 1969 and
1970 showed the State health department had become aware
that many homes, though licensed,      were not adhering to the
Federal requirements,       For 22 of the 30 homes included in
our review,     State inspectors  had reported 22 deficlencles
similar    to those we had found.

       State   health department officials     told us that,   begin-
ning   early   in 1966, they had identified,      had docwnented, and


                                   18
were quite concerned about srgniflcant          devlatlons  from New
York State licensing      requirements,    as well as from Federal
standards for program participation,          among a substantial
nwnber of marginal nursing homes. They stated that from
February 1, 1966, approximately         160 such facllltles    had
closed, most of them voluntarily         under the pressure of the
department's   appllcatlon      of State and Federal standards.
Certain of these facalitles        were closed only after admlnls-
tratlve  hearings.

        The offlclals      informed us that there had been serious
and continuing--       and, in some geographical            areas, critical--
shortages of suitable          alternative      facllltles      and services
for the care of chronrcally             ill patients.         They stated that
it did not seem reasonable or practicable                   to take arbitrary
and strong actions against some of these nursing homes at
times when the only alternatlve              had been to "dump" patients
in the street.         They stated also that It was not only these
shortages that influenced            decisions     on such matters but also
the avallabllrty        of a reasonable balance between facilltles
and services.         They said that,       lacking      such balance,    It was
drfflcult    to make arbitrary          decisions      regarding   any one
level of care that would not have untoward effects                     on other
levels,

       In August 1970 a State offlclal         informed us that New
York had not implemented the HEW requirements--by                  stopping
payments or giving 6-month provlslonal            certlflcations--but
that State agencies were then notifying             facilltles      of the
requirements,    drafting     provider   agreements,       and establishing
policies   and procedures      for rmplementatlon.           Thus Federal
payments were made to skilled          nursing homes through at least
August 1970 without       State implementation        of Federal require-
ments.    State officials      subsequently    informed us that as of
January 1, 1971, all ellgrble          skilled   nursing homes had been
sent provider    agreements and that the enforcement               program
was under way.

      In dlscusslng our flndrngs   with State officials  in June
1970, they informed us that they had closed one home and
that they planned to take enforcement action against another
because of the numerous deflcrencies,    some of them se-rlous,
In both facilltles.



                                       19
      HEW reglonal offlcrals   Informed us that no review had
been made by reglonal    staff of the skllled  nursrng home
program in New York due to the lack of sufficient      staff.

Oklahoma enforcement        of
Federal requirements

      Before and after January 1, 1969, the State Department
of Health considered nursing homes to be eligible    for the
Medrcald program If they were licensed by the State and met
Its required nurse-patient   ratio.  The State, however, did
not start enforcxng MedIcaId requirements    until May 1970.

       State lnspectlon     reports    showed no evidence that the
 inspectors    had been aware of deflclencles            In meeting Medi-
 caid requirements     apparently     because the requirements          had
been omitted from the State's          licensing      standards.      A de-
partment of health offlclal         Informed us that the Medicaid
requirements--    Including   provlslons        for stopping payments
and for 6-month provlslonal         certifications--were          not incor-
porated in State standards until            May 1970 because the State
had not been aware that the absence of these requirements
was resulting     In inadequate lnspectxons.             The offlclal    said
that it had taken a few months to Implement the revised
standards and that actual enforcement had not started until
July 1970.      Thus Federal payments were made to skilled
nursing homes to July 1970, before State enforcement of
Federal requirements.

       After being informed of our findings       in May 1970, State
Department of Public Welfare officials         suspended payments
to six of the 30 nursing homes included in our review.
These homes had a total     of 69 deficlencles.      Subsequently,
two of the homes were closed and one was reclassified          as a
board-and-room    faclllty.   Payments were resumed for the re-
maining three homes after reglstered       nurses were hired as
directors    of nursing.

      HEW reglonal offlclals informed us that they had made
no In-depth review of the Oklahoma skilled    nursing care
program from 1967 due to a lack of sufficient     staff,




                                    20
RECENT HEW ACTIONS

       On November 25, 1969, the HEW Audit Agency inltlated        a
multlstate    audit of nursing homes particrpatlng       In the Med-
scald program.      The audit was to include a review of the
procedures    and controls     established  by the States for in-
specting and licensing        nursing homes. At the time our field
work was completed,       the HEW Audit Agency had issued three
reports    as a result    of this audit,   two of which pointed out
problems similar       to those noted during our review.

      As shown by our review,   some nursing homes may not be
meeting both Medicaid and Medicare requirements,     evidencing
the need for close coordlnatron    among the separate HEW of-
fices admlnlsterlng  the programs.

      HEW also has recognized this need, and on August 11,
1970, SRS pointed out, In a memorandum to State agencies,
that:

      It**  rt may be assumed that the title     XVIII [Medl-
      carej decisions     are coordinated with the title  XIX
      [Medicaid]   actions;   but, we have learned from expe-
      rience that this 1s not always the case."

        The memorandum provides      that SSA advise a State when a
Medicare facility        has been certified       or recertified,      when
significant      deflclencles   have been found during the Medlcare
certification      survey, and when termination          actions have been
taken.      The States are requested        to provide     information    to
SSA on violations        found in their     surveys of Medicaid facill-
ties.      The exchange of information,         if carried      out, will
provide added assurance that deficiencies               applicable     to both
Medicaid and Medrcare are known to the separate groups re-
sponsible     for administering     these programs.

