oversight

Long-Term Care: Federal Oversight of Growing Medicaid Home and Community-Based Waivers Should Be Strengthened

Published by the Government Accountability Office on 2003-06-20.

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

             United States General Accounting Office

GAO          Report to Congressional Requesters




June 2003
             LONG-TERM CARE

             Federal Oversight of
             Growing Medicaid
             Home and
             Community-Based
             Waivers Should Be
             Strengthened




GAO-03-576
                                                June 2003


                                                LONG-TERM CARE

                                                Federal Oversight of Growing Medicaid
Highlights of GAO-03-576, a report to           Home and Community-Based Waivers
congressional requesters
                                                Should Be Strengthened



Home and community-based                        From 1991 through 2001, Medicaid long-term care spending more than
settings have become a growing                  doubled to over $75 billion, while the proportion spent on institutional care
part of states’ Medicaid long-term              declined. Over a similar time period, HCBS waivers grew from 5 percent to
care programs, serving as an                    19 percent of such expenditures—from $1.6 billion to $14.4 billion—and the
alternative to care in institutional            number of waivers, participants, and average state per capita spending also
settings, such as nursing homes. To
cover such services, however,
                                                grew significantly. Since 1992, the number of waivers increased by almost
states often obtain waivers from                70 percent to 263 in June 2002, and the number of beneficiaries, as of 1999,
certain federal statutory                       had nearly tripled to almost 700,000, of which 55 percent were elderly.
requirements. GAO was asked to
review (1) trends in states’ use of             In the absence of specific federal requirements for HCBS quality assurance
Medicaid home and community-                    systems, states provide limited information to the Centers for Medicare &
based service (HCBS) waivers,                   Medicaid Services (CMS), the federal agency that administers the Medicaid
particularly for the elderly, (2) state         program, on how they assure quality of care in their waiver programs for the
quality assurance approaches,                   elderly. States’ waiver applications and annual reports for waivers for the
including available data on the                 elderly often contained little or no information on state mechanisms for
quality of care provided to elderly             assuring quality in waivers, thus limiting information available to CMS that
individuals through waivers, and
(3) the adequacy of federal
                                                should be considered before approving or renewing waivers. GAO’s analysis
oversight of state waivers.                     of available CMS and state waiver oversight reports for waivers serving the
                                                elderly identified oversight weaknesses and quality of care problems. More
                                                than 70 percent of the waivers for the elderly that GAO reviewed
                                                documented one or more quality-of-care problems. The most common
                                                problems included failure to provide necessary services, weaknesses in
GAO is recommending that the                    plans of care, and inadequate case management. The full extent of such
Administrator of CMS take steps to              problems is unknown because many state waivers lacked a recent CMS
(1) better ensure that state quality
                                                review, as required, or the annual state waiver report lacked the relevant
assurance efforts are adequate to
protect the health and welfare of               information.
HCBS waiver beneficiaries, and
(2) strengthen federal oversight of             CMS has not developed detailed state guidance on appropriate quality
the growing HCBS waiver                         assurance approaches as part of initial waiver approval. Although CMS
programs. Although CMS raised                   oversight has identified some quality problems in waivers, CMS does not
certain concerns about aspects of               adequately monitor state waivers and the quality of beneficiary care. The 10
the report, such as the respective              CMS regional offices are responsible for ongoing monitoring for HCBS
state and federal roles in quality              waivers. However, CMS does not hold these offices accountable for
assurance and the potential need                completing periodic waiver reviews, nor does it hold states accountable for
for additional federal oversight                submitting annual reports on the status of waiver quality. Consequently,
resources, CMS generally
                                                CMS is not fully complying with statutory and regulatory requirements when
concurred with the
recommendations.                                it renews waivers. As of June 2002, almost one-fifth of waivers in place for 3
                                                years or more had either never been reviewed or were renewed without a
                                                review; for an additional 16 percent of waivers, reports detailing the review
                                                results were never finalized. Regional office personnel explained that
                                                limited staff resources and travel funds often impede the timing and scope of
                                                reviews. While regional office reviews include record reviews for a sample
www.gao.gov/cgi-bin/getrpt?GAO-03-576.
                                                of waiver beneficiaries, they do not always include beneficiary interviews.
To view the full product, including the scope   The reviews also varied considerably in the number of beneficiary records
and methodology, click on the link above.       reviewed and their method of determining the sample.
For more information, contact Kathryn G.
Allen at (202) 512-7118.
Contents


Letter                                                                                     1
               Results in Brief                                                            3
               Background                                                                  5
               Waivers Are Vehicle for Dramatic Growth in Medicaid Home and
                  Community-Based Services                                                10
               Information on State Quality Assurance Approaches for Waivers
                  Serving the Elderly Is Limited, but Quality Concerns Have Been
                  Identified                                                              14
               CMS Guidance to States and Oversight Of HCBS Waivers Are
                  Inadequate to Ensure Quality Care                                      22
               Conclusions                                                               34
               Recommendations for Executive Action                                      35
               Agency and State Comments and Our Evaluation                              35

Appendix I     Scope and Methodology                                                      42



Appendix II    Suggested CMS Definitions of Home and
               Community-Based Services in Waivers Serving
               the Elderly                                                                45



Appendix III   Medicaid Long-Term Care Expenditures, by Type
               and State, Fiscal Year 2001                                                47



Appendix IV    Number of Beneficiaries Served by HCBS
               Waivers for the Elderly and in Nursing Homes,
               by State, 1999                                                             49



Appendix V     Number of HCBS Waivers for the Elderly,
               Beneficiaries, Expenditures, and per Beneficiary
               Expenditures by State, 1999                                                51




               Page i                   GAO-03-576 Medicaid Home and Community-Based Waivers
Appendix VI     CMS HCBS Quality Initiatives                                              53



Appendix VII    Beneficiary Samples for and Duration of
                Regional Office Reviews of 15 State Waivers
                Serving the Elderly                                                       56



Appendix VIII   Comments from the Centers for Medicare &
                Medicaid Services                                                         58



Tables
                Table 1: States with Highest and Lowest per Beneficiary
                         Expenditures for State HCBS Waivers Serving the Elderly,
                         1999                                                             13
                Table 2: Quality Assurance Mechanisms States Reported Using in
                         HCBS Waivers Serving the Elderly                                 15
                Table 3: Quality Assurance Mechanisms Frequently Cited in Waiver
                         Applications and Current Annual State Reports for HCBS
                         Waivers Serving the Elderly                                      17
                Table 4: Frequently Cited Quality-of-Care Problems Identified by
                         CMS Regional Offices or States in HCBS Waivers Serving
                         the Elderly                                                      21
                Table 5: HCBS Waivers That Had 10 Years or More Elapse without
                         Ever Having a Regional Office Review or without a Review
                         Prior to the Last Waiver Renewal, as of June 2002                25
                Table 6: Status of CMS and State Monitoring for the 15 Largest
                         HCBS Waivers Serving the Elderly                                 28
                Table 7: Number and Specialty of CMS Regional Office Staff
                         Assigned to Oversee HCBS Waivers                                 32
                Table 8: Services States May Include in Their Medicaid Home and
                         Community-Based Services Waiver                                  45


Figure
                Figure 1: Percentage Distribution of Medicaid Long-Term Care
                         Expenditures, Fiscal Years 1991 and 2001                         11



                Page ii                 GAO-03-576 Medicaid Home and Community-Based Waivers
Abbreviations

CMS               Centers for Medicare & Medicaid Services
FTE               full-time equivalent
HCBS              home and community-based services
HCFA              Health Care Financing Administration
HHS               Department of Health and Human Services
ICF/MR            intermediate care facility for the mentally retarded




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Page iii                       GAO-03-576 Medicaid Home and Community-Based Waivers
United States General Accounting Office
Washington, DC 20548




                                   June 20, 2003

                                   The Honorable Charles E. Grassley
                                   Chairman
                                   Committee on Finance
                                   United States Senate

                                   The Honorable John B. Breaux
                                   Ranking Minority Member
                                   Special Committee on Aging
                                   United States Senate

                                   Over the last decade, states have increased their support for long-term
                                   care services in individuals’ homes or in other community-based settings—
                                   such as adult day care, adult foster care homes, and assisted living
                                   facilities—as an alternative to care in nursing homes and other
                                   institutions. For many vulnerable elderly and nonelderly individuals with
                                   physical, developmental, or cognitive disabilities, these alternative settings
                                   and services are seen as preferable to institutional care. Most state funding
                                   of long-term care is through Medicaid, the federal-state health care
                                   program for certain low-income individuals. Medicaid home and
                                   community-based services (HCBS) waivers, authorized under section
                                   1915(c) of the Social Security Act, are the primary means by which states
                                   provide noninstitutional long-term care.1 Waivers allow states to limit the
                                   availability of services geographically, target specific populations or
                                   conditions, control the number of individuals served, and cap overall
                                   expenditures—actions not usually allowed under the Medicaid statute.
                                   The Centers for Medicare & Medicaid Services (CMS)—the federal agency
                                   that manages Medicaid—reviews and approves states’ requests for these
                                   waivers and also is responsible for ensuring that states have necessary
                                   safeguards to protect the health and welfare of individuals receiving
                                   services through waiver programs.2




                                   1
                                    42 U.S.C. 1396n(c)(2000).
                                   2
                                    Until June 2001, CMS was known as the Health Care Financing Administration (HCFA). In
                                   this report, we continue to refer to HCFA when our findings apply to the organizational
                                   structure and operations associated with that name.



                                   Page 1                        GAO-03-576 Medicaid Home and Community-Based Waivers
Despite the growing use of HCBS waivers, concerns have been raised
about the quality of care provided through waivers serving both elderly
and nonelderly populations. Newspaper exposés and some state audit
reports have chronicled serious health and welfare concerns in waiver
programs across the country. Because of continued growth in the numbers
of people served through HCBS waiver programs and concerns about the
quality of care, you asked us to review (1) trends in states’ use of such
waivers, particularly for the elderly, (2) state quality assurance approaches
for waivers serving the elderly, including available data on the quality of
care provided to beneficiaries, and (3) the adequacy of CMS’s oversight of
state waiver programs for the elderly as well as those for other target
populations.

To identify trends in states’ use of waivers, we analyzed CMS and state
reports that contained data on waiver beneficiaries, expenditures, and
services. To identify those waivers that serve the elderly, we compiled a
list of HCBS waivers with “the aged” or “aged and disabled” as their target
populations. Throughout this report, we refer to this universe of waivers
as those “serving the elderly.” To assess state quality assurance activities
for waivers serving the elderly, we analyzed (1) data on quality assurance
approaches from state waiver applications and their most recent annual
reports to CMS, (2) the oversight findings reported by states in their
annual waiver reports, and (3) CMS regional office waiver reviews and
state audits of waivers completed from October 1998 through May 2002.3
For a more in-depth perspective on states’ quality assurance approaches
for waivers serving the elderly, we conducted structured interviews with
state officials and staff in South Carolina, Texas, and Washington. We
selected these states because they operate some of the largest HCBS
waivers for the elderly that have been in effect for 5 years or longer. We
did not attempt to assess the effectiveness of their quality assurance
approaches. To determine the adequacy of CMS oversight of state waiver
programs for the elderly as well as those for other target populations, we
obtained relevant data from officials at CMS headquarters and conducted
structured interviews with all 10 CMS regional offices on their waiver
review activities and staffing as of June 2002. See appendix I for a detailed
discussion of our scope and methodology. We conducted our review from
November 2001 through June 2003 in accordance with generally accepted
government auditing standards.



3
 Our analysis of regional office waiver reviews is based on final reports. Reviews that did
not have a final report were not included in our analysis.



Page 2                          GAO-03-576 Medicaid Home and Community-Based Waivers
                   Total Medicaid spending for long-term care increased from $33.8 billion in
Results in Brief   fiscal year 1991 to $75.3 billion in fiscal year 2001, with a growing share
                   spent on services through home and community-based waivers as an
                   alternative to care in institutions such as nursing homes. Expenditures for
                   services through HCBS waivers increased from $1.6 billion in fiscal year
                   1991 to $14.4 billion in fiscal year 2001, growing from 5 percent of all
                   Medicaid long-term care spending in fiscal year 1991 to 19 percent in fiscal
                   year 2001. Over roughly the same time period, the number of HCBS
                   waivers increased from 155 to 263, with 77 serving the elderly as of June
                   2002. Every state except Arizona operates at least one waiver for the
                   elderly. From 1992 to 1999, the total number of persons served through
                   waivers nationwide nearly tripled to 688,152 and the number of
                   beneficiaries served by waivers for the elderly more than doubled to
                   377,083. In two states, Oregon and Washington, HCBS waiver services
                   have replaced nursing homes as the dominant means of providing long-
                   term care to the elderly under Medicaid. Nationally, average Medicaid
                   expenditures per beneficiary in waivers serving the elderly increased from
                   $3,622 in 1992 to $5,567 in 1999; average spending per beneficiary in 1999
                   ranged from $1,208 in New York to $15,065 in Hawaii, reflecting
                   differences in the type and amount of services provided under different
                   waivers.

                   No nationwide data are available on states’ quality assurance approaches
                   or the status of quality of care for beneficiaries served by waivers for the
                   elderly, but concerns have been identified about the quality of care
                   provided under many of these waivers. Because CMS has not provided
                   detailed guidance to states on federal requirements for HCBS quality
                   assurance systems, the information available to CMS that should be
                   considered before approving or renewing waivers is limited. Thus, state
                   waiver applications and annual waiver reports that we reviewed for
                   waivers serving the elderly often contained little or no information on
                   state quality assurance approaches. For example, 11 applications for the
                   15 largest waivers serving the elderly identified three or fewer specific
                   quality assurance approaches, and none mentioned important approaches
                   such as complaint systems or enforcement tools. Moreover, 18 of 52 state
                   annual waiver reports that we reviewed contained no information on
                   approaches used to help ensure quality. Where information was provided,
                   the most frequently cited quality assurance approaches included (1) audits
                   or reviews of case management agencies, (2) state agency reviews of
                   waiver providers or direct-care staff, and (3) state licensure, certification,
                   or standards for some waiver providers. Although CMS regional office and
                   state reviews identified few if any specific cases of harm to waiver
                   beneficiaries, the reviews for the majority of waivers serving the elderly


                   Page 3                    GAO-03-576 Medicaid Home and Community-Based Waivers
with available relevant detail had one or more problems related to quality
of care. Among the most commonly cited problems were (1) failure to
provide authorized or necessary services, (2) inadequate assessment or
documentation of beneficiaries’ care needs in the plan of care, and
(3) inadequate case management. For example, one recent CMS regional
office review found that more than one-fourth of a state’s waiver
beneficiaries had received none of their authorized personal care services.
However, the consequences for the beneficiaries were not identified in this
review. Since many state waiver programs did not have a recent CMS
review, as required, or the annual state waiver report lacked the relevant
information, the extent of quality-of-care problems is unknown.

CMS guidance to states and oversight of HCBS waivers is inadequate to
ensure quality of care for waiver beneficiaries. CMS has not developed
detailed guidance for states on appropriate quality assurance mechanisms
as part of the waiver approval process, and initiatives under way to
generate information on state quality assurance approaches do not
address this problem. In addition, the agency has not fully complied with
the statutory and regulatory requirements that condition the renewal of
HCBS waivers on (1) states submitting required annual reports that
include information on state quality assurance approaches and
deficiencies identified through state monitoring and (2) CMS’s conducting
and documenting periodic waiver reviews to determine whether states
satisfied requirements for protecting the health and welfare of waiver
beneficiaries. Many state annual waiver reports submitted to CMS regional
offices for waivers serving the elderly were not timely and lacked required
information on quality assurance and state monitoring. As of June 2002,
228 HCBS waivers for all target populations had been in place for 3 years
or longer and should have been reviewed by CMS regional offices.
However, 42 waivers serving approximately 132,000 beneficiaries either
had never been reviewed or were renewed without a review. For 36
additional waivers, reviews were conducted, but the reports summarizing
the findings were never finalized, raising a question as to whether any
weaknesses were identified and, if so, had been corrected. CMS regional
office personnel informed us that limited staff and travel resources
impeded the timing and scope of reviews. While regions’ reviews included
an examination of beneficiary records, we found that the reviews varied
considerably in the number of beneficiary records reviewed and their
method of determining the sample, raising a question about the extent to
which findings could be generalized. In addition, they did not always
include beneficiary interviews. Although updated in 2001, CMS guidance
for conducting waiver reviews does not address key operational issues



Page 4                   GAO-03-576 Medicaid Home and Community-Based Waivers
             such as an adequate sample size or the sampling methodology to provide a
             basis for generalizing review findings.

