[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
    IN THE HANDS OF STRANGERS: ARE NURSING HOME SAFEGUARDS WORKING?

=======================================================================


                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 15, 2008

                               __________

                           Serial No. 110-116


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov



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                    COMMITTEE ON ENERGY AND COMMERCE

                  JOHN D. DINGELL, Michigan, Chairman

HENRY A. WAXMAN, California          JOE BARTON, Texas
EDWARD J. MARKEY, Massachusetts          Ranking Member
RICK BOUCHER, Virginia               RALPH M. HALL, Texas
EDOLPHUS TOWNS, New York             FRED UPTON, Michigan
FRANK PALLONE, Jr., New Jersey       CLIFF STEARNS, Florida
BART GORDON, Tennessee               NATHAN DEAL, Georgia
BOBBY L. RUSH, Illinois              ED WHITFIELD, Kentucky
ANNA G. ESHOO, California            BARBARA CUBIN, Wyoming
BART STUPAK, Michigan                JOHN SHIMKUS, Illinois
ELIOT L. ENGEL, New York             HEATHER WILSON, New Mexico
ALBERT R. WYNN, Maryland             JOHN B. SHADEGG, Arizona
GENE GREEN, Texas                    CHARLES W. ``CHIP'' PICKERING, 
DIANA DeGETTE, Colorado              Mississippi
    Vice Chairman                    VITO FOSSELLA, New York
LOIS CAPPS, California               STEVE BUYER, Indiana
MICHAEL F. DOYLE, Pennsylvania       GEORGE RADANOVICH, California
JANE HARMAN, California              JOSEPH R. PITTS, Pennsylvania
TOM ALLEN, Maine                     MARY BONO MACK, California
JAN SCHAKOWSKY, Illinois             GREG WALDEN, Oregon
HILDA L. SOLIS, California           LEE TERRY, Nebraska
CHARLES A. GONZALEZ, Texas           MIKE FERGUSON, New Jersey
JAY INSLEE, Washington               MIKE ROGERS, Michigan
TAMMY BALDWIN, Wisconsin             SUE WILKINS MYRICK, North Carolina
MIKE ROSS, Arkansas                  JOHN SULLIVAN, Oklahoma
DARLENE HOOLEY, Oregon               TIM MURPHY, Pennsylvania
ANTHONY D. WEINER, New York          MICHAEL C. BURGESS, Texas
JIM MATHESON, Utah                   MARSHA BLACKBURN, Tennessee
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana

                                 ______

                           Professional Staff

                 Dennis B. Fitzgibbons, Chief of Staff

                   Gregg A. Rothschild, Chief Counsel

                      Sharon E. Davis, Chief Clerk

               David L. Cavicke, Minority Staff Director

                                 7_____

              Subcommittee on Oversight and Investigations

                    BART STUPAK, Michigan, Chairman
DIANA DeGETTE, Colorado              ED WHITFIELD, Kentucky
CHARLIE MELANCON, Louisiana              Ranking Member
    Vice Chairman                    GREG WALDEN, Oregon
HENRY A. WAXMAN, California          MIKE FERGUSON, New Jersey
GENE GREEN, Texas                    TIM MURPHY, Pennsylvania
MIKE DOYLE, Pennsylvania             MICHAEL C. BURGESS, Texas
JAN SCHAKOWSKY, Illinois             MARSHA BLACKBURN, Tennessee
JAY INSLEE, Washington               JOE BARTON, Texas (ex officio)
JOHN D. DINGELL, Michigan (ex 
    officio)

                                  (ii)


                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Bart Stupak, a Representative in Congress from the State of 
  Michigan, opening statement....................................     1
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     3
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, prepared statement................................     5
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................     7
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, opening statement.......................................     8
    Prepared statement...........................................     9
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................    10
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, prepared statement......................................    12
Hon. Jan Schakowsky, a Representative in Congress from the State 
  of Illinois, prepared statement................................   204

                               Witnesses

Lewis Morris, Chief Counsel to the Inspector General, Office of 
  the Inspector General, U.S. Department of Health and Human 
  Services.......................................................    13
    Prepared statement...........................................    16
Richard Blumenthal, Attorney General, State of Connecticut.......    32
    Prepared statement...........................................    35
Susana Aceituno..................................................    52
    Prepared statement...........................................    54
Thomas DeBruin, president, Pennsylvania Service Employees 
  International Union............................................    86
    Prepared statement...........................................    88
David Zimmerman, Ph.D., director, Center for Health Systems 
  Research and Analysis, University of Wisconsin-Madison.........    93
    Prepared statement...........................................    95
Andrew Kramer, M.D., head, professor of medicine, Division of 
  Health Care Policy and Research, University of Colorado-Denver.   103
    Prepared statement...........................................   105
Neil L. Pruitt, Jr., chairman and chief executive officer, UHS-
  Pruitt Corporation.............................................   121
    Prepared statement...........................................   124
Mary Jane Koren, M.D., M.P.H., assistant vice president, The 
  Commonwealth Fund..............................................   137
    Prepared statement...........................................   140
Kerry Weems, Acting Administrator, Centers for Medicare and 
  Medicaid Services, U.S. Department of Health and Human Services   183
    Prepared statement...........................................   185
    Answers to submitted questions...............................   210

                           Submitted Material

Presentation accompanying Dr. Koren's testimony..................   148
Haven Nursing Facilities and Affiliated Entities Organizational 
  Chart..........................................................   206
Definitions of terms used in hearing.............................   208
Chart entitled, ``CMS Nursing Home Quality Milestones, 2007-
  2008''.........................................................   209
Subcommittee exhibit binder......................................   223


    IN THE HANDS OF STRANGERS: ARE NURSING HOME SAFEGUARDS WORKING?

                              ----------                              


                         THURSDAY, MAY 15, 2008

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                          Committee on Energy and Commerce,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 10:03 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Bart 
Stupak (chairman) presiding.
    Members present: Representatives Stupak, Green, Schakowsky, 
Dingell (ex officio), Shimkus, Whitfield, Walden, Murphy, 
Burgess, Blackburn, and Barton (ex officio).
    Staff present: Scott Schloegel, John Sopko, Kristine 
Blackwood, Michael Heaney, Voncille Hines, Kyle Chapman, Alan 
Slobodin, Peter Spencer, and Whitney Drew.
    Mr. Stupak. This meeting will come to order.
    Today we have a hearing entitled ``In the Hands of 
Strangers: Are Nursing Home Safeguards Working?''
    Each member will be recognized for an opening statement. I 
will begin.

  OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Stupak. This is National Nursing Home Week, which makes 
today's hearing quite timely. Surprisingly, this subcommittee 
has not held an oversight hearing on nursing home care since 
1977. The make-up of the nursing home industry and its 
clientele has radically changed over the past 31 years.
    The last significant change in nursing home regulations 
came 21 years ago in the Nursing Home Reform Act, which was 
passed as part of the Omnibus Budget Reconciliation Act of 
1987, or OBRA 87. In that act, Congress established standards 
for quality of care and quality of life that nursing homes must 
meet in order to receive payment from Medicare and Medicaid. 
Now, 21 years later, we are examining whether these standards 
continue to provide an appropriate level of patient care and 
protect the residents of nursing homes.
    Some of our most frail, elderly, disabled citizens live in 
nursing homes either for a short time for rehabilitation or for 
long periods, when it becomes their final resting home. Many 
are completely dependent on others for everything from eating 
to bathing, turning them over in bed, and pain management. 
Government regulations require that a base level of care be 
provided to nursing home residents, not only because this 
vulnerable population cannot speak for themselves but also 
because taxpayer-funded programs like Medicaid and Medicare pay 
for the vast majority of the care provided at nursing homes.
    The Centers for Medicare and Medicaid Services, CMS, 
enforces these minimum standards by contracting with each state 
to conduct annual inspections or surveys of nursing homes. If 
state surveyors identify a problem, called a deficiency, they 
can recommend various sanctions to CMS, ranging from civil 
monetary penalties to the rarely used ultimate sanction of 
termination from participation in the Medicare and Medicaid 
programs. CMS and state surveyors strive hard to look beyond a 
nursing home's walls to see whether the fragile nursing home 
residents are receiving all the care they need. However, 
surveys often fail to identify serious problems that threaten 
residents. Moreover, when the surveyors do identify problems, 
the penalties imposed by CMS can be so weak that they fail to 
bring about sustainable improvement in the practices of the 
facilities.
    The day-to-day responsibility for the difficult task of 
care in nursing homes falls on dedicated and hardworking nurse 
aides, skilled nurse professional and industry owners and 
operators. We entrust our loved ones often only as a last 
resort to the hands of these strangers to care for our 
grandparents and parents. In most cases, these strangers become 
a second family for us and our loved one, and they care for our 
family member with the same love and attention as if he or she 
were part of their own family. These dedicated, devoted 
caregivers and many of the companies that employ and manage 
them deserve our profound thanks for their commitment and 
leadership in the daunting task of caring for an increasingly 
fragile and medically complex patient population.
    In the past few years, a wave of new owners and investors 
have begun purchasing nursing home chains, both small and 
large, successful and unsuccessful chains. These firms are 
private, unregulated, and new to the nursing home market. Many 
worry that the top priority for these new owners will be 
profits rather than providing for staffing and resources 
necessary to ensure top quality care for our loved ones. 
Frequently, they use complex corporate structures separating 
the nursing home real estate from the operating companies and 
putting multiple layers of limited liability partnerships 
between themselves and the day-to-day operations of the nursing 
home.
    The impact of these new owners on the quality of care and 
safety of nursing home residents is still unclear. Some 
companies reinvest their profits into the facilities and focus 
on quality of patient care. Others unfortunately skim off the 
profits to line the pockets of investors or plow the money into 
separate ventures that have nothing to do with nursing home 
care. What is certain, however, is that CMS and the States lack 
the tools to keep up with the rapid change in the industry, to 
know who actually owns the country's nursing homes and who 
should be held accountable for residents in their care.
    When Congress passed the OBRA 87 safeguards, the typical 
nursing home was owned by a sole proprietor or family and not 
part of a chain. Now over 50 percent of nursing homes are part 
of a chain and many of those are in the hands of private equity 
investors. Chain ownership has the potential to improve quality 
of care by allowing the sharing of resources and expertise 
across their facilities. At the same time, chains have the 
potential to hide common problems and obscure responsibility 
for inadequate care. The Centers for Medicare and Medicaid 
Services, CMS, needs to weigh these concerns to a greater 
degree in its enforcement.
    Today's hearing will examine the challenges posed for the 
Federal, State, and local government, individual families, 
resident advocates and family members and the industry as the 
face of nursing home ownership rapidly changes. We will hear 
from witnesses reflecting a variety of perspectives including 
government leaders, academic experts, industry leaders, and 
organized labor representing nursing home workers, and the 
Centers for Medicare and Medicaid Services. We will also hear 
an example of a troubled nursing home chain in New England 
whose homes have been fined more than 45 times in the last 3 
years for patient care problems that have had tragic results 
such as organ failure, amputation of limbs, paralysis, and 
death. The chain is now in bankruptcy and on the brink of sale 
to a private equity firm. Clearly, this example is the 
exception rather than the rule when it comes to nursing home 
care. Our goal here today is to be sure that these such 
examples become more and more rare or disappear altogether.
    I look forward to hearing from our witnesses today. We owe 
this hearing to the industry, nursing home staffs and the 
nursing home residents to ensure that Congress is doing all we 
can to see that Federal nursing home regulations are adequate.
    Mr. Stupak. I would now like to now turn to my colleague, 
Mr. Shimkus, for his opening statement.
    Before I do so, we should take note of the fact that Mr. 
Shimkus retired last night after 32 years of service in the 
military in the Army as a ranger, and I want to thank him for 
his service to our country, and I really do enjoy having him as 
my ranking member and a friend, but thank you for your service 
to our country, John, and look forward to your opening 
statement.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Shimkus. Thank you, Mr. Chairman. Thank you for coming 
last night, and the flashback was 1977. I was a freshman at 
West Point, so 31 years ago was the last time we had a hearing 
on this industry, and that is too long and so it is appropriate 
that we do this.
    Today's hearing will expose the issues and practices 
surrounding the critical Federal safeguards for ensuring 
quality of care at nursing homes across the country. This 
bipartisan oversight examination is necessary to ensure these 
safeguards are up-to-date and effective.
    Today's hearing topic is an intensely personal one for many 
people. Many Americans already or will have to entrust a 
mother, father or spouse-- for me, grandparents--at certain 
times of their life at the most vulnerable to the care of a 
nursing home. In fact, my grandmother was a dementia patient 
and was in 10 years before she passed away, and I remember that 
well. When entrusting our most vulnerable citizens, our loved 
ones, to the care of strangers, there is a fundamental need to 
know that they are in good hands.
    The nursing home industry is a complex and diverse industry 
extending to some 16,000 individual facilities, serving 3 
million people per year. This industry has been rapidly 
changing over 2 decades, and the question is: how have these 
changes affected the quality of care?
    From the available evidence, improvements in nursing home 
quality have improved in some ways over the past 2 decades but 
more should be done to assure quality of care, quality of life, 
and the safety in nursing homes. We know there are chronic bad 
actors. The GAO reported last year, and we just have a new GAO 
report that we need to go over, just released, which we have 
not--I have not. So my comments really are directed to the 
previous one until staff reads it real quick, the new one. 
Despite positive efforts by the Centers for Medicare and 
Medicaid Services to improve quality of care, roughly 20 
percent of nursing homes nationwide each year are cited for 
serious deficiencies, and a portion of these homes are 
chronically deficient.
    The GAO also reported shortcomings in the survey and 
standard enforcement system used to identify problem homes. 
Government and academic witnesses will testify today about the 
uneven quality of nursing home inspections and what that means 
for consumers and regulators.
    Witnesses will also testify knowledgably about what more 
might be done to improve the information supplied to regulators 
through a survey process and related industry oversight 
activities. Some developments to improve the quality of 
information look encouraging. New inspection approaches appear 
to take a more systematic look at nursing home quality. I look 
forward to learning how rapidly these can be implemented and 
how these measures can improve consumer ability to identify 
quality homes and information and knowledge is power, and I 
think when people are given a choice, if they have more 
information, the better. The problem is, in rural America, 
there are not a lot of choices. Chairman Stupak knows that from 
his area and I definitely know that in mine.
    I also look forward to discussing what Federal officials 
believe is necessary to strengthen Federal oversight in light 
of industry trends. There are 100,000 fewer beds today than 10 
years ago and nearly 2,000 fewer facilities before 
bankruptcies, malpractice litigation pressures, and new models 
of caregiving transformed the industry, according to an HHS 
study. I have followed the continuing care debate about 
residential living, then assisted living and then long-term 
skilled nursing facility and all combined into one, which is, I 
think, a positive movement in the direction by the industry. 
Today, half the nursing homes are part of a chain, a rate that 
has declined from 10 years ago. Over this period there has been 
corporate restructuring and more focus on regional chains with 
some new corporate ownership arrangements, and we will hear 
this morning, it may be difficult to identify how those 
ultimately accountable for quality-of-care decisions are 
affecting care. More sunlight on these arrangements may make 
sense.
    The Connecticut attorney general will testify about one 
troubled chain in Connecticut which continued to operate 
despite what has been reported as a history of poor care. I 
look forward to what he found were problems in Connecticut's 
experience with this chain. Let me note too that Mrs. Aceituno, 
whose husband suffered while in the care of one of the chain's 
homes, will tell us her story this morning. Please accept mine 
and my colleagues' sympathies, and thank you for testifying. 
Your testimony is very important for us.
    I am pleased to learn of the vigorous enforcement HHS 
Inspector General's Office and the Department of Justice have 
pursued in recent years--a positive story. In 2007 alone, the 
HHS IG's Office helped to work 534 cases and the DOJ has 
already netted $16.6 million in restitution and settlements and 
false claim act cases that mostly involve nursing homes. We 
have to ensure we are getting rid of bad actors and encouraging 
quality improvement, but as we discuss enforcement, we should 
also focus on what more can be done to identify and address 
problems before they result in quality care deficiencies.
    This brings me to the industry's role in quality 
safeguards. On that subject, the buck stops with the industry, 
and so I am eager to learn what steps the industry is taking to 
set standards, to self-police, to improve quality, and improve 
quality not just at the margins among minimum standards but at 
all levels of performance. We need competition for quality. We 
can drive consumer decisions and improve care for all.
    I went over time, Mr. Chairman. Thank you very much, and I 
yield back.
    Mr. Stupak. I thank the gentleman.
    Mr. Chairman Dingell of the full committee for an opening 
statement, sir.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Dingell. Mr. Chairman, I thank you. I want to commend 
you for this hearing, which is a very important one. This is a 
hearing which is going to build on work done by this committee 
and this subcommittee over many years.
    Today we focus on the quality of nursing homes and how new 
types of ownership may affect this vital industry. As an 
original sponsor of the 1987 Nursing Home Reform Act, which 
originated in this committee as a result of hearings held in 
this subcommittee, I want this critical law to effectively 
support and protect those who must live in nursing homes, and 
again, Mr. Chairman, I commend you for holding this hearing 
today. There is much that needs to be done here with regard to 
this industry and with the laws affecting it because it has 
undergone radical changes since the 1987 law was enacted and 
there is real need to go into these matters.
    Nursing homes are an industry with which new investors and 
new financing structures unknown to us are beginning to impact 
significantly on how the healthcare is afforded to our senior 
citizens and others who are not able to any longer protect 
themselves without the assistance of this kind of help. This 
new dynamic raises serious questions about whether profits are 
being placed before the needs of nursing home residents, and if 
so, what needs to be done by this committee and by the Congress 
since the law has not been reviewed for a number of years.
    I look forward to the testimony of Acting Administrator 
Weems of the Centers for Medicare and Medicaid Services and 
about what CMS needs in order to better oversee and improve the 
quality of nursing homes. I will note parenthetically that I am 
not very well satisfied with the behavior of that agency and 
with the judgments that they have been making about healthcare 
in this country. I am hopeful that this hearing will evoke 
greater cooperation from that agency and perhaps some 
manifestation of a better philosophy of government inside that 
agency.
    In some ways, the quality of care in our Nation's nursing 
homes has improved over 20 years but it must be observed there 
is still a way to go. More than 20 years ago, Congress sought 
to establish minimum standards for care and quality of life for 
every nursing home resident. It is disturbing that a subset of 
today's nursing homes appears to be unable to avoid harm to its 
residents. That is a curious repetition of events of 20, 30, 
and 40 years ago when fires, substandard housing conditions, 
poor treatment of patients in nursing homes, dangers to them 
and to their health because of improper care and inadequate 
staffing, were causing significant problems. This hearing is 
going to receive testimony from Federal, State and municipal 
authorities about the failure of some nursing homes to meet the 
basic standards and why they cannot be held accountable.
    Clearly, there is much to be said on both sides of this. 
There are things to be said on the side of the nursing homes if 
they are not being adequately and properly paid and properly 
treated by the government. It is also to be said that the 
government is not engaged in proper supervision or, very 
frankly, proper reporting to the Congress about the situation 
that exists in this particular industry.
    I want to express my thanks to Connecticut Attorney General 
Richard Blumenthal for being here. General, thank you for being 
with us. Mr. Blumenthal will testify about a New England 
nursing home chain with a troubled history of understaffing, 
poor care, and unpaid debts. I am sure that is replicated in 
other places. Also testifying today will be the inspector 
general for HHS, who will identify ways CMS can more 
effectively protect nursing home residents. This will be a 
matter of considerable concern and interest to the Committee.
    The day-to-day care for the frail, elderly and disabled is 
a difficult and, quite frankly, often thankless job. It is 
complicated by the inadequacy of payment by the Federal 
Government on these matters. It takes a special person to care 
for those who cannot care for themselves. No one knows this 
better than the 500,000 dedicated nursing home workers of the 
Service Employees International Union, SEIU, and the Nation 
owes them a great debt for their efforts, and I thank them 
myself, and for leading the fight for ensuring quality 
healthcare for every American, they are owed the thanks of all 
of us.
    I also applaud those industry leaders who have advocated 
higher standards. I particularly want to recognize my friend 
Bruce Yarwood, president of the American Health Care 
Association, AHCA, as one of those leaders who has set the bar 
high through the ``Advancing Excellence'' campaign.
    Finally, I welcome Mrs. Aceituno, who will share the story 
about her husband's experience in a facility that she trusted 
would keep him safe. Mr. Aceituno became paralyzed while a 
resident of this facility and is now confined to a wheelchair. 
This is of course not easy for Mrs. Aceituno, but we are 
grateful to her for putting a human face on what can happen 
when nursing home owners place profits before people in their 
care.
    Mr. Chairman, the proceeding of this committee is a very 
important one. The facts to be gleaned are extremely important. 
The information is going to enable us to look to see what 
action this committee and this Congress should take with regard 
to protecting not only the public interest but the inmates of 
the nursing homes. It also will help us understand what changes 
in the laws are needed, and I commend you for your leadership 
in this.
    Thank you, Mr. Chairman.
    Mr. Stupak. Thank you, Mr. Dingell.
    Ms. Blackburn for an opening statement, please.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Ms. Blackburn. Thank you, Mr. Chairman, and you all were 
talking about 1977 being the last benchmark. The last time we 
had a hearing, and I have a benchmark for that year of my own, 
my first child was born in 1977, and on Monday she gave birth 
to my first grandchild. So I hope that we have good nursing 
home care for people like me. But I do thank you for holding 
the hearing and for taking the time to review long-term quality 
care in our Nation's nursing facilities.
    Whenever I talk about healthcare with my constituents, my 
top concern is preserving and enhancing access to quality care 
and doing it in an affordable manner. That is what our 
constituents want. And as our Nation's population ages, more 
Americans are looking at options for elder care, and since my 
days in the Tennessee State Senate, I have had a record of 
supporting long-term care options for seniors, whether it is 
found in nursing homes, long-term care hospitals, or additional 
options that they want to have to meet their needs.
    I would also like to say, my district is home to Advocate, 
a provider of long-term care services for patients in nursing 
homes in eight States, primarily in the southeast, and I know 
this is a highly regulated industry and Advocate and many of 
their competitors have shown a commitment to transparency, and 
we appreciate that because we have learned a few things and I 
think one of those, Mr. Chairman, is that it is important that 
reported quality-related data be meaningful and useful, not 
only to consumers but to us as lawmakers and to care providers. 
I am looking forward to testimony from today's witnesses 
regarding opportunities to revise and improve quality of care, 
quality of life, and staffing data collection when treating the 
elderly. Instead of placing additional regulation on the 
industry, it is prudent to improve the quality and nature of 
information currently reported to the government and, I think 
also, Mr. Chairman, for us to establish a matrix whereby 
evaluated data provides insight into the outcomes that are 
provided for care. Bad actors are found in every single 
industry that there is, and I caution against holding the good 
actors responsible for poor performers. In addition, I am 
concerned about the public perception of some of the hearings 
that we have and how they can create public fear. I do 
appreciate an open and honest debate and warn against opening 
the doors to trial lawyers who may want to police the long-term 
care industry.
    As a baby boomer, as I said earlier, and now a grandmamma, 
I recognize that the Nation's healthcare sector is evolving to 
meet the needs of an aging population. Everyone wants assurance 
that the elder care industry works to improve the quality of 
long-term care for the benefit of every American retiree today 
and in the years and decades ahead.
    I yield back.
    Mr. Stupak. I thank the gentlewoman.
    The audience should note that there is another hearing 
going on upstairs in the Health Subcommittee so members will be 
bouncing back and forth throughout this hearing.
    Mr. Green for an opening statement, please.

