oversight

Nursing Homes: HCFA Initiatives to Improve Care Are Under Way but Will Require Continued Commitment

Published by the Government Accountability Office on 1999-06-30.

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

                           United States General Accounting Office

GAO                        Testimony
                           Before the Special Committee on Aging, U.S. Senate




For Release on Delivery
Expected at 10:00 a.m.
Wednesday, June 30, 1999
                           NURSING HOMES

                           HCFA Initiatives to Improve
                           Care Are Under Way but
                           Will Require Continued
                           Commitment
                           Statement of William J. Scanlon, Director
                           Health Financing and Public Health Issues
                           Health, Education, and Human Services Division




GAO/T-HEHS-99-155
Nursing Homes: HCFA Initiatives to Improve
Care Are Under Way but Will Require
Continued Commitment
                 Mr. Chairman and Members of the Committee:

                 I am pleased to be here today to discuss the Health Care Financing
                 Administration’s (HCFA) progress in implementing its recent initiatives to
                 strengthen efforts to ensure the quality of care provided by the nation’s
                 nursing homes. The nearly 1.6 million Americans who rely on the nation’s
                 nursing homes for their care are among the sickest and most vulnerable
                 populations. They frequently depend on extensive assistance in basic
                 activities, such as dressing, grooming, and using the bathroom, and many
                 require skilled nursing or rehabilitative care. The federal government will
                 pay a projected $39 billion for nursing home care in 1999 and, in
                 partnership with the states, plays a key role in ensuring that nursing home
                 residents receive quality care.

                 Quality-of-care problems in the nation’s nursing homes had gone largely
                 unnoticed until you initiated your recent inquiries, including requesting
                 studies from us, and began your series of hearings and oversight. The
                 Committee’s earlier hearings, held in July 1998 and March 1999, called
                 attention to major concerns regarding poor quality of care, inadequate
                 response to complaints alleging serious quality concerns, and the lack of
                 enforcement of Medicare and Medicaid requirements in the nation’s
                 nursing homes.

                 During these hearings, we released three reports that focused on problems
                 in California nursing homes as well as the enforcement and complaint
                 investigation processes nationwide, and made a series of
                 recommendations intended to improve HCFA’s role as the principal
                 federal entity responsible for nursing home oversight.1 Major findings in
                 the three reports include the following:

             •   One-fourth of the more than 17,000 nursing homes nationwide had serious
                 deficiencies that caused actual harm to residents or placed them at risk of
                 death or serious injury;
             •   40 percent of these homes had repeated serious deficiencies;
             •   the extent of serious care problems portrayed in federal and state data is
                 likely to be understated;
             •   complaints alleging serious care problems often remain uninvestigated for
                 weeks or months; and

                 1
                  See California Nursing Homes: Care Problems Persist Despite Federal and State Oversight
                 (GAO/HEHS-98-202, July 27, 1998); Nursing Homes: Additional Steps Needed to Strengthen
                 Enforcement of Federal Quality Standards (GAO/HEHS-99-46, Mar. 18, 1999); and Nursing Homes:
                 Complaint Investigation Processes Often Inadequate to Protect Residents (GAO/HEHS-99-80, Mar. 22,
                 1999).



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•   even when serious deficiencies are identified, state and federal
    enforcement policies have not been effective in ensuring that the
    deficiencies are corrected and remain corrected.

    HCFA concurred with virtually all of our recommendations and has
    developed about 30 initiatives to strengthen federal standards, oversight,
    and enforcement for nursing homes. As you requested, my remarks today
    will focus on HCFA’s progress in implementing these initiatives. In
    particular, I will discuss

•   the overall scope of HCFA’s initiatives,
•   early implementation experience for initiatives for which HCFA has
    already issued revised guidance to the states,
•   the implications of a proposed expansion of the category of nursing homes
    that would face more intensive review and immediate sanctions for
    deficiencies, and
•   initiatives that will require a longer-term commitment for HCFA to
    implement.

    In summary, HCFA has undertaken a wide array of changes in its nursing
    home oversight that can be summarized in three key areas:
    (1) strengthening the survey process to be better able to identify violations
    of federal standards, (2) more strictly enforcing sanctions for nursing
    homes that do not sustain compliance with these standards, and (3) better
    educating consumers and nursing home administrators regarding quality
    of care.

    HCFA has provided directives to state agencies on six initiatives, but we
    found that states have only partially adopted these revised HCFA policies.
    While in some cases the states have largely implemented these directives,
    in other cases the directives have not resulted in major changes in state
    practices because states often indicated they already had similar practices
    in place, considered the guidance as optional, or lacked the resources to
    implement certain directives. Furthermore, some of the directives have
    not had an appreciable effect on the number of homes receiving focused
    reviews and stricter enforcement.

    One of the most controversial changes proposed relates to the revised
    definition of homes that would be categorized as “poorly performing” and
    would subject them to immediate sanctions for deficiencies. The revised
    definition, which HCFA plans to implement later this year, would include
    homes that have had deficiencies on consecutive surveys involving actual



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             harm to at least one resident—a “G” level deficiency in HCFA’s scope and
             severity lexicon—which previously had not been subject to immediate
             sanctions. We estimate that if this change in definition had been in effect
             for the 15-month period ending April 1999, it would have significantly
             increased the number of homes classified as poorly performing and thus
             facing stricter enforcement from about 137, or about 1 percent, to 2,275, or
             15 percent. Some homes claim that such deficiencies are not sufficiently
             severe to warrant increased scrutiny and immediate sanctions. Our review
             of a random sample of over 100 homes that received at least one G-level
             deficiency found that in virtually all cases the home had a deficiency that
             represented a serious problem in the nursing home’s care that resulted in
             documented actual harm to at least one resident. These deficiencies most
             typically included failure to prevent pressure sores, failure to prevent
             accidents, failure to ensure adequate nutrition, and leaving dependent
             residents lying for hours in their bodily wastes.

