Medicare and Medicaid Participating Facilities
CMS Needs to Reexamine Its Approach for Funding State Oversight of Health Care Facilities Gao ID: GAO-09-64 February 13, 2009Americans receive care from tens of thousands of health care facilities participating in Medicare and Medicaid. To ensure the quality of care, CMS contracts with states to conduct periodic surveys and complaint investigations. Federal spending on such activities totaled about $444 million in fiscal year 2007; states are expected to contribute their own funds both through the Medicaid program and apart from that program. GAO evaluated survey funding, state workloads, and federal oversight of states' use of funds since fiscal year 2000 to determine if federal funding had kept pace with the changing workload. GAO analyzed (1) federal funding trends from fiscal years 2000 through 2007 and CMS's methodology for determining states' allocations and spending, (2) CMS data on the number of participating facilities and completed state surveys, and (3) CMS oversight of state spending. GAO interviewed state officials and collected data from 28 states.
Federal funding for state surveys increased from fiscal years 2000 through 2002 but was nearly flat from fiscal years 2002 through 2007. In inflation-adjusted terms, funding fell 9 percent from fiscal years 2002 through 2007. CMS has made incremental adjustments to improve its management of state allocations. It shifted federal funding from support contracts to surveys, increasing state allocations about 1 percent in fiscal years 2006 and 2007. For some facilities without statutory survey frequencies, CMS increased the time between surveys from 6 years to 10 years--a schedule that may further increase the chance of undetected quality problems. CMS also developed a budget analysis tool to help address the mismatch between federal allocations and states' current survey workloads, but use of the tool has been limited. Most states, including those that spent more than their initial federal allocations, did not complete CMS's survey workload priorities in fiscal years 2006 and 2007, though the required survey workload--the workload that states would have to complete to meet statutory and CMS survey frequency requirements--decreased about 4 percent nationwide from fiscal years 2000 to 2007. A decrease in the number of the most time-consuming and frequently surveyed facilities, such as nursing homes, offset the increase in other facilities. CMS lacked consistent and reliable data to measure workload changes in other areas such as complaint investigations. States reported that workforce instability due to noncompetitive surveyor salaries and hiring freezes hindered their workload completion but CMS has little influence over state hiring. Among seven states that completed their nursing home surveys, CMS found that 25 percent or more of some of their surveys missed serious deficiencies. According to CMS, the performance of one of these states raised concerns about the state's management of survey activities. There is little oversight of state non-Medicaid contributions intended in part to reflect the benefit states derive from participating in federally sponsored oversight of facilities. State contribution rates have not been reviewed in recent years. CMS officials told GAO that the agency does not collect information on state expenditures to help ensure that states are contributing funds consistent with those rates, noting limits on their authority to require submission of such data. CMS believes, however, that federal funding may not be sufficient and that state spending above the initial Medicare allocation represents state funds in addition to the non-Medicaid share. The evidence is mixed on whether federal funding has kept pace with the changing workload. The required survey workload decreased nationwide but most states told GAO that survey frequencies of 6 to 10 years for many facilities could adversely affect beneficiaries. Moreover, distinguishing the impact of funding, staffing, and management on state workloads is difficult. GAO believes that these and other weaknesses in CMS's current funding approach will continue to frustrate the agency's efforts to support and oversee state survey activities.
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Reexamine Its Approach for Funding State Oversight of Health Care
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
February 2009:
Medicare and Medicaid Participating Facilities:
CMS Needs to Reexamine Its Approach for Funding State Oversight of
Health Care Facilities:
GAO-09-64:
GAO Highlights:
Highlights of GAO-09-64, a report to congressional requesters.
Why GAO Did This Study:
Americans receive care from tens of thousands of health care facilities
participating in Medicare and Medicaid. To ensure the quality of care,
CMS contracts with states to conduct periodic surveys and complaint
investigations. Federal spending on such activities totaled about $444
million in fiscal year 2007; states are expected to contribute their
own funds both through the Medicaid program and apart from that
program. GAO evaluated survey funding, state workloads, and federal
oversight of states‘ use of funds since fiscal year 2000 to determine
if federal funding had kept pace with the changing workload. GAO
analyzed (1) federal funding trends from fiscal years 2000 through 2007
and CMS‘s methodology for determining states‘ allocations and spending,
(2) CMS data on the number of participating facilities and completed
state surveys, and (3) CMS oversight of state spending. GAO interviewed
state officials and collected data from 28 states.
What GAO Found:
Federal funding for state surveys increased from fiscal years 2000
through 2002 but was nearly flat from fiscal years 2002 through 2007.
In inflation-adjusted terms, funding fell 9 percent from fiscal years
2002 through 2007. CMS has made incremental adjustments to improve its
management of state allocations. It shifted federal funding from
support contracts to surveys, increasing state allocations about 1
percent in fiscal years 2006 and 2007. For some facilities without
statutory survey frequencies, CMS increased the time between surveys
from 6 years to 10 years”a schedule that may further increase the
chance of undetected quality problems. CMS also developed a budget
analysis tool to help address the mismatch between federal allocations
and states‘ current survey workloads, but use of the tool has been
limited.
Most states, including those that spent more than their initial federal
allocations, did not complete CMS‘s survey workload priorities in
fiscal years 2006 and 2007, though the required survey workload”the
workload that states would have to complete to meet statutory and CMS
survey frequency requirements”decreased about 4 percent nationwide from
fiscal years 2000 to 2007. A decrease in the number of the most time-
consuming and frequently surveyed facilities, such as nursing homes,
offset the increase in other facilities. CMS lacked consistent and
reliable data to measure workload changes in other areas such as
complaint investigations. States reported that workforce instability
due to noncompetitive surveyor salaries and hiring freezes hindered
their workload completion but CMS has little influence over state
hiring. Among seven states that completed their nursing home surveys,
CMS found that 25 percent or more of some of their surveys missed
serious deficiencies. According to CMS, the performance of one of these
states raised concerns about the state‘s management of survey
activities.
There is little oversight of state non-Medicaid contributions intended
in part to reflect the benefit states derive from participating in
federally sponsored oversight of facilities. State contribution rates
have not been reviewed in recent years. CMS officials told GAO that the
agency does not collect information on state expenditures to help
ensure that states are contributing funds consistent with those rates,
noting limits on their authority to require submission of such data.
CMS believes, however, that federal funding may not be sufficient and
that state spending above the initial Medicare allocation represents
state funds in addition to the non-Medicaid share.
The evidence is mixed on whether federal funding has kept pace with the
changing workload. The required survey workload decreased nationwide
but most states told GAO that survey frequencies of 6 to 10 years for
many facilities could adversely affect beneficiaries. Moreover,
distinguishing the impact of funding, staffing, and management on state
workloads is difficult. GAO believes that these and other weaknesses in
CMS‘s current funding approach will continue to frustrate the agency‘s
efforts to support and oversee state survey activities.
What GAO Recommends:
GAO recommends that CMS consider several actions to address survey
funding weaknesses, such as state funding inequities, limited data on
the impact of funding on facility oversight, and limited oversight of
state spending. GAO also recommends that CMS broadly reexamine its
current approach to funding and conducting surveys. CMS and state
officials disagreed with elements of GAO‘s workload analysis but CMS
concurred with 9 of GAO‘s 10 recommendations and partially concurred
with the other.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-09-64]. For more
information, contact John Dicken at (202) 512-7114 or dickenj@gao.gov.
[End of section]
Contents:
Letter:
Background:
Results in Brief:
CMS Took Modest Steps to Address Recent Funding Trends and Manage
Survey Funding Allocations:
Almost All States Were Unable to Complete Their Survey Workload, and
Pinpointing the Cause Is Difficult:
CMS Oversight of States' Use of Funds Is Limited:
Conclusions:
Recommendations for Executive Action:
Agency and AHFSA Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: CMS Survey Frequency Changes for Facilities Surveyed by
States, Fiscal Years 2000 through 2008:
Appendix III: Federal Funding for Survey Activities in Actual and
Inflation-Adjusted Dollars, Fiscal Years 2000 through 2007:
Appendix IV: Number of and Percentage Change in Facilities Subject to
State Standard and Validation Surveys, 2000 to 2007:
Appendix V: Change in States' Required Survey Workload from Fiscal Year
2000 to Fiscal Year 2007:
Appendix VI: Comments from the Centers for Medicare & Medicaid
Services:
Appendix VII: Comments from the Association of Health Facility Survey
Agencies:
Appendix VIII: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Facility Types Whose State Survey Frequencies Are Established
by Statute and CMS:
Table 2: Funding Source for Survey Activities by Type of Facility:
Table 3: Changes in Medicare Support Contract Funding and Funding for
State Surveys:
Table 4: Facilities with Survey Frequencies Established by CMS That
Have Not Been Surveyed in 6 Years or More, as of September 30, 2007:
Table 5: Number of States That Completed Required Surveys by Tier as
Reported by CMS, Fiscal Year 2006:
Table 6: Range of Medicare, Medicaid, and Non-Medicaid State
Contribution Rates (as a percentage) for Nursing Home Survey Activities
for 21 States, as of January 2008:
Table 7: CMS Survey Frequency Changes for Facilities Surveyed by
States, Fiscal Years 2000 through 2008:
Table 8: Federal Funding for Survey Activities (in millions), Actual
Dollars, Fiscal Years 2000 through 2007:
Table 9: Federal Funding for Survey Activities (in millions), Inflation-
Adjusted to Fiscal Year 2000 Dollars, Fiscal Years 2000 through 2007:
Table 10: Percentage Change in Number of Facilities Subject to State
Surveys, Number of Surveys Each State Is Expected to Conduct, and
Required Survey Workload after Factoring in National Survey Hours,
Fiscal Years 2000 and 2007:
Figures:
Figure 1: Federal Medicare and Medicaid Funding for Survey Activities
in Actual and Inflation-Adjusted Fiscal Year 2000 Dollars, Fiscal Years
2000 through 2007:
Figure 2: Average Survey Frequencies for End-Stage Renal Disease
Facilities by CMS Workload Prioritization Tiers, Fiscal Years 2005 and
2006:
Figure 3: Budget Analysis Tool, Including Component Parts:
Figure 4: Formula to Estimate Required Survey Workload as Applied to
Nursing Homes and Ambulatory Surgical Centers as of Fiscal Year 2007:
Figure 5: Decline in Required Survey Workload (the Completion of
Surveys within the Time frames for which CMS Holds States Accountable),
Based on the Number of Facilities and Average Survey Hours, December
2000 to December 2007:
Figure 6: Federal and State Funding for State Survey Activities in
Fiscal Year 2007:
Abbreviations:
AHFSA: Association of Health Facility Survey Agencies:
CMS: Centers for Medicare & Medicaid Services:
HHS: Department of Health and Human Services:
OIG: Office of Inspector General:
OSCAR: On-Line Survey, Certification, and Reporting system:
PDQ: Providing Data Quickly:
QIS: Quality Indicator Survey:
RN: registered nurse:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
February 13, 2009:
The Honorable Herb Kohl:
Chairman Special Committee on Aging:
United States Senate:
The Honorable Charles E. Grassley:
Ranking Member:
Committee on Finance:
United States Senate:
In 2007, millions of Americans received care from tens of thousands of
health care facilities--including nursing homes, hospitals, dialysis
facilities, and home health agencies--that participate in the Medicare
or Medicaid programs.[Footnote 1] To ensure that these facilities
provide high-quality care in a safe environment, the Centers for
Medicare & Medicaid Services (CMS) contracts with state survey agencies
to conduct periodic inspections known as surveys and complaint
investigations and to initiate enforcement actions against facilities
that fail to comply with federal standards.[Footnote 2] Federal
Medicare and Medicaid expenditures on such survey activities totaled
about $444 million in fiscal year 2007.[Footnote 3]
We have reported concerns about state survey activities and CMS
oversight for the past 10 years.[Footnote 4] In 1998 and 1999, we found
significant weaknesses in federal and state survey activities designed
to detect and correct quality problems in nursing homes, such as the
failure to promptly investigate complaints of alleged serious care
problems or to conduct on-site revisits to verify that nursing homes
corrected serious deficiencies.[Footnote 5] CMS responded by
establishing a set of initiatives, known as the Nursing Home Oversight
Improvement Program, intended to address many of those weaknesses. For
fiscal year 1999, the budget for survey activities was significantly
increased to support the associated workload growth. While nursing
homes make up about 25 percent of facilities that participate in
Medicare and Medicaid, they accounted for about three-fourths of
federal spending on survey activities in fiscal year 2007. In December
2005, we reported CMS's concern that funding for survey activities had
not kept pace with the growth in survey workloads due to the increase
since 2000 in the number of facilities that participate in Medicare and
Medicaid and CMS initiatives to improve nursing home oversight.
[Footnote 6]
You asked us to undertake a broad evaluation of the funding of survey
activities since fiscal year 2000. Specifically, we examined (1) the
trends in federal funding for survey activities and how CMS has managed
the allocation of these funds, (2) the extent to which states have
completed their survey workload and the factors that affected workload
completion, and (3) the effectiveness of CMS's oversight of states' use
of funds for survey activities.
To examine federal funding trends and CMS's allocation of federal funds
since 2000, we analyzed or reviewed (1) the President's budget request;
(2) federal funding for survey activities from fiscal years 2000
through 2008; (3) data on actual state survey expenditures; and (4)
documentation on the process CMS uses to allocate funds to states
(known as the budget allocation process), including the budget analysis
tool developed in 2005 to help determine state funding allocations.
[Footnote 7] We did not, however, evaluate the effectiveness of the
tool. We also discussed the management of the budget allocation process
with CMS central office and regional office staff and obtained the
perspective of survey agency officials from 28 states, which we
selected based on five factors, including state spending trends and
ability to complete survey workloads. Our data collection focused on
information covering fiscal years 2000 through 2007; except where
otherwise reported, 2007 was the year with the most recently available
data.
To examine states' completion of survey workload and factors affecting
states' ability to complete their survey workload, we analyzed data
from CMS's annual state performance reviews for fiscal years 2006 and
2007 and used CMS's On-Line Survey, Certification, and Reporting
(OSCAR) system for fiscal years 2000 and 2007.[Footnote 8] We used
OSCAR data to measure states' required survey workload--the workload
that states would have to complete to meet statutory and CMS survey
frequency requirements--by taking into consideration the number of
facilities, required survey frequencies, and average survey hours by
facility type. Because OSCAR only stores data on the four most recent
surveys, we obtained survey hours for all facility types from CMS for
fiscal years 2000 through 2007. We could not include in our
calculations the workload impact of complaint investigations or
revisits intended to ensure that serious deficiencies had been
corrected because CMS data were either not available or not
consistently reported over time. We also discussed workload changes and
completion rates with CMS and state officials. In addition, we used CMS
data on the quality of state surveys to examine the relationship
between workload completion, state spending, and states' ability to
identify all serious deficiencies at the time of a state survey.
[Footnote 9]
To examine the effectiveness of CMS oversight of states' use of survey
funding, we reviewed CMS guidance to regional offices and states on how
state spending should be monitored, periodic state spending reports
from several of the 28 states we contacted, and state spending audits
conducted by the Department of Health and Human Services (HHS) Office
of Inspector General (OIG). We also interviewed CMS central office
officials and staff in five CMS regions. For a more detailed
description of our scope and methodology and our state selection
criteria, see appendix I.
Throughout the course of our work, we discussed our analysis of OSCAR
data and other data provided by CMS with CMS officials to ensure that
the data accurately reflected state survey activities. We also tested
the information provided by the states for completeness and
consistency. We determined that these data sources were valid and
reliable for our purposes. We conducted this performance audit from
June 2007 through February 2009 in accordance with generally accepted
government auditing standards. Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to provide
a reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
Background:
Under contract with CMS, states survey 13 types of health care
facilities that participate in Medicare and Medicaid; in 2007, there
were about 60,000 such facilities. State survey activities are
primarily funded by the federal government.[Footnote 10] Other types of
facilities that participate in Medicare and Medicaid are also subject
to surveys, but the surveys are not always conducted by states or are
not federally funded. For example, community mental health centers are
surveyed by federal surveyors located in each of CMS's 10 regional
offices rather than state surveyors. Four facility types--ambulatory
surgical centers, home health agencies, hospices, and hospitals--can
choose to be surveyed by accrediting organizations, such as the Joint
Commission, instead of states.[Footnote 11] However, facilities that
choose this option are charged fees and are subject to state validation
surveys that assess how well the accreditation process detects
deficiencies in compliance with Medicare quality standards.[Footnote
12] Clinical labs are unique in that CMS collects fees from the labs to
cover the cost of state surveys and federal oversight, including state
validation surveys of a sample of accredited labs.[Footnote 13]
Survey Frequency:
Survey frequencies for nursing homes, intermediate care facilities for
the mentally retarded, and home health agencies are established by
federal statute, range from about 1 to 3 years, and are defined as
maximum time intervals between surveys. In contrast, CMS sets survey
frequencies for the 10 other facility types that states survey as a
matter of policy (see table 1). These frequencies are typically every 6
years or more and they have generally been defined as the average
across all facilities of the same type (see appendix II). As a result
of CMS's reliance on averages, some facilities could be surveyed
earlier and others later and still meet the agency's frequency
standard. CMS distinguishes, however, between (1) its policies on
survey frequency, and (2) the survey frequencies that it holds states
accountable to meeting each year in its state performance reviews
(discussed below), which may be less frequent than those established by
policy. Although its policies on survey frequency change infrequently,
CMS officials told us that nonstatutory survey frequencies are resource
driven and depend on each year's funding level. For example, CMS policy
for most nonstatutory survey frequencies has been about 6 years since
fiscal year 2001; based on available resources, however, the survey
frequencies for which CMS has held states accountable have ranged from
3.5 years to 10 years from fiscal years 2006 through 2008 (see appendix
II).[Footnote 14] In fiscal year 2003, CMS introduced a 4-tier
structure for prioritizing surveys with tier 1 being the highest
priority--facilities with statutorily mandated survey frequencies--and
tier 4 the lowest priority. CMS instructs states to ensure that tiers 1
and 2 will be completed as a prerequisite for planning surveys in
subsequent tiers.
Table 1: Facility Types Whose State Survey Frequencies Are Established
by Statute and CMS:
Survey frequency established by statute:
Type of facility: Home health agency[A].
Type of facility: Intermediate care facility for the mentally retarded.
Type of facility: Nursing home.
Survey frequency established by CMS:
Type of facility: Ambulatory surgical center[A].
Type of facility: Comprehensive outpatient rehabilitation facility.
Type of facility: End-stage renal disease facility.
Type of facility: Hospice[A].
Type of facility: Hospital[A].
Type of facility: Organ transplant centers[B].
Type of facility: Outpatient physical therapy provider.
Type of facility: Portable X-ray service.
Type of facility: Psychiatric residential treatment facility[C].
Type of facility: Rural health clinic.
Type of facility: Validation surveys for accredited providers[D].
Source: CMS.
[A] Home health agencies, ambulatory surgical centers, hospices, and
hospitals can choose to be inspected by an accrediting organization,
such as the Joint Commission, or by states. The following percentage of
each facility type was subject to state surveys in 2007: ambulatory
surgical centers (78 percent), home health agencies (86 percent),
hospices (85 percent), and hospitals (33 percent).
[B] In 2007, CMS issued a regulation that requires organ transplant
center programs to be surveyed. These surveys will be phased in over a
3-year period, beginning in 2007.
[C] States conduct validation surveys to ensure that psychiatric
residential treatment facilities are in compliance with attestations
concerning the use of restraints.
[D] States conduct two types of validation surveys of accredited
facilities to evaluate accreditation organizations' ability to ensure
facilities' compliance with Medicare quality standards: (1)
representative sample surveys, and (2) complaint surveys.
[End of table]
Survey Activities:
States undertake a variety of survey activities, including standard and
validation surveys, complaint investigations, revisits, and enforcement
actions.[Footnote 15] Surveys and complaint investigations are
conducted to determine facility compliance with federal quality and
safety standards.[Footnote 16] The quality-of-care component of a
survey focuses on assessing the facility's compliance with all
regulatory requirements, other than the requirements pertaining to
protection from fire. It involves direct observation of the provision
of care to a sample of patients or residents; interviews of a sample of
patients or residents; and review of patient or resident medical
records, as well as other facility documents. The safety component of a
survey examines a facility's compliance with federal fire safety
standards. Complaint investigations allow state surveyors to intervene
promptly if problems arise between standard surveys or at accredited
facilities. Compared to surveys, complaint investigations are (1) more
targeted because they focus on specific concerns, and (2) less
predictable because they depend on the number and seriousness of the
allegations. For example, some complaints involve potential immediate
jeopardy to patient health and safety and must be investigated within 2
to 5 working days. Less serious complaints must be investigated
promptly or, in the case of accredited facilities, within 45 calendar
days. Moreover, when a complaint investigation identifies a serious
deficiency at an accredited facility, an intermediate care facility for
the mentally retarded, or a home health agency, a full or extended
survey must be conducted.
Deficiencies identified during a survey or complaint investigation are
categorized according to their severity. States conduct revisits to
ensure that facilities correct any serious deficiencies identified by
state surveyors; revisits may also be conducted to determine when a
nursing home has returned to compliance and an enforcement action known
as a sanction may be ended. On the basis of state recommendations, CMS
may implement a sanction when surveyors identify serious deficiencies
in a facility's compliance with federal standards.[Footnote 17] The
nature of the care provided by a facility influences the type of
expertise needed to conduct surveys. For example, nursing home survey
teams primarily consist of registered nurses (RN) and social workers.
Surveys of intermediate care facilities for the mentally retarded, on
the other hand, call for the skills of a developmental disabilities
specialist.
Funding for State Survey Activities:
In general, state survey activities are funded through a combination of
Medicare, Medicaid, and non-Medicaid state funds.[Footnote 18]
Typically, almost 60 percent of federal spending on survey activities
comes from Medicare, with the remaining 40 percent funded by the
federal Medicaid share.[Footnote 19] Salaries, particularly surveyor
salaries, are the most significant cost component of state survey
activities. Table 2 shows how the two programs fund survey activities
for each type of facility. Nursing homes are the only facility type
whose surveys are funded by both Medicare and Medicaid.
Table 2: Funding Source for Survey Activities by Type of Facility:
Funding source: Medicare;
Type of facility: Ambulatory surgical center.
Type of facility: Comprehensive outpatient rehabilitation facility.
Type of facility: End-stage renal disease facility.
Type of facility: Home health agency.
Type of facility: Hospice.
Type of facility: Hospital.
Type of facility: Nursing home[A].
Type of facility: Organ transplant centers.
Type of facility: Outpatient physical therapy provider.
Type of facility: Portable X-ray service.
Type of facility: Rural health clinic.
Funding source: Medicaid;
Type of facility: Intermediate care facility for the mentally retarded.
Type of facility: Nursing home[A].
Type of facility: Psychiatric residential treatment facility.
Source: CMS.
[A] Most nursing homes participate in both Medicare and Medicaid and
their surveys are funded equally by both programs. Surveys of nursing
homes that participate only in Medicare or participate only in Medicaid
are funded by each program, respectively.
[End of table]
* Medicare. Medicare funding for survey activities is requested and
provided as part of a lump sum appropriation for the CMS Program
Management Account, which generally funds CMS operations.[Footnote 20]
For each fiscal year, CMS develops a budget request for that account,
including an amount for survey activities, giving priority to funding
for statutory requirements. In determining the amount for survey
activities, CMS considers three factors: the number of facilities; the
number of surveys states need to conduct, as determined by the
established survey frequencies; and the cost of surveys, using the
number of hours to complete them as a proxy. The request is submitted
to Congress as part of the President's proposed budget. In the annual
appropriations act for HHS, Congress authorizes the transfer of a
specific amount from the Medicare Trust Funds to CMS's Program
Management Account, which limits the amount of money that CMS can use
for operations, including survey activities.[Footnote 21] Typically,
tables within the conference report identify amounts for survey and
other activities funded through the Program Management Account.
According to a CMS official, the agency generally allocates the amounts
specified in the conference report tables to the relevant
activities.[Footnote 22] Funding for survey activities covers (1) state
survey operations; (2) direct federal surveys, such as community mental
health centers; and (3) support contracts, such as for training
surveyors, developing a new nursing home survey methodology, and
surveying psychiatric hospitals.[Footnote 23] The costs of managing
survey activities, such as salaries for staff of CMS's Survey and
Certification Group and federal surveyors in each of CMS's 10 regional
offices, are also funded through CMS's Program Management Account, but
not as part of the funds designated in the conference report for survey
activities.
