oversight

Dialysis Facilities: Problems Remain in Ensuring Compliance with Medicare Quality Standards

Published by the Government Accountability Office on 2003-10-08.

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

               United States General Accounting Office

GAO            Report to the Chairman, Committee on
               Finance, U.S. Senate



October 2003
               DIALYSIS FACILITIES

               Problems Remain in
               Ensuring Compliance
               with Medicare Quality
               Standards




GAO-04-63

                                                October 2003


                                                DIALYSIS FACILITIES

                                                Problems Remain in Ensuring
Highlights of GAO-04-63, a report to the        Compliance with Medicare Quality
Chairman, Committee on Finance, U.S.
Senate                                          Standards



Most patients with end-stage renal              A substantial number of ESRD facilities do not achieve minimum patient
disease (ESRD) must rely on                     outcomes specified in clinical practice guidelines, with significant
dialysis treatments to compensate               proportions of their patients receiving inadequate dialysis or treatment for
for kidney failure. Currently, over             anemia. Similarly, inspections of dialysis facilities by state survey agencies
222,000 ESRD patients visit dialysis            have uncovered numerous problems that put patient health at risk. Between
centers several times a week to
have toxins removed from their
                                                fiscal years 1998 and 2002, these inspections, commonly called surveys,
bloodstreams. While dialysis care               revealed that 15 percent of facilities surveyed had serious quality problems
has improved overall, questions                 that, if left uncorrected, would warrant termination from the Medicare
remain regarding the quality of care            program. Serious deficiencies commonly found during surveys included
provided by some of the nation’s                medication errors, contamination of water used for dialysis, and insufficient
roughly 4,000 ESRD facilities. We               physician involvement in patient care.
examined (1) the extent and nature
of quality of care problems                     Infrequent, poorly targeted, and inadequate inspections allow facilities’
identified at dialysis facilities,              quality of care problems to go undetected or remain uncorrected.
(2) the effectiveness of state survey           Specifically:
agencies in ensuring that quality
issues are uncovered, corrected,
and stay corrected, and (3) the
                                                •	  Although ESRD survey activity has increased in recent years, only nine
extent to which the Centers for                     state survey agencies consistently met CMS’s goal to inspect 33 percent
Medicare & Medicaid Services                        of ESRD facilities annually.
(CMS) funds, monitors, and assists              • 	 A substantial number of facilities go many years between inspections. In
state survey activities related to                  fiscal year 2002, 216 facilities nationwide went 9 or more years without
dialysis care.                                      an inspection.
                                                • 	 Deficiencies may not have been detected during an inspection if the
                                                    surveyors had little experience in assessing dialysis quality.
GAO suggests that Congress
consider authorizing CMS to                     Even when deficiencies are identified and facilities take corrective action,
impose immediate sanctions, such                little incentive exists for these facilities to remain in compliance. Data show
as monetary penalties or denying                a pattern of repeated serious deficiencies in successive inspections of an
payment for new Medicare                        individual facility. No effective sanctions are available to enforce
patients, on dialysis facilities cited          compliance, short of terminating the facility from the Medicare program,
with serious deficiencies in                    which is rarely done.
consecutive surveys. GAO
recommends that the CMS                         Federal monitoring of state agencies’ performance of surveys and technical
Administrator create incentives for             assistance provided is uneven across CMS regions. CMS substantially
facilities to maintain compliance               increased its funding for ESRD surveys from an estimated $3.1 million in
with quality standards, increase use
                                                fiscal year 1998 to $8.2 million in fiscal year 2002. At the same time, several
of expert staff in conducting ESRD
facility surveys, and enhance the               CMS regional offices in our study did not actively oversee how the state
support and monitoring of state                 agencies used these funds to improve survey activities. CMS has not taken
survey agencies. CMS did not                    steps needed to facilitate information sharing between federally funded
indicate an intention to implement              ESRD networks and state agencies on the performance of individual dialysis
five of our six recommendations.                facilities—information that could help states to target their inspection
                                                resources. In addition, CMS has not offered adequate training opportunities
www.gao.gov/cgi-bin/getrpt?GAO-04-63.
                                                for surveyors inspecting ESRD facilities.
To view the full product, including the scope
and methodology, click on the link above.
For more information, contact Leslie G.
Aronovitz at (312) 220-7600.
Contents 



Letter                   
                                                                           1
                         Results in Brief 
                                                          3
                         Background
                                                                 5
                         Quality Problems Prevalent among Dialysis Facilities and Put 

                           Patient Health at Risk 
                                                  9
                         Limitations in the ESRD Survey Process Leave Quality Problems 

                           Undetected or Inadequately Addressed 
                                  15
                         CMS Has Increased Funding for State Surveys, but Monitoring and 

                           Technical Support Are Uneven
                                            24
                         Conclusions                                                               
33
                         Matter for Congressional Consideration 
                                  35
                         Recommendations for Executive Action 
                                     35
                         Agency Comments and Our Evaluation
                                       36

Appendix I               Scope and Methodology                                                     40



Appendix II 	            Medicare Conditions for Coverage for Dialysis
                         Facilities                                                                44



Appendix III 	           State Agencies’ Progress toward Meeting CMS
                         Survey Goals                                                              45



Appendix IV 	            Comments from the Centers for Medicare &
                         Medicaid Services                                                         49



Appendix V               GAO Contact and Staff Acknowledgments                                     56 

                         GAO Contact                                                               56

                         Acknowledgments                                                           56


Related GAO Products 
                                                                             57




                         Page i                                 GAO-04-63 Dialysis Facility Compliance
Tables
          Table 1: Proportion of ESRD Facilities Recertified Within 3, 6, 9, or
                   More Years, Fiscal Years 1998 to 2002                               18
          Table 2: Association between Surveyor Specialization and Rate of
                   Condition- and Standard-Level Deficiencies Cited in Fiscal
                   Years 2001 and 2002                                                 20
          Table 3: Rates of Repeated Deficiencies in Consecutive Surveys
                   Conducted from Fiscal Years 1998 through 2002                       22
          Table 4: Federal Support for Provider Surveys, Fiscal Years 1998 to
                   2001                                                                26
          Table 5: ESRD Facilities Recertified Annually by State, Fiscal Years
                   1998 to 2002                                                        45
          Table 6: Facilities to Be Recertified to Meet CMS 3-Year Goal, by
                   State                                                               47


Figures
          Figure 1: Projected Growth in the ESRD Population and Medicare
                   Costs                                                                 6
          Figure 2: Number of Facilities Where Some Patients Receive
                   Inadequate Dialysis Treatment and Anemia Management,
                   2000                                                                10
          Figure 3: State Variation in the Rate of Condition-Level
                   Deficiencies Cited in Recertification Surveys Conducted
                   from Fiscal Year 1998 through 2002                                  12
          Figure 4: ESRD Facility Survey Rate Compared to CMS Goal, Fiscal
                   Years 1998 to 2002                                                  16
          Figure 5: State Variation in the Proportion of Dialysis Facilities
                   Surveyed for Recertification, Fiscal Year 2002                      17




          Page ii                                   GAO-04-63 Dialysis Facility Compliance
Abbreviations

CMS               Centers for Medicare & Medicaid Services 

DFC               Dialysis Facility Compare Web site 

EPO               erythropoietin 

ESRD              end-stage renal disease

ICF/MR            intermediate care facilities for the mentally retarded 

LTC               long-term care 

OSCAR             Online Survey Certification and Reporting system





This is a work of the U.S. government and is not subject to copyright protection in the
United States. It may be reproduced and distributed in its entirety without further
permission from GAO. However, because this work may contain copyrighted images or
other material, permission from the copyright holder may be necessary if you wish to
reproduce this material separately.




Page iii                                          GAO-04-63 Dialysis Facility Compliance
United States General Accounting Office
Washington, DC 20548




                                   October 8, 2003 


                                   The Honorable Charles E. Grassley 

                                   Chairman 

                                   Committee on Finance 

                                   United States Senate 


                                   Dear Mr. Chairman: 


                                   Most patients with end-stage renal disease (ESRD)—a life-shortening, 

                                   chronic illness—must rely on dialysis treatments to compensate for kidney 

                                   failure. Currently, over 222,000 ESRD patients spend 3 to 5 hours at 

                                   dialysis centers three times a week, where dialysis machines remove 

                                   toxins from their bloodstreams. In addition to having permanent kidney 

                                   failure, ESRD patients are likely to suffer from diabetes or heart disease 

                                   and are at risk for developing illnesses during their course on dialysis. 

                                   Therefore, the care of ESRD patients requires expertise in both the 

                                   medical and technical aspects of maintaining patients on dialysis. 


                                   While dialysis care has improved overall, according to a 2002 Department 

                                   of Health and Human Services report, questions remain regarding the 

                                   quality of care provided to Medicare beneficiaries by some of the nation’s 

                                   roughly 4,000 dialysis facilities. The HHS report noted that many ESRD 

                                   patients do not receive treatment meeting the minimum standards 

                                   established in the National Kidney Foundation’s clinical practice 

                                   guidelines, which, when not met, have documented adverse effects on 

                                   patient outcomes. In 2001, 16 percent of dialysis patients did not have an 

                                   adequate amount of toxins removed from their blood, 24 percent had 

                                   anemia that was not brought under control, and 19 percent of patients 

                                   were dialyzed for extended periods using catheters, the least effective and 

                                   most risky method for connecting patients to dialysis machines.1


                                   ESRD is the one medical condition that confers eligibility regardless of age 

                                   to the Medicare program, which otherwise pays for health care provided 



                                   1
                                    Department of Health and Human Services, Centers for Medicare & Medicaid Services,
                                   2002 Annual Report: End Stage Renal Disease Clinical Performance Measures Project
                                   (Baltimore, Md.: December 2002). These assessments are based on the clinical
                                   performance measures developed by CMS, building on the National Kidney Foundation’s
                                   1997 Dialysis Outcome Quality Initiative Clinical Practice Guidelines.



                                   Page 1                                          GAO-04-63 Dialysis Facility Compliance
to people who are over 65 years of age or to those with disabilities. The
Centers for Medicare & Medicaid Services (CMS), which oversees the
Medicare program, has responsibility for ensuring that dialysis patients
receive quality care. For this purpose, CMS contracts with state survey
agencies that conduct onsite inspections. Following up on a report we
issued in June 2000,2 you asked us to review CMS’s system for enforcing
Medicare’s minimum quality and safety standards for ESRD facilities and
to assess whether and how it might be strengthened. Specifically, we
examined (1) the extent and nature of quality of care problems identified
at dialysis facilities, (2) the effectiveness of state survey agencies in
ensuring that quality issues are uncovered, corrected, and stay corrected,
and (3) the extent to which CMS funds, monitors, and assists state survey
activities related to dialysis care.

To address these issues, we obtained data from existing national
databases and original data from 10 states. We analyzed facility-specific
information about quality measures reported on CMS’s Dialysis Facility
Compare, a consumer guide available on the Internet. For the nation as a
whole and each of the states,3 we also analyzed data from CMS’s Online
Survey Certification and Reporting (OSCAR) system for the last 5 fiscal
years, 1998 through 2002. This database provides information on the dates
when surveys took place, the deficiencies cited, and the time spent
conducting various survey activities. In addition, we interviewed cognizant
officials at CMS’s central office and reviewed changes in the CMS budget
devoted to survey activities from fiscal years 1998 to 2002.

To supplement available national data, we obtained additional information
from 10 states—Alabama, California, Florida, Kansas, Maryland,
Mississippi, Missouri, Nevada, New York, and Pennsylvania—which
together accounted for more than one-third of all facilities in fiscal year
2001. They were selected to provide variation across a range of
dimensions, including the proportion of ESRD facilities surveyed and
deficiencies cited, number of ESRD facilities, and geographic diversity. We
interviewed state surveyors and administrators, representatives from


2
 U.S. General Accounting Office, Medicare Quality of Care: Oversight of Kidney Dialysis
Facilities Needs Improvement, GAO/HEHS-00-114 (Washington, D.C.: June 23, 2000). This
report highlighted the need for additional enforcement tools to ensure that corrections of
quality problems identified in surveys of ESRD facilities would be sustained over time. It
also urged improved cooperation and data sharing between state survey agencies and
ESRD networks to improve targeting of facilities selected for inspection.
3
 In this report, “states” refers to the 50 states and the District of Columbia.




Page 2                                                GAO-04-63 Dialysis Facility Compliance
                        ESRD networks (organizations that promote quality improvement in ESRD
                        services), and federal regional office officials responsible for monitoring
                        ESRD facility surveys. In addition, we collected detailed information on
                        several states’ corps of ESRD surveyors, including their background,
                        training, and experience. We also examined the written reports from
                        numerous facility surveys conducted within the last 2 years. (App. I
                        contains more detail on our scope and methodology.) Our work was
                        conducted from August 2002 to September 2003 in accordance with
                        generally accepted government auditing standards.


                        A substantial number of dialysis facilities do not achieve the minimum
Results in Brief        patient outcomes specified in clinical practice guidelines for a significant
                        proportion of their patients. Data reported on Dialysis Facility Compare
                        show that, in 2000, 512 facilities had 20 percent or more of their patients
                        receiving inadequate dialysis treatment, and nearly 1,700 facilities had 20
                        percent or more of their patients receiving inadequate care for anemia. In
                        addition, the CMS-funded system of on-site inspections of facility
                        conditions, equipment, and staffing has uncovered numerous problems
                        that put patient health at risk. From fiscal year 1998 through 2002, these
                        inspections, generally called surveys, revealed that 15 percent of facility
                        surveys identified serious quality problems that, if left uncorrected, would
                        warrant termination from the Medicare program. Serious deficiencies
                        commonly found during surveys included medication errors,
                        contamination of water used for dialysis, and insufficient physician
                        involvement in patient care.