             To better ensure that state quality assurance efforts are adequate to
             protect the health and welfare of HCBS waiver beneficiaries and to
             strengthen federal oversight, we are recommending that the CMS
             Administrator (1) establish more detailed criteria regarding the necessary
             components of an HCBS waiver quality assurance system, (2) require
             states to submit more specific information about their quality assurance
             approaches prior to waiver approval, (3) ensure that states provide
             sufficient and timely information in their annual waiver reports on their
             efforts to monitor quality, (4) develop guidance on the scope and
             methodology for federal reviews of state waiver programs, and (5) ensure
             allocation of sufficient resources for conducting thorough and timely
             reviews of quality in HCBS waivers and hold regional offices accountable
             for completing such reviews. Although CMS raised certain concerns about
             aspects of our report, such as the respective state and federal roles in
             quality assurance and the potential need for additional federal oversight
             resources, the agency generally concurred with our recommendations.


             The jointly funded federal-state Medicaid program is the primary source of
Background   financing for long-term care services.4 About one-third of the total
             $228 billion in Medicaid spending in fiscal year 2001 was for long-term
             care in both institutional and community-based settings. States administer
             this program within broad federal rules and according to a state plan
             approved by CMS, the federal agency that oversees and administers
             Medicaid. Some services, such as nursing home care and home health
             care, are mandatory services that must be covered in any state that
             participates in Medicaid. Other services, such as personal care, are
             optional, which a state may choose to include in its state Medicaid plan
             but which then must be offered to all individuals statewide who meet its
             Medicaid eligibility criteria. States may also apply to CMS for a section
             1915(c) waiver to provide home and community-based services as an
             alternative to institutional care in a hospital, nursing home, or



             4
              While the purpose of Medicaid is to cover health care and long-term care for low-income
             persons, including persons who are aged, blind, or disabled, it has become a significant
             means of funding long-term care for many middle-income persons as well. Many of these
             persons qualify for Medicaid benefits after a period of “spend-down,” during which they
             deplete their own resources to pay for services.




             Page 5                        GAO-03-576 Medicaid Home and Community-Based Waivers
intermediate care facility for the mentally retarded (ICF/MR).5 If approved,
HCBS waivers allow states to limit the availability of services
geographically, to target services to specific populations or conditions, or
to limit the number of persons served, actions not generally allowed for
state plan services. States often operate multiple waivers serving different
population groups, such as the elderly, persons with mental retardation or
developmental disabilities, persons with physical disabilities, and children
with special care needs.

States determine the types of long-term care services they wish to offer
under an HCBS waiver. Waivers may offer a variety of skilled services to
only a few individuals with a particular condition, such as persons with
traumatic brain injury, or they may offer only a few unskilled services to a
large number of people, such as the aged or disabled.6 The wide variety of
services that may be available under waivers includes home modification,
such as installing a wheelchair ramp, transportation, chore services,
respite care, nursing services, personal care services, and caregiver
training for family members. CMS’s waiver application form for states
includes a list of home and community-based services with suggested
definitions. States are free to include as many or as few of these as they
wish, to include additional services, or to include different definitions of
services from those supplied with the form. See appendix II for a list of
services provided through the HCBS waivers serving the elderly and CMS’s
suggested definitions of these services.

To be eligible for waiver services, an individual must meet the state’s
criteria for needing the level of care provided in an institution, such as a
nursing home, and be able to receive care in the community at a cost




5
 Federal statutory requirements for Medicaid that may be waived include
(1) statewideness, which requires that services be available throughout the state,
(2) comparability, which requires that all services be available to all eligible individuals,
and (3) income and resource rules, which require states to use a single income and
resource standard when determining eligibility for Medicaid, with the exception of
institutional care. A waiver of this last requirement allows states to use more generous
institutional eligibility criteria when determining financial eligibility for waiver services,
thus extending eligibility to individuals in the community who would not otherwise qualify
for Medicaid.
6
 A recent summary by the National Association of State Medicaid Directors identified 75
discretely defined services in HCBS waiver applications as of June 2000. Individual waivers
included as few as one service to as many as 25.




Page 6                          GAO-03-576 Medicaid Home and Community-Based Waivers
generally not exceeding the cost of institutional care.7 States are
responsible for determining the specific financial and functional eligibility
criteria used, conducting the necessary screening and assessment, and
arranging for services to be provided. Factors that states use in assessing
functional eligibility for nursing home care and for waiver services include
the individuals’ medical condition and their degree of physical or mental
impairment. Other factors that states generally consider, and which may
affect the states’ ability to provide care in the community at a cost not
exceeding that of institutional care or to adequately protect beneficiaries’
health and welfare, include the mix of services needed by the individual,
the availability of needed services, the cost of services, the need for home
modification, and the availability of family members or other caregivers.8

In order to receive federal funds for waiver services, a state must submit
an application to the Secretary of Health and Human Services (HHS) that
identifies the target population, specifies the number of persons that will
be served, and lists the services to be included. In addition, states are
required to provide certain assurances that necessary safeguards have
been taken to assure financial accountability and to protect the health and
welfare of beneficiaries under the waiver.9 Federal regulations specify that
the state’s safeguards for the health and welfare of beneficiaries must
include (1) adequate standards for all providers of waiver services and
(2) assurance that any state licensure or certification requirements for
providers of waiver services are met.10 CMS requires that a state’s waiver
application include documentation regarding the standards applicable for
each service provider. If the only requirement for a particular provider is



7
 The average cost of community care under a waiver cannot exceed the average cost of
care in an institution.
8
 For example, a person who requires 24-hour care and supervision and has no family or
other support in the community may exceed the limits of what the waiver program allows
in terms of personal care services. However, the same person who lives with a family
caregiver might be eligible to receive several hours of personal care services each day as
well as occasional respite care and caregiver training for the family.
9
 A state must provide several additional assurances, including the following: (1) the state
will provide for an evaluation of the need for services for individuals, (2) beneficiaries will
be informed of available alternatives to the waiver and provided a choice, (3) the average
per capita expenditures for waiver beneficiaries will not exceed the amount that the state
estimates would have been spent in the absence of the waiver, (4) absent the waiver,
beneficiaries would receive the appropriate institutional care that they need, and (5) the
state will provide information to CMS annually on the impact of the waiver.
10
    See, 42 CFR 441.302(a).




Page 7                          GAO-03-576 Medicaid Home and Community-Based Waivers
licensure or certification, the state must provide a citation to the
applicable state statute or regulation. If other requirements apply, the state
must specify the applicable standards that providers must meet and
explain how the provider standards will ensure beneficiaries’ welfare.
Finally, states must annually report on, among other things, how they
implement, monitor, and enforce their health and welfare standards and
the waiver’s impact on the health and welfare of beneficiaries.

Initial waiver applications and amendments to initial waivers are reviewed
and approved by CMS headquarters. CMS’s 10 regional offices have
primary responsibility for reviewing and approving applications to renew
waivers and amendments to renewed waivers. If CMS determines that a
waiver application meets program requirements, including sufficient
documentation to indicate that necessary safeguards are in place to
protect the health and welfare of waiver beneficiaries, it will approve an
initial waiver for a 3-year period. Subsequently, waivers may be extended
for additional 5-year periods.

Section 1915(c)(3) of the Social Security Act provides that, upon request
of a state, HCBS waivers may be extended, unless the Secretary of HHS
determines that the assurances provided during the preceding term have
not been met.11 Among the assurances that the state makes are that
necessary safeguards have been taken to protect the health and welfare of
waiver participants and that the state will submit annual reports on the
impact of the waiver on the type and amount of medical assistance
provided under the state Medicaid plan and on the health and welfare of
recipients. Regulations implementing section 1915(c) provide that an
extension of a waiver will be granted unless (1) CMS’s review of the prior
waiver period shows that the assurances the state made were not met and
(2) the state fails to provide adequate documentation and assurances to
justify an extension.12 In its explanation of this regulation, HCFA indicated
that a review of the prior period is an indispensable part of the renewal
process.13



11
  42 U.S.C. 1396n(c)(3). Section 1915(c)(3) states "A waiver under this subsection [1915(c)]
shall be for an initial term of three years and, upon the request of a State, shall be extended
for additional five-year periods unless the Secretary determines that for the previous
waiver period the assurances provided under paragraph (2) have not been met."
12
 42 CFR 441.304(a).
13
 See, 59 Fed. Reg. 37702, 37712 (1994) and 53 Fed. Reg. 19950 (1988).




Page 8                          GAO-03-576 Medicaid Home and Community-Based Waivers
Reviews of waiver programs for which a renewal has been requested are,
therefore, expected to occur at some point during the initial 3-year period,
and at least once during each renewal cycle. CMS guidance on the reviews
calls for on-site visits that include an examination of beneficiary and
provider records as well as interviews with state officials. If a state’s
efforts to protect the health and welfare of waiver beneficiaries are
determined to be inadequate, CMS officials told us that the agency can
either bar the state from enrolling any new waiver beneficiaries until
corrective actions are taken or terminate the waiver.

According to a recent CMS-sponsored review, oversight of waivers is often
decentralized and fragmented among a variety of agencies and levels of
government, and rarely does a single entity have accountability for the
overall quality of care provided to waiver beneficiaries.14 Some waiver
service providers are regulated by state licensing agencies, some are
certified by private accreditation organizations, and others operate under
terms of a contract or other agreement with a state agency. While the state
Medicaid agency is ultimately accountable to the federal government for
compliance with the requirements of the waivers, it may delegate
administration of the waivers to state units on aging, mental health
departments, or other departments or agencies with jurisdiction over a
specific population or service. About one-third of waivers for the elderly
are administered by an agency or department other than the Medicaid
agency, most often the state unit on aging.15 These agencies may then
contract with local networks, agencies, or providers to provide or arrange
for beneficiary services.




14
 Maureen Booth and others, Literature Review: Quality Management and Improvement
Practices for Home and Community-Based Care (Portland, Me.: University of Southern
Maine, Edmund S. Muskie School of Public Service, Jan. 10, 2002).
15
  Data gathered by the National Association of State Medicaid Directors identified the
location of waiver administration for 56 HCBS waivers for the elderly as of March 18, 2002.
Thirty-eight of these were administered either directly by the Medicaid agency or within the
same department that houses the Medicaid agency.




Page 9                         GAO-03-576 Medicaid Home and Community-Based Waivers
                       Medicaid-covered HCBS services have become a growing component of
Waivers Are Vehicle    state long-term care systems, with most of the growth accounted for by
for Dramatic Growth    substantial increases in the number of HCBS waivers and the beneficiaries
                       served through waivers. In a few states, these waivers are beginning to
in Medicaid Home and   replace nursing homes as the dominant means for providing long-term
Community-Based        care to the elderly under Medicaid. Over the past 10 years, total Medicaid
                       long-term care spending has more than doubled—from $33.8 billion in
Services               fiscal year 1991 to $75.3 billion in fiscal year 2001. However, the share of
                       spending for institutional care declined from 86 to 71 percent, while the
                       share spent for home and community-based care grew from 14 to 29
                       percent.

                       Most of the growth in home and community-based care spending under
                       Medicaid can be accounted for by HCBS waivers. Total Medicaid home
                       and community-based care spending grew from $4.8 billion in fiscal year
                       1991 to $22.2 billion in fiscal year 2001, while spending for waiver services
                       grew from $1.6 billion in fiscal year 1991 to $14.4 billion in fiscal year 2001.
                       As shown in figure 1, waiver spending grew from 5 percent of all Medicaid
                       long-term care spending in fiscal year 1991 to 19 percent in fiscal year
                       2001. In all but two states—California and New York—and the District of
                       Columbia, over one-half of Medicaid home and community-based services
                       spending in fiscal year 2001 was through waivers, with a much smaller
                       portion going to nonwaiver mandatory home health care or state plan
                       optional personal care services.16 See appendix III for a summary of
                       Medicaid long-term care expenditures by type and state.




                       16
                        California and New York fund most of their Medicaid home and community-based
                       services using the state plan personal care services option and home health benefit. The
                       District of Columbia funds most of its Medicaid home and community-based care using the
                       home health benefit.




                       Page 10                       GAO-03-576 Medicaid Home and Community-Based Waivers
Figure 1: Percentage Distribution of Medicaid Long-Term Care Expenditures, Fiscal
Years 1991 and 2001




Note: GAO analysis of HCFA Form 64 data as reported by Brian Burwell, Steve Eiken, and Kate
Sredl in Medicaid Long Term Care Expenditures in FY 2001 (The MEDSTAT Group, May 10, 2002).
The figure includes data from 49 states and the District of Columbia.


Both the number and size of HCBS waivers have grown considerably over
the past 20 years. Every state except Arizona operates at least one such
waiver for the elderly.17 In 1982, the first year of the waiver program, 6
states operated HCBS waivers. By 1992, 48 states operated a total of 155
HCBS waivers. As of June 2002, 49 states and the District of Columbia
operated a total of 263 HCBS waivers, with 77 serving the elderly. The
average waiver for the elderly served 3,305 Medicaid beneficiaries in 1992


17
 Arizona operates its Medicaid program as a demonstration project under a section 1115
waiver, which includes long-term care as well as acute health care services. Under section
1115 of the Social Security Act, the Secretary of HHS has broad authority to authorize
experimental, pilot, or demonstration projects that are likely to promote objectives of
certain federal programs, including Medicaid.




Page 11                        GAO-03-576 Medicaid Home and Community-Based Waivers
and 5,892 beneficiaries in 1999.18 In 1999, 15 states served more than 10,000
persons in their waivers for the elderly, an increase from only 4 states in
1992.

The total number of HCBS waiver beneficiaries—elderly and nonelderly—
nationwide nearly tripled from 235,580 in 1992 to 688,152 in 1999, the most
recent year for which data were available. The number of beneficiaries
served in waivers for the elderly more than doubled from 155,349 in 1992
to 377,083 in 1999. Over this same period, the number of Medicaid
beneficiaries who used some nursing home care during the year grew by
only 2.5 percent from 1.57 million to 1.61 million beneficiaries. By 1999,
waivers for the elderly were serving 19 percent of all Medicaid
beneficiaries served either in a nursing home or through an HCBS waiver
for the elderly, an increase from 9 percent in 1992.19 In two states, Oregon
and Washington, more elderly and disabled Medicaid beneficiaries were
served in HCBS waivers in 1999 than were served in nursing homes.
Appendix IV includes the number of Medicaid beneficiaries served by
HCBS waivers for the elderly and in nursing homes in each state.

In 1999, the average per beneficiary expenditure in HCBS waivers serving
the elderly was $5,567, an increase from $3,622 in 1992.20 However, the
average per beneficiary expenditure for such waivers varied widely across
states, reflecting differences in the type, number, and amount of services
provided under waivers in different states. As shown in table 1, among
those states with waivers serving the elderly in 1999, per beneficiary
expenditures ranged from an average of $15,065 in Hawaii to $1,208 in



18
  Waiver beneficiary and expenditure data used in this analysis do not cover the same time
periods. Waiver expenditure data are available through 2001. Data on waiver beneficiaries
and services are available only through 1999. A CMS contractor recently developed a
database for HCBS waivers. It is scheduled for installation at CMS in 2003, and it will
include waiver beneficiary, service, and expenditure data from annual state reports.
19
 The shift from institutional care to home and community-based services under Medicaid
has been most significant for persons with mental retardation or developmental
disabilities. In 1992, 28 percent of such beneficiaries who qualified for institutional care
were served under HCBS waivers, and by 1999, that proportion had grown to 68 percent.
20
  These average expenditures do not include expenditures for nonwaiver Medicaid services
for these beneficiaries. In addition to waiver services, waiver beneficiaries are eligible for
the full range of regular Medicaid state plan services. The overall cost to Medicaid for
waiver beneficiaries will be higher than the amounts reported here, which only include
those services provided under the waiver. In addition, Medicaid covers the cost of room
and board for beneficiaries in nursing homes and other institutions, a benefit not generally
covered for those receiving services under the waiver.




Page 12                         GAO-03-576 Medicaid Home and Community-Based Waivers
New York. In Hawaii, one such waiver that provided an average of 85
hours of personal assistance services per month to 91 percent of
beneficiaries of that waiver had an average cost of $10,893 per beneficiary.
A second Hawaii waiver that provided adult foster care, residential care,
or assisted living for waiver beneficiaries had an average cost of $16,958
per beneficiary. In contrast, New York’s waiver for the elderly did not
include personal care or residential services; the primary benefits included
social work services, personal emergency response systems, and home-
delivered meals. Appendix V provides summary information on states’
HCBS waivers for the elderly, including per beneficiary expenditures.