Each August, CMS notifies states of their projected Medicare budget
allocations for the federal fiscal year starting October 1, based on
the President's proposed budget. After enactment of the appropriations
act, the agency notifies states of any changes in their Medicare
allocations for survey activities. At the end of the federal fiscal
year, CMS may provide supplemental funds to states that spent more than
their initial Medicare allocations by redistributing funds from states
that spent less than their allocations.[Footnote 24]
* Medicaid.[Footnote 25] For surveys of facilities funded by Medicaid,
states generally pay 25 percent of the costs and the federal government
pays the remaining 75 percent.[Footnote 26] The President's budget
proposal provides Congress with an estimate of Medicaid spending for
survey activities based on projected workload. The annual
appropriations act for HHS includes an amount for the federal share of
Medicaid expenditures, including states' expenditures for survey
activities. Funds are provided to states based on claims submitted for
survey activities or state estimates of activities to be conducted.
* Non-Medicaid state funding.[Footnote 27] While states contribute to
survey activities by paying 25 percent of Medicaid-covered
expenditures, states are also expected to contribute funds for (1) the
benefit they derive from facilities meeting federal quality standards
and (2) the survey costs associated with state licensing requirements.
According to CMS guidance, if the survey of a Medicare facility covers
100 standards and the state has adopted 50 of them for licensing
purposes, the state and Medicare would contribute equally to the survey
costs of the 50 shared standards and Medicare would cover all the
survey costs for the 50 Medicare-only standards.[Footnote 28] If state
survey requirements are more stringent than federal requirements--for
example, federal requirements call for a facility type to be surveyed
every 3 years but a state mandates surveys every 18 months--the state
is expected to pay for the additional surveys. Moreover, if a state has
no licensing requirements for a facility type, the state still acquires
a derived benefit from that facility's having to adhere to federal
standards because of its participation in Medicare and Medicaid.
Oversight of States' Performance and Use of Funds:
Through staff in its 10 regional offices, CMS oversees the extent to
which states' performance ensures that facilities participating in
Medicare and Medicaid provide high-quality care in a safe environment.
The agency's primary oversight tools are annual performance reviews
that measure states' compliance with specific standards and statutorily
required federal monitoring surveys of nursing homes to assess the
adequacy of state surveys. CMS regional offices also monitor states'
use of federal funds provided for survey activities.
State performance reviews. CMS established state performance reviews in
fiscal year 2001. Annually, the agency's regional offices use the
reviews to determine whether states are meeting federal requirements--
both statutory and nonstatutory--and to identify areas for improvement
in state program management. The reviews assess states' performance
across 18 standards, which generally focus on the timeliness and
quality of surveys, complaint investigations, and enforcement actions.
Since establishing the performance standards, CMS has continued to
refine and expand their scope. For example, the standards originally
focused on state nursing home survey activities, but now include
ambulatory surgical centers, comprehensive outpatient rehabilitation
facilities, end-stage renal dialysis facilities, home health agencies,
hospices, hospitals, intermediate care facilities for the mentally
retarded, and rural health clinics. However, only the survey frequency
standards--whether states are completing surveys within statutory time
frames or CMS-established survey priorities--encompass all 13 facility
types surveyed by states. In fiscal year 2006, CMS began penalizing
states that did not complete their entire tier 1 workload by reducing
the states' Medicare funding allocation for the following year.
Federal monitoring surveys of nursing homes. Regional office staff
conduct statutorily required federal monitoring surveys annually in at
least 5 percent of state-surveyed Medicare and Medicaid nursing homes
in each state. Federal monitoring surveys, which can be either
comparative or observational, provide an indication of the quality of
state nursing home surveys. For a comparative survey, federal surveyors
conduct an independent survey of a nursing home recently surveyed by a
state in order to compare the findings. When federal surveyors identify
a deficiency not cited by state surveyors, they assess whether the
deficiency existed at the time of the state survey and should have been
cited by state surveyors. In prior work, we used the results of federal
comparative surveys as a benchmark for identifying when state surveys
have failed to cite a deficiency altogether or cited a deficiency at
too low a level.[Footnote 29] For observational surveys, federal
surveyors accompany a state survey team to a nursing home to evaluate
the team's on-site survey performance and ability to document survey
deficiencies. Observational surveys allow federal surveyors to provide
more immediate feedback to state surveyors and to identify state
surveyor training needs. In fiscal year 2007, 786 federal monitoring
surveys were conducted, 170 of them comparative, 616 observational.
States' use of federal funds for survey activities. CMS regional
offices are responsible for reviewing state spending. This oversight
has two key aspects. First, regional office staff monitor states'
Medicare spending during the fiscal year and states' adherence to CMS
policies and guidelines. If states request supplemental Medicare funds,
regional offices evaluate the states' requests and make recommendations
to the CMS central office. Second, according to CMS's State Operations
Manual, a state must allocate the costs of a survey to Medicare,
Medicaid, and state licensure based on the extent to which each of
these programs benefit from the survey. According to CMS central office
officials, regional office staff are responsible for working with
states to establish the amount of non-Medicaid state funds that states
contribute to cover the costs associated with their derived benefit and
their licensing requirements that differ from federal requirements.
Results in Brief:
Federal funding for state surveys increased from fiscal years 2000
through 2002 but was nearly flat from fiscal years 2002 through 2007.
In inflation-adjusted terms, funding fell 9 percent from fiscal years
2002 through 2007. CMS has made incremental adjustments to address both
the recent funding trend and survey budget allocation weaknesses. CMS
shifted Medicare funding from certain support contracts, such as the
development of a new nursing home survey methodology, to increase
funding for state surveys, providing an increase of about 1 percent on
average in fiscal years 2006 and 2007. CMS also attempted to reduce
states' survey workload by increasing the amount of time between
surveys for facility types whose survey frequencies are not prescribed
by statute and, at the same time, incorporating a risk-based system for
prioritizing surveys of the most problematic facilities. About 13
percent of facilities had not been surveyed by states in 6 years or
more as of September 30, 2007. In 2005, CMS developed a new budget
analysis tool to identify and address funding inequities resulting from
CMS's previous method for allocating Medicare funds for state survey
activities based on past spending. Although CMS has used the tool to
distribute annual funding increases according to states' survey
workload, it has not used the tool to realign states' base-level
funding with their workload. CMS also asked states to develop
contingency plans to mitigate problems associated with the delayed
notification of their final Medicare budget allocations, which has
occurred 6 months or more after the start of states' fiscal years.
Almost all states were unable to meet CMS survey priorities across
tiers 1 through 3 in fiscal years 2006 and 2007, but pinpointing the
cause is difficult because several factors such as workload, funding,
staffing, and management may have affected states' ability to complete
these priorities and the quality of the surveys conducted. It is
difficult to distinguish the extent to which each factor had an impact.
We found that states' required survey workload--the workload that
states would have to complete to meet statutory and CMS survey
frequency requirements--decreased 4 percent from fiscal years 2000 to
2007. This decrease was due to the decline in the number of nursing
homes and intermediate care facilities for the mentally retarded, which
are the most resource intensive facilities to survey. The declines in
these two facility types offset the growth in the overall number and
type of facilities subject to surveys. Nursing homes and intermediate
care facilities for the mentally retarded (1) are surveyed on average
every 12 months, while some other facilities are surveyed every 10
years as of fiscal year 2007, and (2) require more hours to survey
compared to other facilities; together these two facility types
accounted for 93 and 91 percent of states' required survey workload in
fiscal years 2000 and 2007, respectively. The impact of changes in the
number of state complaint investigations on state survey workload is
unclear because CMS lacks reliable and consistent state data on
complaints received and investigated. While data from fiscal years 2000
through 2007 show small increases in average survey hours for most
facility types, it is difficult to determine whether the changes are
due to new CMS directives and more stringent survey standards
implemented since 2000 or other factors such as surveyor experience
levels. Furthermore, we could not determine the extent to which funding
has affected states' completion of surveys in tiers 1 through 3 because
CMS and states disagree about whether funding is sufficient to complete
surveys in these tiers and several states that spent more than their
initial Medicare allocations still did not complete all such surveys.
In addition, many states we contacted reported that an unstable
workforce has affected their ability to meet CMS survey priorities in
the past several years. In some cases, high surveyor attrition rates
and state hiring freezes prevented 14 states we contacted from spending
their entire Medicare funding allocations. States' completion of
surveys in a given tier does not ensure that the surveys are thorough.
For example, CMS found that 25 percent or more of some nursing home
surveys in 7 states missed serious deficiencies. In one of these
states, performance issues raised concerns about the management of
survey activities.
CMS oversight of states' use of survey funds is limited because it
relies on state-reported data, has inadequate information about non-
Medicaid state funding, and does not require states to justify
supplemental funding requests. To oversee how states spend federal
funds, CMS regional offices now rely primarily on off-site reviews of
state reports that document expenditures and workload. Regional office
officials have expressed concern about whether state expenditures are
accurately reported through CMS's Web-based, automated reporting
system, and there have been instances where errors were discovered in
states' expenditure reports well after their submission. Regarding
states' non-Medicaid contributions to help fund survey activities,
officials from the regional offices we spoke with told us that these
rates have not been reviewed since they were established, even though
federal survey and state licensure requirements may have changed over
time. Furthermore, regional officials told us that they do not verify
that states contributed funds in a manner consistent with their
established contribution rates, noting limits on their authority to
require submission of such data and states' refusal to provide it
voluntarily. In addition, because states are not required to justify
requests for supplemental Medicare funds, it is difficult for CMS to
determine whether expenditures in excess of a state's initial Medicare
allocation represent a state's non-Medicaid share of survey costs.
The evidence is mixed on whether federal funding has kept pace with the
changing survey workload. The required survey workload decreased
nationwide, but most states told us that survey frequencies of 6 to 10
years for many facilities could adversely affect beneficiaries.
Moreover, it is often difficult to distinguish the overall impact of
funding, staffing, and management on state workloads. We believe that
these and other weaknesses in CMS's current funding approach will
continue to frustrate its efforts to support and oversee state survey
activities.
To address weaknesses in the current approach for overseeing facilities
that participate in Medicare and Medicaid, we recommend that CMS
undertake a broad reexamination of how survey activities are funded and
conducted. In the shorter term, we also recommend that the CMS
Administrator take nine actions to address concerns raised in this
report, including (1) increasing the survey priority assigned to
facilities that have not been surveyed in 6 years or more, (2) using
available tools to better align states' baseline Medicare allocations
with their workload, (3) identifying appropriate methodologies to help
evaluate the efficiency and effectiveness of state survey activities,
and (4) collecting information about current non-Medicaid state shares
and the methodologies used to calculate them. We provided a draft of
this report to HHS for comment. In response, the Acting Administrator
of CMS provided written comments in which the agency disagreed with
elements of our survey workload analysis, but concurred with 9 of our
10 recommendations and partially concurred with the other
recommendation. The Association of Health Facility Survey Agencies
(AHFSA) also disagreed with elements of our survey workload analysis.
[Footnote 30]
CMS Took Modest Steps to Address Recent Funding Trends and Manage
Survey Funding Allocations:
Federal funding for state surveys increased from fiscal years 2000
through 2002 but was nearly flat from fiscal years 2002 through 2007.
In inflation-adjusted terms, funding fell 9 percent from fiscal years
2002 through 2007. CMS has taken incremental steps to address both the
recent trend in funding levels and survey budget allocation weaknesses.
CMS has placed a priority on funding state surveys at the expense of
certain support contracts, such as the development of a new nursing
home survey methodology. To ensure that states would have to conduct
some surveys of every facility type each year, CMS distributed the
survey requirements for several facility types across more than one
tier, placing a higher priority on surveying the most problematic
facilities. At the same time, it increased the average time between
surveys for many facility types. Recognizing that its previous method
for allocating Medicare funds for state survey activities resulted in
over-and underfunding relative to state survey requirements, CMS
developed a new budget analysis tool in 2005. However, use of the tool
has been confined to making incremental adjustments, rather than
baseline reallocations, to Medicare survey funding. In addition, the
agency asked states to develop contingency plans to prepare for
possible reductions in Medicare funding.
Federal Funding for Survey Activities Was Nearly Flat from Fiscal Years
2002 through 2007:
Federal funding for state surveys increased from fiscal years 2000
through 2002 but was nearly flat from fiscal years 2002 through 2007.
In inflation-adjusted terms, funding increased modestly by 4 percent
over the entire 8 fiscal years, but fell 9 percent from fiscal years
2002 through 2007 (see appendix III). In fiscal year 2008, Medicare
funding for survey activities increased by about 7 percent after
adjusting for inflation.[Footnote 31] Figure 1 compares overall federal
funding for survey activities in actual and inflation-adjusted dollars
for fiscal years 2000 through 2007.
Figure 1: Federal Medicare and Medicaid Funding for Survey Activities
in Actual and Inflation-Adjusted Fiscal Year 2000 Dollars, Fiscal Years
2000 through 2007:
[Refer to PDF for image: combination line and vertical bar graph]
Fiscal year: 2000;
Actual federal funding: $356.4 million;
Inflation-adjusted federal funding: $356.4 million.
Fiscal year: 2001;
Actual federal funding: $404.4 million;
Inflation-adjusted federal funding: $395.1 million.
Fiscal year: 2002;
Actual federal funding: $425.3 million;
Inflation-adjusted federal funding: $407.7 million.
Fiscal year: 2003;
Actual federal funding: $416.8 million;
Inflation-adjusted federal funding: $391.6 million.
Fiscal year: 2004;
Actual federal funding: $421 million;
Inflation-adjusted federal funding: $385.6 million.
Fiscal year: 2005;
Actual federal funding: $436.1 million;
Inflation-adjusted federal funding: $387 million.
Fiscal year: 2006;
Actual federal funding: $441.8 million;
Inflation-adjusted federal funding: $379.5 million.
Fiscal year: 2007;
Actual federal funding: $443.9 million;
Inflation-adjusted federal funding: $371.2 million.
Note: Fiscal year 2007 was the last year of complete data for total
federal funding. Actual federal funding for survey activities increased
from approximately $356 million in fiscal year 2000 to almost $444
million in fiscal year 2007, which is equivalent to a change from $356
million to $371 million when adjusted for inflation.
Source: GAO analysis of CMS data.
[End of figure]
For about 3 months in calendar year 2007, CMS charged and retained fees
for revisits from Medicare facilities.[Footnote 32] In fiscal year
2007, Congress required CMS to charge user fees for revisit surveys and
to use those fees to cover the costs of these surveys.[Footnote 33]
That authority was extended through part of fiscal year 2008 through a
series of continuing resolutions.[Footnote 34] According to CMS, the
agency sought this authority to encourage Congress to fund requested
increases in the Medicare survey budget, breaking what they perceived
to be a cycle of inadequate funding for survey activities.[Footnote 35]
The agency billed facilities about $8 million during the 3 months that
the revisit user fee program was in effect. Although this authority was
requested in the President's Budget for fiscal year 2008, Congress did
not provide it.[Footnote 36]
CMS Took Modest Steps to Address Budgetary Stress from Fiscal Years
2002 through 2007:
In response to a decline in inflation-adjusted funding since fiscal
year 2002, CMS modestly increased the amount of Medicare funds targeted
for state surveys in fiscal years 2005 through 2007 by tapping into its
support contract funds. For example, in fiscal year 2007, CMS cut
Medicare funding for support contracts by about 17 percent ($2.7
million) and correspondingly increased states' Medicare allocation for
conducting surveys by 1.3 percent, ranging from about $9,000 to about
$368,000 a state (see table 3). A CMS official also told us that the
agency has decreased funding for and thus slowed the refinement and
implementation of the new nursing home Quality Indicator Survey (QIS)-
-a project funded through a support contract initiated about 10-years
ago that is intended to improve the consistency and efficiency of state
surveys and provide a more reliable assessment of quality.[Footnote 37]
CMS had intended to significantly expand implementation from the 5
pilot states, but has only added 3 of the 13 states interested in
transitioning to the QIS. As of May 2008, CMS projected that the QIS
would not be fully implemented nationally until 2014, at an estimated
cost of about $20 million. According to CMS officials, further
reductions in support contracts would adversely affect the activities
funded through the contracts.
Table 3: Changes in Medicare Support Contract Funding and Funding for
State Surveys:
Fiscal year: 2005;
Percentage change in support contract funding (dollar amount): -8.5
($1,722,000);
Percentage change in average state funding for surveys (minimum and
maximum funding increases per state): 3.8 ($6,000 to $1,304,000).
Fiscal year: 2006;
Percentage change in support contract funding (dollar amount): -16.1
($2,987,000);
Percentage change in average state funding for surveys (minimum and
maximum funding increases per state): 1.1 ($7,000 to $315,000).
Fiscal year: 2007;
Percentage change in support contract funding (dollar amount): -17.2
($2,684,000);
Percentage change in average state funding for surveys (minimum and
maximum funding increases per state): 1.3 ($9,000 to $368,000).
Source: CMS.
[End of table]
In fiscal year 2006, CMS adopted a risk-based approach for state survey
requirements in response to declining inflation-adjusted funding since
fiscal year 2002. This approach entailed distributing the survey
requirements for several facility types across more than one tier, thus
ensuring that states would have to conduct some surveys of every
facility type each year. First, CMS required states to survey a
targeted sample of the most problematic facilities as a tier 2 priority
for many facility types. States select 5 percent or 10 percent of
facilities, depending on the type, from a CMS list that identifies
those most at risk of providing poor care. In addition, CMS moved the
previous tier 3 requirement for many facility types to tier 4 and
increased the average time between surveys for tier 3. By doing this,
CMS effectively increased the average time between surveys in tier 3--
for example, from every 6 years to every 8 years--for nine facility
types whose survey frequencies are not set by statute (see appendix
II). For example, survey requirements for end-stage renal disease
facilities--a tier 3 priority in fiscal year 2005--were spread across
tiers 2, 3, and 4 in fiscal year 2006. States were required to survey a
10 percent sample of these facilities selected for tier 2, while
surveying facilities for tiers 3 and 4 on an average of 3.5 and 3.0
years, respectively (see figure 2). The 3-year average for tier 4
reflects CMS's policy for end-stage renal disease facility surveys, but
CMS acknowledges that Medicare funding may not be sufficient for most
states to accomplish tier 4 survey priorities.
Figure 2: Average Survey Frequencies for End-Stage Renal Disease
Facilities by CMS Workload Prioritization Tiers, Fiscal Years 2005 and
2006:
[Refer to PDF for image: illustration]
2005 Distribution:
All renal disease facilities were in tier 3, and all were required to
be surveyed on a 3.0 year average.
Tier 1: blank.
Tier 2: blank.
Tier 3 (3.0 year average):
7 filled dots;
17 unfilled dots.
Tier 4: blank.
2006 Distribution:
10 percent of ’problem“ renal disease facilities were in tier 2. The
remaining renal disease facilities were distributed among tiers 3 and 4
and were required to be surveyed on average every 3.5 and 3.0 years,
respectively.
Tier 1: blank.
Tier 2 (10% of ’problem“ facilities):
2 filled dots;
19 unfilled dots.
Tier 3 (3.5 year average):
8 filled dots;
13 unfilled dots.
Tier 4 (3.0 year average):
9 filled dots;
12 unfilled dots.
Note: The filled dots represent the proportion of end-stage renal
disease facilities surveyed in each tier in each year; the change in
the volume of dots between 2005 and 2006 does not represent a change in
the number of facilities between each year.
Source: GAO.
[End of figure]
In fiscal year 2007, CMS further increased the average survey frequency
in tier 3 for five facility types from 8 years to 10 years and for one
facility type from 3.5 years to 4 years.[Footnote 38] Despite this, we
found that from fiscal years 2000 to 2007 the increased average survey
frequency had almost no impact on states' required survey workload.
Given the fiscal year 2008 increase in Medicare funding, CMS decreased
the time between surveys for many facility types, returning them to
approximately fiscal year 2000 levels (see appendix II).[Footnote 39]
Despite CMS's risk-based approach, some state-surveyed facilities have
not been surveyed for many years.[Footnote 40] About 2,700 facilities
(13 percent) whose survey frequencies are established by CMS had not
been surveyed in 6 years or more as of September 30, 2007 (see table
4); about 900 (4 percent) had not been surveyed in 10 years or
more.[Footnote 41] Officials from both CMS and most of the states we
contacted told us that the time between surveys for facilities without
statutory survey frequencies was too long, which can increase the risk
for quality problems. For example, officials from several states told
us that they cite deficiencies more often, or the deficiencies are more
serious, at facilities that are surveyed infrequently. Officials from
one state said that facility administrators might become complacent
about meeting federal quality standards during the lengthy periods
between surveys. Officials from another state told us that, in 2006,
surveyors of hospices in their state cited serious deficiencies on four
out of eight surveys. Many state officials said that the survey
frequency for all facilities that are not set by statute should be
every 2 to 3 years.
Table 4: Facilities with Survey Frequencies Established by CMS That
Have Not Been Surveyed in 6 Years or More, as of September 30, 2007:
Facility type: Non-accredited ambulatory surgical center;
Facilities that have not been surveyed in 6 years or more: Number: 783;
Facilities that have not been surveyed in 6 years or more: Percentage:
20%.
Facility type: Outpatient physical therapy provider;
Facilities that have not been surveyed in 6 years or more: Number: 531;
Facilities that have not been surveyed in 6 years or more: Percentage:
18%.
Facility type: Rural health clinic;
Facilities that have not been surveyed in 6 years or more: Number: 511;
Facilities that have not been surveyed in 6 years or more: Percentage:
14%.
Facility type: Non-accredited hospice;
Facilities that have not been surveyed in 6 years or more: Number: 292;
Facilities that have not been surveyed in 6 years or more: Percentage:
11%.
Facility type: End-stage renal disease facility;
Facilities that have not been surveyed in 6 years or more: Number: 260;
Facilities that have not been surveyed in 6 years or more: Percentage:
5%.
Facility type: Portable X-ray service;
Facilities that have not been surveyed in 6 years or more: Number: 142;
Facilities that have not been surveyed in 6 years or more: Percentage:
25%.
Facility type: Non-accredited hospital;
Facilities that have not been surveyed in 6 years or more: Number: 84;
Facilities that have not been surveyed in 6 years or more: Percentage:
5%.
Facility type: Comprehensive outpatient rehabilitation facility;
Facilities that have not been surveyed in 6 years or more: Number: 67;
Facilities that have not been surveyed in 6 years or more: Percentage:
12%.
Facility type: Total;
Facilities that have not been surveyed in 6 years or more: Number:
2,670;
Facilities that have not been surveyed in 6 years or more: Percentage:
13%.
Source: GAO analysis of OSCAR data.
[End of table]
CMS's Attempts to Increase the Effectiveness of the Survey Budget
Allocation Process Have Had a Limited Impact:
CMS's attempts to make the survey budget allocation process more
effective have had a limited impact. In fiscal year 2005, it began
using a budget analysis tool to more equitably distribute funding to
states. It also asked states to develop contingency plans to deal with
the uncertainty about state funding due to the timing of the Medicare
budget allocation process.
Budget Analysis Tool:
The budget analysis tool was designed to address funding inequities
resulting from CMS's previous method for allocating Medicare funds for
state survey activities, but its impact has been limited. Previously,
CMS determined states' allocations based on their past spending, but
this method did not guarantee that funding levels accurately reflected
state workloads--some states received too much funding given their
survey workloads, others too little. For example, regional office staff
told us that a state hiring freeze in the 1990s caused severe
understaffing for one state in their region. One year, this state spent
significantly less than its Medicare allocation because it was unable
to hire staff. Consequently, the following year this state's Medicare
funding increases reflected the previous year's low level of
expenditures and the relatively low level of Medicare funding has been
carried forward every year. CMS officials chose not to use the tool to
recalculate states' base allocations to avoid shifts that could result
in layoffs of trained staff. CMS officials anticipated that over time
the use of the budget analysis tool would incrementally align state
funding with workload.[Footnote 42]
The budget analysis tool allows CMS to measure state survey workload
against funding and compare the match of workload to funding across
states. It uses both state-specific and national data to measure state
survey requirements, such as hours needed to perform surveys, and
states' costs for conducting survey activities, such as salaries, as
well as fringe benefits for those staff, training, and travel. While
state-specific data are used to calculate workloads for nursing homes,
national averages are used for other facilities because they are
surveyed so infrequently. The tool makes final adjustments based on
regional office analysis and other factors. The tool then scores each
state from 1 (less well-funded, relative to other states) to 5 (better
funded) given the state's workload (see figure 3). In 2005, 10 states
scored 1 and 15 states scored 4 or 5. In 2008, 7 states had a score of
1 while 14 had a score of 4 or 5.