CONCLUSIONS

       There is a direct   relationship    between HEW requirements
for skllled    nursing homes and the provlslon        of proper care.
Deflclencles    In meeting these requirements        should be a clear
warning that patient     health and safety may be in Jeopardy
and that many homes , particularly      those having inadequate
nursing service and those involving        infrequent    physicians'

                                      21
Vlslts,   are not capable of provrding         the level    of skilled
nursing   care that patients require.

      There is an obvrous need for vrgorous enforcement of
these requirements.       To set an example, HEW may find it nec-
essary to take strong measures--encourage       States to stop
payments to those nursing homes that persistently         fall to
meet requirements      and to obtain refunds from States for the
Federal share of payments made to those homes that did not
meet requirements.       As evidenced by the States'   actions   in
stopping payments to homes that we found had deflclencles,
it seems likely     that improper payments have been made to
many ineligible    homes because of States'    delays in enforcing
HEW requirements.

      The States had the responsibility   for ensuring that the
homes were complying with the requirements,       and HEW should
have been aware --through  Its monstorlng   efforts--that   the
States were not enforcing    compliance.

RECOMMENDATIONTO THE SECRETARY
OF HEALTH, EDUCATION, AND WELFARE

        We recommend that the Secretary     of HEW, to help ensure
that patients      receive proper care, instruct   SRS and the HEW
Audit Agency to continue and increase their monitoring           of
States'     adherence to HEW's requirements    for nursang homes'
participation      in the Medicaid program as skilled    nursing
homes.

AGENCYCOMMENTSAND ACTIONS

       The Assistant   Secretary,   Comptroller,   agreed wrth our
recommendation for continued and increased monitoring          by SRS
and the HEW Audit Agency of States'        adherence to Medicaid
requrrements    for skilled   nursing homes.

        For Medicaid,    SRS has implemented a new monitoring           and
liaison    program with the State agencies under which primary
responsibrlity       for revrewlng   State programs has been given
to the HEW regional        offices  to facilitate      monitoring   actlvl-
ties and to promote faster         corrective     actions.     The new pro-
gram requires      that the regional      offices   maintain closer re-
lationshlps     with State agencies.         It requires    also that

                                    22
regional     officials  make more frequent visits   and make de-
tailed    reviews of State operations.     HEW stated that SRS in-
tended to specifically      follow up on the corrective   actions
initiated     in Michigan,  New York, and Oklahoma.

      With regard to the HEW Audit Agency's efforts,   HEW
stated that Medicaid nursing home programs in 27 States had
been audited or had been in the process of being audited dur-
ing fiscal  year 1970 and that nursing home programs in an-
other 17 States were scheduled for audit in fiscal    year 1971.
HEW stated also that during these audits determinations    had
been, and would continue to be, made as to whether patients
received the proper level of care and whether payments were
made only for the level of care authorized.1

       For Medicare, HEW stated that the fiscal        year 1971 plans
of the Audit Agency called for greater audit emphasis on the
operational   aspects of the program.       In addition,       HEW in-
formed us that, as the Medicare program had progressed,                SSA
had become increasingly     aware of the pattern      of deficiencies,
nationally,   in extended-care   facilities    and had been empha-
sizing the importance of upgrading deficient          facilities.

       HEW stated also that,       although particular       attention    had
been devoted more recently         to fire and safety requirements
(Including     fire drills),    State agencies were working to fos-
ter upgrading       in all areas.     With respect   to the 33 nursing
homes we visited        that had participated     in the Medicare pro-
gram, HEW stated that four of these homes had voluntarily
withdrawn    from the program and that SSA planned to have the
remaining 29 homes resurveyed.            HEW stated also that SSA
planned to have the State agencies work with these homes to
have the homes improved, giving particular             attention      to the
deficiencies       noted by us.

      The actions   taken or promised by HEW should strengthen
administration    of the Medicaid and Medicare programs.


1
 As of January 1971 the Audit Agency had issued 15 reports
  as a result of its review.    Reviews in nine States pointed
 out problems similar   to those noted during our review.



                                     23
Conslderlng    the substantial Federal and State expenditures
under the programs, prompt attention      should be given to the
implementation    of those admxnlstratlve   actions promised.




                                24
                                CHAPTER 3

             ARE PATIENTS BEING PROVIDED WITH LEVELS

               OF CARE MORE INTENSIVE THAN NEEDED?

        Many Medicaid patients      in skilled       nursing homes may not
need skilled-nursing-l           care.      Patients      have been placed
In skilled     nursing homes even though their need may be for
less intensive      and less costly      care that is available        in
other facilltles,       What   does   this    mean?     It  means that  not
only do unnecessary costs result            but also, and perhaps more
important,     unnecessary demands are made on professional               care
available     for other patients      who are in need of such care.
We believe that the primary cause of tlnls problem is that
HEW has not developed a yardstick             or criteria     for measuring
the need for skilled       care.     In the absence of such criteria,
each State has its own criteria            for measuring the need for
skilled    care,

        SRS 'has not Issued any explicit       guidance to the States
on how to decide that a patient          needs skllled-nursing-home
care, except that admlssion to a skilled            nursing 'home must
be based on a physician's        recommendation,       HEW requires    that,
after admission,      p eriodic  reevaluations     be made of whether
a patientneedsto        remain in the home, Since there is no
explicit     guidance, however, the States develop their            own
procedures for judging the need for skilled             care,

        Because of the medical knowledge and judgment involved,
we have not suggested acceptable           criteria    for judging
whether patients        are in need of skilled-nursing-home            care
under MedicaId.          SSA has developed explicit       criteria     for de-
fining    skilled     nursing care under the Medicare program,               In
the absence of Medicaid criteria,            the State of Michigan--to
assist    those persons w'ho normally evaluate patient              needs--
has explicitly        defined the medical and nursing-care           charac-
teristics      it believes patients      should have to qualify          for
skilled     nursrng care.      For example,     they  must    need  potent
and dangerous Injectable         medications      on a regular     basis;
restorative       procedures,   suc'h as bowel and bladder training;
or tube feeding.



