[Federal Register Volume 62, Number 246 (Tuesday, December 23, 1997)]
[Rules and Regulations]
[Pages 67174-67213]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32828]

[[Page 67173]]


Part III

Department of Health and Human Services


Health Care Financing Administration


42 CFR Part 483

Medicare and Medicaid; Resident Assessment in Long Term Care 
Facilities; Final Rule

Federal Register / Vol. 62, No. 246 / Tuesday, December 23, 1997 / 
Rules and Regulations

[[Page 67174]]


Health Care Financing Administration

42 CFR Part 483

RIN 0938-AE61

Medicare and Medicaid; Resident Assessment in Long Term Care 

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Final rule.


SUMMARY: This final rule establishes a resident assessment instrument 
for use by long term care facilities participating in the Medicare and 
Medicaid programs when conducting a periodic assessment of a resident's 
functional capacity. The resident assessment instrument (RAI) consists 
of a minimum data set (MDS) of elements, common definitions, and coding 
categories needed to perform a comprehensive assessment of a long term 
care facility resident. A State may choose to use the Federally 
established resident assessment instrument or an alternate instrument 
that is designed by the State and approved by us. These regulations 
establish guidelines for use of the data set and designation of the 
assessment instrument.
    The provisions contained in these regulations implement statutory 
requirements. The resident assessment instrument is intended to produce 
a comprehensive, accurate, standardized, reproducible assessment of 
each long term care facility resident's functional capacity.

EFFECTIVE DATE: Except for Secs. 483.20(f) and 483.315(h), these 
regulations are effective March 23, 1998. Sections 483.20(f) Facility 
computerization requirements and 483.315(h) State computerization 
requirements are effective June 22, 1998.

FOR FURTHER INFORMATION CONTACT: Cindy Hake, (410) 786-3404.


I. Background

    On December 28, 1992, we published in the Federal Register, at 57 
FR 61614, a proposed rule with an opportunity for public comment, 
``Resident Assessment in Long Term Care Facilities,'' which established 
a resident assessment instrument that all long term care facilities 
participating in the Medicare and Medicaid programs must use when 
conducting an assessment of a resident's functional capacity. We 
proposed that a State may choose to use the Federally established 
resident assessment instrument or an alternate instrument that is 
designed by the State and approved by us. We proposed that a facility 
must enter information from the resident assessment into a computer, in 
accordance with HCFA-specified formats. At least monthly, the facility 
must transmit electronically the information contained in each resident 
assessment to the State.
    The resident assessment instrument would consist of a minimum data 
set (MDS) of screening and assessment elements, including common 
definitions and coding categories for use by a facility in performing a 
comprehensive assessment of a long term care facility resident. In 
addition to containing identifying information such as name, birthdate, 
and occupation, the MDS consists of standardized items that assess, for 
example, a resident's communication patterns, cognitive patterns, 
physical functioning and structural problems, health conditions, and 
medications. The proposed rule established guidelines for use of the 
data set, and designated one or more assessment instruments that a 
State may require a facility to use.
    We proposed to add a new Sec. 483.315, which would require a State 
to specify for use in long term care facilities within the State either 
the HCFA-designated resident assessment instrument or an alternate 
instrument. The State would request and receive approval from us before 
implementing or modifying an alternate instrument. The uniform MDS was 
included in Sec. 483.315(b). We also provided as attachments to the 
regulations the utilization guidelines for the resident assessment 
instrument, MDS common definitions, and resident assessment protocols 

II. Analysis of and Responses to Public Comments

    We received 146 timely letters in response to our December 28, 
1992, proposed regulation. Most were from provider organizations and 
nursing home staff. We also heard from consumer organizations, 
professional organizations, nursing home residents and their families, 
and State and Federal agencies.
    Prior to addressing comments on specific regulatory sections, we 
will provide a summary of public comments on major topics, and discuss 
some of the general issues raised by these regulations (in the order in 
which those issues appeared in the preamble to the proposed rule).

Summary of Public Comments

Summary of Public Comments on MDS

    During the public comment period, respondents suggested over 70 
different additions to the MDS. Many commenters suggested modifying 
items to increase clarity. For example, the item ``wheeled self'' was 
divided into two items, ``wheeled self on unit'' and ``wheeled self off 
unit'' to further differentiate a resident's capabilities. Commenters 
also suggested the addition of items that provided information needed 
by clinical staff caring for residents. Data suggest that nursing home 
residents experience pain on a regular basis, but the MDS items 
associated with pain did not differentiate the intensity and location 
of pain (chest, joint, other). We expanded MDS items associated with 
pain to assist clinicians in determining the nature and scope of pain 
for care planning purposes.
    There was a concern expressed by commenters that the MDS, as 
originally designed, could not be used for determining nursing home 
payment or monitoring quality of care, either at the resident and or 
the facility level. To address this concern, we added items to the MDS 
that are needed to support a case-mix classification system for long 
term care facility payment known as, Resource Utilization Groups III, 
which is a mechanism for determining the level of resources necessary 
to care for an individual based upon his clinical characteristics as 
measured by the MDS. This classification system was developed under the 
auspices of the HCFA-funded Multistate Nursing Home Case-mix and 
Quality demonstration, whose purpose is to develop, implement and 
evaluate a case-mix payment system for SNF services under Medicare. The 
original four States participating in the demonstration began using the 
MDS+ (an alternate RAI that consists of the original MDS, plus 
additional assessment items specified by the State for use in all 
Medicare and Medicaid-certified nursing homes in the State), based on 
the Resource Utilization Groups III classification system in their 
Medicaid programs in 1994, as have several other States subsequently.
    Section 4432 of the Balanced Budget Act of 1997 (Public Law 105-
33), amends section 1888 of the Social Security Act (the Act), by 
adding a new subsection (e). The Balanced Budget Act and the 
Prospective Payment System (PPS) will require national implementation 
in Fiscal Year 1998 of a casemix payment system for Medicare that is 
based on MDS data. The Secretary determines the manner and

[[Page 67175]]

time frames within which resident assessment data are collected at the 
State and national levels to develop and implement casemix payment 
rates. The resident assessment data submitted to the State is a 
resource upon which the Secretary can draw for development and 
implementation of the PPS system.
    We added other items to the original MDS to ensure that key 
indicators of quality of care, (known as quality measures) could be 
derived from the MDS and monitored longitudinally at the resident and 
facility level. The addition of items needed to support payment and 
quality monitoring programs will also strengthen the clinical relevancy 
of the MDS by providing important information to facility staff about 
the resident's potential for achieving the highest level of 
functioning. One example of such items are nursing care interventions 
related to rehabilitation and restorative care for the resident, such 
as range of motion, training and skill practice in walking, 
transferring, eating, dressing/grooming, and communication.
    Commenters were particularly concerned with the ability of the MDS 
to assist in assessing the quality of life for nursing home residents. 
Revisions we made within the section on mood and behavior, in 
particular, have the potential for providing important information 
regarding the resident's risk for depression, as well as the presence 
of depression. Nursing home residents have a high risk of developing 
depression, with clinical experts estimating that at least 60 percent 
of current nursing home residents have some level of depression. 
However, analysis of MDS records for a large group of residents showed 
that the mood and behavior items were checked for only 16 percent of 
the residents. We found that nursing homes that have clinical staff 
with expertise in this area identify more residents with mood and 
behavior problems. Concerned that residents with, or at risk of, 
depression may not be identified, we have modified the mood and 
behavior items to help facility staff identify objective behaviors 
frequently associated with depression. We also added a scale to measure 
the frequency with which these symptoms occur. An item indicating the 
use of a behavior management program was modified to allow the assessor 
to identify specific strategies that were being used with the resident 
to deal with mood and behavior symptoms.
    Finally, commenters expressed concern that the MDS was not 
appropriate to use with some groups of nursing home residents, such as 
the non-elderly or short term stay populations. To better understand 
the changing nursing home population, we have added an item in Section 
P that identifies different populations often served by nursing homes 
(for example, pediatric resident, hospice care resident). To address 
commenters' concerns, we also added items focusing more on short-term 
nursing and therapy needs, and issues important to terminal residents, 
such as pain. We also expanded the item on discharge planning to assess 
the resident's potential for discharge, including the resident's desire 
to return to the community and the presence of a support person who is 
positive towards discharge. This item will also be useful in developing 
a RAP on discharge planning that was suggested by a number of 

Summary of Public Comments on Triggers

    Commenters believed that the trigger legend was too complex and 
needed to be simplified or eliminated. It is substantially revised, and 
we have reduced the number of triggers for particular RAPs. We have 
also eliminated the categories of automatic and potential triggers as 
this had not been well understood and sometimes led to unnecessary work 
by nursing home staff.

Summary of Public Comments on the RAP Summary Form

    We revised the RAP Summary Form and accompanying instructions to 
reduce confusion regarding their use that was noted by commenters. 
Specifically, the revised form provides a column for indicating if the 
RAP was triggered. It provides more specific instruction and direction 
on the type of information that we would expect a facility to document 
for each triggered RAP, including rationale to support decision-making 
regarding whether to proceed with a care plan for a triggered RAP. 
Additionally, because we consider the RAPs part of the utilization 
guidelines for the MDS, we designated the RAP Summary form as Section V 
of the MDS. This will provide nursing home staff and surveyors with 
more complete information on resident care problems and outcomes. This 
will also permit surveyors to monitor the completion of the RAPs.

Summary of Public Comments on RAPs

    Most of the commenters valued the RAPs as part of the RAI for 
improving the quality of care. A number of commenters indicated the 
need for the addition of new RAPs. Specifically, we received comments 
suggesting the creation of RAPs on discharge planning, pain, terminal 
care/imminent death, resident rights, bowel incontinence/constipation, 
abnormal lab values, and foot care. A new RAP on discharge planning is 
already developed and we expect to develop other RAPs during 1997.
    There was also concern that many of the current RAPs do not address 
the needs of short-stay residents. Work is currently in progress and we 
expect to publish revised RAP Guidelines that address the needs of this 
population in 1997.

Comments on MDS and RAPS

    Comment: Most commenters asserted that the original MDS did not 
provide enough information in some areas. These commenters noted that 
the areas of nursing diagnosis and medical needs, and certain 
information needed for care planning, were lacking. Some commenters 
stated that professional nurses are knowledgeable regarding areas that 
are not addressed on the MDS and automatically incorporate them into 
the assessment and care plan. Another commenter pointed out that the 
MDS+ includes additional information that is helpful in care planning.
    Response: As discussed elsewhere, we have added a number of items 
that nursing home staff have identified as useful in assessing a 
resident's functional capability and medical problems. We have also 
clarified items that had been confusing for facility staff in the past. 
Some of the items added to the MDS were previously on the MDS+. We 
believe that the MDS captures information on most of the areas of 
concern in assessing nursing home residents. While we agree that there 
are additional items that would provide necessary information for 
nursing home staffs' use in care planning, it is not possible for us to 
design an instrument that covers every potential item that a nursing 
home needs to know to provide care to residents. The RAI is not 
intended to replace or substitute for a resident's full clinical 
record. The facility should document in those clinical records 
pertinent information whether or not required by the RAI. A facility is 
responsible for providing care that is necessary to assist a resident 
in attaining or maintaining his or her highest practicable well-being, 
regardless of whether the care areas are captured on the MDS. A 
facility may document additional information regarding the resident's 
status wherever it chooses in the resident's clinical records.
    Comment: One commenter urged that we move cautiously in adding any 

