[Senate Hearing 110-398]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-398
 
               NURSING HOME TRANSPARENCY AND IMPROVEMENT

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

                                HEARING

                               before the

                       SPECIAL COMMITTEE ON AGING
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             WASHINGTON, DC

                               __________

                           NOVEMBER 15, 2007

                               __________

                           Serial No. 110-17

         Printed for the use of the Special Committee on Aging



  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html


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                       SPECIAL COMMITTEE ON AGING

                     HERB KOHL, Wisconsin, Chairman
RON WYDEN, Oregon                    GORDON H. SMITH, Oregon
BLANCHE L. LINCOLN, Arkansas         RICHARD SHELBY, Alabama
EVAN BAYH, Indiana                   SUSAN COLLINS, Maine
THOMAS R. CARPER, Delaware           MEL MARTINEZ, Florida
BILL NELSON, Florida                 LARRY E. CRAIG, Idaho
HILLARY RODHAM CLINTON, New York     ELIZABETH DOLE, North Carolina
KEN SALAZAR, Colorado                NORM COLEMAN, Minnesota
ROBERT P. CASEY, Jr., Pennsylvania   DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri           BOB CORKER, Tennessee
SHELDON WHITEHOUSE, Rhode Island     ARLEN SPECTER, Pennsylvania
                     Debra Whitman, Staff Director
            Catherine Finley, Ranking Member Staff Director

                                  (ii)

  
?

                            C O N T E N T S

                              ----------                              
                                                                   Page
Opening Statement of Senator Herb Kohl...........................     1
Opening Statement of Senator Gordon H. Smith.....................     8
Opening Statement of Senator Larry Craig.........................     9
Opening Statement of Senator Robert Casey........................    10
Opening Statement of Senator Ron Wyden...........................    12
Opening Statement of Senator Bill Nelson.........................   106

                                Panel I

Senator Charles Grassley, Ranking Member Senate Finance Committee     3

                                Panel II

Kerry Weems, Acting Administrator, Centers for Medicare and 
  Medicaid Services, U.S. Department of Health and Human 
  Services, Washington, DC.......................................    13

                               Panel III

David Zimmerman, professor, College of Engineering, University of 
  Wisconsin, and director, Center for Health Systems Research and 
  Analysis, Madison, WI..........................................    37
Arvid Muller, director of Research, Service Employees 
  International Union, Washington, DC............................    52
Steve Biondi, vice president of Extendicare, Milwaukee, WI; on 
  behalf of the American Health Care Association.................    61
Bonnie Zabel, administrator for Marquardt Memorial Manor, Inc., 
  Watertown, WI; on behalf of the American Association of Homes 
  and Services for the Aging.....................................    73
Sarah Slocum, state long term care ombudsman, Office of Services 
  to the Aging, Lansing, MI......................................    97

                                APPENDIX

Testimony submitted by Barbara Hengstebeck, advocate for nursing 
  home residents.................................................   115
Statement submitted by Stephen Guillard, executive vice president 
  and chief operating officer, ManorCare.........................   136
Statement submitted by AARP......................................   143

                                 (iii)

  


               NURSING HOME TRANSPARENCY AND IMPROVEMENT

                              ----------                              --



                      THURSDAY, NOVEMBER 15, 2007

                                       U.S. Senate,
                                Special Committee on Aging,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 1:30 p.m., in 
room G-50, Dirksen Senate Office Building, Hon. Herb Kohl 
(chairman of the committee) presiding.
    Present: Senators Kohl, Wyden, Lincoln, Nelson, Salazar, 
Casey, Smith, and Craig.

        OPENING STATEMENT OF SENATOR HERB KOHL, CHAIRMAN

    The Chairman. We will get started right now. We are 
awaiting our first witness, Senator Grassley, who will be here 
momentarily. So we call this hearing to order. We welcome our 
witnesses today.
    In May this Committee held a hearing to examine the legacy 
of the 1987 Nursing Home Reform Act. We heard from various 
experts on how far nursing homes have come in the past 20 
years. While our previous hearing was about looking back, 
today's hearing is about moving forward and taking the next big 
step in improving our nation's nursing homes.
    To do so, we have been working--I have been with my 
colleague, Senator Grassley, on our proposal to improve nursing 
home quality by increasing transparency as well as 
strengthening enforcement. We are very pleased to have Senator 
Grassley here today to make a statement.
    We believe that Americans should have access to as much 
information about a nursing home as possible, including the 
results of government inspections, the number of staff employed 
at a home, as well as information about the home's ownership. 
The government should ensure that consumers can obtain this 
information in a clear, timely, and accurate manner so that 
they can make the right decision about where to place a loved 
one.
    Our bill will strengthen the government system of 
enforcement. Under the current system, nursing homes that are 
not providing good care or even worse, are putting their 
residents in harm's way, can escape penalty from the government 
while they slip in and out of compliance with Federal 
regulations. If course, that is not acceptable.
    We need the threat of sanctions to mean something. Under 
the bill that I am working on with Senator Grassley, they will 
mean something. We also need to make sure that regulators are 
able to intervene quickly in order to protect the safety of 
residents.
    Today we will also hear from CMS Acting Administrator Kerry 
Weems. While working on our bill with CMS, we have discovered 
that many of our goals are aligned. Administrator Weems will 
testify shortly about the special focus facility program 
created by CMS to deal with those nursing homes exhibiting a 
consistent history of providing poor care to residents.
    We will be asking him about a significant move toward 
transparency that CMS is planning to undertake in the near 
future. In fact, in just over 2 weeks, CMS will be disclosing 
the names of the facilities taking part in this special focus 
facility program.
    I am pleased to say that CMS is beating us to the punch. 
Disclosing this list is a provision in our forthcoming bill. 
CMS does understand what we understand, that it is in 
everyone's best interest to let consumers know which nursing 
homes are repeatedly demonstrating deficiencies and violating 
government standards. Those homes are obviously not doing their 
jobs.
    Often the only way to ensure the improvement of any entity 
is to bring its failings to light. Senator Grassley feels that 
way. CMS feels that way. I feel that way, too.
    I do honestly believe that more nursing homes will come 
back into compliance for good if they have the court of public 
opinion and the power of market forces as encouragement. At the 
same time, we acknowledge that our goal is not to close a home, 
but to fix the home because that is often what is best for the 
residents. As you will hear, the special focus facility program 
is helping these facilities make the changes that are needed to 
improve.
    Our hearing today also features a third panel of 
distinguished witnesses. In a rare stroke of good fortune, 
three of them come to us from my own home state.
    We will hear recommendations from national experts, 
organized labor, and representatives of the nursing home 
industry on the topics of transparency and enforcement. As 
always, I find it very important to state that while we are 
shining a light on poor performing homes, we believe that a 
vast majority of nursing homes in our country are doing a good 
job. Most homes provide exemplary care, the type of care that 
you would be happy to have a member of your own family receive.
    We will hear from one such home today, the Marquardt 
Memorial Manor in Watertown, WI. I can personally vouch for 
this home, as I have had the opportunity to visit it many 
times.
    So we thank everybody for being here today. We look forward 
to working with you all. I look forward also to hearing from 
the Ranking Member on this Committee, as well as Senator Craig. 
But I would ask them to defer for just a few minutes because 
Senator Grassley, whose statement we very much would like to 
hear, has only a limited time to be with us today.
    So, Senator Grassley, we recognize you.

 STATEMENT OF SENATOR CHARLES GRASSLEY, RANKING MEMBER, SENATE 
                       FINANCE COMMITTEE

    Senator Grassley. I thank you and my colleagues who are 
deferring to me. I thank you very much for not only that, but, 
of course, your very important role as leaders on this 
Committee.
    First of all, thank Chairman Kohl for his holding this very 
important hearing. When I had the privilege of serving as 
Chairman of this Committee, many of our efforts were focused on 
abuse and substandard care in America's nursing homes. I am 
glad to see that under the leadership of Chairman Kohl this 
critical issue remains at a top priority. I applaud the 
Committee's efforts.
    In America today there are nearly 1.7 million elderly and 
disabled individuals in approximately 17,000 nursing homes. 
This includes the men and women of the World War II generation. 
Our duty to ensure that these Americans receive high-quality 
care couldn't be higher.
    But in addition to the people currently living in nursing 
home facilities, another issue lies on the horizon. That is the 
baby boom generation getting older. The number of Americans in 
nursing homes will go up dramatically. Therefore, it is 
critical that we confront the issue of safe and high-quality 
nursing homes today to be ready for tomorrow.
    As the Ranking Member of the Senate Finance Committee, I 
have a special interest in nursing home care. The industry is 
often the subject of both my investigative and legislative 
work, and today I would share some thoughts with you.
    I want to emphasize four areas: the problem of repeat 
offender homes; the issue of fire safety; the need for greater 
transparency in quality at these homes; and recent concern over 
reports that the rise of private equity firm ownership of 
nursing homes is resulting in poorer quality of care. In the 
nursing home industry, the vast majority of homes provide 
quality care on a consistent basis. They provide an invaluable 
service to our older and disabled. We applaud them for that 
service.
    But as in many sectors, this industry is given a bad name 
by a few bad apples that spoil the barrel. A critical tool in 
confronting these bad actors is the sanctions that CMS can 
place on homes for failure to meet certain standards of care. 
Yet too often, nursing homes are able to yo-yo in and out of 
compliance, temporarily correcting deficiencies and having the 
sanctions rescinded, only then to fall back into noncompliance.
    When sanctions are put in place, nursing homes currently 
have the incentive to file appeal after appeal after appeal, 
delaying the imposition of penalties and adding costs to the 
taxpayers. A recent Government Accountability Office report 
examined 63 nursing homes that had been identified as having 
serious quality problems.
    Of these, nearly half continued to cycle in and out of 
compliance between years 2000 and 2005. Twenty-seven of the 63 
homes were cited 69 times for deficiencies warranting immediate 
sanctions. Yet in 15 of these cases sanctions were not even 
imposed.
    Eight of the homes reviewed cycled in and out of compliance 
seven or more times each period. This is unacceptable.
    But the real meaning of substandard care isn't about 
numbers. It isn't about statistics. It is about real people-our 
mothers, fathers, grandparents and loved ones. Every day there 
are stories reported across the Nation about residents 
suffering or even dying from preventable situations.
    Imagine, just recently I read about a nursing home resident 
in Florida who was taken to a hospital with bed sores, a 
partially inserted catheter, an infected breathing tube, and 
maggots in one of his eyes.
    Each and every one of you will agree with me. This is 
unacceptable. It is not humanitarian. It is an outrage.
    The current system provides incentives to correct problems 
only temporarily and allows homes to avoid regulatory 
sanctions, while continuing to deliver substandard care to 
residents. This system must be fixed.
    In ongoing correspondence that I have had with Kerry Weems, 
who is here and is Acting Administrator of CMS, and you will be 
hearing from him, that agency has requested the statutory 
authority to collect civil monetary penalties sooner and hold 
them in escrow pending appeal. I think that is a good start.
    Penalties should also be meaningful. Too often, they are 
assessed at the lowest possible amount, if at all. Penalties 
should be more than merely the cost of doing business. They 
should be collected in a reasonable timeframe and should not be 
rescinded so easily. These changes will help prod the industry 
and particularly, the bad actors to get their act together or 
get out of business.
    Another pressing issue is that of fire safety. As we saw in 
2003, this is an issue of life or death importance.
    Sixteen people died in a nursing home fire in Hartford, CT, 
and 15 died-in a home in Nashville in 2003. Neither home had 
installed automatic sprinkler systems.
    Despite the fact that a multiple-death fire has never 
occurred in a sprinklered home, there are approximately 2,773 
homes still without full sprinkle systems. Following these 
terrible events, I requested the Government Accountability 
Office to look into this matter and have held an ongoing 
conversation with CMS on how we can better protect America's 
nursing home residents from preventable fires.
    In October 2006, CMS began to move in this direction and 
expects to issue a final rule in the summer of 2008. This is 
much-needed improvement that will surely save lives.
    While a better penalty system and better fire safety will 
do much to increase nursing home safety, we have also got to 
give nursing home residents and their families better access to 
information about these homes. To do that we obviously have to 
have more transparency than we presently have.
    The public does currently have access to some information 
on nursing homes through the Web site Nursing Home Compare, 
located on Medicare's Web site. Yet for all the valuable 
information this Web site provides, it could be improved 
through the inclusion of information on sanctions, as well as 
an identification of the worst offending homes, often called 
special focus facilities. By listing these homes and the 
implemented enforcement action online, information the 
government already has, you don't have to go out and get more 
information. The public then would have better access to 
nursing home information, and nursing homes would have an extra 
incentive to meet quality standards.
    The process of choosing a nursing home is a very important 
and personal one for thousands of American families every year. 
We owe it to them to give them complete information when they 
are making a decision of where to put a loved one. Acting 
Administrator Weems in a recent letter to me, gave his 
assurance that CMS would begin posting some of this information 
online. I thank him for his commitment and look forward to 
seeing that carried out.
    So for me, the key is to ensure that nursing homes provide 
quality care to residents consistently day in and day out. If 
they don't, the public should be aware of that fact. In this 
area, as in others, a little sunshine will go a long way.
    Finally, I want to touch on an issue that has garnered a 
lot of attention lately, that of the purchase of nursing homes 
by private equity groups. Recent news reports have highlighted 
concerns over decreasing quality of care, decreasing staffing, 
and decreased budgets at nursing homes purchased by private 
equity groups. At one home, it is alleged that 15 residents 
died in 3 years due to negligent care at a home purchased by 
one of these groups.
    In response to these concerns, Senator Baucus and I have 
launched an inquiry into private equity firms and their 
ownership of nursing homes. Last month, we sent letters to five 
private equity firms asking for detailed information about 
their purchases and impending purchases of nursing facilities.
    In private equity ownership of nursing homes if that 
ownership is, in fact, having the effect of decreasing 
staffing, decreased budgets, and, in turn, decreased care, then 
something must be done about it. I plan to continue my inquiry 
and look forward to working with Senator Baucus to take 
whatever measures are appropriate to address the issue.
    Those four issues that are presented to you: ineffective 
enforcement; nursing home fire safety; the need for greater 
transparency; and concerns over private equity ownership affect 
millions of vulnerable Americans. The U.S. Senate has a great 
responsibility in addressing them.
    Again, I thank Chairman Kohl and the members of this 
Committee for holding this hearing and look forward to working 
with you all on these matters. I also want to acknowledge the 
efforts of the group that is entitled Advancing Excellence in 
America's Nursing Homes. This group is a broad coalition of 
organizations dedicated to improving the quality of care and 
quality of life of nursing home residents.
    Coalitions such as this are vital to our efforts. All of 
us-and I mean private organizations. I mean families. I mean 
residents. I mean caregivers, nursing home advocates, the 
government, all of the above and maybe more that I haven't 
mentioned, have a role to play in this important work if we 
want to be successful in our efforts to continue improving 
nursing home care.
    Indeed, much work needs to be done. So, I thank you for 
taking my testimony and wish you well. You are doing good work 
in this area. Because where we were 10 years ago the job is 
still not done. Thank you very much.
    The Chairman. That was a great statement, Senator Grassley. 
We appreciate your stopping by and making it. As a former 
Chairman of the Committee, what you have to say is valued, 
appreciated. We will take into consideration everything you 
have said with the greatest seriousness.
    Senator Grassley. Thank you.
    [The prepared statement of Senator Grassley follows:]