                                      25
       To determlne the effects of not having uniform Medic-
aid criteria,     we examined into the procedures followed by
Michigan, New York, and Oklahoma in determining the needs
of patients for skilled-nursrng-home      care, In Michigan--
the only one of the three States that had developed ex-
plicit   criteria   for determining patient needs--State and
county medical personnel who normally evaluate patient
needs accompanied us to 15 of the 30 homes reviewed for com-
pliance with Medicaid requirements for participation,       (See
ch. 2.)
       At our request, these personnel made determinations as
to the level of care needed by 378 patients by reviews of
patients ' medical records; discussions with nursing person-
nel; and observations of the patients, if considered neces-
sary, They concluded that about 297 (79 percent) of the
378 patients whose needs were evaluated did not require
skilled care as defined in Michigan's criteria.
       We could not have similar evaluations made in New York
and Oklahoma, since these States had not developed such
criteria;   however, as discussed on page 30, recent studies
in New York showed that about 25 to 35 percent of the pa-
tients in skilled nursing homes were inappropriately    placed,
In addition, in a limited test, we were advised by the eval-
uators that, if the medical and nursing-care characteristics
required by New York and Oklahoma patients were measured
against the Michigan criteria,   a similar high percentage of
patients probably would not require skilled-nursing-home
care.




                              26
MICHIGNA

        In the five counties we visited,       either   State or
county public health nurses or medical-social            caseworkers
(evaluators)       decided whether patients    should be admitted to
skilled    nursing homes, Subsequently,        three of the counties
began requiring       physicians'  recommendations.      But two of
the counties --one of which had over 50 percent of the
State's    skilled    nursing homes--continued     to rely on recom-
mendations by nonphysicians.

        State health department officials          informed us that
they did not believe that the procedures violated                 HEW re-
quirements       for a physician's     recommendation,      because public
health nurses and medical-social            caseworkers     (1) were pro-
vided with a physician's          physical   examination     report,    (2)
were supervised by physicians,            and (3) were instructed        to
consult with physicians         when consldered      necessary.      The of-
ficials     stated that, although the Michigan criteria              were
applied by nonphysicians,          they had been developed by physi-
cians.      In our opinion,     however, supervisory        physicians,     to
provide added assurance that they concur in the evaluators1
recommendations,       should record their       approvals.

       The officials also said that the evaluators           often rec-
ognize that patients    are not in need of skllled-nurslng-
home care but place the patients        in skilled     nursing homes
because beds in alternative    facilities       providing     less in-
tensive care are not available.

       The State's    subsequent reevaluations       of patient   level-
of-care needs have verified         that evaluators    recognized    that
a large number of patients        in skilled   nursing homes were
not In need of skllled-nursing-home          care.    Prior to and
during our review, reevaluations          were made by public health
nurses and medical-social       caseworkers;     however, provision
has now been made by the State for supplementary             annual ob-
servations    and evaluations     by physicians.      On the basis of
visits   to 126 skilled    nursing homes during the period Jan-
uary through July 1970, the evaluators           concluded that,     of
6,159 Medicaid patients       whose needs were evaluated,        3,353,
or about 54 percent,      were in need of a level of care less
than skilled-nursing-home       care.


                                        27
        State offlclals     advlsed us that 73 addltlonal           nursing
homes had refused to allow the State to evaluate the needs
of their patlents,because          the homes were afraid the State
might reduce the payments for patients           determined to be not
In need of skilled       care.    In Michigan,   the Medrcaid rate for
skilled     nursing care 1s $2.23 a day more than for lnterme-
dlate care.       In September 1970 State officials          advised US
that action was pending to stop payments to those homes
that did not permit reevaluations          of patient     needs but that,
because of the nonavarlablllty         of alternate     facilities,       no
actlon was currently        planned against homes that permrtted
reevaluations       even though some patients      in these homes did
not require      skllled   nursing care.

        This shortage of alternatlve     facilltles   probably will
continue for some time, because (1) from January 1, 1969,
through February 18, 1970, beds in skilled          nursing homes
increased from about 12,000 to 21,000--almost           double--and
beds avaalable for lower levels of care decreased from
about 11,000 to 7,000--about       one third and (2) beds in
skilled     nursing homes were expected to increase by an esti-
mated 8,000 in 1970, while beds In intermediate-care             facil-
rtles were expected to Increase at a more gradual rate.

       Evaluators     determine the levels of care needed by pa-
tients   on the basis of crlterla        established   by the State
Department of Public Health on July 22, 1969. These crite-
ria are explicit        as to the medical and nursing-care      needs
required    for patients      to be classlfled    as needing skllled-
nursing-home      care.

       On the basis of these criteria,          State and county medi-
cal personnel evaluated the needs of 378 patients                 rn 15
homes we visited     and concluded that 297 patients,             or 79 per-
cent, were not In need of skilled-nursing-home                care.    The
public health nurses and a medical-social             caseworker making
evaluatrons     for us said that,      in their   opinion,     the
July 22, 1969, crlterla       were too restrictive          and that they
preferred    the crateraa used prior to July 1969. At our re-
quest, they applied the less restrictive             criteria     to patients
in 14 of the 15 homes vlsited         and concluded that,         of the 360
patients    whose needs were evaluated,         151, or about 42 per-
cent, did not require      skllled-nursing-home         care.