[[Page 67176]]

data elements to the MDS, explaining that some States with a non-MDS 
based case-mix system are having difficulty merging the MDS and their 
reimbursement system. Other commenters disagreed regarding the need to 
add items to the MDS at this time. They thought that we should maintain 
the status quo until the industry and surveyors have more fully 
understood and integrated the current instrument into their way of 
doing business. Commenters mentioned that the MDS is a screening tool 
that already contains most of the relevant items. One commenter stated 
that the original MDS underwent extensive scrutiny and testing during 
its development and should be kept as is for at least 10 years in order 
to maintain consistency for providers, computer companies, research, 
and case-mix reimbursement.
    Response: We disagree regarding the need to maintain the MDS for 
the next several years in the form it was originally issued in 1990 
(not as revised in 1995 in version 2.0). Many of the changes in version 
2.0 of the MDS were made to address areas that had been particularly 
troublesome or poorly understood by clinicians responsible for 
completing the RAI. Moreover, changes in the MDS have not been frequent 
enough to cause significant disruption for facilities. Nearly all 
States began to require use of the original RAI in late 1990 or early 
1991, and most did not require facilities to use the new RAI until 
January 1996 (with some States deferring that requirement to 1997). 
This means that the original RAI was in place for nearly 5 years before 
facilities were expected to change to the new instrument. Additionally, 
it is less burdensome and confusing to incorporate necessary 
improvements in the RAI at this time than it will be after 
implementation of requirements in this regulation for facility 
computerization of MDS information. Overall, the advantages of 
implementing version 2.0 of the RAI in 1996 far outweigh maintenance of 
the original assessment system.
    If clinically warranted and supported by affected parties, we 
anticipate reviewing the MDS every 3 to 5 years to determine whether it 
needs to be revised, and sponsoring the development of a new version of 
the RAI approximately every 5 years. For all RAI refinement activities, 
we will seek the input of interested and affected parties.
    Comment: Several other commenters expressed the belief that we 
should conduct more RAI training on a national level and institute a 
facility support effort, rather than making major changes to the 
    Response: We support the need for more RAI training at all levels 
and have numerous activities underway to strengthen the knowledge of 
facility staff and surveyors about comprehensive assessment and its 
linkage to resident care planning and quality of care. The need for 
additional RAI training has been consistently supported by the States, 
provider, consumer and professional associations with which we have 
worked to develop version 2.0 of the RAI. In 1995, we published a new 
edition of the Resident Assessment Instrument User's Manual for version 
2.0 of the RAI that contains new information on the use of the RAPs and 
linking the RAI to care plans. We have developed ``train the trainer'' 
materials for use in both provider and surveyor training, and have 
begun a multi-year effort to develop educational materials for both 
providers and surveyors at both basic and advanced levels. We train all 
long term care facility surveyors on the RAI as part of our basic 
health surveyor course and have offered specialty courses on advanced 
resident assessment issues for surveyors as well as other State staff 
on a routine basis. We also offered a full-day program on resident 
assessment for all long term care facility surveyors during each of the 
HCFA regional conferences held during 1994. We are committed to working 
in partnership with providers and States to identify training needs and 
develop methods to facilitate the dissemination of consistent 
information and improve providers' use of the RAI in order to improve 
care outcomes for nursing home residents.
    We believe that the industry also shares a responsibility to 
promote understanding of the RAI within facilities. Provider and 
professional organizations should offer sessions on resident assessment 
during their annual meetings or as special continuing education 
programs held throughout the course of the year. Our staff have 
participated in a number of national meetings and will continue to do 
so, as warranted. However, we believe that providers can best learn how 
to integrate RAI requirements into their daily practice from other 
providers who have implemented successful programs. We encourage the 
use of ``peer teaching'' programs in a variety of forms.
    Beneficiary organizations have also played an important role in 
getting information on the RAI out to their members. The organizations 
have educated residents, families and ombudsmen regarding the role of 
resident assessment in quality care and how to use the RAI in care 
planning and conflict resolution. They also provided invaluable input 
in modifying the RAI.
    As part of a contract with us, the Research Triangle Institute 
evaluated the extent to which facilities had implemented the RAI as 
well as the accuracy of the assessments being conducted. The Research 
Triangle Institute compared available assessment information for 23 
specific assessment items in facilities both before and after the 
implementation of the RAI. Their sample consisted of over 260 
facilities in 10 States. The Research Triangle Institute's results 
showed that:
     The percent of residents with no assessment information 
available for particular health status issues decreased on average by 
81 percent;
     The percent of residents with accurate information 
documented on assessment items increased on average by 24 percent;
     The percent of residents with available information on all 
23 items increased by 53 percent.
    The Research Triangle Institute's study asserts that facilities are 
using the RAI, and that the RAI has resulted in the presence of more 
accurate information on which a facility can base its individualized 
care plans.
    Comment: Commenters addressed the usefulness of the RAPs. Of those 
who responded to this request for comment, some said that the RAPs are 
useful and provide a structured framework for making sense of the MDS 
data through analysis, interpretation, and synthesis, believing that 
the RAPs tie the assessment process together. A consumer advocacy 
organization believed that the RAPs assist facility staff in learning 
causes of problems and identifying potential risks of decline that 
require further staff attention. A few said that the RAPs have improved 
the quality of care in nursing homes, or could with the appropriate 
training and administrative support.
    Response: The RAPs are structured decision frameworks which contain 
guidelines for additional assessment of relevant resident attributes, 
risk factors, clinical history and other factors. They assist with 
clinical decision-making and help nursing home staff gather and analyze 
necessary information to develop an appropriate and individualized care 
    The Guidelines section of each RAP assists staff to determine 
whether a problem exists and to identify relevant causal factors that 
affect the resident's condition. The RAPs also offer suggestions 
regarding how a facility can eliminate or minimize factors

[[Page 67177]]

contributing to the resident's problem, or how a facility can maximize 
a resident's strengths to achieve the highest practicable well-being. 
In this way, the RAPs help facility staff to develop an individualized 
care plan that meets the needs of the resident.
    According to the report of the Research Triangle Institute's study, 
directors of nursing indicated the RAP triggers and guidelines were 
used routinely in over 90 percent of the facilities participating in 
the survey. Three-quarters of the directors of nursing stated that they 
believed that use of the RAP triggers had increased their facility's 
ability to identify residents' clinical problems, and two-thirds 
believed that using the RAPs had increased their facility's ability to 
identify residents' potential for rehabilitation improvement.
    Among the 180 directors of nursing who thought the RAP triggers had 
increased identification of clinical problems, 45 percent were able to 
identify, without prompting, specific RAPs for which this increase was 
most pronounced. They most frequently cited cognitive loss/dementia (21 
percent), ADL/functional rehabilitation potential (17 percent), 
delirium (16 percent), and communication (15 percent). Seventy-two 
percent of the directors of nursing interviewed stated that they did 
not believe it had been at all difficult for staff to provide necessary 
care in response to the newly identified clinical problems.
    Comment: Some commenters believed that the RAPs are too 
prescriptive, and that we are ``legislating a cookbook approach.''
    Response: RAPs function as resident-care related assessment tools 
rather than as clinical standards. RAPs do not contain prescriptive 
mandates to perform particular diagnostic tests or specialized 
assessments. Rather, RAPs lead facility staff through a process that 
enables them to gain a better understanding of the resident's status in 
a particular area.
    For each resident, facility staff are required to make decisions 
regarding whether each RAP that triggered for that resident identifies 
a problem that requires care planning and intervention. Staff are 
required to proceed with a care plan only if clinically appropriate. As 
part of the RAP review process, facilities are required to document key 
information regarding a particular area or condition that includes 
objective findings and subjective complaints of the resident. 
Irrespective of RAI requirements, this type of information should be 
routinely assessed and documented by a facility as a part of good 
clinical practice. We do not require that a facility provide 
documentation that addresses each issue or question raised in a 
particular RAP guideline. We disagree that the RAPs represent a 
cookbook approach. The RAPs are tested assessment protocols that lead 
facility staff through a focused, logically progressive, clinical 
evaluation of the resident, relative to the particular area addressed 
by the RAP. The RAPs are not intended to prescribe courses of action 
for a facility. Rather, they provide a structured, problem-oriented 
framework for organizing MDS information and additional clinically 
relevant information that identifies medical problems. Upon completion 
of the RAPs, the facility staff will have:
     Identified clinical issues unique to the resident that may 
adversely affect his or her highest practicable level of well-being;
     Identified factors that place the resident's highest 
practicable functioning at risk;
     Considered whether the identified potential problems could 
be prevented or reversed, or risk factors minimized, and evaluated the 
extent to which the resident is able to attain a higher level of well-
being and functional independence; and
     Evaluated ongoing care practices for the individual 
    Comment: One commenter asked that we not mandate standards for care 
planning until there is better understanding of how the assessment 
process works. The commenter stated that a great deal of work needs to 
be done in setting up appropriate standards for care planning.
    Response: Neither the RAPs, nor any other component of the RAI 
contains required standards of care or standards regarding the specific 
interventions and time frames for evaluation that must be present in 
care plans. As noted in the responses above, the RAPs are a structured 
framework that lead the facility through more in-depth assessment; they 
do not mandate a course of action for care planning. A facility has a 
great deal of flexibility in developing a care plan to meet a 
resident's individual needs.
    Comment: Some who commented thought that the RAPs are too complex 
and difficult to use. One expressed the belief that the RAPs are not 
the only correct criteria for providing good care. Another pointed out 
that it has been a difficult learning process for facilities to 
understand that the MDS provides only raw data about a resident. 
Commenters recommended that some of the RAP items be included in the 
MDS as core assessment items.
    Response: We agree that there has been a steep learning curve in 
terms of facilities' understanding of the RAPs and their ability to 
integrate them into day-to-day clinical process. Anecdotally, and more 
recently supported in the Research Triangle Institute study, facilities 
report that understanding and use of the RAPs has lagged well behind 
that of the MDS. Recognizing that the system required a major learning 
process, we have tried to address the RAPs in newer versions of our 
train-the-trainer courses offered annually for State RAI coordinators. 
Initially, our courses and materials focused on use of the MDS, then 
use of the RAPs, then integration of the RAI in care planning. Many 
States are still in the process of conducting training sessions for 
providers on use of the RAPs and care planning.
    We also have made revisions to the RAP Summary form and our 
instructions regarding use of the RAPs in order to make them easier to 
understand and use. We will continue to refine our training products as 
well as evaluate facility staffs' ability to use the RAPs. If problems 
are identified, we are open to exploring ways to revise the RAP format 
or content in order to make the comprehensive assessment process more 
meaningful and productive for both facility staff and residents. We 
have incorporated some additional RAP triggers into the MDS and 
integrated assessment procedures contained in the RAP Guidelines 
throughout the instructions contained in the October 1995 edition of 
the RAI User's Manual.
    Comment: A few commenters suggested that we make the RAPs available 
to facilities on request. Commenters asserted that often there is not a 
copy at the nurse's station.
    Response: We agree that it is important for the RAPs to be 
available for staff use. In 1990, we sent information to each nursing 
home administrator regarding the RAI, and this information included a 
copy of the RAPs. Additionally, in 1990, we provided each State with a 
camera-ready copy of the original version of the RAI, and in 1995, we 
provided each State with a camera-ready copy of the new RAI, version 
2.0. States were then responsible for providing facilities with a copy 
of the revised RAI including the RAPs.
    We do not believe it is our responsibility to ensure that each 
nursing home currently has a copy of the RAPs. Facilities could request 
a copy from States, provider organizations or from other sources. 
However, we are exploring strategies to improve consistent distribution 
of RAI