             Other HCFA initiatives will require longer-term efforts to develop and
             implement. For example, HCFA has issued a contract to improve the
             methodology that state surveyors use to sample residents for intensive
             review during annual on-site surveys. The improved methodology will use
             a more rigorous and more targeted sampling technique. This will better
             enable surveyors to identify potential care problems in nursing
             homes–including poor nutrition, dehydration, neglect and abuse, and
             pressure sores—and to determine the prevalence of such problems when
             they are found. HCFA will soon start providing quality indicator
             information on homes to surveyors to consider when selecting sample
             cases. But implementation of a more rigorous sampling methodology that
             will better permit identifying a problem’s prevalence will not take place
             until mid-2000. Furthermore, while much of HCFA’s enforcement and
             oversight efforts depend on complete, accurate, and timely data, our
             previous reports highlighted many flaws with its survey and certification
             management information system. HCFA is still planning the redesign of
             this system, and implementation of a fully redesigned system for nursing
             homes is unlikely before 2002.


             On the basis of statutory requirements, HCFA, within the Department of
Background   Health and Human Services, defines standards that nursing homes must
             meet to participate in the Medicare and Medicaid programs and contracts
             with states to certify that homes meet these standards through annual
             inspections and complaint investigations. The annual survey, which must
             be conducted no less than once every 15 months at each home, entails a



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                                         team of state surveyors spending several days on site conducting a broad
                                         review to determine whether care and services meet the assessed needs of
                                         the residents. HCFA establishes specific protocols for state surveyors to
                                         use in conducting these comprehensive reviews. In addition, when a
                                         complaint is filed against a home by a resident, his or her family or friends,
                                         the concerned public, or nursing home employees, a complaint
                                         investigation may be conducted that involves a targeted review of the
                                         specific complaint.

                                         HCFA classifies nursing home deficiencies by their scope—the number of
                                         residents potentially or actually affected—and severity—the potential for
                                         more than minimal harm; actual harm; or serious injury, death, or its
                                         potential (“immediate jeopardy”). Deficiencies are classified in one of 12
                                         categories labeled “A” through “L.” The most serious category (L) is for
                                         a widespread deficiency that causes death or serious injury or creates the
                                         potential for death or serious injury to residents; the least serious category
                                         (A) is for an isolated deficiency that poses no actual harm and has
                                         potential only for minimum harm. (See table 1.) Homes with deficiencies
                                         that do not exceed the C level are considered in “substantial
                                         compliance,” and as such are deemed to be providing an acceptable level
                                         of care.


Table 1: HCFA’s Scope and Severity Grid for Medicare and Medicaid Compliance Deficiencies
          Scope                                                      Sanctiona
Severity category            Isolated             Pattern                 Widespread              Required               Optional
Actual or potential for      J                    K                       L                       Group 3                Group 1 or 2
death/serious injuryb
Other actual harm            G                    H                       I                       Group 2                Group 1c
Potential for more than      D                    E                       F                       Group 1 for            Group 2 for
minimal harm                                                                                      categories D and E;    categories D and E;
                                                                                                  group 2 for            group 1 for
                                                                                                  category F             category F
Potential for minimal harm   A                    B                       C                       None                   None
(substantial compliance)
                                         a
                                          Group 1 sanctions are a directed plan of correction, directed in-service training, and/or state
                                         monitoring. Group 2 sanctions are denial of payment for new admissions or all individuals and/or
                                         civil monetary penalties of $50 to $3,000 per day of noncompliance. Group 3 sanctions are the
                                         appointment of a temporary manager, termination from the Medicare and Medicaid programs,
                                         and/or civil monetary penalties of $3,050 to $10,000 per day of noncompliance.
                                         b
                                             This category is referred to in regulations as “immediate jeopardy.”
                                         c
                                          Sanctions for this category also include the option for a temporary manager.




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                              The federal government has the authority to impose a variety of sanctions
                              if homes are found to have a deficiency, including fines, denying Medicare
                              or Medicaid payment for new or all residents, or ultimately terminating the
                              home from participation in Medicare and Medicaid. The scope and severity
                              of a deficiency determine the types of applicable sanctions and whether
                              they are required or optional. Under their shared contractual responsibility
                              for Medicare-certified nursing homes, state agencies identify and
                              categorize deficiencies and make referrals with proposed sanctions to
                              HCFA. Under HCFA’s current policies, most homes are given a grace
                              period, usually 30 to 60 days, to correct deficiencies. States do not refer
                              homes to HCFA for sanctions unless the homes fail to correct their
                              deficiencies within the grace period. Exceptions are provided for homes
                              with deficiencies at the highest level of severity (J, K, or L) and for homes
                              that meet HCFA’s definition of a “poorly performing facility”–a special
                              category of homes with repeat serious deficiencies. HCFA policies call for
                              states to refer these homes immediately for sanction. HCFA also provides
                              a notice period of 15 days before a sanction takes effect, and if homes
                              come into compliance during this time, the sanction is waived.2


                              HCFA has undertaken about 30 initiatives intended to improve nursing
HCFA Has                      home oversight and enforcement and has provided monthly status reports
Undertaken a Broad            to this Committee since last year. HCFA’s efforts over the past year can be
Array of Initiatives in       categorized in three broad categories:

Response to Identified    •   Improved survey processes intended to result in better detection of
Concerns                      noncompliance with federal requirements. HCFA has already provided
                              revised guidance to states in some survey process areas, such as requiring
                              them to respond more rapidly to complaints alleging harm to residents and
                              requiring states to begin some of their inspections on weekends or after
                              normal working hours. Over the longer term, HCFA is changing the
                              standard inspection process to focus the sample of residents selected for
                              review on problem areas identified using patient-specific data reported by
                              the nursing home. However, this major change will require time to design
                              the new sampling methodology and train state surveyors in it.
                          •   Stricter enforcement aimed at ensuring that nursing homes maintain
                              compliance with federal requirements. HCFA’s initiatives include requiring
                              states to conduct more “revisits” to better ensure that homes correct
                              serious deficiencies found in a prior survey and targeting a limited number
                              of nursing homes with particularly poor compliance records for more

                              2
                               Only civil monetary penalties can be assessed retroactively even if a home corrects the problem. For
                              homes found to have a deficiency at the highest severity level (J, K, or L), HCFA may put a sanction
                              into effect after a 2-day notice period.