                                     28
      The State's      evaluation    of patients'       needs for skilled-
nursing-home    care and the evaluations            made at our request
showed that,     for a large percentage           (42 to 79 percent)      of
the patients,      less intensive     levels of care would have been
adequate; however, alternative           facilities      were not avail-
able.    If intermediate-care        homes were available         and if
half of the about 14,000 Medicaid patients                in skilled     nurs-
ing homes could be placed in intermediate-care                homes, sav-
ings of about $5.7 million         annually would be realized            by
the State and the Federal Government, because intermediate
care is less costly        than skilled     care.

        HEW regional   officials       informed us that they believed
that uniform national         criteria     are needed to ensure that
patients    in skilled    nursing homes are those in need of
skilled   nursing care.




                                      29
NEW YORK
       Except for those admitted        to privately  owned nursing
homes in New York City, patients          are admltted to skilled
nursrng homes on the recommendation of their physicians.
Physicians   acting for the State Department of Health evalu-
ate patients    before their    stays in the home have exceeded
100 days, to determlne therr need for continued           skllled-
nursing-home    care.     Subsequently,    at least annually,    physr-
clans reevaluate      these needs.

       For privately  owned homes In New York City, physicians
of the City Department of Social Services evaluate the rec-
ommendations for admission to skilled          nursing homes by the
patients'   attending   physicians.     These physrcians    also eval-
uate the patients'    needs before they have been 1n a home
100 days.     Subsequently,    they reevaluate   the patients'   needs
when determined necessary by the City Department of Social
Services.

        The State and the city,        however, have not established
any written     criterion    defining    the medical and nursing care
required    for patients     to be classified        as needing skilled-
nursing-home     care.     Patients'    physical     and mental conditions
are shown on evaluation         forms, but no lnstructlons          are pro-
vided as to how this rnformatlon            is to be used in determln-
ing whether patients        need skilled-nursing-home         care.    As a
result,    evaluators     (physicians)     establish    their own criteria.

         Department of Health officials        informed us that several
voluntary       areawide health planning agencies in New York had
developed rather detailed          definitions     of nursing homes and
of the needs of patients         for care in such homes and that
professional       health teams using these deflnltions        sn care-
fully     designed studies had recently        examined into the suit-
abzllty      of patients'   placement in nursing homes in 10 coun-
ties.       According to these officials,        the studies showed
that 25 to 35 percent of such patients              could have been cared
for more suitably,        and often at less cost, in some other
facilities.

      Department of Health officials    informed us also that,
because there was a shortage of alternative       facilities in
which to place patients,   they would not be able to enforce
a well-defined   criterion for determining    which patients

                                     30
need skxlled care. They said that an intermedrate-care     pro-
gram only recently had been introduced In New York and that
there were about 12,000 beds available In intermediate-care
facilxtres   compared with about 54,000 beds in skilled nurs-
ing homes, They said also that there was a serious shortage
of beds in skilled nursing homes, which was rapidly being
reduced, and a much more serious shortage of beds in
Intermediate-care   facilities.  They informed us that the
shortage of beds in intermedlate-care    facilities would not
be elrminated for several years,
      HEWregional officials   informed us that the difficulty
of establishing  adequate national criteria was at least
partly responsible for the absence of such criteria     at the
State level.




                              31
oTaAHoMA

       The Oklahoma Department of Public Welfare requires              that
a patient     be examined by a physician    and that a medical-
social summary be prepared by a social worker before a de-
termination     can be made as to whether a patient         is eligible
for admIssion to a skilled     nursing home. This determina-
tion is made by three medical-social        analysts who are not
physicians     but who work under the supervision       of a physi-
cian.     Prior to our review, a physician      seldom recommended
the level of care required     for a patient,     because the phys-
ical examination     form did not specifically      require     such a
recommendation from the physician.        As a result      of our re-
view, the Department changed the form to require              a physi-
cian's recommendation.

        In addition       to evaluating   the condition  of each pa-
tient     initially,      the social analysts reevaluate    the condi-
tion of each patient           annually as to continued need for
skilled      'care.     During 1969 the analysts made about 16,000
reevaluations         and concluded that only 401 patients,      or
2.5 percent,         did not need skilled-nursing-home     care.

       Both the initial    and subsequent evaluations    of skllled-
nursing-home-care      needs of patients  are made on the basis of
the State's    general criteria   which require   only that eligible
persons be:

      "*-k3c bedfast,   chairfast,    or require  the assistance
      of another person to walk, or must by reason of
      other health problems as recommended by the at-
      tending physician       require  constant  skilled  nurs-
      ing supervision."

      Oklahoma does not have an intermediate-care        program
to provide for patients      needing less than skilled     care.
A Department of Public Welfare official        informed us that
the department would not establish       such a program unless
forced to do so by the Federal Government.          He said that,
if intermediate    care were provided in Oklahoma, rates al-
lowed probably would be equivalent       to current rates for
care provided   q,n skilled   homes and that rates for skilled
care, if more strbctly      defined, would be higher.



                                    32
       HEWregional officials informed us that HEN standards
for determining the level of care required by patients were
needed but that they should be developed at the national
level.




                             33
EVALUATION OF PATIENT NEEDS USING
MICHIGAN'S CRITERIA
             --
        In vlsrts     to eight New York nursing homes and sxx Okla-
homa homes, we obtained consrderable             documented medrcal in-
formation     on the conditions      of 120 patients       in New York and
86 patients       in Oklahoma.    We  asked    medical    personnel    who
evaluated     the needs of Michigan patients           for us to evaluate
the needs of these New York and Oklahoma patients,                  using
the July 22, 1969, criteria          developed by Michigan State De-
partment of Public Health physicians.              A physicran      also
participated        in these evaluations.       We noted that the ap-
placation     of uniform criteria       resulted    In similar    high per-
centages of patients         in New York and Oklahoma who may not
have been In need of skilled          care, as summarized below.