An agency official acknowledged that there are limitations in the
tool's effectiveness. First, state scores do not account for state
enforcement activity or the fixed costs associated with administering
survey activities. Second, CMS officials told us that they did not know
how long an efficient survey should take and could not assess whether
the considerable interstate variation in the length of surveys was
appropriate. Third, state-specific data are limited for most facility
types other than nursing homes because they are surveyed less
frequently.
Figure 3: Budget Analysis Tool, Including Component Parts:
[Refer to PDF for image: illustration]
Survey requirements, plus Costs, Adjustment, equals Score.
Survey requirements:
* Total survey hours required by type of facility and type of survey.
Includes travel for each facility type.
* Projected surveys required (including standard and complaint).
Costs:
* Medicare share of salaries, fringe benefits, training, and travel.
Adjustment:
* Adjustments for other state-specific conditions, such as additional
funding, complaint workloads, differing survey hours, or surveyor
ratios.
Source: GAO.
[End of figure]
CMS has used the budget analysis tool five times: (1) twice to
distribute annual increases in Medicare funds to states (after
allocating a small across-the-board inflation increase), and (2) three
times to redistribute Medicare funds at the end of the fiscal year to
states that spent more than their initial allocations by using state
funds and had requested supplemental funding. In fiscal year 2005, CMS
used the tool to distribute a 3 percent increase in survey funding,
which translated into a 0.5 percent to 9.5 percent increase depending
on the state. In fiscal year 2008, average increases to states ranged
from about 10 percent for states which scored 1 to about 6.5 percent
for states which scored 5. In fiscal years 2005 through 2007, CMS used
the tool to redistribute year-end supplemental funding to states, but
the amount to be redistributed has shrunk in recent years. For example,
CMS had about $6 million available to redistribute in fiscal year 2005
but only about $2.5 million in fiscal year 2007.
State Contingency Budget Plans:
To help address uncertainty about federal Medicare funding levels, CMS
asked states to develop a baseline budget and contingency plans for a
specified reduction or increase to the baseline for fiscal years 2007
and 2008.[Footnote 43] In general, CMS communicates state-projected
allocations in August, before the beginning of the next federal fiscal
year. These projected allocations may be more or less than the final
allocation and, for the past several years, CMS's budget for state
survey activities has not been finalized until 6 to 8 months later. CMS
acknowledged the uncertainty that resulted from states not knowing
their final Medicare allocations until well into the state fiscal year,
which for most states begins on July 1.
Regional office and state officials identified several problems that
can result from finalizing states' Medicare allocations late in the
state fiscal year. First, officials from one regional office told us
that states had to conduct their survey work cautiously until they
received their final Medicare allocations, which could be less than
initially projected. In some cases, the uncertainty may cause states to
defer some of their surveys until the end of the fiscal year,
potentially causing them to spend less than their Medicare allocations.
Second, officials from one state told us that if their Medicare
allocation was less than initially projected, they would have to cut
staff or other direct costs such as travel--all essential to completing
their survey workload. Third, officials from another state said that
the lag in receiving their final Medicare allocation further delayed
hiring new staff.
Almost All States Were Unable to Complete Their Survey Workload, and
Pinpointing the Cause Is Difficult:
Only one state, Arkansas, was able to complete all surveys in tiers 1
through 3 in fiscal year 2006, but pinpointing the cause is difficult
because (1) several factors such as workload, funding, staffing, and
management could have had an impact and (2) distinguishing the extent
to which each factor contributed to state completion rates and the
quality of each states' surveys is challenging. Overall, we found that
states' required survey workload--the workload that states would have
to complete to meet statutory and CMS survey frequency requirements--
decreased 4 percent from fiscal years 2000 to 2007. This decrease was
due to a decline in the number of the most frequently surveyed
facilities that also require more time to survey compared to other
facilities. This decline offset the workload increase from the overall
growth in the number and type of other facilities subject to surveys
over the same time period. It is unclear how states' complaint
investigation workload changed over this same time period because CMS
lacks reliable and consistent state data on complaints received and
investigated. According to CMS, the agency adjusts the survey
priorities in tiers 1 through 3 so that the workload is feasible given
Medicare funding levels, but the states we contacted disagree. However,
some of the states we contacted that spent significantly more than
their initial Medicare allocations still did not complete all surveys
in those tiers. Sixteen of the 28 states we contacted were unable to
spend their entire Medicare allocations, most indicating that this was
due to high surveyor attrition rates and hiring freezes. Though many
states believe that noncompetitive surveyor salaries contribute to
attrition, states, not CMS, establish those salaries. In two states,
CMS concluded that poor management of the survey process had
compromised the quality of state surveys, but acknowledged that in one
of the states staffing levels, salaries, and other issues may have been
a contributing factor.
Almost All States Were Unable to Complete CMS's Survey Priorities
Despite Decreases in the Required Survey Workload:
CMS state performance reviews for fiscal years 2006 and 2007 found that
few states were able to complete or nearly complete all surveys in
tiers 1 through 3, despite decreases in the required survey workload
from fiscal years 2000 to 2007.[Footnote 44] However, the impact of
complaint investigations and revisits on state workloads during this
time period is unclear because the data were not complete or reliable.
Completion of CMS Survey Priorities:
Only one state, Arkansas, was able to complete its surveys in all three
tiers in fiscal year 2006.[Footnote 45] Seventeen states did not
complete their tier 1 surveys in fiscal year 2006 and, as a result,
were assessed deductions totaling $298,200 from their fiscal year 2007
Medicare survey allocations (see table 5).[Footnote 46] Thirty-five
states were unable to complete their tier 2 surveys and 46 states were
unable to complete their tier 3 surveys. Some states narrowly missed
completing surveys in one or more tiers, while others missed completion
by a wide margin. For example, in fiscal year 2006 one state completed
99.9 percent of the surveys of intermediate care facilities for the
mentally retarded, while another state completed only 33 percent of
such surveys, but CMS rated both states as not meeting the survey
workload.[Footnote 47] Counting the few states that narrowly missed the
standards as passing had little impact on the results presented in
table 5. These results were similar in fiscal year 2007--25 states were
unable to complete their tier 1 surveys, 34 did not complete tier 2
surveys, and 41 did not complete tier 3 surveys. CMS officials believe
that recent Medicare funding levels have been sufficient for states to
complete surveys in tiers 1 through 3.
Table 5: Number of States That Completed Required Surveys by Tier as
Reported by CMS, Fiscal Year 2006:
Tier: 1;
Number of states that completed requirement: 34;
Number of states that did not complete requirement: 17.
Tier: 2;
Number of states that completed requirement: 16;
Number of states that did not complete requirement: 35.
Tier: 3;
Number of states that completed requirement: 5;
Number of states that did not complete requirement: 46.
Source: CMS.
[End of table]
Decline in Required Survey Workload:
States' required survey workload--the workload that states would have
to complete to meet statutory and CMS survey frequency requirements--
decreased nationally from fiscal year 2000 to fiscal year 2007, even
though the number and type of facilities subject to surveys during that
period increased. The decrease in the required survey workload was due
primarily to the decline of more than 1,100 nursing homes and 300
intermediate care facilities for the mentally retarded (see appendix
IV). Declines in these two facility types offset overall increases in
other facilities subject to surveys because nursing homes and
intermediate care facilities for the mentally retarded are
comparatively the most resource-intensive facilities to survey: (1)
statute dictates that nursing homes and intermediate care facilities
for the mentally retarded must be surveyed approximately every 12
months, and (2) their surveys take longer than most other facilities to
complete. For example, even though the number of ambulatory surgical
centers increased by 31 percent from fiscal year 2000 to fiscal year
2007, the increase had a small impact on the required survey workload
because on average ambulatory surgical centers require 26 hours to
survey and, as of fiscal year 2007, only had to be surveyed once every
10 years to meet tier 3 workload priorities; in contrast, nursing homes
take 157 hours to survey and their surveys are tier 1 workload
priorities that must occur an average of every 12 months. After
factoring in both average survey hours and required frequencies, 1 less
nursing home can offset the workload increase of 60 new ambulatory
surgical centers (see figure 4). Surveys of nursing homes and
intermediate care facilities for the mentally retarded together
accounted for about 93 percent of states' required survey workload in
fiscal year 2000 and 91 percent of states' required survey workload in
fiscal year 2007; all other surveyed facilities accounted for less than
10 percent of the workload in both years.[Footnote 48] When all
facilities are considered, the required survey workload decreased by
about 4 percent (see figure 5).[Footnote 49] Almost all of the decrease
was due to the decline in nursing homes and intermediate care
facilities for the mentally retarded; the increase in the interval
between surveys had a negligible impact.
Figure 4: Formula to Estimate Required Survey Workload as Applied to
Nursing Homes and Ambulatory Surgical Centers as of Fiscal Year 2007:
[Refer to PDF for image: illustration]
1 nursing home equals 60 ambulatory surgical centers
Formula applied to a nursing home:
1 nursing home:
times:
Annually (100 percent of all homes):
times:
157.1 hours per home:
equals:
157.1 survey hours per year per home.
Formula applied to an ambulatory surgical center:
1 ambulatory surgical center:
times:
Every 10 years (10 percent of all centers)[A]:
times:
26.3 hours per center:
equals:
2.6 survey hours per year per center.
Source: GAO (analysis), Art Explosion (clip art).
[A] On average, 10 percent of ambulatory surgical centers are surveyed
annually.
[End of figure]
Figure 5: Decline in Required Survey Workload (the Completion of
Surveys within the Time frames for which CMS Holds States Accountable),
Based on the Number of Facilities and Average Survey Hours, December
2000 to December 2007:
[Refer to PDF for image: stacked horizontal bar graph]
Fiscal year: 2000;
Nursing homes (hours in thousands): 2662.2;
Intermediate care facilities for the mentally retarded (hours in
thousands): 395.9;
Home health agencies (hours in thousands): 114.9;
End-stage renal disease facilities (hours in thousands): 27.3;
Hospitals (hours in thousands): 46.7;
All others (hours in thousands): 43.7;
Total hours (hours in thousands): 3290.8.
Fiscal year: 2007;
Nursing homes (hours in thousands): 2486.4;
Intermediate care facilities for the mentally retarded (hours in
thousands): 376.9;
Home health agencies (hours in thousands): 141.9;
End-stage renal disease facilities (hours in thousands): 58.1;
Hospitals (hours in thousands): 50.8;
All others (hours in thousands): 37.7;
Total hours (hours in thousands): 3151.8 (-4% change from 2000).
Source: GAO analysis of CMS data.
Note: In 2000, nursing homes comprised 80 percent of the required
survey workload, intermediate care facilities for the mentally retarded
were 12 percent, home health agencies were about 3 percent, end-stage
renal disease facilities and hospitals were about 1 percent each, and
all other categories were less than 1 percent. In 2007, nursing homes
were 79 percent, intermediate care facilities for the mentally retarded
remained 12 percent, home health agencies were about 4 percent, end-
stage renal disease facilities were about 2 percent, hospitals were
about 2 percent, and all other categories were less than 1 percent.
[End of figure]
The disproportionate impact of decreases in nursing homes and
intermediate care facilities for the mentally retarded on states'
required survey workload is illustrated by Washington. From fiscal year
2000 to fiscal year 2007, the number of facilities subject to surveys
in Washington increased by about 16 percent due largely to growth in
ambulatory surgical centers, end-stage renal dialysis centers, and
rural health centers. In fiscal year 2007, these facility types were
subject to surveys on average every 10, 4, and 10 years, respectively.
During the same period, however, Washington experienced decreases in
the numbers of nursing homes and intermediate care facilities for the
mentally retarded, which, on average, are surveyed every 12 months. As
a result, the number of surveys that Washington was expected to conduct
each year decreased about 9 percent; when average survey hours are
taken into account, the state's required survey workload decreased by
11 percent. Eleven states--Alabama, Alaska, Delaware, Florida, Georgia,
Mississippi, New Jersey, North Carolina, Texas, Utah, and Virginia--
experienced increases in their required survey workload, ranging from
less than 1 percent to about 8 percent (see appendix V).
Workload Impact of Complaints, Survey Process Improvements, and
Revisits:
In addition to changes in the number and type of facilities subject to
surveys, two other survey activities as well as survey process
improvements could have affected states' overall workload, but the
results for complaints and revisits were unclear because the data were
not available or reliable.[Footnote 50] It is difficult to discern from
the data whether survey process improvements contributed to the small
increases from fiscal years 2000 to 2007 in average survey hours for
most facility types.
* Complaint investigations. Although complaint investigations represent
a significant portion of state workload, CMS officials told us that the
agency lacks complete and reliable data on complaints received and
investigated.[Footnote 51] CMS implemented a new complaint database in
2004 but officials told us that the data are not reported
consistently.[Footnote 52] First, a few states either do not report
complaints in the CMS database or investigate complaints under state
licensure, thus underreporting the number of complaints in the
database. Second, states may not be consistently reporting complaints.
According to CMS, the agency instructs states to differentiate between
facility-reported incidents, which they can choose to investigate as
complaints, and complaints received from residents, family members, or
others. According to CMS, however, some states report few if any
facility-reported incidents. Third, CMS believes that some states may
be overestimating the number of complaints by reporting complaints
received and investigated during standard surveys in the CMS complaints
database. According to CMS, about 15 percent of complaints are
investigated during standard surveys.
Although the changes in the complaint workload are difficult to
quantify, both CMS and state officials told us that resource
constraints have hampered complaint investigations. For example,
according to both CMS and state officials, states may be bundling
complaints--waiting until they receive two to three complaints about a
particular facility and then investigating them all at the same time--
resulting in less timely complaint investigations. One state now sends
in one surveyor to investigate complaints rather than two or three,
which had been a more typical team size. Officials from a different
state expressed concern that complaint bundling may affect the adequacy
of their investigations. State officials stressed that the
unpredictable nature of complaint investigations can be disruptive to
scheduling and completing standard and validation surveys.
State officials told us that CMS does not adequately fund complaint
investigations and that CMS expects states to use their own funds.
According to CMS officials, the amount identified for such
investigations in the fiscal year 2008 President's budget request does
not fully fund all anticipated complaint investigations. We believe,
however, that it is appropriate for states to cover the additional
costs of completing complaint investigations within state time frames
that are more stringent than federal requirements. For example, both
California and Pennsylvania require all investigations to be initiated
within 10 days, while CMS requires such rapid investigations only for
complaints alleging immediate jeopardy or actual harm. In contrast,
Florida requires all complaints to be investigated within 90 days. We
believe that it is difficult to determine the appropriate federal
funding level for complaint investigations without a complete estimate
of the complaint workload.
* Revisits. CMS does not have reliable and complete data on revisits
from fiscal years 2000 to 2004 due to changes in how revisit survey
activities were reported across states. As a result, it is not possible
to fully account for the impact of revisits on states' overall survey
workload. However, CMS data for fiscal years 2005 to 2007 show that the
revisit workload declined by 4 percent. Revisits for standard surveys
accounted for approximately 8 percent of states' survey workload in
fiscal year 2007 and nursing homes and intermediate care facilities for
the mentally retarded constituted about 85 percent of states' revisit
workload in 2007. We believe that the decline in revisits for fiscal
years 2005 to 2007 is consistent with states' overall decline in survey
workload since fiscal year 2000.
* Survey process improvements. To improve the quality of state surveys,
CMS has implemented new directives and more stringent standards for
surveys, which CMS believes have increased states' survey workload. For
example, CMS added new survey requirements for hospices and end-stage
renal disease facilities and required states to include in their
surveys home health and outpatient physical therapy locations (branches
and extensions, respectively) that are under the supervision of a
licensed facility. According to one state we interviewed, new
requirements (1) increase the time required to conduct surveys and (2)
require additional surveyor training, which decreases productivity and
is not reflected in recorded survey hours. Although new requirements
that result in additional time to conduct surveys should be reflected
in the survey hours that states report, CMS expressed doubt that survey
hours were actually increasing as a result of these initiatives because
it believes that states lack adequate resources to carry them out. Data
for fiscal years 2000 to 2007 show small increases in average survey
hours for most facility types; however, it is difficult to determine
whether these changes are due to the new requirements or to factors
such as surveyor experience levels.
Multiple Factors May Affect States' Ability to Complete Survey
Workloads:
Several other factors--funding, staffing, and management of the survey
process--may have an impact on states' ability to complete survey
workloads and these factors also influence the quality of surveys.
These factors are often interrelated and can play out differently in
each state. States disagree with CMS's position that there is
sufficient funding to complete the workload in tiers 1 through 3,
primarily because of workforce instability due to noncompetitive
salaries. However, states, not CMS, establish these salaries and manage
the workforce and the survey process.
Funding Sufficiency:
CMS established the tiered survey priorities to ensure that Medicare
funding was sufficient for states to complete surveys in tiers 1
through 3.[Footnote 53] While most of the states we contacted believe
that CMS's expectations are unreasonable, the data suggest the
influence of factors other than the federal Medicare allocation. For
example, 16 of the 28 states we contacted spent more than their fiscal
year 2006 initial Medicare allocations, but none were able to complete
all required surveys in these three tiers. Seven of these states were
unable to complete even their tier 1 requirements--those that are
statutorily mandated. For example, Missouri spent more than its fiscal
year 2006 initial Medicare allocation and was able to complete all of
its surveys in tiers 2 and 3 but failed to complete its entire tier 1
workload. On the other hand, 16 of the states we contacted spent less
than their Medicare funding for fiscal years 2000 through 2006, 11 of
these states spent less than their fiscal year 2006 allocations. For
some of these states, the ability to spend Medicare allocations--not
the Medicare funding level itself--affected their ability to complete
the required surveys. Officials from 23 of the states we contacted told
us that an additional $35 million in cumulative Medicare funding was
needed, primarily to increase surveyor salary levels so that states
could fill staff vacancies and offer incentives to retain current
staff, issues that they believe have significantly inhibited their
ability to complete required surveys.[Footnote 54] Conversely,
officials from 4 states told us they did not need any additional
Medicare funding.[Footnote 55]
Workforce Instability:
Officials from AHFSA and many of the 28 states we contacted told us
that an unstable workforce had affected their ability to meet CMS
survey priorities over the past several years. The workforce
instability arises mostly from noncompetitive salaries, which result in
the hiring of less qualified candidates, and hiring freezes.[Footnote
56] Salary levels, minimum qualifications, and decisions about when to
hire or not hire surveyors are the result of state personnel policies
that affect surveyor positions as well as positions for other state
employees.
According to AHFSA and state officials, staff retention issues among
states can be attributed primarily to noncompetitive salaries for RNs-
-the profession that comprises the largest proportion of surveyors
nationally. In fiscal year 2006, the surveyor attrition rate among the
28 states we contacted ranged from 0 percent to about 46 percent, and
17 of these states reported attrition rates of 10 percent or higher.
Officials from one state told us that the starting salary for their RN
surveyors ranged from $30,000 to $35,000 and that trained RNs typically
leave surveyor positions after a few years to seek jobs in the private
sector for higher salaries. The average salary for RN surveyors in the
28 states we contacted was about $59,000 in fiscal year 2006 and ranged
from about $37,000 to about $88,000.[Footnote 57] More recently, some
states have been able to increase surveyor salaries from previous
levels to compete with the private sector. For instance, in one state,
the salaries of experienced surveyors increased by about 28 percent in
fiscal year 2007. However, officials from 13 states are concerned that
any increase in surveyor salaries may not be sustainable in the long-
term without increases in state Medicare allocations. Without an
increase, these states indicate that they may have to lay off staff,
which would adversely affect their ability to complete the survey
workload.
According to AHFSA officials, states have hired applicants that are
less qualified for surveyor positions due to noncompetitive surveyor
salaries. They told us that some states formerly hired RN surveyors
with bachelor's degrees, but given current salary levels, these
positions may only be attractive to licensed practical nurses with 2-
year rather than 4-year degrees. States are also hiring nurses with
less nursing experience to fill the positions. Of the 28 states we
contacted, 6 states offered surveyor positions to applicants with no
prior experience. AHFSA officials believe that inexperienced surveyors
tend to be less productive and require increased supervision and
oversight.
Hiring freezes have also affected states' abilities to manage their
survey workloads. During the past few years, some states temporarily
suspended the hiring of state employees due to state budget deficits.
Consequently, states had to suspend hiring of surveyors, even though
they may have had sufficient federal funding to support the additional
staff. Of the 28 states we contacted, 16 states spent less than their
Medicare budget allocations from fiscal years 2000 through 2006 and 14
of them identified hiring freezes or vacancies as the primary reason.
With consistently high turnover rates among these states' surveyors,
the hiring freezes prevented states from filling vacant positions.
Survey Process Management:
Given workforce instability, states told us that they have adjusted how
they manage surveys to meet CMS priorities. Some states adjust the size
of a survey team depending on the availability of staff. Of the 28
states we contacted, officials from 20 states indicated that they
reduced the survey team size or restricted the time a surveyor is
allowed to spend in a facility in fiscal year 2006. Officials from one
of these states explained that, in the past, a survey team may have
consisted of four surveyors plus a specialist, but now a survey team
only consists of three surveyors. As noted earlier, they also told us
that a state may send one surveyor to investigate several complaints
whereas previously, multiple surveyors were sent to investigate
complaints. Additionally, a state may limit or restrict the time a
surveyor is allowed to spend in a facility to ensure that other
facilities are surveyed and the state meets CMS performance measures.
As a result, officials from 11 states told us that surveyors do not
have enough time to conduct thorough surveys.
Quality of Surveys:
Although states may complete surveys in a given tier, this does not
ensure that the surveys are thorough. CMS's 2006 state performance
review indicated that Missouri, Oklahoma, New Mexico, South Carolina,
South Dakota, Tennessee, and Wyoming completed all of their nursing
home surveys within the statutorily required time frames. But, as we
previously reported, more than 25 percent of federal comparative
surveys conducted in these states from fiscal years 2002 through 2007
found that state surveyors had missed serious deficiencies.[Footnote
58] For example, South Carolina missed at least one serious deficiency
on 6 of the 18 comparative surveys during those 6 fiscal years, with an
overall total of 19 missed deficiencies that caused harm or placed
residents in immediate jeopardy.
In one of these states, CMS told us that performance issues raised
concerns about the management of survey activities. For example, 26
percent of federal comparative surveys conducted in Tennessee from
fiscal years 2002 through 2007 found that state surveyors had missed
serious deficiencies. Moreover, the results of federal observational
surveys from this same time period indicated that the proportion of
Tennessee surveyors with below satisfactory ratings in investigative
skills and deficiency determination was more than double the national
average. A new director took over the state survey agency in October
2007 and, due to the surveyor performance issues and staff turnover,
brought in CMS regional office staff to assist in retraining all of the
state's surveyors.
Unlike these seven states, about 93 percent of Alabama's nursing home
surveys in fiscal year 2007 were not completed within the maximum 15.9
month interval. In a June 2007 letter to the state, CMS described these
results as alarming and asked Alabama to develop an action plan in 2007
to address persistent weaknesses in state performance. The agency used
both comparative and observational data from federal monitoring surveys
to highlight persistent weaknesses in the survey process to Alabama
state officials. Although CMS recognized that the state's inability to
complete surveys could be due to staffing levels, salaries, and other
issues, CMS ultimately concluded that Alabama needed to improve
organization, management, and oversight of all regulatory systems and
functions.
CMS Oversight of States' Use of Funds Is Limited:
CMS oversight of states' use of funds for survey activities is limited.