                 Prepared Statement of Senator Grassley

    Good morning. I want to begin by thanking Chairman Kohl and 
the members of the Senate Special Committee on Aging for 
holding this important hearing. When I had the privilege of 
serving as chairman of this committee, many of our efforts were 
focused on abuse and substandard care in America's nursing 
homes. I'm glad to see that under the leadership of Chairman 
Kohl, this critical issue is remains a top priority and I 
applaud the committee's efforts.
    In America today, there are nearly 1.7 million elderly and 
disabled individuals in approximately 17,000 nursing home 
facilities. This includes the men and women of the world war 
two generation--and our duty to ensure that they receive the 
quality care they deserve couldn't be higher.
    But in addition to the Americans currently living in 
nursing home facilities, another issue lies on the horizon. As 
the baby boom generation gets older, the number of Americans in 
nursing home facilities is going to rise dramatically. 
Therefore, it's critical that we confront the issue of safe and 
high quality nursing home care today.
    As the Ranking Member of the Senate Finance Committee, I 
have a special interest in nursing home care. The industry is 
often the subject of both my investigative and legislative 
work, and today I'd like to share some of my thoughts. In 
particular, I want to emphasize four area that are of concern 
in the nursing home industry from my perspective: 1) the 
problem of repeat offender homes, 2) the issue of fire safety, 
3) the need for greater transparency in nursing home quality, 
and 4) recent concern over reports that the rise of private 
equity firm ownership of nursing homes is resulting in poorer 
quality of care.
    In the nursing home industry, the vast majority of homes 
provide quality care on a consistent basis. They provide an 
invaluable service to those who can no longer care for 
themselves, and we applaud them for this service. But as in 
many sectors--this industry is given a bad name by a few bad 
apples that spoil the barrel. A critical tool in confronting 
these bad actors are the sanctions CMS can place on homes for 
failure to meet certain standards of care. Yet too often, 
nursing homes are able to ``yo-yo'' in and out of compliance, 
temporarily correcting deficiencies and having the sanctions 
rescinded, only to fall back into noncompliance. When sanctions 
are put in place, nursing homes currently have the incentive to 
file appeal after appeal, delaying the imposition of penalties 
and adding costs to the taxpayer. So for me the key is to 
ensure that nursing homes provide quality care to residents 
consistently--day in and day out--and if they don't, the public 
should be aware of that fact.
    A recent GAO report examined 63 nursing homes that had been 
identified as having serious quality problems. Of these, nearly 
half continued to cycle in and out of compliance between fiscal 
years 2000 and 2005. Twenty seven of the 63 homes were cited 69 
times for deficiencies warranting immediate sanctions, yet in 
15 of these cases sanctions were not imposed. Eight of the 
homes reviewed cycled in and out of compliance seven or more 
times each period. This is unacceptable.
    But the real meaning of substandard care isn't about 
numbers and statistics--it's about real people--our mothers, 
fathers, grandparents and other loved ones. Every day there are 
stories reported across this nation about residents suffering 
or even dying from preventable situations. Imagine, just 
recently I read about a nursing home resident in Florida who 
was taken to a hospital with bed sores, a partially inserted 
catheter, an infected breathing tube, and maggots in one of his 
eyes. Each and every one of you will agree with me--this is 
unacceptable. It is an outrage.
    The current system provides incentives to correct problems 
only temporarily and allows homes to avoid regulatory sanctions 
while continuing to deliver substandard care to residents. This 
system must be fixed. In ongoing correspondence I've had with 
Kerry Weems, the acting administrator of CMS, that agency has 
requested the statutory authority to collect civil monetary 
penalties sooner, to be held in escrow pending the decision on 
appeal. I think this is a good start. Penalties should also be 
meaningful--too often, they are assessed at the lowest possible 
amount, if at all. Penalties should be more than merely the 
cost of doing business; they should be collected in a 
reasonable timeframe; and should not be rescinded so easily. 
These changes will help prod the industry's bad actors to get 
their act together or get out of the business.
    Another pressing issue is that of fire safety, and as we 
saw in 2003, this is an issue of life-or-death importance. That 
year, 16 people died in a nursing home fire in Hartford, 
Connecticut, and 15 died at a home in Nashville, Tennessee. 
Neither home had installed automatic sprinkler systems. Despite 
the fact that a multiple-death fire has never occurred in a 
sprinklered home, there are approximately 2,773 homes still 
without full sprinkle systems.
    Following these terrible events, I requested that GAO look 
into the matter, and have held an ongoing conversation with CMS 
on how we can better protect America's nursing home residents 
from preventable fires. In October 2006, CMS began to move in 
this direction, and expects to issue a final rule in the summer 
of 2008. This is a much needed improvement that will surely 
save lives.
    While a better penalty system and better fire safety will 
do much to increase nursing home safety, we've also got to give 
nursing home residents and their families better access to 
information about these homes. And to do that you need more 
transparency.
    The public currently has access to some information on 
nursing homes through the website ``Nursing Home Compare,'' 
located on Medicare's website. Yet for all the valuable 
information this website provides, it could be improved through 
the inclusion of information on sactions, as well as an 
identification of the worst offending nursing homes, often 
called ``Special Focus Facilities.'' By listing these homes and 
the implemented enforcement actions online--information the 
government already has--the public would have better access to 
nursing home information and nursing homes would have an extra 
incentive to meet quality standards.
    The process of choosing a nursing home is a very important 
and personal one for thousands of American families every 
year--we owe it to them to give them complete information when 
making this decision. Acting Administrator Weems, in a recent 
letter to me, gave his assurance that CMS would begin posting 
this information online. I thank him for his commitment and 
look forward to seeing this carried out. In this area, as in 
others, a little sunshine will go a long way.
    Finally, I want to touch on an issue that has garnered a 
lot of attention lately--that of the purchase of nursing homes 
by private equity groups. Recent news reports have highlighted 
concerns over decreasing quality of care, decreased staffing, 
and decreased budgets at nursing homes purchased by private 
equity groups. At one home, it is alleged that 15 residents 
died in three years due to negligent care at a home purchased 
by one of these groups.
    In response to these concerns, Senator Baucus and I have 
launched an inquiry into private equity firms and their 
ownership of nursing homes. Last month, we sent letters to five 
private firms asking for detailed information about their 
purchases and impending purchases of nursing facilities. If 
private equity ownership is in fact having the effect of 
decreased staffing, decreased budgets, and, in turn, decreased 
care, then something must be done about it. I plan to continue 
my inquiry and look forward to working with Senator Baucus to 
take whatever measures are appropriate in addressing this 
issue.
    Those four issues--ineffective enforcement mechanisms, 
nursing home fire safety, the need for greater transparency, 
and concerns over private equity ownership--affect millions of 
vulnerable Americans and the United States Senate has a great 
responsibility in addressing them. Again, I thank Chairman Kohl 
and the members of this committee for holding this hearing, and 
look forward to working with you all on these matters. I also 
want to acknowledge the efforts of the group ``Advancing 
Excellence in America's Nursing Homes.'' This group is a broad 
coalition of organizations dedicated to improving the quality 
of care and quality of life of nursing home residents. 
Coalitions such as this are vital to our efforts. In closing, 
all of us--and I mean private organizations, families, 
residents, caregivers, nursing home advocates, and the 
government--have a role to play in this important work if we 
want to be successful in our efforts to continue improving 
nursing home care. Indeed, much work remains to be done. Thank 
you.

    The Chairman. Thank you.
    Now, I would like to turn to our Ranking Member, Senator 
Smith, for his statement.

  OPENING STATEMENT OF SENATOR GORDON H. SMITH, RANKING MEMBER

    Senator Smith. Thank you, Mr. Chairman. I appreciate this 
important hearing and this continuing discussion we are having 
on nursing home quality.
    These discussions are necessary to ensure that those in 
need of long-term care get the quality care that they deserve. 
The issue of nursing home quality and safety is of particular 
interest to me and all members of this Committee. I thank our 
panelists today for being here.
    I, like Senator Kohl, appreciate Senator Grassley. As a 
former Chair of this Committee and having served as both 
Chairman and Ranking Member of the Senate Finance Committee, 
the interest of our citizens in nursing homes has long been a 
priority for him.
    We know that the need for long-term care is expected to 
grow significantly in the coming decades. Almost two-thirds of 
the people currently receiving long-term care are over the age 
65. This number is expected to double by 2030.
    We also know that the population over age 85, those are the 
ones most likely to need long-term services and supports. They 
are expected to increase by more than 250 percent by the year 
2040 from 4.3 million to 15.4 million.
    Today, millions of Americans are receiving or are in need 
of long-term care services and support. We don't have to wait 
that long. It is already here.
    Surprisingly, more than 40 percent of the persons receiving 
long-term care are between the ages of 18 and 64. The past 
decade has revealed a shift in the provision of long-term care.
    A great example of this is in my home State of Oregon, 
where much of the care is provided in community settings and in 
recipients' homes. We also have seen that long-term care 
providers are offering services that put the patient at the 
center of care, encouraging inclusion of families in 
decisionmaking, and giving more choices in the location of 
care, such as community-based and home care settings.
    As I have said in this Committee before, ensuring patient 
safety is a responsibility that rests with no one party or 
entity. It is shared by care providers, by Federal and State 
governments, law enforcement agents, local agencies, and 
community advocates. It is a responsibility that I and my 
colleagues take very seriously.
    We must all work together more collaboratively to curb the 
incidence of elder abuse. We owe that to the millions of 
seniors who have placed their trust in our nation's long-term 
care system and to those who remain in their homes and in their 
communities.
    With the passage of the Elder Justice Act, this would be a 
wonderful and much-needed step toward this goal. Apart from 
improving communication and cooperation of enforcement 
activities, there would be new stronger policies in place to 
ensure that seniors receive the safest long-term care 
possibily.
    To that end, I have introduced the Long-Term Care Quality 
and Modernization Act with Senator Blanche Lincoln. This bill 
encourages a number of important improvements to nursing homes 
and the long-term care system that aim to enhance the quality 
and safety of care provided to our seniors. I look forward to 
continuing to work with the many advocates, industry 
representatives, and regulators here today to ultimately pass 
this important legislation.
    I would like to applaud the work that Senator Kohl has done 
in this area as well, and especially in regard to helping 
nursing homes and other facilities better identify potential 
bad actors in the workforce and to ensure families are informed 
of facility quality. It is essential that we find more 
effective ways to help poor performing facilities operate at a 
much higher level or to consider ways that they can be phased 
out of the system. We cannot let the inappropriate actions of a 
few continue to destroy the trust our nation's seniors have 
placed in the long-term care system.
    I am confident this fine panel of experts will be able to 
provide a fresh light, some fresh insight into the work that is 
being done at the Federal, State, and local levels to reduce 
elder abuse and provide the safest, highest quality care that 
is possible. Thank you.
    The Chairman. Thank you, Senator Smith.
    In order of arrival, we have Senator Craig first and then 
Senator Casey.
    Senator Craig.

          OPENING STATEMENT OF SENATOR LARRY E. CRAIG

    Senator Craig. Mr. Chairman, thank you very much. A special 
thanks to you and our Ranking Member, Senator Smith.
    Before Senator Grassley left the room, there were either 
four former or currently serving chairmen. I think once you 
have served on this Committee a time, your passion for its 
mission never leaves you because we have always viewed our 
aging community as one of our more vulnerable communities. 
Thank you for the work you are doing and for the work Senator 
Smith has done.
    The challenge of nursing home improvement is a prime 
example of the Aging Committee's importance of putting a 
spotlight on issues that are of vital significance to our 
senior population and their families. This Committee also plays 
a valuable role in crafting solutions to challenges facing our 
aging population.
    During my tenure as Chairman of this Committee, I spent 
some time examining long-term care and issues relating to the 
well-being of our vulnerable seniors. While our aging 
population is moving more toward home and community-based 
services, as Senator Smith has mentioned, there still is going 
to be a need for nursing home care.
    Now, I look forward to the hearing and to our witnesses 
today, and to all of your comments. Transparency is an 
important factor in ensuring that our nursing homes are safe 
places. It is important for families to have the necessary 
background information when choosing a nursing home. Most 
people are not going to choose a poor performing facility for 
their loved ones.
    So making inspection information readily available to the 
public is also a great incentive for nursing homes to meet 
their standards. Unfortunately, like all good ideas, the devil 
is in the details.
    CMS' nursing home compare is a great step for those who 
want more information about nursing homes. However, more can be 
done to make information on the Web site easier to understand 
so that families know what the deficiencies that a facility 
receives actually mean and how this actually impacts a senior 
in these facilities.
    Families who are looking for a nursing home are often 
overwhelmed by this tremendous lifestyle change that is about 
to hit their family. They do not have the time to become the 
expert in nursing home oversight and inspection.
    I also want to stress the importance of information on 
nursing home compare being kept as up to date as possible. It 
is unfair to both the nursing home provider and seniors when 
only outdated information about the problem at a particular 
facility is available online.
    With that said, I look forward to our hearing today.
    Mr. Chairman, it is an important one as legislation moves 
forward on this issue. I thank you.
    The Chairman. Thank you, Senator Craig.
    Senator Casey.