                        Infrequent, poorly targeted, and inadequate inspections by state survey
                        agencies allow facilities’ quality of care problems to go undetected or
                        remain uncorrected. Specifically:

                   •	  Although ESRD survey activity has increased in recent years, state
                       compliance with CMS’s goal to resurvey 33 percent of ESRD facilities
                       annually has been inconsistent. While 33 states met the goal in at least 1 of
                       the last 2 fiscal years, only 9 of the 33 states surveyed a third or more of
                       their facilities in both years. Eighteen states failed to meet the goal in
                       either fiscal year 2001 or 2002.
                   • 	 A substantial number of facilities go many years between inspections. In
                       fiscal year 2002, 216 facilities nationwide (5.4 percent) went 9 or more
                       years without an inspection, up from 53 facilities (1.6 percent) in fiscal
                       year 1998.
                   • 	 Deficiencies may not have been detected during a survey if the surveyors
                       who inspected the facilities had little experience in assessing dialysis



                        Page 3                                    GAO-04-63 Dialysis Facility Compliance
quality. Data from several states showed that survey agencies where
designated staff specialized in performing ESRD surveys uncovered a
substantially larger number of deficiencies than agencies without such
staff expertise.

Even when deficiencies are identified and facilities take corrective action,
little incentive exists for these facilities to remain in compliance with
Medicare’s minimum quality standards on a continuing basis. As shown in
nationwide data, when quality problems were cited, the problems were
corrected but often did not stay corrected. For example, from fiscal years
1998 through 2002, 18 percent of facilities found to have serious
deficiencies were cited again for the same deficiencies in successive
inspections. At present, there is no effective sanction to encourage a
facility to avoid repeating prior deficiencies, short of terminating the
facility from the Medicare program, which is rarely done.

CMS has expanded funding to support state ESRD survey activities, but its
monitoring of state agencies’ performance of surveys and providing
technical assistance is uneven across CMS regions. CMS substantially
increased its aggregate funding for ESRD surveys from an estimated
$3.1 million in fiscal year 1998 to $8.2 million in fiscal year 2002. At the
same time, several regional offices in our study did not actively oversee or
assist in improving ESRD survey activities. In addition, CMS has not
removed barriers between federally funded ESRD networks and state
agencies that inhibit the sharing of information on the performance of
individual dialysis facilities—information that could assist states in
targeting their inspection resources. Furthermore, surveyors in several
states reported that CMS has not offered adequate training opportunities
for surveyors inspecting ESRD facilities.

To encourage ESRD facilities to adhere to Medicare quality standards, we
suggest that Congress consider authorizing CMS to impose immediate
sanctions, such as monetary penalties or denying payment for new
Medicare patients, on dialysis facilities cited with serious deficiencies in
consecutive surveys. We are also recommending that CMS: conduct more
frequent surveys of facilities with serious deficiencies; publicize facilities’
survey results; encourage state agencies to use ESRD-specialized
surveyors; expand ESRD surveyor training opportunities; require periodic,
routine sharing of information between ESRD networks and state survey
agencies; and enhance oversight of state agency performance.




Page 4                                      GAO-04-63 Dialysis Facility Compliance
             In its comments on a draft of this report, CMS affirmed its commitment to
             strengthening oversight of dialysis facilities and state survey agencies, but
             did not indicate an intention to implement five of our six
             recommendations. Instead, the agency highlighted its efforts to develop
             tools to assist states in selecting facilities for inspection and to make the
             survey process more uniform. We continue to believe that more focused
             efforts to evaluate compliance with Medicare requirements and stronger
             actions against poor performers are needed to ensure an effective,
             consistent, and timely ESRD survey and certification program.


             Individuals with ESRD, characterized by permanent kidney failure, must
Background   undergo either regular dialysis treatment or a kidney transplant to stay
             alive. In 2000, about 248,000 individuals received one of two modes of
             dialysis treatment—hemodialysis or peritoneal dialysis—both of which
             can be performed at a facility or at home.4 Most ESRD patients undergo
             hemodialysis.5 The number of hemodialysis patients enrolled in Medicare
             has risen sharply, from about 118,000 in 1991 to over 222,000 in 2000. With
             anticipated annual growth of over 7 percent, the dialysis population is
             projected to reach more than 520,000 by 2010.6 (See fig. 1.) This growth in
             enrollment has been attributed largely to improvements in the survival rate
             for people with ESRD and an increase in the number of Americans with
             conditions, such as diabetes or high blood pressure, that often lead to
             kidney failure.




             4
               In hemodialysis, a patient’s blood is filtered through an external machine that acts as an
             artificial kidney to withdraw excess fluids and toxic materials before returning cleansed
             blood to the patient. The machine uses a semipermeable membrane, called a hemodialyzer,
             to filter out the toxins. In peritoneal dialysis, the patient’s peritoneal membrane, located
             within the abdominal cavity, is used to remove excess fluids and toxins.
             5
              In 2000, about 222,300 patients received hemodialysis, 21,400 underwent peritoneal
             dialysis, and 4,400 underwent dialysis of an unspecified mode. In addition, approximately
             74,700 beneficiaries were recipients of kidney transplants, for a total of approximately
             322,800 individuals that received Medicare benefits as of December 31, 2000.
             6
              Projections are based on data for 1982 to 1997. See J.L. Xue, J.Z. Ma, T.A. Louis, and A.J.
             Collins, “Forecast of the Number of Patients With End-Stage Renal Disease in the United
             States to the Year 2010,” Journal of the American Society of Nephrology, vol. 12 (2001):
             2753-2758.




             Page 5                                              GAO-04-63 Dialysis Facility Compliance
Figure 1: Projected Growth in the ESRD Population and Medicare Costs




Growth in the ESRD population has been matched by growth in the
number of dialysis facilities. In the decade between 1991 and 2001, the
number of outpatient dialysis facilities doubled from about 2,000 to more
than 4,000 facilities. In 2001, 83 percent of all facilities were freestanding
(nonhospital-based) and 79 percent of all facilities were for-profit. In 2001,
the four largest for-profit dialysis chains accounted for about two-thirds of
all freestanding facilities.

The rise in the ESRD population has been accompanied by an even more
rapid increase in program spending. Medicare not only provides coverage




Page 6                                      GAO-04-63 Dialysis Facility Compliance
to most beneficiaries with ESRD for all ESRD-related services but for their
other health care needs as well.7 From 1990 to 2001, Medicare
expenditures for beneficiaries with ESRD rose from about $5 billion to
over $15 billion, and are forecast to grow to $28 billion in 2010. Spending
growth has been fueled by an expansion of enrollees with greater medical
needs—older beneficiaries and those with chronic comorbidities8—and
the program’s inclusion of new treatments, particularly erythropoietin
(EPO)—a synthetic hormone widely used to manage anemia—and other
injectable medications. While Medicare pays ESRD providers a set
amount—a composite rate—including the nursing services provided and
supplies used in each dialysis treatment, it pays separately for injectable
drugs.9 The composite rate for dialysis services has remained virtually
unchanged since the program’s inception. However, payments to
freestanding dialysis facilities for injectable drugs have grown
considerably in recent years, increasing from 33 percent of total payments
in 1997 to 40 percent in 2001.

In 1976, CMS established minimum requirements that dialysis facilities
must meet in order to receive Medicare payments. The regulations,
referred to as “conditions for coverage,” address 11 general areas,
including the facility’s physical environment and overall management by a
governing body, as well as the adequacy of patient treatment plans.10 (See
app. II.) One condition covers the detailed procedures that facilities must
follow if they choose to reuse certain supplies, such as dialyzers, rather
than replace them for each treatment.11 Under each condition are related
“standards.” For example, under the condition “physical environment,”


7
  For individuals eligible for Medicare only because of permanent kidney failure, Medicare
coverage starts on the fourth month of dialysis. Medicare will not pay for services during
the first 3 months of dialysis unless the patient already has Medicare because of age or
disability. After that, Medicare is the secondary payer for 30 months. During this period,
private insurance or Medicaid pays first on health care bills and Medicare pays second. Full
Medicare coverage begins with the 34th month of dialysis and any private insurer becomes
the secondary payer. For those who are uninsured, Medicare is the primary payer.
8
 The proportion of new ESRD patients 75 or older grew from 18 percent in 1991 to about 25
percent in 2001, while the proportion of new ESRD patients with diabetes grew from 36
percent of all new patients to 46 percent during the same period.
9
 In 2002, the average composite rate was approximately $130 for freestanding dialysis
facilities. Payments for injectable drugs averaged about $80 per treatment in 2001.
10
     See 42 C.F.R. Part 405 Subpart U (2002).
11
 These requirements include appropriate methods for disinfection and steps to ensure that
such supplies are only reused by the same patient.




Page 7                                             GAO-04-63 Dialysis Facility Compliance
there are specific standards to maintain the purity of water used for
dialysis. Even deficiencies found solely at the standard level indicate
potential harm to patients. But, deficiencies cited at the condition level are
the most egregious, as they indicate a problem that is widespread at a
facility or serious in terms of its harm, or potential to harm patients.
Typically, they are accompanied by multiple standard-level deficiencies
under that condition.

To ensure provider compliance with dialysis quality standards, Medicare
contracts with state survey agencies.12 These agencies conduct initial on-
site surveys of dialysis facilities when providers seek enrollment in the
Medicare program. Subsequently, state agencies periodically conduct
unannounced inspections, referred to as recertification surveys, to ensure
that facilities are maintaining compliance with Medicare standards.
Although no statutory or regulatory requirements exist regarding the
frequency of recertification surveys, CMS has established goals for state
survey agencies to ensure that facilities are surveyed within certain
intervals. States are expected to survey 33 percent of their dialysis
facilities annually, and each facility every 3 years. In addition, state survey
agencies must respond to complaints that they receive concerning dialysis
facilities and, when warranted, conduct on-site investigations.

If the state agency determines that a facility is out of compliance with any
condition or standard, CMS requires that the facility develop a plan to
correct the deficiency. The state agency is then responsible for
determining if the plan of correction is adequate to address the quality
problems identified. Facilities that do not correct condition-level
deficiencies within a reasonable amount of time, generally within 90 days,
are subject to termination from the program. A much shorter time frame
for termination applies in situations where a facility’s noncompliance
poses an immediate and serious threat to patient health or safety.

CMS also contracts with 18 ESRD network organizations that are
responsible for helping providers improve the quality of care patients
receive in dialysis facilities. Rather than enforcing compliance with federal
quality regulations, the networks recruit facility participation in national
and regional quality improvement projects that focus on enhancing



12
  These agencies are typically part of state health departments and are responsible for
monitoring compliance with quality standards associated with several types of facilities,
including nursing homes and home health agencies.




Page 8                                             GAO-04-63 Dialysis Facility Compliance
                           specific clinical outcomes of dialysis patients. Networks collect data from
                           individual facilities on numerous clinical indicators and provide them
                           feedback on their performance. The networks also provide technical
                           assistance to facilities and handle grievances concerning patient care.
                           Each network has a medical review board composed of dialysis facility
                           representatives, physicians, and dialysis patients, that oversees network
                           operations.

                           To assist beneficiaries with ESRD in deciding where to get dialysis
                           services, CMS reports certain information on Dialysis Facility Compare, an
                           Internet Web site. Initiated in 2001, the site provides information on
                           specific characteristics—such as the location, operating hours, and size—
                           of all Medicare-certified facilities. It also provides data on clinical
                           outcomes related to several quality measures, but does not contain the
                           results of state agency surveys. In contrast, CMS routinely posts survey
                           results for nursing homes on a similar but separate Internet Web site
                           called Nursing Home Compare.


                           Data made public by CMS reveals that poor care is a problem at many
Quality Problems           facilities, with large numbers of patients receiving inadequate hemodialyis
Prevalent among            or treatment for anemia. Similarly, inspections of ESRD facilities continue
                           to find evidence that serious health and safety problems exist for dialysis
Dialysis Facilities and    patients. From fiscal year 1998 through 2002, as many as one out of seven
Put Patient Health at      surveys identified problems sufficiently severe to initiate the process of
                           terminating the facility from the Medicare program. These deficiencies,
Risk                       such as medication errors and contamination of water used for dialysis,
                           put the health of patients at risk.


Many Facilities Do Not     Data reported on the Dialysis Facility Compare Web site provides evidence
Provide Adequate Care to   that the care delivered at many facilities is substandard. The most recent
Their Hemodialysis         information available indicates that, in 2000, a substantial number of
                           facilities did not provide all of their Medicare patients with a level of care
Patients                   that meets minimum clinical practice guidelines. Figure 2 shows the extent
                           to which facilities did not achieve two commonly accepted quality
                           benchmarks based on the National Kidney Foundation guidelines: (1) the
                           percent of the facility’s patients not receiving adequate hemodialysis and
                           (2) the percent of the facility’s patients receiving EPO whose anemia was
                           not adequately managed.13 Despite some measurement limitations, both of


                           13
                                EPO is used for the treatment of anemia for nearly all dialysis patients.



                           Page 9                                                 GAO-04-63 Dialysis Facility Compliance
these indicators are considered characteristics of patient care that reflect
dialysis facility quality.

Figure 2: Number of Facilities Where Some Patients Receive Inadequate Dialysis
Treatment and Anemia Management, 2000

1000 Number of facilities



 800



 600



 400



 200



    0
        Less than 5                5 to 9            10 to14             15 to19             20 to 24     25 or more
                                    Percentage of the facility's patients with inadequate hemodialysis



1200 Number of facilities



1000



 800



 600



 400



 200



    0
        Less than 10             10 to 19            20 to 29            30 to 39            40 to 49     50 or more
                                   Percentage of the facility's patients with inadequate anemia control
Source: CMS, Dialysis Facility Compare Web site.

Notes: Adequacy of dialysis is measured as the percentage of the facility’s hemodialysis patients that
had the minimum recommended urea reduction ratio—a measure of the waste products removed
from the blood—of 65 or more. Data were reported for 3,158 facilities.
Anemia management is measured as the percentage of the facility’s patients who received EPO that
had a hematocrit level—a measure of low red blood count—of 33 or greater. Data were reported for
3,325 facilities.