To oversee how states spend federal funds, CMS regional offices we
spoke with now rely primarily on off-site reviews of state reports
documenting their expenditures and workload, but there are limitations
to relying on such reports, including their accuracy. In eliminating
the budget and financial standard from annual state performance reviews
in 2006, CMS redefined these financial responsibilities as core state
functions, but not all regional offices we reviewed are attempting to
hold states accountable for ensuring the appropriate application of
costs to Medicare, Medicaid, and state licensure programs. We also
found that regional offices we spoke with had taken a variety of
approaches to determining non-Medicaid contribution rates for the
states in their regions. Most told us that these rates have not been
reviewed in recent years, even though federal survey and state
licensure requirements may have changed over time. Regional officials
told us that they do not verify that states actually contributed funds
in a manner consistent with their shares, noting limits on their
authority to require state data and states' refusal to provide it
voluntarily. However, CMS assumes that the cost for a state to operate
a survey program is higher than the amount CMS provides them and the
agency is convinced that states were likely contributing more than
their fair share to survey activities. Finally, most regional offices
we spoke with do not require states to justify requests for
supplemental Medicare funds. As a result, it is difficult for CMS to
determine whether expenditures in excess of a state's initial Medicare
allocation represent the state's non-Medicaid share of survey costs.
Regional Office Oversight Now Relies on State-Reported Data:
To oversee states' use of federal funds for survey activities, the five
CMS regional offices we spoke with now rely primarily on the off-site
review of reports on expenditures, workload, and survey hours that
states submit during the fiscal year, but reliance on such reports for
financial oversight has limits.[Footnote 59] CMS's central office
believes that the majority of the analyses regional offices are
expected to perform as part of their oversight can now be accomplished
using the reports states submit. In contrast, officials from four of
the five CMS regional offices we spoke with generally told us that in
the 1990s, they either conducted more formal, on-site reviews or more
detailed reviews of systems, such as those used for time and effort
reporting, which served as the basis for states' allocations of survey
costs to Medicaid, Medicare, and state licensure programs. This allowed
regional offices to verify the accuracy of states' expenditures and
ensure that states complied with financial procedures established by
CMS.
Effective fiscal year 2006, CMS eliminated the state performance review
standard that focused on states' budget practices and financial
reporting and redefined these financial responsibilities as "core"
functions that states were required to perform. As a part of the state
performance review, the state's budget practices were evaluated against
14 elements to determine if the state used acceptable methods for (1)
charging the federal programs, and (2) monitoring the current rate of
expenditures and planned workload. Two of these 14 elements dealt with
the appropriate application of program contribution rates across
Medicare, Medicaid, and state licensure programs. Specifically, states
must provide reasonable assurances that survey and certification costs
were appropriately applied to the Medicare, Medicaid, and state
licensure programs for all items and costs in their budgets and across
providers and suppliers and the various types of facilities. According
to CMS, however, regional offices are still expected to ensure that
states are fulfilling their responsibilities under the standards, but
only one of the five regional offices we spoke with (San Francisco)
determines whether or not it has reasonable assurances that survey and
certification program costs are appropriately applied to Medicare,
Medicaid, and state licensure programs. Two other regional offices
(Chicago and Dallas) inspect state records regarding the application of
program costs across the three programs, but do not determine
reasonable assurance of this accounting. Two regional offices (Atlanta
and New York) have not incorporated these two elements into a review of
this standard and its oversight of state survey activities.
Relying primarily on state-reported expenditure data for federal
financial oversight has limits. Since fiscal year 2002, states have
been required to submit their financial information electronically
through a Web-based, automated reporting system provided by CMS.
Regional office officials have expressed concern regarding whether
state expenditures are accurately reported through this system, as
there have been instances where errors were discovered in states'
expenditure reports well after their submission. For example,
Washington state officials told us that they identified a significant
error on the state's expenditure report for fiscal year 2006. In
reporting the amount of staff time it took to complete its workload,
the state provided the data in terms of months, though it was required
to provide staff time in years. As a result, the information in the
expenditure report was contradictory. In addition, officials from the
Dallas regional office told us that Texas underreported its
expenditures in fiscal years 2003 and 2004 due to errors that resulted
as the state transitioned to a new accounting system. The error was not
discovered until the Medicare funds the state appeared not to have
spent had been reallocated to other states. Officials from the Chicago
regional office told us that it is difficult to verify the figures
presented on state expenditure reports because of delays by many states
in entering information into OSCAR, which regional offices may use to
verify states' expenditures. Also, a lack of timeliness in reporting
such information can limit regional office oversight efforts. For
example, in its review of Delaware's survey expenditures for fiscal
years 1998 and 1999, HHS's OIG found that, in addition to not having
sufficient internal controls for preparing accurate reports of its
Medicare and Medicaid expenditures, the state did not file its fiscal
year 1999 expenditure reports on time.
Non-Medicaid State Contributions Are Based on Long-standing Rates That
Are Not Reviewed and Vary Greatly by CMS Regional Office:
The contribution rates for states in the five regions we spoke with
were determined using different methodologies and in most cases have
not been reviewed in recent years. Moreover, states are not required to
report their non-Medicaid state expenditures to CMS and, as a result,
the agency has no way of verifying that states are contributing their
own funds appropriately. Nonetheless, CMS central office and regional
office officials we spoke with generally assume that the cost of
conducting survey activities is greater than the federal funds
provided. Consequently, they believe states are contributing more than
their fair share to the cost of survey activities and that the exact
amount of the non-Medicaid state contribution is less important.
CMS guidance reflects the complexity of establishing equitable state
shares and acknowledges that regional office staff must be
knowledgeable about state licensure requirements to negotiate states'
non-Medicaid contribution rates. For 21 states, the non-Medicaid state
share for nursing homes ranged from 12 to 48 percent (see table 6).
Regional offices we spoke with have taken a variety of approaches to
setting these rates. In some regions, regional office staff determined
the rates, while in other regions the states determined the rates
themselves.
Table 6: Range of Medicare, Medicaid, and Non-Medicaid State
Contribution Rates (as a percentage) for Nursing Home Survey Activities
for 21 States, as of January 2008:
Minimum:
Medicare: 28;
Medicaid: 21;
Non-Medicaid State: 12.
Median:
Medicare: 34;
Medicaid: 36;
Non-Medicaid State: 25.
Maximum:
Medicare: 53;
Medicaid: 51;
Non-Medicaid State: 48.
Source: GAO analysis of state-reported data.
Note: Although 28 states responded to our inquiries, this table
excludes 7 states that did not report percentages or whose reported
percentages could not be summarized. One state reported its non-
Medicaid state contribution rate, but did not report its Medicare and
Medicaid contribution rates.
[End of table]
* Officials from the Chicago regional office told us that the
methodology used by their staff to determine state contribution rates
was complex and involved determining a separate state share for each
facility type that was surveyed. Regional office staff took into
consideration the number of surveys that each state needs to conduct in
a given year, the average amount of time each survey should take, and
how much of a benefit each state derived from having to conduct the
survey.
* Officials from the San Francisco regional office told us that
contribution rates for the states in their region are mostly based on
historical figures, as reported in states' time and effort record
keeping systems.
* Officials from the New York regional office told us that their staff
and state officials jointly determined that Medicare, Medicaid, and
state licensure programs derived equal benefit from federal nursing
home surveys conducted by states in the region. As a result, they
concluded that each program should be responsible for one-third of the
cost of these surveys. In contrast to what other regions told us,
however, states in this region do not have a non-Medicaid state share
for other facility types.
* Officials from the Atlanta regional office told us that they played
no role in establishing these rates and were unaware of the process
states in their region used to determine them.
* Officials from the Dallas regional office told us that, due to the
complexity involved in determining an appropriate state share, states
in their region do not have pre-established non-Medicaid state
contribution rates. Instead, a staff person reviews state surveyor
salaries and makes sure that states have apportioned them appropriately
between federal and state licensure activity, based on the surveyors'
workload from the previous year.
Officials from four CMS regions indicated that the rates for states in
their regions are not regularly reviewed and in one case have not been
reviewed since they were established. CMS guidance does not prescribe
how often the rates should be updated given changes in requirements for
federal and state licensure surveys over time. A 2002 HHS OIG review
also found that states in four of the five regions it reviewed
allocated survey costs based on predetermined, historical contribution
rates. Because these rates were established in prior years,
documentation of the basis for the rates was not available.
CMS officials told us that the agency does not collect information from
states on their non-Medicaid survey expenditures. As a result, CMS does
not know if states are contributing their own funds appropriately (see
figure 6).[Footnote 60] CMS officials noted limits on the agency's
authority to collect state data, particularly regarding licensure
activities. In addition, states are not willing to voluntarily disclose
information on state funding.[Footnote 61] For example, officials from
the Dallas regional office told us that Texas officials indicated the
Dallas officials were not entitled to this information when they
requested it. However, information on state expenditures could be
relevant to federal oversight of state survey activities in certain
situations. For example, if a state requests supplemental funding for
shared survey activities--that is, those not exclusively conducted for
purposes of state licensure--having information on the state's
expenditures for the non-Medicaid share could be relevant in evaluating
whether survey costs are equitably shared and that Medicare is not
paying more than its fair share for survey activities.
Figure 6: Federal and State Funding for State Survey Activities in
Fiscal Year 2007:
[Refer to PDF for image: stacked vertical bar graph]
Funding source:
Medicare (federal): $258.1 million.
Funding source:
Medicaid (federal): $185.7 million;
Medicaid (state): $66.5 million.
Non-Medicaid: unknown.
Total: Federal: $443.9 million ($258.1 Medicare plus $185.7
Medicaid[A]).
Total: State: unknown ($66.5 Medicaid plus unknown Non-Medicaid).
[A] Numbers do not sum due to rounding.
[End of figure]
Most Regional Offices We Interviewed Do Not Require States to Justify
Requests for Supplemental Medicare Funds:
Though officials from CMS's central office told us that regional
offices should require states to justify any requests for supplemental
Medicare funds they submit, three of the five regional offices we
interviewed told us that they do not require states to do so. Without
an examination of state justifications, it would be difficult for CMS
to know if expenditures in excess of states' initial Medicare
allocations represent their non-Medicaid share of state costs.
According to CMS guidance, states can request supplemental Medicare
funds in two ways. They can submit a memo to their regional office that
includes the amount of funds requested and a detailed rationale for why
the funds are needed. A second method is for states to include actual
Medicare expenditures in excess of their allocation on the expenditure
report they submit at the end of the fiscal year. The state is eligible
to receive supplemental Medicare funding as reimbursement for the
portion of these expenditures that exceeds the amount in Medicare funds
CMS allocated to it during the fiscal year. According to CMS central
office officials, both the memo and the amounts reported on states'
expenditure forms are subject to review and approval by the regional
offices prior to the funding of states' supplemental requests.
Central office officials told us that the amount of Medicare
supplemental funds requested each year has been substantially more than
the amount of funds available to redistribute. Consequently, CMS
expects that regional offices will use their judgment regarding the
intensity of reviews so that they are not spending time reviewing
requests that will not be funded anyway.[Footnote 62] The level of
review conducted by three of five regional offices we interviewed was
limited. Officials from the New York regional office told us that their
staff checks to see whether a state completed its workload and if the
state's expenditures reflect what was included in its budget plan.
Officials from the Atlanta and Chicago regional offices said that they
do not require documentation or conduct audits to verify these
requests. However, officials from the Dallas and San Francisco offices
told us that their staff follows up with states to verify their need
for supplemental funding, such as asking states for documentation to
justify their expenditures in excess of their initial Medicare
allocations. On at least one occasion, the Dallas region told CMS that
some of a state's requested money should be disallowed because the
state conducted tier 4 work before completing work in a higher priority
tier.
Conclusions:
The current approach for funding state surveys of facilities
participating in Medicare and Medicaid is ineffective--yet these
surveys are meant to ensure that these facilities provide safe, high-
quality care. We found serious weaknesses in CMS's ability to (1)
equitably allocate more than $250 million in federal Medicare funding
to states according to their workload, (2) determine the extent to
which funding or other factors affected states' ability to accomplish
their workload, and (3) guarantee appropriate state contributions.
These weaknesses make assessing the adequacy of funding difficult.
* CMS has made limited progress in ensuring that federal Medicare
allocations reflect state workloads. Since 2000, CMS has taken several
steps in response to relatively flat, inflation-adjusted federal
funding for state surveys, but these efforts have had little impact.
Reducing funding for support contracts--such as one to develop and
implement a new nursing home survey methodology to improve the
consistency and efficiency of state surveys--provided only about 1
percent more funding to states in fiscal years 2006 and 2007. In our
view, the delay in implementation of the QIS is problematic and CMS and
beneficiaries would benefit from its implementation well before 2014.
Increasing the time between surveys for many facility types had almost
no impact on state workloads and state officials believed many
facilities were already surveyed too infrequently. Asking states to
develop funding contingency plans could not resolve the problem that
states do not know their final Medicare allocations until late in the
fiscal year, which can hamper efforts to effectively manage state
resources. In addition, while Congress did not provide CMS authority to
charge facilities for revisit surveys in fiscal year 2008, revisit fees
could offer (1) Medicare Trust Funds savings if they result in
reductions of amounts that would be otherwise transferred, and (2)
somewhat more predictable funding to the extent the fees do not require
annual appropriations. Oversight of clinical labs, which pay user fees,
provides a precedent for facility contributions to defray the cost of
survey activities.
* CMS took these steps because it believed that Medicare funding had
not kept pace with state workloads. But we found that the required
survey workload actually decreased from fiscal years 2000 to 2007,
suggesting that resources available in fiscal year 2007 were similar to
or slightly greater than those in fiscal year 2000 given the modest 4
percent increase in inflation-adjusted federal funding. Nevertheless,
because state allocations have been based on historical spending, CMS
believes that some states have too much funding given their workload
while others have too little. The budget analysis tool that CMS
developed to align survey funding with state workloads has been used
only incrementally to address state funding inequities, rather than
adjusting the mismatch between federal allocations and states' current
survey workloads. We believe that CMS's concerns about the instability
that would be created if it changed baseline funding for state survey
activities could be mitigated through other means. For example, CMS
could limit the annual adjustments on states with shrinking baselines
to a fixed percentage of each state's historical funding baseline. In
addition, CMS lacks adequate data on states' complaint workloads, a
significant weakness in its ability to ensure that it is requesting
adequate Medicare funding. Moreover, agency officials believed that the
amounts identified for complaint investigations in connection with the
President's budget request had not fully funded state complaint
surveys.
* It is difficult to determine the extent to which funding and other
factors affected states' ability to accomplish survey workloads. Twenty-
three of the 28 states we contacted told us that more funding was
needed and many of these states said that RN salaries were not
competitive, which created workforce instability. Although states set
surveyor salaries, Medicare allocations that do not support salary
increases could result in states' laying off staff, further limiting
their ability to accomplish survey workloads. For some states that did
not spend their initial allocations, the inability to spend their full
allocations rather than the level of funding may interfere with
workload completion. Most states told us that underspending was the
result of insufficient staff due to retention problems or state hiring
freezes. Other states spent more than their initial Medicare
allocations and still failed to complete their survey workload. Even if
states complete their workload, ensuring that facilities comply with
federal quality and safety standards is not guaranteed. For example,
seven states completed their nursing home surveys in fiscal year 2006,
but CMS found that they missed serious deficiencies on more than a
quarter of federal comparative surveys.
* CMS lacks information on state contributions, which impedes an
overall assessment of the resources available for state surveys. While
CMS knows states' Medicare and Medicaid spending, including requests
for supplemental federal funding, it has no way to ensure that states
contribute their fair share of non-Medicaid state funds. Non-Medicaid
state shares for nursing homes vary widely across states, state
contribution rates are not determined consistently, and CMS officials
do not collect information on such state expenditures. But CMS
officials said the agency assumes that the cost of conducting all
required surveys is greater than the federal funds provided, so the
exact amount each state contributes is less important. Further, states
in most regions we interviewed were not required to justify
supplemental funding requests. Without examining state justifications,
CMS cannot be sure that spending above states' initial Medicare
allocations represents their non-Medicaid state share of survey costs.
The evidence is mixed on whether federal funding has kept pace with the
changes in states' required survey workload--the workload that states
would have to complete to meet statutory and CMS survey frequency
requirements. On the one hand, the required survey workload decreased
nationwide. On the other hand, most states told us that survey
frequencies of 6 to 10 years for many facilities could adversely affect
beneficiaries. Moreover, it is often difficult to distinguish the
impact of funding, staffing, and management on state workloads overall.
We believe that these and other limitations of the current funding
approach will continue to frustrate CMS's efforts to support and
oversee state survey activities.
Recommendations for Executive Action:
To address significant shortcomings in the current system for financing
and conducting surveys of Medicare and Medicaid facilities, we
recommend that the CMS Administrator take the following nine shorter-
term actions.
To help ensure that those facilities that have not been surveyed in at
least 6 years are in compliance with federal quality standards, we
recommend that the CMS Administrator take the following two actions:
* Increase the survey priority assigned to such facilities in the
annual instructions given to state survey agencies with the goal of
surveying them as quickly as possible.
* Monitor the progress made by state survey agencies that have a
significant number of such facilities.
To ensure that Congress has adequate information on the impact of
funding on facility oversight, we recommend that the CMS Administrator
take the following two actions:
* Inform Congress of the projected cost of surveying all facilities
that lack statutorily mandated survey frequencies a minimum of at least
once every 3 years.
* Include information in the President's budget request on projected
state complaints and the cost of completing the associated workload.
To help address state survey funding inequities, we recommend that the
CMS Administrator:
* Use available tools to adjust the annual baseline Medicare
allocations provided to each state.
To improve CMS's ability to differentiate between funding and
management issues and help ensure the quality of surveys, we recommend
that the CMS Administrator take the following two actions:
* Identify appropriate methodologies to help evaluate the efficiency
and effectiveness of state survey activities. One such methodology may
be the new Quality Indicator Survey, developed to help ensure the
consistency, efficiency, and effectiveness of state nursing home
surveys. Explore the feasibility of using a similar methodology to
survey other Medicare and Medicaid facilities.
* Provide Congress with an estimate of the cost of implementing, over 3
years, the Quality Indicator Survey methodology for nursing homes.
To improve the oversight of state expenditures, we recommend that the
CMS Administrator take the following two actions:
* Collect information about current state shares, including the
methodologies used to determine them and the date that they were last
reviewed.
* Regularly review state shares to ensure that they are accurate,
explore ways to obtain information from states on non-Medicaid
expenditures where such information is relevant for ensuring that costs
are actually shared on an equitable basis, and consider ways to
simplify the process of determining state shares.
Over the longer term, we are also recommending that the CMS
Administrator undertake a broad-based reexamination of the current
approach for funding and conducting surveys of Medicare and Medicaid
participating facilities. This reexamination should consider issues
such as (1) the source and availability of funding, including possible
imposition of user fees, and (2) ways of ensuring an adequate survey
workforce with sufficient compensation to attract and retain qualified
staff.
Agency and AHFSA Comments and Our Evaluation:
We provided a draft of this report to HHS for comment. In response, the
Acting Administrator of CMS provided written comments. We also received
written comments from AHFSA. CMS's and AHFSA's comments are reproduced
in appendices VI and VII, respectively.[Footnote 63] Although CMS
disagreed with elements of our survey workload analysis, the agency
concurred with 9 of our 10 recommendations. For 2 of these, we
recommended that CMS provide Congress with certain information and the
agency indicated that it would do so upon Congress' request. CMS
partially concurred with 1 of our 10 recommendations. While the agency
agreed to produce special follow-up reports and have its regional
offices contact states with a significant number of facilities that
have not been surveyed for lengthy periods, it did not agree to
increase the survey priority assigned to facilities that have not been
surveyed in at least 6 years with the goal of surveying them as quickly
as possible. Instead, CMS noted that the agency had expanded its risk-
based approach in fiscal year 2008 such that the maximum tier 3 survey
frequency is a 7-year interval (down from an 8-year average).
Additionally, for those facilities that have not been surveyed in 7
years and that are identified with certain risk factors, CMS will
consider these facilities as part of the tier 2 targeted surveys. As
noted in our draft report, many state officials told us that the survey
frequency for all facilities that are not set by statute should be
every 2 to 3 years. CMS concurred with our recommendation to inform
Congress of the projected cost of surveying these facilities a minimum
of at least once every 3 years. We continue to believe that all 2,700
facilities that had not been surveyed in more than 6 years as of
September 30, 2007 (900 in 10 years or more), should be inspected as
soon as possible, regardless of their risk factors. Finally, AHFSA also
disagreed with elements of our survey workload analysis, specifically
our treatment of complaints and enforcement actions. CMS's and AHFSA's
comments and our evaluation are summarized below.
Funding trends. CMS noted that surveys are the principal quality
assurance system for Medicare and that the portion of the Medicare
budget devoted to quality assurance decreased from 0.1 percent in
fiscal year 2000 to 0.06 percent in fiscal year 2008. CMS commented
that by combining Medicare and Medicaid federal funding in our draft
report, we obscured the differences between the two funding sources and
the different decisions that face the Congress and executive branch. We
reported aggregate federal funding in our draft report because it is
the total federal funding available to support state survey activities.
However, we reported Medicare and Medicaid funding levels separately
for fiscal years 2000 through 2007 in appendix III and described in the
background section how both Medicare and Medicaid fund state survey
activities.
Examining the change in states' required survey workload. CMS commented
that our basic approach to examining the change in states' required
survey workload from fiscal years 2000 through 2007 was sound, but
disagreed with some elements of our analysis. AHFSA also disagreed with
a few elements.
* Use of tier 3 priorities. CMS commented that we understated the
number of facilities subject to state surveys in fiscal year 2007 and
omitted other survey activities, such as initial surveys of new
providers, which are a tier 4 priority. As we noted in our draft
report, however, the nationwide survey workload would still have
declined from fiscal year 2000 to fiscal year 2007 if we included tier
4 surveys. Because CMS's four-tier structure for prioritizing states'
survey workload did not exist in fiscal year 2000, we used the fiscal
year 2000 survey frequencies required by CMS policy. For fiscal year
1999, CMS's budget for survey activities was increased significantly
and CMS expected states to complete all surveys. Our draft report
pointed out that CMS subsequently established a system for
distinguishing between (1) its policy on survey frequencies
(essentially those for fiscal year 2000), and (2) the survey
priorities, as reflected in its tier structure, to which it holds
states accountable for meeting each year in its state performance
reviews. For the latter, CMS officials told us that they based their
reviews on the requirements in tiers 1 through 3 because they did not
believe funding was adequate to survey facilities that were a tier 4
priority. CMS adopted priorities because of the concern that resources
were insufficient to accomplish all of the survey workload but
maintained its policy on survey frequencies. CMS's comments indicate
that states that conduct initial surveys of new providers (a tier 4
priority) before completing all surveys in tiers 1 through 3 may be
required to submit a plan of correction and, in addition, there could
be other consequences. As such, our workload analysis for fiscal year
2007 used the survey priorities for which CMS held states accountable
in its state performance reviews during that fiscal year--tier 1
through 3 priorities.
* Differentiating between Medicare and Medicaid. CMS attempted to
replicate our survey workload analysis but separated it by the source
of funding--Medicare and Medicaid. CMS concluded that the Medicare-
funded workload increased by up to 20 percent from fiscal year 2000 to
fiscal year 2007. First, because we were attempting to measure states'
overall required workload, we did not differentiate between funding
streams. While the results of CMS's analysis are not inconsistent with
ours, the net effect remains a decrease in states' required survey
workload when the Medicaid workload is considered. Thus, we reported
that the decline from fiscal year 2000 to fiscal year 2007 in the
number of nursing homes and intermediate care facilities for the
mentally retarded, whose surveys receive significant Medicaid funding,
offset overall increases in other facilities, whose surveys are largely
Medicare-funded, because the two facility types are comparatively the
most resource-intensive facilities to survey. Second, in replicating
our methodology to incorporate the effect of survey hours on workload,
CMS used average survey hours by facility type for fiscal year 2000. As
noted in our draft report, because the yearly CMS survey hour data were
not consistent or reliable, we calculated national average survey hours
for each facility type for all fiscal years from 2000 through 2007. We
used these national averages in our analysis for both fiscal years 2000
and 2007. This could account for some of the difference between CMS's
and our results.
* Inclusion of 2008 data. CMS commented that our analysis did not
include data for fiscal year 2008 and, as such, may not accurately
reflect states' current workload. Our analysis was limited to the
change in states' required survey workload from fiscal year 2000 to
fiscal year 2007 because fiscal year 2008 data were not available when
we conducted our analysis. Wherever possible, we tried to note recent
CMS initiatives or regulations that could potentially affect workload,
including recent regulations requiring organ transplant center programs
to be surveyed and new survey requirements for hospices and end-stage
renal disease facilities. AHFSA commented on the costs associated with
implementing additional CMS requirements, such as new survey protocols
and data-entry time frames. However, CMS's comments acknowledged that
not all of the workload associated with its recent initiatives can be
quantified.