                                         Patients    believed
                                          not in need of
                        Number of         skilled-nursing-
                        patients               home care
            State       evaluated
                               ----    Number            Percent
                                                         ---
           Michigan        378             297              79
           New York        120              85              71
           Oklahoma         86              73              85

      As noted prevaously,      we did not Judge the reasonable-
ness of criteria     for evaluating   the needs of patlents--in-
eluding Mlchlganls--     because of the medical expertise      and
Judgment Involved.       We believe,  however, that the wide
range in results--     25 to 71 percent for New York and 2.5 to
85 percent for Oklahoma, depending on the criteria         used--
provndes evidence of the need for uniform criteria.



      The Assistant   Secretary, Comptroller,   advised us that
Oklahoma, in replying    to our draft report,   had stated that,
although the State had no crlticlsm     of our obJectives,      it
felt that the true test of Its skilled-nursing-home        pro-
gram was whether the State had observed the provisions          in
its approved State plan rather than criteria      established      by
another State.


                                      34
       In evaluating      patients'    needs in Oklahoma under Mrchi-
ganls criteria,        it was not our intentron      to imply that
Michigan's    criteria     for skilled-nursing-home        care be
adopted and applied by Oklahoma but it was our intention
simply to point out the latitude            of determinations     resulting
from the diversity        of criteria    being followed     by the States
in determinlng       the medical and nursing-care         requirements     for
patients   to be classified         as being in need of skilled-
nursing-home     care.

RECENT HEW ACTIONS

      As discussed in chapter 2, HEW regional       offices   and
the HEW Audit Agency had not made reviews of the skllled-
nursing-home   programs of the States included 1n our review.
The multistate    audit of nursing homes participating      in the
Medicaid program initiated     by HEW on November 25, 1969,
however, is aimed at ensuring that skilled-nursing-home
care is provided only when such care is required.

      The audit provides   for determining   whether patients
are receiving   the proper level of care and whether payments
are made only for the level of care authorized.        This au-
dit, which was partially     completed at the time of our re-
view, should, when completed,     provide guidance in overcoming
the problems found during our review.       As noted in the foot-
note on page 23, as of January 1971 the Audit Agency had is-
sued 15 reports    on Its audits of Medicaid nursing-home     pro-
grams, of which nine reports     pointed out problems similar
to those found during our review.




                                      35
CONCLUSIONS

       The absence of unrform criteria        settrng    forth the ex-
pllcit   medlcal and nursing-care      needs of patients         under Med-
icaid has permitted    limited   financial     resources      to be used
for the development of skilled-care         facilities,       although a
more critical    need seems to be for alternative           facllltles      sn
which less intensive     and less costly care can be provided,
Perhaps more important,      the effectiveness        of limited      human
resources,    such as physicians    and registered       nurses, is dr-
minished when they are required        for provrdlng       skilled     care
for patients    not in need of such care.

       HEW's development of uniform criteria             should in no way
impinge on the professional        expertise       and Judgment of physl-
clans.    On the contrary,      physicians      should be directly      in-
volved in the development and appllcatron              of such criteria.
In our opinion,     the use of such criteria          would pinpoint     more
precisely    the extent to which skilled           or less costly nursing
care is needed and, as a result,           limited    human resources
could be allocated       to meet more effectively         the most critical
nursing-care    needs.     Under the exrsting,        unreallstrc    proce-
dures, decisionmakers       often are confronted         with only two
choices-- skilled     care or no care at all.

RECOMMENDATIONSTO THE SECRETARY
OF HEALTH, EDUCATION, AND WELFARE

      We recommend that the Secretary         of HEW, to assist    the
States in determining     whether Medicaid patients        are in need
of skilled    care, issue criteria    setting     forth the medical
and nursing care required      for patients     to be classified    as
being in need of skilled-nursing-home          care.    We suggest that
consideration     be given to the experience with the criteria
already developed for the Medicare program.

      We recommend also that the Secretary      of HEW Instruct
SRS and the HEW Audit Agency to contrnue and increase their
monitoring   to ensure that States are following     existing   HEW
MedicaId regulations     relating to the admissIon of patients
to skilled   nursing homes and are periodically     determining
whether patients    admitted to skilled  nursing homes are still
in need of skilled    care.


                                     36
AGENCY COMMENTSAND ACTIONS

       With regard to our recommendation           that HEW issue crite-
ria setting    forth the medical and nursing care required               for
patients    to be classified      as in need of skilled-nursing-home
care, the Assistant       Secretary,    Comptroller,     stated that SRS
was planning to issue, within          6 months, guidelines       for the
States to follow,     which would clarify        and be more specific
in evaluating     a patient's     need for skilled      nursing care and
other services under the Medicaid program.               He stated also
that, where applicable,        these guidelines      would consider ar-
eas of common interest,        as outlined    in the criteria       devel-
oped for the Medicare program.

        With regard to our recommendation for continued and in-
creased monitoring     by SRS and the HEX Audit Agency to ensure
that the proper level of care is provided,           HRW stated that
monitoring    programs were being increased,        which would aid in
the reduction     of deficiencies    discussed in this and other of
our reports.      In addition,    HEW informed us, with respect to
Medicare,    that action had been taken to educate employees of
facilities     on the use of the utilization       renew mechanism
which ensures that the proper level of care is provided and
that procedures had been tightened          to prevent payments for
improper levels of care.

      The actions taken or promised by HEW should strengthen
administration   of the Medicaid and Medicare programs.    In
view of the substantial    Federal and State expenditures  un-
der these programs, prompt attention     should be given to the
implementation   of the promised administrative   actions.