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman, and thank you for 
holding this hearing, and like a lot of members, I am also on 
the Health Subcommittee and I am going to go up there in a few 
minutes, but I want to thank our witnesses for being here and 
thank you for calling this hearing.
    Like my colleague from Tennessee, for many years I was a 
State legislator in Texas, and nursing home regulation was 
something we dealt with every session, but since 1987, a more 
aggressive effort. It is interesting, though. I always thought 
it was regulated on the State level but since most of the 
Medicaid money is from the Federal Government, 60 percent 
typically, it was often difficult, because I know in Texas our 
Medicaid program is not as rich as some other States, but it is 
such a big part of our Medicaid dollar in Texas.
    The decision to take a loved one to a nursing home is a 
difficult decision, and I have not known anyone who would not 
rather have their family member remain independent or at home 
with them and not make that decision. In fact, I want to 
welcome Mrs. Aceituno because a number of years ago my wife and 
I had to make that same decision. Her mother was diagnosed in 
1995 with Alzheimer's, and we didn't go to a nursing home but 
we kept her independent as long as we could but then to an 
Alzheimer's center, which is like a nursing home but set up for 
Alzheimer's patients. Ultimately she passed away in a nursing 
home but it was really hospice care because it used to be 
hospice was separate but now they are also part of nursing home 
facilities in Christmas of 2006, and a lot of people think 
elected officials, we don't experience the same things 
everybody does, but we do. Our family went through that illness 
for 10 years, and I know members of Congress who are on our 
full committee who are going through it right now with their 
families. So it is a difficult decision, and I am glad you are 
willing to come and testify.
    I have to admit, we had problems in Texas and Louisiana 
with hurricanes 3 years ago, and my mother-in-law was under 
hospice care, and when Rita was coming into, we thought 
Houston, but it ended up going to Beaumont just to the east, 
and we had had a terrible experience in Louisiana with nursing 
home patients not having evacuation procedures, and our office 
actually checked every one of ours, and while everybody was 
stuck on the freeway leaving Houston, I went to the one where 
my mother-in-law was at and was really proud that they had cots 
on the floor for the staff, they had brought in staff to make 
sure they would be there. We only lived 2 miles from them so I 
was going to go over there and be there anyway, but in that 
case, and it was a chain nursing home, was very well prepared 
to deal with the patients at that facility, and again she was 
part of the hospice facility on that.
    When we do have to make those decisions as families, people 
turn to nursing homes to give their loved ones the type of care 
they cannot provide. They entrust those nursing homes with 
their family members, and again, the squeaky wheel gets the oil 
whether you are here in government or in the private sector, 
and if you are there all the time, you keep on it, you will 
actually see because oftentimes the understaffing, I know the 
requirements by statute and by regulation but oftentimes it is 
difficult so families have to stay involved. But in the past, 
nursing homes were mainly mom-and-pop institutions and we have 
those in my district too, but times have changed and now we 
have the larger chain nursing homes in multiple States, and 
this corporate structure of nursing homes is sometimes a 
tangled web of finances that at times requires a forensic 
accountant to figure out who actually owns a specific nursing 
home. In instances where complaints have been made against the 
home where tragedies have resulted from abuse or mistreatment, 
it is often difficult for CMS to deal with this new system of 
nursing homes to levy fines or enforcement penalties, and that 
is what this hearing is about today.
    Mr. Chairman, I would like the remainder of my statement to 
be placed in the record so we can go forward with the hearing, 
but I appreciate your calling this hearing.
    [The prepared statement of Mr. Green follows:]

                      Statement of Hon. Gene Green

    Mr. Chairman, I want to thank you for holding this hearing 
today on nursing home safeguards.
    The decision to take a loved one to a nursing home facility 
is often a difficult decision. I don't know anyone who wouldn't 
rather have their family member remain independent or at home 
with them.
    Sometimes the circumstances do not allow for families to 
have their loved ones stay with them. Oftentimes, individuals 
need a quality of care and around the clock monitoring that 
families cannot provide.
    When this happens, most people turn to nursing homes to 
give their loved ones the type of care they cannot provide. 
They entrust nursing homes with their family members, hoping 
they will receive quality care.
    In the past many nursing homes were mom and pop 
institutions, but times have changed and now most nursing homes 
are part of a larger chain of nursing homes, sometimes 
throughout multiple states.
    Along with this new corporate structure of nursing homes 
has come a tangled web of finances that at times has required a 
forensic accountant to figure out just who owns a specific 
nursing home.
    In instances where complaints have been made against the 
home or tragedies have resulted from abuse or mistreatment, it 
is often difficult for CMS to deal with this new system of 
nursing homes to levy fines or enforce penalties.
    We have found that CMS sometimes does not know who owns a 
nursing home or even if one nursing home is part of a larger 
chain. Right now, CMS has a survey and enforcement system that 
was never designed to identify chain-wide or systematic 
problems.
    We cannot allow this to happen, and clearly a new 
enforcement system must be put into place that will give 
greater transparency to the system and we need a system that 
will allow CMS to know who the facility operator is.
    We need to know when we put our loved ones into a nursing 
home facility they will be safe and well taken care of.
    I am hopeful this hearing today will shed some light on the 
problems with nursing home safeguards nationwide and action 
congress can take to help give families a greater piece of mind 
and patients the protections they deserve.
    Thank you Mr. Chairman, I yield back my time.
                              ----------                              

    Mr. Stupak. I thank the gentleman and look forward to his 
participation throughout the morning.
    Mr. Burgess for an opening statement.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. Thank you, Mr. Chairman, and I too appreciate 
you holding this hearing. I note the chairman of the full 
committee said he was looking forward to hearing the testimony 
of Administrator Kerry Weems. I am as well. Unfortunately, we 
will have to wait until the end of this hearing to hear that 
testimony, and once again, we are in the awkward position of 
tying up the head of a large Federal agency for the better part 
of a day when we know they have other important things on their 
plate. You know this is an issue that bothers me and I do wish 
the committee would approach this with a little more 
sensitivity.
    Representative Blackburn talked about long-term care 
insurance, and I know that is not the purpose of this hearing 
today but I do also want to mention just a little bit about 
long-term care insurance. I was at the Alzheimer's Association 
fundraiser last night, the banquet that they have, and it 
really is apparent to me that we are not as a body talking 
about long-term care insurance and the availability of long-
term care insurance nearly enough with the American people that 
it even pops up on their radar screen. When I turned 50 years 
old, which was unfortunately some time ago, my mother, in fact, 
one of the last pieces of advice my mother gave to me was to 
consider buying long-term care insurance because she told me if 
you don't buy it when you are 50, you won't be able to afford 
it when you are 75 or 80, and truly that was good advice and I 
do want us to use our opportunities with the ability to inform 
the American people that the availability and the cost of long-
term care insurance in midlife is an affordable option that 
people ought to consider. Yes, the Medicaid program will pick 
up the cost of your nursing home expense but at least in my 
home State of Texas, they are only obligated to place you 
within 500 miles of your home. That means for someone living in 
Louisville, Texas, as I do, they might be placed in a nursing 
home in Paris, Texas, and if you think--Representative 
Blackburn is gone, but if you think it is hard to get your 
grandkids to visit you when you only live a few miles away, try 
living 500 miles away. So it is something that is important. I 
do want this committee to focus on that.
    There are so many issues involved in the topic at hand 
today. I am glad to see we are focusing on this issue. I do 
hope that the panel before us today will focus specifically on 
some issues related to transparency and the type of 
transparency that is needed in the industry. Perhaps the best 
information we can give consumers is information about not just 
the cost of the stay in the nursing home, and I would prefer 
that we call them residents of the nursing home rather than 
inmates, but cost as well as things like infection rates, 
things like the availability of occupational and physical 
therapy. The problem is, I am afraid this hearing is going to 
get bogged down in trying to figure out who owns what and who 
has done what to whom.
    I have always been a strong advocate of transparency in the 
medical and nursing community, and recently introduced a bill 
about greater transparency in health information technology in 
the health industry. H.R. 5885, for anyone keeping score at 
home, would allow hospitals and physicians' offices to 
integrate information technology in a much more seamless manner 
than they are able to do currently, and this issue seems on 
point for this hearing today because it appears that a major 
problem of monitoring and enforcement and regulation of nursing 
homes is the lack of integrated information being supplied to 
people like Administrator Weems at the Center for Medicare and 
Medicaid Services.
    I still wonder if the larger problem lies not with a 
general lack of transparency but with the lack of consistent 
and uniform enforcement. So often we are seeing good nursing 
homes found deficient and given fines because of a regulator 
who was sent to their facility perhaps in a somewhat 
overzealous manner. Meanwhile, nursing homes that have a poor 
indicator of quality are given a seal of approval because the 
regulator sent to check up on them employed a much more laid-
back approach. I am interested in learning about the 
effectiveness of the Quality Indicator Survey pilot program and 
how it can effectively work on a nationwide scale.
    And finally, I can't help but notice the recent New York 
Times article that focused on this topic and noted the 
frustration of our friends on the trial bar, personal injury 
lawyers who are having a hard time figuring out whom to sue, 
and while I feel their pain, one of the problems that we are 
facing today, we are critical of large chains that have 
acquired a larger and larger ownership share of nursing homes 
but we have sued and regulated and underfunded the smaller 
owner of the nursing home just completely out of existence in 
the past 10 years, and while some of that fault perhaps lies at 
the State level, a good deal of that blame lies here on the 
doorstep of the United States House of Representatives, so I do 
hope that rather just simply focusing on whom to blame in this 
discussion today, we might be able to focus on a few solutions 
because after all, that is what the American people sent us 
here for.
    I will yield back the balance of my time, Mr. Chairman.
    Mr. Stupak. I thank the gentleman.
    I want to compliment Administrator Weems for being here and 
sitting through this. He was given the option, if he so chose, 
to have a staff person sit and take notes and come down when 
his panel appeared. To his credit, he stayed, and I appreciate 
him being here, especially since it has been 31 years since 
Congress has looked at this issue. I think there are things we 
can all learn from this hearing today. So I welcome his 
participation and his willingness to be with us at this 
hearing.
    Next I would turn to Mr. Barton for an opening statement, 
sir.
    Mr. Barton. Mr. Chairman, I will put my opening statement 
formally in the record. I do want to say, though I think this 
is a very good hearing. We haven't done oversight on the 
nursing home industry in a number of years and so I think you 
and Mr. Dingell are to be commended for doing this, and we will 
work with you in a bipartisan basis to uncover the facts, and 
if actions are necessary after we uncover the facts, to 
implement those actions, so we appreciate the hearing.
    [The prepared statement of Mr. Barton follows:]

                      Statement of Hon. Joe Barton

    Chairman Stupak and Ranking Member Shimkus, thank you for 
convening this important hearing. Good nursing home care is 
very important to the three million Americans who are receiving 
care this year in the 16,000 federally certified nursing homes.
    One measure of a society is how it cares for its elderly. 
Some of us here today aren't too far from finding out directly, 
and many of us have aging parents or grandparents who already 
know. Over the past few decades, Americans have relied more and 
more upon skilled nursing facilities to care for those we love, 
usually in the most fragile and vulnerable moments of their 
lives. Nearly two-thirds of all nursing home care is paid by 
Federal, State and local taxpayers, and it cost them more than 
$78 billion in 2006.
    The challenges to maintaining quality care are great. And 
we must be vigilant to find ways to improve the safeguards we 
have established through legislation like the Nursing Home 
Reform Act that was part of what is known as OBRA 87. So this 
subcommittee's oversight work is vital to fulfilling our 
congressional responsibility to protect the interests and lives 
of our elderly.
    The nursing home industry is complex and it changes 
rapidly. This industry has expanded to include national and 
regional chains, small groups, non-profits, and for-profits. 
There are even some mom-and-pop nursing homes. And there are 
facilities that specialize in certain types of care, such as 
rehab or helping people with Alzheimer's disease.
    The industry has long suffered a mixed reputation. Most 
folks in the business are decent people who mean well and work 
hard every day to provide care to our loved ones, but some of 
the unhappy reputation is deserved. According to the GAO and to 
the inspector general of HHS, nursing home operations also give 
rise to bad players and scofflaws.
    Rules need to be vigorously enforced to rid the industry of 
its scofflaws and to deter anyone who would skimp on care in 
order to swell an illegitimate profit. A bright dose of 
sunshine into nursing home practices may be needed to expose 
offensive acts and discourage bad behavior. We will hear about 
transparency today. That is a good thing and I think it should 
be encouraged. More information helps families make good 
choices and helps regulators identify bad operators.
    But as we talk about safeguards, we should remember the law 
of unintended consequences so we do not hinder more than we 
help. I think we have to be wary of one-size-fits all solutions 
and the kind of rigid, made-in-Washington policies that never 
seem to work.
    It's also important to recognize that this is not your 
grandfather's nursing home industry. In recent years, some 
publicly owned chains have gone private, and others have been 
transformed by complex new ownership structures. I have 
questions about some of these operating arrangements, 
especially where the property is owned by one firm and the care 
is delivered by another.
    There is not clear evidence yet that these changes are bad 
or good. Some may actually provide more focused resources that 
result in improved care.
    I believe that we need a strong and flexible regulatory 
system to ensure folks are meeting applicable standards, and 
that encourages accountability and quality innovation.
    I look forward to hearing from our witnesses today about 
systems for addressing quality and anticipating problems. These 
are areas where industry really can improve, and I hope we 
learn that they are ready to do so.

                                 # # #

                              ----------                              

    Mr. Stupak. Thank you, Mr. Chairman.
    Ms. Schakowsky was here but she must have stepped out. She 
probably ran upstairs, because I know she is on the Health 
Subcommittee also.
    So let us conclude the opening statements by members and 
let us turn to our first panel of witnesses. On our first 
panel, we have Mr. Lewis Morris, the Chief Counsel to the 
Inspector General for the U.S. Department of Health and Human 
Services; the Hon. Richard Blumenthal, Attorney General for the 
State of Connecticut; Luis Navas-Migueloa, long-term care 
ombudsman for the city of Baltimore; and Ms. Susana Aceituno, 
the wife of the Connecticut man who broke his back and was 
paralyzed at the nursing home. So we welcome all of our 
witnesses. Thank you for being here.
    It is the policy of this subcommittee to take all testimony 
under oath. Please be advised that witnesses have the right 
under the Rules of the House to be advised by counsel during 
their testimony. Do any of our four witnesses wish to be 
advised by counsel during their testimony? The indication is 
no. Therefore, I am going to ask to please rise, raise your 
right hand, and to take the oath.
    [Witnesses sworn.]
    Mr. Stupak. Let the record reflect that the witnesses 
replied in the affirmative. You are all under oath.
    I will begin opening statements. I am going to ask Mr. 
Morris to begin with the opening statements. We will go right 
down the line, 5-minute opening statements. If you have a 
longer statement, we will insert it in the record. Mr. Morris, 
if you would begin, please.

   STATEMENT OF LEWIS MORRIS, CHIEF COUNSEL TO THE INSPECTOR 
 GENERAL, OFFICE OF THE INSPECTOR GENERAL, U.S. DEPARTMENT OF 
                   HEALTH AND HUMAN SERVICES

    Mr. Morris. Good morning, Chairman Stupak and distinguished 
members of the Committee. My name is Lewis Morris. I am Chief 
Counsel in the Office of the Inspector General at the 
Department of Health and Human Services.
    As a result of congressional action and efforts by CMS and 
the nursing home industry, important steps have been taken to 
improve residents' health and quality of life. Unfortunately, 
not all nursing homes consistently provide the level and amount 
of care that the residents require. In 2006, almost one in five 
nursing homes was cited for deficiencies that caused actual 
harm or placed residents in immediate jeopardy.
    OIG affirmatively addresses nursing home vulnerabilities in 
three ways: oversight, enforcement, and guidance. First, in our 
oversight role, OIG has conducted approximately 90 evaluations 
of the nursing home program since major nursing home reforms of 
2 decades ago. One of our recommendations was the development 
of a national abuse registry for long-term care employees. We 
have found that without accurate and accessible background 
information, nursing homes may hire individuals who could place 
residents at considerable risk.
    In our enforcement role, OIG has investigated cases of 
egregiously substandard care in nursing homes and pursued 
criminal, civil, and administrative remedies against those who 
harm our beneficiaries. We have collaborated extensively with 
the Department of Justice and State Medicaid fraud control 
units to successfully prosecute nursing homes and caregivers 
for failing to provide basic levels of care including cases of 
residents suffering from preventable pressure sores, untreated 
broken bones, drug overdoses, and death. OIG has excluded from 
participation in Federal healthcare programs caregivers who 
have abused or neglected residents as well as nursing home 
administrators and operators for systemic failures. In these 
cases, we may not exclude the facilities providing bad care if 
we believe it is in the best interest of the residents. As an 
alternative, we negotiate corporate integrity agreements which 
establish comprehensive compliance programs and require 
appointment of an independent quality monitor. The monitor has 
extensive access to all aspects of the organization and makes 
recommendations to address underlying deficiencies. These 
compliance programs have been instrumental in improving the 
quality of care.
    As a third initiative, we promote compliance with our 
program requirements and greater awareness of quality-of-care 
issues. For example, we recently published a draft supplemental 
guidance that discusses the fraud and abuse risks that nursing 
homes should address when implementing a compliance program. 
OIG also is working to increase awareness by stakeholders of 
the importance of delivering quality of care. For example, we 
recently co-authored a Healthcare Board of Directors Resources 
Guide. Last year we met with nursing home representatives from 
across the country to explore how to better inform their boards 
about the quality of care provided in their facilities. 
Consumers should also have reliable, user-friendly data on 
nursing home quality to make informed choices for family 
members.
    OIG makes three recommendations we believe will contribute 
to improving the quality of care that residents receive in 
nursing homes. First, create a nationwide centralized database 
to improve screening of nursing home staff. That database could 
merge the OIG's exclusion database, State nurse aide registries 
and disciplinary actions by licensure boards. We believe such a 
database would reduce the risk that potentially abusive 
caregivers will be employed to care for this vulnerable 
population.
    Second, direct CMS to create demonstration projects to 
establish mandatory compliance programs for nursing homes. 
Effective compliance programs can help reduce fraud and abuse, 
enhance operational functions, and improve the quality of 
healthcare services.
    And third, enhance the quality of data made available to 
the nursing home industry and to the public. CMS's Nursing Home 
Compare Web site offers consumers and the nursing home industry 
a good base of information on the quality of nursing homes. 
However, the Web site can be improved by adding data that 
provides a clearer and more comprehensive picture of the 
specific facility as well as the performance of the nursing 
home chain.
    Thank you for the opportunity to testify today, and that 
concludes my remarks. I look forward to your questions.
    [The prepared statement of Mr. Morris follows:]

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    Mr. Stupak. Thank you, Mr. Morris.
    Mr. Attorney General, Mr. Blumenthal, your opening 
statement, please, sir.