             OPENING STATEMENT OF SENATOR BOB CASEY

    Senator Casey. Mr. Chairman, thank you very much for 
chairing this hearing and for your work as the Chairman of our 
Committee. This is an incredibly important hearing, for a lot 
of reasons. I was going to tell some personal stories that I 
think demonstrate to me how critical this hearing is and the 
subject matter of the hearing.
    I also want to thank Senator Grassley for his testimony. I 
missed part of it, but I know his commitment and so many others 
who are here.
    This issue for me is probably more personal than most 
because it affected both the work that I did before I got to 
the Senate, as well as has had an impact on my own family 
background. My work as a State official, the auditor general, 
allowed us to audit the oversight by the Pennsylvania 
Department of Health of nursing homes. We put out a report, 
which was very critical. I hit that agency very hard in 1998. 
That led to a lot of work down the road.
    I don't want to spend a lot of time on that, but suffice it 
to say that some of the problems that we will talk about today, 
some of the questions that we will ask, some of the priorities 
that we enunciate from this platform, but also at the witness 
table, remind me of what we were doing in 1998 and 1999. So 
there is still much work to be done.
    But two personal insights, Mr. Chairman. One is a meeting I 
had across the street from a nursing home. When we got into 
this work pretty deeply, a lot of families were contacting us. 
We know from the work in long-term care that this is an issue 
that isn't just about older citizens in the twilight of their 
lives. It is about the whole family.
    Younger members of the family worry about where a loved one 
is placed. They worry about the care. They worry about the 
expertise and the professionalism that will be brought to bear 
on their loved one.
    So we set up a meeting with a woman whose husband was in a 
nursing home. We wanted to meet her across the street first to 
talk to her, and then we went for a visit. As soon as she sat 
down across from me in--I think it was a deli or a coffee shop. 
As soon as she sat down, I shook her hand. She looked at me. 
Before she could talk, she started to cry.
    Now, she wasn't crying because he was getting terrible 
care. There was no crisis necessarily. But she was crying 
because, like a lot of Americans, it is a traumatic decision, 
as others have said today, to place a loved one in a nursing 
home. Once they are there, you worry about them.
    I think the basic worry that most people have, especially a 
spouse or a close family member, is will that person get the 
same kind of care in this facility, as good as it might be, as 
they would get in the home or they would receive from a husband 
or a wife or a family member. That is the principle worry that 
people have.
    Our obligation in the Senate is to do everything possible 
to understand that fear and that worry and that sometimes the 
failure to have the kind of peace of mind that people deserve 
and to bring about policies that will do our best to meet that 
obligation so that someone who makes that decision, a family 
decision, can have that kind of peace of mind.
    The second example in my own life is my father. He suffered 
from an incurable disease in the later part of his life. He was 
a big, tough, powerful person in his day. But at the end of his 
life, he had no power. His mind was fine, but he had no power 
to move.
    So when he was in a long-term care setting, moving from 
here to here, I mean, literally inches, he couldn't do on his 
own. So he relied upon the skill and the expertise of long-term 
care workers, nurses, nurses aids, the whole gamut of 
expertise.
    I learned a lot about that. He got great care. But I 
remember distinctly being in the hospital one night when he was 
getting very bad care from one particular nurse.
    She just happened to be an agency nurse who was there 
temporarily. She didn't know him, didn't know much about his 
medications. She made a terrible error.
    So, I had a glimpse, a fleeting glimpse into what bad care 
can result in. Fortunately, he wasn't permanently impacted by 
that poor care.
    So all these personal and human memories come back when I 
think about this issue. It is particularly disturbing in light 
of this new phenomenon with regard to private equity firms 
purchasing, acquiring long-term care facilities.
    It is bad enough when the government is not doing its job 
in terms of oversight. I saw that at the State level. 
Fortunately, it is better today, at least in terms of what we 
were identifying.
    That was bad enough. But when you have the added problem of 
private entities that stand to make a lot of money on the 
initial purchase, but also stand to make a lot of money in the 
long run, sometimes at the expense of good care, that makes the 
problem all the worse.
    I was just citing a report that I know from the back of the 
room by the Service Employees International Union, ``Equity and 
Inequity: How Private Equity Buyouts Hurt Nursing Home 
Residents.'' What is in this report is not just disturbing to 
me, it reminds me what I was working on almost a decade ago in 
Pennsylvania. I am sure the same was true in a lot of other 
states.
    What is identified in this report is disturbing. It is 
troubling, to say the least. It cries out for action by this 
Committee, by the U.S. Senate, and, frankly, by the 
administration. Frankly, the administration doesn't always need 
a new law or a new regulation to move forward. The 
administration should focus more acutely on this.
    So we have a lot of work to do. This is a very personal 
issue for a lot of Americans. I feel that obligation very 
deeply.
    I know, Mr. Chairman, you do, and the members of this 
Committee. I look forward to the testimony today. Thank you.
    The Chairman. Thank you, Senator Casey.
    Senator Wyden.

             OPENING STATEMENT OF SENATOR RON WYDEN

    Senator Wyden. Thank you, Mr. Chairman. I want to commend 
you and Senator Smith and so appreciate the bipartisan approach 
that you all take to this issue.
    I just make three points very quickly. First is something 
is out of whack in this country when it is a lot easier to find 
information about the quality of a washing machine than it is 
to get information about the quality of long-term care 
facilities. That is a fact.
    All over this country you can easily get access to 
information about home appliances and a variety of other retail 
purchases you make. But you can't get information about the 
essential health care services that are available.
    I think that is why it is so good that you are going 
forward in your leadership, Senator Kohl and Senator Smith.
    Second, on this trend toward the large chains and private 
equity firms getting into the field. I think it is worth noting 
Senator Smith and I see it as we have a great many long-term 
care facilities in our State that are essentially small, family 
owned facilities. I think it is pretty clear that those kinds 
of health care facilities do a lot more to make information 
available to families, share information with respect to long-
term care choices than some of these big chains.
    So this notion that you can't be straight with the public 
and with the consumer and the families, as Senator Casey speaks 
so eloquently about, that is not correct, No. 1. and No. 2, we 
have some concrete examples of how to have more transparency in 
long-term care.
    That is particularly in a lot of our small towns where you 
have family owned long-term care facilities. They are showing 
how to get information out to families, work with families, and 
make sure they know more about their choices.
    One last point, Mr. Chairman. As you and I have talked 
about, in the Healthy Americans Act, the legislation I have, we 
now have 11 United States senators. It is the first bipartisan 
universal coverage bill in more than 13 years here in the U.S. 
Senate. We have a significant long-term care section in that 
legislation, both on the public side and on the private side.
    One of the reasons I think your hearings are so helpful, 
Mr. Chairman, it is my intent to take the information that you 
all get through the leadership in this Committee and to add to 
that legislation some of what you have found about how to 
promote transparency. Frankly, we have taken some baby steps in 
the legislation to get more information out.
    But as a result of your good work and these important 
hearings, it is my intent to take the information that comes 
out of these hearings on long-term care facilities and 
transparency, take that information and put it into our 
legislation. I think that is one additional way the Senate can 
work in a bipartisan way to promote better long-term care 
choices for our people.
    Mr. Chairman, I thank you. I look forward to working with 
you.
    The Chairman. Thank you very much, Senator Wyden.
    At this time, we will call Kerry Weems to make a statement 
to us. Kerry Weems is the CMS Acting Administrator.
    Mr. Weems was tapped in September 2007 to take over the 
helm of the agency that administers Medicare and Medicaid, as 
well as the State children's health insurance program, which 
does provide health care services to more than 100 million 
Americans. We are very pleased to have Administrator Weems here 
today to provide us with an account of CMS initiatives to 
enforce existing standards as well as to address the problem of 
poor performing nursing homes to which we have referred already 
today several times.
    So, Mr. Weems, welcome, and thank you for coming. We would 
be delighted to hear your statement.