Page 10                                                              GAO-04-63 Dialysis Facility Compliance
                           Relatively few dialysis facilities reported meeting these two national
                           guidelines for 100 percent of their patients. At about half of the facilities,
                           fewer than 10 percent of their patients fell short of the hemodialysis
                           guideline, but at 512 facilities, 20 percent or more of their patients received
                           inadequate hemodialysis. Results for anemia treatment were less favorable
                           overall. Nearly 1,700 facilities fell short of meeting the guideline for
                           anemia management for 20 percent or more of the patients in their care; at
                           135 facilities, more than 50 percent of patients received inadequate
                           treatment for anemia. Research has shown that variation in such patient
                           outcomes as dialysis adequacy is largely attributable to factors at the
                           facility—its policies governing dialysis care, associated practice patterns,
                           and attention to individual patient problems—as opposed to patient-
                           specific causes.14


Facility Inspections       The cumulative results of surveys conducted from fiscal years 1998
Identify an Unacceptable   through 2002 suggest that condition-level deficiencies—quality problems
Level of Serious Quality   severe enough to warrant termination from the Medicare program unless
                           corrected within 90 days—are still far from rare. Fifteen percent of
Problems                   recertification surveys conducted nationwide from fiscal year 1998
                           through 2002 reported one or more condition-level deficiencies. The
                           distribution across states of condition-level deficiencies cited was
                           substantially uneven. Several states reported no condition-level
                           deficiencies during that 5-year period, whereas other states found such
                           deficiencies in roughly 60 percent of their surveys. As shown in figure 3,
                           most states were at the lower end of the range, with 39 states citing
                           condition-level deficiencies in fewer than 20 percent of their surveys, and
                           21 states, in fewer than 10 percent of their surveys.




                           14
                              J.C. Fink, S.A. Blahut, A.E. Briglia, and others, “Effect of Center- Versus Patient-Specific
                           Factors on Variation in Dialysis Adequacy,” Journal of the American Society of Nephrology,
                           vol. 12 (2001): 164-169.




                           Page 11                                             GAO-04-63 Dialysis Facility Compliance
                         Figure 3: State Variation in the Rate of Condition-Level Deficiencies Cited in
                         Recertification Surveys Conducted from Fiscal Year 1998 through 2002


                         20 Number of states
                                                                                  18
                         18

                         16
                                                            15

                         14

                         12

                         10

                              8
                                    6                                                                    6                   6
                              6

                              4

                              2

                              0
                                   0                      1 to 9               10 to 19               20 to 29           30 or more
                                             Percentage of the state's surveys that found condition-level deficiencies
                         Source: GAO analysis of CMS OSCAR data.




Problems Cited at ESRD   Our review of recertification survey reports from fiscal years 2001 and
Facilities Create the    2002, collected from the 10 states in our study, identified condition-level
Potential for Harm to    deficiencies that were commonly cited among noncompliant facilities.
                         Multiple instances were found of inadequate clinical management,
Patients                 medication errors, improper use of reusable dialysis equipment,
                         contamination of water used for dialysis, and insufficient professional
                         medical involvement in the dialysis patients’ care. State surveyors
                         documented these problems after reviewing facility personnel files,
                         policies, procedures, and the facility’s overall environment. In addition,
                         surveyors reviewed a random sample of medical records from 10 percent
                         of the facility’s patients.15 The vignettes presented below—which illustrate
                         the types of problems found in 35 percent of all surveys conducted from
                         fiscal year 1998 through 2002—were extracted from surveyors’ findings



                         15
                          A patient’s medical record contains required information on identified problems, a plan of
                         care, and documentation tracking the treatments actually provided. The record must show
                         ongoing assessments of patient needs as well as evidence that patients participate in
                         developing their treatment plans and are informed of outcomes.




                         Page 12                                                       GAO-04-63 Dialysis Facility Compliance
     reports. Registered nurses with substantial ESRD survey experience, who
     we asked to comment on the clinical implications of these findings,
     indicated that the deficiencies could lead in some cases to severely
     adverse patient outcomes.

•	   Failure to monitor laboratory values and medication supply. A Maryland
     surveyor found that for 31 days, one facility did not provide any of its
     patients with EPO, a medication routinely used to stimulate the
     production of red blood cells that are compromised by chronic kidney
     disease. Upon reviewing patients’ medical records, 8 out of 10 sampled
     records indicated that the patient’s red blood cell count was below
     normal, thus requiring EPO. In addition, 5 of these records showed that
     the patient’s red blood cell level decreased over a 4-month period. The
     facility’s head nurse did not monitor and report the patients’ abnormal
     laboratory values to the physicians and did not respond to the patients’
     complaints of feeling tired and lacking energy.

     According to our nurse reviewers, patients who have a diminished red
     blood cell count for an extended period of time can develop health-related
     complications, including heart irregularities and a decrease in brain
     function.

•	   Failure to administer medication as prescribed. A California surveyor cited
     a condition-level deficiency when she found that physician orders were
     not being followed. One patient’s medical record documented that 6,000
     units of EPO were prescribed for each dialysis treatment but that the
     patient received only 600 units at each treatment for 20 treatments. Staff
     confirmed that the patient was receiving the wrong dose, and when
     questioned by the surveyors, could not provide an explanation. Another
     patient’s medical record revealed that, despite a physician-ordered
     increase in EPO, the patient received an incorrect dosage of the
     medication for almost 2 months. Again, staff acknowledged that the order
     to increase the dosage was not carried out. A review of two more patients’
     medical records showed written orders for Venofer, a medication to treat
     iron deficiency. The records documented that both patients failed to
     receive this medication for a week or more. Staff acknowledged that there
     was a period of time during which the facility ran out of the medication.

     Our nurse reviewers reported that a reduction of Venofer or EPO could
     increase the dialysis patients’ risk for anemia, a condition that, as noted
     above, can cause a patient to experience extreme fatigue and eventually
     clinical impairments to the heart and brain.




     Page 13                                    GAO-04-63 Dialysis Facility Compliance
•	   Failure to administer dialysis treatments as prescribed. A recertification
     survey in Pennsylvania discovered that, for over half of the medical
     records reviewed, the facility did not ensure that diagnostic and
     therapeutic orders were followed. Specifically, documentation in patients’
     medical records revealed that the duration of dialysis treatments deviated
     from the amount of time prescribed by a physician. One patient’s medical
     record indicated that dialysis treatments were ordered for 3.5 hours in
     duration. However, actual treatment periods were all less than the
     prescribed amount—by 20 to 90 minutes. Similarly, another patient’s
     record indicated that dialysis treatments were ordered for a duration of 3
     hours and 45 minutes but most treatments were for shorter duration—as
     much as an hour less.

     Nurse reviewers indicated that when the dialysis treatment period is
     reduced, the patient retains toxins and other fluids that have not been
     removed adequately from the blood stream. This condition can adversely
     affect the patient’s overall general health and lead to loss of appetite,
     swelling, fatigue, shortness of breath, and possibly heart failure.

•	   Failure to monitor concentration of chemicals in the water system. A New
     York surveyor found that a facility did not monitor the purity of water
     used for dialysis. The water used to prepare dialysate, a solution that
     removes wastes from the blood during dialysis, contained chemical
     contaminates in excess of allowed concentrations. For at least 8 months,
     fluoride levels were 1.0—five times greater than the maximum allowable
     limit of 0.2. In addition, two water tests showed that calcium levels were
     above 5.25, well above the maximum allowable limit for calcium of 2.0.
     The facility medical director did not monitor the results of water tests
     conducted and did not ensure that the facility’s staff took appropriate
     action, such as reporting abnormal values or resampling the water.

     Nurse reviewers told us that excessive amounts of fluoride could cause a
     dialysis patient’s red blood cells to rupture and clot and that excessive
     amounts of calcium in the blood could increase the incidence of bone
     disease.

•	   Failure to involve a transplant surgeon in the review of patients’ long-term
     care plans. A recertification survey in Mississippi revealed that the facility
     did not involve a transplant surgeon, as required, in the review of patients’
     long-term care plans. All of the medical records reviewed in that facility
     had long-term care plans that were not updated within the required 6-
     month time frame. The surveyor interview with the facility’s medical
     director confirmed that a transplant surgeon or his designee had not
     examined patients’ long-term care plans.


     Page 14                                    GAO-04-63 Dialysis Facility Compliance
                            Nurse reviewers commented that, until screened by a transplant surgeon,
                            the dialysis patient’s potential for kidney transplantation cannot be
                            properly assessed.


                            Infrequent or poorly targeted inspections allow facilities’ quality of care
Limitations in the          problems to go undetected or remain uncorrected. Although state survey
ESRD Survey Process         activity increased from fiscal year 1998 to 2002, numerous state agencies
                            did not meet the goal currently set by CMS to survey 33 percent of all
Leave Quality               ESRD facilities annually. An increasing number of facilities continued to
Problems Undetected         operate 9 or more years between inspections. In addition, states that relied
                            primarily on surveyors with limited experience in conducting inspections
or Inadequately             of ESRD facilities tended to report substantially fewer deficiencies than
Addressed                   states using more experienced surveyors, suggesting that surveyors in the
                            first group of states may have missed some quality problems. We also
                            found patterns of repeated condition-level deficiencies, and particularly,
                            citations for the same problem in successive inspections of an individual
                            facility. Finally, facilities had little incentive to ensure continued
                            adherence to Medicare’s minimum quality standards in the absence of
                            sanctions for noncompliance other than termination from the Medicare
                            program—which, historically, has been rarely used.


Increased CMS Goals Have    In recent years, CMS has underscored the importance of conducting
Led to Greater Survey       recertification surveys of ESRD facilities by raising its expectations for the
Activity, but Many States   state agencies regarding the frequency with which such surveys should
                            take place. In fiscal year 2001, CMS increased the recertification goal for
Fall Short                  states to 33 percent of facilities each year, up from 10 percent in fiscal year
                            1999 and 17 percent in fiscal year 2000. Moreover, since fiscal year 2001,
                            there has been a parallel goal for states to survey every dialysis facility
                            within a 3-year period. Thus, by the end of fiscal year 2003, no dialysis
                            facility should have gone more than 3 years since its last recertification
                            survey.

                            In response to CMS’s heightened expectations, state agencies surveyed
                            more ESRD facilities, but not enough to fully meet CMS’s current goals. As
                            shown in figure 4, the percentage of ESRD facilities undergoing
                            recertification surveys annually grew substantially from fiscal year 1998 to
                            2001. However, collectively, state agencies did not achieve the current
                            goal, effective in 2001, of surveying 33 percent of all ESRD facilities each
                            year. In fact, after increasing to over 28 percent in fiscal year 2001, the
                            survey frequency rate declined to about 27 percent in fiscal year 2002.



                            Page 15                                    GAO-04-63 Dialysis Facility Compliance
Figure 4: ESRD Facility Survey Rate Compared to CMS Goal, Fiscal Years 1998 to
2002

Percent

35
                                                                33               33

30
                                                                            28
                                                                                             27

25



20

                                               17
                                                       16
15                                        14
                 12
      10                      10
10



 5



 0
          1998                     1999         2000                 2001             2002
            CMS annual survey goal

            Facilities surveyed

Source: GAO analysis of CMS OSCAR data.



Underlying this aggregate trend are wide disparities in survey frequency
rates across the individual state agencies, as shown in figure 5. State
recertification survey rates ranged from zero to 89 percent in fiscal year
2002. Even among the 13 states with the largest number of ESRD
facilities,16 recertification survey rates varied widely—from 10 percent to
40 percent.




16
 This top quartile of states represents 60 percent of all ESRD facilities and 64 percent of all
dialysis patients.




Page 16                                                 GAO-04-63 Dialysis Facility Compliance
Figure 5: State Variation in the Proportion of Dialysis Facilities Surveyed for
Recertification, Fiscal Year 2002

                                                                                      15
15 Number of states



                                                                        10
10

                                                           7

                                  5
 5                                                                                              4          4
       3
                     2
                                               1

 0
     0 to 4       5 to 9      10 to 14     15 to 19    20 to 24      25 to 29     30 to 34   35 to 39 40 or more
                                      Percentage of the state's facilities surveyed
Source: GAO analysis of CMS OSCAR data.




While 33 state survey agencies met the expanded CMS survey frequency
goal in at least 1 of the last 2 fiscal years—sometimes by substantial
margins—only 9 of those states met the 33 percent goal in both years. (See
table 5 in app. III.) By contrast, 18 state agencies failed to reach 33 percent
in either of the two most recent fiscal years, including some of the largest
ESRD states, such as California, Michigan, Pennsylvania, and Virginia.

As a result, many states may have difficulty meeting CMS’s second goal for
state recertification activity, to survey all their ESRD facilities within a 3-
year period. Because this goal was established in fiscal year 2001, the first
test of state compliance will come at the end of fiscal year 2003. Based on
the facilities surveyed in fiscal year 2001 and 2002, 35 states will have to
inspect more than a third of their ESRD facilities in fiscal year 2003 if they
are to meet the 3-year goal. (See table 6 in app. III.) About one in five
states has more than 60 percent of facilities left to survey. Alabama has the
most facilities—89 percent—that need to be surveyed in the current fiscal
year. Among the largest states, California and Virginia have the largest
backlogs to overcome—around 76 percent.