  STATEMENT OF RICHARD BLUMENTHAL, ATTORNEY GENERAL, STATE OF 
                          CONNECTICUT

    Mr. Blumenthal. Thank you, Mr. Chairman, and I want to join 
in thanking you for holding this hearing and members of the 
Committee for devoting their time and effort, and I want to 
also make the point, although it probably need not be made, 
that we are talking about a small number of nursing homes, 
still a minority in this industry which is composed of many 
hardworking, honest, caring owners and others, and I want to 
make the point particularly as to those others, the staff and 
caregivers who work in these nursing homes. They have been not 
only an extraordinary and profoundly important source of care 
for individuals in Connecticut who are in these homes but they 
have also provided my investigation with exceptionally 
important information. They are very, very important to our 
investigation, whether it is the nurses or the food preparers 
or the maintenance workers. They have given us firsthand 
knowledge about the problems at Haven Health Care and similar 
kinds of problems throughout our nursing home industry in 
Connecticut.
    Connecticut's very frustrating and frightening experience 
with Haven Health Care and it has been mentioned already, is 
symptomatic of a crisis that is really spreading across the 
Nation. It provides a clear clarion call for reform. Our 
present system of scrutiny is ineffective and inconsistent. It 
fails on two principal counts: information and enforcement. Mr. 
Morris has just made some very pertinent and significant 
recommendations as to how to improve the information 
availability and flow, and my testimony is about that area of 
concern but also about enforcement because my job as attorney 
general is to enforce the laws, and that is really how we 
became involved in the Haven Health Care problem. What it 
showed me very dramatically is that our current regulatory 
system is mired in a past era when nursing homes were owned by 
small, local companies or even individuals, and that regulatory 
system is simply inadequate, impotent to address the larger 
problems and challenges posed by mammoth, multi-State 
companies, not because they are big but because they employ an 
interlocking constellation of ownership, a maze of different 
corporate entities in different States that can be shielded 
from accountability, and so I have actually attached to my 
testimony the corporate organization chart of just one of these 
chains, Haven Health Care, which when it filed for bankruptcy 
filed individual actions for every one of the 44 entities.
    Mr. Stupak. Can you put that on the screen so others can 
see it?
    Mr. Blumenthal. It is attached to my testimony so anyone 
who wants it, we would be happy to make it available.
    Mr. Stupak. Thank you.
    Mr. Blumenthal. Haven Health Care is really a poster child 
for the perils of concentrated ownership and power because that 
consolidation of financial control enables the kind of self-
dealing and self-aggrandizement for purposes unrelated to the 
care of patients that occurred at Haven Health Care. To put it 
very simply, what we found was that the ownership and 
management of Haven Health Care was using its resources, either 
directly or as collateral for loans, to completely unrelated 
commercial enterprises, almost $9 million invested in a record 
company in Nashville, a purchase of a building there for $2.1 
million, the purchase of a lakefront home in Connecticut in the 
town of Middlefield for close to half a million dollars, all at 
a time when Haven Health Care owed its vendors close to $13 
million. When we talk about vendors, we are talking about 
companies and individuals who are essential to the quality of 
care at these facilities, 15 nursing homes in Connecticut, 10 
in other New England States, vendors such as pharmaceutical 
companies, equipment suppliers, even utilities that went unpaid 
so that in one of them, when heating oil ran out, the 
individuals in the home suffered from literally freezing cold 
and another where electricity almost was cut off by the power 
company.
    So the impact of fiscal mismanagement is very direct and 
real on patient care, and in fact, the Haven Health Care 
situation I think is symptomatic of exactly that phenomenon and 
the reason why I recommended very specific fiscal management, 
and scrutiny, methods of imposing it to our State legislature, 
which now are the basis of what I am recommending that the 
Federal Government ought to require of all States. I am not 
going to go through in detail what they are because they are in 
my testimony, and I know in the interests of time, some reserve 
is better than full explanation, but I just want to make the 
point that patient and resident quality of care are profoundly 
at risk but we are also taking about literally billions of 
taxpayer dollars. In the case of Haven Health Care, $130 
million in Medicare and Medicaid payments annually. In 
Connecticut, we are talking about $1.3 billion spent in 
taxpayer dollars on nursing homes, obviously billions 
nationwide. So we owe it to taxpayers, even if they have no 
direct family stake as many of the Congressmen who talked about 
their personal experience obviously do, as we at this table do, 
as many in the audience do, as citizens countless of them 
across the country have a direct stake in the quality of care 
through family members, but fiscal controls are a matter of 
governmental responsibility and how we spend these dollars.
    Let me just say finally that I strongly support the kind of 
information database that has been suggested by Mr. Morris and 
in addition I have proposed a strike force composed of Federal 
and State representatives that could not only monitor but take 
swift, strong action as well as conditions to be imposed on the 
States that would require State systems for monitoring fiscal 
mismanagement and integrity and as well prevent corporate 
bleeding of nursing home finances, require regulation of 
nursing home owners and management companies, establish minimum 
insurance requirements, a number of other conditions that by 
the end of this decade I think the Federal Government should 
impose on all States as a condition for governmental aid.
    Where we are now with Haven Health Care is that we have 
restored stability, we have assured patient care. The entire 
interlocking corporate structure is in bankruptcy court under 
the jurisdiction of the judge. We have a restructuring officer 
and a patient care officer who have in effect taken over 
operation, and it will be shortly sold after an auction to a 
new owner. It has been a long and hard struggle but Haven 
Health care has been very far from a haven. It has been in 
effect a house of horrors for many of the families who 
entrusted their loved ones to its care. It has certainly been a 
fiscal nightmare and a quality-of-care conundrum for all of us 
who have sought to pick up the pieces and restore stability and 
integrity, and I want to thank our State agencies, the 
Department of Social Services, which has been integral to this 
effort, as well as Federal authorities, the Office of Inspector 
General has been a strong partner as has been the United States 
Attorney.
    Thank you.
    [The prepared statement of Mr. Blumenthal follows:]
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    Mr. Shimkus. Thank you.
    Mr. Navas-Migueloa of the Long-Term Care Ombudsman program 
for the city of Baltimore, please, your opening statement.

  STATEMENT OF LUIS NAVAS-MIGUELOA, LONG-TERM CARE OMBUDSMAN; 
COMMISSION ON AGING AND RETIREMENT EDUCATION, CITY OF BALTIMORE

    Mr. Navas-Migueloa. Good morning, distinguished members of 
the subcommittee, thank you for having me. It is actually quite 
an honor to be here. I am a long-term care ombudsman for 
Baltimore City. There are four of us in our office, and we 
advocate for the rights of residents in 31 nursing homes and 
over 300 assisted living facilities.
    I was asked to come here and testify before you and give 
you some examples of how we face difficulties when coming 
against nursing homes who are not very transparent in their 
ownership. In Baltimore City, I have experienced firsthand the 
difficulty in helping not only the residents but also the 
nursing homes in solving problems which affect the care of the 
residents. When I am asked whether I prefer the corporate 
nursing home or the privately owned nursing home, I can only 
answer with a question, and that is, what would you rather--
where would you rather go have a nice dinner, a chain 
restaurant or a restaurant where the chef is the owner? We 
encounter problems such as mouse infestations. I have actually 
been meeting with residents in a room where a mouse has climbed 
up my leg. I have seen nursing homes where there is a total of 
four floors in the nursing home and three of them have no 
working showers for the residents. I have seen nursing homes 
just like the attorney general mentioned where the boiler had 
been broken for months during the winter and the nursing home 
administrator had to go and buy space heaters for the 
residents' rooms, which are completely against COMAR 
regulations here in Maryland.
    The difficulty that we face is that from my experience, 
there is a lack of human touch in the corporate nursing homes 
for the most part. When I go to a nursing home that is 
privately owned and I go up to the administrator, who is my go-
to person, and I say, we have a situation, can we fix it, more 
often than not, the problem has either been addressed or solved 
before I leave the doors of that nursing home. In the less 
transparent ownership nursing homes, the nursing home 
administrator takes the role of almost like a buffer. It seems 
to me like there is a shield where he is either hiding problems 
from whoever he answers to or there is a reluctance to do a 
larger effort, to make a larger effort to solve the problems. I 
have witnessed in one nursing home four nursing assistants 
smoking what appeared to be marijuana and the smoke was coming 
into one of the resident's rooms where I was standing, and when 
I approached the administrator, at first he seemed very 
responsive and proactive about it, and after taking a minute to 
think, he said, why don't you call me tomorrow and we will 
follow up. The next day I was completely shut down from any 
further information. This nursing home in particular is owned 
by one of those large companies based out of Louisiana, I 
believe, and those are the challenges that we face, the lack of 
human touch. You sometimes wonder if the owners have actually 
seen the nursing home before, and I think that is a shame 
because they are dealing with people and these people need help 
and they are not there on vacation. They live there. I hope it 
would be better.
    Thank you.
    [The prepared statement of Mr. Navas-Migueloa follows:]
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    Mr. Stupak. Thank you.
    Mrs. Aceituno, would you like to testify at this point in 
time?
    Ms. Aceituno. Yes.
    Mr. Stupak. You are recognized then, if you would please.