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

    Mr. Weems. Mr. Chairman, good afternoon. Thank you for 
holding this hearing. Senator Smith, other distinguished 
members of the panel, it is my pleasure to be here today to 
discuss the Centers for Medicare and Medicaid Services' 
initiatives to promote and improve nursing home quality.
    Roughly 1.5 million Americans reside in the nation's 16,400 
nursing homes on any given day. More than 3 million rely on 
services provided by a nursing home during any point in the 
year. These individuals and an even larger number of their 
family members and friends must be able to count on nursing 
homes to provide reliable care and consistently high quality.
    Charged with overseeing the Medicare and Medicaid programs, 
whose enrolled populations comprise the vast majority of 
nursing homes, CMS takes nursing home quality very seriously. 
Our efforts in this area are broad, including initiatives to 
enhance consumer awareness and transparency as well as rigorous 
surveying and enforcement processes focused on safety and 
quality.
    As Acting Administrator of CMS, nursing home quality is a 
professional priority, but also a personal cause. My mother-in-
law was a nursing home resident who suffered from Alzheimer's 
disease and was bedridden. During the time that my nomination 
to this position was under consideration in my household, my 
wife, Jean, went to this nursing home to visit her mother and 
noticed a large bruise over her mother's eye.
    If this wasn't upsetting enough, the staff wasn't able to 
tell her what happened. This is exactly the kind of situation 
that CMS' safety and quality initiatives are intended to 
prevent.
    When Jean returned from the visit with her mother, she told 
me that I could accept the nomination to be the next CMS 
administrator, that if I was going to do that, I needed to make 
quality nursing home care a priority. So advancing nursing home 
quality is not only a condition of my employment, you see, it 
is also the condition of a harmonious marriage.
    Now, if I could bring your attention to the chart on 
display-and you also have the materials in front of you-I am 
prepared to lay out a set of milestones for further improvement 
in nursing home care. We talk about accountability in 
government. This is our plan.
    The only caveat that I would add is as CMS administrator, I 
am not the sole decisionmaker on these. These are our 
aspirational goals. This is where we would like to find 
ourselves over the next year.
    Senator Grassley mentioned our participation in Advancing 
Excellence in America's Nursing Homes campaign. That will 
continue.
    The next item. By December 1 of this year, we will post on 
the CMS nursing home compare Web site the names of the special 
focus facilities. I will discuss that in greater detail in a 
moment.
    In early 2008, we plan to expand the quality indicator 
survey pilot to a sixth-State. The program is currently testing 
ways to improve the traditional survey process in Florida, 
Connecticut, Kansas, Louisiana and Ohio. We are seeing 
promising results.
    The survey employs methodological data analysis and 
technology to better focus surveyors on probable areas of 
concern. Data collected from a particular facility are used to 
derive quality of care indicators, which can be then compared 
to national norms that will help guide our surveyors' 
assessments.
    In spring of 2008 CMS hopes to issue a solicitation to 
begin the process of inviting states and nursing homes to 
participate in a value-based purchasing demonstration. The 
program would adjust payment in a manner that recognizes the 
quality improvement in nursing home quality, thus stepping up 
incentives for high-quality care, which is, in the end, what we 
care about, high-quality care.
    In April CMS plans to co-sponsor a national symposium to 
examine and support culture change in the nursing home 
community. This culture change will move nursing homes to a 
more person-centered approach, an environment that respects 
individuals, and inspects nursing home quality at all levels, 
staff management and ownership. Some of this is very simple 
things such as teaching the aids to knock on the door before 
they enter, to ask simple permissions, to move the care to a 
very patient-centered form of care.
    CMS is working on the final evaluation of a 3-year pilot 
demonstrating the comprehensive system of criminal and other 
background checks for prospective new hires.
    I know this is a particular concern of yours, Mr. Chairman.
    Our goal is to issue this final report in May 2008. In June 
we expect to report on the progress of an ongoing national 
campaign to reduce the incidents of pressure ulcers in nursing 
homes and reduce the use of restraints. In that same month we 
hope to issue guidance to surveyors on infection control and 
nutrition in nursing homes. These new guidelines will be the 
latest of an ongoing set of CMS efforts to improve consistency 
and effectiveness of the survey process.
    Senator Grassley mentioned a final CMS regulation on fire 
safety protection, which would require all nursing homes to be 
fully sprinkled by a defined phase-in period. It is currently 
expected to be released in August 2008.
    Also, in August, a new CMS contract for quality improvement 
organizations will take effect. CMS hopes to build into that a 
3-year agenda for the QIOs to begin working with nursing homes 
who have poor quality, including the special focus facilities.
    In September 2008, CMS will issue a report describing 
feasible methodologies for improving the accuracy of staffing 
information submitted by nursing homes for posting on the CMS 
nursing home compare site. Finally, CMS has stated on the 
record previously before this Committee-Senator Grassley 
mentioned that as well-that we would envision supporting 
legislative efforts to permit the collection and escrow of 
deposit for civil monetary penalties as soon as the penalties 
are imposed. Our expectation is that such legislation might be 
reasonably enacted by the Congress by 2008.
    I will now turn to a particular CMS effort that I 
understand is of interest to the Committee, the special focus 
facility initiative. Facilities we target for special focus 
consistently provide poor quality care. Yet oftentimes they 
pass isolated surveys by just fixing the number of problems to 
enable them to satisfy the survey. They then fail the next 
survey, often for many problems that they had ostensibly fixed.
    Of course, this in and out or yo-yo compliance does not 
address the homes' underlying systematic problems. The special 
focus facility program is designed to put an end to fluctuating 
compliance. Once a facility is placed on the special focus 
program, CMS applies a progressive enforcement until the 
nursing home takes one of three paths: graduates from the 
program because it has made significant long-lasting 
improvements; is terminated from participation in the Medicare 
or Medicaid programs; or is given more time because we see 
potential for improvement such as the sale of the nursing home 
to a new owner with a better track record of providing quality 
care.
    We are finding that the special focus initiative really 
works. Here is one example.
    A nursing home in rural South Carolina was a special focus 
nursing home that failed to improve during its first 18 months 
after selection. As a result, in April 2007 CMS issued a 
Medicare notice of termination to the facility. We were 
prepared to see the 132 residents located to another facility 
that provided better care. We all know the trauma that that 
brings with it.
    At that point, however, the nursing home operators 
evidenced a willingness to implement serious reforms with clear 
potential to transform their quality of care. CMS agreed to 
extend the termination date on the condition that the nursing 
home would enter into a legally binding agreement to adopt 
specific quality focus programs. We required a root cause 
analysis of their underlying system of care deficiencies, which 
was conducted by a QIO selected by CMS but paid for by the 
nursing home.
    We required an action plan based on the root cause analysis 
and also an $850,000 escrow deposit to finance the needed 
reforms. Our interventions were successful. The nursing home 
passed its subsequent survey, was purchased by another owner, 
and is now on track to graduate from the special focus 
facility. The nursing home operator is now seeking to replicate 
this approach in the other nursing homes that it operates.
    In closing, I would stress that CMS' quality and safety 
assurance mandates extend to every nursing home in the Nation, 
large, small, public or private. Regardless of setting or 
ownership, quality care for Medicare and Medicaid beneficiaries 
is of utmost importance to CMS.
    To that end, I hope the milestones I have shared with you 
demonstrate our tireless work to quality at CMS. Thank you. I 
would be pleased to answer any questions you might have.
    The Chairman. Thank you, Mr. Weems. The special focus 
facility program-you have, I understand, compiled the list of 
facilities that will likely appear on that program?
    Mr. Weems. We currently have 62 facilities, the names of 
which we will be prepared to put on the Web site on or before 
December the 1st.
    The Chairman. That interim period is for what reason?
    Mr. Weems. Senator, we want to make sure that we have 
notified the facilities and the facilities have had an 
opportunity to talk to their staff, talk to the residents, talk 
to the family of the residents so they understand the nature of 
the action being taken. One of the things that we want to make 
sure that we do is make clear the three possible paths, that by 
being in a special focus facility it is possible to improve. 
But termination is also possible. We don't want to induce panic 
among the residents or among the staff.
    The Chairman. In terms of improving the quality of these 
facilities, are you optimistic that this kind of a program will 
be serious enough to really make a marked difference in a 
relatively short period of time? Because of the nature of the 
sanctions and the awareness that children will have about their 
parents being in a facility that is not performing up to 
standard, are you optimistic that this over a reasonable period 
of time will result in a marked improvement as well as a big-
time reduction in the number of facilities on this program?
    Mr. Weems. Well, Senator, it certainly will produce a 
result for those facilities that are in the program. They are 
going to go down one of those three paths that we have 
mentioned. Also disclosing these facilities and giving people a 
good understanding about what they mean, I think, also provides 
the right kind of incentives to improve quality system-wide.
    The Chairman. Thank you.
    Senator Smith.
    Senator Smith. Mr. Chairman, thank you.
    Mr. Kerry, thank you for being here.
    Mr. Weems. Good to see you, sir.
    Senator Smith. I recognize that this is probably your last 
appearance before this Committee for the balance of this year. 
With the chairman's indulgence, I need to ask you to answer a 
couple of questions about two topics that we have had hearings 
on in this Committee, in no way to take away from the 
importance of the questions being asked or this topic. But they 
affect seniors, and they affect people in nursing homes.
    I need some answers from CMS that I fear I am not getting. 
It first relates to the 1-800-Medicare call centers.
    Mr. Weems. Yes, sir.
    Senator Smith. In anticipation of your appearance here 
today, I had my staff make 15 calls to these centers this past 
week. They asked very basic questions that should have a 
quality control so that there are very easy and accurate 
answers given.
    Like what is the difference between Medicare Part D and 
Medicare Advantage. Pretty basic. What are the enrollment 
periods for these plans? Pretty important. Can a beneficiary 
switch plans after enrollment if they aren't satisfied with 
their plan? They were given false information repeatedly.
    Under what circumstances is the late enrollment penalty 
assessed? Again, very divergent kinds of answers.
    I guess my point in raising this is I think you need some 
quality control at 1-800-Medicare. I am hoping that you can 
tell me what you are going to do about it.
    Mr. Weems. Well, Senator, I certainly will look into it. 
Those are basic questions that----
    Senator Smith. Ought to have real scripted answers.
    Mr. Weems. We audit answers given. We do have quality 
control processes in place. Obviously if you and your staff are 
getting these kinds of answers, those aren't adequate. So let 
me try to make them so.
    Senator Smith. There were 15 calls in the past week, and 
the answers were all over the board. They were often 
inaccurate.
    Mr. Weems. Well, that is not acceptable, Senator.
    Senator Smith. Second, another hearing we had was on the 
validity of genetic testing. Here is a Wall Street Journal 
article last week talking about genetic testing. Is there a 
heart attack in your future? Genetic tests promise to map your 
personal health risks. But some question usefulness.
    CMS has spent 6 years trying to write guidelines for this. 
They have just abandoned it. This field is proliferating.
    It's usefulness is clearly in question. So I would like to 
know what you will do since CMS is apparently walking away from 
a felt need--I mean, an obvious need if the Wall Street Journal 
is questioning it and other publications as well--what CMS is 
going to do to re-pick up the ball and try to put forward some 
guidelines so that the questions as to validity can be assured. 
Because a lot of seniors are getting this stuff, often scaring 
them to death and often without any medical validity at all.
    Mr. Weems. Well, Senator, first of all, this was brought to 
my attention just before this hearing so I will respond in 
writing and with clarity as to what our plans are. The FDA, of 
course, has responsibility for the initial approval of such 
tests. Then CMS would work with them under the Clinical 
Laboratory Improvements Act. But exactly what actions we have 
taken in the past and our current trajectory I will provide you 
in writing.
    Senator Smith. Well, I appreciate it. It is a national 
issue. It is a legitimate concern of this Committee and I think 
many of the Senators on this panel.
    I don't think we are meeting our public responsibility if 
this field is growing. Whether it is snake oil or not, it is 
attracting a lot of money.
    I am not saying it is, but I am saying it may be. To make 
sure it isn't, there ought to be some Federal standard at which 
people can have confidence that it is being met so that people 
aren't just being scammed.
    Thank you, Mr. Chairman.
    The Chairman. Thank you so much.
    Senator Craig, then Senator Casey, then Senator Wyden, and 
then Senator Salazar.
    Senator Craig. Mr. Chairman, again thank you.
    Mr. Weems, thank you for being with us. Your testimony is 
appreciated.
    In my opening comments I talked about information and its 
value. How much of the information on nursing home compare is-I 
should say much of it-is vague about what deficiencies actually 
mean for the patient. At least that is certainly my 
interpretation of it. Are there any initiatives underway to 
make the language easier for the average individual to read and 
actually understand what the practical affects of the 
information are on the patient?
    Mr. Weems. The Web site itself has been run through several 
focus groups to make sure that that information is more 
understandable. We work with focus groups to continue to 
improve to try and make it as understandable as possible.
    There is a lot of information on the Web site. For each 
quality indicator that there is given, there is an explanation 
of what that means. We do strive to make it as user-friendly as 
possible.
    Senator Craig. Do you have any idea how many people utilize 
nursing home compare?
    Mr. Weems. Senator, we measure it in page reads. Last year 
we had about 12 million page reads, which is a significant 
number. Actually, up until the Part D program, it was our most 
visited Web site.
    Senator Craig. That is good. What kind of outreach have you 
done or are you continuing to do as it relates to making more 
people aware of nursing home compare?
    Mr. Weems. Well, we work with a number of partners at the 
local level as somebody is being essentially moved into a 
nursing home so that they know that that potential exists. We 
push it at the-you know, through our national site. There are 
also education efforts that go with physicians and discharge 
nurses who can help in education efforts.
    Senator Craig. In your testimony you talked about 
improvements in a nursing home in South Carolina that was about 
to be shut down. Could some of these tough measures that were 
implemented in that situation, such as a root cause analysis of 
the problem at the facility, been tried earlier in the process 
when the facility was failing?
    Mr. Weems. Senator, the method that we take with the 
special focus facilities is progressive enforcement. So when 
they first enter, we begin with some enforcement efforts. Those 
enforcement efforts get more progressive as the facility fails 
to improve.
    This ``last chance'' systems change that we announced 
really is sort of the end of the road. Either the facility is 
going to improve, or they are going to be terminated.
    The thing about the special focus facilities and this sort 
of ``last chance'' program is it is highly resource-intensive. 
So working out individual agreements with the nursing home the 
way that that one was worked out is very, very resource-
intensive. So we try and spread our resources through 
progressive enforcement.
    Senator Craig. OK. Thank you very much, Mr. Weems.
    Mr. Weems. Certainly.
    Senator Craig. Mr. Chairman, thank you.
    The Chairman. Thank you, Senator Craig.
    Senator Casey.
    Senator Casey. Thank you, Mr. Chairman.
    Mr. Weems, we appreciate your testimony, but, of course, 
even more so your service. It is important work you are doing. 
I appreciate you sharing your own personal story.
    I have a couple of questions that center on staffing. But I 
wanted to first of all talk about the issue that a number of us 
have mentioned and I think is on the minds of a lot of people 
because of the public coverage of this, the New York Times. I 
cited the SEIU report.
    Mr. Chairman, I guess I would ask unanimous consent that 
this SEIU report, ``Equity and Inequity: How Private Equity 
Buyouts Hurt Nursing Home Residents,'' be made part of the 
record of the hearing.
    The Chairman. Without objection.
    [The information referred to follows:]

    [GRAPHIC] [TIFF OMITTED] T1836.001
    
    [GRAPHIC] [TIFF OMITTED] T1836.002
    
    [GRAPHIC] [TIFF OMITTED] T1836.003
    
    Senator Casey. Just, I guess, on two levels. One is how you 
would compare what you set forth in your testimony where you 
say that, starting on page five under the heading of nursing 
home ownership-and then on page six, you say, ``CMS has 
developed a new system called the provider enrollment chain and 
ownership system, known by the acronym PECOS. This new system 
is designed to track and maintain information regarding 
entities that own 5 percent or more of a nursing home to ensure 
only eligible providers and suppliers are enrolled and maintain 
enrollment in the Medicare program.'' Then it goes on from 
there. Your testimony talks about the function of this 
application process, gathering information about the provider, 
whether that provider meets State licensing qualifications, 
where it practices or renders its services, the identity of the 
owner, going on from there.
    The concern that I think a lot of us have is that this 
initiative, your initiative might be just getting up and 
running. That is one concern I have. I would like to have you 
address that.
    Second, whether or not the concerns that have been 
expressed already about the impact of this kind of ownership, 
whether those concerns about the ownership and how it has led 
to some really questionable ownership practices that lead to a 
diminution in the quality of care. So if you could just do a 
comparison here. Then if you can amplify that in a written 
record after the hearing, we would appreciate that as part of 
the record.
    Mr. Weems. I would be happy to do that, Senator. The system 
that you mentioned, the PECOS system, is gathering information 
about ownership and fractional ownership of nursing homes. That 
data base right now is about 60 percent complete. We continue 
to gather that information.
    Once complete, we will be able to perform the kinds of 
analysis that you allude to as to whether or not type of 
ownership affects quality of care. But we are not in a position 
to reach that conclusion just yet, sir.
    Senator Casey. I would ask you as you are developing this 
system to keep in mind these reports. I am just reading from 
the summary of the SEIU report. But here is what it says in 
part talking about two different chains.
    I quote--this is from the executive summary. ``We see 
increases in the number of resident care deficiencies along 
with a trend toward restructuring that, in effect, No. 1, 
limits liability; No. 2, minimizes tax responsibilities; and 
No. 3, makes it difficult for the public,'' as Senator Wyden 
was alluding to, ``to determine how effectively Medicare and 
Medicaid dollars are spent and the care that is a part of 
that.''
    I would ask you to take a look at this report and other 
reports that are on the public record and compare that to how 
you are gathering this information. I think that is going to be 
critically important.
    I would also want to ask you about--one idea that has been 
floated is to have a surety bond requirement that is 
proportional to the number of beds in the facility. Do you 
consider that kind of requirement or anything else-any other 
hurdles or hoops through which a firm, an entity or a person 
has to go through before they would be allowed to make that 
kind of a purchase?
    Mr. Weems. Let me begin with the comment on the first part. 
First of all, CMS has the ability to enforce civil monetary 
penalties, to not provide reimbursement for new admissions or 
to terminate somebody from the program, regardless of how they 
are owned. So that kind of ownership we still have the ability 
to enforce good quality in those areas.
    So we will need to see if ownership affects quality. We 
have not reached that conclusion yet. But nonetheless, we 
believe that we still have the ability to take actions against 
bad quality.
    Senator Casey. I am out of time. But just a quick answer to 
the question on a surety bond.
    Mr. Weems. With respect to surety bonds, we are looking at 
it. We think our survey techniques, especially a survey that 
happens when a sale happens, are probably sufficient. We do 
worry about surety bonds in this and other arenas where they 
might limit access.
    Senator Casey. Thank you.
    The Chairman. Thank you, Senator Casey.
    Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman.
    Mr. Weems, one, let me thank you for that kind note about 
the Wyden twins. It was gracious of you to acknowledge their 
arrival. Let me pick up just on one last question on the very 
good points that Senator Casey was making.
    The issue with the change, of course, is about hidden 
ownership.
    Mr. Weems. Yes.
    Senator Wyden. I am not clear. Can the government now 
identify all the nursing homes throughout the country owned by 
one corporate entity?
    Mr. Weems. Probably not is the answer. We know nursing 
homes by the provider agreement that we have with them, 
especially as there is fractional ownership we have difficulty 
telling that. The PECOS system that Senator Casey alluded to 
that we are building will give us the ability to determine who 
owns a facility down to the fraction of 5 percent.
    Senator Wyden. So it is not possible to have the 
information today, but essentially information about hidden 
ownership is going to be made available and brought to light 
under your project essentially down to these small fractions?
    Mr. Weems. Yes, sir.
    Senator Wyden. When will that be available?
    Mr. Weems. At our current pace, that would be 2009 to have 
a completely populated database.
    Senator Wyden. OK. One question with respect to the 
information that is being made available to consumers. We have 
been trying to go through some of that. I am looking at a page 
involving a facility in Illinois, Hillcrest Home. There is a 
long section that has involved a variety of things.
    I am looking at a category called vertical openings 
deficiencies. This says something about exit doors and the 
like. Have you all brought together consumers and families to 
have them involved in looking at whether this kind of 
information is useful to them?
    Mr. Weems. We have brought together focus groups in that 
regard. We still need to improve the way that that information 
is useful. We need to, first of all, make sure that the 
information that we are providing is useful in making a 
decision. Then second, we need to make sure that it is 
understandable.
    But I would also tell the panel that there really is no 
substitution for visiting a nursing home when making that 
decision, that it is absolutely critical that a visit occur. On 
the CMS Web site you can get actually a fairly simple checklist 
of when you go to a nursing home what you should look for that 
might help ask the right questions in that visit.
    Senator Wyden. Let me ask just one last question. Again, it 
sort of speaks to the way decisions get made in the real world.
    A lot of older adults and their families have to make quick 
decisions about nursing home placement typically while you have 
a senior in the hospital. At that point, the discharge planner 
plays a very important role with respect to getting out 
information about the quality of facilities. What are you all 
doing to get the discharge planners involved in this quality 
area?
    Mr. Weems. We work with the discharge planners to make sure 
that they are aware of the choices in the area. But we also 
want to make sure that the families are involved in that 
decision as well.
    Senator Wyden. It just seems to me that if the families are 
going to get timely information-and I share your view about how 
important they are-it is the discharge planner who, in a lot of 
instances-is going to lay that information out. In other words, 
in a typical instance, you are not going to have a family in a 
position to run to a Web site and crank up their laptop and 
look at the information.
    They are going to ask that discharge planner to help them 
with the choices. I hope you all will be more aggressive in 
reaching out to them because I think that, in the real world, 
is the way a lot of these decisions get made. I look forward to 
working with you and also on the Finance Committee as well.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Wyden.
    Senator Salazar.
    Senator Salazar. Thank you very much, Chairman Kohl. Hello? 
Thank you very much, Chairman Kohl.
    I have to leave to go preside, but I wanted to just make a 
quick statement. First of all, I would ask unanimous consent 
that my full statement be made a part of the record.
    The Chairman. Without objection.
    Senator Salazar. Let me also say, Chairman Kohl and Senator 
Smith and the members of this Committee, I think that for all 
of us there is no doubt that we have been through the 
experiences of both the joys and the heartaches and the 
realities of nursing homes with loved ones as we have visited 
these places. I know I have often been in those places in my 
State of Colorado.
    At the end of the day, what concerns us, what concerns me, 
what concerns all of us is that the consumer of the service at 
the nursing home is getting the best quality care possible. 
Certainly, during my days as attorney general there were times 
when we had to prosecute those who were in charge of nursing 
homes because of the abatament which had occurred in those 
nursing homes with patients where we actually had to go in in 
several occasions and file criminal charges against nursing 
homes.
    We hope that that is, in fact, the exception and not the 
rule and that indeed the enforcement powers of both the Federal 
Government shared with State Government as well as the self-
regulation that occurs with some parts of the nursing home 
industry results in the desired end, the desired end being that 
our loved ones, our elderly population in this Nation are taken 
care of in these facilities.
    So I very much appreciate the fact that you decided to hold 
a hearing on this very important issue. I do believe that in a 
major way, just like the issues of Social Security and Medicare 
will continue to be huge issues for us here in Washington, here 
in the Congress, that the aspect that deals with nursing homes 
and long-term care will continue to be a huge issue. I 
appreciate your interest and your leadership on this issue.
    I will make just a comment about the private equity issue 
and the ownership matter, which has been discussed already, I 
am sure, in this Committee. I think Mr. Weems can respond to 
some of the questions from other members of the panel.
    You know, it is an issue that has been raised with 
legitimate concerns. I do think that we need to take a look at 
it from the point of view that in the context of trying to 
create wealth within a private equity firm that we are not 
somehow displacing the quality of service that ought to be 
provided to seniors who are being served in these homes. So I 
think it is a very important inquiry that has been raised here.
    So I thank you very much, Chairman Kohl. I look forward to 
working with you on this issue.
    The Chairman. Thank you very much, Senator Salazar.
    Before we let you go, Mr. Weems, I would like to ask 
Senator Lincoln if she would like to say a word or two to CMS 
Director Weems, make a statement, ask a couple of questions, 
whatever you wish.
    Senator Lincoln. Thank you, Senator Casey.
    I don't, Mr. Chairman. I just want to thank you so much. I 
think this is such a critical issue. As always, you have come 
right to the mark in terms of bringing us to the awareness and 
bringing up the appropriate individuals in here for us to visit 
with.
    We appreciate you, Mr. Weems. Thank you.
    The Chairman. Mr. Weems, we thank you very much for being 
here with us today. I had the opportunity to visit with you 
myself. I am very impressed with you as a person of great 
capability and ambition and focus.
    Obviously you know I am particularly interested in your 
special facilities program. I agree with you that making it 
transparent and bringing a bright light to shine on those 
relatively few, very few facilities who are not getting the job 
done will do an awful lot to eliminate the problem or vastly 
reduce the problem, if not to eliminate it.
    My sense is that it is pretty difficult for a facility to 
continue to function if it is on this list. I think you feel 
the same way. So, that having this list and being, as I am sure 
you will be, very judicious in its use, will tend to vastly 
improve the performance of those facilities that are on the 
very lowest end of our nursing homes.
    So, you know, I think that is really important. I 
appreciate your responsiveness to this issue. I wish you well. 
I am sure we will be dealing with each other frequently. Thank 
you for being with us.
    Mr. Weems. Thank you for your comments, sir.
    [The prepared statement of Mr. Weems follows:]