Despite improvement in the overall rate of ESRD facility surveys, a
significant proportion of dialysis facilities continue to operate for long
periods without inspections. For example, as of September 30, 2002, 466
facilities had not been surveyed for 6 or more years, of which 216 had not
been inspected for recertification in 9 or more years. Most of the effort to
shorten the interval between recertification surveys has focused on



Page 17                                                           GAO-04-63 Dialysis Facility Compliance
reducing the number of facilities surveyed within 3 to 6 years. (See table
1.) From fiscal year 1998 to 2000, the proportion of facilities not surveyed
for more than 6 years rose sharply (from 9.8 to 17.4 percent) and then
declined (to 11.6 percent). Those that operated 9 or more years without a
recertification survey steadily increased from 1.6 percent (53 facilities) in
fiscal year 1998 to 5.4 percent (216 facilities) in fiscal year 2002. This
aggregate result reflected highly variable survey rates across states. Four
states—California, Texas, New York, and Missouri—accounted for 174
facilities that had not been surveyed within 9 years by the end of fiscal
year 2002.

Table 1: Proportion of ESRD Facilities Recertified Within 3, 6, 9, or More Years,
Fiscal Years 1998 to 2002

                                    Percentage of facilities subject to a recertification survey
 Length of time since 

 last recertification                         1998        1999        2000        2001        2002

 survey                                   (n=3,250)   (n=3,462)   (n=3,679)   (n=3,882)   (n=4,011)

 Less than 3 years                            51.6        51.2        49.8        62.5         72.4
 3 to <6 years                                38.6        32.8        32.8        22.9         16.0
 6 to <9 years                                  8.2       13.9        14.2         10.1         6.2
 9 or more years                                1.6         2.1         3.2         4.4         5.4

Source: GAO analysis of CMS OSCAR data.



State agencies have to balance their efforts to meet survey workload goals
for ESRD facilities against the demands on inspection staff to meet other
CMS survey requirements. In particular, state agencies are required to
inspect nursing homes every 15 months,17 intermediate care facilities for
the mentally retarded (ICF/MR) at least annually, and home health
agencies at least once every 3 years. In its letter to state agencies on fiscal
year 2003 program requirements and budget guidelines for survey
activities, CMS made inspections of dialysis facilities and nine other types
of providers lower in inspection priority, behind nursing homes, ICF/MRs,
and home health agencies.18 ESRD recertifications also received lower



17
 The statewide average interval between standard surveys must be 12 months or less. See
42 C.F.R. § 488.308(b).
18
 Department of Health and Human Services, CMS, memorandum from the Director, Survey
and Certification Group, “Fiscal Year (FY) 2003 State Survey and Certification Budget Call
Letter — ACTION,” July 2, 2002.




Page 18                                                    GAO-04-63 Dialysis Facility Compliance
                     priority than investigation of complaints filed against all types of
                     providers.19 CMS officials asserted that they provide the state survey
                     agencies with sufficient resources to fulfill expectations across all
                     provider types. Nonetheless, several state officials we spoke with reported
                     difficulty in meeting all of these expectations, especially those
                     experiencing substantial growth in ESRD facilities in their states. They
                     indicated that, given the relatively low priority assigned to ESRD
                     recertifications, they would most likely cope by adjusting the number of
                     dialysis facilities inspected.


Lack of Surveyor     Even when facilities are inspected, some surveyors may be more adept
Specialization May   than others at identifying quality problems. Because dialysis treatment is
Contribute to Less   technically complex, surveyors who focus on ESRD surveys say that they
                     become more proficient in detecting and properly documenting quality of
Effective Surveys    care problems as a result. However, state agencies may be reluctant to
                     designate a subset of surveyors who specialize in performing ESRD
                     inspections as it limits their flexibility in scheduling inspections of nursing
                     homes, home health agencies, and other provider types. Moreover, such
                     specialization is less feasible for states with few ESRD facilities overall. In
                     states without a specialist approach to facility inspections, many surveyors
                     are likely to conduct no more than a few ESRD surveys each year. Among
                     the nine state survey agencies from which we collected workload data, six
                     typically assigned ESRD inspections to surveyors who spent most of their
                     time surveying other provider types.20 The other three assigned most ESRD
                     inspections to surveyors who often performed surveys of dialysis facilities.




                     19
                       CMS requires every state to establish a screening mechanism to evaluate complaints as
                     they come in, and to apply explicit criteria to determine which ones need to be followed up
                     with a survey as well as the time frame within which that survey must take place. Surveys
                     prompted by complaints are intended to address a particular issue raised in the complaint,
                     which often does not involve clinical issues. If during the course of the complaint
                     investigation the surveyor discovers systemic quality problems, the inspection is usually
                     converted into a recertification survey.
                     20
                        For each state, we calculated a specialization ratio that indicated the likelihood that any
                     given ESRD survey would be conducted by a surveyor who frequently conducted surveys
                     of dialysis facilities. (See app. I.) On a scale of zero to one, the values of the specialization
                     ratio clustered into two groupings: the states with specialized ESRD staff included New
                     York (0.68), California (0.63), and Maryland (0.57); the states without ESRD specialized
                     staff included Pennsylvania (0.36), Missouri (0.27), Alabama (0.21), Florida (0.17), Kansas
                     (0.14), and Nevada (0.11).




                     Page 19                                               GAO-04-63 Dialysis Facility Compliance
A comparison of survey results between states that had a designated corps
of ESRD surveyors and those that did not suggested that surveyors who
frequently conduct ESRD inspections may be more effective in detecting
and reporting deficiencies. Table 2 shows that the more specialized group
of states was almost three times as likely to find a condition-level
deficiency. Surveyors from these states cited a substantially larger number
of deficiencies at the less serious “standard-level” as well. While other
factors could have also influenced the number of deficiencies reported by
surveyors in various states, the magnitude of the difference observed
between states that did and did not specialize suggests that specialization
has a major impact.21

Table 2: Association between Surveyor Specialization and Rate of Condition- and
Standard-Level Deficiencies Cited in Fiscal Years 2001 and 2002

                                                              State surveyor specialization in ESRDa
                                                               Percentage of              Percentage of
                                                                    surveys in                 surveys in
                                                         nonspecialized states         specialized states
                                                                       (n=367)                    (n=261)
    Surveys with condition-level 

    deficiencies                                                                8.4                   24.1

    Surveys with standard-level
    deficiencies numbering
    0                                                                         26.4                     6.9
    1 to 5                                                                    45.8                    21.1
    6 to 10                                                                   14.2                    31.0
    11 to 20                                                                  11.4                    28.4
    21 or more                                                                  2.2                   12.6

Source: GAO analysis of state-provided workload data and CMS OSCAR data.
a
Nonspecialized states include Pennsylvania, Missouri, Alabama, Florida, Kansas, and Nevada.
Specialized states include, California, Maryland, and New York.


The importance of surveyor specialization for inspection results may be
stronger for ESRD facilities than other types of providers. Although some
general surveying skills apply across provider types, much of the content
of ESRD standards is highly specialized, reflecting both the technological


21
 Statistical tests (chi square) indicate that the difference in outcomes between these two
groupings of states is highly significant (p=0.000). Thus, it is very unlikely that these
differences could have occurred simply by chance.




Page 20                                                             GAO-04-63 Dialysis Facility Compliance
                             complexity of the dialysis process and the clinical complexity and
                             vulnerability of the ESRD patient population. In a 184-page appendix
                             devoted to ESRD surveys, CMS’s State Operations Manual lays out the
                             specific steps that surveyors are expected to follow. Presumably,
                             surveyors who have the opportunity to focus on mastering this material
                             develop greater proficiency in identifying quality of care problems,
                             including proficiency in identifying indications of adverse patient
                             outcomes and appropriate facility responses.


Facilities with Prior        Our June 2000 ESRD report described the inability of Medicare’s survey
Deficiencies Are Likely to   and certification system to ensure that problems identified in surveys and
Be Cited for Problems in     addressed by a facility’s plan of correction will stay corrected for the long
                             term. Once a facility has been recertified, it faces no adverse
Subsequent Surveys           consequences should it fail to remain in compliance in the future. When
                             the next survey takes place—usually several years later—the process will
                             start over with deficiencies identified and a new opportunity for the
                             facility to correct them. This allows facilities to cycle in and out of
                             compliance with Medicare’s quality standards.

                             The results of surveys conducted from fiscal year 1998 through 2002
                             showed that a pattern of persistent noncompliance with quality standards
                             was not uncommon. First, facilities cited for deficiencies in previous
                             surveys were substantially more likely than other facilities to have
                             deficiencies when surveyed again. Of surveys involving facilities that had a
                             condition-level deficiency in their most recent prior survey, 29 percent had
                             a condition-level deficiency in the subsequent survey as well, compared
                             with 16 percent for those with only standard-level deficiencies in the prior
                             survey and 12 percent for those with no prior deficiencies.

                             Similarly, we found that repeated citations for the same deficiency
                             occurred frequently. From fiscal year 1998 through 2002, 2,073
                             recertification surveys (57 percent of the total) involved facilities that had
                             received deficiencies in their most recent prior survey. Of those, a third
                             found deficiencies that repeated one or more specific condition- or
                             standard-level deficiency codes cited in that prior survey. Moreover, 18
                             percent of the facilities with a condition-level deficiency on the prior
                             survey were cited again for the same condition-level deficiency. (See table
                             3.) Another 44 percent repeated one or more standard-level deficiencies.




                             Page 21                                    GAO-04-63 Dialysis Facility Compliance
Table 3: Rates of Repeated Deficiencies in Consecutive Surveys Conducted from
Fiscal Years 1998 through 2002

                                   Percentage of subsequent surveys           Percentage of
                                    identifying the same deficiencies           subsequent
                                                                                surveys not
                                                                                 identifying
                                                            Standard-              the same
                                    Condition-level         level only         deficiencies
 Prior survey with both 

 condition- and 

 standard-level 

 deficiencies (n=271)                         18.1                43.9                  38.0

 Prior survey with only 

 standard-level 

 deficiencies (n=1,802)                         n/a               28.6                  71.4



n/a = not applicable
Source: GAO analysis of CMS OSCAR data.



ESRD surveyors in 6 of the 10 states in our study stated that they try to
reduce the occurrence of persistent noncompliance by taking a facility’s
previous survey results into account when deciding which facilities to
survey. Following this policy, facilities doing poorly on one survey should
undergo a recertification survey more frequently. However, CMS’s current
goals for ESRD surveys, because they focus solely on the frequency of
survey performance and not on the effectiveness of survey targeting,
create a disincentive for states to give greater attention to previously
noncompliant facilities. In particular, CMS’s mandate to survey every
facility within a 3-year period tends to discourage survey agencies from
revisiting poorly performing facilities until all other facilities have been
inspected.

An analysis of survey activity from fiscal year 1998 through 2002 indicates
that targeting of facilities based on their past survey results occurred to
only a limited extent in recent years. Only 5.9 percent of facilities surveyed
from fiscal year 1998 through 2001 with condition-level deficiencies were
resurveyed within a year, compared to 3.9 percent of facilities that had no
condition-level deficiencies that also were resurveyed within a year. The
difference was somewhat greater over a 2-year period, with 20.8 percent of
facilities having condition-level deficiencies in fiscal year 1998 through
2000 being resurveyed compared to 12.6 percent of facilities that had no
condition-level deficiencies. Nonetheless, the large majority of facilities
with condition-level deficiencies were not resurveyed on an accelerated 1-
or 2-year schedule.


Page 22                                                GAO-04-63 Dialysis Facility Compliance
CMS Has Few Options to   State agencies are hampered in their ability to induce facilities to comply
Sanction Noncompliant    fully and consistently with Medicare quality standards by the paucity of
Facilities               sanctions available for cases of noncompliance. At present, the only
                         penalty that CMS can impose on ESRD facilities that do not comply with
                         these requirements is revoking their eligibility to participate in the
                         Medicare program. However, facilities typically are given a grace period—
                         usually 3 months—in which to correct any problems identified in a survey.
                         As long as these deficiencies have been addressed when surveyors revisit
                         the facility, the provider suffers no adverse consequences from having
                         failed to maintain compliance with Medicare quality standards.22
                         Consequently, very few ESRD facilities are terminated from Medicare, and
                         those that are can apply for readmission to the program. From fiscal years
                         1998 through 2002, only one dialysis facility was terminated from the
                         Medicare program and stayed out of business.23

                         Moreover, state survey agencies are often reluctant to press for the
                         termination of dialysis facilities because such closures would force
                         patients to find another provider and, in general, reduce patient access to
                         care. Many surveyors expressed a need to have additional sanctions
                         available to deal with poorly performing ESRD facilities. A number of such
                         alternatives already exist for nursing homes, including a denial of payment
                         sanction for new patients and civil monetary penalties. Denying Medicare
                         payments for new patients would curb the facility’s major source of
                         revenue without eliminating, as a termination does, its ability to serve
                         existing patients. However, the lost revenue from potential new patients,
                         while the sanction is in effect, creates a concrete incentive for the facility
                         to resolve its quality problems quickly and to stay in compliance
                         thereafter. In addition, CMS requires states to refer for immediate
                         sanctions nursing homes found to have actually harmed one or more
                         residents or exposed them to potential serious injury on successive
                         surveys. In this situation, no grace period is granted to the facility. Having



                         22
                          If surveyors find that the facility is still out of compliance at the first revisit, additional
                         revisits are usually scheduled. Some facilities get as many as four or five separate
                         opportunities to demonstrate that they have achieved compliance with Medicare’s
                         minimum quality requirements.
                         23
                          Adverse results on surveys could contribute to a provider’s decision to close a facility,
                         even without a termination from Medicare. An examination of OSCAR data for fiscal years
                         1998 though 2002 revealed six instances where facilities closed voluntarily within 6 months
                         of a survey that had condition-level deficiencies. Five different facilities were recorded as
                         voluntary terminations, but remained open at the same addresses, sometimes under new
                         names and sometimes not.




                         Page 23                                                GAO-04-63 Dialysis Facility Compliance
                        multiple sanctions available means that surveyors can recommend the one
                        that best fits a given set of circumstances, taking into account the likely
                        impact on both the facility and the patients it serves.