                                    37
                              CHAPTER 4

                           SCOPE OF REVIEW

       We examined into the practices       of the States of Michi-
gan, New York, and Oklahoma in (1) certifying           homes as
meeting requirements      for participation    as skilled   nursing
homes under Medicaid and (2) determining          whether individual
patients    in skilled   nursing homes were in need of the level
of care provided.       For  those homes that were found to be
deficient     in meeting Medicaid requirements      for participa-
tion,    we ascertained   whether the homes were serving Medi-
care patients     and whether Medicare requirements       were being
met.

        Our selection   of States    was based on the significance
of Federal fvnds expended for          skilled nursing homes both
in amount and in relation       to   total Medicaid expenditures      in
the States.      In selecting   90   nursing homes (30 in each
State),    we attempted to make      our sample representative     of
the homes in each State.

       Our examination    into the need for the level of care
provided was directed      primarily    toward determining     the ef-
fects of not having explicit         HEW Medicaid criteria.       We did
not establish    acceptable    criteria    for measuring level-of-
care needs because of the medical expertise           and judgments
involved nor did we Judge the reasonableness           of criteria
established   by the States.

      Our review was made at HEW headquarters       in Washington,
D.C., and at its regional    offices    in Chicago, Illinois;      New
York, N.Y.;   and  Dallas, Texas,    Our  review  was made    also  In
each State at the responsible      State and county offices       and
at skilled  nursing homes in various counties.

        As part of our review, we examined into the basic leg-
islation     authorizing     the Medicaid program and the pertinent
HEW regulations        implementing  the program.  We also examined
pertinent     records and documents at State and county offices
and at nursing homes. We also discussed with HEW, State,
county, and nursing home officials         matters relative to the
administration       of the program,


                                     35
APPENDIXES




     39
                                                                                                  APPENDIXI

                           NURSING HOMES NOT FULLY IN COMPLIANCE

                                    WITH MEDICAID REQUIREMENTS

                           INCLUDING STATE LICENSING REQUIREMENTS



                                                           Medzcaid homes having
                                                           deflcrencles   (note a>                    Medicare
                                                                  New                                  homes
          Requirement                                  Mlch       York  m        Total                (note b)
Emergency electrical                service                 13         10      29            52              10
Adequate nursing            staff       (number and
   qualifications)                                          12         13      23            48               8
Physicran       vlslts      every 30 days                   12          8      27            47              12
Fire drills         three times a year                      17          5      22            44               7
Complete nurses'            call system                     11         13      19            43
Rxamlnatlon        room                                     11         10      17            38              9
Designated        social worker                             11          4      11            26              5
Record of current             health       examlna-
   tlons for staff            members on file                6         11      10            27              9
Cubicle      lsolatlon        curtains                      16         12                    28              8
Adequate patient            room accommoda-
   trons                                                     2         19          2         23              9
Qualified       consultant          dletrtlan                                     14         19
Written      polrcy     for patient           care           :          i          6         14          -2
Adequate torlet           facllltles                                   15                    15            5
Transfer       agreement with nearby
   hospital                                                  1          3      10            14
Adequate day-dlnrng               area                       6          5                    11              -4
Elevator                                                     3         13      -2            18               5
Wrltten      nursing-care           plan for each
   patient                                                   1          4          4              9           1
Nurses ' station                                             3          5          2             10
Posted dzsaster           plan                               5          4                         9           ;
Quallfled       admlnrstratlon                                          6                         6           3
Emergency drug kit                                          -4                     1              6
Adequate bathing            facilities                        1         t                         7      -3
Written      narcotics        record maintained         _          1          3              4          -zm
      Total                                             141         175       gig                        &gg
aComparlsons    of deflclencles       In each state               should    not be made, because of
 dlfferlng   licensing     requirements.
b Homes, Included  rn total,whlch               also    served     Medicare       patients       and which        did
  not meet Medicare requrrements.




                                                        41
             APPENDIXII




                                  DEPARTMENT   OF HEALTH,     EDUCATION,           AND WELFARE
                                                WASHINGTON.        D C     20201




OFFICE   OF THE   SECREl   ARY

                                                   MAR23 1971




              Mr John D Heller
              Assistant Director,  Crvll Division
              United States General Accounting Office
              Washington, D.C     20548

              Dear Mr            Heller

              The Secretary has asked me to respond to the draft report on
              the GAO review of Violations  of Medicaid and Medicare Standards
              for Skilled Nursing Homes and Questionable Need for Skilled
              Nursing Home Care    Enclosed are the Department's comments on
              the flndings and recommendations in your report.

              We appreciate this opportunity  to comment prior to issuance of
              the flnal report   We also appreciate your continuing interest
              in helping us improve Medicare and Medicaid administration.

                                                     Sincerely           yours,




                                                    Assistant            Secretary,    Comptroller

              Enclosure




                                                              42
                                                                   APPENDIX II



           VIOLATIONS OF MEDICAID AND MEDICARE STANDARDS
                     FOR SKILLED NURS'INGHOMES
                                AND
          QUESTIONABLENEED FOR SKILLED NURSING HOMECARE


The draft audit report presents a picture of various vlolatlons      of
MedicaId and Medicare standards for skilled   nursliig hoqes In Mlchlgan,
New York, and Oklahoma as bell as the questlonable need of skIlled
nursing home care for certain lndl\lduals     Its recommendations are
generally consistent. with findings of the Social and Rehabllltatlon
Service (SRS) and the Social Securl'c> Admlqlstratlon   (SSA) on these
points