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    The Chairman. I will call our third and final panel. Our 
first witness will be professor David Zimmerman, who is a 
distinguished professor of health systems engineering. He is 
also the head of the Long-Term Care Institute at the University 
of Wisconsin, Madison.
    In this capacity, Dr. Zimmerman leads pioneering work to 
improve nursing homes that operate under corporate integrity 
agreements with the HHS Office of Inspector General. Dr. 
Zimmerman has worked with more than 900 nursing homes to 
improve the care that they provide.
    Next we will hear from Arvid Muller, who is the assistant 
director of research for the Service Employees International 
Union. For the last 14 years, Mr. Muller has conducted much of 
the analytic work underpinning SEIU's positions on nursing home 
ownership, reimbursement, and quality issues.
    Next we will hear from Steve Biondi, who is vice president 
for clinical services at Extendicare Health Services in 
Milwaukee. Mr. Biondi is a registered nurse, licensed nursing 
home administrator, and has been certified by CMS as a nursing 
home surveyor.
    He co-chairs the American Health Care Associations Survey 
and Regulatory Committee. He also serves on the quality 
improvement Committee, which seeks to advance quality 
improvements in the use of evidence-based practices.
    The fourth witness will be Bonnie Zabel, also a registered 
nurse and a nursing home administrator for the last 15 years. 
Ms. Zabel runs an exemplary operation at the Marquardt Memorial 
Manor facility in Watertown, WI. She is also a member of an 
advisory group sponsored by the Wisconsin Association of Homes 
and Services for the Aging charged with developing training 
materials for facilities throughout the State of Wisconsin.
    Our final witness will be Sarah Slocum. For the past four 
years, Ms. Slocum has served as Michigan's long-term care 
ombudsman. She is the lead advocate on behalf of residents 
living in licensed long-term care facilities. As the State 
ombudsman, Ms. Slocum oversees a network of paid staff and 
volunteers working in every region of Michigan to improve the 
quality of life and the quality of care for that State's most 
vulnerable citizens.
    So we welcome you all here today.
    Mr. Zimmerman, we will start with you.

 STATEMENT OF DAVID ZIMMERMAN, PROFESSOR AND ACADEMIC DIRECTOR 
    OF THE COLLEGE OF ENGINEERING, UNIVERSITY OF WISCONSIN, 
                          MADISON, WI

    Mr. Zimmerman. Thank you very much, Mr. Chairman and the 
other members of the Committee. My name is David Zimmerman. As 
the Chairman has said, I am a professor of health systems 
engineering and the director of a research center at the 
University of Wisconsin, Madison. I am also the president of a 
nonprofit organization that was created to assist in the 
monitoring of quality of nursing home care in organizations 
with Corporate Integrity Agreements with the DHHS Office of the 
Inspector General. I have been conducting research in nursing 
home quality of care and performance measurement for 25 years.
    Our researchers developed the original set of quality 
indicators used by all 17,000 nursing homes and 50 State survey 
agencies. More recently, the Long Term Care Institute has been 
involved in 13 monitoring engagements with national and 
regional corporations under OIG corporate integrity agreements 
covering more than 1,000 nursing homes and 100,000 nursing home 
residents.
    Our researchers and monitors have conducted visits to more 
than 900 nursing homes in the past 6 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.
    These activities have given us important insights into the 
world of nursing home quality assurance, and they provide the 
background for my remarks this afternoon.
    There has been increasing attention focused on the quality 
of nursing home care, most recently because of the rise in the 
number of ownership transactions between nursing home 
corporations, and the tendency for these transactions to 
involve a transfer of ownership from a public corporation to 
entities commonly referred to as private equity firms. At the 
heart of this debate and scrutiny over this particular 
phenomenon, I believe that the single most important issue that 
we need to face, and soon, is the issue of transparency.
    I have five suggestions for how we should proceed with 
respect to progress on that problem. My first suggestion is 
that there should complete transparency on full ownership of 
every nursing home, including both the operating entity and the 
landlord.
    The Federal Government, which spends billions of dollars on 
nursing home care every year, should have the right to know the 
complete ownership structure of every nursing home 
participating in the Medicare and Medicaid program no matter 
which or what type of entity owns them.
    The complete ownership structure of all entities involved 
in the provision and administration of resident care should be 
fully reported to CMS as a matter and a condition of 
participation in the Medicare and Medicaid program.
    The ownership reporting responsibility should be that of 
the provider organization. That is, it should not be the 
function or the responsibility of the Federal Government to 
ferret out the information on who owns what and which entity is 
providing what part of the care to residents.
    The principle of transparency should apply no matter what 
level of complexity in the labyrinth of organizational 
structures exists. In fact, the more complex the web, the 
greater the need for the more detailed transparency that I am 
calling for. The greater the complexity, the more reasonable it 
is that those who have created the complexity should have the 
responsibility for explaining it in very detailed terms to the 
Federal Government.
    My second suggestion is that staffing information for every 
nursing home should be reported in a standardized format to the 
Federal Government. In other words, there should be 
transparency on the staffing in nursing homes so the purchaser 
of care can know the labor resources that are being devoted to 
this task. Nursing home care is what we call a high-touch 
industry. The labor resources need to be known.
    This information should be based on payroll data, which 
exists in accessible form for virtually every nursing home in 
this country. The technological means exist to achieve this 
goal. We have been in enough nursing homes that I can make that 
statement with absolute confidence.
    Reasonable people representing all stakeholders can make 
sound decisions about how to structure the definitions into a 
common taxonomy for the purpose of reporting. Acuity-based 
staffing in this industry, frankly, is far more crowed about 
than practiced; but to the extent that it is necessary to make 
adjustments for acuity of residents, this can be done.
    My third suggestion is that there needs to be greater 
ability to expand the scope of observation and analysis from 
individual facilities to nursing home corporations and 
networks. In many situations, it is the corporate entity's 
policies and procedures that govern the system of resident care 
in the facility. In some cases, these corporate policies and 
procedures are not adequate to provide proper governance to the 
delivery of that care. Yet in many other cases, the problem at 
the facility and resident care levels is that reasonable 
corporate policies and procedures are not being executed 
consistently across facilities in their own networks. A 
stronger focus on this level of management would be a very 
efficient way to improve care systematically across an 
organization, as opposed to one facility at a time.
    Yet currently there is virtually no way that a State 
regulatory agency can expand its scope across State lines. CMS 
does have greater authority to expand the scope to a more 
systematic examination of multi-facility networks, even to some 
extent across State lines, but much more could be done to 
utilize the available information in an aggregated fashion to 
focus on regional and even national nursing home networks.
    Our center produces monthly reports on survey deficiencies 
comparing the largest national corporations and provides them 
to the OIG and to each specific corporation that is covered by 
a corporate integrity agreement. I have provided de-identified 
examples of these types of reports with this testimony.
    We provide similar information on the MDS quality 
indicators and quality measures to the same parties on a 
quarterly basis. This information can and should be provided on 
all national and regional corporations on a routine basis.
    My fourth suggestion is that there needs to be greater use 
of intermediate corrective measures, as several speakers have 
talked about earlier. There have been calls for broader and 
more innovative ways to incentivize, exhort, and pressure 
providers into taking better and more systematic corrective 
actions to improve care and sustain that higher care level. 
Care problems need to be identified earlier and addressed in 
meaningful ways more promptly and with more ingenuity and 
commitment.
    There needs to be increased scrutiny on providers at both 
the facility and corporate network level who have not 
demonstrated the ability to adequately self-identify a problem 
and fix it and then keep it fixed.
    One measure that has demonstrated success in both process 
and outcomes is the use of monitors to provide additional 
scrutiny on the care provided in problematic facilities, as 
well as the systems put in place to correctly identify problems 
and sustain that fix, including systems that actually have 
their origin in the corporation itself as opposed to just the 
facility.
    Our previously mentioned work with several national 
corporations has provided a number of insights into barriers to 
and facilitators of quality improvement efforts. Monitoring can 
correctly place the focus on the systems of care that need to 
be implemented consistently across every facility, every shift, 
and every bedside. It is the systems more than it is the 
leaders that, in fact, really deliver good quality care.
    Providers sometimes place too much reliance on finding 
leaders and then do not provide those individuals with the kind 
of support they need to be able to do their jobs. When there is 
a failure of care, there leaders are the ones who typically are 
the scapegoats. I call that concept the ``awesome goat'' 
phenomenon.
    The monitoring process can also promote and expand the 
concept of transparency described earlier. Facilities and 
organizations that have demonstrated problems in providing 
quality care should be the focus of additional scruting with 
the transparency that monitors can provide to determine the 
providers capability to improve their systems.
    My final solution is that I think we absolutely have to 
increase the focus on the landlord as well as the licensed 
operator in nursing homes. Currently, the entity owning the 
actual physical asset of the nursing home, what is typically 
referred to as the bricks and mortar, has virtually no 
responsibility or accountability for the adequacy of the care 
provided at that facility. Yet we have seen cases, many of them 
in our monitoring work, in which actions or inactions of the 
landlord have had deleterious and sometimes direct effects on 
the quality of care in the facility.
    There are sometimes restrictive clauses in the lease 
agreements that effectively prohibit the licensed operator from 
making needed upgrades or renovations consistent with evidence-
based care practices. Other restrictive lease practices might 
make the implementation of physical or structural changes so 
onerous financially that it becomes prohibitive for the 
licensed operator to even consider such changes, especially 
under some of the new lease agreements that we see. Frankly, 
those lease agreements in some cases are the most important 
single document in the practice of care in the facility and 
create major constraints on the ability to adequately deliver 
care.
    Holding the landlord to the identical certification and 
licensing requirements as the operator may not be feasible. But 
consideration should be given to making sure that these lease 
provisions are transparent, along with other aspects of 
ownership, and we should find a way to ensure that if lease 
agreements stand in the way of corrective actions there is a 
way to deal with these situations.
    All the solutions that I have proposed have to do, in some 
way, with increasing the transparency of information about who 
provides care and who owns whatever entity or entities 
responsible for the decisions pertaining to that care. 
Transparency is essential to the continued delivery of nursing 
home care through existing private and public markets.
    With full transparency, of ownership so we know who is and 
should be accountable, and transparency on staffing, so we will 
know who is providing care, we can examine the outcomes as they 
are produced through the survey process and resident level 
status measures. Facilities and organizations demonstrating 
their ability to deliver adequate care can continue on with 
this critical task, and with our appreciation. Facilities and 
organizations that have demonstrated an inability to deliver 
adequate care should expect to see additional scrutiny and even 
greater transparency requirements, including outside monitors 
to assure that they can earn our trust to provide care and 
protect the health and safety of our most vulnerable 
population. Thank you very much.
    [The prepared statement of Professor Zimmerman follows:]

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    The Chairman. Thank you very much, Professor Zimmerman.
    Mr. Muller I would like to request that you all hold your 
statements to the 5 minutes when the red button appears.
    Mr. Muller. OK.
    The Chairman. Go ahead.