[[Page 67178]]

information to nursing homes and ensure that clinical staff have access 
to the RAI User's Manual. We believe that for the RAPs to be used as 
intended, a copy of the RAPs should be available at each nursing 
station. States are responsible for communicating with facilities 
regarding the State-specified instrument and should, therefore, ensure 
that the facilities have the most current RAPs.
    Comment: Some commenters wanted more flexibility in using the RAPs. 
They thought the RAPs should be adaptable, and, as professionals, 
facility staff should be able to pick and choose appropriate 
interventions from those suggested in the RAPs. Commenters also 
suggested that we make the RAPs optional. One commenter believed that 
the final product and process forces health care professionals into a 
format that stifles flexibility and interferes with the assessment and 
care planning process. Another suggestion was to allow a facility to 
use the RAPs as a flexible assistive device in care planning.
    Response: We agree that facility staff are capable professionals 
and, as such, should be able to use the RAPs as is appropriate for each 
individual resident. This has always been our intent regarding their 
use. A facility may supplement the RAP assessment.
    We believe that negative feelings regarding the utility of the RAPs 
are associated with lack of understanding of their use. As 
aforementioned, our training in the past did not focus on the RAPs. It 
has been our experience that facility staff who have been properly 
trained on the RAPs and integrated them into their clinical practice 
are convinced of their utility and positive effects on resident 
    We do not believe that use of the RAPs should be optional, as they 
reflect necessary components of a comprehensive assessment. The RAPs 
represent a standard methodology for assessing and analyzing certain 
aspects of resident status. As part of the utilization guidelines for 
the RAI, the RAPs ensure consistent identification of medical problems 
and description of functional capabilities. They supplement the MDS to 
provide a standardized comprehensive assessment as is required by the 
Omnibus Budget Reconciliation Act of 1987 (OBRA '87).
    Comment: A few commenters suggested that we collaborate with the 
Department's Agency for Health Care Policy and Research and the 
industry to make the RAPs more germane to current industry practice, 
knowledge, and standards. One commenter wanted us to provide actual 
assessment tools and decision trees. A State provider association 
recommended that the RAI contain fewer RAPs, and furthermore, that we 
encourage facilities to develop their own triggers consistent with 
their care planning system.
    Response: We collaborated extensively with the industry in 
developing the original 18 RAPs. The Department's Agency for Health 
Care Policy and Research was not yet in existence when we developed the 
original RAPs. In revising the RAPs, we will seek the input of 
interested and affected parties. Regarding the comment to develop 
assessment tools and decision trees, it would be difficult for us to 
develop decision trees that cover all possible scenarios. We do not 
wish to require such a methodology for completing the RAPs, as it would 
limit the flexibility of facilities. Most providers have tended to 
request that we develop more RAPs, rather than fewer. We have an 
ongoing process for developing new RAPs by clinical experts and 
validating the RAPs through testing. Also, we will review the content 
of the current RAPs to ensure that they contain information pertinent 
to the changing nursing home population. We do not anticipate issuing 
changes to the RAPs more frequently than once a year. States may, with 
our approval, revise their instruments as frequently as they deem 
    Triggers are risk factors or strengths that are indicative of a 
need for additional assessment. They do not automatically flag all 
problems worthy of care planning. The original triggers were developed 
using an expert consensus process and have been empirically validated. 
As such, it is inappropriate to suggest that a facility identify its 
own triggers based on their care planning systems. A facility may 
choose to add additional triggers, but must use at least the triggers 
identified in the State RAI. Facility staff may choose to assess 
residents using the RAPs even if the RAPs are not triggered.
    Comment: Commenters suggested that we emphasize that the RAP 
process is not limited to the completion of the RAP Summary form. It 
includes the need to understand why the resident's condition triggered 
the RAP. The commenter also recommended that the RAI Training Manual 
contain a set of examples concerning how to use the information in the 
RAPs as part of the assessment process.
    Response: We agree that the RAP process is not merely filling out 
the RAP Summary form, but is an important link between gathering 
assessment information and developing the appropriate care plan. In 
April 1992, we issued guidance to our regional offices and the States 
regarding the RAP process and other policy issues. We also shared this 
information with provider and consumer organizations. We have revised 
the RAI User's Manual to include this guidance and more specific 
instructions and examples, including RAP documentation and linkages to 
care planning. In October 1995, we distributed to States and 
associations ``train the trainer'' materials that included special 
course content for RAI surveyors and trainers. This included 
instructions on using the RAPs.
    Comment: A commenter urged that we structure the RAPs so that they 
identify resident problems, complicating conditions and risk factors. 
The individual stated that some RAPs are currently in this structure 
and that this would make the RAPs easier to use.
    Response: We believe that all RAPs presently contain this 
information. However, we are open to reviewing the RAPs to ensure that 
their format is consistent as a part of our ongoing RAP review and 
refinement process that we began in 1995.

Comments on the Development of a Computerized National Data Base of 
Assessment Information

    Comment: Generally, commenters that supported the proposed 
requirement to computerize the MDS included State governments and 
national and State provider organizations. One State expressed the 
belief that computerization should be optional; they thought that 
States should determine when and whether participation is feasible 
given the States' prevailing conditions.
    Response: We intend to implement a Federal process for assuring and 
improving quality in this country's nursing homes which relies on 
resident-level MDS assessment data reported by nursing homes 
participating in Medicaid and Medicare. Furthermore, our intention is 
to improve the Federal long term care survey process by using 
information derived from MDS data to identify potential quality 
problems within nursing facilities. The goals of this approach are 
twofold: to improve care received by beneficiaries by enhancing the 
timeliness and effectiveness of facility monitoring; and to better 
utilize survey agency resources by targeting potential problem 
facilities and by focusing onsite survey activities on specific problem 
areas within a facility.
    We view the collection of MDS data and its use within a 
standardized survey process, as defined under our State

[[Page 67179]]

Operations Manual as being consistent with our current practices. Under 
the present survey process, the facility must submit specific 
information to the State survey agency, including data on resident 
census, facility staffing and ownership status. These facility-specific 
data, along with other information gathered by the survey team (for 
example, facility deficiency information) are currently maintained both 
at State agencies and within a national data base maintained by HCFA. 
In addition, survey teams review residents' clinical records and other 
resident-specific information. The submission and use of MDS data 
within the context of facility regulation is entirely consistent with 
existing practices and our obligation to collect the information 
necessary to ensure the quality of care provided to residents of 
Medicare and Medicaid certified long term care facilities.
    Automated data collection is essential to meaningful analysis of 
the quantity of data collected. The MDS data system would allow us to 
expand our existing system for gathering data related to quality, and 
provide us with objective and detailed measures of the health status 
and care outcomes for residents of a facility. Coupled with facility 
characteristic and deficiency history data, we expect the MDS system 
will be more reliable and effective in supporting early identification 
of potential care problems and directing the survey process towards 
these identified problem areas.
    In their roles as our agents for conducting regulatory survey and 
quality assurance activities, States will be required to process and 
analyze MDS data reported by facilities to meet the objectives stated 
above. MDS information collected by States will also be used to 
construct a national repository of MDS assessments. The national data 
base will be used to serve numerous functions: to study and refine the 
quality measures used to direct survey activities of State agencies 
(for example, to enhance the ability of these indicators to support 
survey targeting); to understand the characteristics of the nation's 
nursing home residents and the services they receive; to measure the 
impact of regulation and assist in the formulation of national health 
care policy; and to provide researchers with information needed to 
evaluate the outcomes of various types of care and to improve standards 
of clinical practice.
    Our authority to require computerization of MDS information is 
based on our general authority to set health and safety standards for 
providers under sections 1819(f)(1) and 1919(f)(1) of the Act. We will 
use the computerized data to establish standards, evaluate a facility's 
compliance with these standards, and review the standards' 
effectiveness and their continued appropriateness. For example, 
analysis of MDS assessments within a national repository might indicate 
an increase in the number of residents suffering from depression. We 
may then develop standards to assist facility staff in detecting and 
treating the disease. Such a standard could then be evaluated and its 
effectiveness assessed by a process of continually re-analyzing the MDS 
data base for changes in the prevalence of this characteristic over 
    Computerization of RAI data is also consistent with our authority 
under sections 1819(h)(3) and 1919(h)(3) of the Act to perform, review 
and validate facility surveys. As is discussed above, we intend to 
revise the survey process to utilize computerized assessment data. The 
new process will be an information-based approach, oriented around 
quality measures derived from computerized MDS data, as well as other 
sources of information. Furthermore, sections 1819(g)(2)(A)(I) and 
1919(g)(2)(A)(I) of the Act mandate that we subject facilities to a 
``standard'' survey. The availability of computerized assessment data 
will improve our ability to make the survey process more standard and 
consistently implemented within the across the States.
    Currently, part of the standard survey includes an assessment of 
the status of a sample of residents over time to determine whether the 
facility has assisted the residents to attain or maintain their highest 
practicable level of well-being. Computerized assessment data will be 
instrumental in that it will allow a complete monitoring of 
characteristics of ``all'' residents, including changes in their 
functional status over time. Furthermore, under the current survey 
process, we can only determine changes in resident status and a 
facility's relative success in maintaining resident well-being cross-
sectionally during an annual onsite survey. MDS computerization, on the 
other hand, provides the ability to monitor resident functional status 
and other characteristics through a longitudinal process of continuous 
    These uses of computerized RAI data also provide justification for 
requiring computerization under our overall program supervision 
responsibilities and general rulemaking authority under section 1102 of 
the Act, to the extent that the information will be used for general 
monitoring of care and beneficiary needs. This computerized information 
will ensure that program standards set forth in sections 1819(b) and 
1919(b) of the Act are met, that the program is being properly 
administered, and that beneficiaries are being served, as contemplated 
generally by the Act. We address elsewhere the further uses of the data 
for monitoring the Medicaid and Medicare programs.
    In addition to the authority cited above, to the extent that the 
RAI data are collected solely for Medicaid purposes, section 1906(a)(6) 
of the Act requires State agencies to make reports as required by the 
Secretary. As discussed above, the RAI data are essential for the 
Secretary's evaluation and monitoring responsibilities under the Act.
    We disagree with suggestions to offer States a choice to 
participate in the proposed national MDS data base for a number of 
reasons. First, the processes being regulated by Federal authority via 
State agencies (healthcare delivery and associated standards of care) 
do not have varying criteria from one State to the next. In other 
words, standards of medical care and health service delivery do not 
vary across States; health standards in New York are the same as those 
in Alaska. This commonality has reasonably led to the formulation of 
one national set of regulations to evaluate provider performance with 
respect to these common health standards. It is our belief that this 
standard regulatory approach is in the best interest of the nation's 
healthcare consumers with respect to both ensuring consistent delivery 
of services across States and with respect to the healthcare industry's 
reasonable expectation to operate under a single set of rules and 
requirements. Thus, as this standard approach to facility regulation 
evolves over time, with its specific objectives for continuous 
improvement and refinement, it is appropriate for us to require our 
agents (in other words, States) to adopt the standard processes and 
mechanisms required to consistently implement these new approaches.
    Specifically, allowing States to choose not to adopt a standard 
system for MDS information will adversely affect our ability to meet 
the objectives for these data. The following goals cannot be met 
without consistent implementation of the MDS system and process 
standards across all States:
     The ability to construct a modern regulatory model 
provides a reliable and objective means of measuring facility 
performance. MDS information gathered and maintained by a standard 
system in each State provides an information structure capable of 
providing this

[[Page 67180]]