                  STATEMENT OF SUSANA ACEITUNO

    Ms. Aceituno. Good morning. My name is Susana Aceituno. I 
was born in Buenos Aires, Argentina, January 27, 1933. My 
husband, Oscar, was born on April 1, 1929, in Buenos Aires, 
Argentina. We met in 1950, and after courting for some time, we 
got married on January 27, 1955, in Buenos Aires.
    Oscar would always travel all over Europe and the States, 
so when we decided to leave Argentina because of personal 
circumstances, Oscar said we should move to the United States. 
In January 1966, we moved to the United States. We settled in 
Pleasantville, New York, with our three beautiful daughters: 
Laura, 8 years old; Sandra, 5 years old; and Patricia, 2 months 
old; and $200 in our pocket. And after much working and saving, 
in 1975 we were able to buy our home in White Plains, New York.
    Throughout his life, Oscar was an active man. He went to 
Air Force school in Cordoba for 2 years, and, as I say, he 
would travel. He loved to play the guitar and dance the tango. 
He was always doing something. We never had to call a carpenter 
or a plumber to do anything in the house. He would garden. His 
life was breathing, walking, and working. He would walk many 
miles. He loved to walk. He would read the newspaper every day. 
He was never sick, very healthy, and always there for me and my 
girls. My nickname for him was Tarzan. He was one of the most 
honest human beings that I have ever known.
    When he was 65 years old, he was first diagnosed with 
Alzheimer's. One of the signs of this illness was that he began 
wandering from the house. I realized how great a danger he was 
in when we found him in the middle of the Bronx River Parkway 
walking. That is when we knew we could not keep him home. It 
was a heart-wrenching decision but one that we took 
responsibly. We began researching and touring several 
facilities. We had Oscar examined by our doctor and by visiting 
nurses.
    We went to Haven Health Care of Greenwich and met with the 
administrator. She specifically said to me, don't worry, we 
will take care of him. Very secure. So in May 14, 2004, Oscar 
became a resident of Haven Health Care. We danced a tango for 
the other residents and they thought we were professional 
dancers. The same morning, Oscar wandered out of the building 
one time and went outside. That afternoon at my visit, I was 
told by the nurse that he refused to wear the wander guard 
bracelet and that he wandered but they told me not to worry 
because they will take care of him.
    For the next 2 weeks, I visited him every day with my 
daughters. We would eat together, we would walk outside, and we 
would take to other residents and staff.
    In the first 4 days that he was at Haven Health Care, Oscar 
was allowed to leave the facility 10 times. He was not allowed. 
He escaped from the facility. I was told that he continued to 
wander throughout the day and evening and removed his wander 
guard bracelet at least five times. It seemed like he was being 
allowed to wander. I made arrangements to move Oscar to another 
facility across the street. But on May 18, 2004, on Oscar's 
fourth day at Haven Health, I met with the administrator and 
she told me that Oscar was adjusting well to Haven Health and 
that we should let him stay there instead of transferring him. 
She said to give them another opportunity.
    From that meeting on May 18 to May 30, I was never told 
anything about Oscar wandering. On May 30, 2004, at about 7:30 
p.m., he was seen having escaped the building along with 
another resident and he was returned to his room. Twenty 
minutes later, he could not be located. He was found outside 
the health center about a mile down the road, at the side of 
the road at the bottom of an embankment with his face covered 
in mud. He was then taken to a local hospital by ambulance.
    Unfortunately, the hospital did not take any X-rays of 
Oscar, for what reason, I don't know. They sent him back to 
Haven Health Center. Oscar had a bruise on his spine from 
falling down the embankment. The bruise was from the inside and 
it got swollen and cut off all his nerves in his spine. The 
doctors say he is a quadriplegic.
    Oscar went into Haven Health Center as a strong and proud 
man. Since this happened, he doesn't walk, doesn't talk. He has 
to be fed because his hands don't work and he has had to wear 
diapers. I look in his eyes but he doesn't look at me. When the 
administrator at Haven Health came to the hospital to see 
Oscar, I said to her, ``This is what you gave me back.''
    The Connecticut Department of Health investigated my 
husband's care and found errors committed by Haven Health Care. 
They were fined $615 for not looking after Oscar, but because 
Haven Health Care said that would be a financial hardship for 
them, they sent the State a check for $1.
    I am happy to answer your questions and provide more 
information if you need it. I would like for what happened to 
us for something good to come out so that other people do not 
go through what we have gone through. Thank you very much.
    [The prepared statement of Mrs. Aceituno follows:]
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    Mr. Stupak. Thank you, and thank you for your testimony. We 
know how difficult it was for you.
    We will begin with questions here. Mr. Morris, if I may, I 
will begin with you, a couple questions, if I may. Is it fair 
to say that information about who owns and controls a hospital 
is helpful to regulators at all levels in the government?
    Mr. Morris. Information about ownership is critical to both 
promoting compliance and our enforcement efforts. Our 
experience has been that when we are looking into substandard 
care provided by nursing homes, one of the enormous challenges 
we face is navigating through the corporate structure that is 
put up to deflect responsibility from those who have made 
resource decisions. I would suggest that while transparency is 
a critical part of improving care and supporting our 
enforcement efforts, it is a means to an end. The end is 
improving quality. And so we would submit that a compliance 
program which gets critical information up to decision makers, 
up to shareholders and those who actually are controlling the 
resources of a chain, is essential. Knowing who they are is 
critically important. Getting them that information so they can 
be held accountable if they don't act on it is equally 
important.
    Mr. Stupak. CMS has undertaken a program called PECOS, 
which should help to ensure ownership accountability. Has your 
agency looked at PECOS and its implementation and has it 
achieved its goals?
    Mr. Morris. We have not recently looked at PECOS as part of 
our evaluative effort. I believe one of the concerns that we 
have with PECOS is how many layers of accountability it 
captures, and we have seen in our investigations and some of 
the investigative journalism reports, there are so many layers 
between the individual facility with which CMS has its provider 
agreement and those who are really calling the shots, PECOS 
does not capture that number of different indirect owners. So 
it is part of the solution but it is not a comprehensive 
solution.
    Mr. Stupak. Let me ask you this question. How do compliance 
programs work in conjunction with a voluntary industry 
standard? I know the nursing homes have been doing an 
``Advancing Excellence'' campaign. How do you look at that with 
your compliance as a regulator? Do they complement each other? 
Can it help? Explain that a little bit.
    Mr. Morris. Certainly. They certainly can complement each 
other. The nursing home industry should be applauded for the 
steps it has taken to promote voluntary efforts to improve 
care. In our experience, a compliance program has as its 
cornerstone integrity, financial integrity, and integrity over 
clinical care. That is what makes a compliance program such a 
powerful tool. I would suggest the next step towards advancing 
care, is that you mandate certain components of a compliance 
program. You empower a compliance officer to, if you will, 
speak truth to power. You build in internal systems to get the 
root cause analysis. To come back to the transparency point, 
you empower the compliance officer to bring that information to 
those who actually make resource decisions. So while we applaud 
what the nursing home industry has done, we think much more can 
be done to promote quality through compliance programs.
    Mr. Stupak. Let me ask you----
    Mr. Morris. We would suggest, for example, that a 
demonstration project mandating compliance programs would be a 
good start.
    Mr. Stupak. Let me ask you, because you testified that the 
OIG is continuing its oversight of the use of antipsychotic 
drugs in nursing homes. Has your investigation--what has your 
investigation found? More use, less use? What have you found? 
And it is ongoing, I take it?
    Mr. Morris. That work is still ongoing so it would be 
premature for me to report on its results. We would be pleased 
to come back to you once that work is completed.
    Mr. Stupak. Mr. Attorney General, you have recommended the 
creation of a national clearinghouse of nursing home 
information. Why isn't the current information which CMS 
maintains on nursing homes adequate?
    Mr. Blumenthal. Mr. Chairman, I think it is inadequate 
because of a number of factors, first of all, because it is 
incomplete in many respects, it fails to encompass or capture 
the real owners of nursing homes. The kind of labyrinthine maze 
of corporate structure that many of the chains now have 
prevents that database from being fully current or accurate. 
But equally important, there are issues about its availability 
to the States, the access that State regulators may have to it. 
For example, our Department of Public Health, our Department of 
Social Services may not have full, current information about 
citations, investigations, license denials, disciplinary 
proceedings, simply because it fails to capture all that data 
or make it available in a timely way to the States. So I think 
the States should be a partner in that kind of national 
clearinghouse rather than just a bystander. In the case of 
Haven Health Care, for example, numerous violations occurred, 
repeated in some of the nursing homes, 45 in the course of 3 
years involving very severe issues of patient care. I am 
doubtful that any of those kinds of citations or incidents 
appeared in the database that exists now even though Haven 
Health Care was operating 10 nursing homes in other New England 
States. So I think that again coming back to the present perils 
of concentrated ownership and power, we need a different 
paradigm to deal with them in terms of information gathering 
and enforcement.
    Mr. Stupak. Well, you are the top law enforcement agent in 
the State of Connecticut and you have been there longer than 
Haven has had ownership of these; was there no central base for 
you to go to as the chief law enforcement officer of 
Connecticut to look to as you began your investigation in Haven 
to say, gee, we have a problem here and this is the exception, 
not the rule for--how did you gather the information about the 
45 violations over 3 years? Did you have to go back and hand-
create that database?
    Mr. Blumenthal. Well, we were aware of the problems that 
Haven Health Care, certainly the financial problems and some of 
the healthcare issues, and one of the recommendations that I 
have made is that fiscal problems and gross mismanagement be 
sufficient reason in effect to intervene and establish a 
receiver under State court proceedings. Present laws simply 
fail to give law enforcement the power it needs to prevent the 
recurrence of these problems. Fines and penalties are all too 
often simply regarded as a cost of doing business, and very 
often, as happened in Haven Health Care and Ms. Aceituno's 
case, the nursing home operator will make the case to 
regulators that a financial penalty will actually diminish the 
quality of healthcare because it diminishes the resources 
available for healthcare. And so my pitch to the committee 
basically is, we need stronger means of preventing gross 
mismanagement or self-dealing and bleeding of resources before 
it occurs because, as happened with Haven Health Care, we were 
aware of its problems back in 2006. We urged the Department of 
Social Services to seek a receiver. It had reasons for 
declining our recommendation. But we would have been probably 
better off with earlier intervention, a better standard, a 
better means of imposing control such as a receiver or joint 
Federal-State action.
    Mr. Stupak. And Haven Health Care is the exception, not the 
rule of nursing homes, I think you said in your testimony. Is 
that the case?
    Mr. Blumenthal. Well, it is an exception. You know, we have 
intervened and we have done in our State criminal prosecutions 
of fraud. We have also done receivers for other nursing homes. 
We just, as a matter of fact, established a receiver for a 
nursing home chain called Marathon, which has a number of homes 
both in Connecticut and Massachusetts, which then went to 
bankruptcy court, and very often the bankruptcy court structure 
itself can impose delay and confusion on the process. It took 
us literally months of a team of our lawyers, three or four of 
our lawyers, going to repeated bankruptcy court proceedings, 
working with creditors, secured creditors, a very complicated 
process but I think what we will find is that more and more 
these nursing homes will seek the refuge of bankruptcy court, 
as they are legally entitled to do, in order to avoid more 
effective State intervention unless this committee establishes 
some of the recommendations that are being made.
    Mr. Stupak. Thank you, and I am over my time, and we will 
go for a second round of questions.
    Mr. Shimkus for questions, please.
    Mr. Shimkus. Thank you, Mr. Chairman.
    Mrs. Aceituno, thank you for sharing your story. You said 
you had shopped around for a nursing home for your husband, 
Oscar. In that searching, were there any signs that this 
particular nursing home--I mean, talk through that process. The 
whole issue is information, so were you concerned? Again, in 
rural America they may only have one choice and there may be--
--
    Ms. Aceituno. No, I liked the nursing home because it was a 
small one like a home. So the big, big nursing home, I didn't 
know too much about them. I guess I should have found 
something, you know, more important what happened in the 
nursing home. Today I open my eyes more because I know what is 
going on. But I liked the place because it was like home. It 
was close to my house too. I used to visit him every day 
together with my daughters. I never expected that to happen.
    Mr. Shimkus. CMS, and we hope they elaborate more. We are 
trying to get more information. There is a Web site. I think 
there is going to be a question about how much information is 
available, what is accessible for the consumers, what might be 
accessible in addition to for local law enforcement or 
inspector generals or AGs of various States.
    Mr. Morris, can you talk about the Web site and information 
about maybe information that is available that is not available 
to everybody?
    Mr. Morris. I would be glad to, and I would also note that 
Dr. David Zimmerman will be appearing on the next panel, who 
has a great depth of expertise around the quality indicators 
and how they can be used effectively. The suggestions coming 
from the inspector general are aimed at putting the information 
that is available in context so that a consumer or an 
enforcement agency and, equally important, the industry itself 
can look at the information, see how a facility is doing 
relative to its peers so there is a context, so consumers can 
read the information and understand what the deficiencies mean 
in the context of overall care. And equally important, provide 
consumers and the industry with trending information so you 
know how this facility and the chain it is a part of has done 
over time. One of the things we have seen is that many 
facilities are what are called yo-yo facilities that come in 
and out of compliance. So if you happen to take a snapshot 
while they are in compliance, it may not tell you everything 
you need to know.
    Mr. Shimkus. And I think we have experienced that quite a 
bit, especially in the inspection regime based upon a pop 
inspection versus one that somehow they know is coming. There 
are preparatory actions. You know, we did that in the military 
when we knew our IG was coming around. And that is what we need 
to address too is this yo-yo effect.
    Mrs. Aceituno, you testified about the penalty and that the 
company only had to pay $1. Based upon your experience, what 
should have happened to that nursing home?
    Ms. Aceituno. What should happen?
    Mr. Shimkus. Yes. I mean, they were fined $615. I think 
that my perspective would be, that is small, and then they only 
paid $1, which is even less.
    Ms. Aceituno. He was a $1 man. I think people should have 
more information about what they expect from the nursing home 
and what they require from the nursing home. And I really hope 
you can change the law and be a little more tough about this. I 
not only lost my husband but the father of my daughters, a 
grandfather. He was a great man. He was very, very happy to be 
an American. Nobody could say anything about America because he 
would turn around and say listen, the airport is open; if you 
don't like America, go home. That was my husband.
    Mr. Shimkus. Yes, I wish I would have had a chance to meet 
him. I think I would have been proud to welcome him here.
    Mr. Blumenthal, in this briefing book there is a lot of 
different tabs and stuff and one talks about the Hartford 
Current doing a story on the nursing home in 2006. I guess the 
question--and you kind of raised it with the chairman, with all 
these signals being raised, what could you all have done more? 
Was there more that you could do just in the State with State 
rules and State laws?
    Mr. Blumenthal. Even with existing State law, to be very 
blunt, we could have sought a receiver, that is, a State 
takeover through a State court action earlier than we did, and 
it is now a matter of public record that my office recommended 
a State takeover earlier than was done, and our State 
Department of Social Services, which has the ultimate authority 
through its approval process to undertake that action, declined 
to adopt the recommendation. But the Hartford Current article 
has certainly performed an enormously important service in 
raising public awareness about these problems.
    Mr. Shimkus. Yes, and I appreciate--we are just trying to 
follow the facts to help us in the public policy arena, and 
raise education, even among public policy people in the 
executive branch so they do the job, and this is obviously one 
that could have been done better by a lot of people.
    Let me just raise, because this is a concern in Illinois 
right now, and first I will start with Mr. Blumenthal because I 
don't know what the State FMAP is, which the FMAP is the 
percentage of reimbursement versus what we pay on Medicaid. 
Illinois is a 50/50 State. Other States, their share is 
different, and I have a big beef about that, to begin with. But 
being a 50/50 State, there are two problems. One, and a lot of 
care in these facilities are Medicaid recipients, if we do not 
fund based upon a percentage, then what Illinois has to do is, 
we have to find the loopholes to game the system to try to 
bring more money in. So I don't know what Connecticut's is. 
That is the first question. The second question is, we have a 
particular problem in Illinois because the State is the payer. 
They get the money back. They get their portion back. But if 
they delay payment, in some cases right now in the State of 
Illinois for 4, 5, 6 months, that really kills financially some 
of these facilities because then they are trying to--how do you 
run a business when you have this delay in payment? So do you 
know--I am not trying to put you on the spot. Do you know the 
State's rate?
    Mr. Blumenthal. If I may answer your question, we have, I 
believe, as well a 50/50 match.
    Mr. Shimkus. You know, there are some States that have 70/
30?
    Mr. Blumenthal. Right, and I think that observation, and I 
think it is a very pertinent one on your part, emphasizes the 
importance of our working together and recognizing the 
complexities of these issues. I have recommended, for example, 
in my testimony that a 10 percent change in beneficial 
ownership trigger additional monitoring or review. If that 
process had been in effect when Ray Termini, who came to be the 
owner, took over, it would have been found that he had no 
experience in this industry other than repairing the roofs on 
some of the facilities. It would have prompted stronger 
oversight and monitoring, which I believe is necessary, and you 
are absolutely right that suspending or withholding money may 
be problematic for some of these institutions, which is why----
    Mr. Shimkus. Do you know the State's time frame of payment? 
I will stop with that one, Mr. Chairman. Do you know how long 
it is that the State of Connecticut pays on the obligation for 
Medicaid for long-term care?
    Mr. Blumenthal. How long it----
    Mr. Shimkus. Well, again, I only know my State. We are 
probably 4 months behind.
    Mr. Blumenthal. I feel a little insecure answering. I 
believe----
    Mr. Shimkus. That is fine. I am not trying to put you on 
the spot. I am just----
    Mr. Blumenthal. I believe we are current.
    Mr. Shimkus. It is a problem in this industry and 
throughout healthcare across the Nation when reimbursements are 
not made in a timely manner. I am indicting my own State 
because of my State's failure. I just don't know how prevalent 
it is in some of the other States.
    Thank you, Mr. Chairman.
    Mr. Blumenthal. I don't know what the experience in 
Illinois is but let me just make a very important point to you, 
that very often these institutions in financial trouble are 
advanced money, not suspended by advanced money, and I would 
wager that happens in a lot of other States as well and the 
critical decision that our agency would have to make is whether 
to advance more money, in other words, throw good money after 
bad, good money being for the care of patients, but possibly 
for exploitation as well.
    Mr. Stupak. I thank the gentleman.
    Ms. Schakowsky for questions. Your opening will be made 
part of the record. I noted earlier you were here and you were 
bouncing back and forth between the Health Subcommittee, so we 
appreciate you being here.
    Ms. Schakowsky. Thank you so much, and I do apologize for 
not having been here for the testimony. I have looked at the 
testimony and my staff is here and I was able to get the end of 
Ms. Aceituno's testimony, which was very, very moving.
    Mr. Morris, isn't it the case that CMS currently has no 
centralized database from which State officials can easily find 
information about nursing home companies moving into their 
States?
    Mr. Morris. I couldn't speak to that directly. I believe 
Acting Administrator Weems will be testifying later. There is 
data available through PECOS which identifies immediate owners 
of facilities. As we were discussing a couple of moments ago, 
the big difficulty is being able to follow that ownership 
upstream through multiple----
    Ms. Schakowsky. Well, let me ask you this, then. I think we 
are going to hear later from CMS that they only have 
information on about 70 percent of nursing home providers in 
the country and they are going to tell us that it focuses on 
the quality of care nursing home residents receive without 
regard to ownership. What difference does it make whether CMS 
has complete information about corporate ownership of a nursing 
home chain?
    Mr. Morris. I think it makes a difference because the 
government should know who it is doing business with, and if 
the benefit of the bargain, the money we pay for services, is 
not being met, we should be able to go to those who have 
received our money through ownership interests and hidden 
shells and be able to have a conversation with them and hold 
them accountable if they don't improve the care of the 
residents for whom we are charged with looking after. So I 
think it makes it a huge amount of difference.
    Ms. Schakowsky. So would everyone on the panel agree that 
that information should be part of the searchable database? 
Does anybody want to comment? No? OK.
    Let me ask Mr. Blumenthal, the owner of Haven Health Care, 
Ray Termini, borrowed against the equity value of the real 
estate in his nursing home to finance really extravagant 
ventures such as the purchase of a recording studio in 
Nashville, Tennessee. Why do owners such as Mr. Termini attempt 
to separate the ownership and operators of a nursing home? What 
is the economic rationale?
    Mr. Blumenthal. For permitting them to have ownership or 
for his doing what he did?
    Ms. Schakowsky. His doing what he did, really.
    Mr. Blumenthal. Well, you are asking the wrong person for a 
defense here.
    Ms. Schakowsky. Well, let me ask you this. Is it a problem 
for an owner to use a nursing home's equity to finance non-
healthcare-related ventures, in your view?
    Mr. Blumenthal. And I apologize. I didn't mean to be 
facetious. It is a very serious question, and for us, a very 
real one, and in fact, we are continuing our investigation. 
There has been public mention, I can't comment on it, that 
Federal authorities may be involved as well, but the use of 
that money for unrelated purposes raises very serious and 
significant legal exposure for him, and in my view, there is 
simply no rationale for it. There is no excusable reason for 
resources to be taken from a nursing home enterprise, as we 
alleged he did, for a recording company or a private home or 
other unrelated ventures, whether extravagant or not, and 
risking the financial liability of the nursing home.
    Ms. Schakowsky. And then to claim that $651 or whatever it 
was is just too much for him to pay, I think that is a pretty 
insulting fine to begin with but to send $1 is absolutely 
despicable, in my view.
    Mr. Blumenthal. And your question goes exactly--I think it 
is a very good illustration of the practical consequences of 
the separation of these different entities into different 
corporate structures so that they can be insulated from 
accountability, and I know that Ms. Aceituno's attorneys are 
here today, they are seeking recovery, and by the way, others 
have sought recovery through malpractice actions, and one of my 
recommendations is that there be minimum insurance requirements 
so that people who are in this situation can hold accountable 
these----
    Ms. Schakowsky. There are no minimum insurance requirements 
at all now?
    Mr. Blumenthal. They differ from State to State and they 
are inadequate in most States.
    Ms. Schakowsky. Well, thank you for that suggestion.
    I want to ask Mr. Navas-Migueloa, you indicate in your 
testimony when nursing home ownership is transparent, it is 
easy for the ombudsman--and I really appreciate the work of 
ombudsmen, we have some in our community--to prompt improvement 
in a nursing home. How often do you find that non-transparency 
is a problem in the homes that you visit?
    Mr. Navas-Migueloa. Non-transparency?
    Ms. Schakowsky. Yes.
    Mr. Navas-Migueloa. I would say between a handful and a 
dozen nursing homes out of 31 are difficult to intertwine who 
runs it. In some nursing homes, you have a conglomerate, it is 
a mesh. You have an administrator, a CEO, a board of directors, 
some management company from out of state, et cetera, et 
cetera, et cetera.
    Ms. Schakowsky. So if you encounter a non-transparent home, 
what steps does your office take to determine who the owner is?
    Mr. Navas-Migueloa. From our office ourselves, we do all 
the research we can do from calling the administrator to trying 
to decipher who owns the place. In some cases the administrator 
will actually look at you and say I am not quite sure, I think 
they are a company out of Chicago but we also have a CEO who 
may be able to help you, and it is quite frustrating and I 
understand that they are running a business, for better or 
worse, and I know that my role is in the trenches and I 
understand that there is bigger agencies involved and I hope 
that somebody knows.
    Ms. Schakowsky. Well, Mr. Chairman, may I ask a couple more 
questions?
    Mr. Stupak. Yes, a few more.
    Ms. Schakowsky. Thank you.
    If you are dealing with a nursing home that had a record of 
poor performance in another State, would you have any way of 
finding out, and how would you do it now?
    Mr. Navas-Migueloa. Unless there was a warning, I wouldn't 
know.
    Ms. Schakowsky. You wouldn't know, and is there any way you 
could find out?
    Mr. Navas-Migueloa. I am not terribly sure.
    Ms. Schakowsky. What has your experience been with nursing 
homes that are purchased by companies that are based out of 
your State? Is there any difference in the quality of care that 
you have noticed?
    Mr. Navas-Migueloa. The quality of care, I guess that is a 
question that the residents should answer. I am not one to say 
that quality of care is better than this one. I guess it 
depends on what the resident expects is quality of care.
    Ms. Schakowsky. Well, you do have a standard, I hope, of--
--
    Mr. Navas-Migueloa. Sure, but I am not going to put words 
in the residents' mouths.
    Ms. Schakowsky. No, but I mean, do you find--well, this is 
an important issue.
    Mr. Navas-Migueloa. Sure, absolutely.
    Ms. Schakowsky. I mean, do you find more substandard care? 
Have you noticed any difference between those that are part of 
an outside of your State chain?
    Mr. Navas-Migueloa. Yes.
    Ms. Schakowsky. What kind of steps do you think that 
Federal regulators could take to most assist your work in 
dealing with non-transparent nursing homes? This is my last 
question.
    Mr. Navas-Migueloa. Allowing us to know who to go to, 
allowing us to know who the owners are so that if we have to go 
far and beyond the administrator who is our contact person, we 
know where to go, we know who to call, we know who to approach 
to solve a problem, like not having showers in the nursing 
home.
    Ms. Schakowsky. Let me just ask Mr. Blumenthal to answer 
that too.
    Mr. Blumenthal. As you just heard, the information sharing 
is completely inadequate, and what I would like to see is that 
the Federal Government establish a clearinghouse, a database 
that is freely accessible to regulators and perhaps even 
proactively warns State regulators about owners, operators, 
managers who have encountered problems. You know, we are not 
talking about rocket science, to use an overused term. It is a 
very simple concept that this information be freely available 
and that there be joint State-Federal enforcement and that the 
Federal Government absolutely require as a precondition for 
providing all those billions of dollars that you do, that the 
State do an adequate job of monitoring, that it require people, 
adequate numbers of inspectors and the kind of enforcers who 
will protect again the Haven Health Care kind of situation. 
Thank you.
    Mr. Stupak. Mr. Whitfield for questions, please. If you run 
over, that is fine. We have five votes coming up but go ahead 
and get started.
    Mr. Whitfield. Mr. Chairman, thank you, and I certainly 
want to thank the panel for being with us today.
    Mr. Morris, I was just glancing at the New York Times 
coverage today of this hearing, and it says that there is 
widespread understatement of deficiencies in the nursing home 
business, and then you are quoted also as saying, ``We found 
nursing home residents who are grossly dehydrated or 
malnourished. We found maggot infestations in wounds and dead 
flesh,'' and so forth, and I was just wondering, Number one, in 
conducting this report or submitting this report, how many 
States did you go in and look at nursing homes in those States, 
and from your perspective, what portion of nursing homes do you 
feel are not meeting minimum standards in our country today?
    Mr. Morris. Let me try to answer the question this way. I 
believe the Times article you are referring to, today's 
article, was actually talking about a report issued by the GAO 
today so we were not part of that evaluative effort. However, 
as part of our audits and evaluations, we look at facilities 
throughout the country, all 50 States and use those to base our 
findings and recommendations. In the particular matters that 
you are addressing, we work very close with State and Federal 
law enforcement officials in every State. We work with the 
State Medicaid fraud control units. They are really on the 
front line of these enforcement efforts. So we bring all of 
that enforcement information as well as our evaluative work.
    To the question of how many facilities, how many chains are 
providing substandard care, we would note that the empirical 
evidence suggests about one in five is providing care that puts 
residents in harm's way, either putting them in jeopardy or 
providing actual harm. We would also note that many of these 
facilities yo-yo in and out of compliance with program 
requirements so the magnitude of the problem when looked over a 
multi-year period is probably more dramatic than that.
    Mr. Whitfield. So you are saying that 20 percent of the 
nursing homes in the country are endangering the patients today 
in the care that they are providing?
    Mr. Morris. Based on the survey information coming out of 
both the State and Federal surveyors, yes.
    Mr. Whitfield. Now, when we talk about Federal standards, 
meeting Federal standards, what does that term actually mean? 
Can you delineate some of the different types of standards that 
we are referring to?
    Mr. Morris. Well, the Centers for Medicare and Medicaid 
Services have conditions of participation which specify both 
patient care as well as life safety requirements that nursing 
homes are required to meet in order to participate in our 
program, and those are the standards from which we in the 
Federal Government and then our partners in the State use to 
evaluate whether a particular facility is in compliance. There 
is a State survey process by which each facility is subject to 
on average about 15 months of survey reviews and then the 
Federal surveyors go back and review some portion of that work 
to see whether the quality of those surveys is adequate and 
consistent.
    Mr. Whitfield. Now, I want to go back to this owners issue 
for just a minute. A nursing home is either meeting the 
requirements or it is not. It is either providing care at a 
certain standard or it is not. So why is the ownership aspect 
of it so important?
    Mr. Morris. The ownership aspect is important because care 
is delivered through a range of different mediums and the 
quality of care varies throughout the week and year. When we 
see systemic failures of care, it means something is wrong with 
how that nursing home is delivering care not to just one 
individual but across the board. When we in the enforcement 
community and the compliance improvement community want to have 
a conversation about how to improve care, we need to find who 
has got control of the resources. Our experience has been that 
when a facility is under the control of a large corporation 
which has put multiple layers of accountability between 
decision makers and the facility, resources are drained away 
from care so we need to be able to have transparency and 
accountability with those who actually make the resource 
decisions. As was alluded to in this panel, many times when we 
speak to the head of the facility, they don't know who is in 
charge. They don't know how to respond to an ombudsman's 
concern or a State surveyor's concern. It is always passed 
uphill. They may not know who has got control over those 
resources, and as I said, I think if we are pouring billions of 
dollars into this industry, we ought to know who we are giving 
that money to.
    Mr. Whitfield. One other question, Attorney General 
Blumenthal. As attorney general of Connecticut, do you have the 
authority yourself to close down a nursing home if it is 
providing substandard care?
    Mr. Blumenthal. I do not alone. I can act only when the 
experts--I am not a healthcare expert, I am not a doc, I am not 
a trained medical person nor is anyone on my staff. I depend on 
the Department of Social Services to go through a proceeding 
and that happened in this instance eventually and we did go to 
court, but I cannot unilaterally do so, but I want to come 
back--I think you have asked an excellent question, why do we 
care about ownership? Well, if you take the case that you just 
heard about, Oscar Aceituno suffered huge harm and that 
facility should have been held accountable, and it was not 
because it said we don't have resources. So they sent $1. If 
they had known who the owner was and been able to go after him 
and hold him accountable, he would not have been using those 
resources to buy a record company in Tennessee or a house on 
the front of a lake. Now, that is an extreme example. The 
resources were there but the chain of command and control was 
so complex that it couldn't be held accountable.
    Mr. Whitfield. Thank you, Mr. Chairman.
    Mr. Stupak. Let me just briefly follow up on that, if I 
may, and if anyone wants to jump in, go ahead. We only have a 
few minutes. We are going to break for votes. Even though you 
may know who the owner is and they may be out of State and you 
can follow the money, that still doesn't require or make 
certain that the nursing home is--that money is going into the 
nursing home. They have a right after they pay whatever they 
do, whatever money left over to use how they want. It doesn't 
necessarily guarantee an improvement for those residents. So 
other than your surety bond or your insurance proposal, minimum 
insurance liability proposal, how do you get them to do the 
right thing in this case? Because we pay $78 billion a year in 
direct costs. That is not counting all the other parts of 
Medicare which are doled out to nursing homes for therapy and 
drugs and other things.
    Mr. Blumenthal. Well, that question, which is an excellent 
one, goes to some of the other suggestions I have made. 
Information sharing would presumably alert a regulator in 
Illinois or Michigan or Vermont or New Hampshire about an 
individual in Connecticut who was betraying the public trust, 
and it is a trust. People are entrusted to the care of this 
institution, and if there were the kind of pattern of 
violations, citations, findings in Connecticut that were 
established there, it could be made available to others and 
eventually even in Connecticut, action could be taken against 
him.
    Mr. Stupak. So that minimal insurance policy, the more 
violations you have, should you tie bar it to that and make 
sure insurance liability then go up?
    Mr. Blumenthal. It could and should be raised, and if it 
applied uniformly across the country as a condition of Federal 
Medicare or Medicaid aid, it would be even more effective. But 
some of the proposals I have made have to do with greater 
cooperation among the States, which I think has to happen.
    Mr. Stupak. Sure. Mr. Morris, did you want to say something 
quickly and then I am going to go to Mr. Shimkus for a 
question.
    Mr. Morris. Yes. Just to elaborate, that not only 
information sharing among States but actually information 
sharing with those in command and control. If we can establish 
that those who control the resources know of the substandard 
care being provided at the facility level, it increases 
accountability and may draw their attention to fixing those 
problems.
    Mr. Stupak. So as our ombudsman, he is our first line of 
defense in a way?
    Mr. Morris. The ombudsman, but also going upstream in the 
corporation so you don't get the defense of, ``I had no idea 
what was going on; you can't hold me personally accountable.''
    Mr. Blumenthal. If I may----
    Mr. Shimkus. We are really running out of time and I need 
to get this going.
    Mr. Stupak. Go ahead.
    Mr. Shimkus. We have got 4 minutes to get to the floor for 
the vote. Because Mr. Weems is going to testify on the last 
panel. He states in his testimony, ``Nursing homes are required 
to submit updates to their existing provider enrollment when 
they have a change in information, such as ownership, which 
then populates the PECOS database. Using PECOS, CMS has the 
ability to better track ownership and changes in ownership.'' 
Mr. Morris, do you want to respond to that?
    Mr. Morris. As I believe I said earlier, the challenge is 
getting to multiple tiers of ownership. My understanding is, 
PECOS actually only addresses direct----
    Mr. Shimkus. Does CMS have the authority? The question is 
legislation, or do they have already have the authority to 
force this?
    Mr. Morris. I don't know the answer to that.
    Mr. Shimkus. We need to find out that answer, Mr. Chairman.
    Mr. Stupak. OK. Thanks. We are going to excuse this panel. 
We may follow up with other written questions because I know I 
want a couple more questions, and we have five votes, and we 
are going to recess until 12:30, and I don't want to keep you 
here until 12:30 for a few more quick questions. So we will 
dismiss this panel. We will recess. We will back at 12:30 for 
our second panel.
    Thank you all for being here. Mrs. Aceituno, thank you 
especially for your difficult testimony, and I thank each one 
of you for what you try to do to bring some enforcement to this 
industry.
    [Recess.]
    Mr. Stupak. We are going to reconvene this hearing. I see 
our second panel. Is Mr. DeBruin here? Does anyone have any 
idea where he is at? I hate to go through and swear in the 
witnesses and have to do it again. Well, let us begin.
    On the second panel, we have Dr. David Zimmerman, who is 
the Director of the Center for Health Systems Research and 
Analysis at the University of Wisconsin-Madison; Dr. Andrew 
Kramer, who is Professor of Medicine and Head of Colorado 
Division of Health Care at the University of Colorado; Mr. Neil 
Pruitt, Jr., who is the Chairman and CEO of the UHS-Pruitt 
Corporation, a large nursing home chain headquartered in 
Georgia; and Dr. Mary Jane Koren, who is Chair of the American 
Healthcare Association's Advancing Excellence campaign. And Mr. 
DeBruin, we will wait for you, who is a former nursing home 
worker and president of Pennsylvania Service Employees 
International Union.
    As you know, it is the policy of this subcommittee to take 
all testimony under oath. Please be advised that witnesses have 
the right under the Rules of the House to be represented by 
counsel. Do any of you wish to be represented by counsel during 
your testimony? Everyone seems to be shaking their heads no. I 
will take it as a no. Therefore, I am going to ask to please 
rise, raise your right hand, and take the oath.
    [Witnesses sworn.]
    Mr. Stupak. Let the record reflect that each witness 
answered in the affirmative. Therefore, you are under oath as 
you give your opening statement.
    We will begin with you, Mr. DeBruin, for a 5-minute opening 
statement. If you have a longer statement, we will make it part 
of the record but we will go 5 minutes with your opening. If 
you would begin, sir. Make sure that light is on and pull it 
fairly close so we can hear you.

 STATEMENT OF THOMAS DEBRUIN, PRESIDENT, PENNSYLVANIA SERVICE 
                 EMPLOYEES INTERNATIONAL UNION

    Mr. DeBruin. Chairman Stupak, Ranking Member Shimkus and 
honorable members of the subcommittee, I thank you for the 
opportunity to testify today. I am the president of SEIU Health 
Care Pennsylvania, and I am here today speaking on behalf of 
SEIU's 1.9 million members, including 150,000 nursing home 
workers.
    Nearly 35 years ago, I began my working life as a nursing 
assistant in a large public nursing home. Even today, I can 
remember my first day on the job, the challenge of providing 
quality, compassionate care and support for the frail, elderly 
residents entrusted to me. I have seen a great deal of progress 
since that time but I am here today out of a great concern 
about our ability to continue that progress.
    A new player has entered the nursing home world: private 
equity firms. SEIU is deeply concerned that the private equity 
business model, which seeks to make extreme profit, will 
operate at the expense of nursing home residents, their 
families, caregivers, and taxpayers. Buyout firms operate 
behind a veil of secrecy that allows them to conceal virtually 
all aspects of their business from regulators and affected 
stakeholders.
    Others have testified today and at other congressional 
hearings about the tragedies that occur too often in nursing 
homes. These tragedies will only continue because Federal laws 
and regulations have failed to keep pace with the trends in 
nursing home ownership and financing, which are placing many 
homes in financial jeopardy while making it increasingly 
difficult to hold them accountable for patient care problems. 
The industry has moved towards increasingly complex corporate 
structures and highly leveraged buyouts. For example, last 
year, the Carlyle Group completed a $6.6 billion leveraged 
buyout of Manor Care. It remains unclear how Carlyle Manor Care 
will service such high debt without some effect on care. Plain 
common sense suggests that there is reason to be worried about 
cost-cutting pressure at a company that has just taken on 
almost $5.5 billion in new debt. Are we really to believe 
Carlyle's investment plan for Manor Care is to drive a 
profitable company deeply into the red and not cut costs, of 
which staffing is one of the largest, to keep its investment 
profitable?
    There is a real concern that nursing homes involved in 
highly leveraged buyouts will cut staffing to pay off debt. 
This raises concern both about the safety of residents and 
about the value taxpayers are getting for Medicare and Medicaid 
dollars.
    In addition to the concern of inadequate staffing, there is 
a fundamental lack of transparency in the nursing home 
industry. Nursing homes today employ ownership structures that 
obscure who is actually responsible for decisions that impact 
the quality of care in the facility. Buyout firms set up 
layered entities. Sometimes there are hundreds of entities 
involved to run their nursing homes and avoid liability, often 
separating the real estate asset holdings from the operations.
    Such diffuse structures become even more complex when 
employed by large chains, which may create multiple layers of 
corporate shields that stand between the ultimate parent 
company and the facility-level LLCs. Nursing home chains have 
used such structures in the past to frustrate efforts by 
regulators to hold parent companies accountable for the care 
provided in their facilities and to obscure transactions and 
self-dealing between related parties. CMS has previously 
testified that they do not know who owns all nursing homes in 
this country. This despite the fact that the nursing home 
industry receives $75 billion a year from Medicare and 
Medicaid. How can Congress accept this?
    Twenty years ago, it was at the urging of courageous 
reformers like Chairman Dingell and Pennsylvania's Republican 
Senator, the late John Heinz, that Congress passed landmark 
nursing home reform legislation. The real question before you 
is whether Congress will show the political courage today to 
once again pass significant nursing home reform. In February, 
Senators Grassley and Kohl introduced the bipartisan bill S. 
2641, the Nursing Home Transparency and Improvement Act, and 
Representatives Stark and Schakowsky have indicated that they 
will introduce similar legislation soon.
    Congress will likely pass a Medicare bill this year. The 
Senate is currently negotiating legislation which means there 
is an opportunity to attach S. 2641, a no-cost bill, and I 
invite the industry to work with us to pass S. 2641. We commend 
many in the industry who have recognized the need for greater 
transparency. However, the for-profit industry appears to be 
blocking this legislation. We stand ready to work with them, 
but if they choose to continue lobbying against this bill, then 
I urge Congress to stand up to the industry pressure and stand 
with the vulnerable seniors who count on their members of 
Congress to represent their interests. Hearings are not enough. 
Your constituents want to take real action and not simply talk 
about the problem.
    Taxpayers trust that Medicare and Medicaid dollars will go 
toward providing seniors with quality care they deserve and 
will not become profit at the expense of nursing home 
residents. Congress must exercise its oversight authority to 
ensure that Medicare and Medicaid dollars are spent as 
intended, to provide high-quality care. We must not fail to 
protect our seniors and we cannot allow the bad actors in the 
for-profit nursing home industry to continue to let our seniors 
down and block attempts to pass meaningful reform. With S. 2641 
and the Stark-Schakowsky bill soon to be introduced, you have a 
great opportunity before you and we urge you to seize it.
    I thank you very much for inviting me here to testify.
    [The prepared statement of Mr. DeBruin follows:]
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    Mr. Stupak. Thank you, Mr. DeBruin.
    Dr. Zimmerman, if you would, please, for your opening 
statement, sir.