Table 1: States with Highest and Lowest per Beneficiary Expenditures for State
HCBS Waivers Serving the Elderly, 1999

                                          Average expenditures                         Number of
 State                                          per beneficiary                      beneficiaries
 United States                                          $5,567                           377,083
 States with highest per beneficiary waiver spending
 Hawaii                                                 15,065                                  923
 New Mexico                                             14,151                                1,404
 North Carolina                                         13,778                               11,159
 Alaska                                                 12,015                                  712
 West Virginia                                          11,213                                3,470
 States with lowest per beneficiary waiver spending
 Michigan                                                2,632                                6,328
 Iowa                                                    2,517                                3,994
 Missouri                                                2,224                               20,821
 Massachusetts                                           1,919                                5,132
 New York                                                1,208                               19,732

Source: CMS.

Notes: GAO analysis of annual state waiver report data (HCFA Form 372) as reported by Charlene
Harrington in Medicaid 1915(c) Home and Community-Based Waivers: Program Data, 1992-1999
(San Francisco, Calif.: University of California, San Francisco, August 2001).

All states in this table except Hawaii operated one waiver serving the elderly in 1999. Hawaii operated
two waivers, one that served 288 beneficiaries at a cost of $10,893 per beneficiary and a second that
served 635 beneficiaries at a cost of $16,958 per beneficiary.




Page 13                            GAO-03-576 Medicaid Home and Community-Based Waivers
                           No comprehensive nationwide data are available on states’ quality
Information on State       assurance systems for or the quality of care provided through HCBS
Quality Assurance          waivers, including those serving the elderly. In the absence of detailed
                           federal requirements for HCBS quality assurance systems, states’ waiver
Approaches for             applications and annual reports often contained little or no information on
Waivers Serving the        the mechanisms used to ensure quality, raising a question as to whether
                           CMS had adequate information to approve or renew some waivers. More
Elderly Is Limited, but    than half of the waivers serving the elderly for which we were able to
Quality Concerns           obtain a CMS waiver oversight report, an annual state waiver report, or a
Have Been Identified       state audit report identified oversight weaknesses and quality-of-care
                           problems. Frequently cited quality-of-care problems included (1) failure to
                           provide authorized or necessary services, (2) inadequate assessment or
                           documentation of beneficiaries’ care needs in the plan of care, and
                           (3) inadequate case management. We were unable to analyze over one-
                           third of waivers serving the elderly because they lacked a recent regional
                           office review, the annual state waiver report lacked the relevant
                           information, or they were too new to have annual state reports.


States Use a Variety of    Although the state waiver applications and annual waiver reports we
Waiver Quality Assurance   reviewed for waivers serving the elderly identified more than a dozen
Approaches in Waivers      quality assurance approaches, many contained little or no information
                           about how states ensure quality.21 For example, 11 applications for the 15
Serving the Elderly, Yet   largest waivers serving the elderly identified three or fewer quality
Some States Provide        assurance mechanisms and none of these 11 waivers mentioned important
Limited or Incomplete      approaches, including complaint systems or sanctions. Eighteen of 52
Information to CMS         state annual waiver reports that we reviewed contained no information on
                           the mechanisms used to help ensure quality. Moreover, when waiver
                           applications and annual waiver reports did contain some information, the
                           information was often incomplete. Our work in South Carolina, Texas, and
                           Washington identified additional quality assurance mechanisms that were
                           not listed in their waiver applications or annual reports, suggesting that
                           such documents may understate the nature and extent of their oversight



                           21
                             CMS uses the waiver applications, in part, to assess whether the proposed quality
                           assurance mechanisms are sufficient to warrant waiver approval. HCFA Form 372, referred
                           to in this report as the annual state waiver report, is a key source of information on how
                           states have ensured quality until states renew their waivers. In addition to service use and
                           spending data, the annual state waiver report includes information about the state’s
                           process for monitoring waiver standards and safeguards and the findings of those
                           monitoring processes—specifically, any deficiencies that were detected during the period
                           covered by the report.




                           Page 14                        GAO-03-576 Medicaid Home and Community-Based Waivers
                                  approaches. As a result, CMS’s understanding of how these states ensure
                                  quality in the waivers may be incomplete.

States Use a Variety of Quality   Information provided to CMS in state waiver applications and annual
Assurance Mechanisms              reports identified a variety of mechanisms used to protect the health and
                                  welfare of beneficiaries in waivers serving the elderly. Table 2 describes 14
                                  quality assurance approaches that states reported using in HCBS waivers
                                  for the elderly. Some of these approaches focus on the waiver beneficiary,
                                  such as case management or beneficiary satisfaction surveys. Other
                                  approaches are focused on providers, including licensure and inspections,
                                  corrective action plans, sanctions, and program manuals. States may
                                  require that certain providers be licensed or certified or meet other
                                  requirements contained in state laws or regulations. Such providers are
                                  generally subject to periodic inspections that may include a review of
                                  beneficiary records to determine whether the records meet program
                                  standards. A third set of quality assurance approaches focuses on waiver
                                  program operations, including internal or external evaluations of the
                                  waiver program, supervisory reviews of waiver beneficiary assessments
                                  and plans of care, and audits or reviews of case management agencies.

                                  Table 2: Quality Assurance Mechanisms States Reported Using in HCBS Waivers
                                  Serving the Elderly

                                  Quality assurance mechanism                Description
                                  Beneficiary-oriented mechanisms
                                  Case management                            Case management includes assessing the
                                                                             beneficiary’s needs, developing the plan of care,
                                                                             arranging for the delivery of services, monitoring
                                                                             the beneficiary, and conducting periodic
                                                                             reassessments of the beneficiary’s needs and
                                                                             modifying the plan of care as needed.
                                  Beneficiary satisfaction surveys or        A survey instrument or other tool is used to
                                  interviews                                 measure waiver beneficiaries’ views about their
                                                                             waiver services and the extent to which services
                                                                             are meeting their long-term care needs.
                                  On-site visits of beneficiaries            On-site visits may be conducted by program
                                                                             officials other than the beneficiary’s case
                                                                             manager to observe services being provided
                                                                             and gather information about the care provided.
                                  Complaint systems                          Systems to accept, investigate, and track the
                                                                             status of waiver beneficiaries’ or others’
                                                                             complaints regarding the waiver program.
                                  Provider-oriented mechanisms
                                  Licensure, certification, or other state   States require that certain providers be
                                  standards                                  licensed, certified, or meet other requirements
                                                                             contained in state law or regulation. Providers
                                                                             are generally subject to periodic inspections that




                                  Page 15                           GAO-03-576 Medicaid Home and Community-Based Waivers
                                Quality assurance mechanism                  Description
                                                                             include a review of beneficiary records to
                                                                             determine if they meet program standards.
                                Provider or direct care staff reviews or     State program officials conduct reviews of
                                audits                                       waiver providers or individual caregivers to
                                                                             determine whether waiver-specific requirements
                                                                             were met. Such reviews involve reviews of
                                                                             beneficiary records and other provider
                                                                             documentation as well as individual beneficiary
                                                                             interviews.
                                Corrective action plans                      List of actions that the provider agrees to take to
                                                                             return to compliance with federal or state
                                                                             standards.
                                Sanctions and penalties                      Depending on the severity of the violation,
                                                                             actions available to penalize the provider for not
                                                                             complying with federal or state standards.
                                Training and technical assistance            Ongoing, continuing education for case
                                                                             managers and waiver providers to ensure
                                                                             competency in delivering and monitoring the
                                                                             care of waiver beneficiaries.
                                Program manuals                              Distribution of rules, policies, procedures, or
                                                                             standards to waiver providers.
                                Program-oriented mechanisms
                                Case management agency review or             Reviews of agencies responsible for case
                                audit                                        management of the HCBS waiver, including a
                                                                             review of a sample of case managers’ records
                                                                             to ensure timeliness and completeness.
                                Supervisory review of beneficiary            Review conducted by case managers’
                                assessments or plans of care                 supervisors or at the state level of documents
                                                                             related to waiver beneficiaries’ assessed needs
                                                                             and identified services.
                                Analysis of automated waiver program         Review or monitoring of electronic version of
                                data                                         client data, such as assessments,
                                                                             reassessments, and care plans.
                                Internal or external evaluation of           Program review of the procedures for waiver
                                waiver program                               beneficiary assessments, development of plans
                                                                             of care, and delivery of waiver services; review
                                                                             may be conducted by state agency officials or
                                                                             by contractor.

                               Source: CMS.

                               Note: GAO analysis of the most recent waiver application for the 15 largest HCBS waivers serving the
                               elderly and the most recent annual state reports for 52 waivers serving the elderly submitted to CMS
                               regional offices as of July 2002.


States Provide CMS Limited     Because CMS has not provided detailed guidance to states on federal
Information about Their        requirements for HCBS quality assurance systems, the waiver applications
Quality Assurance Approaches   and annual reports submitted by states to CMS for waivers serving the
                               elderly often contained little or no information on state mechanisms for
                               ensuring quality, raising a question as to whether CMS had adequate
                               information to approve or renew some waivers.



                               Page 16                           GAO-03-576 Medicaid Home and Community-Based Waivers
•   Waiver applications. Our review of the most current waiver applications
    for the 15 largest waivers serving the elderly found that many states
    provided CMS limited information about how they plan to protect the
    health and welfare of beneficiaries.22 Eleven of the 15 states cited three or
    fewer quality assurance mechanisms. For example, New York’s application
    only contained information about the state licensure and certification
    requirements for its waiver services. None of these 11 applications
    included well-recognized quality assurance tools such as complaint
    systems, corrective action plans, sanctions, or beneficiary satisfaction
    surveys. The remaining 4 states each identified six to eight quality
    assurance approaches, including at least one of these four important tools.
    As shown in table 3, the two mechanisms most frequently cited by states
    were (1) licensure for some HCBS waiver providers, such as home health
    agencies and residential care providers, and (2) case management.

    Table 3: Quality Assurance Mechanisms Frequently Cited in Waiver Applications
    and Current Annual State Reports for HCBS Waivers Serving the Elderly

                                                       Waiver application:      Annual state
                                                         number of states     report: number
                                                 citing mechanism (n=15       of states citing
                                                                                              a
                                                     largest state waivers       mechanism
    Quality assurance mechanism                            for the elderly)     (n=40 states)
    Case management agency reviews or
    audits                                                                8                 30
    Waiver provider or direct-care staff
    reviews or audits                                                     1                 24
    Licensure, certification, or other state
    standards                                                            15                 22
    Waiver beneficiary satisfaction surveys
    or interviews                                                         2                 21
    Case management                                                      12                 20
    Training and technical assistance                                     0                 20
    On-site visits of waiver beneficiaries                                1                 16
    Complaint systems                                                     1                 13
    Supervisory review of waiver beneficiary
    assessments or plans of care                                          7                 11
    Corrective action plans                                               2                  9
    Sanctions and penalties                                               1                  7




    22
      We reviewed waiver applications for the 15 largest state waivers for the elderly based on
    the number of beneficiaries. These waivers were from the following states: Colorado,
    Florida, Georgia, Illinois, Kentucky, Missouri, New York, North Carolina, Ohio, Oregon,
    South Carolina, Texas, Virginia, Washington, and Wisconsin. In 1999, these waivers ranged
    in size from 10,514 beneficiaries in Virginia to 27,978 beneficiaries in Texas.




    Page 17                        GAO-03-576 Medicaid Home and Community-Based Waivers
                                                            Waiver application:          Annual state
                                                              number of states         report: number
                                                      citing mechanism (n=15           of states citing
                                                                                                       a
                                                          largest state waivers           mechanism
        Quality assurance mechanism                             for the elderly)         (n=40 states)
        Analysis of automated waiver program                                   1                      4
        data
        Internal or external evaluations of waiver                                0                     4
        program
        Waiver program manuals                                                    0                     4

    Source: CMS.

    Note: GAO analysis of the most recent waiver application for the 15 largest HCBS waivers serving the
    elderly and the most recent annual state reports for 52 waivers serving the elderly submitted to CMS
    regional offices as of July 2002.
    a
     We reviewed 70 annual state waiver reports from 49 states and the District of Columbia. Fifty-two of
    these annual reports from 40 states contained some information about states’ monitoring processes
    for HCBS waivers serving the elderly. States may have more than one HCBS waiver serving the
    elderly.


•   Annual waiver reports. Compared to waiver applications, annual state
    waiver reports identified more quality assurance mechanisms for waivers
    serving the elderly. The quality assurance mechanisms states’ annual
    reports cited most frequently included (1) audits of case management
    agencies, (2) reviews of provider or direct-care staff, (3) licensure and
    certification of providers, (4) beneficiary satisfaction surveys or
    interviews, (5) case management, and (6) training and technical
    assistance. As shown in table 3, these six mechanisms were mentioned by
    at least half of the 40 states that provided such information.23 However, as
    was the case with most of the 15 waiver applications we reviewed,
    complaint systems, corrective action plans, and sanctions were identified
    less frequently. For example, only 13 of the 40 states identified complaint
    systems for waivers serving elderly beneficiaries as a monitoring tool in
    their annual waiver reports.24 Responding to beneficiary complaints is a
    key element in protecting vulnerable nursing home residents and home


    23
     As of June 2002, there were 77 waivers serving the elderly. However, our analysis includes
    2 additional waivers for the elderly that had been terminated or not renewed as of that date
    because the states were able to provide us with their most recent annual report.
    24
     Only 1 of the 15 waiver applications we reviewed indicated that the state had a complaint
    system for the providers under its waiver. For a discussion of the role of complaint
    systems, see U.S. General Accounting Office, Nursing Homes: Sustained Efforts Are
    Essential to Realize Potential of the Quality Initiatives, GAO/HEHS-00-197 (Washington,
    D.C.: Sept. 28, 2000) and U.S. General Accounting Office, Medicare Home Health Agencies:
    Weaknesses in Federal and State Oversight Mask Potential Quality Issues, GAO-02-382
    (Washington, D.C.: July 19, 2002).




    Page 18                           GAO-03-576 Medicaid Home and Community-Based Waivers
                            health beneficiaries. Moreover, 18 of the elderly waiver reports (26
                            percent) from 12 states did not include a description of the process for
                            monitoring the standards and safeguards under the waiver, as required on
                            the reporting form.

                            State officials in South Carolina, Texas, and Washington informed us they
                            use a wider range of quality assurance mechanisms in their waiver
                            programs than were described in either their waiver application or their
                            annual state waiver report. Officials in Washington informed us they use
                            12 of the 14 mechanisms identified in table 3, yet they included only 2 of
                            these on their application and 3 in their most recent annual report. For
                            example, Washington operates a complaint system for waiver providers
                            but did not refer to this approach in its waiver application or annual
                            report. On the other hand, only Washington included reviews or audits of
                            case managers or case management agencies in its application or annual
                            report, yet all three states provided information on their use of this quality
                            assurance tool during our interviews. States’ formal reports to CMS on
                            their quality assurance mechanisms may therefore understate the nature
                            and extent of their oversight approaches.


State Oversight and         Although information on the quality of care provided in the 79 waiver
Quality Issues in Waivers   programs serving the elderly is limited, state oversight problems were
Serving the Elderly Have    identified by CMS regional offices or states in 15 of 23 waivers and quality-
                            of-care problems in 36 of 51waivers that we were able to examine.25 We
Been Identified by CMS      were unable to analyze findings related to 28 waivers serving the elderly
Regional Offices and        for various reasons: they lacked a current regional office review or a
States                      waiver review report was never finalized,26 the annual state waiver report
                            lacked the relevant information, or the waivers were too new to have an
                            annual state report. Because of incomplete information and the absence of



                            25
                              Our analysis of state oversight issues is based on 23 discrete waivers that had either a
                            regional office review or a state audit. State auditors are responsible for reviewing state
                            programs and may include Medicaid HCBS waiver programs as a part of these audits.
                            Annual state waiver reports do not address state oversight weaknesses. Our analysis of
                            quality-of-care issues is based on 51 discrete waivers that had either a regional office
                            review or an annual state report. As of June 2002, there were 77 waivers serving the elderly.
                            However, our analysis of state oversight and quality-of-care problems included 2 additional
                            waivers for the elderly that had been terminated or not renewed as of that date because
                            they had had a regional office review during the October 1998 through May 2002 time
                            period we examined.
                            26
                             Regional office review reports that did not have a final report were not included in our
                            analysis.



                            Page 19                        GAO-03-576 Medicaid Home and Community-Based Waivers
                             current reviews for many of the active waivers, the extent of quality-of-
                             care problems is unknown.