alternate approach to measuring quality and creates the foundation for 
an information-based regulatory model. The ability to successfully 
implement such an approach is directly tied to process standardization 
across States.
     If States are allowed to choose not to operate this 
standard system, then we would not be capable of developing and 
implementing a facility targeting system or, information-based survey 
process consistently across States; thus, at best, an environment would 
exist in which facilities in one State would be subject to different 
quality monitoring and survey approaches than facilities in a 
neighboring State.
     Our ability to build a centralized national repository to 
support our various objectives with respect to quality monitoring, 
policy, program and regulatory development and evaluation, and to 
facilitate healthcare research, is dependent on our ability to receive 
reliable and timely MDS information from each State. Without a 
standardized MDS collection system in each State, the development of 
this MDS repository will be severely limited if not entirely impossible 
due to the prohibitive costs associated with interacting with varying 
system implementations in each State. Furthermore, without full 
participation of each State in this program, the general 
representativeness and usefulness of the information in the data base 
will likely be skewed or biased, depending on which States choose to 
participate. This would affect the validity of the information and 
could seriously limit its application for health resource planning and 
research of value to State and Federal governments, providers and 
     Finally, States will play a critical role in informing 
consumers in that States will make aggregate MDS information available. 
This information will allow potential residents or their family members 
to select a facility that may best suit their needs. Without a standard 
approach and system for developing these public information resources, 
consumers and advocacy groups will not have reliable, consistent and 
comparable information healthcare providers across States.
    Comment: In commenting on what specific uses States would have for 
the computerized data, commenters discussed using the data in the 
nursing home survey process. One State believed that the data would 
assist State survey agencies to focus the survey process and set norms. 
A consumer advocacy organization pointed out that, based on the 
strengths and weaknesses of a facility, a State could individualize the 
composition of the survey team sent to evaluate the facility's 
regulatory compliance. In other words, the number and type of surveyors 
sent onsite would be based on the types of potential care problems 
identified at the facility. For example, if a facility had a high 
prevalence of antipsychotic drug use, the survey team would include a 
pharmacist. This approach has the dual benefits of maximizing limited 
survey agency resources by better targeting them against the most 
likely problem areas, and for minimizing the general invasiveness of 
the survey process within the facility by focusing the process on key 
problem areas.
    The MDS data set provides objective and consistent measures of a 
number of facility care and outcome parameters. By comparing individual 
providers to ``gold standards'' and other peer group-based norms on 
each of these parameters, States can identify high and low facility 
performance outliers on measures associated with the quality of care 
and the quality of life for residents of these facilities. Commenters 
also suggested that the data could be used to replace some resident-
level information currently collected during the survey process on a 
form called the Resident Census and Conditions of Residents (HCFA-672), 
as well as other reporting forms for State and Federal needs, which 
would reduce facility burden. The MDS assessment contains detailed 
resident characteristics that can be used to eliminate all other forms 
and resident-level data collected by facilities to meet State and 
Federal requirements. One commenter, however, believed that the 
information should not be collected by the survey agency and used for 
investigations or enforcement.
    Response: As described in prior responses, MDS data will assist 
State survey agencies in a plethora of ways to achieve greater 
efficiencies in monitoring quality of care and ensuring the highest 
levels of quality of care and quality of life for residents of nursing 
facilities. These examples include:
     Problem identification: the capability to reliably target 
areas for investigation of potential resident care problems prior to 
and in support of the onsite survey process;
     Survey targeting and scheduling: the ability to determine 
survey frequency and scope based on specific indicators of potential 
care problems;
     Tailoring survey team composition to specific problem 
potentials in facilities to most efficiently use limited staff and 
resources. It is important to note that States currently are not 
prohibited from considering nursing home characteristics when 
determining survey team composition, provided that the team includes a 
registered nurse. The State Operations Manual notes in section 2801 
that to the extent practical, the team's composition should reflect the 
type of facility surveyed; and
     Conducting cost/benefit analysis of care approaches, based 
on resident outcome data adjusted for case-mix classification 
categories. This is consistent with the Department's medical treatment 
effectiveness initiative.
    Many software programs currently used by nursing homes to enter MDS 
information already have the capacity to generate timely resident 
census information such as that found on the HCFA form 672. Several 
States are also developing systems to facilitate this activity for 
providers. The availability of the MDS standard system will provide 
significantly more detail on resident characteristics than general 
census information, and will make use of definitions that have been 
clinically developed and refined to maximize both reliability and 
validity. As such, the MDS will create a whole new model for 
understanding and communicating about resident characteristics. This 
new model will far outperform the limited view of residents that can be 
derived from information from current sources, such as the Form 672.
    We further believe that automated resident status information has 
much more potential to further decrease the amount of paper work 
associated with the survey process. We have recently completed an 
evaluation of the survey process and intend to make ongoing refinements 
to incorporate new technologies and increase the efficiency of the 
survey process.
    Comment: One commenter stated that using computerized data to 
target surveys would resemble a ``big brother'' environment and not one 
conducive to accurate assessments for fear of investigations based upon 
minimal data.
    Response: We disagree that using assessment data to target the 
survey process would resemble a ``big brother'' environment or that 
fear of investigations would affect the accuracy of assessments. 
Facilities already submit significant resident-level information to 
support both survey agency functions and for claims processing under 
Medicaid and Medicare. These data have been collected for years without 
the adverse effects suggested by a ``big brother'' analogy; instead, to 
the extent that facility information has been made public (for example, 
release of survey and complaint results and findings), this release has 
served to provide valuable information to those interested in promoting 
the quality of life in nursing

[[Page 67181]]

facilities. There is no reason to believe that collection and analysis 
of MDS information will not similarly be used in the interests of the 
general public with respect to their right to know the quality of 
healthcare services delivered by Medicaid and Medicare providers.
    The MDS simply provides a better, more powerful mechanism than is 
currently available to observe and report resident condition or to 
monitor facility quality and safeguard the rights of residents of these 
facilities. The MDS is a tool for measuring healthcare facility 
performance, which also creates a foundation for improving the 
effectiveness of regulatory agencies as well as their operational 
    Having a standard MDS repository available within State and Federal 
agencies provides a rich information resource to serve many objectives: 
it will provide access to reliable information and standard measures of 
resident characteristics for the many groups interested in improving 
care and quality of life in nursing homes, including consumer advocates 
and researchers; and, the MDS will support many other programs within 
States including providing the basis for Medicaid payments as is 
currently in effect in a number of States.
    Clearly, the availability of MDS information within standardized 
Federal systems maintained by States directly benefits the general 
public as consumers of healthcare services and generally enhances the 
public knowledge of the quality of these services.
    Furthermore, we expect that the MDS repository will enable HCFA or 
its State agent, or both, to provide facilities with analytic reports 
based on aggregated resident characteristics. This is consistent with a 
quality improvement model, as it allows facilities to compare 
themselves to other homes that are similar in terms of size and 
resident demographics. This directly promotes facilities as they seek 
to develop their own in-house quality assurance programs. Ultimately, 
facilities may use the data in ways that would analyze allocation of 
resources, and demonstrate efficiencies in caring for certain types of 
residents, and in turn, negotiate with managed care organizations for 
admission of certain types of residents.
    We recognize that information contained within the MDS assessment 
is sensitive and must be safeguarded, and that protecting the privacy 
of residents is essential. In establishing a system of records for 
storage of MDS data, both HCFA and the States (as HCFA's contractors in 
performing survey functions) must comply with the Privacy Act, which 
applies to Federal systems of records containing individually-
identifiable information. While we can make public aggregate summaries 
of the data, there are strict Federal guidelines for the release of 
individually-identifiable information by Federal agencies to any 
individual or organization. We can only release individually-
identifiable information if a disclosure provision exists in the 
Privacy Act System of Records that is published in the Federal 
Register. We review requests on an individual basis, according to the 
provisions of the Privacy Act. Refer to the more detailed discussion 
later in this preamble concerning protection of privacy.
    In summary, it is clear that the availability of structured 
analyses derived from MDS information will empower those working with a 
variety of approaches to improve the lives of residents of nursing 
homes. Whereas the big brother term suggests a scenario in which the 
interests of the individual are sacrificed to promote the interests of 
the State, this is clearly not the case with respect to the objectives 
for MDS information. Instead, MDS information will be used to directly 
support the interests of individual nursing home residents by 
substantially enhancing our understanding of healthcare delivery in 
nursing homes and by creating a standard framework for monitoring the 
quality of this care.
    Comment: A few commenters noted that computerized assessment data 
would support a case-mix reimbursement system, and that it would be 
helpful to be able to compare facilities with similar case-mix levels.
    Response: Our Office of Research and Demonstrations began the 
Nursing Home Case-mix and Quality Demonstration in 1989. One goal of 
the demonstration is to design, implement and evaluate a nursing home 
payment and quality monitoring system for Medicare skilled nursing 
facilities based on resident-level information contained in an expanded 
set of MDS data. States participating in the demonstration are also 
using MDS data to calculate reimbursement under Medicaid. Computerized 
information from the demonstration's data base will provide information 
on outcomes and processes of care, stratified by case-mix and other 
characteristics in the six participating States. This will also provide 
a mechanism by which to evaluate the effect of reimbursement on quality 
    Several other Medicaid agencies in States not participating in the 
demonstration have chosen to independently implement an MDS-based case-
mix system for setting payment rates for facilities and for determining 
coverage. Numerous other States are currently studying moving toward a 
case-mix payment system based on the MDS. Furthermore, States have 
identified a plethora of other functions to be supported by information 
contained on the MDS assessment form, these functions include: 
utilization review, service placement, and improvement in the States' 
ability to monitor and evaluate the cost-effectiveness and quality of 
care and services provided under the Medicaid program.
    At least two States have already incorporated, or plan to 
incorporate, MDS information into their Medicaid management information 
system. West Virginia notes that to do so will allow the State to fine-
tune its long term care rate setting and payment methodology. West 
Virginia integrated its stand-alone long term care payment process into 
the Medicaid management information system. The system captures monthly 
data to calculate the resident-specific case-mix index. An electronic 
billing system was implemented through the Medicaid management 
information system, which calculates the base rate reimbursement for 
all Medicaid beneficiaries, as well as the additional payment due based 
on the case-mix acuity determined from an expanded set of MDS data. The 
MDS reporting system not only enables the Medicaid agency to conduct 
utilization review, but also allows the survey agency to use the 
reports for quality of care issues.
    Another State has a legislative mandate to integrate to the fullest 
extent possible, its MDS system, preadmission screening and annual 
resident review system, and treatment authorization request system. The 
State points out that, because it uses a composite per diem rate, the 
State agency has little ability to comprehensively review and adjust 
approval or reimbursement systems in order to improve the quality of 
care, increase efficiency, or control costs in long term care. We 
believe that integration of the MDS and the Medicaid management 
information system will support the objectives of its Medicaid program, 
including provision of the highest practical level of care and 
management of available funds in a fiscally prudent manner to maximize 
purchasing power. The State maintains that its system will provide 
information to facilities, State and Federal agencies, and to the 
public that will improve the quality and cost effectiveness of care 
delivered in the State.
    Comment: Another use of computerized resident data that

[[Page 67182]]

commenters addressed was to support policy analysis and monitoring of 
trends. One State noted that the data could be used to inform and 
improve general Medicare and Medicaid policies. Another State gave the 
example of using the data as a tracking system for prevalence of 
pressure sores, restraints, and drug therapy. A commenter stated that 
data could be used by the appropriate quality monitoring personnel in 
the State to increase the probability of detecting and analyzing State-
wide health care problems. Another State commenter suggested using the 
data at the resident-specific level to determine an individual's needs 
for assistance with activities of daily living and other required 
services. The commenter also discussed analyzing aggregate information 
for residents by facility.
    Response: We agree that these data will benefit both the policy and 
operational components of States and the Federal Government as well as 
provide valuable information to the consumers of long term care 
    Potential benefits in policy development and evaluation expected 
from this information include the following:
     Foremost is the added operational efficiency derived from 
the MDS' ability to support a multitude of applications and 
programmatic objectives. As a single form designed to capture a 
comprehensive view of residents and related facility care practices, 
when submitted within the context of a standardized data management 
system, it greatly reduces the operational costs of data gathering as 
compared to current program requirements involving multiple forms and 
submissions from the facility. For example, many States receive three 
different categories of resident information from facilities, each 
requiring separate forms and submission rules: placement determination 
forms (for example, preadmission screening and resident review), 
payment-oriented clinical information to support case-mix adjustment 
(for example, Minnesota's or West Virginia's case-mix assessments), and 
survey-oriented forms describing resident characteristics. With the 
breadth of data collected on the MDS, the requirements in each of these 
examples can easily be met via a single submission of MDS data; thus, 
the operational overhead and associated costs for both facility and 
State are reduced.
     At the national level, policy decision-making, 
development, and evaluation are supported through the creation of a 
standard means to analyze State differences in the quality of services 
and resident care outcomes in the nation's 17,000 certified long term 
care facilities.
     By deriving both payment and quality functions from a 
single instrument, a framework is developed to closely monitor the 
relationship between payment and corresponding service delivery, and to 
provide an objective basis upon which incentives to promote and reward 
outstanding care patterns and outcomes can be built.
    With respect to support for survey agency operations, creation of a 
standardized MDS repository in State agencies provides the framework 
for the development of an information-driven survey process by which 
the frequency and scope of facility review are based on objective 
measures of a facility's performance in comparison to established 
standards. This information-based survey concept and its benefits are 
discussed in prior sections of this regulation.
    Comment: We also received other suggestions and examples of ways 
that States are currently using computerized MDS data. A few States 
indicated that they are using or could use the data for resident review 
requirements under the preadmission screening and resident review 
program (PASRR). Other ideas included:
     Relating to research support, MDS information will support 
both basic clinical research activities as well as practical 
applications such as identifying issues for ``best practice'' 
     Using the resident data to identify strengths of each 
facility, staffing patterns, common diagnoses, and resident 
characteristics (suggested by a professional organization).
     Using the data for health planning related to long term 
care services, certificate of need decision-support, projecting nursing 
home bed need, and determining characteristics and care needs of 
current residents.
     Identifying industry and surveyor training needs with 
respect to changing demographics and industry structural delivery 
mechanisms (for example, as service delivery blends across multiple 
traditional care settings).
    One State commenter expressed the belief that the paperwork burden 
in that State would be reduced by having MDS data available for a 
variety of purposes.
    Response: We agree that potential benefits exist for all of the 
above listed uses of automated assessment information. A standardized 
system for MDS data collection and analysis that we will be providing 
to States will facilitate States' and facilities' ability to make use 
of these data by creating an infrastructure for managing, analyzing and 
distributing information to meet these varying program objectives.
    Comment: A commenter did not think that a facility could determine 
staffing patterns from the MDS data set, which would negate its ability 
to be used in determining differential rates of payment.
    Response: The commenter is partially correct, in that the RAI does 
not explicitly collect information on staffing. However, staffing 
standards, staffing mix, and minimum staffing requirements are already 
well understood with respect to the intensity of care required for a 
given resident and his or her clinical characteristics. There are, in 
fact, several commercially available systems that currently use MDS 
data and derived resident characteristics information to assist 
facility administrators in setting appropriate staffing levels 
according to the mix of resident care requirements in their facility.
    Furthermore, with respect to State payment and rate setting, States 
that currently use an MDS-based case-mix payment approach have adopted 
the resource utilization group methodology for the payment 
determination. This methodology is based on resource groupings that are 
created through time studies of facility staff as they carry out their 
daily care tasks. These time study data are then linked to 
corresponding resident characteristics data to determine levels of care 
resource utilization (staff time, supplies, etc.) for given sets of 
care needs.
    Thus, in this approach, staff requirements are implicit in the 
determination of each distinct care grouping, each of which is then 
associated with a specific reimbursement rate. Residents with complex 
care characteristics fall into a higher reimbursement group which 
directly reflects the additional staff resources required to care for 
that resident. In more sophisticated States, these models have been 
extended to allow for staffing pay rate differences across various 
regions within the State (for example, urban vs. rural staff pay 
    The current MDS 2.0 assessment form includes calculations for 
several of the most common variations of the resource utilization 
group's scoring in the standard specification for MDS data. Therefore, 
States that do not currently use case-mix-based reimbursement will 
still have an implicit and proven method of measuring the relative care 
and staffing requirements of residents