   STATEMENT OF DAVID ZIMMERMAN, PH.D., DIRECTOR, CENTER FOR 
 HEALTH SYSTEMS RESEARCH AND ANALYSIS, UNIVERSITY OF WISCONSIN-
                            MADISON

    Dr. Zimmerman. Good afternoon, Mr. Chairman. As a fellow 
UPR--that would be Dollar Bay, Michigan--I am especially 
pleased to be here this afternoon. My name is David Zimmerman. 
I am a professor of health systems engineering at the 
University of Wisconsin-Madison, and I am the director of the 
Center for Health Systems Research and analysis at UW Madison. 
I am also the president of the Long Term Care Institute, a 
nonprofit organization created to assist in the monitoring of 
quality of nursing home care in organizations with corporate 
integrity agreements with the Office of the Inspector General 
within the Department of Health and Human Services.
    As researchers and monitors, our clinicians and analysts 
have conducted visits to more than 1,000 nursing homes in the 
past 8 years. We have observed or participated in more than 100 
quality improvement meetings, including more than 30 such 
sessions at the corporate level of organizations. I have spoken 
to at least 15 corporate boards or board committees and met 
with individual board members about quality of care issues. So 
we have been observing and analyzing the care of nursing home 
residents and the systems that govern this care from the 
bedside to the boardroom.
    What are some of the things we have learned from this rich 
field experience? One thing that is very clear from our 
experience is that there is tremendous variation in the quality 
of care by facility, by unit and area of care within a 
facility, by district and region and across nursing home 
corporations as a whole. Even the best performing organizations 
have pockets of mediocrity in performance, and even in the 
worst performing organizations, there are facilities that 
deliver good care. It is this inconsistency that represents one 
of the most difficult challenges to overcome, and yet it also 
represents a significant opportunity to take a systems approach 
to improving nursing home quality of care.
    Frankly, another thing that comes out loud and clear from 
our field experience is that there is an unarguable need for 
transparency in the provision of nursing home care. Others have 
spoken to this issue, and frankly, I am astonished that it 
still is even a subject of debate.
    What else have we learned? Well, we have some pretty solid 
preliminary evidence that monitoring has had a positive impact 
on improvement in regulatory outcomes, at least for the 
national and regional corporations that have been the subject 
of our work and our analysis. The initial findings are also 
quite positive in terms of the effect of monitoring on reducing 
excessive rates of resident functional and clinical impairment. 
In addition, we have substantial anecdotal evidence, including 
feedback from the providers themselves, that monitoring has had 
a productive impact on their quality assurance and quality 
improvement initiatives.
    How does monitoring help? We believe the presence of 
monitors and monitoring activities has elevated the importance 
of the internal compliance function within the organization 
themselves and it is difficult to exaggerate the importance of 
this. Having a more important and a more prominent compliance 
function within the facility and the organization not only 
improves the quality of care but imbues the organization with 
an enhanced culture of quality by making compliance a more 
visible and integral part of the leadership and management of 
the organization. Our experience has been that this increased 
presence and visibility as well as the existence of a more 
direct line of communication between compliance and top 
leadership including the board can lead directly to improved 
care and it can help put quality of care on an equal footing 
with financial stewardship within the organization.
    Another advantage of the monitoring process is it can help 
to expand the quality assurance function beyond individual 
facilities to levels of organization that can more effectively 
make things happen to implement quality initiatives and help to 
sustain them throughout the organization.
    Another important contribution, and one which we stress 
greatly in all of our work, is the emphasis on systems of care 
and quality assurance at all levels of the organization. 
Probably the single most important insight from our monitoring 
work has been the importance of developing and sustaining 
effective systems of care which along with good policies and 
procedures can promote more consistent care across units, 
facilities, districts and regions of organizations. Too often 
we find that such consistency is lacking and it was through 
continuous interaction with the organization including at the 
top levels that this commitment to consistency and capability 
to bring about consistency was achieved.
    A critical corollary point is that implementing and 
sustaining good systems of care and quality assurance demands 
loyalty to what we have come to refer to as the V word, 
validation. Too many times we have found that those responsible 
for the oversight of quality in monitored organizations would 
accept without validation assurances of compliance with policy 
or that care protocols were being carried out as documented or 
reported yet validation did not confirm that this was true. 
When quality assurance efforts include validation, that what 
was said was happening was indeed happening consistently, then 
care improved markedly. Validation must be a fundamental part 
of any effective quality oversight function or any quality 
initiative that the industry or the regulatory community 
undertakes. This of course includes validation of staffing 
levels and staff competencies.
    So in conclusion, we believe that the internal compliance 
function is absolutely essential to meaningful quality 
improvement and quality assurance. It can work side by side 
with the regulatory community to bring about lasting quality of 
care for nursing home residents.
    Thank you.
    [The prepared statement of Mr. Zimmerman follows:]
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    Mr. Stupak. Thank you, and everything is fine in Dollar 
Bay.
    Dr. Kramer, your opening, please, sir.

STATEMENT OF ANDREW KRAMER, M.D., HEAD, PROFESSOR OF MEDICINE, 
  DIVISION OF HEALTH CARE POLICY AND RESEARCH, UNIVERSITY OF 
                        COLORADO-DENVER

    Dr. Kramer. Good afternoon, Mr. Chairman, Mr. Shimkus, 
members of the Committee. I am a physician and a professor of 
medicine and health policy, and about 10 years ago I was over 
at the Hart Building and gave testimony similar to this before 
the Senate Special Committee on Aging. Chairman Grassley asked 
me, how come the methods I use in research are not currently 
being used in the survey process, because I had testified about 
problems with subjectivity and inconsistency in the survey 
process. My response was that I didn't know. And then in 1998 
they began the QIS initiative, starting with a development 
contract. Dr. Zimmerman and I led the team on that early 
development of QIS.
    So 10 years later, where are we? Well, we still have very 
good nursing homes out there, we have not so good ones, and we 
have poor ones. And the problem is that today you still can't 
tell from the information that is publicly reported or the 
information in the survey process which nursing homes fall in 
which categories. You can't tell. You know, I can't even tell 
from the information that is available. And that is a serious 
problem. We have enforcement problems because we don't have a 
system that surveyors are confident about, which my team has 
shown in some recent case study work. And we don't even have a 
national standard that is widely recognized, indicating what is 
quality for providers. But we are making some progress and we 
are making some progress in six States that have now 
implemented the Quality Indicator Survey. And I want to tell 
you a little bit about that progress we have made because I 
think it is very important for today's discussion. CMS is 
moving toward a national rollout of QIS, but it is very, very 
slow.
    So the QIS, how is it different from the traditional 
survey? The QIS involves much larger samples of residents and 
facilities, people who are currently residing in the facility 
and recent admissions. And as somebody said earlier, in the QIS 
survey you talk to the residents. You talk to 40 of them. You 
ask them questions. You ask them, do you have choice about when 
you get up in the morning. You ask them whether they have oral 
pain. You find out about their nutrition. You ask them all 
sorts of questions. You make structured observations. You pull 
information from records. You pull weights out of charts. You 
ask them if they are on a weight-loss program. There are 162 
indicators that are used in the first 2 days of QIS that cover 
the Code of Regulations. And that is what the QIS is based on: 
the regulations.
     There is another aspect of the process very exciting: the 
data. It is very structured and very data driven and so at the 
end you can audit what surveyors are doing with all that 
information. In June we are actually training the regional 
office oversight people to use that same information in their 
oversight process.
    So let us talk for a minute about what the impacts of QIS 
have been. First of all, the surveys. There have been over 700 
surveys that are QIS. There are over 200 surveyors trained in 
QIS. Of these the surveyors, 80-plus percent of them said they 
would never go back to the traditional process. Now, there are 
those that don't like this imposed structure. Deficiencies--we 
are finding deficiencies that are in the Code of Regulations 
that were never identified before. These deficiencies are in 
dental health and oral pain, because surveyors ask people about 
oral pain. There are programs in a couple of the QIS states 
that are being led by the Provider associations, working with 
the State Dental Associations, to start providing oral 
healthcare inside nursing facilities. Hospitalization, quality 
of life, and choices are the kinds of problems cited in QIS. 
The culture change movement has embraced QIS because of the 
importance of these areas.
    There is another impact, consistency. When I first went to 
one of these QIS States, a group of providers came up to me and 
they said Dr. Kramer, we are getting a large increase in 
deficiencies in our district office. Guess what? This was a 
district office that had a long history of low deficiencies 
because the process was not consistent.
    There has been one more impact of QIS and that is on 
providers. Providers have started to embrace and use the tools 
of QIS for quality improvement. Some are proactive whereas 
others receive a bad QIS survey, and then they use the tools 
for quality improvement.
    And so the next question is, why has it taken 10 years to 
roll QIS out in six States? First of all, development. 
Development took many years. We had to build new systems under 
CMS contract to support QIS, so there was a great deal of 
development work. There was an evaluation that took twice as 
long as was expected, and that slowed things down. Secondly, 
everybody criticizes the survey process, but there is 
reluctance to change it. There is reluctance and we have worked 
together. At this stage there is a core group in CMS of about 
eight people that are very strong advocates of QIS, but it has 
taken some time.
    And then the final issue is budget. Thirteen States applied 
to be QIS states after the demonstration. One of them was 
chosen, Minnesota. For the other States, CMS did not have 
budget to roll it out. And that has been the biggest problem, 
the budget has been uncertain. The budget commitment has been 
uncertain. It would take $20 million, one time, to roll QIS out 
in every one of the other States over the next several years, 
and that is the one recommendation I have to make.
    Thank you.
    [The prepared statement of Dr. Kramer follows:]
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    Mr. Stupak. Thank you.
    Mr. Pruitt, your opening, please.

STATEMENT OF NEIL L. PRUITT, JR., CHAIRMAN AND CEO, UHS-PRUITT 
                          CORPORATION

    Mr. Pruitt. Thank you, Chairman Stupak, Ranking Member 
Shimkus and members of the committee. I am Neil Pruitt and I am 
chairman and CEO of UHS-Pruitt Corporation. I am grateful for 
the opportunity to be here on behalf of the American Health 
Care Association to offer perspective on the success and 
remaining challenges we face in ensuring quality nursing home 
care.
    For nearly 40 years, my family-owned company has been 
providing professional healthcare services throughout the 
Southeast. With nearly 8,000 employees, we touch the lives of 
more than 18,000 individuals daily and we have a longstanding 
tradition of quality and a commitment to caring. I am proud of 
the advances our profession has made in delivering high-quality 
care, and we remain committed to sustaining these gains in the 
future when demand for care will dramatically increase.
    Data tracked by CMS clearly illustrates improvements in 
patients' outcomes, increase in overall direct care staffing 
levels and significant decreases in quality of care survey 
deficiencies in our Nation's skilled nursing facilities. 
Positive trends are also evidenced by initiatives including 
Quality First and the Advancing Excellence in America's Nursing 
Homes campaign, which are having a significant impact on the 
quality of care provided. The Advancing Excellence campaign is 
a coordinated initiative among providers, caregivers, 
consumers, CMS and others that promotes quality and encourages 
best practices and evidence-based processes. This voluntary 
initiative is working and outcomes and processes are improving. 
We remain committed to building upon quality improvements for 
the future.
    Twenty-one years ago, passage of OBRA 87 brought forth 
significant changes in our approach to patient care. Today we 
are in danger of abandoning the original intent of OBRA 87 in 
favor of a regulatory system that defines quality in a context 
that is often measured by fines and violations rather than by 
quality of care, or quality of life as was originally intended. 
We believe that a reformed and effective survey process should 
embody three guiding principles. The survey should be fair, 
accurate and consistent; protect the health and safety of the 
residents; and should focus on areas requiring improvement in 
problem. We must revamp the system to ensure that quality of 
life is emphasized consistent with the intent of OBRA 87.
    We know the vast majority of nursing homes provide high-
quality, compassionate care that patients and their families 
want and deserve. However, we recognize there is a very small 
fraction of facilities that do not meet these high standards of 
quality care. There should be incentives rather than current 
disincentives for new operators to take over troubled 
facilities and improve the care of the patients.
    UHS-Pruitt has a history of purchasing facilities that have 
had troubled survey records and turning them into top-tier 
performing nursing facilities. We have been successful in 
working with the regulatory agencies in Georgia, North 
Carolina, and South Carolina to improve the quality of care 
delivered to those that we serve. I am proud of our 
organization's ability to improve underperforming facilities 
and make them a better place for our patients.
    However, these efforts do not come without risk or 
difficulties. Last year we purchased a facility in Monks 
Corner, South Carolina. This was a facility with the SFF 
designation, which needed significant investment to reform it 
into a better environment that embraces the constructs of 
culture change, implements advances including information 
technologies, and has increased staffing levels. Prior to our 
purchase, this facility had been issued a Medicare notice of 
termination and efforts were underway to relocate more than 130 
patients. Further, the center was one of the first to enter 
into a settlement agreement with CMS. Upon transfer of 
ownership, this agreement was renamed a systems improvement 
agreement. I believe that this type of agreement is a model for 
government-provider collaboration to improve care in 
underperforming nursing centers.
    Before purchase, we presented a performance improvement 
plan to CMS and the South Carolina Department of Health and 
Environmental Control. Both the regulatory agencies offered 
valuable feedback on the past performance of the facility and 
the likely effectiveness of our plan to address past 
performance deficiencies. Our team holds periodic briefings 
with both agencies. These briefings are honest and open and are 
focused in achieving outcomes that will benefit patient care. 
While I am the first to admit the facility is still far from 
perfect, we are proud of our efforts and outcomes we have seen. 
This facility has had significant improvement and been publicly 
recognized by CMS regarding our intervention and success in 
improving this facility. It has been almost 8 months since we 
acquired the property. Over this time we have made considerable 
investment to improve the facility. However, we have still not 
been approved for Medicare certification and thus have not 
received any Medicare payments for the improved care and 
services we continue to provide.
    We know that encouraging the purchase of troubled 
facilities can help patient care but there remain significant 
barriers with the current change of ownership process. This 
must be recognized and changed. There are ways to improve the 
regulatory process and ensure the current safeguards are 
adequate and appropriate. One inherent flaw with the current 
survey process is that it is incredibly subjective by nature. 
This is because the review relies upon the individual 
interpretation. There is, however, one system that has been 
mentioned that shows promise in reducing the human 
interpretation and subjectivity: the Quality Indicator Survey. 
We applaud CMS's latest attempt to minimize human variability. 
Although it is too early to draw conclusions on QIS, AHCA is 
cautiously optimistic that the process will help correct some 
of the inadequacies of the current system.
    While I have provided a more thorough list of 
recommendations for a smarter oversight system in my written 
statement, some ideas include Congress to establish a pilot 
program in a few States that would require funds collected 
through civil monetary penalties to be put back into the system 
to improve quality care. Congress should create a national 
commission that includes all long-term care stakeholders to 
best determine what information would provide assistance to 
consumers and how it should be made available. Encourage the 
posting of more complete staffing data on Nursing Home Compare. 
We also urge Congress to pass the Long-Term Care Quality and 
Modernization Act of 2007.
    We are proud of the advances we have made in delivering 
high-quality long-term care and we remain committed to 
sustaining these gains in the years and decades to come.
    I thank you for the opportunity to offer these comments and 
I look forward to answering your questions.
    [The prepared statement of Mr. Pruitt follows:]
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    Mr. Stupak. Thank you, Mr. Pruitt.
    Dr. Koren, your opening statement, please.