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                            frequent inspections. In addition, HCFA has proposed broadening the
                            category of homes that are defined as poor performers and thereby not
                            granted a grace period to correct their deficiencies. HCFA has also
                            recently begun expanding the use of civil monetary penalties to apply
                            penalties on a per-instance basis in addition to per day. It is also
                            reevaluating policies relating to terminated homes. This includes
                            developing standards (1) ensuring that federal payments are made to
                            terminated homes only if they are actively transferring residents to other
                            settings, (2) providing guidance on the appropriate length of a “reasonable
                            assurance period” in which a home demonstrates it has eliminated
                            deficiencies before the home is allowed to reenter the Medicare program,
                            and (3) ensuring that a home’s pre-termination compliance history is
                            considered in any subsequent enforcement actions after it has been
                            readmitted.
                        •   Better information to track homes’ compliance status and assess quality
                            of care as well as to educate consumers and nursing home administrators.
                            HCFA has begun posting the results of recent surveys for each nursing
                            home in the nation on the Internet to enable consumers searching for a
                            nursing home to better distinguish among homes on the basis of quality. In
                            addition, HCFA has initiated educational programs for nursing home
                            administrators to better enable them to meet federal requirements.
                            Examples include developing and posting on the Internet best practice
                            guidelines for caring for residents at risk for weight loss and dehydration
                            and engaging in national efforts promoting awareness on prevention
                            abuse, such as developing educational posters and other materials. Finally,
                            HCFA has embarked on a major redesign of its survey and certification
                            management information systems. This will include a redesign of its
                            management information system–the On-Line Survey, Certification, and
                            Reporting (OSCAR) system—and development of a system to track chain
                            ownership of providers, including nursing homes. These projects are just
                            beginning and will require several years to complete.

                            See table I.1 for a complete list of HCFA initiatives and their status.


                            Over the past year, HCFA has issued revised directives and guidance to the
States Have Partially       states implementing several of the survey improvement and enforcement
Adopted Revised             initiatives. In order to determine states’ responses to these initiatives and
HCFA Guidance               HCFA’s monitoring of their implementation, we requested information
                            from each of the 10 HCFA regional offices and the largest state in each




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                              region.3 Some states have revised their practices in response to several of
                              the initiatives. Other states reported that the new HCFA guidance has not
                              resulted in changed practices because they believed existing state
                              practices accomplished similar goals or they chose not to implement the
                              HCFA policy. States also highlighted some concerns or operational
                              difficulties, including resource constraints, associated with specific
                              initiatives. To date, HCFA has conducted only limited monitoring of states’
                              implementation of these initiatives.


Several Initiatives Require   Three of the initiatives that HCFA instructed the states to implement can
States to Significantly       require a significant increase or modification in states’ nursing home
Increase Survey Activity      survey activity. For each initiative, some of the 10 states we polled
                              indicated that their existing practices were similar to the change required
                              by HCFA and thus they implemented no new practices. States that did not
                              have similar existing practices often cited that resources were a significant
                              barrier to compliance.

Revisits for Serious          In July 1998, we reported that states often accepted homes’ self-reports
Deficiencies                  that they had corrected serious deficiencies without performing an
                              independent, on-site follow-up. In some cases, we found that these
                              deficiencies had not been corrected despite the home’s self-report. We
                              recommended that, for homes with recurring serious violations, HCFA
                              require state surveyors to substantiate by an on-site review that the home
                              has achieved compliance. In response, HCFA issued a policy letter in
                              August 1998 directing state agencies to perform revisits for all deficiencies
                              where harm to one or more residents was found until the state was
                              assured that the deficiencies were fully corrected.4

                              More than half of the states we contacted informed us that prior to the
                              new HCFA policy they had been verifying that homes corrected serious
                              deficiencies through a revisit. Additionally, Florida, Massachusetts, and
                              Texas indicated that they had implemented this new policy, and California
                              indicated that it had partially done so. California and Massachusetts
                              reported that this change has led to a sharp increase in the number of
                              revisits they conduct and requires additional resources. As a result, their

                              3
                               The states we contacted were the largest in each HCFA region as measured by the number of certified
                              nursing home beds: California, Colorado, Florida, Illinois, Massachusetts, Missouri, New York,
                              Pennsylvania, Texas, and Washington. These states represent 46 percent of all certified nursing home
                              beds nationwide.
                              4
                               Under earlier practice, if at the first revisit the state agency found that the deficiency, while not fully
                              corrected, continued at a severity level of less than actual harm to a resident, it could accept the
                              nursing home’s written assertion that it had corrected all identified problems as evidence of correction
                              without performing another state on-site revisit.



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                              ability to timely meet requirements for other types of surveys, such as
                              complaint investigations and annual surveys, may be restricted.

Complaints Alleging Actual    In response to our March 22, 1999, report finding that states often did not
Harm to Residents             investigate serious complaints for weeks or months, HCFA issued a policy
                              letter in March 1999 instructing states to investigate any complaint alleging
                              actual harm within 10 workdays. We found that many states expressed
                              concern that they would need substantial additional resources to
                              implement it. Of the 10 states we contacted, 4 reported that they were
                              meeting this requirement. For example, in response to a state auditor’s
                              report, Pennsylvania had begun investigating all complaints within 2
                              calendar days. Three other states, California, Illinois, and Washington, also
                              had state requirements that serious complaints be investigated within 10
                              workdays (7 calendar days for Illinois), but California and Washington
                              acknowledged that they were not fully able to investigate all complaints
                              within this time frame without additional resources. Washington, for
                              example, estimated that it would require nine additional surveyors to meet
                              the 10-workday requirement in all cases.5 The remaining three
                              states–Colorado, Massachusetts, and Missouri–indicated that they had
                              not implemented the more stringent 10-day investigation requirement for
                              complaints alleging actual harm situations, generally indicating that they
                              were awaiting clarification on this policy from HCFA before implementing
                              it. HCFA continues to develop additional guidance for states regarding
                              which complaints should appropriately be considered as alleging actual
                              harm and thereby be investigated within 10 workdays.

Evening and Weekend Surveys   We previously reported that annual surveys are often predictable, allowing
                              nursing homes to prepare for surveys in ways that did not represent the
                              normal course of business or care, and we recommended that HCFA
                              require the states to stagger the starting months of surveys in a way that
                              reduces their predictability. Although HCFA disagreed that surveys are
                              predictable and has not directly acted on this recommendation, it issued
                              instructions effective in January 1999 requiring that 10 percent of annual
                              surveys be started on weekends or outside normal working hours.
                              Because homes are often staffed differently and exhibit different care
                              environments on weekends, evenings, and nights, this initiative is intended
                              to allow state surveyors a better opportunity to identify the actual
                              operating conditions of homes. Eight of the 10 states we contacted
                              indicated that they had fully implemented this new policy. One state noted
                              that it had previously conducted surveys during evening and weekend

                              5
                               In our March 22, 1999, report, we found that Washington categorized over 80 percent of its complaints
                              in the priority level requiring an investigation within 10 days, but the state met this time frame for only
                              about half of such complaints.