State Oversight Weaknesses   CMS regional office reviews or state audits identified weaknesses in state
                             oversight for waivers serving the elderly in 15 of the 23 waivers we
                             examined. In some cases, the waiver programs did not have essential
                             oversight systems or processes in place. For example, in the case of a
                             Virginia assisted living waiver that had over 1,250 beneficiaries, the
                             Philadelphia regional office found several state oversight problems,
                             including (1) no system in place to track the completion of the required
                             annual resident assessments, (2) insufficient monitoring to ensure that
                             beneficiaries were cared for in settings able to meet their needs,
                             (3) insufficient monitoring to ensure that state standards were met for
                             basic facility safety and hygiene, and (4) failure to inspect medication
                             administration records sufficiently to ensure that medication was being
                             dispensed safely and by qualified staff. The regional office identified
                             serious lapses in Virginia’s oversight of the waiver and the protection of
                             beneficiaries, resulting in both medical and physical neglect of waiver
                             beneficiaries. On the basis of the regional office review findings, HCFA
                             allowed the waiver to expire in March 2000. In other cases, states may
                             have had an oversight system or process in place, but they were
                             determined to be inadequate. Five state audit agency reports we reviewed
                             identified inadequate monitoring systems in state waiver programs. For
                             example, Connecticut had a policy in place for monitoring and evaluating
                             its HCBS waiver program, but, from January 2000 through March 2001 it
                             conducted no quality assurance reviews of the agencies it contracted with
                             to coordinate and manage services for waiver beneficiaries.

Quality-of-Care Related      CMS regional office reviews and states’ annual waiver reports identified
Problems                     quality-of-care related problems in 36 of 51 HCBS waiver programs for the
                             elderly that we were able to examine. Specifically, they found weaknesses
                             in the delivery of key elements of home and community-based services
                             that could affect waiver beneficiaries’ health and welfare (see table 4).
                             Typically, the reports did not provide sufficient detail to demonstrate the
                             impact of these weaknesses on waiver beneficiaries. Consequently, few, if
                             any, specific cases of beneficiary harm were identified.




                             Page 20                   GAO-03-576 Medicaid Home and Community-Based Waivers
Table 4: Frequently Cited Quality-of-Care Problems Identified by CMS Regional Offices or States in HCBS Waivers Serving the
Elderly

                                                                                                                            Number of 51
                                                                                                                         waivers in which
 Problem area                        Example                                                                       problem was identified
 Provision of authorized             Beneficiary not receiving services identified as being needed.                                    20
 or necessary services
 Plan of care                        Beneficiary’s care needs not addressed in plan of care.                                                20
 Case management                     Case manager for HCBS waiver program not providing ongoing                                             20
                                     assessment and monitoring of waiver beneficiaries or
                                     inadequate follow-up of changes in beneficiaries’ care needs.
 Staffing                            Insufficient number of staff to provide adequate care or staff not                                     12
                                     having appropriate credentials or training to provide care.
 Assessment                          Beneficiary’s needs not assessed or reassessment not                                                   11
                                     completed in a timely manner.
 Documentation of service delivery   Incomplete record of waiver services provided to beneficiary.                                           8
 Training                            Case managers identified as needing additional training on                                              8
                                     Medicaid eligibility.
 Quality assurance or                HCBS waiver program lacked a formal quality assurance                                                   7
 quality of care                     system; poor quality of care or services were identified.
 Medication                          Unable to document that facilities providing care to waiver                                             4
                                     beneficiaries dispensed medication safely and by qualified staff.

Source: CMS.

                                           Notes: GAO analysis of CMS regional office final waiver review reports for HCBS waivers serving the
                                           elderly issued from October 1998 to May 2002 and the most recent annual state waiver reports for 51
                                           waivers serving the elderly.

                                           Fifteen waivers serving the elderly had no problems identified in their regional office reviews or
                                           annual state reports; the remaining 36 waivers had problems related to quality of care. When both the
                                           CMS regional office and the state identified a waiver as having the same type of problem, we counted
                                           that problem only once.


                                           The most frequently identified quality-of-care problems in waivers serving
                                           the elderly involved failure to provide authorized or necessary services,
                                           inadequate assessment or documentation of beneficiaries’ care needs in
                                           the plan of care, and inadequate case management.

                                      •    Provision of authorized or necessary services. Identified problems
                                           included (1) services identified in plans of care not rendered,
                                           (2) inadequate nutrition provided to waiver beneficiaries, and
                                           (3) discontinuation of services without adequate notice to beneficiaries.
                                           For example, CMS’s Dallas regional office found that significant numbers
                                           of Oklahoma waiver beneficiaries did not receive personal care services
                                           from their direct-care provider—4,303 beneficiaries (27 percent) received
                                           none of their authorized personal care services and 7,773 beneficiaries (49
                                           percent) received only half of their authorized services. While the
                                           consequences for beneficiaries were not identified in this review, failure to



                                           Page 21                           GAO-03-576 Medicaid Home and Community-Based Waivers
                           provide authorized needed services may result in harm and could affect
                           the continued ability of beneficiaries to be cared for at home.
                       •   Plan of care. Issues included plans of care that (1) insufficiently addressed
                           the needs of waiver beneficiaries, (2) were not completed or updated
                           appropriately, and (3) were missing from beneficiaries’ files. In the review
                           of one of the Florida waivers, CMS’s Atlanta regional office staff found
                           several instances where needs identified through individual assessments,
                           including significant changes in waiver beneficiaries’ conditions, were not
                           addressed in the plan of care, a situation that could lead to beneficiaries
                           not receiving the necessary services. Without an appropriate plan of care
                           to direct the type and amount of services to be delivered, the waiver
                           beneficiary may not receive an adequate level of care.
                       •   Case management. Examples of case management problems included case
                           managers who (1) were unaware of beneficiaries having lapses in delivery
                           of care, (2) were not always aware of procedures or protocols for
                           reporting abuse, neglect, or exploitation, (3) failed to complete resident
                           assessments—service plans were either incomplete or inappropriate, and
                           updates to plans of care were late, or (4) did not always appear to have a
                           clear understanding of service definitions or requirements of the waiver or
                           Medicaid program.


                           CMS has not developed detailed guidance for states on appropriate quality
CMS Guidance to            assurance approaches as part of the initial waiver approval process.
States and Oversight       Moreover, although CMS oversight has identified some quality problems, it
                           does not adequately monitor HCBS waiver programs or the quality of care
Of HCBS Waivers Are        provided to waiver beneficiaries for waivers serving the elderly as well as
Inadequate to Ensure       those serving other target populations.27 CMS does not hold its regional
                           offices accountable for conducting and documenting periodic waiver
Quality Care               reviews, nor does CMS hold states accountable for submitting annual
                           reports on the status of quality in their waivers. As of June 2002, about
                           one-fifth of the 228 waivers in place for 3 years or more had either never
                           been reviewed or were renewed without a review.28 We found that the
                           reviews varied considerably in the number of beneficiary records



                           27
                             Because CMS regional offices have responsibility for oversight of all HCBS waivers,
                           including those serving the elderly, our analysis included all HCBS waivers as of June 2002.
                           28
                             As of June 2002, CMS regional offices had oversight responsibility for 263 HCBS waivers.
                           These waivers included other population groups as well as those serving the elderly. Of this
                           total, 228 had been in place for 3 years or more and should have had a regional office
                           review; 70 of these 228 waivers served the elderly. Nine waivers serving the elderly had not
                           been in place for 3 years or more and therefore were not included in this analysis.




                           Page 22                        GAO-03-576 Medicaid Home and Community-Based Waivers
                             examined and the method of determining the sample, potentially limiting
                             the generalizability of findings. According to CMS regional office staff, the
                             allocation of staff resources and travel funding levels have at times
                             impeded the scope and timing of their reviews. In addition, some regional
                             office staff told us that limited travel funds have resulted in the
                             substitution of more limited desk reviews for on-site visits and in the
                             conduct of reviews with one staff member when two would have been
                             preferable.


CMS Lacks Detailed           CMS has a number of initiatives under way to generate information and
Guidance for States on the   dialogue on quality assurance approaches, but the agency’s initiatives stop
Necessary Components of      short of (1) requiring states to submit detailed information on their quality
                             assurance approaches when applying for a waiver or (2) stipulating the
a Quality Assurance          necessary components for an acceptable quality assurance system. CMS
System                       recognizes that insufficient attention has been given to the various
                             mechanisms that states could and should use to monitor quality in their
                             waiver programs. As described in appendix VI, the initiatives CMS has
                             under way include identification of strategies that states are currently
                             using to monitor and improve quality in home and community-based care,
                             distribution of a guide on quality improvement and assessment
                             mechanisms for states and regional offices, and provision of a variety of
                             technical assistance and resources to states. The agency also has
                             implemented a new HCBS waiver quality review protocol for use by
                             regional offices in assessing whether state waivers should be renewed.29
                             Regional office staff told us that some states have begun to modify their
                             approaches to quality assurance in HCBS waivers based on the use of the
                             new waiver review protocol. For example, Washington officials
                             established a new quality assurance unit within the agency that oversees
                             its waiver for the elderly. In May 2002, CMS also introduced a voluntary
                             application template for its new consumer-directed HCBS waiver that asks
                             for a detailed description of states’ quality assurance and improvement
                             programs, including (1) the frequency of quality assurance activities,
                             (2) the dimensions monitored, (3) the qualifications of quality assurance
                             staff, (4) the process for identifying problems, including sampling



                             29
                              This protocol was developed to provide a standardized and comprehensive set of
                             procedures for regional office staff to follow when conducting periodic waiver reviews. See
                             Department of Health and Human Services, HCFA, HCFA Regional Office Protocol for
                             Conducting Full Reviews of State Medicaid Home and Community-Based Services
                             Waiver Programs (Washington, D.C.: Department of Health and Human Services, Dec. 20,
                             2000).




                             Page 23                        GAO-03-576 Medicaid Home and Community-Based Waivers
                                methodologies, (5) provisions for addressing problems in a timely manner,
                                and (6) the system for handling critical incidents or events. While these
                                CMS activities are intended to facilitate the development of HCBS-related
                                quality assurance approaches, they do not constitute a consistent set of
                                minimum requirements and guidance for states’ use to obtain approval for
                                their HCBS programs.


CMS Is Not Holding              In addition to the lack of detailed guidance for states, CMS is not holding
Regional Offices or States      its own regional offices or states accountable for oversight of the quality of
Accountable for Oversight       care provided to individuals served under HCBS waivers. CMS regional
                                offices are expected to conduct periodic waiver reviews to determine
of HCBS Waiver Quality          whether states are protecting the health and welfare of waiver
                                beneficiaries. Annual state reports are required by statute, and CMS
                                regulations indicate that they are intended to play a key role in
                                determining whether a waiver should be renewed.30 We found that regional
                                offices are neither conducting waiver reviews prior to renewal nor
                                obtaining complete annual state reports in a timely manner. As a result,
                                CMS has not fully complied with the statutory and regulatory requirements
                                that condition the renewal of HCBS waivers on states fulfilling their
                                assurances that necessary safeguards are in place to protect the health and
                                welfare of waiver beneficiaries.

CMS Regional Offices Often      Most CMS regional offices have not conducted timely reviews of the state
Are Not Conducting Timely       agencies administering waivers serving the elderly and other target
Reviews of State HCBS Waivers   populations or completed reports to document the results of their reviews.
                                Periodic on-site reviews are used to determine, among other things,
                                whether a state is ensuring the health and welfare of waiver beneficiaries.
                                Guidance from CMS headquarters instructs the regional offices to conduct
                                reviews before the first renewal of a waiver at the end of 3 years and
                                within 5 years for subsequent waiver renewals.

                                Eighteen percent of all HCBS waivers (42 of 228) that have been in place
                                for 3 years or more as of June 2002 either have never been reviewed by the
                                regional offices or had not been reviewed prior to their last waiver
                                renewal. Approximately 132,000 beneficiaries were served by these 42
                                waivers in 1999. Fourteen of the 42 waivers—serving approximately 37,000
                                waiver beneficiaries in 1999—have had 10 or more years elapse without a
                                regional office review (see table 5). CMS’s Dallas regional office was


                                30
                                 See, 50 Fed. Reg. 10013, 10016-17 (1985).




                                Page 24                        GAO-03-576 Medicaid Home and Community-Based Waivers
                                           responsible for 9 of these 14 waivers. Over a 10-year period, a regional
                                           office should have conducted at least two reviews for each waiver. The
                                           New Mexico AIDS Waiver, initially approved in June 1987, has been in
                                           place the longest without ever being reviewed—15 years. CMS officials
                                           were aware that regional offices had not reviewed some waivers but were
                                           unaware of the extent of the problem.

Table 5: HCBS Waivers That Had 10 Years or More Elapse without Ever Having a Regional Office Review or without a Review
Prior to the Last Waiver Renewal, as of June 2002

                                                                                                                          Number of
                                                                                                      Number of       years without a
                                                                                                           waiver       CMS regional
 State                                                Target population                             beneficiariesa      office review
    No regional office waiver review ever conducted
 Dallas regional office
 New Mexico                                         Persons with AIDS                                            60                  15
                                                                                                                  b
 Oklahoma                                           Persons with mental retardation                          2,550                   14
 Texas                                              Medically dependent children                               895b                  14
 Louisiana                                          Elderly and persons with disabilities                       393                  12
 New Mexico                                         Medically fragile children                                  152                  11
 Texas                                              Persons with mental retardation and                       1,047                  11
                                                    related conditions
 Texas                                              Persons with mental retardation                          4,956b                  10
 Texas                                              Persons with mental retardation                            224b                  10
 Louisiana                                          Elderly and persons with disabilities                       113                  10
 Seattle regional office
 Idaho                                              Elderly and persons with disabilities                     1,000                  12
 Idaho                                              Persons with mental retardation and                         512                  12
                                                    developmental disabilities
    No regional office waiver review conducted prior to last waiver renewal
 Kansas City regional office
 Iowa                                                 Elderly                                                3,994                   11
 Missouri                                             Elderly                                               20,821                   10
 San Francisco regional office
 Hawaii                                               Persons with AIDS                                          66                  12

Source: CMS.

                                           Note: GAO analysis of data provided by CMS, June 2002.
                                           a
                                           The number of HCBS waiver beneficiaries is based on 1999 HCFA Form 372 data. See Harrington,
                                           Aug. 2001.
                                           b
                                           Author’s estimate. See Harrington, Aug. 2001.




                                           Page 25                          GAO-03-576 Medicaid Home and Community-Based Waivers
                             As of June 2002, based on an analysis of the most recent regional office
                             review that occurred prior to October 2001 for each of the waivers, we
                             found that 23 percent of the review reports (36 of 158) in over half of the
                             regional offices had not been finalized.31 CMS requires its regional offices
                             to prepare a final report on each HCBS review to document their findings,
                             recommendations, and the state response. Without such a final report,
                             there is no formal document to indicate whether a state has fulfilled the
                             required assurances, including those related to the health and welfare of
                             waiver beneficiaries. The New York regional office did not finalize 11 of its
                             12 reviews, dating back to 1998, and the San Francisco regional office did
                             not finalize 7 of its 13 reviews, 1 of which was for a review that occurred in
                             1990. Without a final report documenting the review results, CMS cannot
                             be assured that, if problems were identified, they were appropriately
                             addressed.

CMS Does Not Obtain Timely   Many state annual waiver reports submitted to CMS regional offices are
and Complete State Annual    neither timely nor complete. During the interval between regional office
Waiver Reports               reviews, the required annual state waiver reports provide key information
                             on how states monitor beneficiaries’ quality of care and on any quality-of-
                             care related problems. According to regional office officials, states
                             routinely fail to submit these annual reports within the required time
                             frame—within 6 months after the period covered. In August 2000, officials
                             in CMS’s Philadelphia regional office reported that they had current
                             annual state reports for less than half (11 of 28) of the waiver programs in
                             their region. Our review of the most recent annual state reports for 70 of
                             79 HCBS waivers serving the elderly confirmed that producing these
                             reports remains a problem: (1) reports for more than a third of the waivers
                             were at least 1 year late—the most recent report from one of Louisiana’s
                             HCBS waivers was for calendar year 1997, (2) reports for approximately
                             one-fourth of the waivers provided no information on whether deficiencies
                             had been identified through the monitoring processes,32 and (3) five
                             reports indicated that deficiencies had been identified but provided no




                             31
                               In our analysis, we included only those reviews that had taken place prior to October
                             2001, allowing 9 months from the time the regional office conducted the waiver review to
                             final report issuance—from October 2001 to June 2002. CMS allows up to 4 months from
                             the time the regional office completes all waiver review activities to issuance of a final
                             report documenting the review findings.
                             32
                              As noted earlier, about one-quarter of annual state reports for waivers serving the elderly
                             did not include information requested concerning the approaches used to monitor quality
                             assurance.