   STATEMENT OF ARVID MULLER, DIRECTOR OF RESEARCH, SERVICE 
         EMPLOYEES INTERNATIONAL UNION, WASHINGTON, DC

    Mr. Muller. Chairman Kohl and other distinguished members 
of the Committee, thank you for giving me the opportunity to 
appear before you today. I am the assistant director of 
research for SEIU, which represents almost 1 million health 
care workers, including more than 150,000 nursing home workers.
    SEIU appreciates Chairman Kohl's commitment to improving 
the quality of care in nursing homes. We also want to 
acknowledge Senator Grassley's long-time leadership on these 
issues. We look forward to continuing our work with both 
senators on this issue.
    Twenty years after Congress passed landmark nursing home 
reform legislation, SEIU remains concerned that there are 
serious problems with quality of care across the industry. We 
fear the current enforcement system is simply not working. It 
is also difficult for families and residents to get the 
information they need because the industry still lacks 
transparency.
    SEIU analyzed OSCAR deficiency data from CMS. It is 
unfortunate that any way you cut the data the analysis shows 
that nursing homes have far too many quality problems. In fact, 
our research indicates care appears to be getting even worse.
    In our analysis we do not include life safety code 
violations, nor do we include complaint violations. So the 
total number of problems found by State inspectors in any given 
year was actually worse than our numbers indicate.
    By compiling all the deficiencies from annual inspections 
for the years 2004 through 2006, we were able to determine if 
the number of violations per inspection increased or decreased 
from year to year. Unfortunately the trends we found were quite 
disturbing. Overall the number of violations per inspection 
increased each year for a total increase of 13.8 percent from 
2004 to 2006.
    The next analysis we did was to look at the severity of the 
violations. Violations of resident care, otherwise known as 
deficiencies, have four levels of severity: deficiencies with 
potential for minimal harm, deficiencies with potential for 
actual harm, deficiencies that cause actual harm, and finally, 
the most serious deficiencies, those that cause immediate 
jeopardy.
    When we looked at the same data sets and broke down the 
violations by severity, we found that while the least serious 
violations decreased during this time, the more serious 
violations increased. Violations that had only potential for 
minimal harm decreased from 2004 to 2006 by almost 10 percent. 
However, violations that had potential for actual harm 
increased by 17.8 percent. Violations that were found to have 
caused actual harm increased by an even greater 19.5 percent.
    Since the average number of violations per facility is 
between six and seven during this period, we also looked to see 
whether there was an increase in the number of facilities that 
had significantly more violations. For this analysis, we looked 
at all the facilities that had 10 or more violations during a 
single inspection in any given year.
    We discovered an increase in the number of facilities that 
got cited by State inspectors for at least 10 violations from 
20.9 percent in 2004 to 26 percent in 2006. This means that 
more than one out of every four facilities inspected in 2006 
had 10 or more violations of minimum Federal resident care 
standards.
    In addition, as has been mentioned here today, a new breed 
of nursing home operator, private equity, has entered the 
nursing home markets;. and for the companies we analyzed, this 
had a clearly negative effect on care.
    Private equity firms take on a lot of debt, have ownership 
structures that are particularly complex and a business model 
that is based on buying and selling businesses within a 
relatively short period of time. This private equity model 
lacks transparency and accountability and may be exacerbating 
the care problems we find in the overall industry.
    In our analysis of deficiency data, we released a new 
report today in which we compared the number of violations per 
inspection from just before they got bought by private equity 
to their most recent inspection. In the case of the private 
equity buyout of Mariner Health Care in December 2004, we found 
that since the buyout the total number of Mariner Home 
violations increased by 29.4 percent, more than double the 
increase of the non-Mariner facilities in those same states.
    Moreover, actual harm violations for the Mariner Home 
increased by an incredible 66.7 percent, while the other homes 
in these states saw an increase of just 1.5 percent. During 
their most recent inspections, over 43 percent of Mariner 
facilities were cited by State inspectors for 10 or more 
violations compared to only 25 percent before the sale.
    Most importantly, we must remember that each of these 
statistics reflect a fragile nursing home resident whose needs 
are not met or who is or who could be injured because of the 
nursing home's poor performance. We owe it to our seniors to do 
better.
    The bottom line is that reform is needed to improve 
transparency and enforcement throughout the industry. CMS must 
improve the efficiency of the enforcement system in ways that 
will catch the homes that need to make improvements. They need 
to do so earlier in the process than many do now before fragile 
nursing home residents are injured. Furthermore, given the 
increase in the number of homes cited for 10 or more 
violations, it is imperative to focus more attention on homes 
that are chronic poor performers.
    We are encouraged that the Chairman and Senator Grassley 
are considering legislation to address these concerns, and we 
urge you to consider the following policy changes: increase the 
transparency and accountability of corporate ownership, require 
full disclosure to the CMS of all affiliated entities with a 
direct or indirect financial interest in the facility and their 
parent company, amend the provider agreement to require that 
providers deposit assets in a bond, require CMS to certify the 
provider agreements annually, and, require CMS to post 
enforcement actions against facilities.
    In order to promote improved staffing, we urge you to 
require CMS to collect electronically submitted data from 
facility payroll records and temporary agency contracts on a 
quarterly basis. We would ask you to require that information 
on cost reports for Medicare be reported based on five cost 
centers: direct care nursing services, other direct care 
services, indirect care, capital costs, and administrative 
costs. Finally, we ask that you require CMS to conduct audits 
of nursing staff data reports and cost reports at least every 3 
years.
    Taxpayers trust that Medicare and Medicaid dollars will go 
toward providing seniors and the disabled with the quality care 
they deserve. I thank you for inviting me here today to testify 
about SEIU's concerns about the quality of care in nursing 
homes today.
    The Chairman. Thank you, Mr. Muller.
    [The prepared statement of Mr. Muller follows:]

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    Mr. Biondi.

   STATEMENT OF STEVE BIONDI, VICE PRESIDENT OF EXTENDICARE, 
     MILWAUKEE, WI; ON BEHALF OF THE AMERICAN HEALTH CARE 
                          ASSOCIATION

    Mr. Biondi. Thank you, Chairman Kohl and members of the 
Committee. I am pleased to be here representing the American 
Health Care Association and the nursing home profession. My 
name is Steve Biondi. I have been an ombudsman, a State 
regulator of health care, a health facility operator, and a 
consumer who has had a family member cared for in a nursing 
home. By profession I am a licensed nursing home administrator 
and a registered nurse and have worked in acute care, long-term 
care, and home care.
    First I want to thank you, Chairman Kohl, for your 
leadership in this important Committee and for introducing the 
Patient Safety and Abuse Prevention Act, which the AHCA 
supports. I also want to acknowledge Senator Grassley's 
longstanding commitment to issues of aging and the millions of 
Americans our profession cares for each and every day. I also 
commend the other members of this Committee, especially 
Senators Smith, Lincoln, and Collins who have put forth some of 
the most important regulatory reform concepts of the past 20 
years.
    Their Long-Term Care Quality and Modernization Act takes an 
important step toward broadening the culture of cooperation 
among long-term care stakeholders and benefits the patients and 
families we all serve. My comments build on testimony of my 
colleague, Mary Ousley offered to this Committee about the 
refinements of OBRA 1987 that are still needed to support the 
vision of patient-centered care.
    What was undeniable 20 years ago, is undeniable today and 
will be undeniable 20 years from now is the unbreakable link 
between stable funding and quality and the critical need for 
well-qualified staff who deliver quality care each and every 
day. We are proud of the progress we have made and the 
transparency we have around improving quality.
    Our latest initiative is advancing excellence in America's 
nursing homes. It is a voluntary program co-founded by the 
American Health Care Association and a coalition of providers, 
caregivers, researchers, government agencies, workers, and 
consumers. Advancing excellence focuses on specific measurable 
clinical quality and organizational goals. The resources for 
providers include best practices and are all evidence-based.
    Perhaps the most unique feature of this campaign is how it 
encourages greater partnership among the stakeholders, both 
nationally and at the State level to improve care and services. 
Our profession is also focusing on consumer satisfaction. 
Consumers, including patients and families, are being asked how 
they judge our services and whether they would recommend them 
to a friend.
    A very high percentage are truly pleased. Providers use 
these independent satisfaction surveys to improve the patient 
quality, quality of care and quality of life. My own company 
uses these consumer feedback mechanisms to make changes within 
our facility operations.
    These kinds of focused efforts have improved quality and 
clinical outcomes. CMS OSCAR data shows a positive trend in the 
quality measures posting on nursing home compare with 
improvements in key areas for short-term and long-term stay 
patients and residents in pain, restraints and pressure ulcers.
    I think it is important to expand the concept of 
transparency beyond just facilities to include the survey and 
enforcement process itself. We have been working with CMS for 
more than a year with some success trying to better understand 
its special focus facility program. We still need clarity 
around the formula that CMS uses to identify those facilities 
and the successful strategies that more than 60 facilities thus 
far have used to achieve sustained compliance.
    Clearly, all of us share a commitment to quality. 
Transparency around this program would improve regulatory 
compliance and reduce the number of poor performing facilities.
    From our perspective the quality improvement organizations 
are a valuable external resource for all facilities, even those 
that are already doing well in terms of quality. The 
commonwealth fund study looking at residents' quality of life 
found that QIOs work with nursing homes ``a sound investment 
for health care dollars.''
    However, when we look at internal resources, our greatest 
challenge is attracting, training, and retaining quality long-
term care staff. Today we have nearly 100,000 vacant nursing 
positions. We could use your help in addressing the critical 
shortage of nurses, which is driven as well by the nurse 
educator shortage.
    For the consumer, AHCA has an easy to understand Web site 
to educate consumers about long-term care. Since beneficiaries 
generally look to CMS for guidance in this arena, we have a 
number of recommendations on improving nursing home compare in 
my written testimony. The main point we want to make is that 
nursing home compare does not currently give consumers 
understandable information that they can use in truly choosing 
a nursing home.
    Last, as we look at our survey and enforcement system, what 
most people haven't considered is how the survey process 
impacts caregivers and nursing homes. The system focuses solely 
on operational shortcomings with rare positive acknowledgement 
for the quality of services provided. It is important that we 
begin to recognize our most valuable resource, the human 
capital that work within our facilities and within our 
profession.
    We personally appreciate your focus on long-term care, 
Senator Kohl. AHCA looks forward to working with this Committee 
toward our mutual interest of continuing the progress we are 
making in improving nursing home quality. Thank you.
    [The prepared statement of Mr. Biondi follows:]

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    The Chairman. We thank you, Mr. Biondi.
    Ms. Zabel.

STATEMENT OF BONNIE ZABEL, ADMINISTRATOR FOR MARQUARDT MEMORIAL 
     MANOR, INC., WATERTOWN, WI; ON BEHALF OF THE AMERICAN 
           ASSOCIATION OF HOME SERVICES FOR THE AGING

    Ms. Zabel. Thank you. My name is Bonnie Zabel. I am pleased 
to be here representing Marquardt Memorial Manor in Watertown, 
WI and the American Association of Homes and Services for the 
Aging. I am grateful for this opportunity to fulfill my 
personal desire to tell you from my heart what I feel is needed 
for quality long-term care. This is based upon my 20 plus years 
in long-term care.
    True quality of care has to include all providers at all 
levels of service from acute care to long-term care to assisted 
care in the home setting. We all need to provide the same 
quality.
    Consistency in care is especially important at the time of 
admission to the nursing home. Currently hospital discharge 
decisions are made with little if any family input or time to 
visit or check out a nursing home. Consumers often are stressed 
and don't know that they can challenge the hospital's decision.
    Often they have neither the time nor the knowledge to make 
a good decision. No one says, ``When I grow up, I want to live 
in the home,'' and decides in advance where they want to go. 
People are in crisis when the decision must be made.
    I recently experienced such a crisis with my own father. He 
had a joint infection in his knee which required urgent surgery 
and I.V. antibiotics. He hasn't gotten out of bed in his first 
24 hours in the hospital, even though there were orders to do 
so. He happens to be 86 years old.
    I informed them that he couldn't urinate without standing. 
They put a catheter into his bladder three times that first 24 
hours. He urinated blood for 2 days after that.
    On his first post-op day, the discharge planner came in and 
told us that he needed to go to a nursing home the next day 
because he wasn't walking well enough. I told her that he 
wasn't going to a nursing home the next day. Her response was 
she would be back at 8 a.m. the next day and, yes, he would be 
going to a nursing home.
    The next day his drain was out, his dressing changed, he 
was dressed and ready to go home. Her response, ``What a 
difference a day can make.''
    In reality if I were not a nurse and administrator, my 
father most likely would have been discharged to a nursing 
home. I could challenge the hospital decision in a way that 
most consumers cannot. Discharge planners too often take the 
path of least resistance, which is calling a facility and 
getting the resident admitted within an hour or two.
    Marquardt Manor was actually reprimanded by our local 
hospital for wanting to assess a resident prior to admission 
and requiring doctor orders the afternoon before admission so 
we could be sure that the resident's needs could be met. Their 
rationale, given by a physician and the vice president of 
patient services, was, ``People get infections and die and 
there are multiple medication errors that can kill in 
hospitals. We need to get them out as soon as possible.''
    How should the hospital discharge and nursing home 
admissions system work? We make sure that our staff knows about 
the resident and family and their needs prior to admission. All 
supplies and equipment are available.
    For the past 10 years, all of our residents have had 
private rooms with private baths. A one-day admission process 
improves quality and allows the family to personalize the room. 
This is not an additional cost to Medicare. Poor transitions 
have cost, too.
    Families are in crisis when they hear that admission to a 
nursing home is needed. If they have time to choose, they don't 
know what to look for. Nursing home compare is written in 
industry language and only tells consumers about problems in 
facilities, not about what to look for in quality.
    For example, the site tells you if the home has a separate 
dementia unit, but the availability of dementia units doesn't 
necessarily mean that the residents receive specialized care. 
Questions need to be asked.
    How does staffing differ from regular units? How many hours 
of activities are provided beyond the regular units? How long 
will my mother stay on this unit, until the end of her life, 
only while ambulatory, only while continent?
    Wisconsin's consumer information report does a much better 
job of explaining the survey results for consumers. But it, 
too, is limited by its focus on deficiencies and compliance. 
However, the CIR also reports on nurse staffing and retention, 
which is a very good piece of information.
    Consumers should be looking for places that provide person-
directed care. But nursing home compare doesn't give you the 
tools to do this or even say that this is an important element 
of quality.
    Person-directed care is a philosophy, not a building 
design, animals, plants or buffet dining. It is about 
individuals as people, people who are someone's mother, father, 
brother, sister or spouse, people who were teachers, butchers, 
farmers, factory workers, business people. Their lives made a 
difference in America, and they deserve to be treated with 
dignity, caring, and respect.
    Finally, I would like to emphasize the importance of 
adequate funding, especially for Medicaid. Funding has declined 
and continues to decline. There was no Medicaid Title 19 
increase in Wisconsin this year, zero. My facility loses $65 
per day per Title 19 resident. Sixty-five to 70 percent of my 
residents are on Title 19.
    Facilities are limiting Title 19 admissions or eliminating 
them altogether. I fear the return of the ``poor farm'' of the 
1950's. Not funding Title 19 will certainly get us there.
    Without adequate financing there cannot be quality. We are 
a service industry that requires good staff. I identified that 
20 years ago.
    I have been proactive and innovative in creating programs 
to attain and maintain good staff. Adequate wages and benefits 
are a necessity. High standards for performance and adequate 
training, equipment, and supplies run a close second. That does 
not mean an increase in the time of training. It means adequate 
training.
    Consistent, caring hands-on managers cannot be overlooked. 
Eight years ago I created a gratitude attitude program in my 
facility. It has made a big difference in staff quality and 
retention. Our workers compensation costs are minimal due to 
adequate training, equipment, and oversight. Our staff 
retention surpasses most. Our customer relations and 
satisfaction are excellent.
    We need your help to change our current system of educating 
consumers. Consumers need adequate time to make decisions and 
good information to base those decisions upon. The system 
already has lots of regulations and the means to enforce them. 
It is time to focus on getting the word out on quality.
    I thank you for this opportunity of a lifetime.
    [The prepared statement of Ms. Zabel follows:]