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                            hours but had not necessarily started the surveys at these times as
                            required by the new HCFA guidance. However, several states also
                            indicated that conducting more surveys during these hours has posed
                            labor issues, including increased overtime pay, and may make it more
                            difficult to recruit or retain surveyors.

                            Of the two states that had not fully implemented the revised HCFA policy,
                            Texas indicated that existing state policy requires that 20 percent of
                            inspections be done during “off” hours but that this included complaint
                            investigations and permitted a less stringent definition of “off” hours than
                            HCFA’s requirement. Pennsylvania had not implemented this HCFA policy,
                            but commented that its aggressive complaint investigation policy has
                            resulted in increased surveillance of nursing homes on weekends,
                            evenings, and holidays.


Recent Initiatives          Three HCFA initiatives were intended to enhance monitoring of, and
Targeting Poorly            impose more immediate sanctions on, homes with records of poor
Performing Homes Have       performance. However, to date, these initiatives have not significantly
                            increased the number of homes receiving closer scrutiny. The impact of
Focused on Few Additional   these initiatives has been limited because the first was designed to target
Homes                       only a small number of homes; the second, partially implemented initiative
                            has not yet significantly changed the number of homes considered poorly
                            performing; and the third was optional, and most states chose not to
                            implement it.

Special-Focus Facilities    In January 1999, HCFA implemented its program for enhanced monitoring
                            of 100 “special-focus” nursing homes–two per state–with records of
                            poor care. HCFA identified four homes in each state with persistently poor
                            compliance records, and each state agency was expected to select two of
                            these homes for enhanced monitoring, including conducting standard
                            surveys every 6 months rather than annually. Although worthwhile, the
                            very narrow scope of this initiative excluded many homes providing poor
                            care.

                            All 10 states we contacted indicated that they had begun enhanced
                            monitoring of the special-focus facilities in their state. Several indicated
                            that the additional resources required to focus on two homes were
                            minimal. However, some states questioned HCFA’s selection criteria and
                            indicated that they would have identified homes other than those
                            identified by HCFA as more appropriately warranting increased scrutiny.
                            Some also suggested that HCFA should develop clear criteria as to when a



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                         home should no longer be considered a special-focus facility and replaced
                         by another selected for focused monitoring. Also, a HCFA regional office
                         questioned the appropriateness of having an equal number of homes per
                         state, regardless of a state’s total number of nursing homes. For example,
                         Washington, with 284 homes, is focusing on the same number of homes as
                         Alaska, which has 15 homes. Two states noted that they had begun
                         increased monitoring of a larger number of homes: Illinois intends to
                         include all 4 HCFA-suggested homes in its enhanced monitoring efforts,
                         and California indicated that it had identified 34 nursing homes for
                         increased survey activity.

Redefinition of Poorly   In July 1998, we recommended that, for homes cited for repeated serious
Performing Homes         violations, HCFA eliminate the grace period in which homes were allowed
                         to correct deficiencies without a sanction being imposed. In September
                         1998, HCFA modified its former policy accordingly by expanding its
                         definition of a poorly performing facility to include those with recurring
                         actual harm deficiencies. However, HCFA initially included only recurring
                         actual harm deficiencies that involved a pattern or were widespread in
                         scope (H-level or higher). HCFA postponed including homes with isolated
                         actual harm deficiencies (G-level) in two consecutive surveys when it
                         recognized that the number of homes designated as poor performers and
                         the associated costs to states of dealing with them would increase
                         significantly. Thus, HCFA currently considers any home a poorly
                         performing facility if it had been cited with a deficiency for a pattern of
                         actual harm to several residents (H-level) or worse in two consecutive
                         annual surveys or any intervening revisit or complaint investigation.
                         Nursing homes given this designation are automatically denied an
                         opportunity to correct deficiencies before sanctions are applied and are
                         referred immediately to HCFA for sanction.6 Eight of the 10 states we
                         contacted said that they had implemented the policy including recurring
                         H-level and higher deficiencies. Most of these states indicated that the
                         revision has not significantly changed the number of nursing homes
                         designated as poorly performing. Our analysis of HCFA data nationwide
                         also indicated that the new definition, if it had been in effect for the
                         15-month period prior to April 1999, would have actually reduced slightly
                         the number of homes meeting the definition of poor performers from




                         6
                         When states find serious violations of federal standards in a Medicare-certified nursing home, they
                         must refer the home to HCFA for imposition of a sanction.



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                           about 146 homes to 137 homes (about 1 percent of homes).7 Of the two
                           states that had not implemented the interim HCFA guidance, California
                           reiterated that it has implemented its own focused enforcement program
                           for 34 homes with a poor compliance history, and New York, while it is not
                           complying with this requirement, said that it is using the new HCFA
                           criteria to impose state fines.

Poorly Performing Chains   Also in September 1998, HCFA issued interim guidance to states allowing
                           but not requiring them to immediately refer chain-owned homes with
                           actual harm deficiencies for sanctions if any of the chain’s homes had poor
                           performance records. Of the 10 states we contacted, only Pennsylvania
                           indicated that it had implemented this guidance, and Massachusetts and
                           Florida said that they had “partially” implemented it because they were
                           already taking some action against problem nursing home chains.
                           However, none of the three states had referred any homes to HCFA for
                           sanctions because they belonged to poorly performing chains. Some
                           states, such as California and Florida, indicated that they are using other
                           approaches, such as denying state licensure, to limit chains with poor
                           compliance records from expanding in their states. The other states
                           indicated that they chose not to implement this guidance or found HCFA’s
                           guidance to be unclear and were awaiting further clarification of HCFA’s
                           policy. Some were concerned that referrals to HCFA that are based
                           partially on the performance of other homes, even with common
                           ownership, are unfair or that the practice could lead to increased informal
                           dispute resolution8 requests by homes.

                           One significant barrier to implementing this initiative is that HCFA is
                           unable to reliably identify homes that belong to nursing home chains and
                           does not keep statistics on nursing home enforcement actions according
                           to ownership. HCFA estimates that ownership information will not be
                           consistently and completely tracked for several years.