                             Page 26                        GAO-03-576 Medicaid Home and Community-Based Waivers
                                  additional information about the nature of or response to the problems. 33
                                  CMS headquarters has no central repository for annual state reports but is
                                  in the process of establishing a centralized database for state report
                                  information sometime in 2003, a development that could facilitate ongoing
                                  monitoring of the timeliness and completeness of these reports.

Extent of Oversight               Our analysis of CMS’s oversight activities for the 15 largest HCBS waivers
Weaknesses Evident in 15          serving the elderly demonstrates the extent of oversight weaknesses.
Largest Waivers Serving the       Overall, 8 of the 10 CMS regional offices provided inadequate oversight for
Elderly                           13 of these 15 largest state waivers for the elderly, which, in 1999, served
                                  about 215,000 beneficiaries—over half (57 percent) of the total elderly
                                  waiver beneficiary population at that time (see table 6). We found that

                              •   Four of the 15 HCBS waivers were not reviewed in a timely manner by the
                                  CMS regional office—none of the 4 had reviews for 8 or more years and
                                  yet were renewed.34
                              •   Four of the 15 waivers had no waiver review final report completed by the
                                  regional office. Two of the reviews occurred in 1999, and for the remaining
                                  2 waivers the regional office could not tell us the date of the reviews or
                                  whether a final report was available.
                              •   Four of the 15 waivers lacked a timely annual state report to the regional
                                  office. As of April 2002, the most recent annual report for these 4 waivers
                                  was either for the waiver period ending August 1999 (1 waiver) or
                                  September 2000 (3 waivers).
                              •   Seven of the 15 waivers had annual state reports that were incomplete
                                  because they either lacked information on their quality assurance
                                  mechanisms or on whether deficiencies had been identified.




                                  33
                                    Eight of the remaining 9 waivers were new and had not yet had an annual report
                                  submitted. The CMS Atlanta regional office did not provide a current annual report for 1
                                  waiver. As of June 2002, there were 77 waivers serving the elderly. However, our analysis
                                  includes 2 additional waivers for the elderly that had been terminated or not renewed as of
                                  that date because the state was able to provide us with their most recent annual report.
                                  34
                                   These 4 waivers are a subset of the 42 HCBS waivers in place for 3 years or more that
                                  either were never reviewed by the regional offices or were not reviewed prior to their last
                                  renewal.




                                  Page 27                        GAO-03-576 Medicaid Home and Community-Based Waivers
Table 6: Status of CMS and State Monitoring for the 15 Largest HCBS Waivers Serving the Elderly

                                                                            CMS waiver review not            Annual state report not
                                                  Number of waiver           timely or report not           timely or documentation
                                                                  a                                                            b
 State                                               beneficiaries                finalized                       insufficient
 New York regional office
 New York                                                      19,732                   X                                 X
 Philadelphia regional office
 Virginia                                                      10,514                                                     X
 Atlanta regional office
                                                                                            c
 South Carolina                                                14,361                   X                                 X
 Georgia                                                       14,018                                                     X
 Florida                                                       13,762                                                     X
 Kentucky                                                      13,339                                                     X
 North Carolina                                                11,159                   Xc                                X
 Chicago regional office
 Ohio                                                          26,135
                                                                    d
 Illinois                                                     17,396                    X                                 X
 Wisconsin                                                     13,900                   X
 Dallas regional office
 Texas                                                         27,978                   X                                 X
 Kansas City regional office
 Missouri                                                      20,821                   X
 Denver regional office
 Colorado                                                      11,481                   X
 Seattle regional office
 Oregon                                                        26,410                                                     X
 Washington                                                    25,718

Source: CMS.

                                        Note: GAO analysis of data provided by CMS, June 2002 and the most recent annual state waiver
                                        reports. The 15 largest HCBS waivers serving the elderly are based on the number of beneficiaries.
                                        a
                                        The number of HCBS waiver beneficiaries is based on 1999 HCFA Form 372 data. See Harrington,
                                        Aug. 2001.
                                        b
                                         The annual report is required by statute and CMS directs states to (1) submit such reports within 6
                                        months after the period covered, and (2) include information on how the state implements, monitors,
                                        and enforces its health and welfare standards and the waiver’s impact on the health and welfare of
                                        beneficiaries.
                                        c
                                         The CMS regional office could not provide the date that the last waiver review was conducted or
                                        specify whether a report had been finalized.
                                        d
                                            Author’s estimate. See Harrington, Aug, 2001.




                                        Page 28                              GAO-03-576 Medicaid Home and Community-Based Waivers
Scope and Duration of        The limited scope and duration of periodic regional office waiver reviews
Regional Office Waiver       raise a question about the confidence that can be placed in findings about
Reviews Are Limited          the health and welfare of waiver beneficiaries. CMS regional offices
                             conduct reviews using guidance provided by headquarters. The guidance
                             instructs regional office staff to review beneficiary records; interview
                             waiver beneficiaries, primary direct-care staff of waiver providers, and
                             case managers; and observe waiver beneficiaries and the interaction
                             between the beneficiary and direct-care staff. This guidance was updated
                             in January 2001 when use of the new HCBS waiver quality review protocol
                             became mandatory. However, the new protocol does not address
                             important operational issues such as

                         •   an adequate sample size or sampling methodology for the beneficiary
                             record reviews and interviews to provide a basis for generalizing the
                             review findings;
                         •   whether the sample should be stratified according to the different groups
                             served under the waiver (i.e., for a waiver serving both the elderly and the
                             disabled, selecting a stratified sample based on the proportion of persons
                             aged 65 and over and those aged 18 to 64 with disabilities); and
                         •   the appropriate duration of an on-site review, taking into consideration the
                             number of sites and beneficiaries covered in the waiver.

                             Our analysis of regional office review reports for 21 HCBS waivers serving
                             the elderly found that the reviews varied considerably in the number of
                             beneficiary records evaluated and their method of determining the sample,
                             potentially limiting their ability to generalize findings from the sample to
                             the universe of waiver beneficiaries.35 Specifically, we found a wide range
                             of sample sizes in 15 of the 21 regional office reviews that included such
                             information. The sample sizes for record reviews ranged from 14
                             beneficiaries (of 73 served) in the Boston regional office review of the
                             Vermont waiver to 100 beneficiaries (of 24,000 served) in the Seattle
                             regional office review of the Washington waiver. (See app. VII for a
                             summary of the sample sizes in the regional office reviews.) Eleven of the
                             15 CMS waiver review reports included information on the specific
                             number of beneficiaries interviewed or observed during the review;
                             however, we could not determine whether beneficiary interviews or
                             observations had been conducted in other waiver reviews. The method by
                             which the beneficiary record review samples were selected varied, with


                             35
                               We requested that regional offices provide us with final reports for HCBS waivers serving
                             the elderly issued from October 1998 to May 2002. Eight of the 21 reviews we analyzed
                             were completed after CMS’s new HCBS waiver quality review protocol was implemented.




                             Page 29                        GAO-03-576 Medicaid Home and Community-Based Waivers
                            some regional offices using randomized sampling methods, some basing
                            their sample on geographic location, and others reporting no method of
                            sample selection.

                            For most of these same 15 waivers serving the elderly, we found that the
                            regional staff typically spent 5 days conducting the waiver review—
                            regardless of the number of waiver beneficiary records sampled or the
                            overall size of the waiver. However, the Seattle regional office staff
                            conducted only three reviews in the past 4 years, targeting its largest
                            HCBS waivers. For example, the regional office has spent 3 to 4 weeks per
                            waiver for the on-site portion of the review and another week for state
                            agency interviews and review of documents. Generally, the number of
                            beneficiary records reviewed and beneficiaries interviewed is dependent
                            on (1) the number of days allocated to the waiver review by a regional
                            office and (2) the number of regional office staff members available.


Limited Regional Office     The limited number of assigned staff and available clinical specialists,
Resources Available for     coupled with insufficient travel funds allocated to regional office oversight
Oversight of HCBS Waivers   of HCBS waivers, have contributed to the timeliness and scope problems
                            we identified. According to regional offices, the level of attention given to
                            HCBS waiver oversight, including periodic reviews when waivers come up
                            for renewal, is at the discretion of regional office management and
                            competes with other workload priorities.36 In August 2000, some regional
                            office officials formally communicated to HCFA headquarters their
                            concern that the agency was not devoting sufficient resources to properly
                            monitor the quality of HCBS waiver programs. Regional office officials
                            responsible for waiver oversight told us that the number of staff available
                            for waiver oversight has not kept pace with the growth in the number of
                            waivers and beneficiaries served and that resource issues remain a key
                            challenge for waiver oversight.




                            36
                             Headquarters officials are responsible for establishing waiver policy and the 10 regional
                            offices have responsibility for waiver oversight. Both headquarters and the regional offices
                            answer separately to the Administrator without any formal reporting links. In earlier work,
                            we reported that these organizational reporting lines complicated coordination and
                            communication, weakened oversight, and blurred accountability when problems arose. See
                            U.S. General Accounting Office, Medicare Contractors: Further Improvement Needed in
                            Headquarters and Regional Office Oversight, GAO/HEHS-00-46 (Washington, D.C.: Mar.
                            23, 2000) and U.S. General Accounting Office, Nursing Homes: Sustained Efforts Are
                            Essential to Realize Potential of the Quality Initiatives, GAO/HEHS-00-197 (Washington,
                            D.C.: Sept. 28, 2000).




                            Page 30                        GAO-03-576 Medicaid Home and Community-Based Waivers
We found that CMS regional offices differed substantially in the number of
staff assigned to waiver oversight and the extent to which staff with
clinical or program expertise were assigned to waiver oversight.
According to Dallas, Denver, and Philadelphia regional office staff, the
level of resources allocated by the regional offices for such reviews
dictated the number of waiver beneficiary records reviewed or beneficiary
interviews conducted. Six of the 10 regional offices had two or fewer full-
time-equivalent (FTE) staff assigned to monitoring HCBS waivers (see
table 7).37 Moreover, we found that the number of regional office staff
assigned to monitoring HCBS waivers bore little relationship to the waiver
workload. For example, the Chicago regional office had six FTE staff to
monitor 34 HCBS waivers with 131,902 waiver beneficiaries, while the
Dallas regional office had one-and-a-half FTE staff for 28 HCBS waivers
with 63,614 waiver beneficiaries. Until a few years ago, one person in the
Philadelphia regional office was assigned to oversee HCBS waivers—
despite growth in the number and size of the region’s HCBS waivers over
the past decade.38




37
  We asked the regional offices to distinguish between staff assigned to HCBS waiver
oversight and staff who may be temporarily assigned, such as those borrowed from another
division for their specific expertise.
38
 In 1992, the Philadelphia regional office was responsible for oversight of 16 waivers
serving approximately 17,000 waiver beneficiaries. By 1999, the regional office had
responsibility for 23 waivers serving over 48,500 waiver beneficiaries. As of 2002, the
regional office’s total number of waivers had grown to 33. Since early 2000, this regional
office has hired or reassigned approximately three additional staff to focus on waiver
oversight.




Page 31                        GAO-03-576 Medicaid Home and Community-Based Waivers
Table 7: Number and Specialty of CMS Regional Office Staff Assigned to Oversee HCBS Waivers

                                                                  Number of HCBS
                                                                                   a
                                 Number of HCBS                waiver beneficiaries                Number of FTE                     Specialist
                               waivers (number of                (number of elderly              staff assigned to           staff assigned to
 CMS regional office       waivers for the elderly )           waiver beneficiaries)             oversee waivers             oversee waivers
 Boston                                       26 (9)                45,390 (20,190)                              1                          No
                                                                                                                  b
 New York                                     15 (3)                69,390 (24,319)                            <2                           No
 Philadelphia                                 33 (8)                48,537 (18,554)                            4.1                          No
                                                                                                                  b                           c
 Atlanta                                    43 (15)                122,120 (78,669)                          <3.5                         Yes
 Chicago                                    34 (10)                131,902 (73,935)                              6                          No
 Dallas                                       28 (9)                63,614 (47,454)                            1.5                          No
                                                                                                                                              d
 Kansas City                                  23 (4)                59,253 (33,873)                            1.4                        Yes
 Denver                                       29 (7)                32,866 (15,420)                              4                        Yese
 San Francisco                                15 (6)                51,068 (10,829)                              2                          No
 Seattle                                      17 (6)                64,012 (53,840)                             .4                          No

Source: CMS.

                                        Note: GAO analysis of data provided by CMS, June 2002.
                                        a
                                        The number of HCBS waiver beneficiaries is based on 1999 HCFA form 372 data. See Harrington,
                                        Aug. 2001.
                                        b
                                            Staff are not working full-time on HCBS waivers.
                                        c
                                            One qualified mental retardation professional and one qualified mental health professional.
                                        d
                                            One individual who is both a registered nurse and a qualified mental retardation professional.
                                        e
                                            One registered nurse and one part-time qualified mental retardation professional.


                                        As shown in table 7, 3 of the 10 regional offices had specialists assigned to
                                        waiver oversight, such as registered nurses or qualified mental retardation
                                        professionals.39 When asked to identify one of the greatest improvements
                                        that could be made in federal waiver oversight, 3 of the 10 regional offices
                                        identified the direct assignment of specialist staff. CMS’s waiver review
                                        protocol specifies that the participation of clinical and other specialist
                                        staff is important to assessing issues related to beneficiaries’ health and
                                        welfare. However, many regional offices indicated that they had to
                                        “borrow” specialist staff from other departments within the region in order
                                        to conduct their waiver reviews. The Seattle and Boston regional offices
                                        provide contrasting examples of the role played by regional office
                                        management in obtaining clinical staff to conduct reviews. According to
                                        Seattle regional office staff, it has been a challenge to obtain specialist


                                        39
                                         Two of these three regions indicated that they had intentionally hired someone with a
                                        clinical specialty for waiver reviews.




                                        Page 32                               GAO-03-576 Medicaid Home and Community-Based Waivers
staff on the waiver review teams. For 4 to 5 years, the region did not
conduct any HCBS waiver reviews. In the past 4 years, it has only
conducted three reviews—regardless of the number of waivers due for
review. The region has four waivers that have never been reviewed, two
dating back to 1989. According to the staff, the prior regional
administrator did not target resources for HCBS waiver reviews, and it
was difficult to obtain clinical and other specialist staff from other
departments to assist in conducting reviews. Although it has no specialist
staff assigned to waivers, Boston regional office officials informed us that
conducting HCBS waiver reviews has been a management priority, as
evidenced by the fact that the region always includes a registered nurse or
other relevant specialist on the review team. We noted that the Boston
regional office has conducted timely reviews of all of its waivers.

When asked to identify the greatest challenges related to HCBS waiver
oversight, 4 of the 10 CMS regional offices identified insufficient travel
funding. Regional office staff indicated that there appears to be no
correlation between the amount of travel dollars made available by the
regional offices for the reviews and the review schedule set forth by CMS
headquarters. Moreover, they told us that they had to compete for limited
travel resources with the regional office staff responsible for overseeing
nursing homes. Regional office responses to inadequate travel funds have
included (1) conducting a “desk review” without visiting state agency
officials, providers, and waiver beneficiaries, (2) limiting the number of
days allotted for the review, (3) reducing the number of staff assigned to
conduct the review, or (4) not reviewing a particular waiver at all. In the
New York regional office, a lack of travel funds led to desk reviews for 9 of
15 waivers. According to the Philadelphia regional office’s final report for
a Virginia HCBS waiver, some cases that should have been pursued were
not reviewed because only 1 week had been allotted for fieldwork, and 2
of the 18 cases selected for field review were dropped because there was
insufficient time to conduct the review. In 2001, the Chicago regional
office conducted a limited on-site review of a Michigan HCBS waiver
serving over 6,000 beneficiaries. During the review, three case files were
examined and one beneficiary was interviewed. According to Denver
regional office officials, travel budget problems have meant that the
reviews are conducted by one staff member when two would be
preferable.




Page 33                   GAO-03-576 Medicaid Home and Community-Based Waivers
              HCBS waivers give states considerable flexibility to establish customized
Conclusions   programs offering long-term care services for specific populations, such as
              elderly persons, persons with mental retardation, or children with special
              needs. While maintaining this flexibility is important, insufficient emphasis
              has been placed on balancing flexibility with measures to ensure
              accountability. At present, states may obtain a waiver serving the elderly
              with a limited explanation of how they plan to monitor quality, and CMS
              has not held states accountable for submitting complete and timely annual
              waiver reports detailing their quality assurance activities. Moreover, CMS
              has not fully complied with the statutory and regulatory requirements that
              condition the renewal of HCBS waivers on whether the state has fulfilled
              its assurances that necessary safeguards are in place to protect the health
              and welfare of waiver beneficiaries. The current size and likely future
              growth in HCBS waiver programs that serve a vulnerable population—
              particularly elderly individuals eligible for nursing home placement—make
              it even more essential for states to have appropriate mechanisms in place
              to monitor the quality of care.