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    The Chairman. Thank you, Ms. Zabel.
    Ms. Slocum.

  STATEMENT OF SARAH SLOCUM, STATE LONG TERM CARE OMBUDSMAN, 
          OFFICE OF SERVICES TO THE AGING, LANSING, MI

    Ms. Slocum. Thank you, Senator Kohl, Senator Smith, and 
members of the Committee. I deeply appreciate this important 
hearing that you are holding today. Chairman Kohl, the National 
Association of State Ombudsman Programs particularly wants to 
thank you for your years of work on behalf of nursing home 
residents.
    Twenty years after the passage of OBRA we see too many 
instances of poor quality care and continuing poor performance 
by certain providers. Given the vulnerability of residents, we 
must ensure the public has access to meaningful information 
about ownership, enforcement actions, financial solvency, and 
staffing in all nursing facilities.
    On ownership, Congress should require CMS to publish 
information on the nursing home compare Web site that shows 
ownership linkages. It should publish information about 
ownership also of other services such as pharmacy, laundry, and 
food services. Owners should be required to submit audit 
results and financial data to demonstrate fiscal solvency of 
all commonly owned entities.
    Why is ownership important? Here is one example. During 
2005, two nursing facilities in Michigan burned. One resulted 
in two resident deaths and partial facility evacuation during 
the Easter holiday. The other resulted in two resident deaths 
and 60 residents sent to the hospital along with a complete 
evacuation in mid-December.
    There was no overt connection between these two facilities 
such as the same name. It took considerable effort by the 
ombudsmen to learn of their common management company. Neither 
facility had provided specific training and drills to ensure 
that staff knew how and when to use fire extinguishers and fire 
doors. Had a connection been apparent, regulators could have 
required a review of emergency procedures in all facilities 
operated by this management group prior to these terrible 
events.
    Enforcement-all enforcement actions--should be published by 
facility name on the nursing home compare web site. Actions 
such as denial of payment for new admissions, civil money 
penalties, directed plans of correction, mandatory temporary 
management, monitors, terminations, and special focus 
facilities should all be clearly listed on the Web site. Plain 
English explanations of these terms must be included.
    Residents of facilities, their loved ones, and the 
community at large should be notified of enforcement action. 
For too many residents and families, the termination action is 
their first notification of the facility's problem. Information 
on enforcement actions would help individuals make informed 
decisions in choosing a nursing home and would give residents 
and families information about areas that require vigilance in 
their home.
    The complete text of the survey results, the 2567 form, 
should be published on nursing home compare. The descriptive 
text found in these reports helps consumers get a better idea 
of what violations are cited and what is needed to correct 
these problems.
    Another essential tool for residents, families, and friends 
is a standard complaint form. This type of form helps people by 
prompting them to identify and include all basic information 
needed to investigate a complaint. Survey and complaint units 
must also continue to provide for telephone complaints where 
staff assists consumers in reducing the complaint to writing.
    On civil money penalties, Federal CMP funds should be 
collected without any discount for non-appealed violations. If 
the CMP is not correct or is too harsh and the facility appeals 
the decision, the appeal process will deal with any reductions 
or deletions that are merited. Federal CMP funds should be 
returned to the State survey and certification agency for, 
first, increased staffing for survey teams and ombudsmen 
programs; second, funding to carry out financial viability 
audits and reports; and, third, financial restitution to any 
individual resident who has suffered harm.
    Staffing: Staffing shortages continue to plague residents 
and staff at many nursing facilities. A recent revisit survey 
at a Michigan facility resulted in a citation for pressure 
sores. In the narrative for the citation, there is an interview 
with a certified nursing assistant who had not turned a 
resident as stated in his care plan. The CNA said, ``I have 14 
residents to care for, and 11 residents are total care. It is 
very hard to turn people every 2 hours because sometimes we 
just can't.'' One resident at this facility was admitted in 
December 2006 with no pressure ulcers. By February 2007, he had 
a pressure ulcer on his left heel. By September 2007, he had a 
maggot infestation and infection that required surgery on his 
stage four pressure sore and removal of part of his heel.
    Congress should enact safe and clearly enforceable staffing 
requirements to ensure no other residents suffer this fate. The 
amount and type of nursing staff, RNs, LPNs and CNAs serving 
residents in each nursing facility should be posted on nursing 
home compare. Substantiated complaints about staffing levels 
should also be listed.
    Ombudsman access to information: All information about 
ownership, enforcement actions, civil money penalties, 
staffing, and special focus status must be shared immediately 
by State agencies with long-term care ombudsmen. Ombudsmen 
serve as a source of counseling and information for consumers 
and their families as they consider long-term care options. 
When ombudsmen know about sanctions and facility status, they 
can increase visits to safeguard residents, and they can help 
consumers through the trauma should there be a closure.
    Ombudsmen should be consulted in the development of lists 
of potential and actual special focus facilities. Data from the 
ombudsman program about complaints and issues at facilities 
would add a consumer perspective to the decisionmaking process.
    There are very serious effects on residents of the 
enforcement actions taken. For years ombudsmen in many states 
have expressed a need for CMS to hold poorly performing 
facilities accountable, to consistently use strong enforcement 
action when violations exist, and to enforce all requirements 
for quality of care and quality of life. At the same time, 
ombudsmen have expressed great concern over the harm suffered 
by residents when these same enforcement actions bring about 
decertification and closure.
    The special focus facilities program has brought these 
competing concerns into sharp relief as chronically poor 
performing facilities receive additional scrutiny in a 
shortened enforcement cycle. On average, five Michigan 
facilities, slightly more than one percent of our nursing home 
supply, close each year.
    During fiscal year 2007, 445 nursing facility residents 
were forced to move from their homes because of these closures. 
We must take resident welfare very seriously and consider that 
at every point in the enforcement process.
    Some recommendations about enforcement and closure that I 
would like to make in closing here. State survey and 
certification agencies must always take control of the 
relocation of residents. Voluntary closures result in chaos and 
in lack of resident choice too many times.
    Specific timelines for each closure must be established by 
CMS and the State survey agency. Timelines may vary depending 
on the number of residents, the availability of acceptable 
options, and the risk of harm to residents who remain at the 
facility.
    Medicare and Medicaid payments should not be limited to 30 
days after the termination date. Thirty days is often not 
adequate to choose a better facility or transition to home and 
community-based services. A 30-day timeline pushes residents to 
move to far away homes or to substandard facilities.
    Every day I hear from consumers who are thirsty for 
reliable and understandable information. The National 
Association of State Ombudsmen Programs stands ready to provide 
information on resident experiences and how information can be 
made accessible, transparent, and meaningful to consumers.
    We are grateful for your determined efforts to inform, to 
protect, and to empower each long-term care resident. Thank 
you.
    [The prepared statement of Ms. Slocum follows:]

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    The Chairman. Thank you, Ms. Slocum.
    I would like to call now up Senator Bill Nelson who has not 
had an opportunity to speak yet.
    We would be delighted to recognize you, Senator Nelson.