                        In our June 2000 ESRD report, we noted that CMS had the authority to
                        expand the enforcement tools available for addressing quality problems
                        with ESRD facilities, but had not issued regulations and procedures to
                        implement alternative sanctions. Other sanctions, notably civil monetary
                        penalties, would require legislative changes by Congress. At that time, we
                        recommended that CMS act to expand available penalties where permitted
                        under its existing authority and that Congress consider authorizing civil
                        monetary penalties for dialysis facilities comparable to those already in
                        place for nursing homes. Since then, there have been no regulatory or
                        legislative actions to expand available enforcement tools for ESRD
                        facilities.

                        The publication of survey results could provide another incentive for
                        facilities to maintain compliance with Medicare quality standards. If ESRD
                        patients were able to readily compare the outcomes of surveys for
                        facilities in their area, they could choose to seek care from facilities with
                        more favorable inspection results. CMS has not taken any steps to make
                        survey results publicly available. By contrast, CMS routinely posts survey
                        results for nursing homes on an Internet Web site called Nursing Home
                        Compare. In 2001, when CMS created a comparable Web site covering
                        ESRD facilities, Dialysis Facility Compare, it chose not to make survey
                        results accessible.


                        The limitations inherent in state survey processes have been compounded
CMS Has Increased       by inconsistent CMS oversight. On the one hand, CMS has substantially
Funding for State       increased funding for ESRD surveys in line with its expectation that states
                        survey a higher proportion of facilities each year. On the other hand,
Surveys, but            survey agencies do not always receive the monitoring and technical
Monitoring and          support that could enhance ESRD survey effectiveness. CMS regional
                        offices vary widely in the extent to which they examine states’ ESRD
Technical Support Are   survey activities and provide related assistance. In addition, many state
Uneven                  agencies do not routinely have access to information from ESRD networks
                        that could assist them in selecting facilities to survey. Finally, the limited
                        number of CMS courses has made it difficult for many state surveyors to
                        obtain the training considered necessary to conduct ESRD surveys.




                        Page 24                                    GAO-04-63 Dialysis Facility Compliance
Funding Has Increased to   In recent years, financial support for state survey activities overall has
Support CMS’s ESRD         grown substantially. According to the Director of CMS’s Survey and
Survey Goals               Certification Group, the increases responded to concerns that financial
                           support for survey activities was not keeping pace with the growth in
                           facilities and was putting Medicare beneficiaries at risk. From fiscal year
                           1998 to 2002, total federal expenditures for state surveys increased about
                           60 percent, with spending for long-term care (LTC) and non-LTC facility
                           survey activities growing 61 and 56 percent, respectively.24 Non-LTC
                           facility survey activities are supported almost entirely by federal funds,
                           which must be allocated by states among home health agencies, hospices,
                           ambulatory surgical centers, rehabilitation facilities, and other types of
                           providers, as well as ESRD facilities—within a set of guidelines
                           established by CMS. ESRD survey activities, therefore, must compete for
                           funding with other non-LTC survey activities, including statutorily-
                           required surveys for home health agencies that receive a higher priority.
                           However, survey goals for ESRD facilities are more ambitious than those
                           for hospices, ambulatory surgical centers, and many other non-LTC
                           providers as CMS expects the agencies to survey ESRD facilities more
                           frequently.

                           Notwithstanding the competing survey priorities, the expansion in
                           financial support allowed state survey agencies to increase funding for
                           ESRD surveys to help meet higher survey goals. We estimated that federal
                           expenditures for ESRD survey activities nearly tripled from fiscal year
                           1998 to 2002, from $3.1 million to $8.2 million.25 Most of the increase
                           occurred between fiscal years 2000 and 2001, when the ESRD survey goal
                           almost doubled from 17 to 33 percent of a state’s facilities each year. (See
                           table 4.) Increased spending for ESRD survey activities was evident across
                           nearly all states. From fiscal year 1998 to 2002, 42 states had an increase in
                           spending for ESRD survey activities, and the median state experienced a
                           144 percent increase.


                           24
                            CMS allocates most funding for state survey activities by LTC and non-LTC categories.
                           LTC funding covers surveys of nursing homes and ICF/MRs. Non-LTC funding supports
                           surveys of dialysis facilities, home health agencies, accredited and nonaccredited hospitals,
                           hospices, ambulatory surgical centers, outpatient physical therapy providers, rural health
                           clinics, comprehensive outpatient rehabilitation facilities, portable x-ray suppliers,
                           psychiatric residential treatment facilities, and psychiatric hospitals.
                           25
                              These estimates are based on workload and expenditure reports provided annually to
                           CMS by state survey agencies, which combine all non-LTC survey activities. Several state
                           governments also fund provider survey and certification activities for non-LTC providers.
                           In fiscal year 2001, state support accounted for approximately 6 percent of total spending
                           on non-LTC activities.




                           Page 25                                            GAO-04-63 Dialysis Facility Compliance
                             Table 4: Federal Support for Provider Surveys, Fiscal Years 1998 to 2001

                                 Dollars in millions
                                                                                                              Non-long-term care provider
                                                                                                                       surveys
                                                                    Long-term care                               Non-ESRD
                                                                          provider                                 surveys     ESRD surveys
                                                              Total        surveys                              (estimated)      (estimated)
                                 1998                      $ 253.2                  $ 209.2a                        $ 41.0a            $ 3.1a
                                                                                               b                         b,c                  b,c
                                 1999                        265.1                     217.2                         44.5               3.3
                                 2000                        312.1                      260.3                         47.3d                 4.6d
                                 2001                        350.6                     288.9e                         53.7e                 8.1e
                                 2002                        405.2                      336.6                          60.5                 8.2

                             Source: CMS aggregate budget data for Medicare and Medicaid survey activities.

                             Note: GAO estimates are based on the ESRD share of non-LTC survey hours reported to CMS. The
                             three budgetary subcomponents do not sum to totals because of rounding.
                             a
                                 Excludes Nebraska.
                             b
                                 Excludes Tennessee.
                             c
                                 Excludes Washington.
                             d
                                 Excludes Arkansas.
                             e
                                 Excludes Vermont and Virginia.


                             In most states, the increase in ESRD spending outpaced the growth in
                             spending for all non-LTC survey activities. As a result, the ESRD share of
                             non-LTC expenditures also increased, from about 7 percent of non-LTC
                             survey expenditures in fiscal year 1998 to about 12 percent in fiscal year
                             2002. For fiscal year 2002, we estimated that the ESRD share of non-LTC
                             survey expenditures across states ranged from about 0 to 35 percent. For
                             the states with the largest number of dialysis facilities, the ESRD share
                             ranged from 6 percent in Virginia to 25 percent in Georgia.


Regional Office Monitoring   Regional offices’ review of agency surveys, referred to as federal
and Assistance to State      monitoring surveys, are conducted by CMS to monitor state agency
Agencies Are Highly          performance in interpreting and applying federal standards as well as to
                             identify training or technical assistance needs of surveyors. Although CMS
Inconsistent                 is required to conduct monitoring surveys that assess the adequacy of the
                             state’s survey for nursing homes, no similar legislative requirements apply




                             Page 26                                                                GAO-04-63 Dialysis Facility Compliance
to ESRD facilities.26 As such, CMS has used monitoring surveys for dialysis
facilities that are observational in nature—regional office staff accompany
state surveyors on inspections of dialysis facilities, observe them as the
surveyors identify and document facility deficiencies, and provide
feedback on the surveyors’ performance. CMS has not specified the
number of ESRD monitoring surveys that regional offices should conduct.
Perhaps as a consequence, representatives for six regional offices that we
contacted—responsible for 29 states—told us they have conducted very
few such surveys over the last 2 fiscal years. In fiscal year 2001, the
number of monitoring surveys each regional office performed ranged from
3 to 11; in fiscal year 2002, they ranged from 2 to 6. None of the regional
offices in either year conducted a monitoring survey for every state in its
jurisdiction.

Even for the few monitoring surveys conducted, most CMS regional
offices in our study provided little feedback to the states. At 3 of the 10
state survey agencies we contacted, representatives reported receiving
only one monitoring survey in 5 years and were provided no feedback.
Other survey agency representatives stated that regional offices provided
verbal feedback on their monitoring surveys. In contrast, two CMS
regional offices also provided written feedback that included evaluations
of surveyors’ decisions regarding specific conditions and standards.

The regional offices in our study also have not taken full advantage of
available data to monitor state agencies’ survey performance for ESRD
activities. CMS has instructed regional offices to use data from its OSCAR
system as an integral tool to assess and compare state agency
performance, particularly differences in the time required to conduct
surveys and the types of deficiencies cited. According to CMS, such
analyses can provide the information necessary to help state agencies
improve their efficiency in conducting ESRD surveys and achieve
consistency in their quality. For example, because OSCAR contains data
on the number of hours spent on each ESRD survey, regional offices could
use a benchmark to compare and assess survey times across their state
agencies. CMS has indicated that similar analyses could be performed for
the types of deficiencies cited by surveyors to determine whether there



26
  For each state, CMS is required to perform validation surveys—on-site inspections of
facilities, separate from those conducted by the state agency—for at least 5 percent of the
nursing home surveys conducted annually, but no fewer than five homes in each state. See
42 U.S.C. § 1395i-3 (g) (3) (B) (2000).




Page 27                                            GAO-04-63 Dialysis Facility Compliance
     were any differences in state agencies’ application of quality standards.27
     Despite such potential uses of data to monitor state agency performance,
     most of the regional offices analyzed their available data on a more limited
     basis. They checked on past survey results for certain ESRD facilities and
     relied extensively on quarterly workload reports from each state agency to
     determine the number of recertification surveys conducted.

     In addition to monitoring and tracking ESRD survey activities, CMS
     requires regional offices to assist state agencies in fulfilling their survey
     responsibilities. Such assistance includes alerting the agencies to CMS
     policies and goals, coordinating communications with the CMS central
     office, helping surveyors obtain ESRD training, and consulting on a regular
     basis on program activities and achievement of survey goals. The
     performance of regional offices in our study varied from little contact with
     their state agencies to extensive collaboration. One CMS regional office
     had almost no contact with its state survey agencies or network and was
     not sure of the state agencies’ performance in meeting ESRD survey goals.
     A survey agency representative in that region stated that contact with the
     regional office consisted primarily of a few calls the agency made to obtain
     clarification on a policy or procedure. In contrast, most of the regional
     offices included in our study, at a minimum, contacted state survey
     agencies to discuss CMS policies and goals, provided technical
     information or training on ESRD issues, and offered assistance in
     conducting select surveys.

     Among the most active regional offices in providing support on ESRD
     surveys was Region 9.28 Its efforts to improve state agency survey
     performance included a range of activities:

•	  The office collaborated with state agencies and networks to provide ESRD
    training to state surveyors in addition to that provided by the CMS central
    office.
• 	 Through conference calls, the office contacted its state agencies monthly
    (including their district offices) to discuss current ESRD survey issues,
    relevant federal bulletins or alerts, instructions for more consistent coding
    of deficiencies, updates on training needs and slots available, and surveyor


     27
       Regional offices have used OSCAR data to prepare tracking reports on areas related to
     state and regional office performance for nursing home surveys, including facility
     terminations, number of surveys without deficiencies, and analyses of most-frequently
     cited deficiencies across states.
     28
          Region 9 includes state survey agencies for Arizona, California, Hawaii, and Nevada.




     Page 28                                               GAO-04-63 Dialysis Facility Compliance
                               decisions related to inspection findings. The conference calls provided a
                               mechanism for surveyors to pose questions directly to CMS officials and
                               often receive an immediate response.
                           • 	 The office conducted quarterly conferences that included representatives
                               from the networks and state survey agencies to provide updates on quality
                               improvement programs underway by the networks, general issues related
                               to ESRD, and issues specific to certain facilities.
                           • 	 The office joined state agencies and networks in a campaign to educate
                               facility managers about ESRD regulations and the survey process.

                              Disparities in regional office performance—not unlike the disparities in
                              state survey agency performance—may reflect their ability to cope with
                              CMS’s survey priorities. Officials representing several regional offices
                              noted that CMS’s focus has been on nursing homes and other types of
                              facilities that are a higher survey priority than ESRD facilities. Some of
                              these officials indicated that, as a consequence, needed attention in
                              monitoring state agencies and providing technical assistance for ESRD
                              survey activities has lagged.


Networks Do Not               State survey agencies are not routinely receiving information from ESRD
Routinely Share Facility      networks—organizations authorized by statute to collect information on
Data with State Agencies      patient complaints, quality improvement projects, and clinical
                              performance. The networks operate under contracts with CMS which, in
                              fiscal year 2002, totaled $24.7 million, approximately three times the
                              amount of federal funds we estimate were spent on state survey and
                              certification activities for dialysis facilities.29 Networks use the information
                              they collect to perform a wide range of quality improvement activities and
                              to identify and address any quality issues that may arise with individual
                              facilities. Under the terms of their CMS contract, they are to cooperate
                              with state survey agencies by providing them facility-specific information
                              upon request. However, our June 2000 study found that most CMS regional
                              offices had restricted networks from sharing facility-specific information,
                              contending that federal confidentiality regulations prohibited such
                              exchanges. In response, we recommended that CMS establish procedures



                              29
                                Network responsibilities are established by the Social Security Act, which also authorizes
                              the Secretary to prescribe other network duties and functions. See § 1320c-9(b)(1) and §
                              1395rr(c)(2). Current network responsibilities are set forth in contract: ESRD Network
                              Organizations, Statement of Work, FY 1999-2003, Section C.4.F, Cooperative Activities With
                              State Survey Agencies and Quality Improvement Organizations, CMS. The networks are
                              funded through a fifty-cent charge on each Medicare dialysis treatment.




                              Page 29                                            GAO-04-63 Dialysis Facility Compliance
to facilitate routine cooperation and information sharing between
networks and state agencies. The HHS Inspector General made similar
recommendations in June 2002.30 However, most of the states in our
current review reported that they have seen little evidence of increased
information sharing by ESRD networks.