The Medicaid and Medicare programs are constantly        working zowards
upgrading the quality     of care and services rendered by partlclpatlng
providers of services       Towards this goal, we have lnstltuted       several
programs deslgned to evaluate the operational       effectiveness    of Mealcald
and Medicare State agencies and to assure that partlclpatlng          facllltles
are cooperating to the fullest     extent of their resources In Improving
their operations      Coordlnatlon  between MedIcaid and Medlcare program
polrc1es  and guldcllnes,    to the fullest  extent feasible,     1s highly
desirable and 1s being undertaken
                                  [See GAO note. 1
The first    recommendation (page 39 of the draft report) recommerds
that    the Secretary of mW instruct  the Social and Rehabllltatlon
Service and HEW Audit Agency to continue and increase their monl-
toring of States' adherence to Its Medicaid requirements for
skllled    nursing homes

SRS has implemented a new monltorlng           and llalson program with the
State agencies by each of the SRS Reglonal Offlces along with assistance
from the Vashlngton Central Office             Under this new program, primary respon-
slblllty     for reviewing the State program has been given to the Reglonal
@fflces in order to facilitate         monltorlng    actlvltles   and promote faster
corrective      actions     The scope of the new program reqtlres         a closer
relationship      with the State agencies along with more frequent vlslts           and
detailed reviews of State operations              The lnltlal   monltorlng reviews
hvlll tend to be more comprehensive in the beglnnzng phases but will               later
develop into more lntenslve        revlebs of troublesone areas such as noted In
this report         Concerning the deflclency      corrtiented on In this recommendation,
SRS ~111, of course give specldl follow-up revlew of the corrective                 aLtlons


GAO note:       The deleted comments pertain              to matters discussed in
                the draft report but omltted              from this fuxal report.


                                        43
APPENDIXII

 lnltlated by the States    While SRS plans contlnulng monltorlng
 programs In these three States, as well as in the other 49 JWLS-
 dlctlons,  they also have these three States scheduled for lnten-
 slfled program reviews during FY 1971

 We also agree with the recommendatlo? that the audit effort expended
 by JBW In this area should continue and increase        With regard to
 MedIcaid, the GAO report did note that the agency had 'I        lnltlated
 a multi-State  audit of nursing homes partlclpatlng     in the Medicaid
 program " During FY 1970, nursing home programs were audited, or
 audits were In progress, sn 27 States     An addltlonal     17 States are
 scheduled for audit In FY 1971 Determinations       have been and will
 continue to be made during these audits as to whether reclplents
 received the proper level of care and whether payments were made only
 for the level of care authorized

 We would also like to point out the review efforts            of the Medrcare
 program by the Audit Agency and SSA

 The FY 1971 plans of the Audit Agency for Medicare call for greater
 audit emphasis on the operatlonal    aspects of this program       This 1s a
 contlnulng effort    away from the earliest    audits which were directed In
 the maln, towards verlfyzng    the admlnlstratlve     costs claimed by rnter-
 medlarles and State agencies      The Audit Agency has reviewed most of
 the State agencies responsible    for the examining and certifying      of
 extended care facllltles

 SSA In conJunctlon with the Public Health Service,               perforps prograrr
 reviews of each State agency partlclpatzng             lr the Medicare program
 under Section 1864 SSA, and the ten health insurance regional offices
 conduct comprehensive reviews of State operations                 During these reviews,
 Federal surveyors do direct surveys of a sample of providers to deter-
 mine, among other quality controls,            the effectiveness     of the State review
 capabllltles   of State surveyors and their adherence to Federal guldellnes
 The SSA has a valldatlon        program which, among other functions,         measures
 whether partlclpatlng      facllltles     are rendering quality services          It
 also has a program integrity          operation which evaluates consumer complaints
 against lndlvldual    facllltles       where there IS a llkellhood       that fraud IS
 Involved

 SSA has also instituted     measures to Improve the quality of State agency
 professional     employees   The third In a series of tralnlrg       programs for
 State agency survey personnel IS being held at Tulane Unlverslty            and
 slmllar   institutes   are being started In three other unlversltzes          About
 300 surveyors will receive this training        In 1971, and it 1s planned that
 all surveyors will ultlmatell     have the opportunity      of atterdzng such
 training    at various SSA sponsored institutes      throughout the country
 SSA has also been working closely with Federal and State merit system
 offlclals    to upgrade and augment staffing     wlthln State Medicare agencies




                                         44
                                                                                     APPENDIX II


As the Medlcare          program     has progressed,         SSA has become lncreaslngly
aware of the pattern            of deflclencles         nationally         In Ertended        Care
Facllltles      and has been emphaslzlng              the Importance           of upgrading
deficient     facxlltles           Whxle particular          attention       has been devoted
more recently         to fire     and safety     requlrewents          (lncludlng      fire     drills
mentioned     rn the audit         report),     State    agencies        are working        to foster
upgrading     In all areas




                           [See GAO note             on p. 43.1




                                                45
APPENDIX II




                          [See GAO note        on p, 43.1




  The third recormnendatlon (page 56 of the draft report) recommends that
  the Secretary issue crlterza     settzng forth the medical and nursing
  care required for persons to be classlfled       as in need of skilled        nursing
  home care and that conslderatron      be given to the experience wzth the
  crlterla  already developed for the Medicare program            SRS currently    has
  such guzdellnes In draft form which w~l.1 clarify         and be more speclflc
  for the States to evaluate a recipient's      need for skllled      nursing care
  and services     Where applicable,    these guidelines     considered areas of
  common Interest   as outlined In the criteria      developed for the Medicare
  program    SRS plans to have these guldellnes       wlthln the next SIX months

  The fourth recommendation (page 56 of the draft report? recommends
  that the Secretary of HEW instruct       the Social and Rehabllltatlon
  Ser~zce and the HEWAudit Agency to continue and increase their
  monltorlng to assure that States are following       existing  HEW regulations
  relating     to the admlsslon of persons to skilled   nursing homes and
  perlodlcally     effectively  determining whether persons admitted to skilled
  nursing homes are still      zn need of such care    As noted above, monltorlng
  programs are being increased which will aid in the reduction of defl-
  clenc+es found in this and other GAO reports