  STATEMENT OF MARY JANE KOREN, M.D., M.P.H., ASSISTANT VICE 
                PRESIDENT, THE COMMONWEALTH FUND

    Dr. Koren. Thank you, Mr. Chairman, for inviting me to 
testify. I am Dr. Mary Jane Koren. I am a geriatrician and I am 
here to testify on my own behalf as an expert in this field. 
Besides having been a nursing home physician and having had a 
father in a nursing home, from 1987 to 1992 I was the director 
for survey and certification for New York State. I have also 
been privileged to be a member of the National Commission on 
Quality Long-Term Care, which was chaired by former Senator Bob 
Kerrey, and former House Speaker Newt Gingrich.
    Currently, I am an assistant vice president of the 
Commonwealth Fund, where I direct a program to improve nursing 
home quality, and I have the honor to be this year's chair of 
the steering committee, which, if I may comment, is actually an 
independent coalition of stakeholder groups and is really not 
sponsored by any one given organization.
    This Advancing Excellence so far has over 43 percent of the 
nursing homes in the country as participants. I would like to 
thank you, Chairman Stupak and also Ranking Member Shimkus and 
every member of the committee for conducting these hearings 
today since recent events have brought to light important 
issues with the nursing home oversight system and how quality 
may be achieved in the Nation's nursing homes. I would like to 
tell you about some of the positive changes that have been 
occurring and that continue to spread.
    I believe that survey and enforcement is a critically 
important undertaking because it really sets a floor of what we 
expect all nursing homes should be doing. I also think it 
should be easy to find out where the buck really stops when 
there are problems so that they can be fixed expeditiously and 
permanently. However, while I agree that our current survey 
system of oversight could and should be improved, I don't think 
we should rely on the regulatory process to improve quality of 
care alone and we certainly shouldn't ask our surveyors to 
become consultants to the industry.
    There are other ways government can help improve nursing 
homes. For example, Washington State has a quality assurance 
nurse program as a separate and distinct unit from its survey 
agency. In addition, a federally supported quality improvement 
organization program could be charged to help nursing homes 
come into compliance after survey and continue to work 
collaboratively with voluntary efforts such as happening now 
with two initiatives which I would like to tell you about 
briefly.
    The first is called Culture Change. It is a grassroots 
movement which began about 15 years ago when a number of people 
suddenly tapped into OBRA 87's potential to promote resident-
centered care and to really try to turn nursing homes into 
homes. Picture a nursing home where you can stay up to watch 
the end of the ballgame, you can get yourself a midnight snack 
and then you are helped to bed by somebody who actually knows 
you and all your little quirks. This is light years away from 
business as usual but it is something that is happening more 
and more. It is applicable whether you stay in a nursing home 
for 5 days or whether you stay there for 500 days. Findings 
from a recent national survey of nursing homes supported by the 
Commonwealth Fund showed that over half the facilities in the 
field say that they are either doing something to try to make 
themselves more resident-centered or that their leadership is 
committed to the principles of resident-centered care and that 
they will begin shortly.
    Likewise, the survey found that adopters are beginning to 
see a positive impact on their bottom line. The Quality 
Improvement Organization program's 8th Scope of Work borrowed 
from the culture change movement to target things like how to 
retain staff and ways to help staff really get to know their 
residents and to test resident satisfaction. This boosted 
interest across the industry in resident-centered care. At the 
same time, CMS's Office of Survey and Certification has been 
trying to ensure that the survey process itself not become a 
barrier to innovation.
    The other positive development is Advancing Excellence, 
which several of you here have mentioned today. This effort is 
less than 2 years old. The campaign's national steering 
committee which, as I said, I do chair, is made up of an 
unprecedented coalition of 30 organizations including provider 
associations, health professionals, unions, consumer advocacy 
groups, and representatives from CMS. The collaborative spirit 
of the group itself deserves to be counted as one of its most 
noteworthy accomplishments. The campaign has been very 
successful so far. It has opened all nursing homes, not just 
those in the association. It also seeks support and 
participation from consumers and frontline staff. We are 
tracking the clinical goals and results already show that it is 
working. Participant homes are improving at a faster rate for 
the clinical goals than homes which have not yet joined. Forty-
nine State-level networks have been established that are very 
efficient ways to get good ideas out there and provide 
technical assistance to homes. One call that we had, we have 
over 10 percent of the industry actually on that call to hear 
about evidence-based ways to improve performance in taking care 
of pressure ulcers.
    In addition, I would like to conclude my remarks by 
observing that there are a number of steps Congress could take 
that would really support current voluntary efforts while at 
the same time improving transparency and the regulatory 
process. They include the CMS Web site, Nursing Home Compare, 
include information on multiple staffing characteristics and 
the rate of consistent assignment, and also perhaps whether or 
not a nursing home is participating in Advancing Excellence. 
Also, CMS should be charged with developing payment methods 
that would reward nursing homes participating in the campaign 
or achieving results on adopting resident-centered care 
practices. Also, CMS should be encouraged to continue to make 
long-term commitments to supporting Advancing Excellence and 
similar efforts at quality improvement. Perhaps also we should 
direct CMS to fund and conduct a demonstration to pilot other 
ways to provide technical assistance that could be linked to 
the survey process but not be provided by the survey agency. 
And lastly, that CMS be directed to continue to vigorously 
pursue its work on using resident input to improve the 
assessment, the care planning and the survey processes.
    Thank you.
    [The prepared statement of Dr. Koren follows:]
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    Mr. Stupak. Thank you. Thank you all for your testimony. We 
will begin questions.
    Dr. Kramer, I understand you are one of the authors of the 
report commissioned by CMS titled ``Improving Nursing Home 
Enforcement'' and that report was completed about March of 
2007?
    Dr. Kramer. Correct, yes.
    Mr. Stupak. And it has not been made public yet by CMS?
    Dr. Kramer. I understand that, yes.
    Mr. Stupak. Do you know any reason why it would not be made 
public?
    Dr. Kramer. I actually do not know the reason why it is not 
public.
    Mr. Stupak. In this report, it shows that the survey system 
as it is currently administered significantly underestimates 
the deficiencies present in most nursing homes. In fact, there 
is a GAO report out that basically echoed those findings. The 
report shows only about a quarter of the deficiencies practiced 
are detected by the surveyors. Why is that?
    Dr. Kramer. Well, that report was based on going to nursing 
facilities and using the methods that are used in the Quality 
Indicator Survey concurrently with surveys. This was done in 26 
facilities, and one of the things that was very evident is that 
without the structure of something like a Quality Indicator 
Survey, the surveyors are faced with this morass of regulations 
that they are trying to interpret. They have interpretative 
guidance to do this, but there is no structure to follow. And 
in the end, the documentation that comes out of it is not 
strong enough for them to trust. The QIS approach that was used 
in these case studies is a much more methodical, replicable 
process.
    Mr. Stupak. You have QIS and then you have other, the 
current way they do the surveys. I take it the current way of 
doing the surveys, as I have heard from Mr. Pruitt, Dr. Koren 
and others, that it is basically more subjective than the QIS?
    Dr. Kramer. Yes, that is what the case studies showed and 
that is what----
    Mr. Stupak. Is that the inconsistency then in enforcement 
depending on the----
    Dr. Kramer. Well, the enforcement is at the end. But 
enforcement actually can get watered down if you don't have 
really clear evidence of the problem and good documentation. 
And the problem is that in the traditional survey process they 
invest a lot of resources in but because that structure is not 
there, they don't always get all the information that is 
needed.
    Mr. Stupak. On the QIS, again, that CMS commission and 
evaluation, that was completed in December--do you know of any 
reason why that has not been released?
    Dr. Kramer. I don't know why that is not released.
    Mr. Stupak. Are there any independent conducted surveys 
that document the superiority of the QIS over the current 
survey system?
    Dr. Kramer. Independent--like what are you----
    Mr. Stupak. Well, other than the one that you were 
commissioned to do to complete the survey for CMS, is there 
anything else that has taken the same factors of the Quality 
Indicator Survey, the QIS, and to show that it works better 
than the current system we have?
    Dr. Kramer. OK, so the evidence we have--the case studies 
are one example. We went in and used QIS methods and then the 
surveyors used the traditional process, and there were pretty 
dramatic differences in the problems identified. The other 
evidence is what you hear from the surveyors. They all say it 
is more consistent, more objective. That is why the States are 
lining up to do it. And what is very interesting is that there 
is another group that is starting to support it and that is the 
provider community because they also find it more objective. 
Even though there are more deficiencies in QIS and in different 
areas and in some new areas, there is support there among 
providers.
    Mr. Stupak. Dr. Koren mentioned the Advancing Excellence 
program that nursing homes are voluntary doing. Are you 
familiar with that program?
    Dr. Kramer. I am familiar with that program.
    Mr. Stupak. How does that relate to the QIS?
    Dr. Kramer. At this stage, because QIS is not rolled out 
nationally, it is not integrated with that Advancing Excellence 
activity.
    Mr. Stupak. Could it be integrated?
    Dr. Kramer. It could be fully integrated and broaden that 
initiative so that you could target the full range of the Code 
of Federal Regulations instead of more narrowly targeted areas.
    Mr. Stupak. You mentioned $20 million to get the other 
States into it. Were those the States that were first selected 
as the pilot States or are you talking about nationwide?
    Dr. Kramer. We could do it nationally for $20 million. The 
pilot States are in it. There are three more being rolled out 
this year. With $20 million, it could be rolled out to every 
State in the country.
    Mr. Stupak. Dr. Zimmerman, you mentioned your group had 
looked at 1,000 nursing homes. Is it fair to say that CMS's 
regulatory framework is not equipped to address the 
contemporary challenges posed by chain ownerships that we heard 
about in the earlier panel?
    Dr. Zimmerman. Well, I think that the regulatory process as 
it currently exists is to some extent limited by the fact that 
the contracting agencies that actually carry out the surveys 
are the State survey agencies, they are State agencies, and to 
my knowledge, there has been very little thus far. Now, I am 
not privy to a lot of the information within CMS so I would 
defer to Administrator Weems on this, but to my knowledge, 
there hasn't been a lot of activity that enables survey 
agencies to cross State lines, and so if you have a corporation 
that has facilities across a variety of States or regions, it 
is somewhat difficult within that regulatory community to be 
able to do this. So that is one issue. The other issue is that 
I think that the internal compliance function within 
corporations as well as looking at the systems of care is 
something that the regulatory process right now is not that 
equipped to do. That is not to say that there is not a 
prominent role for it but I think it has limitations in terms 
of looking at systemic changes that can be brought about.
    Mr. Stupak. As we look at these private equity firms, and I 
think in my opening I said more than 50 percent of the nursing 
homes now are owned by private equity firms, I got the distinct 
impression in listening to the earlier panel that while the 
nursing home administrator who would be there when the surveys 
are going on would like to do the right thing but who do they 
turn to to get the resources to do it or to make those policy 
decisions? In your surveys, did you see that when you did a 
nursing home that was locally or privately owned as opposed to 
those that are part of a chain in a private equity firm?
    Dr. Zimmerman. Well, we certainly saw the phenomenon of 
facility leadership wanting to engage in more resources. This 
phenomenon was not universal but we saw quite a bit of it. I 
don't--I am not prepared to say that that was systematically 
different between private equity firms and other organizations, 
Number one, and Number two, it is also true that in some cases, 
the reversed phenomenon took place, which is that there were 
district and regional folks within a corporation that wanted to 
engage in quality initiatives and there was some resistance. So 
this is a complicated problem.
    Mr. Stupak. I have one last question and then I will turn 
to Mr. Shimkus. Dr. Kramer, you said $20 million for full 
funding the national rollout of the QIS. You also said industry 
is now supporting the QIS. Has there been any discussion about 
maybe having industry help provide some of that $20 million to 
roll out the program?
    Dr. Kramer. I haven't been privy to those discussions but--
--
    Mr. Stupak. I thought I would throw it out there.
    Dr. Kramer. That is an interesting----
    Mr. Stupak. How about you, Mr. Pruitt? Do you think 
industry should provide some of that $20 million?
    Mr. Pruitt. I am not aware of any discussions within our 
association to offer to help defray the cost.
    Mr. Stupak. Do you think it is a good idea?
    Mr. Pruitt. I believe that we need to address our current 
funding issues before we spend our resources on rolling out 
that initiative.
    Mr. Stupak. Dr. Koren, do you want to say anything on that?
    Dr. Koren. No.
    Mr. Stupak. OK. Mr. Shimkus for questions.
    Mr. Shimkus. Thank you, Mr. Chairman. The $20 million, in 
the numbers that we deal here in Washington, it didn't seem 
like an awful lot of dollars. It is interesting how we do it 
and how it gets applied. This is a very good hearing and I 
appreciate all the testimony.
    Mr. Pruitt, you operate in three States. Is that correct?
    Mr. Pruitt. Four States.
    Mr. Shimkus. Four States. Do you know--the question I had 
asked earlier on the--you may not see it because you just see 
the reimbursement from the State on Medicaid services, but do 
you know the individual States' FMAP from the four States that 
you service?
    Mr. Pruitt. I have a general idea but I would be afraid to 
quote those FMAP statistics to you. I can get that for you at a 
later date.
    Mr. Shimkus. It would just be interesting in your service 
area whether you have one 50/50 State, one 60/40, one--I really 
dislike this FMAP, and when we talk about the reimbursement for 
services and care, it is just--if you can get funded, it might 
help people do cost shifting. But I also observed, I think all 
of us who have had loved ones have observed the change in care 
and the continuum of care, as I mentioned before, and I think 
the continuum of care probably can help. Those who are moving 
to this continuum of care are probably more--I shouldn't just 
be generalizing but it is our own experiences as Members of 
Congress, we go into nursing facilities, we visit all these 
different aspects, and then--but the newer ones--what I want to 
focus on is the debate now is this QIS and what the industry is 
doing on its own, and there was a percentage of 43 percent, Dr. 
Koren mentioned 43 percent participants. The debate is, how do 
you get the 57 percent to get to 100 percent and do you do it 
regulatory? And then the debate is, if you have the 
information, then how do you follow up the ladder? If it is 
voluntary, then where is the ability of government to step in? 
So why don't you answer that question? I think I want to go to 
Mr. DeBruin for hopefully a segue into it after I get--how do 
we get the other 57 percent to be involved?
    Mr. Pruitt. The Advancing Excellence campaign has been a 
tremendous success, and as was mentioned earlier, it is 2 years 
old. During that time, we have seen participation dramatically 
increase. From my own organization's experience, all of our 
facilities participate in Advancing Excellence. The American 
Health Care Association has publicly stated that it encourages 
all members to participate in the campaign. One of the ongoing 
industry efforts is, we are collecting quality statistics about 
our members and where there are deficiencies in practices, we 
are offering resources to help them improve.
    Mr. Shimkus. Before I go to Mr. DeBruin, Mr. Zimmerman, how 
does this program affect the internal compliance issues that 
you've discussed or does it not? Is there a connection? Have we 
got three different things going in different directions?
    Dr. Zimmerman. Well, I don't think they are completely 
independent at all. I think that the Advancing Excellence 
campaign is really an initiative, a quality improvement 
initiative that has taken on aggregating importance throughout 
the industry and I think that is very important. It can be very 
complementary to internal compliance functions. Frankly, 
internal compliance is just good management and so if you are 
engaged in good management, you are going to look for quality 
improvement programs as well. I would suggest that what we need 
to do, as any good manager would do, is to make sure that we 
validate that what we are being told in terms of some of the 
outcomes, in terms of some of the processes is happening as we 
are told it is happening, and I am not suggesting that we need 
to do that because we don't automatically believe somebody but 
it is just good oversight and management to make sure that we 
validate these quality improvement efforts. So I think they can 
be very complementary.
    Mr. Shimkus. And what is the number of nursing homes that 
are involved in internal compliance issues?
    Dr. Zimmerman. Well, I am aware--I am not sure I have this 
correct but I think that with respect to the corporate 
integrity agreements, there probably are anywhere from 1,000 
nursing homes to 1,200 nursing homes that have been part of 
corporate integrity agreements with the Office of the Inspector 
General. The OIG also has corporate compliance agreements with 
probably another 1,000, I would bet, but at any rate--so that 
would represent a little over 10 percent of the industry.
    Mr. Shimkus. The mandatory versus voluntary, what about 
voluntary?
    Dr. Zimmerman. I am not actually that familiar with the 
voluntary ones because we don't get involved as outside 
monitors in this process, so I would have to defer to actually 
Mr. Morris, who was on the previous panel.
    Mr. Shimkus. Mr. Pruitt, do you have a compliance program?
    Mr. Pruitt. We have a voluntary--well, before our purchase 
of the Monks Corner facility, we were not required to have a 
compliance program. Once we purchased that facility, they 
wanted us to maintain the quality of care compliance program. 
That was 8 months ago. Prior to--since 2002, we have had a 
voluntary compliance program that is extremely effective within 
our organization. We have used it to improve quality and ensure 
that we are in compliance with all Federal laws and 
regulations.
    Mr. Shimkus. How does that help you? I mean, you said it 
helps you. How?
    Mr. Pruitt. We have a corporate compliance officer, who is 
also trained in Six Sigma. She has a staff that analyzes our 
data. When there are issues, we identify them internally and 
disclose them when necessary to government authorities. This, 
by being proactive, we are able to catch problems before they 
become a large event in our corporation.
    Mr. Shimkus. Thank you, and I have been meaning to get to 
Mr. DeBruin. The first panel dealt with Connecticut and the sad 
state of affairs, so what I am trying to do is connect the dots 
and I am trying to say OK, we need to have information. We have 
got Dr. Kramer's system that sounds like it is pretty good. We 
have got industry working on its own. The State still has a 
major role to play with licensing and the attorney general, and 
we saw in the Connecticut issue, that there was a problem 
identified and there was a couple steps that had failed within 
the States. My issue is, how much--if we are going to re-look 
at this, we also have to look at the ability of the States to 
carry their share of the load as far as laws on the books to 
help us in this process and segue more of this information into 
that arena. Would you agree?
    Mr. DeBruin. Absolutely I agree. I think States obviously 
play a major role, I think. I agree that voluntary programs are 
very important. In fact, the Advancing Excellence program is a 
program that we as a union are very involved in and support and 
I think that the questions you are asking go right to the heart 
of the issue here, which is there are many of the providers--
most of the providers that our union represents are very good 
providers that do volunteer and do very good work to comply. 
The problem is with those who don't and that, as Mr. Morris 
testified earlier, based on recent surveys and information that 
is available, if 20 percent of the nursing homes in this 
country are actually putting nursing home residents at risk by 
not being involved in these voluntary programs and not 
complying, that is--of 1.5 million residents in nursing homes, 
that is 300,000 people, and that is really, I think what 
regulation is needed for, is to hold those providers 
accountable.
    Mr. Shimkus. And again, I will just end up by saying 
because of the way the industry has changed in rural small town 
America, there are still probably in the model of care from 20, 
25 years ago where they haven't done this expansion or capital 
because the numbers are there not to, and it is going to be 
interesting to see how we segue because they are needed. That 
is why I am so hot on the FMAP, and I will end on that.
    Mr. Stupak. Mr. Walden for questions, please.
    Mr. Walden. Yes. Thank you very much, Mr. Chairman. I want 
to take issue with my colleague from Illinois, who suggests 
that we are all headed toward the nursing home. I have no plans 
to run for the United States Senate.
    I want to touch on a couple of issues from a serious 
standpoint now, because I have actually spent more time in the 
nursing home in the last year than I would have liked. My 
brother was nearly killed in a motorcycle accident in August. 
My mother-in-law actually just passed away this morning. And so 
there are some real-life issues I think many of us deal with 
and have questions with and some of them, frankly, are the 
stupid regulations that are on the books today, and I wish I 
could have been here for the earlier part of the panel but I 
wasn't able to. In my brother's case, he is now fortunately 
mostly recovered. He went into a veterans' nursing home, which 
was terrific except that there is a regulation that says you 
can't put up the little bar there on the side of the bed 
because it is considered a restraint. So you know what they 
did? They lowered the bed as far as they could to the floor and 
put a plastic mat out with a sensor so when he would roll out 
of the bed, he would roll onto a mat, because there is a 
regulation or a law that says oh, no, you can't restrain 
somebody like that. I mean, that is pretty darned stupid out 
there, and I just wonder, we all talk in these terms of quality 
assurance and yada, yada, yada. I want to get to the real-life 
problems that you all are dealing with and that we as family 
members deal with. And then I read about, the issue here is the 
State inspectors apparently aren't doing their jobs, and I am 
wondering, do we need a new law or do we just need to bring the 
States up short and say do your job, do the inspection, report 
back.
    The other issue, and I know this came up in earlier 
discussion about access to ownership. I was a licensee of the 
Federal Communications Commission for more than 20 years. We 
had to file annual ownership reports and I believe those were 
available on the Internet. How hard is this with today's 
technology to do that? And if there is a change in ownership, 
you are required to file or you don't get paid. It is real 
simple. And so it just strikes me, there are some of these 
things that don't make a lot of sense, and I have seen really 
good treatment and I have seen some real bonehead mistakes. My 
mother-in-law was gluten intolerant, allergic to wheat. Two 
mornings in the same week they tried to feed her Cream of Wheat 
for breakfast. They ground up pills that were time-release 