[[Page 67183]]

according to widely accepted norms for such comparisons.
    Again, the ability to support this functionality is created by the 
deployment of the standardized system for managing State MDS data 
repositories, upon which such resource utilization groups-oriented 
analyses will be derived.
    Comment: We requested public comment on whether to collect a sample 
or 100 percent of MDS data. Of those who commented, most believed it 
would be preferable to collect 100 percent of facility data. One State 
thought that collecting only a sample of data would not produce the 
necessary level of detail required for a multipurpose data base system. 
The commenter further stated that operational activities generally 
focus on specific individuals, which would usually require information 
on all residents from all facilities. Another noted that 100 percent 
would be advantageous for rate setting and quality assurance, 
recognizing that the intended use of the data influences the collection 
requirements. The commenter said that an aggregate of 100 percent of 
facility data would serve well for the Federal level data set. A third 
State believed that having facilities submit data for all residents 
would make the State survey agency's sampling procedure in the long 
term care survey process more effective, as well as result in a 
comprehensive national data base. One State thought that sampled data 
would be disadvantageous in that it would provide incomplete or 
inaccurate representation and would be influenced by factors such as 
population density.
    Those opposing collection of 100 percent of the data listed the 
associated cost, the size of the data base, and the man hours involved 
in collecting and maintaining the data. Proponents of collecting a 
sample of facility data noted that current survey protocols determine 
compliance with State and Federal requirements based on a sample, and 
that MDS data set required for submission should be no different. A 
national provider organization said that collecting 100 percent of the 
data would not meet the underlying intent of the law pertaining to the 
implementation of comprehensive assessments, the resultant care plans, 
and improved quality of care. A national provider organization believed 
that if 100 percent of the data is collected at the facility level, the 
State should send us a stratified sample on a quarterly basis, while if 
a sample is gathered at the facility level, the State should send us 
the entire sample on a quarterly basis.
    Response: There are many drawbacks associated with sampling. An 
incomplete representation or smaller number of records would make 
estimates of trends more difficult. Problems with resampling would 
prevent the development of longitudinal measures. Such problems 
     The retention of any bias in the initial sample that would 
increase over time and would affect the reliability of the data.
     The unequal burden on facilities in the sample to correct 
errors, respond to inquiries and provide data.
     The need to develop complex instructions that would direct 
facilities how to replenish the sample when subjects drop out. We would 
require other instructions to handle changes of ownership in 
facilities, facilities that leave the Medicare and Medicaid programs, 
and facilities that go out of business.
    In short, it would be difficult and expensive to construct and 
maintain a statistically significant sample of residents for whom we 
would require a facility to transmit its MDS records to the State.
    Furthermore, since the facility must obtain the information 
required by the MDS on each resident for clinical care planning, and 
given that most facilities today have already automated this process, 
the added requirement of submission of data adds comparatively little 
overhead and associated costs to this process. Certainly, there is some 
fixed cost associated with developing and supporting transmission of a 
single resident's record to the State, but the marginal cost of 
transmitting all residents' records is negligible. Therefore, there is 
no cost saving to the facility to transmit MDS assessments for a sample 
versus the entire population of residents.
    We agree with the comments that support requiring facilities to 
transmit 100 percent of all required MDS assessments. We are requiring 
that a facility submit all initial, annual, and quarterly reviews, as 
well as partial assessments completed upon discharge, transfer, death, 
or reentry to the facility, for all residents, and that a State submit 
those assessments to us.
    Generally, selection of a statistically representative sample of 
MDS assessments adds another complicated, costly and unnecessary layer 
to producing useful, valid data that can be used to inform States, 
nursing homes, and us about the quality of care and the status of 
residents in nursing homes.
    One hundred percent of the data is necessary for the following 
     It is necessary for longitudinal tracking of residents 
across time and facility admissions. This will allow us to track 
special subpopulations of residents such as those with pressure sores 
or Alzheimer's disease. It will allow the detection of certain trends, 
such as characteristics of new admissions to nursing facilities, and it 
will allow the detection of rare but significant events, such as 
hospitalizations for pneumonia, fractures or other conditions.
     The universe of data is also necessary to link to facility 
level data bases, such as ASPEN deficiency data in State agencies and 
the Online Survey, Certification and Reporting System, and to link to 
Medicare and Medicaid claims files at the national or State level to 
determine patterns of utilization and resource use pre- and post-
admission to nursing homes, and to determine resource utilization in 
nursing homes.
     It allows for targeting individual and aggregate resident 
outcomes for use in an information-driven survey process that would be 
impossible without a universal data base.
    The universe of MDS assessments makes possible the analysis of data 
at any level (for example, resident, unit within a facility, facility, 
State, regional, national, or for specific resident populations). An 
incomplete representation or smaller number of MDS assessments, as well 
as issues associated with resampling that were mentioned above, would 
limit trend analyses.
    Working with the universal population of resident assessments will 
eliminate the technical difficulty and expense of selecting and 
maintaining a representative sample such as will be necessary to 
support longitudinal analyses. Creating and implementing a complex 
sampling process would be burdensome to facilities and States, and the 
burden could fall unequally on selected States or selected facilities. 
If facilities were required to perform sampling, there would be 
additional cost to upgrade their software and training for this 
capability. Additionally, some sampling methodologies would require 
complicated survey analyses to adjust sampling design. This would also 
be expensive.
    In conclusion, the marginal additional cost of obtaining the full 
universe of assessments will, in fact, be exceeded by the cost and 
difficulty of maintaining a representative sample of assessments large 
enough to provide the necessary information for all the uses proposed 
for the data base.

[[Page 67184]]

    Comment: A State suggested submitting 100 percent of data to the 
State, which would then submit only a sample to us. The State contended 
that it needed the most complete data set possible. The State also 
noted that its data base would be manageable and would not warrant 
    Response: We disagree with the concept of sending a sample of data 
to us. Our regional offices have many of the same needs as State survey 
agencies for 100 percent of resident-level data for certified long term 
care facilities within their States as one method to target and conduct 
Federal monitoring surveys in nursing homes. Furthermore, we need 100 
percent of the data to develop and refine quality measures, which will 
be an integral part of the data-driven survey process.
    All the factors enumerated in the above comment regarding the 
negative aspects of sampled submissions between facilities and States 
apply equally to the submission between States and the national data 
base: there is no advantage in terms of cost saving by using a sampling 
approach as it is no more costly or complex to transmit assessments for 
the full population. In fact, managing sampled data sets is actually 
more costly; and, the ability to meet the objectives for these data at 
the national level in terms of support for policy decision-making, 
development and evaluation, as well as for support for research 
initiatives, requires access to a complete population-based repository 
of assessments.
    Comment: Commenters discussed whether a national data base would 
provide useful information to States for making comparisons for 
management, performance, measurement, and research purposes. Of those 
who addressed this, all agreed that such information would be valuable. 
One State said that it would be helpful for them to be able to compare 
their State with others regarding length of stay for residents with 
certain diagnoses and for utilization rates of special treatments and 
    Response: As discussed previously, we agree that there are many 
useful purposes for information from this proposed national MDS data 
base. One example of this submitted by a commenter is that the data 
base could provide information for interstate comparisons of resident 
lengths of stay according to diagnoses or outcomes.
    Fundamentally, the MDS data, represented within the context of a 
standardized information system, provides the foundation for organizing 
complex clinical and facility information in ways that can be easily 
generalized to support numerous current and future objectives at the 
facility, State, and Federal levels. It provides a common framework for 
communicating about resident clinical characteristics, care outcomes, 
and quality, as well as facilities' service delivery and quality. Many 
of these specific objectives have been identified throughout this 
    Finally, the RAI has been translated into at least seven languages 
and is being used in several European and Asian countries for care 
planning to improve clinical care and for research purposes. The 
international development of comparable data sets would facilitate 
performance of cross-national research studies to examine the effects 
of differences in care patterns on long term care resident outcomes. 
These studies may provide a great deal of information on the geriatric 
long term care population across all countries.
    Comment: Of those who addressed how data should flow, the majority 
of commenters, including a national provider organization, stated that 
data should flow through the States to us. Some expressed the belief 
that States should also maintain their own data base. One commenter 
recommended that data be transmitted to us by the States on an annual 
basis. A few commenters believed that the States should send summary 
information to us. One commenter said that initially, facilities will 
need a great deal of technical assistance, and it would be easiest for 
that to come from the States. A national provider organization wanted 
States mandated to devise methods for disseminating computerization 
information to facilities and for providing technical assistance. One 
State noted, however, that States should not be required to collect and 
store information, if there are no expectations about how the data will 
be used.
    Response: We agree that States should have the responsibility to 
provide some level of general and technical assistance to facilities as 
relates to our and States' requirements for encoding and transmission 
of MDS data. We understand that States have varying levels of 
experience with the use of computerized information systems and data 
bases. However, several States have already established an MDS data 
base for case-mix, quality assurance or survey and certification 
purposes, or both, and have provided necessary training and assistance 
to facilities which enabled them to successfully implement automated 
    We have established technical and user groups as part of the 
systems design process. These groups consist of States, provider and 
consumer representatives and experts in systems design. Their expertise 
and knowledge will be used to facilitate provider and State automation. 
We will also work with States to ensure that personnel have the 
necessary technical expertise and training to fulfill State automation 
responsibilities. Also, system specifications and other relevant 
materials are already available via an internet web-site, initially 
established to support MDS software vendors, and otherwise available 
from HCFA.
    The pilot testing of the MDS standard system and associated 
procedures is another step currently undertaken by us to ensure that 
all aspects of this standard MDS system are fully understood with 
respect to technical operational requirements, State and facility user 
support needs, and general issues associated with deployment and system 
acceptance. Information from this test phase will directly support our 
ability to assist States in successfully installing and operating this 
system and ensure that facilities can easily accomplish their 
assessment submission requirements.
    We fully appreciate the magnitude of support and effort that will 
be necessary to ensure that appropriate training is developed and 
disseminated to all who will be involved in implementing this data 
base, and are in the process of developing additional procedures and 
communication strategies to address this need.
    Finally, a central requirement for the MDS standard system design 
is to ensure that maximum attention is given to understanding and 
assessing current technologies employed by facilities and States so 
that the MDS system will best integrate and accommodate these existing 
systems. We intend that this will both facilitate system acceptance 
across all user levels, and minimize support and other implementation 
costs. Also, we will emphasize technologies that lend themselves to 
ease of use and user-friendliness in the selection process for each 
level of the standard systems, but especially as this relates to 
systems used by facilities to submit MDS assessments to their State 
agency. Also, one of the implicit benefits of the decision to develop a 
standard system for MDS data management is that this provides the 
greatest ability to centralize support efforts, and also reduces costs 
for multi-state facility chains and software vendors by reducing the 
variation of systems with which they will interface, in that they need 
only support access to a single standard system across States.