Most of the state agencies included in our study did not receive facility-
specific information from networks on a regular basis. State agency
officials indicated that the networks typically provided summary data for
facilities, and that access to facility–specific information occurred on a
case-by-case basis. Much of the information that was shared by networks
came in response to inquiries from state agencies regarding specific
providers. In addition, networks rarely identified facilities as candidates
for inspection. For example, one state agency official noted that the area
ESRD network rarely shared information on complaints and made only
one recommendation over the last 5 years that identified a facility for
inspection.

Several state agency officials attributed the limited disclosure of facility-
specific information to confusion in the ESRD community about
requirements pertaining to safeguarding this information. The Social
Security Act prohibits the disclosure of facility-specific information to any
person subject to several exceptions, for example, where federal
regulation authorizes the disclosure in order to protect the rights and
interests of patients.31 Although their contracts with CMS indicated that
the agency wanted them to share facility-specific information with state
survey agencies, the networks are hesitant to follow this directive because
the agency regulations do not identify such disclosure as a specific
exemption from the general statutory prohibition. Reportedly, network
officials are concerned that the release of such information could
undermine their quality improvement efforts and collaborative
relationships with facilities.32 CMS acknowledged that confusion exists in
this area and convened a workshop to promote more understanding and



30
 Department of Health and Human Services, Office of Inspector General, External Quality
Review of Dialysis Facilities: A Call for Greater Accountability, OEI-01-00050 (Washington,
D.C.: June 2000).
31
     See 42 U.S.C. §§ 1320c-9(a) and (b).
32
  CMS policy stipulates that state agencies may not release confidential information that
they receive from ESRD networks to third parties, even under subpoena.




Page 30                                            GAO-04-63 Dialysis Facility Compliance
                             cooperation between the networks and the state agencies.33 However, CMS
                             has not required networks to routinely share facility-specific information.

                             The potential benefits that can be achieved from increased sharing of
                             network information are well illustrated by the recent experience of the
                             California state survey agency. The state agency routinely receives facility-
                             specific information from its two corresponding networks verbally—no
                             facility-specific data are sent to the state agency in written form.
                             Regardless of the method, the networks and the state agency agreed that
                             they need to be able to share such information, considering its potential
                             benefits in improving facilities’ quality of care, and have conveyed this to
                             the ESRD facilities’ managers. Consequently, the networks regularly
                             contact the state agency to share different types of quality of care
                             information on individual facilities, including complaints the network
                             received and the results of related investigations. The networks now
                             routinely make suggestions regarding potential facilities for the state
                             agency’s attention. This relationship improved markedly after years of
                             little communication between the state agency and the networks, largely
                             as the result of increased trust derived from working together on a series
                             of joint projects.34


States Report Insufficient   According to state officials, scarcity of ESRD training opportunities has
ESRD Training                impeded state agencies’ efforts to improve surveyor performance. Because
Opportunities                most surveyors do not have prior training or experience in dialysis, state
                             survey agencies have for years relied on the courses that CMS has
                             organized to train ESRD surveyors in the technical aspects of dialysis and
                             the application of ESRD quality standards. The need for specialized
                             training is consistent with the highly technical nature of ESRD surveys
                             relative to surveys of other provider types. CMS offers basic ESRD training
                             for surveyors who are not experienced with ESRD surveys and advanced
                             training for others. Officials at the state agencies in our study generally




                             33
                              To encourage data sharing, CMS has begun work on a draft Memorandum of
                             Understanding that the state agencies and ESRD networks could adopt.
                             34
                               In 2000, the state agency and the network participated in a special project intended to
                             increase the number and quality of ESRD surveys. The networks, along with the state
                             agency and the CMS regional office, jointly provided ESRD training to surveyors who had
                             limited experienc with ESRD surveys. All three then worked together to help facilities
                             correct deficiencies and have since collaborated on educating facility managers about
                             ESRD standards and the survey process.




                             Page 31                                           GAO-04-63 Dialysis Facility Compliance
commended these courses, noting that they provided surveyors with the
knowledge and skills needed to conduct ESRD surveys effectively.

Three of the state agencies we reviewed require that surveyors complete
CMS’s basic ESRD training before they are allowed to perform surveys
unassisted. State agency officials emphasized that they try to get surveyors
trained as quickly as possible after they have been assigned ESRD survey
responsibilities. This not only permits the surveyors to gain expertise in
conducting ESRD surveys at the appropriate time, but it also allows them
to begin conducting surveys unassisted in a timely fashion. Delays in
getting surveyors scheduled for basic training delays their readiness to
conduct surveys unassisted, which in turn has an impact on a state
agency’s performance in the number of surveys it conducts during the
year.

For most of the state agencies in our study, the limited number of CMS
training classes offered has been problematic. In particular, the
infrequency of classes at the introductory level for ESRD training has had
the greatest impact on state agency operations. From fiscal year 1999 to
2002, CMS offered only one course each year for basic training, always
given at the same time of year, and since fiscal year 2000, always in
Denver. In light of this schedule, state agencies were particularly
concerned about the delay in training surveyors who were new to ESRD.
At times, state agencies sent these surveyors to take advanced courses
when openings in the basic course were unavailable. However, these
courses dealt largely with selected topics and did not explain the core
technical and regulatory concepts covered in the basic course. As a result,
surveyors who had previously taken basic training and had some
experience in conducting ESRD surveys found the advanced courses most
informative and useful. Officials of several state agencies also indicated
that CMS could help accommodate surveyors by offering basic ESRD
training at multiple sites, taking into consideration the location of class
enrollees. Some officials added that this would provide the additional
benefit of helping their agencies save funds used for travel.

CMS has highlighted the value to surveyors of attending its basic ESRD
training course by instituting a new policy that requires all newly
appointed ESRD surveyors to complete it. Effective fiscal year 2003, all
newly hired ESRD surveyors, or surveyors who have not previously
performed ESRD surveys, must complete the course before they can serve
in a capacity other than a trainee. However, CMS has chosen not to fill this
gap for surveyors who took advanced courses as a substitute for the basic
course in years past. For surveyors who performed ESRD surveys prior to


Page 32                                   GAO-04-63 Dialysis Facility Compliance
              fiscal year 2003, other CMS ESRD training courses are considered
              equivalent. Experienced ESRD surveyors who have not received any
              ESRD training from CMS have until fiscal year 2004 to complete either
              ESRD basic or advanced training.

              CMS fielded a questionnaire to state agencies to determine current training
              needs in light of the new training requirement. Although the results of this
              survey are still being reviewed and analyzed by CMS, preliminary
              tabulations indicate that at least 21 percent of experienced ESRD
              surveyors met the training requirement through one of the presumed
              equivalent courses and had never taken the CMS basic course. In at least
              six states fewer than half the surveyors had taken the basic ESRD training.
              The extent to which experience in conducting ESRD surveys compensates
              for a lack of formal training is an open question. Until that process is
              complete, the scarcity of training opportunities in the past could continue
              to constrain the effectiveness of many ESRD surveyors.


              As a result of critical weaknesses in the system established to monitor and
Conclusions   enforce compliance with Medicare’s quality standards for ESRD facilities,
              full and consistent compliance with these standards has become more the
              exception than the rule. Despite increased surveying goals recently set by
              CMS, many facilities continue to escape the attention of state surveyors
              for long periods of time. This is especially problematic for facilities that
              have performed poorly in the past and are therefore relatively more likely
              to reveal deficiencies when surveyed again. In addition, there are few if
              any negative consequences for facilities if they are surveyed and found out
              of compliance with Medicare’s quality standards. Currently, facilities can
              escape negative publicity from having multiple deficiencies, despite the
              fact that the statement of deficiencies prepared by state surveyors is a
              public document.

              The wide variation across states in the number of condition-level
              deficiencies found indicates in part that some surveyors are more
              proficient than others in detecting quality problems. ESRD survey
              expertise can be enhanced through training and experience. Promoting
              surveyor specialization should lead to more thorough ESRD inspections
              and more accurate documentation of deficiencies. Similarly, were CMS to
              offer more basic level ESRD courses, at different locations and times,
              surveyors newly assigned to ESRD facilities could more quickly obtain the
              training they need to conduct effective inspections. In addition, a
              comparable expansion in advanced course offerings would enable a larger



              Page 33                                   GAO-04-63 Dialysis Facility Compliance
proportion of experienced surveyors to catch up with technical
developments in dialysis treatments.

State survey agencies could better target their survey activities if they had
access to information from ESRD networks on the extent of serious
quality problems at individual facilities. However, CMS regulations that
require networks to safeguard the confidentiality of data that they obtain
from dialysis facilities has generated confusion among the networks as to
what facility-specific information they legitimately can and should share
with state survey agencies. CMS could remove this long-standing
impediment by revising those regulations to clearly make such data
sharing with state agencies mandatory.

Moreover, the magnitude of variation across states in the level of survey
activity and survey results underlines the need for more intensive
monitoring of, and support to, the individual state agencies. However,
CMS has not addressed the enormous variation among its own regional
offices in the extent to which they undertake these activities. The highly
inconsistent performance in the number of ESRD surveys conducted by
state agencies and surveyors’ detection of deficiencies may reflect uneven
monitoring and support provided to them by CMS regional offices—some
of which devoted considerable attention to ESRD survey activities, and
others, virtually none.

Ultimately, no quality assurance system can be effective unless providers
face real consequences when they are cited repeatedly for deficiencies.
Because they are routinely given multiple opportunities to demonstrate
that they have corrected any problems found, ESRD facilities have no
strong incentive to adhere to those standards until a survey takes place.
Facilities are likely to continue cycling in and out of compliance until state
agencies have a broader range of enforcement tools, especially ones that
take effect even if deficiencies are subsequently corrected. CMS could
implement some additional sanctions by regulation. However, as we noted
in our June 2000 report, CMS did not have the authority to expand to
ESRD facilities the range of alternative sanctions available for use against
noncompliant nursing homes. We therefore suggested at that time that
Congress consider authorizing CMS to impose civil monetary penalties on
dialysis facilities. Our current work supports consideration of this
suggestion.

Moreover, the effectiveness of alternative sanctions would be greatly
strengthened if they could also be imposed promptly, without allowing
facilities a grace period to correct identified deficiencies. Such immediate


Page 34                                    GAO-04-63 Dialysis Facility Compliance
                       sanctions could be applied when facilities are found to have condition-
                       level deficiencies in successive surveys. For instance, immediate denial of
                       payments for new patients could create a strong incentive to maintain
                       compliance because the facility loses income from Medicare, which
                       usually represents a substantial part of operating revenues.


                       To encourage ESRD facilities to sustain their compliance with Medicare
Matter for 
           quality standards, Congress should consider authorizing CMS to
Congressional 
        immediately impose a sanction when a dialysis facility has condition-level
                       deficiencies in successive surveys without providing the facility a grace
Consideration 
        period before the sanction takes effect. The immediate sanction options
                       available to CMS should include denial of Medicare payments for new
                       patients and civil monetary penalties.


                       We recommend that:
Recommendations for
Executive Action 	     To create incentives for facilities to maintain compliance with Medicare
                       quality standards, the Administrator of CMS should

                  •	   establish a goal for state agencies to reduce the time between surveys for
                       facilities with condition-level deficiencies and
                  •    publish facilities’ survey results on its Dialysis Facility Compare Web site.

                       To help surveyors identify and systematically document deficiencies, the
                       Administrator of CMS should

                  •	  strongly encourage states to assign ESRD inspections to a designated
                      subset of surveyors who specialize in conducting ESRD surveys and
                  • 	 make ESRD training courses more available to state surveyors, which may
                      include increasing the number of classes and slots available as well as
                      varying class location.

                       To enhance the support and monitoring of state survey agencies, the
                       Administrator of CMS should

                  •	  amend its regulations to require that networks share facility-specific data
                      with state agencies on a routine basis and
                  • 	 ensure that regional offices both adequately monitor state performance
                      and provide state agencies ongoing assistance on policy and technical
                      issues through regularly scheduled contacts with state surveyors.




                       Page 35                                    GAO-04-63 Dialysis Facility Compliance
                       In its written comments, CMS did not indicate an intention to implement
Agency Comments 
      five of our six recommendations. Nevertheless, it affirmed its commitment
and Our Evaluation 
   to ensuring adequate oversight of dialysis facilities and state survey
                       agencies, and described a number of measures that it has initiated to
                       strengthen this process. (CMS’s comments are reprinted in app. IV.)
                       However, two of these initiatives—a proposed survey of ESRD
                       beneficiaries and the automation of data reporting by facilities to CMS—
                       will only indirectly affect the survey and certification program that was the
                       focus of our report. In our report, we identified several key limitations in
                       the structure and implementation of this program that constrain its
                       effectiveness in enforcing Medicare’s quality standards for ESRD facilities.
                       In addition to comments on each of our recommendations, CMS also
                       provided technical comments that we incorporated where appropriate.

                       With respect to our matter for congressional consideration, CMS affirmed
                       its commitment to take action against ESRD facilities with serious quality
                       problems. It also acknowledged that the agency needed to create strong
                       incentives for facilities to provide quality care. The agency proposed to
                       address this issue by initiating an evaluation of the effectiveness of
                       sanctions on improving nursing home care. Although such an evaluation
                       may produce useful information about nursing homes, it will have limited
                       relevance for the quality of care provided to ESRD patients. We continue
                       to believe that Federal oversight of dialysis facilities could be improved by
                       strengthening the enforcement process. Therefore, Congress should
                       consider authorizing CMS to impose immediate sanctions on dialysis
                       facilities cited with serious deficiencies in consecutive surveys.