* States' complaint workload. Both CMS and AHFSA commented that our
analysis of the change in states' required survey workload did not
adequately account for the work associated with investigating
complaints. AHFSA noted that when its members were surveyed, those
states that responded indicated an overall increase in complaint growth
over the last 5 years. AHFSA's response did not quantify the increase.
CMS commented that the number of complaints investigated on-site
increased by about 13.1 percent from fiscal years 2005 to 2007. In our
draft report, we acknowledged that complaint investigations represented
a significant portion of states' workload. Although CMS implemented a
new complaint tracking system in fiscal year 2004, officials told us
that the agency lacks complete and reliable data on complaints received
and investigated. For example, in our draft report we noted that CMS
believes some states may be overestimating by 15 percent the number of
complaints investigated by reporting those complaints received and
investigated during standard surveys in the complaints database. We
included in our draft report a recommendation that the CMS
Administrator include information in the President's budget request on
projected state complaints and the cost of completing the associated
workload and the agency concurred with our recommendation.
* Enforcement workload. AHFSA commented that our analysis did not
account for the workload associated with enforcement activities. The
association noted that decoupling states' responsibilities to conduct
surveys, complaint investigations, and enforcement follow up is
impossible. As noted in our draft report, CMS (1) did not have reliable
and complete data on revisit surveys from fiscal years 2000 through
2004 and (2) data for fiscal years 2005 through 2007 showed that the
revisit workload declined by 4 percent. Because revisits are an
indication of enforcement actions, we believe that states' enforcement
workload also decreased.
* Length of an efficient survey. Finally, CMS commented that we did not
address how long a survey should take to achieve a quality result. In
its written comments, CMS noted that the only relevant hard data are
for survey hours that CMS regional office staff devote to federal
comparative surveys and that, for nursing homes, these surveys are
typically 15 percent to 25 percent longer than the average state survey
time. As noted in our draft report, CMS officials told us that they did
not know how long an efficient survey should take and could not assess
whether the considerable interstate variation in the length of surveys
was appropriate. Comparative surveys may not be the best measure of how
long a survey should take. Indeed, many officials from the states we
contacted during the course of our work told us that comparative
surveys were not a good measure. Moreover, our May 2008 report found
that when the number of surveyors and time on-site are taken together,
federal comparative surveys averaged 12.9 surveyor-days and the
corresponding state surveys averaged 12.6 surveyor-days in fiscal year
2007.
CMS oversight and state performance standards. CMS commented that in
fiscal year 2000, the base year of our analysis, there were few
consequences for poor performance and few, if any, effective national
measures of survey performance. CMS highlighted the improvements it had
since made to its performance system, which we noted in our draft
report. CMS commented further that its overall approach to
accountability is to communicate workload priorities by organizing them
into tiers, initiate consequences for unacceptable performance, and
match the strength of consequences with the priority and importance of
the work. We acknowledged CMS's efforts to link states' performance to
workload priorities and, as a result, we focused on changes in the
workload that CMS holds states accountable to complete.
Future trends. CMS believed that the Medicare-funded survey workload is
likely to continue to increase and that, given the overall federal
budget situation, it is imperative that the agency design survey
methodologies that leverage resources to ensure maximum productivity
and effectiveness. CMS highlighted examples of such productivity
enhancements, including implementing the Quality Indicator Survey
methodology for conducting nursing home surveys nationwide, targeting
resources to surveys of the most at-risk facilities, and investing in
methodologies that help states address their staffing barriers. AHFSA
also noted staffing challenges, such as (1) vacant or frozen surveyor
positions and (2) a lack of cross-trained surveyors who can survey more
than one type of facility. We noted some of these initiatives and
challenges in our draft report and, to the extent that we were able, we
indicated how these issues might affect states' survey workload. We
also made specific recommendations to the CMS Administrator for
improving the agency's ability to differentiate between funding and
management issues and to help ensure the quality of surveys.
CMS and AHFSA also provided technical comments, which we incorporated
as appropriate.
As agreed with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies to the
Administrator of the Centers for Medicare & Medicaid Services and
appropriate congressional committees. The report also will be available
at no charge on the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staffs have any questions about this report, please
contact me at (202) 512-7114 or dickenj@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions to
this report are listed in appendix VIII.
Signed by:
John E. Dicken:
Director, Health Care:
[End of section]
Appendix I: Scope and Methodology:
This appendix provides a more detailed description of our scope and
methodology.
Centers for Medicare & Medicaid Services (CMS) budget and expenditure
data. To identify the trends in federal funding for survey activities,
we reviewed the President's budget request and analyzed federal funding
for survey activities CMS expended for survey activities from fiscal
years 2000 through 2008.[Footnote 64] We selected fiscal year 2000
because of the significant increase in funding for survey activities
for fiscal year 1999 to support an increased workload associated with
the Nursing Home Oversight Improvement Program. We also analyzed data
provided by CMS on state survey expenditures from fiscal years 2000
through 2007, including the provision of supplemental funds to states
that spent more than their initial Medicare allocations by
redistributing unspent state allocations. To understand the Medicare
funding allocation process, we reviewed CMS's State Survey and
Certification Budget Call Letters or Mission and Priority Documents for
fiscal years 2000 through 2008; CMS uses these documents to (1) provide
instructions to states on preparing budget requests for federal funds,
(2) communicate anticipated federal Medicare funding levels to states,
and (3) communicate state survey priorities based on the requested
funding. We also discussed the survey budget process with CMS
officials, including their use of the Budget Analysis Tool, which the
agency began using in 2005 to better calibrate federal funding with
states' survey workloads. Because of its limited use, we did not
evaluate the tool's effectiveness. To gain a state and regional office
perspective on the budget process and how it had changed over time, we
interviewed regional office officials as well as state officials in two
states that spent more (Florida and New York) and two states that spent
less (Ohio and Washington) than their initial Medicare allocations for
fiscal years 2000 through 2006 and reviewed periodic state expenditure
reports.
CMS databases on state survey activities. To determine the extent to
which states completed their survey workloads, we analyzed CMS data on
the results of the fiscal year 2006 state performance review, the most
recent data available at the time we conducted our analysis.[Footnote
65] We subsequently compared state completion rates to those from the
fiscal year 2007 review when that data became available. In addition,
we used CMS's On-Line Survey, Certification, and Reporting (OSCAR)
system data to determine the number of facilities with survey
frequencies established by CMS that states had not surveyed within 6
and 10 years.
We also used OSCAR and CMS documents for fiscal years 2000 and 2007
[Footnote 66] to examine changes in states' required survey workload--
the workload that states would have to complete to meet statutory and
CMS survey frequency requirements. We then analyzed the effect of the
following three factors on states' required survey workload: (1)
changes in the number of facilities subject to state surveys including
state validation surveys of accredited facilities, (2) changes in
intervals between surveys from fiscal year 2000 to fiscal year 2007 for
facility types that lack statutory survey time frames, and (3)
differences in the time devoted to surveys across facility types.
First, we calculated the proportion of each facility type subject to
standard and validation surveys in every state based on survey
frequency requirements for fiscal years 2000 and 2007.[Footnote 67]
Second, we multiplied this result by national average survey hours for
each facility type to estimate survey workload in hours and computed
the percentage change in the required survey workload between fiscal
years 2000 and 2007 (see appendix V). We used national average hours
instead of state average survey hours for each facility type because
surveys for many facility types were too infrequent at the state level
to produce reliable data. We asked CMS to provide the survey hour data
because OSCAR data on state-specific survey hours was incomplete for
fiscal years 2000 through 2004.[Footnote 68] Because we used national
average survey hours, our analysis does not reflect differences in
average facility size across states; it also does not reflect any
differences in survey hours over time. Although CMS survey hour data
from fiscal years 2000 to 2007 showed an increase of about 4 percent
overall, this increase was not gradual from year-to-year and the
increases and decreases could not be explained. Therefore, we
determined that the yearly survey hour data were not consistent or
reliable. In assessing how states' survey workload changed over this
time period, we also considered state complaint investigations, survey
process improvements that increased survey hours, and facility revisits
required to ensure that serious deficiencies had been corrected. We did
not attempt to incorporate these state survey activities into our
workload analysis because the data lacked reliability and consistency
and the increases in survey hours were modest for most facility types.
CMS oversight of states' use of federal funds. To assess the
effectiveness of CMS oversight of states' use of survey funds, we
reviewed CMS's State Operations Manual, which sets expectations for
both CMS regional offices and states on budgeting and expenditure
reporting. We also examined CMS's state performance review protocols,
which included a standard on state budget practices and financial
reporting, and several audits of states' survey expenditures conducted
by the Department of Health and Human Services (HHS) Office of
Inspector General in fiscal years 2001 and 2002.[Footnote 69] We
discussed expectations of how CMS regional offices should carry out
oversight with central office officials and staff from five regional
offices and also obtained the perspective of state officials.
State perspectives. During early data collection for this study, we
interviewed state officials from Florida, New York, Ohio, and
Washington on issues such as the survey budget process, reasons for
over-or underspending federal Medicare allocations, completion of CMS
workload priorities, state licensure requirements, and staff
recruitment and retention. Subsequently, we sent e-mail questionnaires
to 27 other states covering similar issues as well as questions on
federal oversight, and we followed up with the 4 states already
interviewed. We used five factors to select these additional states,
which follow.
* Expenditure of federal Medicare allocations. We selected states that
spent at least 5 percent more or less than their total federal Medicare
budget from fiscal years 2000 through 2006 and whose total over-or
underspending was at least $500,000. At the time of our state
selection, data for fiscal year 2006 were the most recent data
available.
* Accomplishment of CMS workload priorities. We selected states that
accomplished 50 percent or fewer of CMS's workload priorities in tiers
1 through 3 for fiscal year 2006. At the time of our state selection,
data for fiscal year 2006 were the most recent data available.
* Quality of nursing home surveys. To gauge the quality of states'
nursing home surveys which most states were able to complete, we
analyzed the results of federal comparative surveys conducted from
fiscal years 2002 through 2007 using CMS's federal monitoring survey
database. We reported the results of this analysis in May 2008.
[Footnote 70] We selected states in which at least 25 percent of
federal surveys found that state surveys had missed serious
deficiencies.
* Number of facilities. Using CMS's OSCAR database, we selected states
that had experienced an increase or decrease of at least 20 percent in
the number of facilities from fiscal years 2000 through 2006.[Footnote
71] At the time of our state selection, data for fiscal year 2006 were
the most recent data available.
* Geographic distribution. We selected at least two states from each of
the 10 CMS regions.
Twenty-four of the 28 additional states responded to our e-mail
questionnaire; considering the 4 states contacted initially, we
collected information from a total of 28 states. In addition, we also
interviewed officials from the Association of Health Facility Survey
Agencies, an organization that represents state survey agencies.
Data reliability. We verified the consistency and reliability of
documentations and data that CMS provided through various means. On the
basis of CMS's documentation, we determined that CMS's data on state
survey expenditures from fiscal years 2000 through 2007 were reliable
for examining state expenditures and the allocation of supplemental
funds to states. We determined that CMS's state performance reviews
were reliable to understand states' completion of CMS survey priorities
because CMS uses this information for the same purpose. In addition,
CMS generally recognizes OSCAR data to be reliable and throughout the
course of our work we discussed our analysis of OSCAR data with CMS
officials to ensure that the data accurately reflected state survey
activities. We tested the data provided by CMS on survey hours for
consistency and compared the data to survey data from OSCAR. We also
interviewed CMS officials to learn about how they use the data and to
clarify any data discrepancies. We reviewed state-reported data for
consistency and plausibility and followed up with state officials to
retrieve missing data and resolve data inconsistencies. In general, we
determined that the data provided by the states were accurate for our
purposes.
[End of section]
Appendix II: CMS Survey Frequency Changes for Facilities Surveyed by
States, Fiscal Years 2000 through 2008:
Table 7 shows the overall survey frequencies by facility type against
which CMS measures each states' completion of its survey workload. In
fiscal year 2006, in response to available Medicare funding, the agency
began adjusting survey frequencies for facility types that lack
statutory survey time frames. According to CMS officials, these
adjustments did not alter its policy on survey frequency, which remains
at about every 6 years for most facilities with nonstatutory survey
frequencies.
Table 7: CMS Survey Frequency Changes for Facilities Surveyed by
States, Fiscal Years 2000 through 2008:
Survey frequency established by statute:
Type of facility: Home health agency[A]: Nonaccredited home health
agency;
Survey frequency: Fiscal year 2000:
Survey frequency: Fiscal years 2001-2005:
Survey frequency: Fiscal year 2006: 3 years;
Survey frequency: Fiscal year 2007: 3 years;
Survey frequency: Fiscal year 2008: 3 years.
Type of facility: Intermediate care facility for the mentally retarded;
Survey frequency: Fiscal year 2000:
Survey frequency: Fiscal years 2001-2005:
Survey frequency: Fiscal year 2006: Annually;
Survey frequency: Fiscal year 2007: Annually;
Survey frequency: Fiscal year 2008: Annually.
Type of facility: Nursing home[C];
Survey frequency: Fiscal year 2000:
Survey frequency: Fiscal years 2001-2005:
Survey frequency: Fiscal year 2006: Annually[C];
Survey frequency: Fiscal year 2007: Annually[C];
Survey frequency: Fiscal year 2008: Annually[C].
Survey frequency established by CMS:
Type of facility: Ambulatory surgical center[A]: Nonaccredited
ambulatory surgical center;
Survey frequency: Fiscal year 2000:
Survey frequency: Fiscal years 2001-2005:
Survey frequency: Fiscal year 2006: 8 years;
Survey frequency: Fiscal year 2007: 10 years;
Survey frequency: Fiscal year 2008: 7 years.
Type of facility: Ambulatory surgical center[A]: Accredited ambulatory
surgical centers[B];
Survey frequency: Fiscal year 2000: N/A;
Survey frequency: Fiscal years 2001-2005: 5 percent[E];
Survey frequency: Fiscal year 2006: 5 percent;
Survey frequency: Fiscal year 2007: 5 percent;
Survey frequency: Fiscal year 2008: 5 percent.
Type of facility: Comprehensive outpatient rehabilitation facility;
Survey frequency: Fiscal year 2000: 6.67 years;
Survey frequency: Fiscal years 2001-2005: 6 years;
Survey frequency: Fiscal year 2006: 8 years;
Survey frequency: Fiscal year 2007: 10 years;
Survey frequency: Fiscal year 2008: 7 years.
Type of facility: End-stage renal disease facility;
Survey frequency: Fiscal year 2000: 6.67 years;
Survey frequency: Fiscal years 2001-2005: 3 years;
Survey frequency: Fiscal year 2006: 3.5 years;
Survey frequency: Fiscal year 2007: 4 years;
Survey frequency: Fiscal year 2008: 4 years.
Type of facility: Home health agency[A]: Accredited home health agency
validation surveys[B];
Survey frequency: Fiscal year 2000: N/A;
Survey frequency: Fiscal years 2001-2005: 5 percent;
Survey frequency: Fiscal year 2006: 5 percent;
Survey frequency: Fiscal year 2007: 5 percent;
Survey frequency: Fiscal year 2008: 5 percent.
Type of facility: Hospice[A]: Nonaccredited hospice;
Survey frequency: Fiscal year 2000: 6.67 years;
Survey frequency: Fiscal years 2001-2005: 6 years;
Survey frequency: Fiscal year 2006: 8 years;
Survey frequency: Fiscal year 2007: 10 years;
Survey frequency: Fiscal year 2008: 7 years.
Type of facility: Hospice[A]: Accredited hospices[B];
Survey frequency: Fiscal year 2000: N/A;
Survey frequency: Fiscal years 2001-2005: 5 percent[E];
Survey frequency: Fiscal year 2006: 5 percent;
Survey frequency: Fiscal year 2007: 5 percent;
Survey frequency: Fiscal year 2008: 5 percent.
Type of facility: Hospital[A]: Nonaccredited hospital;
Survey frequency: Fiscal year 2000: 9 years;
Survey frequency: Fiscal years 2001-2005: 3 years;
Survey frequency: Fiscal year 2006: 4.5 years;
Survey frequency: Fiscal year 2007: 4.5 years;
Survey frequency: Fiscal year 2008: 4.5 years.
Type of facility: Hospital[A]: Accredited hospitals[B];
Survey frequency: Fiscal year 2000: 5 percent;
Survey frequency: Fiscal years 2001-2005: 1 percent[F];
Survey frequency: Fiscal year 2006: 1 percent;
Survey frequency: Fiscal year 2007: 1 percent;
Survey frequency: Fiscal year 2008: 1 percent.
Type of facility: Organ transplant center[D];
Survey frequency: Fiscal year 2000: N/A;
Survey frequency: Fiscal years 2001-2005: N/A;
Survey frequency: Fiscal year 2006: N/A;
Survey frequency: Fiscal year 2007: To be determined;
Survey frequency: Fiscal year 2008: 3 years.
Type of facility: Outpatient physical therapy;
Survey frequency: Fiscal year 2000: 6.67 years;
Survey frequency: Fiscal years 2001-2005: 6 years;
Survey frequency: Fiscal year 2006: 8 years;
Survey frequency: Fiscal year 2007: 10 years;
Survey frequency: Fiscal year 2008: 7 years.
Type of facility: Portable X-ray service;
Survey frequency: Fiscal year 2000: 6.67 years;
Survey frequency: Fiscal years 2001-2005: 6 years;
Survey frequency: Fiscal year 2006: 8 years;
Survey frequency: Fiscal year 2007: 8 years;
Survey frequency: Fiscal year 2008: 7 years.
Type of facility: Psychiatric residential treatment facility[B];
Survey frequency: Fiscal year 2000: N/A;
Survey frequency: Fiscal years 2001-2005: 5 years[G];
Survey frequency: Fiscal year 2006: 5 years;
Survey frequency: Fiscal year 2007: 5 years;
Survey frequency: Fiscal year 2008: 5 years.
Type of facility: Rural health clinic;
Survey frequency: Fiscal year 2000: 6.67 years;
Survey frequency: Fiscal years 2001-2005: 6 years;
Survey frequency: Fiscal year 2006: 8 years;
Survey frequency: Fiscal year 2007: 10 years;
Survey frequency: Fiscal year 2008: 7 years.
Source: CMS.
Note: In fiscal years 2000 and 2001, CMS required that states survey an
established percentage of providers for a given provider type (e.g., 15
percent). CMS changed this requirement in later years to intervals
(e.g., every 6 years). In order to allow comparison among years, we
present the 2000 and 2001 requirements in intervals (e.g., every 6.67
years) instead of percentages (e.g., 15 percent). Requirements for
fiscal years 2006 through 2008 reflect CMS's survey priorities as
established in tiers 1 to 3.
[A] These facility types can choose to be inspected by an accrediting
organization, such as the Joint Commission, or by states. Nearly 80
percent of ambulatory surgical centers and 85 percent of hospices were
surveyed by states as of fiscal year 2007.
[B] There are two types of state validation surveys that evaluate
accreditation organizations' ability to ensure facilities' compliance
with Medicare quality standards: (1) representative sample surveys,
which are standard surveys conducted shortly after an accreditation
organization survey in order to assess the accreditation organization's
survey process, and (2) complaint surveys, which are used to identify
the compliance of the accredited facility with selected regulatory
requirements noted in the complaint received by CMS. This table
reflects representative sample validation surveys. In the case of a
psychiatric residential treatment facility, state surveys verify that
the facility is in compliance with its attestation concerning the use
of restraints.
[C] By statute, every nursing home receiving Medicare or Medicaid
payments must undergo a standard survey not less than once every 15
months, and the statewide average interval for these surveys must not
exceed 12 months.
[D] In 2007, CMS issued a regulation that requires organ transplant
center programs to be surveyed. These surveys will be phased in over a
3-year period, beginning in 2007. See 42 C.F.R. § 488.61 (2008).
[E] Accredited ambulatory surgical centers and hospices did not have an
established rate for their validation surveys until 2002.
[F] The rate for representative sample validation surveys of accredited
hospitals changed from 5 percent to 1 percent in 2003.
[G] Accredited psychiatric residential treatment facilities did not
have an established rate for their representative sample validation
surveys until 2002 and in 2003 validation surveys were done for 5
percent of facilities.
[End of table]
[End of section]
Appendix III: Federal Funding for Survey Activities in Actual and
Inflation-Adjusted Dollars, Fiscal Years 2000 through 2007:
Table 8: Federal Funding for Survey Activities (in millions), Actual
Dollars, Fiscal Years 2000 through 2007:
Fiscal year: 2000;
Medicare: $209.7;
Medicaid: $146.7;
Total: $356.4.
Fiscal year: 2001;
Medicare: $242.1;
Medicaid: $162.2;
Total: $404.4.
Fiscal year: 2002;
Medicare: $253.1;
Medicaid: $172.2;
Total: $425.3.
Fiscal year: 2003;
Medicare: $252.7;
Medicaid: $164.1;
Total: $416.8.
Fiscal year: 2004;
Medicare: $251.3;
Medicaid: $169.8;
Total: $421.0.
Fiscal year: 2005;
Medicare: $258.7;
Medicaid: $177.4;
Total: $436.1.
Fiscal year: 2006;
Medicare: $258.1;
Medicaid: $183.7;
Total: $441.8.
Fiscal year: 2007[A];
Medicare: $258.1;
Medicaid: $185.7;
Total: $443.9.
Fiscal year: Change from 2000 to 2007;
Medicare: 23.1%;
Medicaid: 26.6%;
Total: 24.5%.
Fiscal year: From 2000 to 2002;
Total: 19.3%.
Fiscal year: From 2002 to 2007;
Total: 4.3%.
Source: CMS.
[A] Numbers do not sum due to rounding.
[End of table]
Table 9: Federal Funding for Survey Activities (in millions), Inflation-
Adjusted to Fiscal Year 2000 Dollars, Fiscal Years 2000 through 2007:
Fiscal year: 2000;
Medicare: $209.7;
Medicaid: $146.7;
Total: $356.4.
Fiscal year: 2001;
Medicare: $236.6;
Medicaid: $158.5;
Total: $395.1.
Fiscal year: 2002;
Medicare: $242.6;
Medicaid: $165.1;
Total: $407.7.
Fiscal year: 2003;
Medicare: $237.5;
Medicaid: $154.1;
Total: $391.6.
Fiscal year: 2004;
Medicare: $230.1;
Medicaid: $155.5;
Total: $385.6.
Fiscal year: 2005;
Medicare: $229.6;
Medicaid: $157.4;
Total: $387.0.
Fiscal year: 2006;
Medicare: $221.7;
Medicaid: $157.8;
Total: $379.5.
Fiscal year: 2007;
Medicare: $215.9;
Medicaid: $155.3;
Total: $371.2.
Fiscal year: Change from 2000 to 2007;
Medicare: 3.0%;
Medicaid: 5.9%;
Total: 4.2%.
Fiscal year: From 2000 to 2002;
Total: 14.4%.
Fiscal year: From 2002 to 2007;
Total: (9.0%).
Source: GAO analysis of CMS data.
[End of table]
[End of section]
Appendix IV: Number of and Percentage Change in Facilities Subject to
State Standard and Validation Surveys, 2000 to 2007:
Facilities subject to state standard surveys:
Type of facility: Ambulatory surgical center;
Number of facilities: December 2000: 2,959;
Number of facilities: December 2007: 3,865;
Change (percentage change): 906 (31).
Type of facility: End-stage renal disease facility;
Number of facilities: December 2000: 3,951;
Number of facilities: December 2007: 5,050;
Change (percentage change): 1,099 (28).
Type of facility: Hospice;
Number of facilities: December 2000: 2,169;
Number of facilities: December 2007: 2,746;
Change (percentage change): 577 (27).
Type of facility: Home health agency;
Number of facilities: December 2000: 6,569;
Number of facilities: December 2007: 7,909;
Change (percentage change): 1,340 (20).
Type of facility: Rural health clinics;
Number of facilities: December 2000: 3,334;
Number of facilities: December 2007: 3,781;
Change (percentage change): 447 (13).
Type of facility: Comprehensive outpatient rehabilitation facility;
Number of facilities: December 2000: 518;
Number of facilities: December 2007: 535;
Change (percentage change): 17 (3).