because she was having trouble swallowing. We ended up hiring 
private care to be in the room to make sure those things didn't 
happen.
    So, I mean, I have seen all sides on this industry. I have 
also seen when my mother was in her final years, a decade or 
more ago, that the staff was so burdened with the paperwork 
requirements of the government that they didn't have time to do 
the care they were trained to do. And so I don't want to see us 
go to the point where we just add a whole new layer of rules 
and regulations, some of which, as I have said, don't make any 
sense to me as a layperson here. I talked to a nursing home 
administrator who manages some homes that deal specifically 
with those who have mental deficiencies and they are required 
under the rules in this particular State, not my own, that all 
those people have access to anything anybody else has access 
to, and he said, that means if we have drain cleaner, they can 
get access to it and we can't lock it up. I mean, it just makes 
no--there are some commonsense things here. We cannot 
micromanage. We have to have responsible people and then we 
have to have quality assurance programs that enshrine that 
commonsense piece.
    Can any of you explain to me why we would have a rule on 
the books that says if somebody is rolling out of bed 
repeatedly, you can't have one of those bars you put up like 
you do if you have a baby? Dr. Kramer?
    Dr. Kramer. Why don't I talk about it?
    Mr. Walden. And who is doing something about it?
    Dr. Kramer. So here is the dilemma. There is a code of 
regulations.
    Mr. Walden. Oh, I know.
    Dr. Kramer. And that code of regulations are quite 
nonspecific, and the issue with physical restraints is, there 
are cases where somebody is truly at risk and there is no other 
way but some form of a system for helping them preventing 
falls. But there are all sorts of ways of doing that, and the 
trick is, how do you apply these regulations in individual 
cases. And that is why you need a structured process. You 
mentioned that you don't think the surveyors are doing their 
job.
    Mr. Walden. No, I am just saying what is in the press 
reports here and----
    Dr. Kramer. Well, the thing about the surveyors is, I don't 
think in the current process they have the tools always to do 
the jobs and help them work through the decision process in 
order to apply those many regulations. Those regulations make a 
lot of sense in many, many cases and you just have to figure 
out how to apply those regulations to individual cases.
    Mr. Walden. Somewhere, though, we have lost common sense 
and there has to be a threat of the person running the 
operation that says if I do anything, I am going to get sued or 
I am going to get fined. Tell me then why they couldn't put, or 
I was going to go put the bar up on the bed. I mean, every 
hospital bed has one of those.
    Dr. Kramer. That actually doesn't have the impact that 
everybody thinks it is going to have in terms of prevention 
because there is some danger associated at times with those 
bars. People can get----
    Mr. Walden. I could give you two pages to tell you how many 
times he rolled out on the floor.
    Dr. Kramer. Well, that is a problem. He shouldn't be 
rolling out of bed.
    Dr. Zimmerman. Actually, let me supplement what Dr. Kramer 
says.
    Mr. Walden. He wasn't injured. They had a nice pad and a 
little device that went off every time he rolled out.
    Dr. Zimmerman. Our monitors have seen at least 50 cases in 
which people have strangled themselves in side rails. They have 
seen cases in which people have climbed over the side rails 
because they were in danger of falling, and they could get over 
the side rails just as easily as they could fall without the 
side rails. So that is the reason for the----
    Mr. Walden. You can't redesign side rails? We have done 
cribs, redesigned those.
    Dr. Zimmerman. That is exactly right. There are ways to 
design restraints that would keep somebody from falling out of 
bed without having it be side rails, some of which can kill 
people. So I think that is what Dr. Kramer is saying. There is 
common sense that needs to be provided, and the application of 
a rule which is blind to the context in which it is being 
applied is agreed to be bad.
    Mr. Walden. That is the issue.
    Dr. Zimmerman. And yet there are ways in which we can do 
this without having to put somebody in the kind of jeopardy 
that we have just discussed. So yes, there is a solution to 
your problem.
    Dr. Kramer. And every one of those things have a risk----
    Mr. Walden. Of course they do.
    Dr. Kramer [continuing]. Associated with them and so the 
application of all these regulations has to be done with care, 
and side rails turns out to be a reasonable regulation. The 
issue is to approach it and make sure that people aren't 
falling out of bed. There are other ways to approach that kind 
of issue and----
    Mr. Walden. Mr. Pruitt?
    Mr. Pruitt. If I can answer from a provider's perspective, 
AHCA has encouraged the creation of a commission to examine 
issues such as that. The restraints is a quality measure that 
we do measure on a periodic basis but all of the quality 
measures need to be examined. For instance, high-risk pressure 
ulcers is one of the Advancing Excellence initiatives that is 
publicly tracked. What is an issue with this indicator is that 
you don't count the indicator on the initial assessment, so if 
I met a patient with a high-risk pressure ulcer on day 5 when I 
do my initial assessment, that doesn't count against me. But if 
I haven't healed that pressure ulcer by the 14-day assessment, 
it goes on my record as a deficient practice if you measure 
that in terms of quality indicators. AHCA believes we need to 
examine quality measures and come up with a smarter way of 
looking at the measurements of quality.
    Mr. Walden. Anybody else?
    Thank you, Mr. Chairman.
    Mr. Stupak. Thank you.
    Let us go another round with this panel here. It is a good 
panel. We have had some good discussions.
    Mr. Pruitt, if I was going to go into the nursing home 
business and we have these private equity firms moving in 
there, if you take a nursing home, how much should I be able to 
expect on return on my investment? Is there a rule of thumb 
that you look at?
    Mr. Pruitt. There is no real rule of thumb. I can only 
speak to how we look at a facility when we look at purchasing 
one. We look at the long-term value that it can create, and a 
lot of it has to do with our social mission as well as how we 
feel that will fit into our model of care, which also involves 
community services. So we look at a center-by-center basis. We 
plug in the staffing levels that we would provide, which 
typically is more than the seller provided, and we look at our 
ability to operate that center and achieve the type of care we 
want to achieve.
    Mr. Stupak. The private equity firms, Carlyle, and I think 
Mr. DeBruin mentioned they got a $5.5 billion return they have 
to make up. When you buy a number of centers, as you said, 
there has to be some kind of expected return on it, otherwise 
you wouldn't do it, and especially private equity firms who are 
in the business of making money. So I am just a little bothered 
with that.
    Let me ask this question. The Advancing Excellence, does it 
cost more to implement it or is it commonsense things you 
should be doing and you make up for deficiencies elsewhere 
within the home and you eliminate those deficiencies so in the 
long run it is profitable?
    Mr. Pruitt. What Advancing Excellence has allowed us to do 
is concentrate our resources and moving certain indicators. In 
my opinion, it does not cost more to implement the initiative. 
In fact, it saved money on the back end. If we can identify 
problems and as an industry share best practices, we are more 
than likely to decrease the cost of care. If we can prevent a 
wound, it is going to be cheaper than if we have to treat a 
wound, and I believe Advancing Excellence encourages us to do 
what is right in the first place.
    Mr. Stupak. Well, then, Dr. Koren, why wouldn't more 
centers come into your Advancing Excellence? We are at 43 
percent. I think Mr. Shimkus said what about the other 57 
percent. How do we get them there?
    Dr. Koren. Well, remember, we have only been doing this now 
for less than 2 years, and it is a voluntary effort and I don't 
think you will ever get 100 percent of people to volunteer for 
something like this. But what we are hoping to do is, we are 
hoping to reach out to people and start to show the advantages 
of improvement. As Mr. Pruitt said, one of the things, one of 
our targets is trying to increase staff retention. The cost to 
a nursing home of high staff turnover is profound, and here is 
a way that you can both improve quality and save costs, and we 
are trying to show those kinds of things so that we have people 
come into the campaign and kind of join it. We are going to 
continue it. We are looking to use our local area network to 
continue to recruit.
    Mr. Stupak. So basically your quality program here, your 
Advancing Excellence, while there can be some beneficial, as 
Mr. Pruitt said, it is easier to prevent the wound, the open 
wound as opposed to treat it. That is the incentive, right, 
better quality care? Maybe you can cut down your costs. But 
there is nothing mandatory, there is no enforcement. If I am in 
it, I am participating and I think this is just too much a 
hassle and I drop out, there is no mechanism or no punishment 
for doing that, is there?
    Dr. Koren. No, this a completely voluntary campaign, and so 
it has that limitation as well as that advantage.
    Mr. Stupak. All right. Let me ask this question. It came up 
in the last panel, besides ownership, one of the things that 
they were talking about was a database, and Mrs. Aceituno, who 
testified about her husband there, she felt like she didn't get 
enough information about the quality of care that was provided 
by that center that her husband was at and she said if there is 
one thing she wanted to see was a more comprehensive report or 
patient information before you put your loved one in a nursing 
home or a center. Any problem with that, like identifying who 
the owners are, what are your rights before you enter into a 
center? Do either Mr. Pruitt, Dr. Koren or anyone else want to 
comment on that?
    Dr. Koren. I think that one of the big problems, first of 
all, as we know, the nursing home compare site just has a very 
limited amount of information and a lot more could be put on 
there in order to help people make the decision. But I think we 
should also realize the discharge planners, and most people who 
end up in nursing homes come from a hospital, don't tell people 
to go look at it. So one of the things we have got to do is 
work collaboratively with the hospital side to ensure that 
people know where to go to get information.
    Mr. Stupak. How about online information? We are suggesting 
that be done in our Food and Drug bill that we are moving on so 
someone--you would know where to go to have that information as 
to the ownership, what is its quality assurance or Advancing 
Excellence, if they are a member of that program or not. Just 
trying to get more information online, would that be 
appropriate?
    Dr. Koren. I think it would be critical. I had to choose a 
nursing home for my father, and while I was able to go to 
Nursing Home Compare because I knew about it although the 
discharge planner didn't tell me about it, it provided enough 
information that I knew what nursing homes were in his area and 
I could start to narrow my search. But it certainly didn't 
provide enough information to be able to go and say I know this 
one is a good one and this one isn't.
    Mr. Stupak. So you would have no objection to an online 
program or some universal database nationwide?
    Dr. Koren. No.
    Mr. Stupak. Mr. Pruitt?
    Dr. Zimmerman. Mr. Chairman, one other point about this is 
that----
    Mr. Stupak. Sure, and then I will go to Mr. Pruitt. Go 
ahead, Mr. Zimmerman--Dr. Zimmerman. I am sorry.
    Dr. Zimmerman. The issue--two other points about the 
Nursing Home Compare and that information. First of all, we 
actually were engaged in a project that was funded by the 
Commonwealth Fund to engage folks in using some of this 
information, using the data on the quality indicators and the 
deficiencies, et cetera. It turned out that one of the most 
difficult groups to engage in this process was hospital 
discharge planners, and it is not clear even to this day why it 
was somewhat difficult to get them to be engaged but I think in 
fact they probably had a lot of other things to do and felt 
that they might have had sufficient information. So we have to 
make sure that those professionals who are responsible for the 
reference to nursing homes are going to be using this 
information.
    Secondly, I think one of the opportunities we are really 
missing in this information is that it is not just the 
selection of the nursing home that means that you can use this 
information, because as several of you have mentioned and 
several panel members, frankly, the selection of a nursing home 
is very limited. It is extremely limited in rural areas. There 
just aren't that many options, and you have a very traumatic 
situation. What I am talking about is using this information 
after the selection to make sure that you can monitor how well 
the nursing home is taking care of your mother, which I think 
would suggest a somewhat different way of putting the 
information together.
    Mr. Stupak. Mr. Pruitt, you had wanted to say something?
    Mr. Pruitt. I would mention on the transparency aspect of 
our industry, many corporations including myself and including 
those that are involved in private equity do release voluntary 
quality reports that report on our indicators, many of which 
are the same as the Advancing Excellence campaign. The American 
Health Care Association supports transparency but I urge the 
Committee to be careful that we don't restrict capital in our 
profession, in our industry. We are serving our patients and 
our residents in outdated buildings, many of which were built 
in the 1960s and 1970s. If we disclose all relationships, we 
may discourage banks which lend our corporation money and have 
really no say-so in our operations from investing in our 
industry.
    Mr. Stupak. I think what we are trying to say is, we need 
to know who do you go to, and not have to discover which shell 
the pea is under. You know, if your number of entities limited 
liability corporations, fine. Someone is in charge of making 
decisions about that facility; who is it. That is who we need 
to know so the ombudsmen can do their job without having to go 
to litigation. Mr. Kramer?
    Dr. Kramer. I would just like to say that I concur with the 
notion of transparency and that there ought to be much more 
information available to residents and to discharge planners 
and people making these decisions. One of the things I think we 
need to keep working on is the breadth of that information, and 
again, I come back to QIS because of the breadth. It covers 
quality-of-life issues and a full range of the regulatory 
areas. It turns out that a lot of times the issues that are 
most important to residents are things like self-determination, 
somebody waking you up at 5 in the morning versus getting up, 
things that Dr. Koren talked about. That information is not 
very available, and there are some very important things that 
we need to make available and I think we can do that with a 
much broader array of information than we currently provide 
people.
    Mr. Stupak. We ask for transparency from the ownership and 
from the nursing homes but we still need transparency from CMS 
on the Kramer report and the QIS report, and we are still 
waiting on that.
    Dr. Kramer. I mistakenly did not comment about the QIS 
evaluation report and I should just tell you something about it 
since I do know about it. One of the reasons it hasn't been 
released is that it is inconclusive. It took a long time to do. 
They actually only went on 10 QIS surveys, and in their own 
words, they qualify these findings by noting, ``the comparisons 
between QIS and standard surveys were limited by sample size, 
thus the data we provide are best used for survey improvement 
purposes rather than to inform decisions about what type of 
process.'' So they ended up with a very modest study that 
wasn't actually conclusive and didn't really address the 
consistency issue. So I know there is a lot that needs to be 
done to put that in context and say how CMS is going to address 
the concerns here but move forward. And they all recommended to 
move forward with QIS and so that is why CMS has moved forward.
    Mr. Stupak. Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman. I don't really have a 
lot more but I do want to follow up. You may not have the 
answer, but it is my understanding that hospitals provide more 
information. The irony behind this is that hospitals have to 
provide more information. Then you have the discharge planner 
who is not really requiring or helping in sending someone to a 
facility. We all know the recidivism aspect. I don't know if 
that is the right word. But if you go to a place where the care 
is not great, you could be bounced back to the hospital. So the 
whole aspect of--you would hope, if you are concerned about the 
patients and the wellness that the discharge planner would want 
to encourage care to a proper provider. Maybe there is concerns 
about--I don't know. Why wouldn't they--Dr. Zimmerman, it looks 
like you want to respond.
    Dr. Zimmerman. Well, I am not sure why they would not want 
to know. I think that there hasn't been a really organized way 
of providing the information, et cetera, but frankly, the 
transition of care between settings is, to put it bluntly, one 
of the scariest aspects of our care problem now with the 
elderly. It is abysmally bad in terms of the transfer of 
information from the acute care setting to just about any other 
setting, whether it is home care, whether it is skilled nursing 
facilities, whether it is a hospice, whether it is a long-term 
acute care hospital, et cetera. In my testimony, I said the 
following, which I can repeat very quickly if you will permit 
me. If we are truly to accomplish the goal of giving our 
elderly citizens the care they so richly deserve, then we need 
to expand our focus to include the other care provider settings 
that feed into skilled nursing facilities. In particular, this 
must include greater scrutiny of acute care hospitals whose 
discharge practices have placed enormous pressures on skilled 
nursing facilities because sometimes they will discharge folks 
before they are ready to be discharged and sometimes the 
hospital itself is inadequately prepared to provide the complex 
care needed by elderly patients. We have some hospitals that 
have a program called an ACE program, Acute Care for the 
Elderly. About 40 hospitals around the country have this 
program. But often they don't, and frankly, that is not their 
business. That is not, as we say in economics, their 
comparative advantage. And so I think we have to be very 
careful to make sure that this setting transfer is handled more 
carefully than it is now.
    Mr. Shimkus. I appreciate those comments. It is kind of 
scary and it is scary for families too as they are trying to 
move people through the process. In some hospitals in southern 
Illinois, because of the way just regular healthcare has 
changed from inpatient to outpatient, they have beds and they 
have segued into skilled nursing facilities. So I imagine in 
that facility where you have limited choices, I would think and 
I will go check with my local providers, that is not a big a 
problem because you are just going from really one wing of the 
hospital to another. But I just want to--I will make a comment 
on the--I would think if I was a provider and I had my own 
quality assurance program or the Advancing Excellence issue, 
that is something I would be advertising and throwing 
information out, as Dr. Zimmerman said. I mean, it is an aspect 
of where you can get a competitive advantage as people are 
looking for quality care.
    This whole resident-centered care, which we all know is--we 
all want to be individuals. We want individuals in education 
planning. We don't want to be segmented into groups. That has 
got to cost a little more, doesn't it?
    Dr. Koren. What we are finding, at least what we found from 
the survey that we just conducted, was that in fact there seems 
to be a positive effect on the bottom line. It might be a 
program that costs before it saves, but ultimately as you start 
to empower staff, as you start to make them in charge of their 
own residents and make it a better job, you have lower 
turnover, you have happier residents, you have higher occupancy 
rates, you have fewer lawsuits, you are not being dinged on 
surveys. I mean, there are huge advantages to really 
individualizing the care and taking care of those people, and 
it is really trying to get people to understand that, that not 
only is it a good way to do business but it is the right way to 
do business.
    Dr. Kramer. And I would concur with her. You know, the 
problem is not a cost issue to start doing resident-centered 
and culture change care. The issue has more to do with the 
focus of our whole regulatory system and our whole quality-of-
care system. Quality of life has not been part of that focus 
for a long time, and the amount of reliance on what residents 
and families tell surveyors has not really been the focus. And 
it is starting to become the focus and it needs to be the focus 
of the regulatory process and the quality improvement process.
    Mr. Pruitt. I would say as a provider, there are aspects of 
resident-centered care which absolutely do not cost more. It is 
instead a way of changing how you operate a building. For 
instance, traditionally, nursing homes in many of our state 
regulations require higher staffing on the first shift. Well, 
many of our patients don't wish to be bathed or have their 
activities of daily living performed on the first shift. They 
may have done that traditionally at night. So as an operator, 
as we have more consistent staffing across all shifts, it is a 
reallocation of resources and it becomes more outcome driven, 
more customer satisfaction driven than necessarily regulatory 
driven.
    Mr. Shimkus. I thank you very much.
    Mr. Chairman, since I have no more questions for this 
panel, I don't want to segue into the high cost of energy for 
healthcare delivery. That is a debate for another time.
    Mr. Stupak. I am always willing to have that debate with 
you.
    Residents at Pine Crest Medical Care Facility, which you 
probably know in the Powers area, has opened a couple of these 
residences and I was there 2 weeks ago as they cut the ribbon 
and all this, and it was really interesting that these were 
probably some of the most severely injured people but they were 
so excited and they did one a year earlier so this would be 
their second one, and I asked about the cost and the initial 
cost to build the building with special features. There is a 
cost there, but in the long run, happier, staff is happier and 
the quality of life that you speak of was much greater. So I 
think there are a lot of good things happening.
    Let me ask you one question if I can. How often does a 
hospital person call and say we are discharging such and such 
who just had major surgery, can you handle them or what would 
you recommend? Do you have that much interaction with a 
hospital on a discharge or is it just the family heard about 
you and showed up with their loved one?
    Mr. Pruitt. We have tremendous interaction with the acute 
care setting. The discharge planners in the hospital routinely 
contact nursing facilities to understand their capabilities of 
caring for patients. They will then find several options for 
the family. They will inform the family of their choices. We 
know from our satisfaction surveys that we conduct that our 
family members visit several facilities before ultimately 
deciding on ours so from our corporation standpoint, and I 
believe I can say from the industry as a whole, there is 
tremendous interaction with acute care settings.
    Mr. Stupak. Let me thank this panel. It has been most 
interesting, and thank you very much for your input into this 
problem that it has been 31 years since this subcommittee has 
visited it. We will keep on it, I can guarantee you. I think we 
all have some personal experiences we can relate to and we 
appreciate what you do and helping us understand it. Thank you.
    As I call up our witness on the third panel, we have Mr. 
Kerry Weems, who is the acting administrator at the Centers for 
Medicare and Medicaid Services, CMS, as we call it, within the 
Department of Health and Human Services, and we appreciate the 
fact that you stayed with us all day today and have been 
interacting as we had a chance to say hello out in the hall. It 
is the policy of this subcommittee to take all testimony under 
oath. Please be advised that witnesses have the right under the 
Rules of the House to be advised by counsel during their 
testimony. Do you wish to be advised by counsel during your 
testimony, Mr. Weems?
    Mr. Weems. No, sir.
    Mr. Stupak. OK. Then I will ask you to please rise, raise 
your right hand and take the oath.
    [Witness sworn.]
    Mr. Stupak. Thank you, sir. Let the record reflect that the 
witness replied in the affirmative. He is now under oath. We 
will begin with your opening statement, and again, 5-minute 
opening statement. A lengthier statement can be submitted for 
the record.
    Mr. Weems.