[[Page 67185]]

    Comment: A few commenters thought that the data should be sent 
directly to us without being sent to the State first. One said that it 
would be costly and duplicative if States maintained their own data 
base. One State agreed that State data bases would be duplicative and 
suggested that States have access to a HCFA data base through the 
Online Survey, Certification and Reporting System. The State commenter 
noted that this could be difficult for States that have adopted an 
alternate Resident Assessment Instrument, since it would be necessary 
to remove extraneous data collected by the alternate instrument. A 
State put forth the idea of creating a single national entity for the 
centralized collection of MDS data. The commenter suggested that States 
could then arrange for periodic digital communications with the entity, 
believing that this method would be more efficient than each State 
having to develop the capacity to receive facility data.
    Response: We support having each facility initially submit 100 
percent of the MDS data to the State. This would enable States to 
maintain a data base for use in Medicare and Medicaid activities that 
are primarily State responsibilities: quality assurance, longitudinal 
tracking of care outcomes for survey, certification and licensing, and 
in some States, case-mix reimbursement classification systems. Several 
States are already using computerized MDS information for this purpose, 
having decided that the derived benefits outweigh the costs of 
establishing and maintaining such a system. Our experience has been 
that States realize even more programmatic uses for the data once it is 
available to them.
    While we could develop a central mechanism for collecting 
information from providers, there are significant disadvantages 
associated with this approach: (1) It would impose an additional layer 
between facilities and States with associated impact on timeliness and 
accuracy of information; (2) With so many of the objectives for MDS 
data being at the State level, direct submission of information to us 
creates an unnatural information flow which will have an impact on the 
ability of States to meet these objectives, especially as many of the 
objectives, such as the information-based survey process, are so 
dependent on timely access to MDS assessment information; (3) With the 
many State-specific uses for MDS information, such as case-mix payment, 
many of which require specialized elements recorded in the State-unique 
S Section of the MDS, we could not possibly centralize support for 
these functions or even accommodate all these variations in a central 
repository; thus, direct submission to us would defeat the goal of 
supporting unique State objectives; and, (4) States are in a much more 
appropriate position to support their individual facilities with 
respect to the MDS assessment, submission and data validation 
    The information provided by a State-maintained MDS data base is not 
duplicative of a national data base. States vary with regard to their 
demographics, licensing policies, quality assurance and reimbursement 
systems. States are a logical level for maintenance of MDS information 
since each State performs and must manage its own survey and regulation 
processes. Information provided by MDS assessments cannot be obtained 
from our Online Survey, Certification and Reporting System. The Online 
Survey, Certification and Reporting System itself is not designed to 
provide the quantity and specificity of the information in the proposed 
MDS data base. Furthermore, a central MDS repository is necessary to 
support objectives such as policy and regulation development, but would 
not be as readily available for State functions as State-specific data. 
Since specific functions (for example, information-based survey 
process) are performed from this data base at the State level, it would 
be inefficient to require States to support these functions via access 
to a central repository.
    We disagree that it will be significantly more expensive for States 
with alternate instruments to collect MDS data. The design of every 
aspect of the standard MDS system, from the record transmission format 
to the State data base repository, is intended to support the 
customizations required by individual States. Thus, although there will 
be some additional costs during the initial system implementation in 
States requiring custom formats, the system design makes these costs 
insignificant. At this time, there is no State variant of the MDS that 
cannot be accommodated within the context of the standard system 
    With respect to transmissions between the State and national 
repositories, we are requiring that a facility transmit only the core 
MDS items on the HCFA-designated RAI, the State will only maintain the 
State-specific elements at the State level.
    Comment: A State noted that it currently collects computerized data 
from only Medicaid-certified nursing facilities because the State can 
reimburse them. The State asked if computer requirements apply to 
Medicare-certified facilities, and whether Medicare facilities would 
submit directly to us.
    Response: The requirement to place the MDS in machine readable 
format applies to all Medicare and Medicaid certified nursing homes. 
There are no plans to have Medicare-only facilities submit MDS 
information directly to us. In the impact statement, we address how 
certified facilities will be reimbursed for information systems 
equipment and supplies, as well as data encoding and transmission. Long 
term care facilities certified to participate in Medicare are required 
under section 1819(b)(3) of the Act to use the State-specified RAI. The 
State's authority to collect computerized data from Medicare facilities 
springs from its role as an agent for us in performing Medicare surveys 
under section 1864 of the Act.
    Comment: Commenters discussed auditing procedures that would ensure 
the accuracy of the data entered into the national data base. Some, 
including State commenters, believed that the accuracy of the data 
should be verified through the survey and certification process. A 
State commenter believed that it would take surveyors approximately 5 
minutes to compare a resident's actual records with a computer 
printout. One commenter pointed out that if the accuracy is checked 
during the survey, a facility will take the assessment seriously and 
the assessment would not be viewed as ``paperwork.'' Another supported 
using surveyors to audit the match between a resident, his or her MDS 
and a computer editing software system.
    Response: We agree that auditing the accuracy of MDS data on an on-
going basis is very important in validating the ability of the data to 
support key operational and policy decisions. Indeed, the establishment 
of mechanisms to ensure acceptable reliability levels is critical to 
our ability to move forward with using MDS data for quality assessment 
and improvement activities, as well as other programmatic purposes. 
Currently, the survey process includes evaluation of the accuracy of 
assessments, as required by sections 1819(g)(2)(A)(II) and 1919 
(g)(2)(A)(II) of the Act. Surveyors compare information from the most 
recently completed RAI with the current status of a sample of residents 
found onsite at the time of survey. We may modify and enhance the 
methods for accomplishing this task to reflect access to more 
longitudinal resident status information.
    Several States, particularly those with case-mix reimbursement 
systems, have a separate auditing system in which nurse reviewers 
conduct an onsite assessment

[[Page 67186]]

using the MDS and compare it to that completed by the facility in order 
to verify the accuracy of the facility's assessment. We have recently 
completed a study of such methods and will be considering how to most 
efficiently assure the quality of MDS data. The methods under 
consideration could involve onsite review by surveyors or others, as 
designated by us, or offsite data analysis and evaluation, or both. We 
are also considering whether auditing would be carried out in 
conjunction with the survey process, as well as the timing and 
frequency of audits.
    Comment: Commenters discussed methods for data verification. A few 
commenters stated that we should not require auditing and we should 
accept data as submitted. One State noted that any auditing process 
will result in cost increases. Another commenter pointed out that the 
data should be error free before the facility submits it. A commenter 
suggested that we not require auditing unless the MDS data is used for 
reimbursement purposes. A few commenters, including a national provider 
organization, disagreed with the idea of double entering data as a 
means of ensuring data integrity. They stated that it would be too 
costly, resulting in an unnecessary expenditure of time, cost, and 
    Response: We strongly disagree with the comments that verifying 
accuracy of the data is not necessary. Foremost, it is imperative that 
the data be accurate and reliable for it to be used in any policy 
making, planning or resource utilization capacity. Accurate resident 
status information is necessary not only for reimbursement systems but 
for the health planning at the State and Federal level. Secondly, 
accurate assessments are necessary for quality care at the facility 
level, given that care planning should be based on the resident's 
    While data verification may be costly in the short run, we believe 
that it is cost efficient in the long run, in that accurate data will 
help prevent unnecessary expenditures or poor policy or reimbursement 
decisions that might result from erroneous information.
    Several States that have computerized MDS data bases have 
encountered significant inaccuracies in the data originally received 
from facilities. This problem was rectified by establishing a process 
for ongoing validation of the accuracy of the data through on-line 
electronic systems feedback to facilities, or other systems for 
frequent cross checks and communication.
    On-line data editing systems can facilitate timely detection and 
correction of inaccuracies. Virtually all the States that have 
computerized MDS data bases have developed built-in edit checks for 
obvious inaccuracies which would disallow entry of conflicting or 
invalid data, for example, for a resident coded simultaneously as 
comatose yet, inconsistently, enjoying playing cards.
    We agree that double entering data to ensure validity would be 
expensive and we are not requiring it. We emphasize, however, the 
important role that validation plays in the establishment of a data 
base. To this end, we published standardized range and relational edits 
in May 1995 that MDS data will have to pass in order to be accepted at 
the State level.
    Comment: Some commenters placed responsibility for the accuracy of 
the data on the facility. According to a commenter, having the edit 
checking process occur at the facility is critical, otherwise the State 
system would quickly become overburdened with rejecting records back to 
the facility for correction. One recommendation was for a facility to 
have a system for visually checking MDS information prior to submitting 
the data. Commenters noted that computer software can validate that the 
MDS is complete and that responses are within an acceptable range, and 
can also generate a condensed MDS with the responses, and staff can 
compare this to the MDS to verify accuracy. A State commenter proposed 
that we require a facility to maintain an accuracy rate of 95 percent 
for its data to be accepted by the State. Commenters suggested that a 
facility only transmit updates and changes to the data base once the 
original assessment is on file. Another proposal was for us to require 
a facility to incorporate surveillance and correction procedures as 
part of its quality assurance program.
    Response: We concur that a facility has a responsibility to submit 
assessment data that is accurate, and there are many ways to accomplish 
this. A facility is required by section 1919(b)(3) of the Act to 
conduct a comprehensive, accurate, standardized and reproducible 
assessment of each resident's functional capacity. We are adding to 
Sec. 483.20(g) the facility's responsibility to accurately assess 
residents, as well as Sec. 483.20(f)(3), which notes the facility's 
responsibility to transmit accurate data to the State. We believe, 
however, that the State also has a role in verifying the accuracy of 
the data and systematically monitoring and evaluating the quality and 
accuracy of the assessment data which will be submitted from 
    States will monitor completeness and accuracy of MDS data 
submissions from the facility. A facility will be in compliance unless 
an unacceptable percentage of the records completed by the facility 
during a target period are either not submitted to the State or not 
accepted by the State because of data errors. We will determine 
compliance based on a review of missing records for the target period, 
allowing sufficient time after the close of the specified period for 
relevant records to be submitted from the facility to the State.
    Our initial plan is to have States accept required records 
submitted by the facility, except when specific data errors occur. 
Currently, plans are for States to reject records only if:
     A submission file has a missing or misplaced header record 
or trailer record;
     Any record in the file does not have the correct record 
length with the last data character being the ``end of record'' 
delimiter required by the standard data specifications;
     The submission file contains an invalid facility ID code 
(Fac__Id in the data specifications) in the header record or data 
record; or
     The total number of records in the submission file does 
not correspond to the record count given in the trailer record.

We will evaluate this process and make necessary changes based on 
    A facility is in compliance unless there is an unacceptable error 
rate for the set of records completed by the facility during a 
specified period. Determination of compliance is based on a review of 
records accepted by the State, allowing sufficient time after the close 
of the specified period for relevant records to be submitted from the 
facility to the State. The error rate in question is the total number 
of fields in error, due to either range or consistency errors as 
identified in the MDS 2.0 data specifications in effect, divided by the 
total number of required fields across all records for the specified 
period. The fields that we require for each type of record (for 
example, admission assessment, quarterly assessment, discharge tracking 
form, etc.) are detailed in the MDS 2.0 data specifications.
    Further, States have a role in training facility personnel in 
methods of preventing and correcting data errors. The suggestion by a 
commenter that we require a facility to incorporate surveillance and 
correction procedures as part of its quality assurance program may be a 
viable option.