                       CMS’s response to the first of our recommendations for executive action—
                       that it set a goal for more frequent surveys of facilities with a history of
                       condition-level deficiencies—acknowledged the value of targeting surveys
                       on poorly performing providers. Though it expressed a strong
                       commitment to increased oversight of such facilities, CMS did not indicate
                       a willingness to set this additional goal. Instead, CMS relies on the states
                       to use the flexibility that it has built into its budget call letter to target their
                       surveys on ESRD providers most likely to have quality problems.
                       However, we found that the budget call letter placed ESRD facilities in a
                       lower priority category, behind both nursing homes and home health
                       agencies. Without a change in the priorities that CMS has communicated
                       to the state agencies, it is unrealistic to expect most states to go beyond
                       the goals currently set by CMS for ESRD survey activity.

                       In its comment, CMS also highlighted its efforts to develop tools to help
                       state agencies identify facilities that are most likely to exhibit quality


                       Page 36                                       GAO-04-63 Dialysis Facility Compliance
problems. These include reports on individual facilities—produced from
claims data and other administrative data files by CMS contractors—that
describe their practice patterns and outcomes. CMS also stated that it
distributes to the states an Outcomes List that ranks facilities for
surveying priority based on their performance on dialysis adequacy,
anemia management, and adjusted mortality rates. However, CMS’s
surveying goals for the states, as they are currently structured, do not
focus on targeting of any sort. Our analysis of state survey activity found
scant evidence that state agencies were conducting more frequent surveys
of even the most obvious candidates—facilities that had condition-level
deficiencies in their most recent prior survey. Our evidence and CMS’s
response indicates a need for CMS to go beyond its current efforts to
developing inspection goals on poorly performing facilities.

CMS did not directly respond to our second recommendation, that CMS
publish survey results on its Dialysis Facility Compare Web site. Instead,
the agency described various studies it has underway to develop better
information for consumers, including efforts to make survey results more
uniform across the country. While greater uniformity in survey results is a
laudable objective, we would note that the results of surveys currently
conducted are the basis for the agency’s decisions to either recertify or
(potentially) terminate ESRD facilities as Medicare providers. Therefore,
the information we have recommended that CMS share with the public
does not represent an abstract quality indicator of unknown validity.
Rather, it conveys the actual status of the facility in terms of fulfilling its
basic obligation to meet Medicare’s conditions for coverage. In our
opinion, these nominally public, but heretofore undisseminated, survey
outcomes would convey useful information to interested ESRD patients
trying to decide among alternative facilities.

Our third recommendation was that CMS encourage state agencies to
identify a subset of surveyors who would specialize in conducting ESRD
facility inspections. In its comment CMS did not address our
recommendation but responded that, in general, it encouraged states to
have specialized surveyors when possible. However, the agency did not
describe what specifically it had done to promote this practice. CMS did
highlight other initiatives it has taken to enhance surveyor skills and
improve the survey process more generally. These include its development
of a new software system to help guide surveyors as they conduct surveys,
the reports on practice patterns and outcomes of individual facilities, and
increases in the surveyor training that CMS provides. CMS concluded that
these steps were the most appropriate use of limited resources. We would
note, however, that to the extent that states do not concentrate their ESRD


Page 37                                     GAO-04-63 Dialysis Facility Compliance
surveys on a subset of specialist surveyors, more surveyors will need to
receive CMS training in conducting ESRD surveys. That represents a less
efficient use of CMS training resources. We continue to believe that
surveyor specialization contributes to more thorough and effective
inspections, in addition to whatever benefits accrue from other
improvements such as expanded training and customized software.

Our fourth recommendation was that CMS expand the number and slots
available in training courses for ESRD inspections, as well as vary their
locations. CMS responded that it has arranged to increase its offerings to a
minimum of two basic ESRD training classes annually, with one course
conducted in Denver and one in Minneapolis. According to CMS, more
advanced ESRD training may also be increased, depending on demand.
This expansion should lessen considerably the difficulty that state survey
agencies have experienced obtaining the necessary training for their ESRD
surveyors on a timely basis.

In our fifth recommendation, we urged CMS to amend its regulations to
require that ESRD networks share facility-specific data with state agencies
on a routine basis. CMS responded that networks are currently required to
share data with CMS, which can then provide appropriate information,
such as the previously mentioned Outcomes List, to state agencies. CMS
also stated that information that networks obtain through their quality
improvement efforts has limited utility for quality assurance because it is
not standardized (that is, the specific information collected will vary
across networks and projects). On the contrary, we found that the
networks’ quality improvement projects collect new information directly
from dialysis facilities which helps identify those facilities that perform
poorly on one or more quality dimensions. As the experience of California
has shown, such data can provide valuable guidance to state surveyors in
their selection of facilities to inspect, regardless of whether identical
information is collected by every network across the country.

Our last recommendation stated that CMS should ensure that its regional
offices provide adequate oversight of, and assistance to, state agency
monitoring of ESRD facilities. As with several previous recommendations,
the agency reaffirmed its commitment to the overall goal, but did not
address the weaknesses that we found in its implementation. CMS’s
comment describes the resources available to the regional offices,
including assigned ESRD specialists, regional data reports, and monthly
conference calls with state agency officials. However, CMS did not address
the large variation across regions in the extent to which they use these
tools, and refers to no specific measures intended to stimulate greater


Page 38                                   GAO-04-63 Dialysis Facility Compliance
effort in regions that have been less active to date. CMS stated that it is
working hard to clarify its expectations for both state agencies and its own
regional offices, but in its comment provides no explanation or examples
of what this might entail.


As agreed with your office, unless you publicly announce the contents of

this report earlier, we plan no further distribution of it until 30 days from 

its date. At that time, we will send copies of this report to the 

Administrator of CMS and to other interested parties. In addition, this 

report will be available at no charge on GAO’s Web site at 

http://www.gao.gov. We will also make copies available to others upon 

request. 


If you or your staff have any questions about this report, please call me at 

(312) 220-7600. An additional GAO contact and other staff members who 

prepared this report are listed in appendix V. 


Sincerely yours, 





Leslie G. Aronovitz 

Director, Health Care—Program

 Administration and Integrity Issues 





Page 39                                     GAO-04-63 Dialysis Facility Compliance
Appendix I: Scope and Methodology 



Quality of Care   To analyze variation in the clinical performance of individual facilities, we
                  downloaded information available from CMS’s Web site, Dialysis Facility
                  Compare (DFC)—http://www.medicare.gov/Dialysis/Home.asp.1 DFC
                  provides information on two clinical performance measures: the
                  proportion of patients with adequate hemodialysis—defined as a Urea
                  Reduction Ratio of at least 65—and the proportion of patients with
                  adequate anemia control—defined as a hematocrit of 33 or better. DFC has
                  data on the latter measure for patients taking the drug erythropoietin
                  (EPO)—the therapy generally used to treat anemia among ESRD patients.
                  The most currently available data for both measures came from
                  information provided on Medicare claims submitted for treatment
                  furnished in 2000. DFC reports the proportion of patients at each ESRD
                  facility who achieved the designated threshold for these two measures.

                  To provide a more concrete sense of the types of quality problems
                  encountered by state surveyors, we selected five survey reports, known
                  formally as a “statement of deficiencies” (Form 2567), that described in
                  detail the deficiencies cited in inspections of individual facilities in five
                  states. We abstracted from each survey report the justification written by
                  the surveyor for one deficiency citation. The episodes we chose involved
                  deficiency codes that are widely cited among survey reports nationwide.
                  In the data we assembled from CMS’s Online Survey Certification and
                  Reporting (OSCAR) system, at least one of these six specific deficiency
                  codes—111, 112, 118, 240, 264, and 423—was cited in 35 percent of all
                  recertification surveys conducted in fiscal years 1998 through 2002.

                  To more fully appreciate the clinical consequences of these deficiencies
                  for patients, we shared our abstracted citations with three ESRD
                  surveyors, each with at least 5 years of ESRD survey experience, whom we
                  had previously interviewed in conjunction with our site visits to three
                  different states. All were registered nurses. The three surveyors
                  commented on each of the six vignettes that we sent them by describing
                  the potential impact of these situations on patient health and well-being.
                  Their analyses encompassed expected symptoms, such as fatigue,
                  swelling, and shortness of breath, medical conditions that could result,
                  such as heart failure and ruptured red blood cells, and related outcomes,
                  such as shortened life expectancy.



                  1
                   Other clinical performance measures have only been reported from samples of patients,
                  providing data on national and regional trends but without the ability to compare results
                  across individual dialysis facilities.




                  Page 40                                           GAO-04-63 Dialysis Facility Compliance
                       Appendix I: Scope and Methodology




Survey Frequency and   To analyze the frequency and results of surveys conducted in the 50 states
Results                plus the District of Columbia, we obtained all the data stored on CMS’s
                       OSCAR system relating to standard surveys of ESRD facilities. Standard
                       surveys include initial surveys—conducted when a facility first applies for
                       Medicare certification—and recertification surveys—conducted at
                       intervals subsequent to the initial survey for that facility.2 The OSCAR
                       database is continuously updated and retains data for the four most recent
                       surveys for each facility. Our analysis was not adversely affected by the
                       potential loss of data if a given facility had more than four standard
                       surveys conducted, because less than 1 percent of ESRD facilities had as
                       many as four surveys from fiscal year 1998 through 2002, the period of our
                       review.

                       When state survey agencies complete their work on these surveys, CMS
                       requires them to record in OSCAR information about the inspection
                       including the dates that the surveys took place and the specific deficiency
                       codes for each standard-level and condition-level deficiency cited. OSCAR
                       also contains Provider of Service file information on ESRD facilities,
                       including their name, address, chain ownership, date of Medicare
                       enrollment, and the date of, and reason for, termination (if any).

                       The data used in our OSCAR analyses was downloaded on April 2, 2003,
                       providing a 6-month period following the end of fiscal year 2002 for state
                       agencies to complete the process of data entry. To assess the
                       completeness of the data, we compared the number of surveys we found
                       in OSCAR for fiscal years 1998 through 2002 with the number of surveys
                       that state agencies indicated that they completed in annual workload
                       reports submitted to CMS. Although complete workload data were not
                       always available, where they were, the numbers of ESRD surveys reported
                       for most states matched the number recorded in OSCAR either exactly or
                       nearly (plus or minus 3) in each of the 5 fiscal years.

                       In analyzing the proportion of ESRD facilities resurveyed in fiscal years
                       1998 through 2002, we determined the facilities that were available for
                       recertification in each year. We excluded those facilities that were subject
                       to an initial survey, and any that had either dropped out of Medicare prior
                       to that year or that did not begin participating in the program until later.




                       2
                        Similar information is collected on complaint surveys but stored in separate data files.




                       Page 41                                             GAO-04-63 Dialysis Facility Compliance
                          Appendix I: Scope and Methodology




Surveyor Specialization   To assess the effect of surveyor specialization, we analyzed the
                          relationship of survey results statewide with the degree of surveyor
                          specialization in that state. We defined specialization as assigning ESRD
                          facility inspections to a subset of surveyors who spend much of their time
                          focused on ESRD quality issues. We knew from our state site visits and
                          interviews that some states promoted specialization while other states
                          distributed ESRD assignments roughly equally among surveyors who
                          spent most of their time inspecting nursing homes and home health
                          agencies. From 9 of the 10 states that we examined most closely, we
                          obtained data on the number of ESRD and non-ESRD surveys conducted
                          by each surveyor during fiscal year 2002. (We were not able to obtain this
                          information from Mississippi.) From those data we calculated the
                          proportion of total surveys that were of ESRD facilities, first for each
                          individual surveyor, and then for the state as a whole. The statewide ratio
                          combined the individual surveyor ratios, with each individual’s ratio
                          weighted by the proportion of ESRD surveys in fiscal year 2002 accounted
                          for by that individual. The result was a state specialization score that had a
                          possible range from almost 0 to 1. (A state would get a score of 1.0 if all of
                          its ESRD surveys were done by surveyors who never inspected any other
                          provider types.) This approach was designed to gauge the relative
                          likelihood that any given ESRD survey in the state would be conducted by
                          a surveyor whose survey activities focused on ESRD facilities.

                          We assessed the strength of the relationship of surveyor specialization to
                          survey results by comparing the aggregate results of states with low
                          specialization scores with states that had relatively high scores.
                          Specifically, we compared the proportion of surveys with condition-level
                          deficiencies and the number of standard-level deficiencies cited in
                          surveys. We applied chi-square tests to determine if observed differences
                          between the two groups were likely to have occurred by chance, using the
                          conventional 95 percent confidence interval. We were not able to link the
                          results of individual surveys to the experience level of the surveyors who
                          conducted them. Therefore, our analysis compared aggregate survey
                          outcomes across two groups of states, distinguished by their overall level
                          of surveyor specialization.


Surveyor Training 	       To assess the extent of state surveyor training to perform ESRD facility
                          inspections, we drew on the results of a survey conducted by CMS of the
                          state survey agencies. CMS solicited data on the titles and dates of all
                          CMS-sponsored training on ESRD completed by each of the states’
                          individual surveyors who had performed ESRD inspections prior to fiscal
                          year 2003. It initially collected these data in January and February of 2003


                          Page 42                                    GAO-04-63 Dialysis Facility Compliance
                           Appendix I: Scope and Methodology




                           and continued obtaining updated and corrected information through May
                           2003. We analyzed the most recent data supplied to us by CMS at that time.


Federal Funding for ESRD   To assess federal funding for ESRD and other survey activities, we
Surveys                    reviewed quarterly and annual expenditure reports submitted to CMS by
                           state survey agencies for fiscal years 1998 to 2002. These reports specify
                           the funds spent by state agencies for both long-term care (LTC) and non-
                           LTC survey activities under the Medicare and Medicaid programs.
                           However, because the reports aggregate expenditures for all non-LTC
                           survey activities, we had to estimate the expenditures related to ESRD
                           surveys. We developed our estimates based on additional CMS data that
                           indicated the number of hours each state agency reported was spent on
                           activities related to ESRD surveys, as well as activities related to non-LTC
                           surveys overall. We then calculated the ESRD-related share of non-LTC
                           survey hours and applied that percentage to the total non-LTC survey
                           expenditures each state agency indicated on its annual expenditure report.