  STATEMENT OF KERRY WEEMS, ACTING ADMINISTRATOR, CENTERS FOR 
 MEDICARE AND MEDICAID SERVICES, U.S. DEPARTMENT OF HEALTH AND 
                         HUMAN SERVICES

    Mr. Weems. Thank you very much, Mr. Chairman. Good 
afternoon. Mr. Shimkus, good afternoon. Congratulations on your 
decision to retire, which I guess we----
    Mr. Shimkus. Yes, from the Army Reserves. My wife called 
and said no, you are not leaving.
    Mr. Weems. Congratulations on your service there.
    Thank you for inviting me to testify today. Roughly 1\1/2\ 
million Americans reside in the Nation's 16,000 nursing homes 
on any given day. More than 3 million rely on the services 
provided by a nursing home at some point during the year. Those 
individuals, their families and friends must be able to count 
on nursing homes to provide reliable care of consistently high 
quality.
    Charged with overseeing the Medicare and Medicaid programs, 
whose enrolled populations comprise the vast majority of home 
residents, CMS takes nursing home quality very seriously. Our 
efforts are broad including initiatives to enhance consumer 
awareness, transparency, as well as vigorous survey enforcement 
processes focused on safety and quality.
    Consistent with statutory requirements, we conduct onsite 
reviews of every nursing home in the country at least once 
every 15 months, once a year on average. Surveys focus on the 
quality of care experienced by facility residents regardless of 
who owns the facilities. Our focus on actual outcomes ensures 
that Medicare's quality assurance system does not depend on 
particular ownership of a facility. We do continuously seek to 
improve the effectiveness of both the survey process and the 
enforcement of quality care requirements. An example of such 
continuous improvement is our Special Focus Facilities 
initiative, which addresses the issue of nursing homes that 
persist in providing poor quality. This relatively new 
initiative is just one of many efforts underway at CMS to 
further improve nursing home quality.
    I have brought a chart with me today that includes a set of 
commitments I made last November before a Senate panel, and it 
has been updated to show progress to date. Beginning with the 
green checks, those represent actions completed. CMS 
participation in leadership and Advancing Excellence in Nursing 
Homes campaign continues. On November 29, 2007, we posed on our 
Web site the Nursing Home Compare, the names of the Special 
Focus Facilities, a major step forward in greater transparency 
toward nursing home quality. We expanded the Quality Indicator 
Survey pilot in February to include a sixth State, and we are 
looking forward to more promising results. Last month CMS 
cosponsored a well-attended national symposium on nursing home 
culture change.
    Now, moving to the work in front of us, which represents 
actions in progress, I believe we are nearly ready to be able 
to roll out a demonstration project focusing on value-based 
purchasing for nursing homes, which would test payment 
incentives to improve quality. We are also working on a final 
evaluation of a 3-year pilot to test a system of criminal and 
other background checks for perspective new hires in nursing 
homes. Target release of this final report is this summer. In 
June, we expect to publish results from an ongoing campaign to 
reduce the incidence of pressure ulcers in nursing homes and to 
reduce the use of restraints. In July we hope to publish new 
guidance to surveyors on nutrition in nursing homes, the latest 
of an ongoing CMS effort to improve the consistency and 
effectiveness of the survey process.
    In August, our new contract with the quality improvement 
organizations will take effect. We plan to build into that 
contract an ambitious, unprecedented 3-year agenda for QIOs to 
work on nursing homes that have poor quality including those in 
the Special Focus Facilities. Also in August, we plan to 
release a final regulation on fire protection safety requiring 
all nursing homes to be fully sprinkled by a phase-in period.
    In September we hope to issue a report describing the 
methods for improving the accuracy of staffing information 
available for posting on the Nursing Home Compare site.
    Finally, as I have stated previously, we would envision 
supporting legislation to permit the collection and escrow 
deposit of civil monetary penalties as soon as the penalties 
are imposed.
    In closing, I would like to again stress that regardless of 
setting or ownership, quality health and long-term care for 
Medicare and Medicaid beneficiaries is of utmost importance to 
CMS.
    I would be happy to answer your questions. Thank you for 
the opportunity to appear today.
    [The prepared statement of Mr. Weems follows:]
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    Mr. Stupak. Well, thank you, and thank you again for being 
with us.
    Let me ask you, and I sort of ended the last panel with it, 
and I think you heard Attorney General Blumenthal's call for a 
national database to which State officials would have access 
showing problem nursing home chains and facilities. What is 
wrong with that idea? Doesn't CMS have an obligation to protect 
those vulnerable patients in these homes? And why can't CMS 
take the lead on sharing that type of information that would be 
readily available to everybody?
    Mr. Weems. Much of that information is available now so, 
for instance, if you go to the Nursing Home Compare Web site, 
the last three surveys taken are available--a summary of the 
last three surveys taken are available on the nursing home----
    Mr. Stupak. So for every nursing home, that is available? 
Is that what you are saying?
    Mr. Weems. For every nursing home, the last three--a 
summary of the last three surveys are available on the Web 
site.
    Mr. Stupak. So what are there, 7,000 nursing homes or so?
    Mr. Weems. Sixteen thousand, four hundred.
    Mr. Stupak. Sixteen thousand. I am sorry. So you have 45, 
almost 52,000 summaries out there?
    Mr. Weems. Yes.
    Mr. Stupak. Then why in the PECOS system--that is your 
Provider Enrollment and Chain Ownership System, currently only 
has 70 percent of the nursing home ownership information 
database? Even if the Medicare provider discloses everything 
requested on your enrollment forms, in PECOS, we are still 
missing 30 percent as to ownership and other identifiable 
features that would help people to know more about that nursing 
home.
    Mr. Weems. And that is a good question. First of all, I 
think the thing that we need to understand, the CMS PECOS 
initiative isn't just for nursing homes. It is for all 
providers and so we enroll them at--all providers except one 
particular type. We enroll them at a particular pace. That pace 
is about 250,000 to 300,000 a year and so the 70 percent figure 
represents the progress that we have made enrolling a very, 
very large number of providers into the system.
    Mr. Stupak. Well, they tell me that the ownership issue, 
and I am focusing a little bit on that because that is what we 
have sort of been talking about on the first panel, is really 
not linked to the CMS Web site, to the Nursing Home Compare Web 
site.
    Mr. Weems. Right.
    Mr. Stupak. So you almost have to go two different places 
to even try to find it.
    Mr. Weems. Yes, and one of the things that we focused on 
for Nursing Home Compare are indicators that we believe that 
would be useful in selecting a nursing home, so some of the 
quality indicators, things like that. We are collecting the 
ownership information as a matter of--as a data field in PECOS 
and in fact we will collect it down to fractional ownership of 
5 percent. I think the question that we all confront is, how 
meaningful is that information in selecting a nursing home, to 
put it on Nursing Home Compare? It may have other meaning.
    Mr. Stupak. Right, but it wasn't just for a private family 
to select a nursing home. It is also for the ombudsmen, so when 
you have these corporate layers of corporate responsibility, 
who does he go to? The facility manager wants to do the right 
thing but they don't have the power so who do you go to, and 
even the attorney general indicated he had trouble. And I think 
Mr. Walden said in this modern era, data is available it seems 
like sort of piecemeal here. We need a central location. We 
sort of need to link the ownership database to a quality 
database into one database so if we are looking for quality, if 
we are looking for the family, if you are looking for who is in 
charge to put a little pressure to clean up a matter at a 
facility or the state attorney general has to do something like 
Connecticut had to do, there is one place we can go.
    Mr. Weems. Let me begin by agreeing with that but then let 
us step back and think about how we make that information 
useful. Is our goal to populate PECOS 100 percent? Having done 
that, it is also our goal then to link that to the quality data 
that we have. Let me tell you that yes, we do have that as a 
goal. That will have some use. Let us separate that use, 
however, from what is on Nursing Home Compare. Nursing Home 
Compare, we want to make sure that we have information that is 
usable in selecting a nursing home. So I am not sure that 
integrating those two databases achieves the kind of objective 
that you have in mind. I think we have different purposes for 
different databases.
    Mr. Stupak. Well, I guess that is the only place we can go 
to really look to see where the bad actors in this field are. I 
think the testimony has shown on the other panels, it is a 
small number, but unfortunately, a small number when they do 
are bad actors, it hurts, has tragic results. Let me ask you 
this. CMS Special Focus Facilities program appears to be a 
promising way to deal with nursing homes that have a record of 
actually harming or jeopardizing patients. GAO has repeatedly 
reported that about 20 percent of nursing homes have serious 
problems and cycle in and out of compliance, and with the 
figure you had, over 16,000 before, that would be about 3,200 
facilities nationwide moving in and out of compliance yet only 
a couple hundred of facilities are in the SFF program. Why 
wouldn't that program be expanded to try to get at this total 
20 percent?
    Mr. Weems. We would like to expand the program. The program 
right now has about 134, 135 facilities in it. It is a program 
that is resource-intensive. It requires surveying at twice the 
normal rate. Within the resources that we have, it is something 
that we would look to expand.
    Mr. Stupak. Let me ask this since I asked Dr. Kramer and I 
would like to have your response on it. Dr. Kramer's group at 
the University of Colorado, the report commonly referred to as 
the Kramer report, which was completed March of last year, 
2007, and it was approved by the project officer, so why hasn't 
CMS released that report?
    Mr. Weems. You heard Dr. Kramer say that it wasn't a 
particular conclusive report.
    Mr. Stupak. I thought that was the Quality Indicator 
Survey, the QIS.
    Mr. Weems. You are right.
    Mr. Stupak. The Kramer report has been done for a long 
time.
    Mr. Weems. Right. Both of those reports we have. We are 
reviewing. One of the things we like to do when we have a 
report and when we release it is to have an action plan 
associated with it. I would like to have both of those reports 
out and available this summer. Rather than just releasing a 
report, let us have an action plan. Let us see what we are 
going to do about it.
    Mr. Stupak. Well, I don't disagree necessarily with that 
but does it take 15 months to develop an action plan? That is 
how long the Kramer report has been done. QIS, I understand, 
that has been 5 months but I don't think it would take 15, 16 
months, 17 months to put forth an action plan.
    Mr. Weems. It takes a while to go through a report, review 
it and produce those things.
    Mr. Stupak. Let me ask you this. The nursing home industry 
presented a strong case here, and I would get from their 
testimony, I would take away that voluntary quality initiatives 
can take the place of regulation. At least that is what I heard 
them say. But information about whether a chain or a facility 
has achieved voluntary benchmarks is not public unless the 
company chooses to make the information public. Do you believe 
that this type of system can or should replace the current 
regulatory system or QIS system?
    Mr. Weems. I think it is something that is worth looking at 
in a very serious way. I think going through the research, 
being able to see if in fact it makes a difference, and I think 
it is important to separate the regulatory system from the 
enforcement system. I would be loathe to suggest that we need 
to loosen up the enforcement system. Perhaps we can take 
another look at the regulatory system. We are doing that, 
seeing the cultural change, more person-centric care that we 
are looking at. That can make a difference. We need to proceed 
carefully down that path, maybe lift off some of the 
regulations, keep the enforcement regimen in place.
    Mr. Stupak. Thank you.
    Mr. Shimkus.
    Mr. Shimkus. Thank you for your testimony, and you kind of 
really highlighted the challenge that a lot of us are trying to 
get our hands around, which is the regulatory or enforcement, 
and we keep bringing it up. There is a State responsibility 
here too. There is licensing and there is what they have to do 
to be involved with it. In my opening statement, I quoted the 
fact that we have been successful to some extent in 
unfortunately recovering millions of dollars in penalties for 
noncompliance. Our hook in this debate is because we are big 
payers. Isn't that right?
    Mr. Weems. Correct.
    Mr. Shimkus. And we are big payers because of the Medicare 
and the Medicaid.
    Mr. Weems. Yes.
    Mr. Shimkus. So a lot of this debate is trying to follow, 
you know, the money to the ultimate ownership for quality care 
and really, is finding out the ownership--I can see how it is 
beneficial but is it the end-all to improving quality care?
    Mr. Weems. Let me tell you how we think about and our 
thinking about ownership now. Currently CMS's relationship is 
with the owner of the provider agreement so whoever has that 
provider agreement is the entity with which we have the 
relationship. So what would chain ownership or some other 
ownership tell us? Looking, for instance, at the case the 
Committee had in front of it this morning, so if you see a 
couple of homes in a chain beginning to fail, what does that 
tell you? And that is the thing we need to work on. So it is 2 
of 20 then that would require an intervention or is that just 
statistical chance as opposed to a corporate strategy? Is it 
four, is it six? Those are the kinds of things that we need to 
investigate with understanding ownership, distinguishing the 
difference between does it matter or how it matters and when to 
intervene.
    Mr. Shimkus. Kind of following up on the same question, in 
your testimony on page 8, you say that Medicare's quality 
assurance system does not depend on any theory of ownership.
    Mr. Weems. That is correct. Our relationship is with the 
facility itself and the holder of the provider agreement in 
that facility so----
    Mr. Shimkus. You are saying because of this holder of the 
provider agreement, but I guess part of the debate is, the 
holder of the provider agreement may not be the final owner. 
And so that is the disconnect that we are trying to clear up.
    I think, Mr. Chairman, I am kind of out of questions, so I 
will yield back to you for a while.
    Mr. Stupak. Well, fine, jump in if you want.
    Let me just follow up, just talking about ownership there. 
Doesn't it follow then that irresponsible nursing home owners 
can have a negative effect on the quality of their facilities? 
If we take a look at what happened at the quality of care at 
the Haven Health Care chain, didn't it make a difference who 
owned the chain for the quality of care? Why should owners be 
allowed to hide behind a complex web of limited liability 
partnerships and not knowing who they are?
    Mr. Weems. And they shouldn't. That is why our system will 
capture ownership down to the fractional level of 5 percent.
    Mr. Stupak. But see, that is why I want the data at one 
place whether it is police, attorney generals or whatever, 
enforcement, regulators, they got one place to go along with 
the family so you can see what is happening at all aspects of 
it.
    You know, when you said chain ownership, that they have two 
or three or four facilities going bad, where do you draw the 
line? Where do you step in? Is it really the number of 
facilities? Isn't it more the seriousness of the deficiency 
which would say when you step in?
    Mr. Weems. It would be both. I would say that we don't have 
the research now to be able to separate, as we would say, the 
signal from the noise, and it is a very serious question and 
one that we should look at because there are varieties of 
chains, varieties of types of ownership, and varieties of 
numbers of facilities in a chain and varieties of size in a 
chain. Each one of those could be a variable in what could be a 
very complex equation. We want to proceed but we are just not 
in a position now to be able to say, is it 2 in 100 of this 
particular type of what.
    Mr. Stupak. OK. I will give you that as far as the 
ownership issue but where we should be going, the value of 
these surveys, the information gleaned there from, I think has 
sort of fallen on deaf ears at the CMS. Nineteen ninety-eight 
was the last time GAO did a study and they just released 
another one today, and I know you probably didn't have time to 
take a look at it.
    Mr. Weems. We commented on it.
    Mr. Stupak. Yes, but if you take what happened in 1998 and 
you go back to look what happened today, today's report from 
the GAO really shows there are very serious problems with the 
current nursing home survey system so we are not getting at the 
deficiencies. I realize, like you said, you might not have had 
a chance to read it all but they are similar to those of the 
University of Colorado study which you have had for about 17 
months and haven't released and to the OIG, Mr. Morris, who 
testified, and again the 1998. So I look at the 1998, I look at 
the one today. I had a chance to read it between votes, take a 
look at a couple things. It is almost the same. You put that 
with the Kramer report, as I call it, or the Kramer study from 
Dr. Kramer of the University of Colorado, OIG, and it seems 
like we are seeing the same thing: very serious problems with 
the current system of nursing home survey system so today that 
survey has failed to identify serious deficiency 25 percent or 
more of the time. Even more troubling, in all but five States, 
surveyors missed deficiencies at the lowest level of 
compliance, and the lowest level of compliance, undetected care 
problems at this level are a concern because they could become 
more serious if nursing homes are not required to take 
corrective action. So how will CMS remedy this situation?
    Mr. Weems. Stepping back from that, first of all, one of 
the first things that we would like to happen is, let us make 
sure the survey gets done so that if you look at the record of 
CMS from 2000 to today, 2000, 4 percent of surveys weren't 
being done. We are down to about four-tenths of 1 percent 
aren't being done. So as a first step, at least the surveys 
themselves are being done.
    Mr. Stupak. Sure, but surveys have to have quality. They 
have to be quality surveys. I can go and give you every survey 
you want and I can follow up on the phone and if it doesn't 
affect even a minor deficiency, which have a tendency to grow 
into majors. Go ahead.
    Mr. Weems. Secondly, working through that, we need to make 
sure that we educate the surveyors, and we have new guidance to 
surveyors to improve their accuracy on items like pressure 
ulcers, incontinence, quality assurance, making sure that they 
are getting the medications they need. We are educating the 
surveyors to make sure that that happens. Thirdly is the 
Quality Indicator Survey. That will produce greater consistency 
across surveys. You can see that we are undertaking that 
effort. We will be in eight States this year and continuing to 
expand that effort. That will give us more substantial 
consistency across State surveys.
    Mr. Stupak. Sure, and Dr. Kramer said that 80 percent of 
the people who participated in the Quality Indicator Survey 
were happy with it. They thought it was much more concrete and 
it gave them more because if you go back to the GAO report, the 
one that was released today, GAO found the reasons for 
surveyors not identifying problems is that they lack, A, 
investigative skills, and B, the ability to integrate and 
analyze the information they collected to make an appropriate 
deficiency determination. So QIS has to get out there and the 
Kramer report has to get out there. So in the meantime, since 
you are going to do an action plan, what does CMS do to train 
these surveyors who are taking these surveys if we are missing 
all this? What are we doing? You said only a few States are 
using QIS so how current is CMS going to help surveyors using 
the current system or should we start switching over to QIS 
right now?
    Mr. Weems. Well, we move QIS at a pace according to the 
budgetary resources that we have, but what we are doing is 
continuing to educate surveyors to produce a more consistent 
result until those States come into the QIS program.
    Mr. Stupak. Well, then, the QIS, is it a budgetary problem? 
I think Dr. Kramer said it would be $20 million. The healthcare 
folks, American Health Care Association, were a little 
reluctant to say they would put in their private money to help 
implement that $20 million to get it throughout but is $20 
million really the issue? I think even Mr. Shimkus said the 
numbers we deal with, $20 million doesn't seem too far of a 
stretch when you are talking about 1.8, 1.5 million people in 
nursing homes.
    Mr. Weems. If I could adjust your question slightly, it 
would be, is the budget a rate-limiting factor, and I would say 
if you said today, Mr. Weems, we are going to give you $20 
million and we expect to have this implemented in a year, I 
would resist that for the reason that you roll something out 
nationally, let us proceed carefully. We have learned a lot 
from these eight States as we go along. We can pick up the pace 
but this isn't a matter of going nationwide right away.
    Mr. Stupak. But at the same time, if we say Mr. Weems, here 
is your $20 million, you contract with States to do the 
surveys, don't you? And therefore, the States would be getting 
it. You would have the resources then to do adequate surveying 
and do the training necessary. I guess I wouldn't be thinking 
that $20 million would just go right to CMS and stay there but 
would go to the States because you contract out to do the 
surveys and then you follow up either by telephone or a couple 
weeks later the Federal surveyors go in there, right?
    Mr. Weems. Sure.
    Mr. Stupak. So it wouldn't be that much of a burden then 
to--you already have a system in place, but I guess the part 
that really bothers us, $20 million but we want to make sure 
the $20 million is going to surveyors who are doing a QIS and 
it is being done accurately and they have the training to do it 
so we can get accurate data and then it is going into one 
central location so we can all find it.
    Mr. Weems. And to make sure that we are doing QIS properly. 
As I said, we are learning as we go. I really would want to 
think carefully about doing 32 States, you know.
    Mr. Stupak. Well, if you have had QIS since last December, 
in your budget then, did you ask for money to help train people 
to implement QIS?
    Mr. Weems. We do have budgetary resources in our budget 
request for QIS. It is a rate of two or three States a year 
but----
    Mr. Stupak. That is all, right? Two or three States?
    Mr. Weems. Right. But having raised that, for the last 4 
years in a row, CMS has not even achieved the President's 
budget level for survey and certification and that is the 
budget that comes out of.
    Mr. Stupak. Mr. Shimkus?
    Mr. Shimkus. Just a brief one. I just want to change kind 
of the focus to this issue that you deal with Special Focus 
Facilities, and we got 134 such entities in the program. My 
perception is, there is a time lag when they are identified, 
then you finally say let us bring in all these people to fix 
this if it becomes Special Focus First of all, is that a wrong 
observation, and if it is not, why don't we just go after the 
root cause right when we have identified them in this Special 
Focus arena?
    Mr. Weems. When Special Focus Facilities are selected, they 
are selected off of candidate lists that the States give us. 
These are chronically underperforming facilities. Once they 
enter the Special Focus Facility designation, they are then 
surveyed at twice the rate that a normal facility is, and given 
how they perform on those----
    Mr. Shimkus. OK. But the issue is, why not send in--why 
don't you just try to identify the root cause then? I mean, 
they are already identified as problematic. Why not just say 
let us go in and special investigative--yeah, I was going to 
say a SWAT team evaluation.
    Mr. Weems. When we have done root cause analyses and we 
have worked with facilities to do that before, it can be quite 
expensive.
    Mr. Shimkus. OK. And I think we would--so you think by 
upping the investigations, you move them into compliance. You 
have the experience. I don't. You move them into compliance by 
saying OK, we are going to come around and if you don't, then 
we are going to bring in all these people to try to find the 
root cause.
    Mr. Weems. They are going to be on either a path of 
improvement where they will graduate or they have shown some 
improvement but they will still stay in the Special Focus 
Facility program and continued to be surveyed every 6 months or 
they will be on a path to termination. That is what it means to 
be in that designation. We have also taken the step of putting 
the Special Focus Facility designation on the Nursing Home 
Compare Web site. If you go to the Nursing Home Compare Web 
site, you can see that that home is on the Special Focus 
Facilities. You can also see what the most recent update is, 
whether or not they are on a path to improvement or whether 
they are on the road to termination.
    Mr. Shimkus. And my final question is, in the 2008 Action 
Plan for Nursing Home Quality, CMS cites expansion of the 
collaborative focus facility project. What is this project and 
what homes does it cover?
    Mr. Weems. In the most recent scope of work for the Quality 
Improvement Organizations, we have designated special 
facilities with specific problems for the Quality Improvement 
Organizations to work with those facilities to produce specific 
quality outcomes in those facilities.
    Mr. Shimkus. And this kind of wraps up around the initial 
question: Why not use these Quality Improvement Organizations 
more extensively? Is it cost?
    Mr. Weems. You know, Quality Improvement Organizations have 
wide missions, including the PPS hospitals for which we gave 
them specific quality improvement assignments this year as 
well, so they have a very broad mission that extends just 
beyond nursing homes.
    Mr. Shimkus. That is all I have, Mr. Chairman.
    Mr. Stupak. Well, thanks. Let me just summarize, and if I 
may, with this question. We have an ownership issue. We have 
deficiency. We have the GAO report again coming out today 
saying we are not doing very well at surveys, it is still 
deficient. OIG says the same thing. We talked about $20 
million. If we got 1.7 million people in nursing homes or 
centers, that is about $10 per person. I don't think that would 
be a hurdle we should overcome because the problem is, as I see 
it, and it has been a while since this committee has done 
oversight in this area, but still, when you listen to Mrs. 
Aceituno about what happened to her husband, there are reports 
of death, you have people with wounds with maggots in dead 
flesh, I just see the Kramer report which sort of outlines, 
sort of like a blueprint for enforcement to improvement the 
survey system and it is 15, 17 months, nothing is happening. 
While we are not doing anything or rolling that out because you 
don't have an action plan, I think the Kramer report sort of 
gives you the action plan because we have people suffering and 
we want to get this taken care of, and the industry as a whole 
looks pretty good from what I am hearing today, but there is 
that 20 percent that is repeat in and out of deficiencies, and 
I think we need to do a quicker job of taking care of it, and 
if it is $20 million, I am sure when you present it to people 
that it is 10 bucks, maybe even the private nursing homes will 
kick in to get this thing resolved.
    I think we have to have more action as opposed to inaction 
and maybe Congress shares some of that responsibility. Like I 
said, it has been 31 years since this committee looked at it, 
so I plan on staying on top of it. We will have another 
hearing, I know, we are already talking about to follow this up 
so we would hope you will take this Quality Indicator Survey, 
the Kramer report, get your action plans done, let us get it 
implemented and let us get a database we can draw from. I think 
that is a fair assessment of where we have been today.
    Any comments on that, Mr. Weems?
    Mr. Weems. I thank you for your comments. The way that I 
would characterize, first of all, what I have learned today, is 
that improvement is multi-factorial. The chief counsel to the 
Inspector General I think made an interesting suggestion about 
maybe doing a demonstration project that really reaches to the 
far reaches of ownership. Let us see if that makes a 
difference. I think we need to look--one of the things that we 
haven't spent time talking about today are financial incentives 
in nursing homes. I think we need to move to the ability to pay 
for quality. Right now, under Medicare, we pay under a 
prospective payment system. Our payment system is quality 
neutral. It doesn't make a difference. We need to change that. 
We need to change that in the Medicaid world. We need more 
consistency among the surveys. We need all of those things, Mr. 
Chairman, so I agree with you, we shouldn't concentrate on a 
few things. We make progress only by moving on many fronts.
    Mr. Stupak. Well, moving on many fronts, and it is not just 
you but some of the frustrations I see is, like I said, the 
1998 report, the OIG report, we got another one out today, it 
seems like this has repeated itself for the last 10 years and I 
am sure it is before that too. Money tied just to quality, what 
I am concerned about is people who do the work, those dedicated 
workers who work day in, day out to take care of our loved 
ones, who we entrust to them, these workers, a lot of times 
they don't see that money. Many of these jobs are minimum wage-
paying jobs in certain States. I would look at or I would 
suggest that if you are going to target a State for a 
demonstration project, we should be able to put more than one 
State as a demonstration project, Number one. But if we do, why 
don't we do a demonstration project on a bad chain? We know 
they are out there. Maybe we have an opportunity now with our 
Carlyle Group buying out the Manor, which always had a good 
reputation, maybe that is a demonstration project we could do 
to make sure the quality stays up or improve underneath the 
Carlyle Group because there is a concern, as we heard today, 
that it is a $5.5 billion investment, they are going to have to 
recoup their investment. So if you tie money to quality, hype 
the reports on quality so we reap more money to pay down that 
$5.5 billion debt, but in reality, because we don't have strong 
surveys or accurate surveys who aren't catching deficiencies, 
patient care is leaving or going down, not up.
    We appreciate you being here. We appreciate the interaction 
we have had with you and we look forward to working with you, 
and we would like to see the Kramer report and the QIS rolled 
out sooner. If it's a matter of resources, I think this 
committee on both sides would like to see the resources because 
you have heard every one of us have been affected by a family 
member or someone who is at these centers or nursing home 
facilities and we want to make sure that they have the quality 
care that we all think they know and deserve. Thank you.
    That concludes all questioning. I want to thank all of our 
witnesses for coming today and for their testimony. I ask 
unanimous consent that the hearing record will remain open for 
30 days for additional questions for the record. Without 
objection, the record will remain open.
    I ask unanimous consent that the contents of our document 
binder be entered into the record. Without objection, the 
documents will be entered into the record.
    That concludes our hearing. Without objection, the meeting 
of the subcommittee is adjourned.
    [Whereupon, at 2:38 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                    Statement of Hon. Jan Schakowsky

    Thank you very much, Mr. Chairman. I want to also welcome 
our witnesses and thank each of them for being here today.
    Mr. Chairman, it has been far too long--over 20 years in 
fact--since we as a Congress turned a speculative eye towards 
the nursing home industry. But now, just as we did prior to 
passing OBRA '87, we must recognize the changing tides in this 
industry and act to ensure the health and safety of all 
residents who entrust their health and their lives to nursing 
homes.
    Though some progress has been made in improving quality 
since OBRA '87, many of the same concerns we had back then 
stubbornly persist in communities all across this country and 
in fact, new and very serious concerns have come to light over 
the past few years.
    Between 1985 and 1990, I served as the Director of the 
Illinois State Council of Senior Citizens, and in that role I 
fought for better prescription drug prices and benefits for 
seniors as well as financial protection for seniors and their 
families. I also became keenly aware of the myriad of abuses 
inflicted upon far too many of our family members and friends 
who live in nursing homes.
    I am sure that we will hear in greater detail how and why 
those abuses occur from some of our witnesses, so I want to 
specifically mention my concerns about the changing structure 
and changing face of the nursing home industry over the past 
few years. Not only has the number of national chains increased 
to a point where over half of nursing homes are part of a 
chain, but a new player has entered the ownership scene: large 
private equity firms.
    According to a New York Times article published in 
September of 2007, these private groups have agreed to buy 6 of 
the Nation's 10 largest nursing home chains in recent years. 
Research from the same article found that at 60% of homes 
bought by large private equity firms from 2000-2006, managers 
cut the number of clinical registered nurses--in some cases, by 
so much that they were below the level required by law.
    This is a serious indicator of the decline in care at these 
facilities, and unfortunately, staffing is just one area that 
has suffered under this new regime of private investment 
company ownership. The use of physical restraints, poor 
nutrition, and neglect are just some of problems found at 
higher rates in private equity facilities than publicly-owned 
or nonprofit facilities.
    But the fact is, we need more information from all nursing 
home facilities. Though there are some that provide quality 
care, there are others that most certainly don't. That's why I 
am working with my colleague on the Ways and Means Committee, 
Chairman Stark, on companion legislation to the bipartisan 
proposal in the Senate that I think will greatly improve 
oversight of the industry. By increasing transparency and 
accountability across the board, but also specifically of 
ownership structures, I believe this legislation will mark a 
new turn in ensuring quality care for nursing home residents.
    Mr. Chairman, I look forward to working with you and our 
colleagues on the Committee on this legislation in the future, 
and I thank you for giving this Subcommittee the opportunity to 
take a closer look at these very important, very troubling 
issues.
                              ----------                              

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