            OPENING STATEMENT OF SENATOR BILL NELSON

    Senator Nelson. Thank you, Mr. Chairman.
    Thank all of you for your participation on what is an 
increasingly going to be an aspect of American life. Naturally 
you would expect from my State of Florida that we see a greater 
proportion of nursing homes per 1,000 of population. That is 
the good fortune that we have in Florida of having so many 
people decide to spend their twilight years in Florida, the 
land called paradise.
    Now, I want to ask you, Mr. Muller. You have come up with 
this study here. It is about-well, it is entitled, ``How 
Private Equity Buyouts Hurt Nursing Home Resident.'' I am 
curious what are the unique concerns with private equity owned 
chains? Why single out them as your concern with nursing homes?
    Mr. Muller. As I think I mentioned in my testimony, the 
private equity model sort of has a couple of things that are 
relatively unique about it, specifically that they take on a 
lot of debt. They need to make money quickly in order to sell 
the nursing home assets again quickly.
    While it is true that all nursing homes need to do better, 
as our research and the New York Times article have pointed 
out, things seem to get even worse when private equity takes 
over. As I mentioned in the testimony, with Mariner Homes, 
actual harm deficiencies increased by 66.7 percent versus 1.5 
percent for the overall industry.
    We think Congress must take action to improve transparency 
and accountability enforcement for all nursing homes. But 
regulations must also keep up with industry trends. Private 
equity is one of those new trends that requires new regulation.
    Senator Nelson. So what is it about private equity? Would 
you state that again?
    Mr. Muller. Sure.
    Senator Nelson. Without reading it.
    Mr. Muller. OK.
    Senator Nelson. I want you to just tell me.
    Mr. Muller. I think as I said before, with private equity 
what makes it different from other type of ownership situations 
is that private equity when they buy a nursing home company 
takes on a lot of debt. Right? They create a maze of operating 
structures. They need to make money very quickly because they 
have a relatively short time horizon in which to get in and get 
out. Right?
    We are concerned that those business imperatives are 
incompatible with providing quality care, given what we have 
seen at Mariner. Right? Which is a company that was bought by a 
private equity firm. The number of increases in violations we 
saw there compared to the violations in peer group homes in 
those states.
    Senator Nelson. How many private equity firms-let me put 
the question the other way. How many nursing homes are owned by 
private equity firms?
    Mr. Muller. That is a very good question and one to which I 
don't know the answer. I think it is very hard to figure that 
out in part given the maze of ownership and structures, the way 
private equity sets themselves up. It is very hard to figure 
that out.
    I would certainly not want to contradict the gentleman from 
CMS who spoke earlier who said he doesn't know. So, I don't 
think we know, either.
    Senator Nelson. Carlyle, a private equity firm, as you 
point out in this document, has announced its intention to buy 
Manor Care. What are your concerns about this?
    Mr. Muller. Well, Manor Care is one of the largest nursing 
home----
    Senator Nelson. I don't want you to read your answer. I 
want you to talk your answer to me.
    Mr. Muller. OK. Manor Care is one of the largest nursing 
home companies in the country. So, that is a cause for concern 
right there. Second, when we have looked at the history of 
Manor Care violations over the last three inspection cycles, 
their care deficiencies have increased by about 23 percent 
compared to about 14.5 percent for the other homes in the 
states they operate.
    We are concerned, given the history of private equity and 
the trends we have seen in other companies, that the care at 
Manor Care will get worse with Carlyle Group coming in.
    Senator Nelson. Now, the other side says something 
different. In a recent Washington Post article, Manor Care's 
general counsel was quoted as saying that they will continue to 
control all their assets and it will be a transparent company. 
But in your review of the applications that Carlyle filed, can 
you tell us does that appear to be true?
    Mr. Muller. What we saw in the public filing was that there 
was a separation of the operating company from the property 
company and different layers of ownership set up between the 
ultimate parent corporation and the operating company, that is, 
the nursing home, the licensee.
    Senator Nelson. Down in my State, the Florida Agency for 
Health Care Administration recommends that our State expand its 
definition of controlling interest to include all subsidiary 
operations. It recommends that this information be kept current 
with an online reporting mechanism and, of course, be available 
to the public. Do you think these recommendations are enough to 
make sure that we know of the transparent ownership of nursing 
homes?
    Mr. Muller. I have not had a chance to read those 
recommendations, so I wouldn't want to categorize them as being 
enough or not. But they certainly seem like a step in the right 
direction.
    Senator Nelson. What would you say would be additional 
things that we must require to make sure that we have 
transparency?
    Mr. Muller. I think some of the things I mentioned in my 
testimony about requiring surety bonds to make sure that the 
assets of the entire company are available in case the Federal 
Government, State regulators or other parties need some form of 
redress.
    Senator Nelson. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Nelson.
    Senator Casey.
    Senator Casey. Thank you very much, Mr. Chairman.
    I wanted to thank all the witnesses for your testimony and 
the obvious expertise that you bring to these issues. Most of 
the focus that I wanted to bring to the discussion centers on 
staffing. Many of you have not just a lot of experience with 
this issue, but a whole list of recommendations, many of which 
could be the subject of many more hearings and certainly the 
subject of legislation.
    But it has been my experience in State Government looking 
at this fairly closely as a public official that often in many 
places, many facilities it kind of begins and ends with 
staffing. You can make determinations very quickly about the 
quality of care based upon staffing.
    I guess I would ask you to first of all outline-maybe I 
will start with you, Ms. Slocum, just to-and some of this is by 
way of reiteration of your testimony--but what you think is not 
happening now with regard to Federal initiatives, first of all, 
with regard to improving staffing in terms of the quality of 
the staff and second, with regard to what CMS is not doing in 
terms of providing information to consumers, to families before 
they make a determination about where to place a loved one. 
Because I will tell you, listening to CMS talk about the 
information they are providing, I think it is a heck of a lot 
better than it was 10 years ago.
    But what you and others have outlined here today is we have 
still got a long, long, long way to go to provide the kind of 
information that people need and especially in the context of 
staffing. I guess I want you to comment on both what CMS needs 
to be doing better, but also what the Federal Government needs 
to do to ensure that we have quality staff.
    Ms. Slocum. OK. Thank you for that question. First of all, 
I would say I-and I believe my ombudsman colleagues will 
applaud CMS continuing to add to and improve all of the data 
that is on nursing home compare.
    Posting staffing data by particular job types and license 
types will actually help consumers have a more specific idea of 
how a particular facility is staffed. Using payroll data that 
facilities have to submit would also make it more specific.
    So CMS is taking some steps. The ombudsmen will continue to 
comment to them and provide input about how we think that would 
be most useful to consumers. Part of the issue between State 
staffing requirements and Federal requirements--for example, in 
my State, we have staffing ratios and requirements that were 
enacted in 1978. They are extremely low.
    It only requires 2.25 hours per day per resident of direct 
nursing time. That includes essentially everyone except the 
director of nursing--the CNAs, the LPNs and the RNs in the 
building. So that has become in Michigan essentially a 
meaningless staffing requirement. I have only in my four years, 
I think, seen one facility, which was in the process of 
closing, fall below that level.
    The Federal requirements, despite all the great language 
and requirements that are in the OBRA 1987 law and the 
subsequent regulations, there is not a specific enforceable 
staffing level required. There have been well-respected studies 
that show just the average nursing facility needs to staff at 
about 4.1 hours of direct care per resident per day just in 
order to meet basic needs. That is the average resident mix, 
not particularly a super-high acuity population in a facility.
    In Michigan, we are running-I believe the current number is 
3.8 hours per resident per day on average. So obviously some 
facilities are below that, and some are staffing above that.
    But given that we have some data and studies about what is 
actually needed to provide adequate care, it seems like it is 
time, I think, to revisit some of the requirements and that 
Congress certainly could take an active role in looking at how 
to and what is a reasonable staffing requirement that is 
measurable so that we can know do all the facilities meet the 
requirement or not.
    Senator Casey. I want to ask you-I know I am a little low 
on time, but I wanted to ask others. But the focus really that 
I am trying to bring to this is the question of what can the 
Federal Government do in a strategic way, not just in terms of 
setting. As you said, various states do this with regard to the 
hours of care. That is obviously very important.
    But what can the Federal Government do to better prepare 
that person who is the staffer? We heard stories all the time 
in Pennsylvania. They would train 10 people for a couple of 
weeks, and they would retain two. This whole recruitment and 
retention crisis is so central.
    Ms. Zabel, if you wanted to comment on that.
    Ms. Zabel. I would love to. The only way that we can get 
good staff and keep good staff is to treat them like human 
beings. That means that we have to develop programs within our 
organizations. We have to pay them decent wages.
    The starting wage in my facility right now is $13.95, which 
is probably the highest in Wisconsin. Believe it or not, we are 
in a rural wage scale as far as-a rural wage area as far as the 
Medicare program, which lost my facility over $100,000 a year. 
But I believe that the 3.8 hours is probably pretty high. That 
is not around the average.
    In our State of Wisconsin, 2.8 hours are the amount of 
hours that our funding--Title 19 reimburses us that. So if you 
would make it 4.1, most of our facilities who run a high Title 
19 census would not be able to survive. You certainly need to 
keep that in mind.
    We have plenty of regulations and enforcement. But we have 
to look at enabling facilities to treat people well, provide 
adequate equipment, adequate supplies. CNAs shouldn't have to 
hide diapers in their ceiling for their favorite residents 
because the supply comes the first of the month and if it is 
gone by the 28th of the month, sorry, you can't have 
disposable, good diapers. We have to look at that sort of 
thing.
    In Wisconsin, our reimbursement situation sets ceilings. 
There is a ceiling for administration, ceiling for direct care, 
ceiling for the supplementary care. Most of the facilities in 
Wisconsin exceed that ceiling as far as reimbursement. My 
facility is way over the top on that. But we still manage to 
survive.
    We have to look at that. We can't have facilities that are 
just trying to meet that ceiling, the minimum amount of 
investment. We have to invest in these people. It doesn't 
require more regulation. It requires us to really be looking at 
how is the money being spent.
    Indeed, our State association provides a financial report 
that tells you where your facility is in each of those areas 
compared to the national, compared to the State average, 
comparing for-profit, not-for-profit and governmental. That 
information is available. Perhaps that should be made available 
to the consumer.
    But you have to remember the consumer is not involved in 
the admission process. It is the discharge planners. That has 
to change at that level, please.
    Senator Casey. I may want to come back to it. I know I am 
well over time.
    Thank you, Mr. Chairman.
    The Chairman. Members of the panel, in the range of all the 
problems that we are discussing here today, how many of them go 
back to financing and adequate financing in order to do the 
job? How much of it is basic competence of the people that are 
involved?
    Who would like to take a crack? Is financing inadequate, 
financing of the nursing home industry the biggest problem we 
have?
    Or what would you say, Ms. Zabel?
    Ms. Zabel. That is part of the problem. But I think as 
management----
    The Chairman. Management?
    Ms. Zabel. That comes from management, whether it be from a 
corporate level or an individual facility level. You set the 
tone for what is going to happen in your facility. You have to 
be hands on management, not living in an ivory tower. You have 
to know what is happening in your building. You have to be 
available to the people that work in your building. You have to 
support them.
    They have a life outside of your facility. That means that 
they can't just be giving in their work life. We have to 
support their home life as well and understand their needs. You 
can do that without really a very large investment in capital.
    I have seen it happen from the day that I started 20 years 
ago. One of the things that you need to do is enforce your 
disciplinary policy. If you say she should be getting a 
warning, but I am not going to give it to her because we really 
need her to be here because we are short staffed today, then 
the good employees pack up and leave.
    Why should I stay here when I work so hard, and all these 
other people do a mediocre job and they are still here? So you 
have to start at the basic founding of what is the mission of 
the organization and how can you care for these people. You 
establish that before you look at the money.
    The Chairman. Good management and proper financing?
    Ms. Zabel. Correct.
    The Chairman. Good management starts with the person at the 
top.
    Ms. Zabel. Yes.
    The Chairman. It is you.
    Ms. Zabel. Well, it could be higher than me, but it is my 
ability to be a good manager----
    The Chairman. At your facility that is you.
    Ms. Zabel. Yes, it is.
    The Chairman. Anybody else?
    Yes, Ms. Slocum?
    Ms. Slocum. I agree with much of what Ms. Zabel has said. 
She has made some excellent points about staff need to be 
treated in a humane way so that they can treat residents in a 
humane way. I would say financing is certainly an area we need 
to look at. You can't have quality care without reasonable 
financing. But reasonable financing does not guarantee quality.
    We have seen in Michigan because of large turnover rates in 
some of the issues that Ms. Zabel is bringing up, a lot of 
money, millions, over $100 million a year is one estimate, 
wasted on staff turnover. So there is money in the system, but 
we need to take a very careful look at how it is being spent, 
the oversight of that money, and making sure that the best 
system practices are in place so that it is well-used and we do 
actually achieve quality.
    The Chairman. As an ombudsman, how much of an impact do you 
think this list that is going to be published by CMS on 
December 1st in terms of really highlighting those poorest 
performing facilities? Will that have a big impact on the 
industry in terms of lifting up the standards, at least at the 
bottom?
    Ms. Slocum. I think it will be an excellent piece of 
information for consumers to have. I hope very much that it is 
viewed by the provider community as a very strong reason to 
make sure that nobody falls below that bottom line into the 
lowest rung and ends up on that list. I think it is an 
important step.
    The Chairman. Anybody else want to comment?
    Mr. Biondi.
    Mr. Biondi. Senator, if I could offer a few comments. I 
talked in my oral testimony about the survey process. One of 
the components that I think is important in our arena is when 
you think about what staff spends a lot of their day doing is 
difficult, difficult work. I think Ms. Zabel has made very 
excellent comments regarding many of the things I would have 
said in terms of treating people right.
    We have got to find a way to reward and praise people, both 
in the survey process and find the good things that people are 
doing. Most people strive to do good things. Yet our survey 
process really doesn't identify any of that.
    We all have to collectively every day find ways to make 
people feel proud about what they are doing, pay them decent 
wages, make sure we are getting paid in the Medicaid system for 
what we are doing. Clearly, from a staffing perspective, I have 
looked at it many a times where I think we have even been over-
staffed or under-staffed in some of our facilities. Sometimes 
either way can cause a problem with delivering good quality 
care and services.
    It really is dependent on the physical plant, the size of 
the facility, the way it is laid out, the type of residents you 
have there, and how stable that staff is, how educated, how 
trained they, whether they know the residents, know how to do 
the job correctly. There is a delicate balance, and we have to 
strive to find that delicate balance.
    The Chairman. Thank you.
    Mr. Biondi. Thank you.
    The Chairman. Anybody else want to make comment before I 
pass it on to Senator Casey for his last question or two? 
Anybody else?
    Professor Zimmerman.
    Mr. Zimmerman. I think that it certainly is the case that 
we have states in which the Medicaid payment rate is probably 
not adequate to sustain a reasonable amount of care with a 
reasonable staff component. I also think that there are places 
in which the amount of each dollar of revenue that is spent on 
resident care varies substantially. That is, resident care 
relative to either a lease payment or some other form of a 
capital grab.
    I think we have to be very attuned to how much of the 
expenses at a particular facility are retained at that facility 
and are used for facility improvements and facility care. That 
is not to say that any work is incapable of a system that gives 
sufficient money to the facility to do its job.
    But I think we have to be very careful to make sure that 
the Federal Government, which deserves to know because it pays 
so much of the bill-how much of the expense sheet is going to 
resident care. That is a reasonable thing to know.
    If somebody is more efficient and can get the job done more 
efficiently, that should be rewarded as well. But there are 
certain reasonable, intuitively compelling staff levels that 
are so low one would say you can't deliver care with this 
amount of staff. You have to have a greater staff component.
    So that is why I am calling for transparency. It is 
reasonable to know what amount of staff is being used to 
provide care in a facility. That is not an unreasonable thing 
to know and to be reported.
    The Chairman. Thank you.
    Senator Casey.
    Senator Casey. Thank you.
    I wanted to follow up, Professor Zimmerman, on your 
testimony as compared to what Mr. Weems presented. I asked him 
about the provider enrollment chain and ownership system, 
PECOS. Your testimony focused on the broad question of 
transparency.
    Then you had, I guess, five-was it five-solutions. How 
would you compare what is in place now with regard to 
transparency as it relates to CMS, what CMS is doing or 
promising to do? How do you compare that with what you are 
recommending?
    Mr. Zimmerman. I think that as I understand the PECOS 
system-and I have not looked at it in detail-I think it has a 
lot of the elements that I think are going to be necessary in 
terms of ownership information. I think in some cases 
restricting it to only 5 percent may end up to be problematic 
because sometimes it is not the proportion of the ownership, 
but the way it is structured which may end up being the 
problem.
    That is a segue into another point, which is that this 
issue of the landlord, as opposed to the operator, is something 
that we really have to investigate more and have more 
transparency about. I was deeply troubled by some of the 
statements made by individuals quoted in the New York Times 
article about the fact that, rather cavalierly, they were 
saying that the landlord simply has no responsibility.
    Indeed, there are many cases in which the lease 
restrictions will provide major constraints for an operator who 
is the licensee to be able to make the changes sometimes that 
are going to be required by the State in order to fix things 
that come out of a survey. So I think that there are really 
issues around the landlord and operator arrangement that are 
going to be necessary.
    Frankly, I think we are starting to see some lease 
agreements that are so detailed and so constraining that they 
may end up putting major restraints on the ability of the 
operator to run the facility. Operators, frankly, can be 
replaced in days. That is a problem.
    The operator is the licensee. So I think that actually the 
PECOS system starts the job, but what needs to happen is that 
they will need to go beyond that to be able to really ferret 
out who is it that is actually making decisions to control the 
care or direct the care in the facility. I think that is 
possible to do.
    The OIG does it in the corporate integrity agreements. They 
basically say we want to know every part of this structure and 
who is making these decisions. I am not suggesting that we have 
to investigate it to that level of detail.
    This should be based on permitting the people who are 
delivering decent care on the basis of the outcomes to continue 
doing so, as I said in my testimony. It is when they start to 
have problems that there should be the increased scrutiny 
immediately, that means that they will have to start answering 
questions about whether or not there may be some siphoning off 
of finances from the facility. The purchaser of care has the 
right to know that.
    Senator Casey. I know we are short on time. I would just 
ask you to consider an assignment, if you don't mind, for the 
record.
    Mr. Zimmerman. Thank you very much. I am very good at 
giving them.
    Senator Casey. I know it would help me, and I am sure it 
would help others if you could take a closer look at the so-
called PECOS system as compared to the recommendations you 
make, kind of a side-by-side and see where you think the holes 
are. I don't want to sell it too short, but I am troubled by 
the fact that they could summarize it in a couple of lines and 
your testimony is more detailed than that.
    That is probably not a fair way to assess it. But I think a 
more exhaustive look at it would help us.
    Mr. Zimmerman. It is likely that it probably will need at 
least some tweaking, given the increasing complexity of some of 
these Byzantine corporate structures.
    Senator Casey. I have got lots more questions, but I know 
we have to go.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Casey.
    I would like to thank all the members of the panel that 
have journeyed here today to be with us to give us your 
expertise, your advice, your counsel. We, as you can tell, are 
determined to upgrade, along with you, the quality of 
performance of our nursing homes across the country. You have 
made a big contribution to that today.
    I think we certainly should expect to see some measurable 
improvement in our nursing home operation across the United 
States in the months and in the year or two to come. So we 
thank you for your contributions. With that, the hearing is 
closed.
    [Whereupon, at 3:53 p.m., the Committee was adjourned.]

                            A P P E N D I X

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