Type of facility: Outpatient physical therapy or outpatient speech
pathology services;
Number of facilities: December 2000: 2,871;
Number of facilities: December 2007: 2,913;
Change (percentage change): 42 (1).
Type of facility: Hospital;
Number of facilities: December 2000: 2,086;
Number of facilities: December 2007: 2,187;
Change (percentage change): 101 (5).
Type of facility: Intermediate care facility for the mentally retarded;
Number of facilities: December 2000: 6,767;
Number of facilities: December 2007: 6,443;
Change (percentage change): -324 (-5).
Type of facility: Nursing home;
Number of facilities: December 2000: 16,946;
Number of facilities: December 2007: 15,827;
Change (percentage change): -1,119 (-7).
Type of facility: Portable X-ray service;
Number of facilities: December 2000: 675;
Number of facilities: December 2007: 550;
Change (percentage change): -125 (-19).
Type of facility: Organ transplant center[A];
Number of facilities: December 2000: 0;
Number of facilities: December 2007: 254;
Change (percentage change): 254 (N/A).
Type of facility: Psychiatric residential treatment facility;
Number of facilities: December 2000: 0;
Number of facilities: December 2007: 87;
Change (percentage change): 87 (N/A).
Type of facility: Total;
Number of facilities: December 2000: 48,845;
Number of facilities: December 2007: 52,147;
Change (percentage change): 3,302 (7).
Facilities subject to state validation surveys:
Type of facility: Home health agency;
Number of facilities: December 2000: 557;
Number of facilities: December 2007: 1,326;
Change (percentage change): 769 (138).
Type of facility: Hospice;
Number of facilities: December 2000: 66;
Number of facilities: December 2007: 471;
Change (percentage change): 405 (614).
Type of facility: Ambulatory surgical center;
Number of facilities: December 2000: 169;
Number of facilities: December 2007: 1,072;
Change (percentage change): 903 (534).
Type of facility: Psychiatric residential treatment facility;
Number of facilities: December 2000: 0;
Number of facilities: December 2007: 185;
Change (percentage change): 185 (N/A).
Type of facility: Hospital;
Number of facilities: December 2000: 4,607;
Number of facilities: December 2007: 4,434;
Change (percentage change):
-173 (-4).
Type of facility: Total;
Number of facilities: December 2000: 5,399;
Number of facilities: December 2007: 7,488;
Change (percentage change): 2,089 (39).
Type of facility: Overall;
Number of facilities: December 2000: 54,244;
Number of facilities: December 2007: 59,635;
Change (percentage change): 5,391 (10).
Source: GAO analysis of CMS data and Organ Procurement and
Transplantation Network data.
[A] The total number of organ transplant centers is as of January 2008;
collectively these centers operated 844 organ transplant programs. Each
transplant center may have more than one organ-specific program, each
of which will be surveyed separately.
[End of table]
[End of section]
Appendix V: Change in States' Required Survey Workload from Fiscal Year
2000 to Fiscal Year 2007:
In order to determine how states' required survey workload--the
workload that states would have to complete to meet statutory and CMS
survey frequency requirements--has changed from fiscal year 2000 to
fiscal year 2007, we analyzed OSCAR and CMS data for fiscal years 2000
and 2007. First, we determined percentage changes in the number of
facilities subject to state surveys, including state validation surveys
of accredited facilities. Second, we combined the effects of the number
of facilities subject to standard and validation surveys with the
survey frequency requirements for fiscal years 2000 and 2007. Third, we
incorporated the effect of survey hours for each facility type using
average national survey hours to determine the change in states'
required survey workload between fiscal years 2000 and 2007. States are
listed from highest to lowest based on the percentage change in the
number of facilities subject to surveys.
Table 1o: Percentage Change in Number of Facilities Subject to State
Surveys, Number of Surveys Each State Is Expected to Conduct, and
Required Survey Workload after Factoring in National Survey Hours,
Fiscal Years 2000 and 2007:
State: Nevada;
Percentage change in number of facilities subject to surveys: 36.4%;
Percentage change in number of surveys each state is expected to
conduct[A]: 3.4%;
Percentage change in required workload[B]: -1.7%.
State: Utah;
Percentage change in number of facilities subject to surveys: 35.8%;
Percentage change in number of surveys each state is expected to
conduct[A]: 16.6%;
Percentage change in required workload[B]: 7.1%.
State: Florida;
Percentage change in number of facilities subject to surveys: 31.1%;
Percentage change in number of surveys each state is expected to
conduct[A]: 11.5%;
Percentage change in required workload[B]: 1.0%.
State: Texas;
Percentage change in number of facilities subject to surveys: 26.2%;
Percentage change in number of surveys each state is expected to
conduct[A]: 7.2%;
Percentage change in required workload[B]: 0.5%.
State: Michigan;
Percentage change in number of facilities subject to surveys: 24.4%;
Percentage change in number of surveys each state is expected to
conduct[A]: -1.0%;
Percentage change in required workload[B]: -2.1%.
State: Mississippi;
Percentage change in number of facilities subject to surveys: 18.8%;
Percentage change in number of surveys each state is expected to
conduct[A]: 7.2%;
Percentage change in required workload[B]: 7.8%.
State: Missouri;
Percentage change in number of facilities subject to surveys: 16.7%;
Percentage change in number of surveys each state is expected to
conduct[A]: -2.5%;
Percentage change in required workload[B]: -5.5%.
State: Arizona;
Percentage change in number of facilities subject to surveys: 16.5%;
Percentage change in number of surveys each state is expected to
conduct[A]: 0.0%;
Percentage change in required workload[B]: -4.5%.
State: Washington;
Percentage change in number of facilities subject to surveys: 16.3%;
Percentage change in number of surveys each state is expected to
conduct[A]: -9.1%;
Percentage change in required workload[B]: -11.1%.
State: Delaware;
Percentage change in number of facilities subject to surveys: 14.2%;
Percentage change in number of surveys each state is expected to
conduct[A]: 2.0%;
Percentage change in required workload[B]: 2.7%.
State: Illinois;
Percentage change in number of facilities subject to surveys: 13.7%;
Percentage change in number of surveys each state is expected to
conduct[A]: 1.0%;
Percentage change in required workload[B]: -4.0%.
State: Alabama;
Percentage change in number of facilities subject to surveys: 12.6%;
Percentage change in number of surveys each state is expected to
conduct[A]: 1.8%;
Percentage change in required workload[B]: 2.5%.
State: Georgia;
Percentage change in number of facilities subject to surveys: 12.2%;
Percentage change in number of surveys each state is expected to
conduct[A]: 2.8%;
Percentage change in required workload[B]: 1.3%.
State: Nebraska;
Percentage change in number of facilities subject to surveys: 12.2%;
Percentage change in number of surveys each state is expected to
conduct[A]: 0.7%;
Percentage change in required workload[B]: -1.8%.
State: Colorado;
Percentage change in number of facilities subject to surveys: 12.1%;
Percentage change in number of surveys each state is expected to
conduct[A]: -2.0%;
Percentage change in required workload[B]: -4.4%.
State: Oregon;
Percentage change in number of facilities subject to surveys: 12.0%;
Percentage change in number of surveys each state is expected to
conduct[A]: -3.5%;
Percentage change in required workload[B]: -6.5%.
State: Kentucky;
Percentage change in number of facilities subject to surveys: 11.4%;
Percentage change in number of surveys each state is expected to
conduct[A]: -2.3%;
Percentage change in required workload[B]: -4.3%.
State: Idaho;
Percentage change in number of facilities subject to surveys: 11.4%;
Percentage change in number of surveys each state is expected to
conduct[A]: -2.7%;
Percentage change in required workload[B]: -4.5%.
State: New Jersey;
Percentage change in number of facilities subject to surveys: 10.7%;
Percentage change in number of surveys each state is expected to
conduct[A]: 0.4%;
Percentage change in required workload[B]: 0.2%.
State: Louisiana;
Percentage change in number of facilities subject to surveys: 10.2%;
Percentage change in number of surveys each state is expected to
conduct[A]: 2.1%;
Percentage change in required workload[B]: -3.4%.
State: Virginia;
Percentage change in number of facilities subject to surveys: 9.8%;
Percentage change in number of surveys each state is expected to
conduct[A]: 5.3%;
Percentage change in required workload[B]: 0.8%.
State: Ohio;
Percentage change in number of facilities subject to surveys: 7.3%;
Percentage change in number of surveys each state is expected to
conduct[A]: -1.4%;
Percentage change in required workload[B]: -3.5%.
State: California;
Percentage change in number of facilities subject to surveys: 6.5%;
Percentage change in number of surveys each state is expected to
conduct[A]: 0.6%;
Percentage change in required workload[B]: -2.7%.
State: Oklahoma;
Percentage change in number of facilities subject to surveys: 5.9%;
Percentage change in number of surveys each state is expected to
conduct[A]: -1.9%;
Percentage change in required workload[B]: -9.6%.
State: North Carolina;
Percentage change in number of facilities subject to surveys: 5.1%;
Percentage change in number of surveys each state is expected to
conduct[A]: 4.9%;
Percentage change in required workload[B]: 3.5%.
State: Iowa;
Percentage change in number of facilities subject to surveys: 4.1%;
Percentage change in number of surveys each state is expected to
conduct[A]: -0.4%;
Percentage change in required workload[B]: -1.3%.
State: New Mexico;
Percentage change in number of facilities subject to surveys: 4.0%;
Percentage change in number of surveys each state is expected to
conduct[A]: -3.0%;
Percentage change in required workload[B]: -5.5%.
State: South Carolina;
Percentage change in number of facilities subject to surveys: 2.8%;
Percentage change in number of surveys each state is expected to
conduct[A]: -15.7%;
Percentage change in required workload[B]: -10.5%.
State: Maryland;
Percentage change in number of facilities subject to surveys: 2.8%;
Percentage change in number of surveys each state is expected to
conduct[A]: -8.8%;
Percentage change in required workload[B]: -9.6%.
State: Tennessee;
Percentage change in number of facilities subject to surveys: 2.4%;
Percentage change in number of surveys each state is expected to
conduct[A]: -8.9%;
Percentage change in required workload[B]: -8.6%.
State: Pennsylvania;
Percentage change in number of facilities subject to surveys: 1.8%;
Percentage change in number of surveys each state is expected to
conduct[A]: -6.0%;
Percentage change in required workload[B]: -6.8%.
State: Kansas;
Percentage change in number of facilities subject to surveys: 1.7%;
Percentage change in number of surveys each state is expected to
conduct[A]: -8.5%;
Percentage change in required workload[B]: -8.9%.
State: New Hampshire;
Percentage change in number of facilities subject to surveys: 0.9%;
Percentage change in number of surveys each state is expected to
conduct[A]: -2.5%;
Percentage change in required workload[B]: -1.3%.
State: Indiana;
Percentage change in number of facilities subject to surveys: 0.9%;
Percentage change in number of surveys each state is expected to
conduct[A]: -7.2%;
Percentage change in required workload[B]: -8.6%.
State: South Dakota;
Percentage change in number of facilities subject to surveys: 0.6%;
Percentage change in number of surveys each state is expected to
conduct[A]: -1.4%;
Percentage change in required workload[B]: -1.0%.
State: Arkansas;
Percentage change in number of facilities subject to surveys: 0.1%;
Percentage change in number of surveys each state is expected to
conduct[A]: -5.6%;
Percentage change in required workload[B]: -6.6%.
State: Connecticut;
Percentage change in number of facilities subject to surveys: -0.2%;
Percentage change in number of surveys each state is expected to
conduct[A]: -4.5%;
Percentage change in required workload[B]: -5.1%.
State: Alaska;
Percentage change in number of facilities subject to surveys: -2.0%;
Percentage change in number of surveys each state is expected to
conduct[A]: -0.6%;
Percentage change in required workload[B]: 4.4%.
State: Hawaii;
Percentage change in number of facilities subject to surveys: -3.7%;
Percentage change in number of surveys each state is expected to
conduct[A]: -3.8%;
Percentage change in required workload[B]: -0.2%.
State: Wisconsin;
Percentage change in number of facilities subject to surveys: -3.8%;
Percentage change in number of surveys each state is expected to
conduct[A]: -8.7%;
Percentage change in required workload[B]: -7.0%.
State: West Virginia;
Percentage change in number of facilities subject to surveys: -4.8%;
Percentage change in number of surveys each state is expected to
conduct[A]: 0.5%;
Percentage change in required workload[B]: -2.9%.
State: Massachusetts;
Percentage change in number of facilities subject to surveys: -4.8%;
Percentage change in number of surveys each state is expected to
conduct[A]: -13.2%;
Percentage change in required workload[B]: -14.9%.
State: Montana;
Percentage change in number of facilities subject to surveys: -5.1%;
Percentage change in number of surveys each state is expected to
conduct[A]: -9.1%;
Percentage change in required workload[B]: -8.9%.
State: Minnesota;
Percentage change in number of facilities subject to surveys: -5.4%;
Percentage change in number of surveys each state is expected to
conduct[A]: -11.3%;
Percentage change in required workload[B]: -10.3%.
State: Wyoming;
Percentage change in number of facilities subject to surveys: -6.3%;
Percentage change in number of surveys each state is expected to
conduct[A]: -6.0%;
Percentage change in required workload[B]: -1.8%.
State: Vermont;
Percentage change in number of facilities subject to surveys: -7.6%;
Percentage change in number of surveys each state is expected to
conduct[A]: -11.1%;
Percentage change in required workload[B]: -8.7%.
State: Maine;
Percentage change in number of facilities subject to surveys: -8.1%;
Percentage change in number of surveys each state is expected to
conduct[A]: -15.3%;
Percentage change in required workload[B]: -11.3%.
State: District of Columbia;
Percentage change in number of facilities subject to surveys: -8.1%;
Percentage change in number of surveys each state is expected to
conduct[A]: -9.9%;
Percentage change in required workload[B]: -8.7%.
State: New York;
Percentage change in number of facilities subject to surveys: -8.7%;
Percentage change in number of surveys each state is expected to
conduct[A]: -11.8%;
Percentage change in required workload[B]: -7.7%.
State: North Dakota;
Percentage change in number of facilities subject to surveys: -10.1%;
Percentage change in number of surveys each state is expected to
conduct[A]: -4.1%;
Percentage change in required workload[B]: -2.7%.
State: Rhode Island;
Percentage change in number of facilities subject to surveys: -13.1%;
Percentage change in number of surveys each state is expected to
conduct[A]: -21.8%;
Percentage change in required workload[B]: -17.2%.
State: Nation;
Percentage change in number of facilities subject to surveys: 9.0%;
Percentage change in number of surveys each state is expected to
conduct[A]: -1.9%;
Percentage change in required workload[B]: -4.2%.
Source: GAO analysis of CMS data.
[A] The total number of surveys each state is expected to conduct in a
given year is calculated by summing the product by facility type of the
(1) number of facilities and (2) survey frequency.
[B] Required workload for each state in a given year is calculated by
summing the product of (1) number of facilities, each facility type,
(2) average survey hours of all surveys conducted from 2000 through
2007 in the U.S., each facility type, and (3) survey frequency, each
facility type.
[End of table]
[End of section]
Appendix VI: Comments from the Centers for Medicare & Medicaid
Services:
Department Of Health & Human Services:
Office Of The Secretary
Assistant Secretary For Legislation:
Washington, Dc 20201:
January 21, 2009:
John E. Dicken:
Director, Health Care:
U.S. Government Accountability Office:
441 G Street N.W.
Washington, DC 20548:
Dear Mr. Dicken:
Enclosed are comments on the U.S. Government Accountability Office's
(GAO) report entitled: "Medicare And Medicaid Participating Facilities:
CMS Needs to Reexamine Its Approach for Funding State Oversight of
Health Care Facilities (GAO-09-64).
The Department appreciates the opportunity to review this report before
its publication.
Sincerely,
Signed by:
Barbara Pisaro Clark:
Acting Assistant Secretary for Legislation:
Attachment:
[End of letter]
To: John Dicken Director, Health Care:
Government Accountability Office:
From: Kerry Weems:
Acting Administrator:
Subject: Government Accountability Office (GAO) Draft Report: Medicare
And Medicaid Participating Facilities: CMS Needs to Reexamine Its
Approach for Funding State Oversight of Health Care Facilities (GAO-09-
064):
Thank you for the opportunity to comment on the subject GAO Draft
Report, prepared at the request of the Special Committee on Aging and
the Committee on Finance. The objectives of this report are to
determine:
1. What changes have occurred in the survey and certification budget
since the 1999 increase in funding to implement the Centers for
Medicare & Medicaid Services' (CMS) nursing home initiatives?
2. To what extent has funding kept pace with the growing CMS and State
workload?
3. Are sufficient resources being directed towards oversight of all
Medicare and Medicaid providers? and;
4. Should these resources be increased, redirected, or otherwise
modified?
While there are many useful recommendations in the report, there are
some serious issues with the methodology used in the workload analysis
section for survey & certification (S&C). For example, the mixing of
Medicare and Medicaid workloads into one summary statistic obscures the
fact that the Medicare workload is increasing while the Medicaid
workload is decreasing. Since Medicare and Medicaid must be budgeted
and cost-accounted separately, distinct workload calculations are
necessary for the two funding sources.
The report also uses different standards to measure the workload in
fiscal year (FY) 2007 compared to FY 2000. For FY 2007 the GAO analysis
artificially truncated the workload at the "Tier III" priority level,
thereby omitting "Tier IV" work such as initial surveys of many new
providers. In FY 2000 CMS did not provide such priority guidance to
States, and the GAO used all surveys in the FY 2000 "base year"
calculation. The different methodology applied to the 2 years results
in an "apples to oranges" comparison that can be misleading. We hope
that our explanation of these and other aspects of the report,
described in more detail in the following pages, can help to clarify
important trends and provide a clear sense of budget issues and
choices.
The report contains many useful recommendations, all of which we will
adopt in whole or in part, as noted below in our responses to the GAO
recommendations.
CMS Comments:
The S&C is the principal quality assurance system for Medicare (as well
as important aspects of Medicaid). Trained and objective State and
Federal surveyors make onsite reviews of each provider to identify
quality problems and hold providers accountable for failure to meet
Federal standards for patient safety and quality of care. About 8I,000
providers are subject to onsite surveys, and about 104,000 surveys are
conducted each year (including complaint investigation surveys[Footnote
72]).
What percentage of the Medicare program ought to be devoted to Medicare
quality assurance?
The answer depends upon the level of oversight and quality assurance
that Congress and the Executive Branch believe is needed to assure
basic quality, and the level that the Nation can afford compared with
other priorities.
In the late 1990s Congress addressed itself to this issue, expressing
serious concern with the level of Medicare quality assurance. Congress
and the Administration subsequently increased the S&C Medicare portion
of the Medicare budget to 0.10 percent.
Beginning in FY 2005, however, actual appropriations have been well
below the President's Medicare budget requests for S&C. The cumulative
difference between the President's budget request and final
appropriation for the 4-year period FY 2005-2008 amounted to $52
million. The S&C Medicare proportion of the overall Medicare budget
declined substantially until the 110th Congress arrested the decline in
2008. Figure 1 shows the bottoming out of the percent devoted to
Medicare quality assurance as it declined from 0.10 percent of the
overall Medicare budget in FY 2000 to 0.06 percent in FY 2008.
Figure 1: S&C Medicare Budget as Percent of Total Medicare Budget:
[Refer to PDF for image: line graph]
Percentage fro 0.05% to 0.11% plotted versus years 1999 through 2008.
[End of figure]
Funding Trends in Detail:
The GAO observes that "In inflation-adjusted terms, funding increased
modestly by 4 percent over the entire eight fiscal years [from FY 2000
to 2007], but fell 9 percent from fiscal years 2002 through 2007."
[Footnote 73]
The GAO figures reflect the combined total of Medicare and Medicaid. A
clearer picture of trends emerges when Medicare and Medicaid are
identified separately. For Medicaid, the inflation-adjusted funding
declined by 5.9 percent[Footnote 74] from FY 2002 to 2007. For
Medicare, the inflation-adjusted funding for S&C declined by 11,0
percent. Figure 2 shows these recent trends[Footnote 75].
Figure 2: Inflation-Adjusted S&C Funding - Change FY2002-07:
[Refer to PDF for image: vertical bar graph]
Percentage from 0 to -12.0% plotted versus time, FY 2002-2007.
[End of figure]
Isolating the different funding trends in Medicare and Medicaid is
important because the Medicaid portion of the S&C workload has declined
modestly, but the Medicare portion has increased while inflation-
adjusted funding has decreased. In addition, the Federal share of
Medicaid is part of mandatory Medicaid spending law. (Social Security
Act: Title XVIII, section 1864 (Medicare - discretionary funding),
Title XIX, section I919 (Medicaid - mandatory funding). For the
Medicare portion of S&C funding Congress considers the President's
budget request each year in the appropriation process, and may approve
the requested level or indicate a different level.
Summary statements throughout the report that combine Medicaid and
Medicare into a single finding (for the analyses of both workload and
funding) serve to obscure the important differences between the two and
the different decisions that face the Congress and Executive Branch.
GAO Workload Analysis:
The GAO analysis of the S&C workload is based on (a) multiplying the
number of providers in FY 2000 for each provider type (e.g., nursing
homes), times (b) the frequency of surveys that CMS policy called for
in that FY (e.g., once per year), times (c) the average number of hours
for each survey for each different type of provider. The GAO then made
the same calculations for FY 2007 using 2007 data, except for holding
the average hours per survey constant at the FY 2000 level so as to
isolate the workload changes. The two results are then compared. While
this basic approach is sound, there are a number of methodological
problems in its implementation:
* Apples to Oranges Comparison: The GAO used one standard for the
frequency of surveys in FY 2000, and then used a different standard for
FY 2007. In specific: for FY 2000 (the base year in the comparison) GAO
used all CMS priority "Tiers," but for FY 2007 used only Tiers 1-3.
[Footnote 76] This artificially truncated the FY 2007 workload numbers
and omits a variety of survey activities, including initial surveys of
many new providers.
* Obscuring the Medicare Trends and Implications: We recommend that the
GAO clarify the difference between the Medicare and Medicaid survey
workloads. As with the funding trends, combining Medicare and Medicaid
workloads into a single workload statistic obscures the fact that the
Medicare workload has gone up while it is the Medicaid workload that
has gone down.
* Increased Medicare Regulations: Because GAO's analysis did not
include FY 2008 data, the report does not reflect improved regulation
of key provider types such as the first-ever regulation and survey
process for hospital transplant centers effective June 28, 2007
(currently about 878 centers), and the new regulation for dialysis
facilities, effective October 14, 2008.
* Ignoring Complaint Investigations: The GAO correctly observes that
reliable complaint investigation numbers for both received and
investigated complaints is not available for the full time period under
consideration (FY 2000 through 2007). However, such data are available
for 2005-2007 after CMS improved its system for recording and tracking
complaints. These data are useful in considering future workload
implications.
Since funding for Medicare and Medicaid workloads must be budgeted and
cost-accounted separately, the most useful workload analysis is one
that identifies the separate dynamics affecting each funding source.
Figure 3 shows the workload change from FY 2000 through 2007 for
Medicare in the first two bars, using GAO's methodology of holding the
FY00 average hours per certification survey constant and calculating
and comparing the FY)) and FY07 workloads, while the second two-bar set
portrays the same information for Medicaid using our best estimate of
the GAO methodology and number of providers. In short, the Medicare
workload went up (by 4.5 percent) while the Medicaid workload went down
(by 8.2 percent). The Medicaid workload has diminished primarily due to
(a) deinstitutionalization efforts by States that have reduced their
Intermediate Care Facilities for the Mentally Retarded (ICFs/MR) in
favor of home and community-based services, and (b) a substantial
decline in the number of Medicaid-only nursing homes.
Figure 3: Medicare + Medicaid Workload Change: GAO Method:
FY2000 v. 2007(w/o Complaint Investigations):
[Refer to PDF for image: vertical bar graph]
Medicare Aggregate survey hours:
FY2000: 1,410,439;
FY2007: 1,474,220.
Medicaid Aggregate survey hours:
FY2000: 1,761,084;
FY2007: 1,616,281.
[End of figure]
It is clear from Figure 3 that Medicaid's 8.2 percent workload
reduction obscures the 4.5 percent Medicare workload increase when the
two sets of figures are combined into one summary workload statistic.