              While CMS requires periodic reviews of state waiver programs to help
              ensure that beneficiaries’ health and welfare are adequately protected,
              many have been renewed without such a review. In addition, guidance on
              how these waiver reviews should be conducted does not address
              important operational issues such as sample size and sampling
              methodology. Consequently, there is little relationship among the amount
              of time spent on-site conducting waiver reviews, the number of beneficiary
              records reviewed, and the number of beneficiaries served. CMS expects its
              regional offices to interview and observe waiver beneficiaries to obtain a
              first-hand perspective on care delivery and the adequacy of case
              management, but beneficiary interviews are not a component of all
              regional office reviews. Moreover, staff resources and travel funds
              currently allocated to conduct waiver reviews are insufficient. Without
              necessary attention from CMS, these guidance and resource issues will
              only be exacerbated by the expected future growth in the number of
              persons served through HCBS waiver programs. CMS has a number of
              initiatives directed towards improving quality and quality assurance for
              home and community-based waiver programs. They do not, however,
              address the specific oversight weaknesses we have identified in this
              report, such as the lack of detailed criteria or guidance for states regarding
              the necessary components of a quality assurance system to help ensure
              the health and welfare of waiver beneficiaries.




              Page 34                   GAO-03-576 Medicaid Home and Community-Based Waivers
                       To ensure that state quality assurance efforts are adequate to protect the
Recommendations for    health and welfare of HCBS waiver beneficiaries, we recommend that the
Executive Action       Administrator of CMS

                   •   develop and provide states with more detailed criteria regarding the
                       necessary components of an HCBS waiver quality assurance system,
                   •   require states to submit more specific information about their quality
                       assurance approaches prior to waiver approval, and
                   •   ensure that states provide sufficient and timely information in their annual
                       waiver reports on their efforts to monitor quality.

                       To strengthen federal oversight of the growing HCBS waiver programs and
                       to ensure the health and welfare of HCBS waiver beneficiaries, we
                       recommend that the Administrator

                   •   ensure allocation of sufficient resources and hold regional offices
                       accountable for conducting thorough and timely reviews of the status of
                       quality in HCBS waiver programs, and
                   •   develop guidance on the scope and methodology for federal reviews of
                       state waiver programs, including a sampling methodology that provides
                       confidence in the generalizability of the review results.


                       We provided a draft of this report to CMS and South Carolina, Texas, and
Agency and State       Washington, the three states in which we obtained a more in-depth
Comments and Our       perspective on states’ quality assurance approaches. (CMS’s comments are
                       reproduced in app. VIII.) CMS affirmed its commitment to its ongoing
Evaluation             responsibility, in partnership with the states, to ensure and improve
                       quality in HCBS waivers. The agency stated that the federal focus should
                       be on assisting states in the design of HCBS programs, respecting the
                       assurances made by states, improving the ability of states to remedy
                       identified problems, providing assistance to states to improve the quality
                       of services, and thereby assisting people to live in their own homes in
                       communities of their choice. CMS generally concurred with our
                       recommendations to improve state and federal accountability for quality
                       assurance in HCBS waivers but raised concerns about our definition of
                       quality, how best to ensure quality in state waiver programs, the
                       appropriate state and federal oversight roles, and the resources and
                       guidance required to carry out federal quality oversight.




                       Page 35                   GAO-03-576 Medicaid Home and Community-Based Waivers
Definition of Quality   CMS stated that the draft report’s definition of quality in waivers was too
                        narrow because it ignored a wide variety of activities used to promote
                        quality. Furthermore, CMS cited the availability of a broad array of waiver
                        services with choice over how, where, and by whom services are delivered
                        as important to beneficiaries’ quality of life. According to CMS, growth in
                        the number of persons served by HCBS waivers was evidence of
                        beneficiary satisfaction. (See CMS’s “General Comments,” 2 and 3.)

                        Rather than defining quality ourselves, we reported the approaches states
                        used to assure quality in their waiver programs. By analyzing state
                        applications for waivers serving the elderly and state annual waiver
                        reports, we identified a broad array of state quality assurance activities,
                        including licensing and certification of providers and beneficiary
                        satisfaction surveys (see tables 2 and 3). We disagree with CMS’s assertion
                        that beneficiaries’ preference for services that allow them to remain in the
                        community can be equated with satisfaction for the services delivered.
                        Even assuming that beneficiary satisfaction alone is a reliable indicator of
                        quality, CMS offered no empirical evidence to support its position. Only
                        about half of the state annual waiver reports we reviewed indicated that
                        states measured beneficiary satisfaction with services. Moreover, our
                        review of quality-of-care problems identified in waiver programs serving
                        the elderly demonstrated that failure to provide needed or authorized
                        services was a frequently cited problem. For example, as we noted in the
                        draft report, a CMS review found that 27 percent of beneficiaries served by
                        one state’s HCBS waiver for the elderly did not receive any of their
                        authorized personal care services, and 49 percent received only half.


Quality Assurance       CMS commented that the draft report failed to recognize that HCBS
Approaches              programs require a different approach to quality than their institutional
                        alternatives and “leaves the distinct impression that the most effective way
                        to assure and improve quality is through the process of inspection and
                        monitoring.” CMS asserted that design of an HCBS waiver, as opposed to
                        monitoring its implementation, is the most important contributor to
                        quality, and the agency’s recent efforts have focused on working with
                        states to improve design decisions and design options. (See CMS’s
                        “General Comments,” 4 and 7.)

                        We disagree with CMS’s characterization of our findings. Our report
                        recognizes the importance of maintaining states’ considerable flexibility in
                        ensuring quality in HCBS waivers but concludes that insufficient emphasis
                        has been placed on balancing this flexibility with measures to ensure the
                        accountability called for by both statute and regulations. Contrary to


                        Page 36                   GAO-03-576 Medicaid Home and Community-Based Waivers
                             CMS’s comments, we did not recommend an additional or increased
                             federal oversight role or the adoption of oversight systems such as those
                             used for institutional providers. Our analysis and conclusions were based
                             on the criteria established in both statute and regulations that entail
                             federal oversight of waivers and that condition federal approval and
                             renewal of waivers on states’ demonstrating to CMS that they have
                             established and are fulfilling assurances to protect the health and welfare
                             of waiver beneficiaries. We found that CMS currently receives too little
                             information from states about their quality assurance approaches to hold
                             them accountable, raising a question as to whether the agency has
                             adequate information to approve or renew some waivers. While we agree
                             that waiver design is important to ensuring quality, a state’s
                             implementation of its quality assurance approaches is equally, if not more,
                             important. In its protocol for reviewing states’ HCBS waivers, CMS gives
                             equal emphasis to both the design and implementation of quality
                             assurance mechanisms. Despite its concerns, CMS generally concurred
                             with our recommendation to develop and provide states with more
                             detailed criteria regarding the necessary components of an HCBS waiver
                             quality assurance system. CMS cited its current effort to provide such
                             guidance and indicated that it would work to more clearly define its
                             criteria and expectations for quality.


State and Federal Roles in   CMS commented that “the report lends itself to the conclusion that the
Ensuring Quality             federal government ought to be the primary source of quality monitoring
                             and improvement, and fails to recognize that the federal statutes convey
                             respect for state authority and competence in the administration of HCBS
                             programs.” (See CMS’s “General Comments,” 6.) We agree that the states
                             and the federal government have distinct quality monitoring roles but
                             believe that CMS has mischaracterized our description of those roles as
                             defined in statute and regulations. In addition, we believe that CMS has
                             understated the importance of federal oversight.

                             The report describes states’ statutory and regulatory responsibility to
                             (1) include information in their waiver applications on their approaches
                             for protecting the health and welfare of HCBS beneficiaries and (2) report
                             annually on state quality assurance approaches and deficiencies identified
                             through state monitoring. We reported that waiver applications contained
                             limited information on state quality assurance approaches and that many
                             state annual waiver reports were neither timely nor complete. Eleven of
                             the 15 applications for the largest waivers serving the elderly included
                             none of the following well-recognized quality assurance tools: complaint
                             systems, corrective action plans, sanctions, or beneficiary satisfaction


                             Page 37                  GAO-03-576 Medicaid Home and Community-Based Waivers
surveys. Annual reports for more than a third of 70 waivers serving the
elderly were at least 1 year late, and one-quarter of such reports did not
indicate whether deficiencies had been identified, as required. CMS
acknowledged the need for more comprehensive information from states
at the time of application and at subsequent renewals. Consistent with our
recommendation, CMS agreed to revise and improve the application
process and annual state waiver report to include more information on
states’ quality approaches and activities.

The report also describes CMS’s statutory responsibility for ensuring that
states adequately implement their quality assurance approaches—a
responsibility operationalized in policy guidance to the agency’s regional
offices. Waiver reviews are expected to occur at least once during the
initial 3-year waiver period and during each 5-year renewal cycle. We did
not propose an expanded federal quality assurance role. We reported that,
in some cases, CMS had an insufficient basis for determining that states
had met the required assurances for protecting beneficiaries’ health and
welfare. As of June 2002, almost one-fifth of all HCBS waivers in place for
3 years or more had either never been reviewed or were renewed without
a review; 14 of these waivers had 10 or more years elapse without a
regional office review. Some CMS waiver reviews have uncovered serious
state oversight weaknesses as well as quality-of-care problems. For
example, the review of one state’s waiver found both medical and physical
neglect of beneficiaries because of serious lapses in state oversight,
resulting in a decision to let the waiver expire. The full extent of such
problems is unknown because many state waivers lacked a recent CMS
review. CMS did not comment directly on our conclusion that the agency
is not fully complying with statutory and regulatory requirements when it
renews waivers. The agency suggested it would be far more efficient and
equally effective for federal waiver reviews to focus on only one waiver in
cases where there are multiple waivers in a state serving subsets of the
same target group and using the same quality assurance system; however,
CMS’s own guidance to its regional offices calls for each waiver to receive
at least one full review during a given waiver cycle, with each waiver
receiving at least some level of review.40



40
 The only exceptions mentioned in CMS guidance apply to model waivers and those
waivers serving fewer than 200 participants when the regional office determines there is a
high probability that no significant quality problems exist by (1) combining the review of a
smaller waiver with a larger waiver in the same state or (2) conducting an initial mini-
review with the understanding that a more extensive review could follow if quality
assurance problems are detected during the mini-review.



Page 38                        GAO-03-576 Medicaid Home and Community-Based Waivers
Resources and Guidance   CMS commented that the draft report’s recommendations to hold regional
for Federal Oversight    offices accountable for conducting thorough and timely reviews of quality
                         in HCBS waiver programs, including a sampling methodology that
                         provides confidence in the generalizability of the review results, would
                         require a huge new investment or redirection of federal resources.
                         Specifically, CMS commented that the report “does not address the
                         significant resources that would need to be found or redirected to
                         implement its recommendations” and “fails to acknowledge the lack of
                         appropriated funds for HCBS quality.” The agency stated that such funds
                         would have to come from CMS’s operating budget. CMS also pointed out
                         that it had already taken steps organizationally to ensure that enough
                         resources are devoted to quality and that they are appropriately positioned
                         within CMS. (See CMS’s “General Comments,” 5, 8, and 9.)

                         CMS’s existing waiver review protocol directs regional offices to select a
                         sample of waiver beneficiaries for activities such as interviews and
                         observations, but it does not adequately address sampling methodology.
                         We found that sample selection methods varied with some regional offices
                         selecting random samples, some basing their sample on geographic
                         location, and others reporting no methodology for sample selection. Given
                         that the regional offices are already generalizing their findings to the
                         waiver program as a whole, we believe explicit and uniform sample
                         selection guidance is imperative. At the same time, we believe that, as
                         CMS suggested, samples may appropriately be targeted to certain types of
                         participants or services so that, over time, greater assurances are provided
                         about the quality of care. In response to our recommendation to develop
                         guidance on the scope and methodology for federal reviews of state
                         waiver programs, CMS said it is committed to developing additional policy
                         guidance.

                         We did not recommend significant increases in appropriated funds for
                         conducting waiver reviews. Rather, our draft report recommended that
                         CMS ensure allocation of sufficient resources and hold regional offices
                         accountable for conducting thorough and timely reviews of the status of
                         quality in HCBS waiver programs. The CMS Administrator is responsible
                         for assessing whether existing funding levels are adequate to satisfy
                         statutory and regulatory requirements, including periodic regional office
                         review of the states’ assurances. The Administrator may indeed conclude
                         that, to carry out these oversight responsibilities for the growing numbers
                         of frail beneficiaries who prefer and rely on these services, there may be a
                         need to reallocate existing funds or to request additional funds. CMS also
                         noted that it had recently redeployed and reorganized headquarters staff
                         to incorporate the quality function into each program area, including the


                         Page 39                   GAO-03-576 Medicaid Home and Community-Based Waivers
                          operational unit that oversees HCBS waivers. Despite CMS’s concerns
                          about the need for significant funding increases, the agency noted the
                          importance of further investments to advance both state and federal
                          capability to assure quality in waiver programs.


Additional CMS Comments   CMS commented that the draft report had numerous technical
                          inaccuracies, but cited only one and provided no additional examples or
                          technical comments to accompany its written response (CMS’s “General
                          Comments,” 1). Although CMS stated that our characterization of federal
                          requirements concerning waiver renewals was inaccurate, its suggested
                          changes and our report language were essentially the same. To avoid any
                          confusion, however, we have added the statute’s specific language to the
                          background section of the report. CMS further commented that our report
                          should recognize that the Congress created an enforcement mechanism
                          that places great reliance on a system of assurances. Our draft report
                          made that point while also describing CMS’s responsibility, as specified in
                          its implementing regulations, to determine that each state has met all the
                          assurances set forth in its waiver application before renewing a waiver.

                          CMS stated that the draft report failed to acknowledge the steps it has
                          already taken to ensure quality. (CMS’s “General Comments,” 10.) To the
                          contrary, the draft report described each of the efforts CMS referred to as
                          under way to monitor and improve HCBS quality and addressed each
                          activity: the waiver review protocol, the HCBS quality framework, the
                          development of tools to assist states, development of the Independence
                          Plus template, and the national technical assistance contractor. However,
                          we found that CMS’s waiver review protocol does not address key issues
                          relating to the scope and methodology of federal oversight reviews.
                          Moreover, the use of the Independence Plus template, which requires
                          more specific information on states’ quality assurance approaches, is
                          voluntary rather than mandatory.


State Comments            In its written comments, Texas stated that it supports proper federal
                          oversight of HCBS waivers but stressed the need to maintain flexibility in
                          designing waivers to meet the unique needs of residents requiring
                          community care. The state believes that such flexibility should not be lost
                          in establishing more specific quality assurance criteria.




                          Page 40                   GAO-03-576 Medicaid Home and Community-Based Waivers
As arranged with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days after its
issue date. At that time, we will send copies of this report to the
Administrator of the Centers for Medicare & Medicaid Services and
appropriate congressional committees. We also will make copies available
to others upon request. In addition, the report will be available at no
charge on the GAO Web site at http://www.gao.gov.

Please contact me at (202) 512-7118 or Walter Ochinko at (202) 512-7157 if
you have questions about this report. Other contributors to this report
included Eric Anderson, Connie Peebles Barrow, and Kevin Milne.




Kathryn G. Allen
Director, Health Care—Medicaid
 and Private Health Insurance Issues




Page 41                    GAO-03-576 Medicaid Home and Community-Based Waivers
             Appendix I: Scope and Methodology
Appendix I: Scope and Methodology


             This appendix describes our scope and methodology, following the order
             that our results are presented in the report.