                           Page 43                                   GAO-04-63 Dialysis Facility Compliance
Appendix II: Medicare Conditions for
Coverage for Dialysis Facilities


 Condition for coverage                           Description
 Compliance with federal, state, and local        The facility and personnel employed by the facility must be licensed as required by
 laws and regulations 	                           federal, state, or local laws. This includes compliance with all public safety laws and
                                                  requirements.
 Governing body and management 	                  The facility must be under the control of an identifiable body that adopts and enforces
                                                  rules and regulations, including operational rules and patient care policies to safeguard
                                                  the health and safety of individuals.
 Patient long-term-care program and               A professional, multidisciplinary health care team and the patient must develop a written
 patient care plan 	                              long-term-care plan to ensure each patient receives the appropriate type of dialysis and
                                                  care. Patient care plans, which have shorter time lines, must be personalized for each
                                                  patient to address their specific medical, psychological, social, and functional needs. Both
                                                  plans are to be regularly reviewed and updated to respond to changing patient needs.
 Patients’ rights and responsibilities 	          Dialysis facilities must have written policies describing the rights of the patients in order to
                                                  ensure patients are fully informed about the services available, their medical condition,
                                                  whether the facility reuses dialysis supplies, and whether the patient is a candidate for
                                                  transplantation and home dialysis.
 Medical records 	                                Patient medical records must be maintained to document patient assessments,
                                                  diagnosis, and treatment, and medical and nursing histories.
 Physical environment 	                           Dialysis services are to be provided in a setting that is functional, sanitary, safe, and
                                                  comfortable for patients, staff, and the public.
 Reuse of hemodialyzers and other dialysis Facilities that reuse hemodialyzers and other dialysis supplies must follow established
 supplies                                  protocols and standards to ensure patient and staff safety.
 Affiliation agreement or arrangement 	           Agreements between dialysis facilities and inpatient dialysis centers must be in writing to
                                                  ensure inpatient care and other hospital services are promptly available to dialysis
                                                  patients.
 Director of renal dialysis facility 	            Dialysis treatments must be under the general supervision of a qualified director, who is
                                                  responsible for planning, organizing, conducting, and directing professional services.
 Staff of a renal dialysis facility or center 	   Properly trained and qualified personnel must be present in adequate numbers to meet
                                                  the needs of patients, including needs arising in emergencies.
 Minimal service requirements 	                   Dialysis facilities must provide dialysis services as well as laboratory, social, and dietetic
                                                  services needed to address ESRD patient needs.

Source: 42 C.F.R. Part 405 Subpart U (2002).




                                                  Page 44                                              GAO-04-63 Dialysis Facility Compliance
Appendix III: State Agencies’ Progress
toward Meeting CMS Survey Goals

               The table below shows the percentage of facilities surveyed, by state, in
               fiscal years 1998 to 2002. It indicates how the individual states responded
               to the increases in the goal for annual ESRD recertification rates set by
               CMS, from 10 to 17 percent per year in fiscal year 2000 and then to 33
               percent each year starting in fiscal year 2001.

               Table 5: ESRD Facilities Recertified Annually by State, Fiscal Years 1998 to 2002

                                                                      Percentage
                                                     1998      1999       2000      2001      2002
               CMS goal                                10        10         17        33           33
               State recertification survey rates
               Alabama                                 12        15         17         9            2
               Alaska                                  50         0        100       100            0
               Arizona                                  8        13         11        28           23
               Arkansas                                11        50         16        32           37
               Californiaa                              2         4         12        12           11
               Colorado                                 7         6         24         6           27
               Connecticut                             17        28         27        39           39
               Delaware                                 0         9          0        15           36
               District of Columbia                     8         4         28        22           28
                          a
               Florida                                 10        14         22        37           40
                              a
               Georgia                                 12        12         17        37           36
               Hawaii                                  21        13          6        25           22
               Idaho                                   17        13         14        14           14
                       a
               Illinois                                29        21         22        41           32
               Indiana                                  5        19         16        33           31
               Iowa                                     9        11         17        26           27
               Kansas                                  14        24         21        44           33
               Kentucky                                63        54         70        83           89
                                  a
               Louisiana                               10        18         17        32           31
               Maine                                   38        38          8        33           25
               Maryland                                17        16          5        26           28
               Massachusetts                            8        13         14        37           31
               Michigana                               31        28         11        18           10
               Minnesota                               21         4          5        27           33
               Mississippi                              8         9         36        69           9
               Missouri                                 5         7         12        19           22
               Montana                                 64        36         21        36           33




               Page 45                                       GAO-04-63 Dialysis Facility Compliance
Appendix III: State Agencies’ Progress toward
Meeting CMS Survey Goals




                                                                    Percentage
                                               1998         1999         2000      2001    2002
    Nebraska                                      10           11           25      36       33
    Nevada                                        20            0            8       38      16
    New Hampshire                                 11           22            0      40       50
    New Jersey                                     8           12           15      34       22
    New Mexico                                    16            0           29      14       10
    New Yorka                                      4            6           10       33      29
                    a
    North Carolina                                16           15           21       23      31
    North Dakota                                  21           31           31      46       42
    Ohioa                                         13           11           17       38      26
    Oklahoma                                      13           22           16      41       21
    Oregon                                        22           65           19      33       31
    Pennsylvaniaa                                  5           10           10       11      28
    Rhode Island                                  10            0            0      15        8
    South Carolina                                18           16           17      32       34
    South Dakota                                  13           19           18      42       22
    Tennesseea                                    11            9           23       47      29
            a
    Texas                                          2            7            3       21      34
    Utah                                          35           30           30      19       33
    Vermont                                       00           25            0      33        0
                a
    Virginia                                      31           13           12       12      13
    Washington                                    26           18           42       33      32
    West Virginia                                 14           17           13       33      26
    Wisconsin                                     10           16           21      28       30
    Wyoming                                       14            0            0      33       22

Source: GAO analysis of CMS OSCAR data.
a
Indicates the 13 states with the greatest number of dialysis facilities in 2002.


Starting in fiscal year 2001, CMS also set a goal for states to survey all
ESRD facilities every 3 fiscal years. The initial 3-year cycle will be
completed at the end of fiscal year 2003. Table 6 shows the number of
facilities available for recertification in each state at the start of fiscal year
2001 (and not terminated since then) and the percentage that remained to
be surveyed in fiscal year 2003. In fiscal year 2003, 35 out of 50 states, plus
the District of Columbia, need to survey over a third of their ESRD
facilities to meet the cycle goal.




Page 46                                                   GAO-04-63 Dialysis Facility Compliance
Appendix III: State Agencies’ Progress toward
Meeting CMS Survey Goals




Table 6: Facilities to Be Recertified to Meet CMS 3-Year Goal, by State

                                ESRD facilities needing Share of facilities that need 

                                 recertification in fiscal to be surveyed in fiscal 

                               years 2001 through 2003 year 2003 to meet CMS goal 

       State                                   (number)                 (percentage)

1      Alabama                                       92                            89
2      Rhode Island                                  13                            77
3      California                                   347                            76
4      New Mexico                                    29                            76
5      Virginia                                     119                            76
6      Idaho                                          7                            71
7      Michigan                                     104                            71
8      Vermont                                        6                            67
9      Colorado                                      35                            66
10     Missouri                                     102                            64
11     Pennsylvania                                 216                            62
12     District of Columbia                          23                            52
13     Hawaii                                        16                            50
14     Utah                                          20                            50
15     Arizona                                       78                            49
16     North Carolina                               111                            49
17     Maryland                                      95                            47
18     Iowa                                          47                            47
19     Delaware                                      13                            46
20     Texas                                        285                            45
21     Wyoming                                        9                            44
22     Nevada                                        16                            44
23     Wisconsin                                     76                            43
24     New Jersey                                    87                            43
25     Maine                                         12                            42
26     Oklahoma                                      57                            40
27     New York                                     205                            40
28     West Virginia                                 23                            39
29     Washington                                    43                            37
30     Indiana                                       78                            37
31     Minnesota                                     61                            36
32     Louisiana                                    115                            36
33     South Dakota                                  17                            35




Page 47                                         GAO-04-63 Dialysis Facility Compliance
Appendix III: State Agencies’ Progress toward
Meeting CMS Survey Goals




                                           ESRD facilities needing Share of facilities that need 

                                            recertification in fiscal to be surveyed in fiscal 

                                          years 2001 through 2003 year 2003 to meet CMS goal 

         State                                            (number)                 (percentage)

 34      Oregon                                                 40                            35
 35      Ohio                                                  149                            35
 36      South Carolina                                         75                            33
 37      Massachusetts                                          61                            33
 38      Arkansas                                               52                            29
 39      Montana                                                14                            29
 40      Nebraska                                               21                            29
 41      Illinois                                              126                            26
 42      Mississippi                                            62                            26
 43      Kansas                                                 39                            26
 44      Georgia                                               168                            24
 45      Tennessee                                             106                            23
 46      New Hampshire                                           9                            22
 47      Florida                                               237                            22
 48      Connecticut                                            26                            19
 49      North Dakota                                           12                            17
 50      Alaska                                                  2                              0
 51      Kentucky                                               45                              0

Source: GAO analysis of CMS OSCAR data.




Page 48                                                    GAO-04-63 Dialysis Facility Compliance
Appendix IV: Comments from the Centers for
Medicare & Medicaid Services




              Page 49        GAO-04-63 Dialysis Facility Compliance
Appendix IV: Comments from the Centers for
Medicare & Medicaid Services




Page 50                                      GAO-04-63 Dialysis Facility Compliance
Appendix IV: Comments from the Centers for
Medicare & Medicaid Services




Page 51                                      GAO-04-63 Dialysis Facility Compliance
Appendix IV: Comments from the Centers for
Medicare & Medicaid Services




Page 52                                      GAO-04-63 Dialysis Facility Compliance
Appendix IV: Comments from the Centers for
Medicare & Medicaid Services




Page 53                                      GAO-04-63 Dialysis Facility Compliance
Appendix IV: Comments from the Centers for
Medicare & Medicaid Services




Page 54                                      GAO-04-63 Dialysis Facility Compliance
Appendix IV: Comments from the Centers for
Medicare & Medicaid Services




Page 55                                      GAO-04-63 Dialysis Facility Compliance
Appendix V: GAO Contact and Staff
Acknowledgments

                    Rosamond Katz, (202) 512-7148
GAO Contact
                    Eric Peterson, Joel Hamilton, Loren Lieberman, and Behn Kelly made
Acknowledgments 	   major contributions to this report.




                    Page 56                                 GAO-04-63 Dialysis Facility Compliance
Related GAO Products 



              Nursing Home Quality: Prevalence of Serious Problems, While Declining,
              Reinforces Importance of Enhanced Oversight. GAO-03-561. Washington,
              D.C.: July 15, 2003.

              Major Management Challenges and Program Risks: Department of Health
              and Human Services. GAO-03-101. Washington, D.C.: January 1, 2003.

              Nursing Homes: Public Reporting of Quality Indicators Has Merit, but
              National Implementation Is Premature. GAO-03-187. Washington, D.C.:
              October 31, 2002.

              Medicare Home Health Agencies: Weaknesses in Federal and State
              Oversight Mask Potential Quality Issue. GAO-02-382. Washington, D.C.:
              July 19, 2002.

              Nursing Homes: Sustained Efforts Are Essential to Realize Potential of the
              Quality Initiatives. GAO/HEHS-00-197. Washington, D.C.: September 28,
              2000.

              Medicare Quality of Care: Oversight of Kidney Dialysis Facilities Needs
              Improvement. GAO/HEHS-00-114. Washington, D.C.: June 23, 2000.




(290211)
              Page 57                                   GAO-04-63 Dialysis Facility Compliance
                           The General Accounting Office, the audit, evaluation and investigative arm of
GAO’s Mission              Congress, exists to support Congress in meeting its constitutional responsibilities
                           and to help improve the performance and accountability of the federal
                           government for the American people. GAO examines the use of public funds;
                           evaluates federal programs and policies; and provides analyses,
                           recommendations, and other assistance to help Congress make informed
                           oversight, policy, and funding decisions. GAO’s commitment to good government
                           is reflected in its core values of accountability, integrity, and reliability.


                           The fastest and easiest way to obtain copies of GAO documents at no cost is
Obtaining Copies of        through the Internet. GAO’s Web site (www.gao.gov) contains abstracts and full-
GAO Reports and            text files of current reports and testimony and an expanding archive of older
                           products. The Web site features a search engine to help you locate documents
Testimony                  using key words and phrases. You can print these documents in their entirety,
                           including charts and other graphics.
                           Each day, GAO issues a list of newly released reports, testimony, and
                           correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site
                           daily. The list contains links to the full-text document files. To have GAO e-mail
                           this list to you every afternoon, go to www.gao.gov and select “Subscribe to e-mail
                           alerts” under the “Order GAO Products” heading.


Order by Mail or Phone 	   The first copy of each printed report is free. Additional copies are $2 each. A
                           check or money order should be made out to the Superintendent of Documents.
                           GAO also accepts VISA and Mastercard. Orders for 100 or more copies mailed to a
                           single address are discounted 25 percent. Orders should be sent to:
                           U.S. General Accounting Office
                           441 G Street NW, Room LM
                           Washington, D.C. 20548
                           To order by Phone: 	 Voice:      (202) 512-6000
                                                TDD:        (202) 512-2537
                                                Fax:        (202) 512-6061


                           Contact:
To Report Fraud,	
                           Web site: www.gao.gov/fraudnet/fraudnet.htm
Waste, and Abuse in        E-mail: fraudnet@gao.gov
Federal Programs           Automated answering system: (800) 424-5454 or (202) 512-7470


                           Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800
Public Affairs 	           U.S. General Accounting Office, 441 G Street NW, Room 7149
                           Washington, D.C. 20548