CMS Workload Analysis:
Figure 4 shows the different conclusions one would reach if more of the
methodological considerations are taken into account. Focusing on
Medicare, the first column (FY00) shows the Medicare workload using the
GAO methodology for FY 2000. The second column (FY07 GAO Method) shows
the FY 2007 Medicare result, using our best estimate of the GAO
methodology that includes only Medicare survey frequencies at the Tier
III level (omitting Tier IV and omitting Medicaid). In this column FY
2000 hours per survey for each provider type were used to control for
any difference in survey hours between FY 2000 and FY 2007.
Figure 4: Medicare Workload Comparison of Methods:
[Refer to PDF for image: vertical bar graph]
FY00 Actual Hours (All Tiers):
Aggregate survey hours: 1,410,439.
FY07 GAO method:
Aggregate survey hours: 1,474,220.
FY07 Corrected (All Tiers):
Aggregate survey hours: 1,541,686.
FY07 Actual Hours (All Tiers):
Aggregate survey hours: 1,690,856.
[End of figure]
The third column in Figure 4 (FY 07 Corrected (All Tiers)) shows the
result if all four priority Tiers were used for FY 2007 (thus restoring
an apples to apples comparison with FY 2000). In this column, FY 2000
hours per survey were also used to control for any difference in survey
hours. The column shows a 9.3 percent increase in Medicare workload
compared to FY 2000.
The last column is the same as the third column (all priority Tiers are
included) except that it uses FY 2007 actual average hours per survey
for each provider type rather than holding the hours constant at the FY
2000 level. This perspective may be useful because it may partially
incorporate the effects of increased Medicare regulations. This column
shows an increase in workload of 19:9 percent compared to FY 2000.
Figure 5: Nursing Home Complaints: Received versus Investigated:
[Refer to PDF for image: vertical bar graph]
FY2005:
Received: 52,362;
Investigated: 44,677.
FY2006:
Received: 55,461;
Investigated: 45,735.
FY2007:
Received: 55,888;
Investigated: 50,543.
[End of figure]
Finally, the GAO analysis did not incorporate two other considerations.
First, the workload associated with complaint investigations was not
incorporated because CMS does not have data going back to FY 2600 on
the number of complaints received (as opposed to just the number of
complaints actually investigated). This precluded comparison with the
GAO base year of FY 2000.
But CMS does have recent data following implementation of the new Aspen
Complaint Tracking System (ACTS) in FY 2004. The data indicate a slight
but consistently upward trend in the complaint workload. The left side
bars in Figure 5 show the number of complaints received in each year.
The number increased by about 6.7 percent from FY 2005 to FY 2007. The
right side bars in each year show the number of complaints actually
investigated onsite by State survey agencies. The number increased by
about 13.1 percent from FY 2005 to FY 2007 (from 44,677 to 50,543).
Second, the GAO report does not address the question of how long a
survey should take to achieve a quality result. The only relevant hard
data that exist are data on the number of hours per survey that CMS
regional office staff devotes to Federal Monitoring Surveys, sometimes
called comparative or "validation" surveys. Such surveys are conducted
within 60 days after a State survey. CMS regional offices compare the
Federal findings with the State findings to identify differences
between the two. The regional offices then provide follow-up and
oversight to the State survey agencies. For nursing homes, Federal
surveyors typically spend 15-25 percent more time conducting and
completing the Federal Monitoring Survey compared to the average State
survey time (depending on the State and the region). However, to expect
that States spend the same amount of time as Federal surveyors would
significantly increase the projected workload.
CMS Oversight and State Performance Standards System:
The GAO rationale for using only Tiers I-III in its FY 2007 workload
calculations appears to rest on its belief that only frequencies
included in CMS' State Performance Standards System (SPSS) ought to be
considered as a workload. If we are correct, then the rationale would
lead to the untenable belief that there was no workload in the "base
year" of FY 2000, since neither the priority Tiers nor the SPSS existed
at that time. It would also imply that CMS should not pay for Tier IV
work (since it would not count as `workload"). Similarly, if the GAO
had done its review in 2004 using its current methodology, it would
have concluded that there was no workload associated with dialysis
facilities, ambulatory surgical centers, hospices, and other non-long-
term care providers since they were not included in the SPSS at that
time.
The GAO also implies[Footnote 77] that CMS only holds States
accountable for priority Tiers I-III (thereby omitting initial surveys
and other Tier IV work).[Footnote 78] This would be an incorrect
assumption, The real accountability question is how the States are held
accountable for performance, and how effective that accountability
system is at promoting performance. Instead of an "all or nothing"
approach, CMS correlates accountability consequences with the priority
Tiers.
In the GAO's base year of FY 2000 there were few consequences to poor
performance, and few (if any) effective national measures of survey
performance. Since that time CMS implemented, and continuously
improved, a performance system that in many ways may be a model for
intergovernmental relations between the Federal and State Governments.
2000-2002: CMS notified States, on July I4, 2000, of its intention to
develop State performance standards and formed workgroups with States
to do so. On April 6, 2001, CMS issued standards and review protocols
for CMS Regional Offices (ROs) to follow (via Memorandum S&C-01-11).
The focus was on nursing homes.
2003-2004: CMS moved beyond its initial pilot efforts and standardized
the performance reviews (via S&C-03-27 and 04-47).
2005-2007: CMS added many more providers to the SPSS, such as ESRD
facilities, hospices, ambulatory surgical centers, and other non-long-
term care providers. CMS increased the consequences of unacceptable
performance by reducing a State's S&C budget allocation when a State
fails to perform all statutorily-required surveys. Such "non-delivery
deductions" amounted to $638,699 for FY 2008 performance issues.
2008-2009: CMS further integrated budgetary consequences with
performance and communicated the Agency's intention to expand non-
delivery deductions to include Tier II targeted surveys.
A more accurate way to view CMS' approach to accountability, therefore,
is to appreciate that CMS (a) communicates clear priorities through the
priority Tiers, (b) initiates consequences to unacceptable performance,
and (c) arranges the strength of accountability consequences to match
the priority and importance of the work (as delineated in the priority
Tiers). Failure to perform all statutorily-required surveys (Tier I),
for example, now results in a reduction to the State's budgetary
allocation. Failure to conduct Tier IV work, in contrast, does not
result in a budgetary reduction; but it may result in a required plan
of correction pursuant to a Federal review that finds resource
adequacy, and may result in other consequences if CMS finds that a
State performed Tier IV work while neglecting higher-Tiered Federal
priorities.
The results of the SPSS and budgetary coordination are perhaps best
illustrated in the improved performance of States in conducting surveys
of each home health agency at least once every 3 years.
Figure 6 shows the percentage of home health agencies that were
surveyed within this statutorily-required timeframe. The performance
rose from 89.4 percent in FY 2000 to 99.9 percent in FY 2007.
Figure 6: Home Health Surveys Percent Completed 1999-2007:
[Refer to PDF for image: vertical bar graph}
Year: 1999;
Surveys completed: 89.7%.
Year: 2000;
Surveys completed: 89.4%.
Year: 2001;
Surveys completed: 92.2%.
Year: 2002;
Surveys completed: 90.5%.
Year: 2003;
Surveys completed: 92.0%.
Year: 2004;
Surveys completed: 97.0%.
Year: 2005;
Surveys completed: 99.4%.
Year: 2006;
Surveys completed: 99.7%.
Year: 2007;
Surveys completed: 99.9%.
[End of figure]
New, Additional Workload:
It is understandable that the GAO report does not include quantitative
measures of new workloads recently assumed by the national survey &
certification system, as not all of the increased workload can be
readily quantified. Nonetheless, the workload additions are very real
and are concentrated in Medicare, exemplified by the following
examples:
Hospital Transplant Centers: Such centers previously were paid under a
Medicare National Coverage Determination (NCB). Except for kidney
transplants[Footnote 79] the centers were not surveyed, and no Medicare
Conditions of Participation (CoPs) existed. On March 30, 2007, CMS
promulgated a final rule specifying CoPs for transplant centers, with
an effective date of June 28, 2007. (72 FR 15198 (March 30, 2007))
Existing centers had to apply by December 26, 2007 to be surveyed under
the new CoPs. Onsite surveys began in September 2007. Approximately 878
centers in about 240-254 hospitals will be surveyed on a once-every-3-
year cycle. CMS expects that the entire effort will require about $1.8
to $2.2 million per year in addition to information system upgrades.
ESRD Regulations: A comprehensive upgrade of the regulations for End-
Stage Renal Disease (ESRD) took effect on October 14, 2008. (73 FR
20370 (April I5, 2008)) New surveys are expanded to encompass both
refinements to existing requirements and many new expectations, such as
the requirement that every dialysis facility have an internal Quality
Assurance and Performance Improvement (QAPI) system. The number of
Conditions of Coverage increased from 11 to 16, and the number of
Standards within those Conditions increased from 245 to 372.
Hospice Revised Regulation: The final regulation was promulgated in
June 2008. (73 FR 32088 (June 5, 2008)) It became effective in December
2008 and added a variety of new standards and conditions. The number of
standards for which compliance must be surveyed increased from 47 to
92.
Home Health Branch Locations: CMS expanded the purview of surveyor work
to include review of branch locations. The continued and substantial
increase in the use of branch locations by Home Health Agencies is
outstripping CMS and State ability to provide proper oversight. (State
Operations Manual, Chapter 2, Section 2182)
Accrediting Organization (AO) Oversight: The Medicare Improvements for
Patients and Providers Act of 2008 (MIPPA) replaced the Joint
Commission's (JC) automatic and statutory deeming approval under
Medicare with the same requirements for CMS review and approval as all
other AOs. MIPPA a] so expanded the required CMS oversight reports to
Congress from validation and reporting for just the JC to all AOs.
Five-Star Quality Rating System: On December I8, 2008, CMS inaugurated
a five-star quality rating system for all nursing homes on the CMS
Nursing Home Compare Website. Monthly updating and continued
improvement to both the rating system and the Website means an
increased long-term commitment of resources to ensure a Website that is
as accurate, fair, up-to-date, and as informative as possible.
Other: Examples of myriad additional new responsibilities include: new
regulations of Organ Procurement Organizations (OPOs), six major
expansions of survey guidance for nursing home surveys, and expansion
of the Special Focus Facility initiative for nursing homes with a
history of persistent and pervasive quality of care problems.
Future Trends:
The trend of increased Medicare workloads is likely to continue.
Ambulatory surgical centers (ASCs), for example, increased in number by
about 58 percent from 2000 to 2007, dialysis facilities increased by 28
percent, and home health agencies by 30 percent. These trends continue.
We are also experiencing continuous requests for initial surveys of new
providers for most types of providers and suppliers (predominantly Tier
IV work).
Figure: Medicare S&C ASC Facilities:
[Refer to PDF for image: line graph]
Number of facilities plotted versus fiscal years 2000-2008, with ASCs
noted for each fiscal year.
[End of figure]
Increased concerns about patient safety risks in ASC also led us to
develop pilot programs to improve infection control. In 2008 three
pilot States integrated a Centers for Disease Control and Prevention
(CDC)-designed infection control review instrument into the survey
process, a technique that allowed much more effective identification of
infection-control hazards.
Those pilot techniques merit expansion beyond the pilot, but would
require resources. The advisability of strengthening ASC oversight may
be well illustrated by the developments in the State of Nevada in 2008,
during which more than 50,000 people were advised to be tested for
potential exposure to hepatitis C at the area colonoscopy clinics
(certified under the ASC category). CMS and the CDC assisted the State
of Nevada in surveying all 50 ASCs in the State, finding that the
majority manifested serious deficiencies in practice.
Similarly, both potential fraud and quality of care concerns in some
new home health agencies likewise suggest the need for new approaches.
Given the overall Federal budget situation, it is all the more
imperative that we design survey methodologies that leverage resources
to ensure maximum productivity and effectiveness. Examples of such
productivity enhancements include:
CMPs: Collect CMPs while a case is being appealed (rather than only
after final disposition), with provision to return all funds plus
interest if the judgment is in the favor of the nursing home plaintiff.
This would require legislation. See Acting Administrator Kerry Weems
testimony before the Senate Aging Committee, May 2007.
Quality Indicator Survey (QIS): The QIS is a revised nursing home
survey process that makes use of tablet PC technology and a systematic
and objective review of all regulatory areas. The staged survey process
includes systematic methods to focus on selected areas for further
review once the initial, comprehensive reconnaissance is completed. In
this manner the surveyor onsite time is calibrated to enable more time
to be spent with nursing homes for which the initial reconnaissance
indicates more serious problems, and less time with nursing homes that
are performing better. The QIS is being implemented statewide in nine
States so far, and is expected to improve consistency in the survey
process from State to State and from team to team within a State.
However, since the QIS is funded out of the S&C operating budget and
must compete with the need to ensure basic survey completion for all
provider and supplier types, its expansion to other States is very
slow.
Quality Assurance and Performance Improvement (QAPI): We believe it is
advisable to improve the regulatory expectations for nursing homes to
have effectively working, internal QAPI systems similar to other
providers, and invest in the development of additional nursing home
QAPI capability. This places additional emphasis on internal quality
assurance with the hope that external quality assurance (via survey &
certification) could then become less necessary.
Targeted Surveys: Increasingly, we seek to target scarce survey
resources to those providers and suppliers most at risk. Such targeting
of resources could be improved by developing better data sets that can
identify emerging quality of care or patient safety problems,
particularly in providers such as ASC and hospitals.
State Staffing: The GAO report documents a number of issues that State
Survey Agency directors struggle with to attain and maintain a full
cadre of qualified surveyors. This makes clear the advisability of
investing in methodologies that help State survey agencies address the
staffing barriers inherent in State personnel systems.
GAO Recommendations:
Below are the GAO recommendations, followed by CMS responses.
Recommendation 1:
To help ensure that those facilities that have not been surveyed in at
least 6 years are in compliance with Federal quality standards, the GAO
recommends that the Administrator of CMS take the following two
actions:
A. Increase the survey priority assigned to such facilities [that have
not been surveyed in 6 years] in the annual instructions given to State
survey agencies with the goal of surveying them as quickly as possible.
CMS Response:
Beginning with the FY 2008 Mission and Priority Document, we increased
the Tier III priority for these providers to a 7-year maximum interval
(from an 8-year average). For those providers that have not been
surveyed in seven years, (Tier Ill priority) and that also are
identified with certain risk factors, we afford them special attention
in the Tier II targeted surveys to the extent that they do not displace
other providers that are more at risk. While this is not yet at the 6-
year frequency desired, it is an improvement made pursuant to Congress'
action on the FY 2008 budget. Depending on funding availability, we are
not likely to move to a six-year interval. Instead, we will focus on
further improvements to targeted samples for those providers more at
risk.
B. Monitor the progress made by State survey agencies that have a
significant number of such facilities [that have not been surveyed in 6
years].
CMS Response:
We agree. We will produce special follow-up reports and CMS regional
offices will follow-up with State survey agencies that have a
significant number of facilities not surveyed for lengthy periods or
that fail to conduct all Tier II targeted surveys of providers at risk.
Recommendation 2:
To ensure that the Congress has adequate information on the impact of
funding on facility oversight the GAO recommends that the Administrator
of CMS take the following two actions:
A. Inform Congress of the projected cost of surveying all facilities
that lack statutorily mandated survey frequencies.
CMS Response:
Upon request, CMS can provide Congress with technical assistance.
B. Include information in the President's Budget Request on projected
State complaints and the cost of completing the associated workload.
CMS Response:
We concur.
Recommendation 3:
To help address state survey funding inequities, we recommend that the
Administrator of CMS use available tools to adjust the annual baseline
Medicare allocations provided to each State.
CMS Response:
We concur. We will continue to use the Budget Analysis Tool (BAT) to
increase equity among States in the availability of Medicare S&C funds,
and examine more closely any additional methods by which the process
might be improved.
Recommendation 4:
To improve CMS's ability to differentiate between funding and
management issues and help ensure the quality of surveys, we recommend
that the Administrator of CMS take the following two actions-
A. Identify appropriate methodologies to help evaluate the efficiency
and effectiveness of State survey activities. One such methodology may
be the new Quality Indicator Survey. developed to help ensure the
consistency, efficiency, and effectiveness of State nursing home
surveys. Explore the feasibility of using a similar methodology to
survey other Medicare and Medicaid facilities.
CMS Response:
We concur. We will continue to expand the use of the Quality Indicator
Survey (QIS). We will also develop additional tools for improvement
designed to enable State supervisors to gain a faster and better
factual sense of survey performance by their survey teams, including
the development of statistical output reports that are pre-programmed
for ready use. We will also invest in a similar technology for end
stage renal disease (ESRD) surveys for use with the new ESRD
regulation.
B. Provide the Congress with an estimate of the cost of implementing
over 3 years the Quality Indicator Survey methodology for nursing
homes.
CMS Response:
Upon request, CMS can provide Congress with technical assistance.
Recommendation 5:
To improve the oversight of State expenditures, we recommend that the
Administrator of CMS take the following two actions:
A. Collect information about current State shares, including the
methodologies used to determine them and the date that they were last
reviewed.
CMS Response:
We concur. For FY 2009 we implemented a review process with States to
examine all State cost-accounting proportions, as well as the
methodologies and tracking systems employed. We expect the results to
be available in the summer of 2009.
B. Regularly review State shares to ensure they are accurate, explore
ways to obtain information from States on non-Medicaid expenditures
where such information is relevant for ensuring that costs are actually
shared on an equitable basis, and consider ways to simplify the process
of determining State shares.
CMS Response:
We concur. We will await the results of our FY 2009 review process
(described above) and then determine a frequency by which informational
updates would be advisable. We will also analyze methods by which the
process of determining State shares might be simplified.
Recommendation 6:
Over the long term, the GAO is also recommending that the CMS
Administrator undertake a broad-based re-examination of the current
approach for funding and conducting surveys of Medicare and Medicaid
participating facilities. This re-examination should consider issues
such as (1) the source and availability of funding, including possible
imposition of user fees, and (2) ways of ensuring an adequate survey
workforce with sufficient compensation to attract and retain qualified
staff.
CMS Response:
We concur.
The CMS very much appreciates the opportunity that the GAO has afforded
us to comment on this draft report and we look forward to working with
the GAO on this and other issues in the future.
[End of section]
Appendix VII: Comments from the Association of Health Facility Survey
Agencies:
AHFSA:
Association of Health Facility Survey Agencies:
"Monitoring the health care of a nation"
January 15, 2009:
John E. Dicken:
Director, Health Care:
U.S. Government Accountability Office:
Washington, DC 20548:
Dear Mr. Dicken:
Thank you for the opportunity to respond to the Government
Accountability Office (GAO) report entitled "Medicare and Medicaid
Participating Facilities: CMS Needs to Reexamine Its Approach for
Funding State Oversight of Health Care Facilities." The Association of
Health Care Facility Survey Agencies (AHFSA) represents state licensing
and certification agencies from all 50 States, the District of
Columbia, Puerto Rico and the Virgin Islands. AHFSA members are
responsible for enforcing standards established by federal legislation,
federal regulations, state legislation, and state regulations. We
believe that vigorous enforcement of these standards is critical to
improving the quality of life and quality of care for health care
consumers in our country, and is necessary as well if we are to
maintain the improvements already achieved. We believe that the
conclusions of the report are faulty because the GAO has failed to
fully consider important aspects of survey agency work. This additional
work includes survey agency response to public complaints, and
enforcement actions against poor providers. These activities are not
only required by law, but are critically important to public safety and
trust.
AHFSA member agencies conduct periodic, on-site, comprehensive
inspections of health care facilities and programs to determine
compliance with federal and state requirements. Members of AHFSA also
investigate complaints of abuse, neglect, exploitation, poor care, and
inadequate practices by health care providers. Providers as well as
individuals may suffer criminal prosecution, administrative sanctions,
and fines as a result of our investigations and inspections. AHFSA
members are actually in the quality assurance arm of the Medicare-
Medicaid and state health programs.
In conducting this study, the GAO appears to have assumed that various
activities performed by the state can be managed as discrete functions.
But this is not the reality under which state agencies must work.
States are responsible for conducting on-site surveys, complaint
investigations, and enforcement follow-up. As is true for any quality
assurance system, it is impossible to de-couple these three functions.
For example, survey findings have a direct relationship to enforcement
activities. As deficiency citations become more significant in scope
and severity, enforcement remedies, and the administrative and
management time required to impose them, likewise become more
significant. And, as enforcement increases in significance, supervisory
oversight and review of survey findings must become more rigorous to
ensure factual findings and conclusions can survive subsequent legal
scrutiny.
As another example, because of the time-span between routine
inspections, complaints are often the first indicator of developing
compliance issues. Complaint surveys can be a fertile source of serious
deficiency citations and result in the imposition of more frequent
enforcement remedies; as such, they may also consume a lopsided
proportion of management and administrative resources. In the day-to-
day operations of state survey agencies, the line that distinguishes
these quality assurance activities is neither distinct nor static, yet
all these activities are equally vital. State agencies are required to
make daily, sometimes hourly, operational decisions in which highly
trained survey personnel and supervisors may be assigned to any of
these functions as there are needs, and as needs are prioritized. We
cannot investigate complaints without taking enforcement actions when
serious deficient practices are detected. We cannot undertake
enforcement without first conducting surveys. We cannot devote all of
our resources to periodic surveys because it would cause us to fail to
investigate serious allegations of misconduct and harmful care.
The GAO report primarily addressed resources needed for surveys and a
portion of required enforcement activities, while giving scant
attention to the resources necessary for conducting complaint
investigations in a manner that is both effective and responsive. AHFSA
cannot endorse an assessment of our workload if it does not plainly
consider the significance of complaint investigations as a workload
variable. We particularly challenge the conclusion that a decrease in
the overall population of any particular provider type will necessarily
result in a diminished workload. Unlike mandated routine periodic
surveys, which are predictable in number, complaint investigations
cannot be "capped" and are unpredictable in number. When AHFSA members
were queried, reporting states indicated an overall increase in
complaint growth across the last five years. In all settings, the need
to conduct complaint investigations within reasonable timeframes has an
impact on scheduling, staff morale, and management of resources that is
not proportionate to the number of hours required onsite. Previously
scheduled surveys are frequently postponed in order to make staff
available to investigate a priority complaint on short notice. In the
case of non long-term care providers, complaint investigations have
particular impact on available resources. A complaint may require a
team of highly specialized staff to conduct the investigation, and may
trigger a requirement for a full federal survey that was previously
unplanned, unscheduled, and unbudgeted.
In the world of regulatory quality assurance, the cost of business for
state survey agencies cannot possibly be estimated by calculating only
the required number of re-certification surveys. The degree of
"compliance" by any provider is dynamic, and the state workload
attributable to that provider on any given day may vary as changes
occur in facility management, ownership, policies, and resident or
patient populations. Changes in any of those factors may result in new,
unanticipated oversight and enforcement needs. Moreover, the GAO
appears to have assumed, for the purposes of this study, that all
states have a surveyor workforce composed of individuals who are cross-
trained across facility types and who can easily negotiate the
transition in survey methodology from one provider type to another. In
fact, different provider types require different surveyor specialties,
experience, and access to qualified CMS training. CMS funding is often
linked heavily to the establishment of state salaries for surveyors.
When states increase salaries in order to attract quality candidates,
and there is no corresponding increase in the federal match; surveyor
positions are potentially left vacant or frozen to account for the
difference. This has the effect of limiting available staff resources.
Some states may also have structural impediments (i.e. structural
splits between acute care and long-term care) which make any transition
activity even more difficult.
In addition, there was no clear consideration in the study of
infrastructure costs which are not captured on the CMS 670 and for
those activities which are required by CMS through administrative
procedures or operations. These include demands placed on states by CMS
regional office staff, implementation of CMS transmittals with
additional survey protocol requirements that were not included in the
CMS mission and priority document for the current year, down-time for
ASPEN up-grades, and timely data-entry requirements, etc. Non-statutory
workloads also have a direct impact on efficiency in accomplishing
statutory workloads. Finally, CMS does not include in its budget
formula routine costs related to enforcement nor does it fund the
entire enforcement cycles that are necessary to meet statutory and
regulatory requirements.
Again, thank you for the opportunity to provide comment.