                           7
                            The previous definition of a poorly performing facility required that a home be cited on its current
                           standard survey for substandard quality of care and cited in one of its two previous standard surveys
                           for substandard quality of care or immediate jeopardy violations. Violations are classified as
                           substandard quality of care if (1) the deficiencies are in one of three requirement categories—quality of
                           care, quality of life, or resident behavior and facility practices; and (2) their scope is widespread and
                           they have a potential for harming residents (F-level), or they have harmed more than a limited number
                           of residents or put the health and safety of one or more residents in immediate jeopardy (H-level or
                           higher).
                           8
                            Nursing homes that disagree with surveyor-identified deficiencies have one informal opportunity to
                           dispute the citations when they receive the official deficiency report. This process, called informal
                           dispute resolution, involves the nursing home and the state and may be used to refute the deficiency.
                           Nursing homes may appeal to the Department of Health and Human Services’ Departmental Appeals
                           Board any sanctions imposed as a result of deficiencies identified by the state agency.



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HCFA Does Not                HCFA’s 10 regional offices are charged with monitoring state
Consistently Monitor State   implementation of its policies and directives related to enforcement of
Implementation of Its New    federal nursing home requirements. When we asked the regional offices
                             how they were monitoring states’ implementation of these initiatives, their
Policies                     responses ranged from no monitoring of most of the implemented
                             initiatives to requiring states to submit special reports. For example, the
                             Dallas regional office stated that it does not routinely monitor state
                             implementation of any of these HCFA initiatives. The Denver regional
                             office said that it was monitoring most of these initiatives through the
                             normal course of business. In contrast, the Boston regional office said that
                             it was requiring states in its region to submit monthly reports on how they
                             were implementing several of these initiatives.

                             Because of these uneven monitoring practices, HCFA is not well informed
                             on what the states are doing with regard to these initiatives. For example,
                             all regions reported to the HCFA central office that the states in their
                             region had implemented instructions to reduce the predictability of
                             surveys. However, as noted, of the 10 states we contacted, one indicated
                             that it had not implemented, and another said that it had partially
                             implemented, this policy. Furthermore, a HCFA central office official told
                             us that, although the regional offices had reported that all states had
                             implemented this policy, the board of the Association of Health Facility
                             Survey Agencies, representing the state survey agencies, had told HCFA
                             that 12 states had not done so. A HCFA official acknowledged that no
                             action has been taken regarding states that have not complied with
                             HCFA’s initiatives.


                             HCFA’s proposed expansion of the definition of a poorly performing
Proposed Expansion           facility to include homes with G-level deficiencies in two consecutive
of “Poor Performer”          annual surveys or an intervening survey would greatly increase the
Category Is                  number of poorly performing homes that are immediately referred to
                             HCFA for sanction without a grace period to correct deficiencies. If this
Controversial but Has        revised definition had been in effect for the 15-month period ending
Merit                        April 1999, we estimate that nearly 15 percent of all homes nationwide, or
                             2,275 homes, would have been subject to immediate sanction, compared
                             with about 1 percent under the current definition. Industry representatives
                             contend that the proposed definition would inappropriately penalize
                             homes, because G-level deficiencies are often less serious problems not
                             involving harm to residents. However, on the basis of our review of the
                             G-level deficiencies in over 100 surveys of randomly selected homes with




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                          Nursing Homes: HCFA Initiatives to
                          Improve Care Are Under Way but Will
                          Require Continued Commitment




                          such deficiencies, we found that the vast majority appropriately
                          documented actual harm to at least one resident.9

                          Of the 107 surveys with G-level deficiencies that we reviewed, 98 percent
                          (all but 2 surveys) involved care or lack of care that harmed residents.10
                          Most commonly, these deficiencies related to failure to prevent pressure
                          sores (23 percent); accidents that resulted in fractures, abrasions, or other
                          injury (14 percent); poor nutrition (8 percent); abuse (4 percent); or other
                          quality-of-care concerns (6 percent). Quality-of-life deficiencies, such as
                          failing to protect resident dignity and rights to self-determination, were
                          found to have harmed residents in about 4 percent of these deficiencies.
                          Of the 107 homes with G-level deficiencies we reviewed, about two-thirds
                          would have been categorized as a poorly performing facility if the
                          proposed redefinition had been in effect in 1998.

                          Some states are concerned that the broader definition could result in
                          increased enforcement activity, and more actual harm deficiencies being
                          contested through the informal dispute resolution process and subsequent
                          sanctions being appealed to the Department of Health and Human
                          Services’ Departmental Appeals Board. However, our analysis suggests
                          that almost all G-level deficiencies in fact involve documented harm to
                          residents, justifying increased enforcement activity for homes with a
                          history of them. For those few cases where harm to the resident is
                          uncertain, mechanisms exist for homes to request reconsideration of the
                          initial surveyor’s deficiency citations.


                          Several HCFA initiatives will require a longer-term commitment to fully
Several Key Initiatives   implement than those just discussed. These initiatives involve major
Will Require HCFA’s       changes to HCFA’s nursing home survey process to enhance its ability to
Long-Term                 detect and estimate the prevalence of serious quality-related deficiencies
                          and the enhancement of HCFA’s management information system to
Commitment                enable better tracking of homes’ compliance histories. While these reforms
                          are critical for improving the effectiveness of HCFA’s oversight and setting

                          9
                           We analyzed a sample of 107 annual and complaint surveys with G-level deficiencies using HCFA’s
                          OSCAR data. These surveys were randomly chosen from surveys with G-level deficiencies performed
                          in 10 states during fiscal year 1998. The states were the largest state in each of the 10 HCFA regions, as
                          measured by the number of certified nursing home beds—California, Colorado, Florida, Illinois,
                          Massachusetts, Missouri, New York, Pennsylvania, Texas, and Washington. We requested copies of the
                          survey reports from the state survey agencies and abstracted each of the 201 G-level deficiencies in
                          these surveys. For more detail, see Nursing Homes: Proposal to Enhance Oversight of Poorly
                          Performing Homes Has Merit (GAO/HEHS-99-157, June 30, 1999).
                          10
                           Another eight surveys with G-level deficiencies had a deficiency that did not clearly document harm,
                          but other G- or higher-level deficiencies on the same survey resulted in harm to residents.



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                          Nursing Homes: HCFA Initiatives to
                          Improve Care Are Under Way but Will
                          Require Continued Commitment




                          accurate baseline measures of nursing home quality, their complexity
                          means that these initiatives will not be implemented until next year or
                          several years thereafter.