                                       46
In addltlon to our comments on the reeommendatlons we hdve the
fo .lowlng comments concerning various aspects of the report
                                         1
    Nurse-Patient     Rdtlos (pdge    21) - SSA 1s concerned that the
    draft lmplles that the absence of nurse-patlent           ratlo for
    Medicare 1s inherently       bad and would attentuate     the quality
    of care rendered        Under title   XVIII the adequacy of nursjng
    bervlces 1s carefully       determlned based on the :Ldgment of the
    sLr\ey team as It views the needs of a particular            faclllty     and
    the placing and composltlon of its patient load              An lndlvl-
    dualized determination       1s made based on type of care furnlshed,
    the needs of the patients,        and other related factors           SSA's
    view that this 1s the most desirable approach to assuring the
    quality    of nursing care rendered to Medicare patients 1s shared
    by the American Nursing Assoclatlon         and the Public Health
    Service, DHEW There are some inherent dangers in the use of
    arithmetic    ratios,   rncludlng the posslblllty     that the mlnlmum
    ratios established      may gain acceptance as the maximum by pro-
    vlders and surveying agencies

   Physlclan Vlslts       (page 22)l- Medicare regulations,       20 CFR
   405 1123, require a physrclan vlslt           at least once every 30
   days       This condltlon   of partlclpatlon     has been incorporated
   by reference in the Medicaid regulations              It should be noted
   that this requirement 1s to some extent beyond the control of                    .
   a facility       However, our State agencies are working closely                  _
   with facllltles      to have them take whatever steps are necessary
   to insure that these requisite         visits   are being made

   Emergency Electrical     Service (page 26)land Nurse Call System
   (page 27) - With respect to the lack of emergency electrical
   service and nurse call systems, State agencies have been
   encouraging facllltles     lacking these items to Install    them
   However, when facllltles      simply lack the funds to do so lmmedlately,
   but are otherwise In compliance with the r'equlrements and render
   an acceptable level of care, we feel It 1s preferable        to allow them
   to remain in the program as they try to improve        Thrs concept, of
   course, would be true In any case where correction        of a deflclency
   would require a very large expenditure In relation        to the resources
   of the faclllty
                                .
   Level of Care (page 40)&- One of the methods built         into the law
   to ensure that Medicare patients admitted to nursing homes require
   skllled    nursing care 1s btlllzatlon   review    Admittedly,   this 1s
   not perfect,     but actlon has been taken to educate facllltles      and
   there 1s evidence of Improvement        Also, lntermedlarles    have been
   tightening    up their procedures to prevent payment for custodial        care

    1GAO note:
                     The page numbers referred   to In these com-
                     ments are applicable   to GAO's draft report.


                                         47
APPENDIX II


Some Federal crxterla  defining "level of care" in terms of patterns
of skllled  nursxng care and skilled  care profiles  have started a trend
among "nursing homes" oriented more to custodial care to withdraw from
Medicare and to realign so as to create distinct    parts with different
levels of care

Because of our concern with regard to the speclflc     facllltles    visited
by the auditor, we have asked the three regional offices Involved to
request that the State agencies re-survey 29 of these facllltles          that
remain in the Medicare program (Four of them have voluntarily        wlth-
drawn)    The State agencies will work with these facllxtles       to improve,
and particular  attention  will be given to the deflclencles      noted by
the auditors

As requested by GAO, we furnished copies of their draft report to
the responsible State agencies in Oklahoma, New York and Michigan
for their review and comment The State of Mlchlgan did not submit
a formal reply, but indicated they had no objections  to the report
Formal comments were received from Oklahoma and New York, copies of
which are attached ) While these two States have raised various
obJections to parts of GAO's report, these objections were not of
a nature to affect our declslons on the actions we are taking on
GAO's recommendations
      .      1
Attachment

1GAO note:       These attachments   have been considered in prep-
                 aration  of our final report and are not in-
                 cluded as appendixes to the report.




                                       48
                                                             APPENDIXIII

                            PRINCIPAL OFFICIALS OF THE
                  DEPARTMENT
                          OF HEALTH, EDUCATION,ANDWELFARE
                        HAVINGRESPONSIBILITYFOR THE MATTERS
                             DlSCUSSEDIN THIS REPORT

                                                  Tenure of office
                                                  From           To
 SECRETARY OF HEALTH, EDUCATION,
  ANDWELFARE:
    Elliot L. Richardson                       June   1970    Present
    Robert H. Finch                            Jan.   1969    June 1970
    Wilbur J. Cohen                            %Y     1968    Jan. 1969
    John W. Gardner                            Aug.   1965    May 1968
 ADMINISTRATOR,SOCIALANDREHA-
   BILITATION SERVICE:
     John D. Twiname                           Mar.   1970    Present
     Mary E. Switzer                           Aug.   1967    Mar. 1970
 COMMISSIONER, MEDICALSERVICES
  ADMINISTRATION:
    Howard N. Newman                           Feb. 1970      Present
    Thomas Laughlin, Jr. (acting)              Sept. 1969     Feb. 1970
    Dr. Francis L. Land                        Nov. 1966      Sept. 1969
 COMMISSIONEROF SOCIAL SECURITY:
    Robert M. Ball                             Apr.   1962    Present
 DIRECTOR,BUREAUOF HWTH IN-
   SURANCE:
     Thomas M. Tierney                         Apr.   1967    Present
     Arthur E. Hess                            July   1965    Apr. 1967




U S GAO   Wesh,   D C


                                       49