Sincerely,
Signed by:
Polly Weaver, President:
Attachment (Technical Corrections):
[End of section]
Appendix VIII: GAO Contact and Staff Acknowledgments:
GAO Contact:
John E. Dicken, (202) 512-7114 or dickenj@gao.gov:
Acknowledgments:
In addition to the contact named above, Walter Ochinko, Assistant
Director; Kaycee M. Glavich; Leslie V. Gordon; Thomas Han; Keyla Lee;
Jessica C. Smith; and Timothy J. Walker made key contributions to this
report.
[End of section]
Related GAO Products:
Nursing Homes: Federal Monitoring Surveys Demonstrate Continued
Understatement of Serious Care Problems and CMS Oversight Weaknesses.
[hyperlink, http://www.gao.gov/products/GAO-08-517]. Washington, D.C.:
May 9, 2008.
Nursing Home Reform: Continued Attention Is Needed to Improve Quality
of Care in Small but Significant Share of Homes. [hyperlink,
http://www.gao.gov/products/GAO-07-794T]. Washington, D.C.: May 2,
2007.
Nursing Homes: Efforts to Strengthen Federal Enforcement Have Not
Deterred Some Homes from Repeatedly Harming Residents. [hyperlink,
http://www.gao.gov/products/GAO-07-241]. Washington, D.C.: March 26,
2007.
Clinical Labs: CMS and Survey Organization Oversight Is Not Sufficient
to Ensure Lab Quality. [hyperlink,
http://www.gao.gov/products/GAO-06-879T]. Washington, D.C: June 27,
2006.
Clinical Lab Quality: CMS and Survey Organization Oversight Should Be
Strengthened. [hyperlink, http://www.gao.gov/products/GAO-06-416].
Washington, D.C.: June 16, 2006.
Nursing Homes: Despite Increased Oversight, Challenges Remain in
Ensuring High-Quality Care and Resident Safety. [hyperlink,
http://www.gao.gov/products/GAO-06-117]. Washington, D.C.: December 28,
2005.
Nursing Home Deaths: Arkansas Coroner Referrals Confirm Weaknesses in
State and Federal Oversight of Quality of Care. [hyperlink,
http://www.gao.gov/products/GAO-05-78]. Washington, D.C.: November 12,
2004.
Medicare: CMS Needs Additional Authority to Adequately Oversee Patient
Safety in Hospitals. [hyperlink, http://www.gao.gov/products/GAO-04-
850. Washington, D.C.: July 20, 2004.
Nursing Home Fire Safety: Recent Fires Highlight Weaknesses in Federal
Standards and Oversight. [hyperlink,
http://www.gao.gov/products/GAO-04-660]. Washington D.C.: July 16,
2004.
Dialysis Facilities: Problems Remain in Ensuring Compliance with
Medicare Quality Standards. [hyperlink,
http://www.gao.gov/products/GAO-04-63]. Washington, D.C.: October 8,
2003.
Nursing Home Quality: Prevalence of Serious Problems, While Declining,
Reinforces Importance of Enhanced Oversight. [hyperlink,
http://www.gao.gov/products/GAO-03-561]. Washington, D.C.: July 15,
2003.
Nursing Homes: Public Reporting of Quality Indicators Has Merit, but
National Implementation Is Premature. [hyperlink,
http://www.gao.gov/products/GAO-03-187]. Washington, D.C.: October 31,
2002.
Medicare Home Health Agencies: Weaknesses in Federal and State
Oversight Mask Potential Quality Issues. [hyperlink,
http://www.gao.gov/products/GAO-02-382]. Washington, D.C.: July 19,
2002.
Nursing Homes: Quality of Care More Related to Staffing than Spending.
[hyperlink, http://www.gao.gov/products/GAO-02-431R]. Washington, D.C.:
June 13, 2002.
Nursing Homes: More Can Be Done to Protect Residents from Abuse.
[hyperlink, http://www.gao.gov/products/GAO-02-312]. Washington, D.C.:
March 1, 2002.
Nursing Homes: Federal Efforts to Monitor Resident Assessment Data
Should Complement State Activities. [hyperlink,
http://www.gao.gov/products/GAO-02-279]. Washington, D.C.: February 15,
2002.
Nursing Homes: Sustained Efforts Are Essential to Realize Potential of
the Quality Initiatives. [hyperlink,
http://www.gao.gov/products/GAO/HEHS-00-197]. Washington, D.C.:
September 28, 2000.
Medicare Quality of Care: Oversight of Kidney Dialysis Facilities Needs
Improvement. [hyperlink, http://www.gao.gov/products/GAO/HEHS-00-114].
Washington, D.C.: June 23, 2000.
Nursing Home Care: Enhanced HCFA Oversight of State Programs Would
Better Ensure Quality. [hyperlink,
http://www.gao.gov/products/GAO/HEHS-00-6]. Washington, D.C.: November
4, 1999.
Nursing Home Oversight: Industry Examples Do Not Demonstrate That
Regulatory Actions Were Unreasonable. [hyperlink,
http://www.gao.gov/products/GAO/HEHS-99-154R]. Washington, D.C.: August
13, 1999.
Nursing Homes: Proposal to Enhance Oversight of Poorly Performing Homes
Has Merit. [hyperlink, http://www.gao.gov/products/GAO/HEHS-99-157].
Washington, D.C.: June 30, 1999.
Nursing Homes: Complaint Investigation Processes Often Inadequate to
Protect Residents. [hyperlink,
http://www.gao.gov/products/GAO/HEHS-99-80]. Washington, D.C.: March
22, 1999.
Nursing Homes: Additional Steps Needed to Strengthen Enforcement of
Federal Quality Standards. [hyperlink,
http://www.gao.gov/products/GAO/HEHS-99-46]. Washington, D.C.: March
18, 1999.
California Nursing Homes: Care Problems Persist Despite Federal and
State Oversight. [hyperlink,
http://www.gao.gov/products/GAO/HEHS-98-202]. Washington, D.C.: July
27, 1998.
[End of section]
Footnotes:
[1] Medicare is the federal health care program for elderly and certain
disabled individuals. Medicaid is a joint federal-state health care
financing program for certain categories of low-income individuals.
[2] CMS is an agency within the Department of Health and Human Services
(HHS). Throughout this report, we refer to state survey agencies,
including the District of Columbia agency, as "states."
[3] States also contribute a state share of Medicaid funds and non-
Medicaid funds in support of survey activities. State non-Medicaid
contributions are to reflect the benefit states derive from health care
facilities meeting federal quality standards as well as the cost of
assessing compliance with state licensing requirements.
[4] See a list of related GAO products at the end of this report.
[5] GAO, California Nursing Homes: Care Problems Persist Despite
Federal and State Oversight, [hyperlink,
http://www.gao.gov/products/GAO/HEHS-98-20] (Washington, D.C.: July 27,
1998) and Nursing Homes: Complaint Investigation Processes Often
Inadequate to Protect Residents, [hyperlink,
http://www.gao.gov/products/GAO/HEHS-99-80] (Washington, D.C.: Mar. 22,
1999).
[6] GAO, Nursing Homes: Despite Increased Oversight, Challenges Remain
in Ensuring High-Quality Care and Resident Safety, [hyperlink,
http://www.gao.gov/products/GAO-06-117] (Washington, D.C.: Dec. 28,
2005).
[7] We used the gross domestic product price index to adjust for
inflation during this time period.
[8] Data on the number of facilities were from December in fiscal years
2000 and 2007.
[9] Throughout this report, we use the term serious deficiency to refer
to (1) a deficiency in a nursing home that results in actual resident
harm or places residents at risk of death or serious injury, or (2) a
deficiency at other facility types that adversely affects or has the
potential to adversely affect patients.
[10] In general, obtaining a state license to operate is a prerequisite
for a facility to participate in Medicare and Medicaid. However, states
do not necessarily license every facility that participates in federal
health care programs. For example, Florida and Washington do not
license end-stage renal disease facilities and Ohio does not license
hospitals.
[11] By law, CMS is authorized to enter into agreements with states to
survey a selective sample of accredited hospitals or individual
accredited hospitals where there are allegations of serious
deficiencies. 42 U.S.C. § 1395aa(c).
[12] There are two types of state validation surveys that evaluate
accreditation organizations' ability to ensure facilities' compliance
with Medicare quality standards: (1) representative sample surveys,
which are standard surveys conducted shortly after an accreditation
organization survey in order to assess the accreditation organization's
survey process, and (2) complaint surveys, which are used to identify
the compliance of the accredited facility with selected regulatory
requirements noted in the complaint received by CMS. Serious
deficiencies identified in validation surveys result in the facility's
placement under state survey jurisdiction until another state survey
verifies that the facility has returned to substantial compliance with
Medicare quality standards or the facility is terminated from the
Medicare program.
[13] See GAO, Clinical Lab Quality: CMS and Survey Organization
Oversight Should Be Strengthened, [hyperlink,
http://www.gao.gov/products/GAO-06-416] (Washington, D.C.: June 16,
2006).
[14] CMS's Mission and Priority Document communicates the survey
frequencies used to determine states' workload as a part of
establishing annual priorities for states' required survey workload.
Before fiscal year 2006, this document was called the Survey and
Certification Budget Call Letter.
[15] In this report we use the term surveys to refer only to standard
and validation surveys.
[16] A state may conduct one survey to meet both federal and state
licensing requirements.
[17] For nursing homes, CMS has a range of sanctions to help encourage
compliance with quality requirements ranging from less severe
sanctions, such as indicating the specific actions needed to address a
deficiency and providing an implementation time frame, to those that
can affect a home's revenues and provide a financial incentive to
return to and maintain compliance. For many facility types, however,
the only available federal sanction is termination from participation
in the Medicare and Medicaid programs.
[18] As noted, clinical labs pay for the cost of state surveys and
federal oversight.
[19] See 42 U.S.C. § 1395aa(b), which directs the Secretary to pay
states the reasonable cost of carrying out survey activities and for
Medicare's fair share of costs related to Medicare facilities.
[20] A lump sum appropriation is available for a wide array of purposes
and leaves an agency discretion with respect to the distribution of the
funds among those purposes.
[21] Medicare income in excess of spending is held in the Medicare
Trust Funds and invested in federal government securities. The
appropriations act also authorizes CMS to credit the account with
amounts collected under various authorities and, therefore, to use
those amounts for its operations.
[22] CMS generally has the authority to reprogram funds within the
Program Management Account, that is, adjust the allocation of funds
among the various activities. Reprogramming above certain amounts
requires advance notice to House and Senate Committees on
Appropriations. A CMS financial management official told us that such
reprogramming is rare.
[23] CMS recognizes that many states do not maintain the psychiatric
expertise necessary to survey these facilities. As a result, CMS
contracts with a panel of psychiatric consultant surveyors to survey
psychiatric hospitals.
[24] States generally rely on their own funds when they spend more than
their initial federal Medicare allocations on survey activities and may
be reimbursed when CMS redistributes Medicare funds from states that
spent less than their allocations.
[25] References to federal Medicaid funding in this report represent
government expenditures that match state Medicaid expenditures.
[26] 42 U.S. C. § 1396b(a)(2). This cost sharing differs from cost
sharing applicable to federal reimbursement for states' Medicaid
expenditures for services, which are determined by a statutory formula.
Federal financial participation is not available for any expenditures
that are attributable to the state's overall responsibilities under
state law and regulations for establishing and maintaining standards.
42 C.F.R.§ 431.610(h) (2008).
[27] Throughout this report, we refer to state funds that are in
addition to their 25 percent share of Medicaid-covered expenditures as
non-Medicaid state contributions.
[28] See CMS, State Operations Manual, chapters 1 and 4 (noting that
while facilities are surveyed simultaneously for multiple programs,
costs are allocated equitably).
[29] For an analysis of the results of federal monitoring surveys
conducted from fiscal years 2002 through 2007, see GAO, Nursing Homes:
Federal Monitoring Surveys Demonstrate Continued Understatement of
Serious Care Problems and CMS Oversight Weaknesses, [hyperlink,
http://www.gao.gov/products/GAO-08-517] (Washington, D.C.: May 9,
2008).
[30] AHFSA represents survey agencies from all 51 states.
[31] Overall federal funding for fiscal year 2008 survey activities
will not be known until the end of that fiscal year when final Medicaid
expenditures become available.
[32] In general, agencies have authority to charge fees under the
Independent Offices Appropriation Act unless prohibited by some other
law, 31 U.S.C. § 9701, but may not retain them unless they have
specific statutory authority to do so. See 31 U.S.C. § 3302. However,
the general authority is unavailable to CMS with respect to its survey
activities because Congress has prohibited CMS from imposing fees for
survey activities. 42 U.S.C. § 1395aa(e).
[33] Revised Continuing Appropriations Resolution, 2007, Pub. L. No.
110-5, § 2, 121 Stat. 8, 33. CMS published the final rule for the
revisit user fee program in the Federal Register on September 19, 2007,
and the program began on that day. Establishment of Revisit User Fee
Program for Medicare Survey and Certification Activities, 72 Fed. Reg.
53,628 (Sept. 19, 2007) (codified at 42 C.F.R. § 488.30).
[34] Fees were collected from September 19, 2007 (the date CMS
published the final rule for the revisit user fee program in the
Federal Register) through December 25, 2007. A series of continuing
resolutions extended CMS's authority to charge and retain fees into
fiscal year 2008 until the Consolidated Appropriations Act, 2008, which
did not renew the authority, became law on December 26, 2007. See Pub.
L. No. 110-92, §101, 121 Stat. 989, 989 (2007); Pub. L. No. 110-116,
div. B, § 101, 121 Stat. 1295, 1341 (2007); Pub. L. No. 110-137, 121
Stat. 1454 (2007); Pub. L. No. 110-149, 121 Stat. 1819 (2007). CMS
published a series of Federal Register notices to correspond with its
authority to conduct the program under the continuing resolutions. See
72 Fed. Reg. 61,540 (Oct. 31, 2007); 72 Fed. Reg. 71,579 (Dec. 18,
2007); 73 Fed. Reg. 3405 (Jan. 18, 2008); 73 Fed. Reg. 11,043 (Feb. 29,
2008).
[35] In seeking this authority, CMS requested that fees reduce rather
than supplement funding from the Medicare Trust Funds. As enacted, the
authority did not limit the fees to a specified amount or provide for
such a reduction from the Medicare Trust Funds.
[36] Consolidated Appropriations Act, 2008, Pub. L. No. 110-161, div.
G, tit. 2, 121 Stat. 1844, 2177-78 (2007).
[37] The QIS is a two-stage, data-driven survey process intended to
systematically target potential problems at nursing homes by allowing
surveyors to use an expanded sample of residents and structured
interviews. In 2007, CMS concluded a demonstration of the QIS survey
methodology.
[38] Fourteen of the 28 states we contacted told us that they survey
some providers more frequently than CMS requires. For example, Florida,
Pennsylvania, and Washington survey unaccredited hospitals every year,
every 2 years, or every 1-1/2 years, respectively.
[39] Starting in fiscal year 2008, CMS switched from an average to a
maximum survey interval for facilities in tier 3 in order to (1)
increase its ability to hold states accountable, (2) increase the
clarity of the expectation, and (3) increase the integrity of the
measure. However, tier 4 survey frequencies remained an average
frequency of all facilities in that tier.
[40] Our analysis excluded accredited facilities.
[41] Approximately 74 percent of facilities that had not been surveyed
within fiscal year 2007 survey frequencies were in 11 states: Alabama,
California, Colorado, Illinois, Louisiana, Maryland, Michigan, New
York, North Carolina, Ohio, and Pennsylvania.
[42] The budget allocation process will gradually reflect changes that
affect states' survey expenditures. For example, officials from one
state told us that, in 2006, the state experienced a dramatic increase
in its travel reimbursement; however, these increased costs were not
reflected immediately in the state's Medicare funding since the budget
allocation process still largely considers states' historical
expenditures.
[43] In fiscal year 2007, CMS asked states to develop contingency plans
to accommodate a 0.5 percent reduction and an increase ranging from 0.5
percent to 3.5 percent, depending on the state's budget analysis tool
score. For fiscal year 2008 funding, CMS asked for contingency plans to
accommodate a reduction from 0.5 percent to 2.5 percent and an increase
ranging from 1.5 to 2.5 percent, again depending on the state's budget
analysis tool score. After the fiscal year 2007 and 2008 appropriations
were enacted, CMS communicated states' actual Medicare allocations.
[44] In state performance reviews, CMS only examines states'
accomplishment of the agency's workload priorities in tiers 1 through 3
because CMS believes funding is not sufficient for states to complete
tier 4 priorities.
[45] Two other states completed almost all of their workload in tiers 1
through 3. Pennsylvania completed 99.6 percent of home health agency
surveys and Tennessee completed 99 percent of surveys for home health
agencies and immediate care facilities for the mentally retarded.
[46] The nationwide completion rates for nursing home (at least every
15 months) and home health agency (every 3 years) surveys have improved
significantly since 2000 when states only accomplished about 96 percent
and 89 percent of such surveys, respectively. In 2006 and 2007, the
nationwide completion rates were 99.9 percent and 99.7 percent,
respectively.
[47] The state that completed almost all of these surveys had over
1,000 intermediate care facilities for the mentally retarded.
[48] The impact on the required survey workload of facilities inspected
by accrediting organizations was smaller than the number of facilities
might suggest. Between December 2000 and December 2007, the number of
facilities inspected by accrediting organizations increased by 39
percent from 5,399 to 7,488. Even though the increase is significant,
CMS only requires that between 1 percent and 5 percent of these
accredited facilities receive state validation surveys each year.
[49] We also examined the required survey workload by state (see
appendix V).
[50] Revisits take place when state surveyors identify serious
deficiencies that require additional on-site visits to ensure that the
deficiencies have been corrected.
[51] For example, the President's fiscal year 2007 budget request
estimated that the number of complaint investigations were almost
double the number of state surveys.
[52] In October 1999, CMS instructed states to investigate nursing home
complaints alleging actual harm within 10 working days. A primary
objective of survey funding increases in fiscal years 1999 and 2000 was
to enable states to hire additional nursing home surveyors,
particularly to perform complaint surveys.
[53] The Medicare funding penalties that CMS assesses when states fail
to complete all tier 1 surveys underscore that at a minimum a state
should be able to complete all such surveys.
[54] In fiscal year 2008, Medicare survey and certification funding
increased approximately $23 million.
[55] One state did not respond to this question.
[56] We first reported on this issue in 2003. See GAO, Nursing Home
Quality: Prevalence of Serious Problems, While Declining, Reinforces
Importance of Enhanced Oversight, [hyperlink,
http://www.gao.gov/products/GAO-03-561] (Washington, D.C.: July 15,
2003).
[57] This salary range reflects variation across states in experience
and education levels for RN surveyors. For example Washington only
hires RNs with master's degrees and 10 years of experience, while other
states hire RNs with no experience.
[58] See [hyperlink, http://www.gao.gov/products/GAO-08-517].
[59] Of the 28 states that we contacted, only 2 reported to have been
audited by CMS regional office officials since 2000.
[60] Officials from several of the regional offices we spoke with told
us that in the past staff used to conduct on-site audits to verify
states' non-Medicaid state spending on survey activities. Staff would
interview budget personnel and review a sample of surveyor time records
to evaluate how states accounted for their Medicare funds and to obtain
assurance that the state had done so appropriately.
[61] According to a 2002 HHS-OIG report, HHS's Office of General
Counsel concluded that the agency could not require states to disclose
information on state funding of their licensure activities. See HHS,
Office of Inspector General, Results of Survey and Certification
Review, A-05-00-00020 (May 31, 2002).
[62] For example, central office officials told us that when regional
offices reviewed fiscal year 2007 supplemental requests, one region
recommended that a state receive $399,786 in supplemental funding,
though it requested $1,363,901. Central office officials told us that
even this reduced request may not be funded due to the limited amount
of Medicare supplemental funds available for the fiscal year.
[63] During the course of our work, we collected information from 28
states. AHFSA agreed to provide us with consolidated comments on our
draft report on behalf of all states.
[64] We used the gross domestic product price index to adjust for
inflation during this time period.
[65] State performance reviews evaluate states' completion of CMS
survey priorities, a four-tier structure for prioritizing surveys and
adjusting nonstatutory survey frequencies to reflect available funding
with tier 1 being the highest and tier 4 the lowest priority. State
performance reviews hold states accountable for completing surveys in
tiers 1 through 3, but not tier 4.
[66] Data available for the number of facilities in fiscal years 2000
and 2007 were archived in December of the respective fiscal years.
[67] Survey frequencies set by statute were the same in fiscal years
2000 and 2007. The tier structure for prioritizing states' survey
workload did not exist in fiscal year 2000 and most nonstatutory survey
frequencies were between 6 and 7 years (see appendix II). For fiscal
year 2007, we used the same survey frequencies that CMS uses to assess
states' abilities to meet the agency's survey priorities, which ranged
from about 4 years to 10 years (see appendix II). However, even if we
had used CMS's policy for fiscal year 2007, which is 6 years for most
facilities lacking statutory survey time frames, the nationwide survey
workload would still have declined.
[68] OSCAR only retains data for the four most recent surveys, roughly
fiscal years 2005 through 2008 for nursing homes, but longer for
facilities that are surveyed less frequently.
[69] HHS, Office of Inspector General, Commonwealth of Virginia
Department of Health, Section 1864-1902 Survey and Certification Costs
for Health Care Providers and Suppliers: October 1, 1997 - September
30, 1999 (August 2001); HHS, Office of Inspector General, State of
Delaware Department of Health and Social Services, Section 1864-1902
Survey and Certification Costs for Health Care Providers and Suppliers:
October 1, 1997 - September 30, 1999 (November 2001); and HHS, Office
of Inspector General, Results of Survey and Certification Review (May
2002).
[70] GAO, Nursing Homes: Federal Monitoring Surveys Demonstrate
Continued Understatement of Serious Care Problems and CMS Oversight
Weaknesses, [hyperlink, http://www.gao.gov/products/GAO-08-517]
(Washington, D.C.: May 9, 2008).
[71] By grouping the states into three clusters for fiscal year 2006--
small (500 or fewer facilities), medium (between 500 and 2,000
facilities), and large (2,000 or more facilities)--we ensured that we
had selected several states in each cluster. We included 7 of the 7
large states, 12 of the 27 medium states, and 9 of the 17 small states.
[72] The touts also include about 10,500 surveys for about 21,000
clinical laboratories that are surveyed under a user-fee system
pursuant to the Clinical Laboratory Improvement Amendments (CLIA).
[73] Page 16 of draft GAO report.
[74] See Appendix 111, draft GAO report.
[75] The GAO analysis did not include FY 2008, during which Congress
approved 213 of the President's requested S&C increase. This reduced
the inflation-adjusted decline for Medicare to about -5.6% (instead of -
11%) from FY 2002 to 2008.
[76] Technically, CMS did riot have an articulated priority "Tier"
structure in place in FY 2000. So the GAO used all frequencies
articulated in CMS policy. For FY 2007, however, GAO ignored the
authoritative source of CMS budget direction to the States (the Mission
& Priority document), and chose to omit "Tier IV" frequencies front
their analysis. The rationale apparently is that only the first 3 Tiers
are included in CMS State Performance Standards System (SPSS). But the
SPSS did not exist in FY 2000. Hence GAO applied different standards to
FY 2007 compared to FY 2000.
[77] Page 6 of the draft.
[78] CMS introduced the priority Tiers to ensure closer alignment
between State performance and CMS priorities. Tier I encompasses
primarily the statutorily-required frequencies. Tier II contains such
items as extended surveys pursuant to complaint investigations, most
validation surveys to check on the adequacy of surveys by accrediting
organizations, and "targeted surveys." Under the Tier II targeted
survey system, States conduct high priority surveys on a sample of
providers for which available data indicate a higher risk of poor
quality. These include certain home health agencies (5% sample),
hospices (5%), dialysis facilities (10%), and ambulatory surgical
centers (increased from 5% to 10% effective FY 2009). Tier III contains
most remaining standard surveys based on a maximum interval expected
between surveys of any one provider. Tier IV contains the remaining
surveys based on average frequency, as well as the initial surveys for
all new providers that have an accreditation option. The priority Tiers
are important for communicating Federal priorities. The SPSS is
important for measuring performance in relation to those priorities.
CMS correlates accountability consequences in relation to the priority
Tiers; greater consequences accrue the more serious the performance
issue.
[79] It is unknown (and somewhat questionable) how much actual survey
work was done previously for kidney transplant centers, as the surveys
were generally done in conjunction with the dialysis survey and a
separate accountability system for the transplant work did not exist.
[End of section]
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