Redesign of Survey        HCFA has begun a major redesign of its nursing home survey process. A
Process Entails Several   considerable portion of a nursing home’s survey has involved selecting a
Components                sample of residents for focused review of their quality of care. This review
                          may include examination of medical records, physical observation, and,
                          where possible, resident interviews. In an earlier report to this Committee,
                          we found that HCFA’s surveys included too few residents not randomly
                          selected, thereby precluding surveyors from determining the prevalence of
                          identified problems. The inability to estimate prevalence makes it difficult
                          for surveyors and state agencies to determine where a cited deficiency
                          should fall in HCFA’s nursing home deficiency scope and severity grid,
                          which in turn determines whether a nursing home is offered an
                          opportunity to correct before sanctions are applied and the level of
                          sanctions. We recommended that HCFA revise its survey procedures to
                          instruct inspectors to take stratified random samples of resident cases and
                          review sufficient numbers to permit surveyors to better detect problems
                          and assess their prevalence.11

                          In response to our recommendation, HCFA has begun modifying the
                          sampling methodology of its nursing home survey protocol. This change
                          has two parts. First, effective July 1, HCFA will provide surveyors with
                          quality indicators that include comparative information on areas such as
                          nutrition, hydration, and pressure sores. It will also increase the sample
                          size in areas of particular concern, including nutrition, dehydration, and
                          pressure sores. However, the sample will continue to be nonrandom and in
                          large part based on the judgment of the surveyors.

                          The second stage of this change will introduce a more rigorous sampling
                          methodology, incorporating the quality indicators and other data derived
                          from medical records in a two-stage sampling process designed to identify
                          areas in which the nursing home departs significantly from the average of
                          other homes. The methodology will target these areas for focused
                          sampling and permit surveyors to make a reliable estimate of the
                          prevalence of quality-of-care problems identified in the nursing home. This
                          second stage is to be implemented during 2000. We believe that
                          implementation of this stage is necessary for HCFA to fully respond to our


                          11
                            GAO/HEHS-98-202, July 27, 1998, pp. 20, 30.



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                         Nursing Homes: HCFA Initiatives to
                         Improve Care Are Under Way but Will
                         Require Continued Commitment




                         recommendation and significantly improve the ability of surveys to
                         effectively identify the existence and extent of deficiencies.


Redesign of HCFA’s       In a recent report, we recommended that HCFA develop an improved
Management Information   management information system, which would help it track the status and
System Will Require 3    history of deficiencies, integrate the results of complaint investigations,
                         and monitor enforcement actions.12 In response to this recommendation,
Years                    HCFA embarked on a 3-year project to redesign its on-line management
                         information system, the OSCAR system. This project is in its preliminary
                         phase, with a contractor gathering broad requirements for what the system
                         will be required to do as a first step in creating a system design. Initially,
                         this new system will be brought on-line for a single provider type—home
                         health agencies—and subsequently expanded to other providers, with
                         nursing homes projected to come on-line in 2001. HCFA then intends to
                         link this redesigned system with other HCFA quality-related databases,
                         such as the Minimum Data Set for nursing homes, by the end of
                         January 2002.13

                         The Minimum Data Set is potentially a key source of information for
                         tracking changes in quality of care. However, these data have some
                         limitations, particularly in the short term. Because the reporting of these
                         data has begun only recently, reporting is not consistent, and most states
                         lack a baseline for comparison. Also, these data are self-reported by
                         nursing homes and are used to adjust Medicare payments for level of care
                         as well as serve as the basis for the quality indicators now being
                         incorporated into the nursing home inspection process. These multiple
                         uses create a complex set of reporting incentives for nursing homes, which
                         suggests that unaudited information from the Minimum Data Set should be
                         treated with caution as a data source for tracking quality changes. Our
                         earlier work indicated that nursing homes’ medical records often
                         inaccurately portray patient quality of care, suggesting that the Minimum
                         Data Set information also may not accurately reflect quality issues.

                         In addition, HCFA plans to develop a database that will track nursing
                         home ownership to permit better identification of chains. However, a
                         HCFA official told us that HCFA cannot even begin to design this system


                         12
                           GAO/HEHS-99-46, Mar. 18, 1999.
                         13
                           The Minimum Data Set includes standardized information on a patient’s medical and psychological
                         status at a point in time that HCFA requires Medicare-certified providers, including nursing homes, to
                         report. HCFA intends to use this information for adjusting reimbursement to Medicare providers as
                         well as developing indicators of quality of care.



                         Page 15                                                                         GAO/T-HEHS-99-155
               Nursing Homes: HCFA Initiatives to
               Improve Care Are Under Way but Will
               Require Continued Commitment




               until it develops the congressionally mandated national provider ID
               system, which will give each Medicare-certified provider a distinct
               tracking number. Implementation of an ownership tracking system is thus
               several years away.


               During the last year, increased congressional and administration attention
Concluding     to the inadequate care provided for many nursing home residents has
Observations   resulted in significant efforts to improve conditions. Some HCFA
               initiatives have already been implemented, such as providing consumers
               with nursing home compliance information on the Internet, increasing the
               number of state surveys beginning on evenings and weekends, and
               allowing civil monetary penalties to be imposed for each instance of a
               violation. However, many other efforts are still in process and will require
               HCFA’s further effort and commitment to complete. Also, since HCFA
               must depend on the states to implement many of these efforts, it will need
               to monitor state implementation to ensure that implementation is
               consistent and in line with HCFA’s intentions. HCFA must further rely on
               the partnership between states and HCFA’s regional offices to effectively
               implement its initiatives and monitor progress. But, at present, this is
               complicated by inconsistencies in the monitoring practices of the regional
               offices. At your request, we are now examining HCFA’s regional office
               oversight of state agency performance in certifying nursing homes.