[[Page 67187]]

    Comment: Other commenters believed that States should bear primary 
responsibility for the accuracy of the RAI data. One State suggested 
that the States should provide facilities with report formats that 
cross check interrelated data. Another commenter proposed that a State 
keep verification requirements for transmitting data separate from 
verification of clinical consistency of the data. A commenter pointed 
out that it was unclear whether we intended that States notify a 
facility of errant data before transmitting the data to us. One 
suggestion was for the State to check data for completeness, accuracy 
and compliance with processing instructions. Another was that the State 
specify a standardized format for transmitting data that would require 
compliance with edits. A few commenters thought that the States should 
be responsible for the quality of the data transmitted to us.
    Response: The responsibility for data accuracy must reside with the 
facility, the source of the data, and a facility should ensure that MDS 
data pass all standard accuracy edits before transmission to the State. 
The State does have a responsibility to monitor accuracy of data 
submitted by a facility and aid the facility in achieving accuracy. The 
State will perform standard accuracy edits on data files as they are 
received and report any errors found to the facility. A State will also 
be able to monitor the error rate for a facility over time and produce 
an error summary report to share with the facility. The State will also 
have the ability to monitor the error rates for any MDS software 
vendor. When systematic problems are found for a vendor, the State will 
have the opportunity to work with that vendor to correct the problems. 
We may also develop procedures for onsite data accuracy visits to the 
facility when error rates are high. We will determine the frequency of 
such visits during our formal systems design process. MDS data 
submitted to the State will be transmitted to us at least monthly. We 
will again edit the data for accuracy. Accuracy edits will be performed 
at the facility, State, and HCFA levels.
    Comment: We received a number of other suggestions to ensure the 
accuracy of data. One was to allow the registered nurse assessment 
coordinator to validate the data. A few suggested a computer system 
that has a basic set of edit checks, like high-low checks, completeness 
checks, clinical inconsistencies, and incorrect data checks. A consumer 
advocacy organization pointed out that some States currently have 
special nurse auditors who validate the match between a resident and 
his or her MDS. A State suggested that the reliability of MDS data be 
verified by periodic, random, onsite review of individual records 
performed by either State program agency staff or by a contracting 
organization. Another noted that if validity becomes an issue, we could 
consider a regulatory mechanism for appointing independent assessors.
    Response: We agree that the computer systems should have basic edit 
checks, which ought to be in place both at the facility level and at 
the State level. The standard data specifications we have developed 
include valid ranges and required formatting for MDS items and 
consistency between MDS items. Detailed information concerning these 
data specifications is available on our MDS World Wide Web site (at 
http://www.hcfa.gov/Medicare/hsqb/mds20/) and is otherwise available 
from us and the State survey agency. We anticipate that facilities will 
be able to select commercially available software packages that use 
these data specifications. We note that the current regulation grants 
States the authority to take over the assessment process if a facility 
knowingly and willfully certifies false assessment statements. Section 
483.20(c)(4) allows the State to require that assessments be conducted 
and certified by individuals who are independent of the facility and 
who are approved by the State. New York, for example, contracts with 
their peer review organization to conduct onsite audits of the Patient 
Review Instrument, used to calculate Medicaid reimbursement. Nurses 
sample a certain number of resident records. If the records do not pass 
standards based on resource utilization group, the facility loses its 
``delegated status'' to conduct assessments and must hire an 
independent assessor for 1 year.
    Comment: Many of the comments we received regarding privacy and 
confidentiality issues demonstrated concern regarding privacy issues 
and indicated that residents' identities need to be protected. Some of 
the commenters believed that MDS information should be available or 
reported in the aggregate format. A few commenters wanted identifying 
data available at the State level but not in any public data sets 
created. One commenter questioned why we should have access to 
assessment information of private pay residents. A national provider 
organization stated that the need for information in planning and 
quality assurance should not be met at the expense of the resident's 
and facility's right to confidentiality. Commenters suggested that we 
develop ways to block resident identifiers or develop an alternate 
system of identification like numerical coding.
    Response: We agree that protecting the privacy of the resident is 
essential. In establishing this system of records, both we and the 
State (as HCFA's contractor in performing survey functions) must comply 
with the Privacy Act (5 U.S.C. 552a), which applies to Federal systems 
of records containing individually identifiable information. While 
aggregate summaries of the data can be made public, there are strict 
Federal guidelines for the release of individually identifiable 
information by Federal agencies to any individual or organization. A 
release of personal identifiable information can only be made in 
limited circumstances described in the Privacy Act. Disclosure may be 
made under the Privacy Act for ``routine uses,'' which are compatible 
with the purpose for which the information was collected. These routine 
uses are described in the Privacy Act System of Records, which is 
published in the Federal Register. Requirements associated with routine 
uses are also set forth in the System of Records. In most cases, a 
``data use agreement'' is required with the recipient being bound, in 
turn, by the Privacy Act. Some States have additional laws 
strengthening the protection of privacy of the resident.
    We would have difficulty assuring the quality of care in facilities 
if we only had access to periodic aggregate data. While allowing 
evaluation of prevalence rates (percent of residents who have a 
particular condition at a given point in time) over time, such data 
would largely preclude any quality of care indicators based on 
incidence rates (percent of residents who acquire a given condition in 
a facility between two points in time). For example, periodic aggregate 
data might show the prevalence of decubitus ulcers in the resident 
population, but we could not review it to determine the incidence of 
such ulcers while residents are in the care of the facility. A high 
prevalence of ulcers may indicate that the facility accepts residents 
with existing ulcers from the hospital, but a high incidence may 
indicate substandard care. If access were limited to aggregate data, it 
would also be impossible to evaluate other important outcome measures 
potentially indicative of quality of care.
    Our quality assurance activities in Medicare and Medicaid certified 
facilities are not limited to selected residents (for example, Medicare 
or Medicaid residents, or both). Our long term care survey process 
directs State

[[Page 67188]]

survey agencies to review the care provided to all residents of 
certified facilities, regardless of payor source. For example, quality 
assurance survey teams review a random sample of residents without 
respect to payor. We would often have difficulties evaluating the 
quality of care in Medicare and Medicaid certified facilities if access 
to data is limited to residents who are Medicare or Medicaid funded. 
This is especially true in a facility in which Medicare or Medicaid 
residents, or both, are a minority. This requirement is, therefore, in 
keeping with the quality protections that are afforded to all residents 
in certified long term care facilities. We will not give out 
identifying information unless there is a demonstrated need for it; the 
routine use permits disclosure only if we determine that the research 
cannot be reasonably accomplished unless the record is provided in 
individually identifiable form.
    Comment: One commenter was unclear why confidentiality is an issue, 
since we already have systems in place to guard confidentiality, and 
these systems could carry over into the MDS system. A professional 
organization recommended developing a software program that could block 
identifying information except when needed by designated persons.
    Some commenters addressed the question of who should have access to 
the data base. Several suggestions were submitted, including:
     The State survey and certification agency;
     The reimbursement agency (without resident identifiers);
     The ombudsman (one commenter suggested without resident 
identifiers while another said consistent with current access rights 
for resident records);
     The submitting facility (with no access to other 
facilities); and
     Aggregate data should be available to the public. 
Commenters proposed that a State have access to facility data in its 
own State with resident identifiers and to other States and the 
national data without identifiers.
    Response: As aforementioned, under the Privacy Act, when personal 
information in the possession of the Federal Government on an 
individual is accessed by name, Social Security number or any other 
identifying symbol, we must publish a system of records notice. This 
notifies the public that we are collecting the information and will be 
accessing it in an individually identifiable way.
    The notice lists routine uses for the information, including a list 
of entities to which we may release information upon request, the uses 
for which we may release information, and conditions under which we may 
release individually identifiable information. The Privacy Act requires 
that the routine uses be consistent with the purpose for which the 
information is collected. The Privacy Act does not mandate us to 
release the information. The system of records notice will support 
research as a routine use, but will require safeguards to ensure the 
maximum protection of individually identified information. It requires 
that persons or entities requesting the information sign an agreement 
to not re-release the data. The system of records notice also permits 
release to government agencies for purposes of monitoring nursing home 
care. We already have a routine use disclosure provision in place for 
handling data requests by those conducting health services or other 
appropriate research for most of our systems. We evaluate each request 
on an individual basis, including whether it is appropriate to release 
any data with identifying information.
    Comment: A few commenters recommended that we not release resident-
specific information unless the resident has directly consented. One 
State suggested that we and States issue ``designator'' numbers that 
would allow resident-specific information to be released. A commenter 
suggested that we build fines and penalties into the system for breach 
of confidentiality.
    Response: As aforementioned, we will follow all provisions of the 
Privacy Act, as well as the Freedom of Information Act in managing the 
information from this proposed data base. Our Freedom of Information 
Act officer decides whether to release the records if a request is made 
at the Federal level. Under the Freedom of Information Act, 
individually identified RAI data generally would be exempt from 
disclosure as medical (and similar) files, the disclosure of which 
would constitute a clearly unwarranted invasion of privacy (5 USC 
522(b)(6)). Under the Privacy Act, individually identified records may 
not be disclosed, except for good cause, including routine uses 
consistent with the purposes for which the information was collected (5 
USC 522a(b)). (Aggregate data, not individually identifiable, could be 
released under either law.)
    For records collected under the authority of our RAI requirements, 
States are bound by the Privacy act as our agent. In addition, most 
States have their own rules governing protection of privacy for records 
maintained at the State level. We expect each State to take the 
appropriate steps to ensure that resident-identifiable information is 
    We are adding language to Sec. 483.20(f)(5) that prohibits a State 
from releasing resident-identifiable information to the public, and 
provides that a facility may release resident-identifiable information 
to an agent only in accordance with a contract under which the agent 
agrees not to use or disclose the information except to the extent the 
facility itself is permitted to do so. We note that the Health 
Insurance Portability and Accountability Act of 1996 (Public Law 104-
191) provides stiff penalties for persons who wrongfully disclose 
individually identifiable health information. Such penalties can 
include fines or imprisonment, or both.
    RAI data would be part of a resident's clinical record, and as 
such, would be protected from improper disclosure by facilities under 
current law. Facilities are required by sections 1819(c)(1)(A)(iv) and 
1919(c)(1)(A)(iv) of the Act and Sec. 483.75 (l)(3) and (l)(4), to keep 
confidential all information contained in the resident's record and to 
maintain safeguards against the unauthorized use of a resident's 
clinical record information, regardless of the form or storage method 
of the records. We recognize that there are circumstances that may 
necessitate the release of information from the resident's clinical 
record. However, these instances are limited by regulation to 
circumstances required by (1) transfer to another health care 
institution, (2) law, (3) third party payment contract, or (4) the 
resident (Sec. 483.75(l)(4)).
    The transmission is limited to (1) using a private dial-up network 
based on a direct telephone connection from the facility or (2) mailing 
a diskette from the facility. In the case of either telephone 
communications or the mail, the information transmitted is secure, with 
interception of information being prohibited by Federal and State law, 
and strong penalties apply. We and the States both receive large 
volumes of unencrypted voice phone calls, unencrypted data 
telecommunications (for example, claims data), and unencrypted 
mailings, all including resident-specific information.
    Section 1902(a)(7) of the Act requires Medicaid agencies to provide 
safeguards that restrict the use or disclosure of information 
concerning applicants and recipients to purposes directly connected 
with the administration of the plan. Moreover, under the agreement 
between the Secretary and the State survey agency pertaining to