             Data on HCBS Waivers. To identify the universe of state HCBS waivers as
             of June 2002, we asked the CMS regional offices to identify each waiver,
             including the target population and the waiver start date. The regional
             offices identified a total of 263 waivers. Using this information and other
             data, we identified 77 waivers serving the elderly. To identify trends in
             Medicaid long-term care and Medicaid waiver spending, we analyzed data
             covering fiscal years 1991 through 2001 from HCFA reports (HCFA Form
             64) compiled by The MEDSTAT Group. To identify trends in the overall
             number of Medicaid waiver beneficiaries, number of elderly waiver
             beneficiaries, average waiver size, and average per beneficiary
             expenditures for waivers serving the elderly, we analyzed data from state
             annual waiver reports (HCFA Form 372) covering fiscal years 1992
             through 1999 in a database compiled by researchers at the University of
             California, San Francisco.1

             State Quality Assurance Mechanisms. In the absence of comprehensive,
             readily available information on HCBS quality assurance mechanisms that
             states use, we analyzed the information available in a subset of state
             waiver applications and annual state waiver reports for waivers serving
             the elderly. Specifically, we analyzed (1) initial and/or renewal
             applications for the 15 largest waivers serving the elderly as of 1999 and
             (2) annual state waiver reports from 70 of the 79 waivers serving the




             1
              See Harrington, Aug. 2001. Researchers collected HCFA Form 372 reports for most HCBS
             waivers from 1992 through 1999. In some cases, where the annual reports were not
             available, state officials provided estimates of the relevant data. In other cases, where
             annual reports were not available and where state officials were unable to provide an
             estimate, University researchers developed their own estimates for the missing data on the
             basis of trend information for the particular waiver. For 1992, participant and expenditure
             data were estimated for 21 of 155 HCBS waivers; 8 of these were waivers serving the
             elderly. For 1999, participant and expenditure data were estimated for 20 of 214 HCBS
             waivers; 3 of these were waivers serving the elderly. Where participant or expenditure data
             for individual states are based on such estimates, we have indicated so in the text. In
             addition, based on information provided by CMS, we identified 7 of the 238 waivers in this
             database that had been misclassified. Four waivers listed as serving the aged or aged and
             disabled actually served other population groups; and 3 waivers listed as serving other
             population groups served either the aged or aged and disabled. Our analyses reflect the
             actual target populations for these 7 waivers.




             Page 42                        GAO-03-576 Medicaid Home and Community-Based Waivers
Appendix I: Scope and Methodology




elderly.2 The waiver applications are used by CMS, in part, to assess
whether the quality assurance mechanisms in place warrant waiver
approval. The annual waiver reports are required to provide a description
of the process for monitoring the standards and safeguards under the
waiver and the results of state monitoring. Of the 70 state annual waiver
reports that we analyzed, 52 contained some information about states’
monitoring processes. Eight of the remaining 9 annual waiver reports were
new waivers for which the state had not yet submitted an annual report,
and for 1 waiver, a regional office did not provide a copy of the annual
state report.

State Oversight and Quality of Care. To assess state oversight issues in
waivers serving the elderly, we examined regional office waiver review
reports for 21 waivers and state audit reports related to 5 waivers, the only
reports we were able to analyze, for a total of 23 discrete waivers.3 To
assess quality-of-care problems in waivers serving the elderly, we reviewed
51 waivers for which we were able to analyze regional office final reports
and annual state reports. Regional office waiver review reports identified
problems in 19 waivers, and annual state reports identified problems in 22
waivers, for a total of 36 discrete waivers.4 These reports identified no
quality-of-care problems in the remaining 15 waivers. We were unable to
analyze findings from 28 additional waivers because they either (1) lacked
a recent regional office waiver review completed during the period of
October 1998 through May 2002 or an annual state waiver report, (2) the
annual state waiver report did not address whether deficiencies had been
identified, or provided no information on the deficiencies found, or (3) the




2
 As of June 2002, there were 77 waivers serving the elderly. However, our analysis of
quality-of-care problems includes 2 additional waivers serving the elderly that had been
terminated or not renewed as of that date because they had had a regional office review
during the October 1998 through May 2002 time period we examined.
3
 Five state audit agencies—Connecticut, Delaware, Kansas, Louisiana, and Montana—
provided audit reports of waiver programs serving the elderly. Three of the regional office
reviews and three of the state audit reports covered the same waivers.
4
Five of the regional office reviews and five of the annual state reports in which problems
were identified covered the same waivers.




Page 43                        GAO-03-576 Medicaid Home and Community-Based Waivers
Appendix I: Scope and Methodology




waivers were too new to have had a regional office review or to provide an
annual state report.5

CMS Oversight. To determine the adequacy of CMS regional office
oversight of states’ waiver programs, we asked all 10 CMS regional offices
to provide the following information for each of the waivers for which
they were responsible, including both waivers for the elderly as well as
those serving other target populations: (1) the waiver start date, (2) the
current waiver time period, (3) the fiscal year the waiver was last
reviewed, and (4) whether or not the waiver review report was finalized.
Of the 263 waivers, 228 had been in place for 3 years or more and therefore
should have had a regional office review. The other 35 waivers were less
than 3 years old and would not have yet qualified for a review as of June
2002. For information on sample sizes and duration of the reviews, we
analyzed CMS’s HCBS waiver review final reports for waivers serving the
elderly that were issued during the period of October 1998 through May
2002. Fifteen of the 21 waiver review reports that we received included
information on the number of waiver beneficiary records reviewed and on
the duration of the reviews. Some review reports also provided the
number of beneficiaries that were interviewed or observed. We also
discussed regional office oversight activities with CMS headquarters’ staff.




5
 As of June 2002, there were 77 waivers serving the elderly. However, our analysis of state
oversight and quality-of-care problems includes 2 additional waivers for the elderly that
had been terminated or not renewed as of that date because they had had a regional office
review during the October 1998 through May 2002 time period we examined.




Page 44                        GAO-03-576 Medicaid Home and Community-Based Waivers
                                          Appendix II: Suggested CMS Definitions of
Appendix II: Suggested CMS Definitions of Home and Community-Based Services in
                                          Waivers Serving the Elderly


Home and Community-Based Services in
Waivers Serving the Elderly
                                          Table 8 contains a list of services provided through the HCBS waivers
                                          serving the elderly and the suggested CMS definitions. However, states
                                          may provide alternative definitions in their waiver applications.

Table 8: Services States May Include in Their Medicaid Home and Community-Based Services Waiver

HCBS waiver service                             Suggested CMS definition
Case management                                 Services that will assist individuals who receive waiver services in gaining access to
                                                needed waiver and other state plan services, as well as needed medical, social,
                                                educational, and other services, regardless of the funding source for the services to
                                                which access is gained.
Homemaker services                              Services consisting of general household activities (e.g., meal preparation and
                                                routine household care) provided by a trained homemaker, when the individual
                                                regularly responsible for these activities is temporarily absent or unable to manage
                                                the home and care for him- or herself or others in the home.
Personal care services                          Assistance with activities of daily living, such as eating, bathing, dressing, or
                                                personal hygiene. This service may include assistance with preparation of meals,
                                                but does not include the cost of the meals themselves.
Respite care services                           Services provided to individuals unable to care for themselves; furnished on a
                                                short-term basis because of the absence of or need for relief for those persons
                                                normally providing the care. These services may be provided in such locations as a
                                                nursing home, hospital, or waiver beneficiary’s home.
Adult day health services                       Services furnished 4 or more hours per day on a regularly scheduled basis, for 1 or
                                                more days per week, in an outpatient setting, encompassing both health and social
                                                services needed to ensure the optimal functioning of the individual. Meals provided
                                                as part of these services do not constitute a “full nutritional regimen” (three meals
                                                per day). Physical, occupational, and speech therapies indicated in the individual’s
                                                plan of care will be furnished as component parts of this service.
Environmental accessibility adaptations         Those physical adaptations to the home, required by the individual’s plan of care,
                                                that are necessary to ensure the health, welfare, and safety of the individual or that
                                                enable the individual to function with greater independence in the home, and
                                                without which the individual would require institutionalization. Adaptations may
                                                include installation of ramps and grab-bars, widening of doorways, modification of
                                                bathroom facilities, or installation of specialized electric and plumbing systems
                                                necessary to accommodate the medical equipment and supplies that are necessary
                                                for the welfare of the individual.
Skilled nursing services                        Services listed in the plan of care that are within the scope of the state’s Nurse
                                                Practice Act and are provided by a registered professional nurse or licensed
                                                practical or vocational nurse under the supervision of a registered nurse licensed to
                                                practice in the state.
Transportation                                  Service offered to enable individuals served on the waiver to gain access to waiver
                                                and other community services, activities, and resources specified by the plan of
                                                care.
Specialized medical equipment and supplies      Specialized medical equipment and supplies include devices, controls, or
                                                appliances, specified in the plan of care, that enable individuals to increase their
                                                abilities to perform activities of daily living or to perceive, control, or communicate
                                                with the environment in which they live.
Chore services                                  Services needed to maintain the home in a clean, sanitary, and safe environment.
                                                These services include heavy household chores such as washing floors, windows,
                                                and walls, tacking down loose rugs and tiles, and moving heavy items of furniture in
                                                order to provide safe entry and exit.




                                          Page 45                        GAO-03-576 Medicaid Home and Community-Based Waivers
                                       Appendix II: Suggested CMS Definitions of
                                       Home and Community-Based Services in
                                       Waivers Serving the Elderly




 HCBS waiver service                          Suggested CMS definition
 Personal emergency response systems          Electronic devices that enable certain individuals at high risk of institutionalization to
                                              secure help in an emergency. The individual may also wear a portable “help” button
                                              to allow for mobility. The system is connected to the person’s telephone and, once
                                              a “help” button is activated, the telephone is programmed to signal a response
                                              center staffed by trained professionals.
 Adult companion services                     Nonmedical care, supervision, and socialization provided to a functionally impaired
                                              adult. Companions may assist or supervise the individual with such tasks as meal
                                              preparation, laundry, and shopping but do not perform these activities as discrete
                                              services.
 Attendant care services                      Hands-on care, of both a supportive and health-related nature, specific to the needs
                                              of a medically stable, physically handicapped individual. Supportive services are
                                              those that substitute for the absence, loss, diminution, or impairment of a physical
                                              or cognitive function.
 Adult foster care services                   Personal care and services; homemaker, chore, attendant care, and companion
                                              services; and medication oversight (to the extent permitted under state law)
                                              provided in a licensed (where applicable) private home by a principal care provider
                                              who lives in the home. Adult foster care is furnished to adults who receive these
                                              services in conjunction with residing in the home. Typically, there is a limit to the
                                              total number of individuals living in the home.
 Assisted living services                     Personal care and services, homemaker, chore, attendant care, and companion
                                              services; medication oversight (to the extent permitted under state law); and
                                              therapeutic social and recreational programming, provided in a home-like
                                              environment in a licensed (where applicable) community care facility, in conjunction
                                              with residing in the facility. This service includes 24-hour on-site response staff to
                                              meet scheduled or unpredictable needs in a way that promotes maximum dignity
                                              and independence, and to provide supervision, safety, and security.
 Private duty nursing                         Individual and continuous care (in contrast to part-time or intermittent care)
                                              provided by licensed nurses within the scope of state law. These services are
                                              provided to an individual at home.
 Extended state plan services                 Includes physician services, home health care services, physical therapy services,
                                              occupational therapy services, speech, hearing and language services, and
                                              prescribed drugs—services available through the approved state plan but without
                                              limitations on amount, duration, and scope.

Source: CMS.

                                       Note: Definitions contained in current streamlined Medicaid 1915(c) waiver application format, OMB
                                       form 0938 0449.




                                       Page 46                           GAO-03-576 Medicaid Home and Community-Based Waivers
                                          Appendix III: Medicaid Long-Term Care
Appendix III: Medicaid Long-Term Care     Expenditures, by Type and State, Fiscal Year
                                          2001


Expenditures, by Type and State, Fiscal Year
2001

                                                                Percent of expenditures by service or setting
                                                    Institutiona care                  Home and community-based care
                        Medicaid long-
                             term care
                       expenditures (in
                                                                                                              a             b
State                         millions)        Nursing homes         ICF/MR       HCBS waivers Personal care Home health
Alabama                            $927                  73%             7%               17%             0%         4%
Alaska                              156                    46               0               48              5           0
Arizona                              15                   n.a.           n.a.              n.a.          n.a.        n.a.
Arkansas                            647                    57             15                15             10           4
California                        5,066                    51               8               10             27           3
Colorado                            768                    47               2               42              0         10
Connecticut                       1,842                    56             13                23              0           8
Delaware                            195                    57             16                24              0           3
District of Columbia                253                    63             31                  1             0           6
Florida                           2,648                    64             11                21              1           3
Georgia                           1,099                    69             10                16              0           4
Hawaii                              210                    71               4               25              0           1
Idaho                               258                    46             24                23              5           3
Illinois                          2,533                    59             26                14              0           1
Indiana                           1,307                    63             23                11              0           4
Iowa                                756                    49             27                17              0           6
Kansas                              887                    54               8               34              1           3
Kentucky                            935                    60             10                17              0         13
Louisiana                         1,677                    69             21                  8             0           1
Maine                               411                    49             11                37              1           2
Maryland                          1,061                    66               6               20              3           6
Massachusetts                     2,450                    58              9                21             10           3
Michigan                          2,385                    73               1               17              8           1
Minnesota                         1,916                    47             11                32              7           3
Mississippi                         646                    64             26                  8             0           2
Missouri                          1,677                    62             11                18              9           0
Montana                             215                    52             10                27             11           0
Nebraska                            579                    64               8               23              1           3
Nevada                              162                    57             18                17              4           4
New Hampshire                       358                    59               1               38              1           1
New Jersey                        3,192                    69             13                10              6           2
New Mexico                          410                    40               4               39             16           0
New York                        13,469                     47             16                15             14           8
North Carolina                    2,037                    43             20                22             11           4
North Dakota                        251                    60             19                20              0           1
Ohio                              3,643                    64             22                13              0           2
Oklahoma                            811                    53             14                29              5           0
Oregon                            1,058                    51               1               45              3           0



                                          Page 47                        GAO-03-576 Medicaid Home and Community-Based Waivers
                                     Appendix III: Medicaid Long-Term Care
                                     Expenditures, by Type and State, Fiscal Year
                                     2001




                                                           Percent of expenditures by service or setting
                                               Institutiona care                  Home and community-based care
                   Medicaid long-
                        term care
                  expenditures (in
                                                                                                                 a                   b
 State                   millions)        Nursing homes            ICF/MR         HCBS waivers Personal care Home health
 Pennsylvania                5,114                   72                 10                  17              0           1
 Rhode Island                  420                   58                  2                  39              0           1
 South Carolina                789                   47                 21                  28              0           3
 South Dakota                  237                   66                  8                  25              0           1
 Tennessee                   1,203                   65                 19                  15              0           0
 Texas                       3,288                   49                 22                  21              8           0
 Utah                          241                   38                 23                  37              0           1
 Vermont                       191                   44                  1                  49              2           3
 Virginia                    1,010                   52                 19                  29              0           0
 Washington                  1,427                   43                  9                  36            11            1
 West Virginia                 531                   55                  9                  28              5           4
 Wisconsin                   1,813                   53                 11                  27              6           3
 Wyoming                       113                   35                 13                  48              0           4
 U.S. Total                75,288                    57                 14                  19              7           3

Source: CMS.

                                     Notes: GAO analysis of HCFA Form 64 data as reported by Brian Burwell, Steve Eiken, and Kate
                                     Sredl in Medicaid Long Term Care Expenditures in FY 2001, The MEDSTAT Group, May 10, 2002.
                                     Arizona does not have any HCBS waivers as it operates its Medicaid program as a demonstration
                                     project under a section 1115 waiver. Percentages in table may not add to 100 due to rounding.
                                     a
                                     Personal care is an optional Medicaid state plan service.
                                     b
                                     Home health care is a mandatory Medicaid state plan service.