               The purpose behind all these initiatives is, naturally, improvement of the
               care given to nursing home residents. Such improvements are difficult to
               measure, especially in the short run. Tracking the results of nursing home
               surveys, particularly in quality of care deficiencies such as pressure sores,
               nutrition, dehydration, and abuse, can potentially provide some insights.
               However, the changes being made in the survey process are intended to
               result in improved and more consistent detection of quality problems,
               potentially increasing the number reported. Thus, improvements to the
               survey methodology could create a false impression that quality of care is
               getting worse instead of better, because HCFA and the states will be better
               able to identify and document deficiencies. Nonetheless, these initiatives
               are important steps toward improving the quality of care America’s
               nursing home residents receive. If well implemented, the initiatives should
               improve the effectiveness of the survey process, strengthen the
               enforcement process, enhance HCFA’s management information systems,
               and provide better information to consumers and nursing home
               administrators. While in the short run it may be difficult to assess the
               degree to which these changes improve care to nursing home residents,



               Page 16                                                    GAO/T-HEHS-99-155
                   Nursing Homes: HCFA Initiatives to
                   Improve Care Are Under Way but Will
                   Require Continued Commitment




                   over the long run HCFA and the Congress will be better able to monitor
                   the care nursing home residents receive and determine what additional
                   improvements are necessary. Continued commitment and oversight are
                   also important elements of the endeavor to improve nursing home quality
                   of care.


                   Mr. Chairman, this concludes my statement. I will be happy to answer any
                   questions that you or other Members of the Committee may have.


                   For future contacts regarding this testimony, please call me at
GAO Contacts and   (202) 512-7114 or John Dicken at (202) 512-7043. Gloria Eldridge, Terry
Acknowledgments    Saiki, and Peter Schmidt also made key contributions to this statement.




                   Page 17                                                  GAO/T-HEHS-99-155
Appendix I

Status of HCFA’s Nursing Home Initiatives


                                               Since July 1998, HCFA has undertaken about 30 initiatives intended to
                                               improve nursing home oversight and quality of care. Many of these
                                               initiatives respond to earlier GAO reports as well as concerns identified by
                                               HCFA and others. These initiatives can be broadly categorized as

                                           •   improving the survey process to better detect noncompliance with
                                               federal nursing home requirements through strengthening annual surveys
                                               and complaint investigations;
                                           •   stricter enforcement to better ensure that poorly performing nursing
                                               homes are identified and appropriate sanctions are imposed to achieve
                                               sustained compliance with federal nursing home requirements; and
                                           •   better information to track homes’ compliance and assess quality of
                                               care as well as to educate consumers and nursing home administrators.

                                               Table I.1 summarizes each of HCFA’s nursing home initiatives within these
                                               categories and our assessment of the current status of implementation.


Table I.1: Current Implementation Status of HCFA’s Nursing Home Initiatives
Initiativea                                      Current status
Improving the survey process
Stagger or otherwise vary the scheduling of surveys HCFA instructed states on 1/1/99 to start 10 percent of annual surveys on
to reduce the predictability of surveyor visits.    weekends or outside of normal working hours. Eight of 10 states we contacted
GAO-1, HCFA-1(d)                                    have implemented this revised policy, but some are concerned about added cost
                                                    and labor issues. HCFA disagreed with our findings that annual surveys are
                                                    predictable and has not acted on our recommendation that the date of the survey
                                                    be varied.
Take stratified random samples of resident cases    HCFA has contracted to modify the survey process in two phases:
and review sufficient numbers and types of resident —The first phase will incorporate quality indicators derived from the Minimum
cases to establish prevalence of problems. GAO-2 Data Set into the survey beginning 7/01/99.
                                                    —The second phase will introduce a stratified random sampling methodology into
                                                    the survey process in 2000.
Inspect 100 nursing homes with poor compliance           HCFA has identified two “special-focus” homes per state and notified states on
histories more frequently without decreasing             1/5/99. The 10 states we contacted have begun surveying the two homes in their
inspection frequency for other homes. HCFA-1(c)          state every six months, but some are concerned about selection criteria and how
                                                         homes are removed from list.
Provide training and other assistance to states, or      A HCFA work group is developing performance measures to assess state
terminate funding to states with inadequate survey       agencies’ performance and related sanctions. HCFA has developed draft manual
functions. HCFA-2(a)                                     instructions on the assessment of state agency performance that are expected to
                                                         be finalized 8/31/99.
Enhance HCFA review of state surveys. HCFA-2(b)          HCFA implemented changes to the federal monitoring survey process 9/30/98. Of
                                                         the 5 percent of state surveys that HCFA regional offices must review, the new
                                                         policy requires that at least one be an independent comparative survey, with the
                                                         remaining federal reviews in the form of Federal Oversight/Support Survey
                                                         (FOSS). A HCFA work group continues to refine FOSS protocols and scoring of
                                                         state surveyor teams’ performance. A forthcoming GAO report will further assess
                                                         HCFA’s review of state surveys.
                                                                                                                              (continued)


                                               Page 18                                                               GAO/T-HEHS-99-155
                                                  Appendix I
                                                  Status of HCFA’s Nursing Home Initiatives




Initiativea                                                 Current status
Provide clearer guidance to surveyors on key                New survey interpretive procedures have been developed in order to identify
quality-of-life/quality-of-care issues in order to assist   nutrition, hydration, and pressure sore issues within nursing homes. These new
them in identifying nutrition, hydration, and pressure      interpretive procedures are to be implemented 6/30/99 and are part of HCFA’s
sore care problems in nursing homes. HCFA-3(c)              surveyor training course.
Add survey task to assess a home’s resident abuse Incorporated new task into survey protocols that are to be implemented 6/30/99.
intervention system. HCFA-4(a)
Develop standards for investigating allegations of          HCFA instructed states on 3/16/99 to investigate any complaint alleging actual
actual harm. GAO-C1                                         harm within 10 workdays. HCFA is developing additional guidance further
                                                            clarifying this new policy. 4 of 10 states we contacted have not implemented the
                                                            10-workday policy, and 2 other states indicated that they are not fully meeting
                                                            their existing 10-workday time frame. HCFA has established a Complaint
                                                            Improvement Project to develop additional standards regarding complaint
                                                            investigations, and has paired this project with an ongoing staffing study.
Strengthen federal oversight of state complaint             As of 7/31/99, some complaint investigations are to be reviewed in HCFA’s
investigations. GAO-C2                                      federal monitoring survey process. HCFA will analyze the results of a survey of
                                                            regional office complaint logs by 8/30/99 and assess what additional steps may
                                                            be necessary. Performance measures on complaint responsiveness and
                                                            complaint data are to be incorporated into draft manual instructions on
                                                            inadequate survey performance (see HCFA-2(a)).
Require substantiated complaints to be entered in           HCFA directed states on 3/16/99 to cite federal deficiencies on complaint
federal data systems. GAO-C3                                investigations and enter them into the federal data system even if also entered
                                                            into a state licensure system. HCFA is developing a revised complaint form due
                                                            10/31/99. The OSCAR redesign will incorporate needed changes in order to track
                                                            information and deficiencies resulting from complaint investigations more
                                                            accurately.
Strengthening enforcement
Eliminate the grace period for homes cited for              HCFA issued implementing memo to states on 9/22/98 to include homes cited
repeated serious violations and impose sanctions            with repeated pattern of actual harm (H-level or above) deficiencies in the
promptly. GAO-3 (See HCFA-1(a) below.)                      poor-performing facilities category that are denied a grace period.
                                                            HCFA proposes expanding the category of homes denied a grace period to
                                                            include isolated actual harm (G-level) deficiencies later in 1999. HCFA is
                                                            developing new manual instructions, with final instructions due by 9/30/99.
Revise definition of “poor performer.” HCFA-1(a)            See status of previous initiative. We estimate that adding G-level deficiencies to
(See GAO-3 above.)                                          the current poor-performer category would increase nursing homes referred for
                                                            immediate sanction from 1 percent to 15 percent of homes and could increase
                                                            related informal dispute resolution hearings at the state level and appeals at the
                                                            federal level.
Require on-site revisits for problem homes with             HCFA issued revised revisit policy to states and regional offices on 8/20/98 and is
recurring serious violations. GAO-4                         monitoring implementation. Nine of the 10 states we contacted have implemented
                                                            the revised policy. Two states expressed the need for additional resources to
                                                            conduct the large increase in required revisits.
Permit states to impose civil monetary penalties for        Final regulation went into effect 5/17/99 and final manual instructions are due
“each instance.” HCFA-1(b)                                  9/18/99. The American Health Care Association has filed litigation in court to
                                                            enjoin the implementation of this new policy.
Focus enforcement efforts on nursing homes within           Issued optional implementing memo to states; final manual instructions due
chains that have a record of noncompliance with             8/31/99. Only 1 of 10 states we contacted has not fully implemented this
federal requirements. HCFA-1(e)                             guidance. HCFA’s and states’ lack of nursing home ownership data will hinder the
                                                            effectiveness of this initiative. A HCFA ownership database will require several
                                                            years to develop.
                                                                                                                                    (continued)



                                                  Page 19                                                                  GAO/T-HEHS-99-155
                                                 Appendix I
                                                 Status of HCFA’s Nursing Home Initiatives




Initiativea                                                Current status
Prosecute egregious violations. HCFA-5                     Conference with the Department of Health and Human Services (HHS) Office of
                                                           Inspector General and the Department of Justice held 10/22/98. Although HCFA
                                                           has listed this initiative as completed, HCFA and the Department of Justice have
                                                           not yet established a formal agreement on when nursing homes should be
                                                           referred to Justice for prosecution.
Reduce backlog of civil monetary penalty (CMP)             The Congress supplied a $1 million supplemental appropriation for FY 1999 for
appeals. GAO-E1                                            the HHS Departmental Appeals Board. HCFA has requested additional funds for
                                                           the Board for FY 2000.
Continue federal payments to nursing homes past            HCFA is reviewing 30 involuntary termination cases from FY 1998 and will
termination only if homes are transferring residents       determine by 9/30/99 whether policy change is necessary.
to alternative settings. GAO-E2(a)
Ensure that reasonable assurance periods are               HCFA is developing additional examples of reasonable assurance periods for
sufficient before readmitting a terminated nursing         revised draft manual instructions due 9/30/99.
home so that the reason for termination will not
recur. GAO-E2(b)
Consider pre-termination history in subsequent             HCFA included this change in draft revised manual instructions, with final manual
enforcement actions for terminated homes that are          instructions due 9/30/99.
readmitted to the program. GAO-E2(c)
Require states to refer homes that contribute to a         HCFA is providing training to states and added instruction to the enforcement
resident’s death to HCFA for federal enforcement           manual that CMPs should be used for instances of past harm.
actions. GAO-E3                                            HCFA is revising its data system to collect information about deaths for which no
                                                           CMP is imposed, due 6/30/00.
Enhancing information and education
Develop better management information systems.             Contract recently let for development of system requirements. Implementation of
GAO-E4                                                     revised data system for nursing homes scheduled for 2001 with final linkage to
                                                           other data systems by 1/31/02.
Publish survey results on the Internet. HCFA-6             Internet site available as of 9/30/98, with public rollout completed 3/16/99. See
                                                           http///www.medicare.gov/nursing/home.asp.
Develop repository of best practices guidelines for        Internet site with guidelines made available 11/15/98 at
care for residents at risk of weight loss and              http//www.hcfa.gov/medicaid/siq/siqhmpg.htm.
dehydration. HCFA-3(a)
Develop a national campaign to increase                    A work group has been formed and a contract awarded to develop an information
awareness on the prevention of malnutrition and            campaign scheduled to begin 8/16/99.
dehydration. HCFA-3(b)
Establish guidelines and methods for using                 Manual instructions to be implemented 6/30/99 to assist nursing homes and
effective drugs. HCFA-3(d)                                 surveyors to identify the appropriate method and proper administration of some
                                                           drugs. A list of drugs that are not appropriate for use under most circumstances
                                                           because there are better alternatives or other associated risks has also been
                                                           developed and validated.
                                                                                                                                    (continued)




                                                 Page 20                                                                   GAO/T-HEHS-99-155
                                              Appendix I
                                              Status of HCFA’s Nursing Home Initiatives




Initiativea                                             Current status
Develop an abuse intervention campaign. HCFA            Abuse-related poster and messages have been developed. Pilot project in 10
4(b)                                                    states due to begin 7/15/99.
Develop legislative proposals for                       HCFA submitted legislative language 7/29/98. HCFA considers these initiatives
—criminal background checks,                            completed, although according to a HCFA official the 105th Congress did not
—national registry to incorporate state nursing         approve relevant legislation and no legislation is pending in the current Congress.
assistant registries, and
—increasing the number of staff to feed residents.
HCFA 7(a, b, and c)
Study staffing. 3/16/99 HCFA press release              HCFA is conducting a study of the potential costs and benefits of minimum
                                                        staffing levels, scheduled for draft review in 1/2000.

                                              a
                                               HCFA has developed a tracking and coding system to organize initiatives. These tracking codes
                                              follow the brief description of the initiative(s).




(101783)                                      Page 21                                                                    GAO/T-HEHS-99-155
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