                                     Page 48                           GAO-03-576 Medicaid Home and Community-Based Waivers
                         Appendix IV: Number of Beneficiaries Served
Appendix IV: Number of Beneficiaries Served
                         by HCBS Waivers for the Elderly and in
                         Nursing Homes, by State, 1999


by HCBS Waivers for the Elderly and in
Nursing Homes, by State, 1999

                            Number of Medicaid beneficiaries
                                                                                     Percent of beneficiaries
                             Served by HCBS                                               served by waivers
State                   waivers for the elderly     Served in nursing homes                   for the elderly
Alabama                                    5,826                       24,576                          19.2%
Alaska                                       712                           929                            43.4
Arizonaa                         not applicable                 not applicable                  not applicable
Arkansas                                   8,158                       20,699                             28.3
California                                8,671b                      117,843                              6.9
Colorado                                 11,481                        18,918                             37.8
Connecticut                                8,978                       38,862                             18.8
Delaware                                     734                         3,109                            19.1
                    c
District of Columbia             not applicable                          4,359                  not applicable
Florida                                  16,915                        91,985                             15.5
Georgia                                  14,018                        39,720                             26.1
Hawaii                                       923                         4,274                            17.8
Idaho                                      1,000                        5,014                             16.6
Illinois                                 17,396                        81,791                             17.5
Indiana                                    2,338                       47,988                              4.6
Iowa                                       3,994                       21,882                             15.4
Kansas                                     6,701                       17,644                             27.5
Kentucky                                 13,339                        27,739                             32.5
Louisiana                                    872                       35,508                              2.4
Maine                                      1,395                        9,236                             13.1
Maryland                                     132                       27,920                              0.5
Massachusetts                             5,132                        60,044                              7.9
Michigan                                   6,328                       44,180                             12.5
Minnesota                                  7,838                       38,925                             16.8
Mississippi                                2,540                       23,909                              9.6
Missouri                                20,821                         39,762                             34.4
Montana                                    1,514                        5,549                             21.4
Nebraska                                   2,357                       16,487                             12.5
New Hampshire                              1,367                        7,147                             16.1
New Jersey                                4,587b                       51,747                              8.1
New Mexico                                 1,404                        7,074                             16.6
Nevada                                     1,235                        3,821                             24.4
New York                                 19,732                       139,509                             12.4
North Carolina                           11,159                        42,382                             20.8
North Dakota                                 347                        5,570                              5.9
                                               b
Ohio                                    26,135                         92,133                             22.1
Oklahoma                                   9,042                       25,758                             26.0




                         Page 49                       GAO-03-576 Medicaid Home and Community-Based Waivers
                   Appendix IV: Number of Beneficiaries Served
                   by HCBS Waivers for the Elderly and in
                   Nursing Homes, by State, 1999




                          Number of Medicaid beneficiaries
                                                                                                Percent of beneficiaries
                       Served by HCBS                                                                served by waivers
 State            waivers for the elderly             Served in nursing homes                            for the elderly
 Oregon                           26,410                                 12,031                                     68.7
 Pennsylvania                       2,383                                72,481                                      3.2
 Rhode Island                       2,304                                13,297                                     14.8
 South Carolina                   14,361                                 17,458                                     45.1
 South Dakota                         522                                 5,950                                      8.1
 Tennessee                            511                                37,311                                      1.4
 Texas                            27,978                                 95,812                                     22.6
 Utah                                 574                                 5,513                                      9.4
 Vermont                            1,014                                 3,745                                     21.3
 Virginia                         11,835                                 27,746                                     29.9
 Washington                       25,718                                 24,620                                     51.1
 West Virginia                      3,470                                11,788                                     22.7
 Wisconsin                        13,900                                 41,341                                     25.2
 Wyoming                              982                                 2,609                                     27.3
 Total U.S.                      377,083                              1,616,663                                   18.9%

Source: CMS.

                   Notes: GAO analysis of (1) annual state waiver report data (HCFA Form 372) as reported by
                   Harrington, Aug. 2001, and (2) data on beneficiaries in nursing homes from Centers for Medicare &
                   Medicaid Services, MSIS Statistical Report for Fiscal Year 1999.
                   a
                   Arizona does not have any HCBS waivers for the elderly as it operates its Medicaid program as a
                   demonstration project under a section 1115 waiver.
                   b
                       Author’s estimate. See Harrington, Aug. 2001.
                   c
                       In 1999, the District of Columbia did not have any HCBS waivers for the elderly in operation.




                   Page 50                               GAO-03-576 Medicaid Home and Community-Based Waivers
                                        Appendix V: Number of HCBS Waivers for the
Appendix V: Number of HCBS Waivers for the
                                        Elderly, Beneficiaries, Expenditures, and per
                                        Beneficiary Expenditures by State, 1999


Elderly, Beneficiaries, Expenditures, and per
Beneficiary Expenditures by State, 1999

                                                   Number of beneficiaries
                             Number of HCBS       served by waivers for the                              Average expenditures
State                   waivers for the elderly                     elderly       Total expenditures           per beneficiary
Alabama                                       1                       5,826              $37,488,861                    $6,435
Alaska                                        1                         712                 8,554,566                   12,015
Arizonaa                                      0              not applicable             not applicable           not applicable
Arkansas                                      1                       8,158               24,788,949                     3,039
           b
California                                    3                       8,671               26,128,332                     3,013
Colorado                                      1                     11,481                57,968,202                     5,049
Connecticut                                   1                       8,978               54,432,244                     6,063
Delaware                                      1                         734                 6,528,330                    8,894
                    c
District of Columbia                          0              not applicable             not applicable           not applicable
Florida                                       4                     16,915                80,073,234                     4,734
Georgia                                       1                     14,018                48,483,972                     3,459
Hawaii                                        2                         923               13,905,438                    15,065
Idaho                                         1                       1,000                 6,300,645                    6,301
Illinois                                      1                     17,396                46,272,565                     2,660
Indiana                                       1                       2,338               15,477,320                     6,620
Iowa                                          1                       3,994               10,052,900                     2,517
Kansas                                        1                       6,701               40,359,505                     6,023
Kentucky                                      1                     13,339                44,471,778                     3,334
Louisiana                                     3                         872                 8,402,786                    9,636
Maine                                         1                       1,395               14,751,242                    10,574
Maryland                                      1                         132                   678,589                    5,141
Massachusetts                                 1                       5,132                 9,849,893                    1,919
Michigan                                      1                       6,328               16,655,463                     2,632
Minnesota                                     1                       7,838               34,845,022                     4,446
Mississippi                                   1                       2,540               11,645,303                     4,585
Missouri                                      1                     20,821                46,311,315                     2,224
Montana                                       1                       1,514               14,454,089                     9,547
Nebraska                                      1                       2,357               13,813,410                     5,861
New Hampshire                                 1                       1,367               11,977,955                     8,762
New Jerseyb                                   2                       4,587               46,294,225                    10,092
New Mexico                                    1                       1,404               19,868,387                    14,151
Nevada                                        2                       1,235                 5,179,673                    4,194
New York                                      1                     19,732                23,845,013                     1,208
North Carolina                                1                     11,159               153,752,548                    13,778
North Dakota                                  1                         347                 3,328,323                    9,592
      b
Ohio                                          1                     26,135               134,200,340                     5,135
Oklahoma                                      1                       9,042               34,905,750                     3,860
Oregon                                        1                     26,410               168,138,603                     6,366




                                        Page 51                        GAO-03-576 Medicaid Home and Community-Based Waivers
                                  Appendix V: Number of HCBS Waivers for the
                                  Elderly, Beneficiaries, Expenditures, and per
                                  Beneficiary Expenditures by State, 1999




                                                Number of beneficiaries
                       Number of HCBS          served by waivers for the                                         Average expenditures
 State            waivers for the elderly                        elderly             Total expenditures                per beneficiary
 Pennsylvania                           1                          2,383                     13,752,684                         5,771
 Rhode Island                           2                          2,304                     11,650,696                         5,057
 South Carolina                         1                        14,361                      63,652,223                         4,432
 South Dakota                           1                            522                      1,376,800                         2,638
 Tennessee                              2                            511                      4,536,477                         8,878
 Texas                                  1                        27,978                     266,376,586                         9,521
 Utah                                   1                            574                      1,672,476                         2,914
 Vermont                                2                          1,014                      8,988,080                         8,864
 Virginia                               3                        11,835                      80,772,354                         6,825
 Washington                             1                        25,718                     194,129,285                         7,548
 West Virginia                          1                          3,470                     38,908,487                        11,213
 Wisconsin                              1                        13,900                     114,878,732                         8,265
 Wyoming                                1                            982                      4,420,108                         4,501
 U.S. Total                           64                        377,083                  $2,099,299,758                        $5,567

Source: CMS.

                                  Note: GAO analysis of annual state waiver report data (HCFA Form 372). See Harrington, Aug. 2001.
                                  a
                                  Arizona does not have any HCBS waivers for the elderly as it operates its Medicaid program as a
                                  demonstration project under a section 1115 waiver.
                                  b
                                   With the exception of the number of waivers for the elderly, the data for this state are based on
                                  author’s estimates. See Harrington, Aug. 2001.
                                  c
                                      In 1999, the District of Columbia did not have any HCBS waivers for the elderly in operation.




                                  Page 52                               GAO-03-576 Medicaid Home and Community-Based Waivers
              Appendix VI: CMS HCBS Quality Initiatives
Appendix VI: CMS HCBS Quality Initiatives


              CMS has undertaken a series of initiatives to generate information and
              dialogue on existing systems of quality assurance in HCBS waivers and to
              provide a range of assistance to states in this area. Approximately $1
              million was budgeted for these HCBS quality initiatives in fiscal year 2001
              and $3.4 million in fiscal year 2002. Through its HCBS quality initiatives,
              CMS intends to more closely assess the status of quality assurance efforts
              currently in place and to provide direct assistance to states in this area.
              CMS’s initiatives include (1) developing a conceptual framework for
              defining and measuring quality, (2) creating tools for states to adapt and
              use in assessing quality, such as model consumer experience surveys, and
              (3) providing technical assistance and resources for quality assurance and
              improvement. These initiatives, while important, do not address the lack
              of detailed requirements for states on the necessary components of an
              acceptable quality assurance system or the weaknesses in regional office
              oversight of state HCBS waivers that we identified elsewhere in this
              report.

              Quality Framework and Expectations. CMS sponsored the development
              of a framework for quality in home and community-based services that
              focuses on outcomes in several key areas including beneficiary access to
              care, safety, satisfaction, and meeting beneficiary needs and preferences.1
              The next phase involves identifying strategies that states are currently
              using to monitor and improve quality within these key areas. While the
              expectations contained in the quality framework have not been specified
              in CMS regulations, they are reflected in the application template for
              CMS’s new consumer-directed HCBS waiver, Independence Plus.2 States’
              use of the template for the Independence Plus waiver is voluntary. The
              template asks states for a detailed description of their quality assurance
              and improvement programs—something not currently required as part of
              the general HCBS waiver application. Guidance for using the template
              notes that the description should include (1) information on the frequency
              of quality assurance activities, (2) the dimensions that will be monitored,
              (3) the qualifications of persons conducting quality assurance activities,



              1
               The quality framework was developed with input from a variety of organizations and
              individuals including national aging and developmental disabilities organizations, CMS
              officials from headquarters and regional offices, and state directors for Medicaid, aging and
              developmental disabilities.
              2
               Independence Plus is CMS’s new demonstration program for family or individual-directed
              community-based services. Under this consumer-directed care model, beneficiaries are
              provided greater decision-making authority regarding their service needs, their provider of
              services, and how quality of care will be assessed.



              Page 53                        GAO-03-576 Medicaid Home and Community-Based Waivers
Appendix VI: CMS HCBS Quality Initiatives




(4) the process for identifying problems, including sampling
methodologies, (5) provisions for assuring that problems are addressed in
a timely manner, and (6) the system to receive, review, and act on critical
incidents or events.

Quality Assurance Mechanisms. CMS is also developing quality
assessment and improvement mechanisms for states. For example, to
develop a guide for states and CMS regional offices, a contractor reviewed
the literature on quality measurement and improvement in home and
community-based care, convened an expert panel, and conducted
interviews with state officials. As of April 2003, the guide was undergoing
final clearance within CMS. It is expected to include (1) benchmarks for
effective quality assurance programs in home and community-based care,
(2) a discussion of the knowledge and mechanisms needed to design,
implement, and assess quality activities in home and community-based
care, and (3) suggestions for addressing limitations and problems in
assuring quality in home and community-based care. Another contractor
has developed and field-tested consumer experience surveys for use in
waiver programs for the elderly and for persons with developmental
disabilities. This contractor is also developing a set of performance
indicators for states to use in guiding development and assessing quality in
new self-directed HCBS waivers.

Technical Assistance and Resources. Other CMS efforts focus on
providing technical assistance and resources to states. One contractor has
assembled a team of professionals with expertise in home and community-
based services that can serve as a resource for both states and the CMS
regional offices.3 Services available from these teams are expected to
include conducting targeted reviews of waiver programs; providing
suggestions to states regarding their quality assurance activities;
consulting with CMS staff regarding quality aspects of specific waivers;
and providing resource materials on quality assurance monitoring and
improvement tools. This contractor is also assessing the types of data
currently gathered by a sample of states that is, or could be, used for
quality measurement and improvement; compiling information on selected
data-driven state quality efforts; and providing technical assistance to the
states. Finally, CMS sponsored a national conference on HCBS quality




3
The MEDSTAT Group is managing the overall contract with CMS.




Page 54                      GAO-03-576 Medicaid Home and Community-Based Waivers
Appendix VI: CMS HCBS Quality Initiatives




measurement and improvement in May 2002. This day-and-a-half-long
conference—attended by state officials, CMS staff, and others—offered
training and information on strategies and techniques for quality assurance
and improvement in home and community-based care.




Page 55                      GAO-03-576 Medicaid Home and Community-Based Waivers
                                            Appendix VII: Beneficiary Samples for and
Appendix VII: Beneficiary Samples for and   Duration of Regional Office Reviews of 15
                                            State Waivers Serving the Elderly


Duration of Regional Office Reviews of 15
State Waivers Serving the Elderly

                                                                                Beneficiary samplesa
                                                            Number of
                                                                waiver        Record         Interviews or   Duration of on-site
 State                          Target population         beneficiaries      reviews          observation         review (days)
 Boston regional office
 Connecticut                    Elderly                           7,300            21                  21                     5
 Vermont                        Residential care                     73            14                  14                     5
 Philadelphia regional office
                                                                                                         b                     C
 Virginia                       Consumer-directed                    99            15
                                personal attendant
                                services
                                                                                                         b
 Virginia                       Elderly and                       9,000            20                                         5
                                persons with
                                disabilities
 Virginia                       Assisted living                   1,166            39                  20                     5
                                waiver
 Dallas regional office
 Oklahoma                       Elderly and                      10,000            40                   5                     5
                                persons with
                                disabilities
 Kansas City regional office
 Kansas                         Frail elderly                     4,500            17                  11                     4
 Nebraska                       Elderly and adults                2,357            25                  14                     4
                                and children with
                                disabilities
 Denver regional office
 Montana                        Elderly and                       1,514            36                  18                     5
                                persons with
                                physical disabilities
 North Dakota                   Elderly and                         390            36                  17                     5
                                persons with
                                disabilities
 South Dakota                   Elderly                             638            28                  17                     5
 Wyoming                        Elderly and                         850            38                  22                     5
                                persons with
                                physical disabilities
 San Francisco regional office
 California                    Disabled, frail, and              16,335            19                  10                    10
                               elderly
 Seattle regional office
                                                                                                         b
 Oregon                        Elderly and                       36,000            52                                      22.5
                               persons with
                               disabilities
                                                                                                         b
 Washington                    Elderly and                       24,000           100                                      22.5
                               persons with
                               disabilities
 Average                                                          7,615            33                  15                     8

Source: CMS.




                                            Page 56                       GAO-03-576 Medicaid Home and Community-Based Waivers
Appendix VII: Beneficiary Samples for and
Duration of Regional Office Reviews of 15
State Waivers Serving the Elderly




Note: GAO analysis of CMS regional office final waiver review reports for HCBS waivers serving the
elderly that included information on sample size for beneficiary record reviews or interviews, issued
from October 1998 to May 2002.
a
 Fifteen of the 21 CMS regional office waiver review reports for HCBS waivers serving the elderly
included information on sample size of the regional office reviews of waiver beneficiary records. This
appendix provides a summary of the 15 waiver review reports that included this information. The
number of waiver beneficiaries is based on those reported in the regional offices’ waiver review
reports. To the extent that the information was included in the waiver review reports, we have
provided details on the number of beneficiaries interviewed or observed during the reviews.
b
    The regional office review contained no information on beneficiary interviews or observations.
c
This waiver review was conducted at the regional office rather than on-site at the relevant state
agencies.




Page 57                               GAO-03-576 Medicaid Home and Community-Based Waivers
              Appendix VIII: Comments from the Centers
Appendix VIII: Comments from the Centers
              for Medicare & Medicaid Services



for Medicare & Medicaid Services




              Page 58                      GAO-03-576 Medicaid Home and Community-Based Waivers
Appendix VIII: Comments from the Centers
for Medicare & Medicaid Services




Page 59                      GAO-03-576 Medicaid Home and Community-Based Waivers
Appendix VIII: Comments from the Centers
for Medicare & Medicaid Services




Page 60                      GAO-03-576 Medicaid Home and Community-Based Waivers
Appendix VIII: Comments from the Centers
for Medicare & Medicaid Services




Page 61                      GAO-03-576 Medicaid Home and Community-Based Waivers
Appendix VIII: Comments from the Centers
for Medicare & Medicaid Services




Page 62                      GAO-03-576 Medicaid Home and Community-Based Waivers
Appendix VIII: Comments from the Centers
for Medicare & Medicaid Services




Page 63                      GAO-03-576 Medicaid Home and Community-Based Waivers
           Appendix VIII: Comments from the Centers
           for Medicare & Medicaid Services




(290105)
           Page 64                      GAO-03-576 Medicaid Home and Community-Based Waivers
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