[[Page 67189]]

section 1864 of the Act, the State is required to adopt policies and 
procedures to ensure that information contained in its records from the 
Secretary or from any provider will be disclosed only as provided in 
the Act or regulations.
    States may allow other agencies within the State to have access to 
MDS data to the extent that it is related to the operation of the 
Medicaid programs. All agencies must adhere to the confidentiality 
requirements of the Medicare and Medicaid programs relative to this 
information. We are also providing in Sec. 483.315(j) that a State may 
not release resident-identifiable information to the public. Further, 
the State may not release resident-identifiable RAI data to a 
contractor without a written agreement under which the contractor 
agrees to restrict access to the data.
    We believe that adherence to Sec. 483.10(b)(1), Notice of rights 
and services, adequately addresses the commenter's suggestion that 
residents be notified. We believe that using designator numbers as a 
vehicle to permit release of resident-specific information is not 
feasible. Because such a system would require that all providers use 
the same number for the same resident, (in other words, to enable 
tracking of residents across different providers), implementation would 
be extremely burdensome.
    Comment: Commenters addressed other issues pertaining to privacy 
and confidentiality. We received a recommendation to contact specific 
individuals who could assist in developing the security of a data base. 
Another recommendation was to carefully control computer access (in 
other words who can get to the data via computer at the facility and at 
the State).
    Response: Both at the facility and the State, access to the MDS 
records for residents, whether those records are hard copy or 
electronic, must be secured and controlled in compliance with our 
requirements for safeguarding the confidentiality of clinical records. 
The facility must take precautions to ensure that only authorized staff 
have access to confidential information. Electronic MDS data should 
reside on stand-alone computers in secured physical locations, or 
access to those data should incorporate standard user ID and password 
    Comment: A few commenters thought that only the facility in which a 
resident resides should be able to make changes in the data entered. 
One commenter proposed that the data system require the facility to 
``close-out'' a resident's information upon discharge or transfer, 
which would prevent the facility from changing that information. It 
would also prevent ``a receiving facility'' from entering new data on a 
transferred resident until the information base is closed by the 
transferring facility.
    Response: We are in agreement that no other facility may make 
changes in the MDS data. A facility may only change MDS hard copy and 
electronic data as allowed by our policy. This policy requires that 
after the facility performs the assessment, it is ``sealed,'' and 
electronic records are ``locked.'' HCFA policy also require facilities 
to complete tracking forms indicating resident discharge from and 
reentry to the facility. The facility must complete and submit these 
forms and corresponding electronic records to the State within 
specified time frames. It would not be appropriate to require one 
facility to ``wait for'' a discharge record from another facility 
before entering and submitting data for Medicaid payment. This could 
result in payment delays for the one facility when another facility is 
delinquent on submitting MDS records.
    MDS data bases at the State will be used for a variety of purposes, 
including quality monitoring, Medicaid and Medicare payment, and policy 
analysis. It would prove quite cumbersome and, at times unworkable, for 
all data changes to always be made by the facility of residence and 
then updated in the State data bases after resubmission from the 
    Comment: Commenters discussed the schedule for submission of data 
by facilities, for example on an annual or quarterly basis. A national 
advocacy organization supported continuous data flow, pointing out that 
States need up-to-date information due to the survey cycle and their 
need to be able to respond to complaints when they are received. One 
commenter said that most facilities in their State routinely transmit 
on a weekly basis. Other commenters questioned how current would be the 
data that are to be maintained. The few who responded agreed that the 
data do need to be up-to-date and agreed with others who said that 
transmission should coincide with the RAI requirements. Others 
addressed the need for a transaction log to document transmission.
    Some commenters noted that reimbursement agencies may require data 
on a more frequent basis for the purpose of rate setting. It was also 
mentioned that requiring transmission on a more frequent basis would be 
an administrative burden. A few commenters wanted the quarterly reviews 
to be transmitted also. A national provider group suggested quarterly 
submission, staggered in order to facilitate managing the large volume 
of data. For example, at the end of each month, \1/12\ of the 
facilities would submit data for the preceding 3 months.
    One commenter recommended that States transmit data to us on an 
annual basis. There was some support for collecting data on a quarterly 
basis. A few commenters believed that the States should send us summary 
information. A few States suggested submitting data on the same 
schedule as the MDS is completed--that is, upon admission, within 14 
days of a significant change, and annually. Others agreed that annual 
submission would be adequate. A few proposed that data be transmitted 
twice a year. One commenter believed that all States should submit data 
on the same date.
    Response: In order for MDS information to be timely enough for use 
in ongoing quality assurance programs, a facility must submit MDS data 
at least monthly to States. This would entail submitting all full MDS 
assessments (initial, annual and significant change), and any partial 
assessments (quarterly, discharge, and reentry) completed since the 
facility last transmitted data to the States.
    States will also submit data to us at least monthly. The regional 
offices also need timely information in order to perform Federal 
monitoring surveys. To a certain extent, the role of the regional 
office mirrors that of State survey agencies. Hence, the regional 
offices need timely, complete information. Furthermore, this is 
necessary to enable us to timely evaluate State trends or regional 
problems. For example, linking resident status information with SNF 
cost report data could identify potential Medicare utilization problems 
in relation to certain outcomes or resident status changes.
    Analysis regarding the timeliness of MDS data and frequency of 
transmission requirements has shown that the MDS data base must contain 
quarterly review information if it is to be used for quality monitoring 
purposes by State survey agencies. Much of the work being done to 
develop quality measures relies on quarterly assessment data for each 
resident. Leading researchers and survey experts agree that the 
quarterly review data are needed for the timely and reliable 
identification of resident outcomes for this purpose. There is under 
development, discussion and testing, a case-mix demonstration payment 
system using MDS data in calculating appropriate payment rates.
    Comment: Commenters made suggestions regarding what edits should

[[Page 67190]]

be allowed without requiring the facility to produce a new electronic 
record or hard copy. One State wanted any change in MDS information to 
result in a new hard copy. Another State proposed that we allow a 
typographical error to be corrected at any time. A consumer advocacy 
organization proposed that if a facility makes changes to a 
computerized copy, it should be held to the same standard as written 
records. Another commenter believed that MDS software should create an 
audit trail of changes made to an assessment that would include the 
name of the person making the change, the date, the old value, and the 
new value. The commenter suggested that we permit a facility to keep 
the most current copy in a hard copy format. A State commenter believed 
that the computer program should have the ability to update the 
assessment information without changing the original version. Another 
State did not want to make changes if the data had been transmitted 
after the 21st day after admission. Another State proposed using those 
things that meet the criteria for significant change with regard to 
    Response: According to current policy, a facility may correct 
typographical or factual errors within required time frames. To make 
revisions on paper records, a facility enters the correct response, 
draws a line through the previous response without obliterating it, and 
initials and dates the corrected entry. Computer-based systems must 
have a way to indicate and differentiate between the original and 
corrected entries on the printout of the corrected form, and to ensure 
that the correct information is transmitted to the State. Again, we 
note that the assessment must be accurate. A significant correction of 
prior assessment is completed at the facility's prerogative, because 
the previous assessment was inaccurate or completed incorrectly. 
Version 2.0 of the MDS contains an item response that, when checked, 
indicates that the assessment is a significant correction of a prior 
comprehensive assessment. A number of providers have called to our 
attention that the wording of this item precludes its use when the 
prior assessment that is being corrected was a Quarterly Review 
Assessment. We will add code to the MDS version 2.0 that will provide a 
mechanism for this.
    A significant correction of prior assessment differs from a 
significant change in status assessment, in which there has been an 
actual change in resident's health status. If there has been a 
significant change in health status, the facility cannot merely correct 
the affected items on the MDS. The facility must complete a full new 
assessment. Any subsequent changes should be noted elsewhere in the 
resident's record (for example, in the progress notes). As stated 
previously, however, the procedures and policy governing issues of data 
storage, retrieval, validation and maintenance in facilities will also 
be addressed more fully in a forthcoming HCFA publication, such as a 
State Operations Manual.
    Comment: Some commenters requested that the requirements we issue 
allow electronic signatures. This would avoid duplication by not 
requiring that the facility keep on file a hard copy with signatures.
    Response: In the development of the system, we will consider 
requirements for electronic signatures.
    Comment: Commenters addressed how and to what extent we should 
standardize electronic formats and how to revise the format to be 
consistent with technological changes. One State did not think that a 
standardized electronic format is necessary, and proposed that we 
request summary reports, findings and group data instead of 
individualized data, which would obviate the need for a standard 
format. Several others expressed the belief that we should specify a 
format. A national provider organization pointed out that a 
standardized format would facilitate collecting, merging, and analyzing 
national data. Another commenter noted that it would also decrease 
software development costs. A State provider organization pointed out 
that nothing would be more frustrating and costly than software that is 
not well thought out and requires several revisions. The commenter 
suggested that we already have experience in formatting because of the 
case-mix demonstration project.
    A State expressed the belief that it would be easier to maintain a 
single format than have to deal with different software languages and 
media types. The commenter further said that we or the States should be 
responsible for making formatting changes and sharing them with those 
affected. Another recommendation was to use Online Survey, 
Certification and Reporting System and create a subsystem for MDS data. 
By accessing an ``enhancement log,'' the system would be under constant 
review and revision.
    Response: We concur that many of these suggestions have merit. In 
the spring of 1995, we developed and issued a standard record layout 
and data dictionary. These were made available to facilities and 
software vendors as well as the States. When these regulations go into 
effect, the assessment records that facilities transmit to States must 
conform to the standard layout. Hence, software vendors have been 
strongly encouraged to use the layout and data dictionary when 
developing software products for MDS version 2.0. We believe that this 
will ensure uniformity in format but still allow facility flexibility 
and choice in terms of the software products they use to encode MDS 
    Comment: A national provider group proposed that we require States 
to develop and make available a software package that would transmit 
data in the appropriate format. A few commenters expressed the belief 
that as long as they meet Federal standards, States and facilities 
should be able to develop additional standards.
    Response: We have developed, and are in the process of testing, a 
national system for MDS data transmission that will be made available 
to all States that includes commercially available standard 
transmission software. We are mandating that the facility transmit MDS 
data to the State according to minimum data validity specifications and 
using standard communication and transmission protocols. The State may 
choose to impose additional data validity specifications, exceeding our 
mandated minimum specifications.
    Comment: We received a few suggestions regarding specific 
organizations with whom we could consult in developing a standardized 
format. One suggestion was to form a technical advisory board that 
would consist of Federal and State personnel, providers, hardware and 
software vendors, and resident advocacy groups. Another was to contact 
a specific standards committee to obtain their input on developing a 
    Response: We sought technical assistance from those parties as part 
of a technical advisory group that we organized as part of the systems 
design process. We met with several of the groups mentioned above early 
in the design process to get input on a number of systems development 
issues. We will continue to seek input throughout the development. We 
are committed to working closely with interested and affected parties 
in the design process.
    Comment: Commenters suggested that the standardized format should 
be in either ASCII or EBCDIC, and should include data item description, 
data item beginning and ending column, data item length, and whether 
the data is right or left justified. One State noted that some States 
have already begun to computerize and that the format should be 
receptive to those programs,

[[Page 67191]]

particularly for States utilizing our RAI. A State commenter believed 
that a data dictionary should be provided for each data submission, 
which would provide a vehicle for documenting problems with the data 
    Response: As previously stated, we have been working closely with 
States that are computerized. Several States were instrumental in 
developing the data dictionary and record layout. With their expertise, 
we constructed a standard layout that still allows flexibility for 
States which have added MDS items. Facilities and States must conform 
to the standard record layout, which is currently constructed in ASCII.
    Comment: Several commenters wondered how facility noncompliance 
with the requirement to transmit the MDS data would be enforced.
    Response: As stated earlier in this preamble, facility 
noncompliance with the reporting requirement established by this final 
rule will be subject to the full range of enforcement remedies set 
forth in part 488, subpart F, ``Enforcement of compliance for long-term 
care facilities with deficiencies.'' We will treat a facility's failure 
to comply with MDS reporting requirements as noncompliance under the 
definition in Sec. 488.301. At a minimum, we will require a plan of 
correction, and will impose the mandatory denial of payment for new 
admissions sanction if the facility has not achieved substantial 
compliance within 3 months from the date of the finding of 
noncompliance. In such a case, if the facility is still not in 
compliance with requirements within 6 months from the date of the 
finding, we will terminate its provider agreement. Also, we may impose 
one or more other remedies, as determined by us or the State, in 
accordance with part 488, subpart F.
    Facility failure to meet acceptable standards of performance, 
including failure to transmit the MDS data, or failure to otherwise 
improve upon its past poor performance, or failure to transmit or to 
maintain compliance relative to this reporting requirement could be 
considered by us to be indicative of the facility's inability or 
unwillingness to perform the resident assessment itself. We believe 
that this is a reasonable conclusion because if the requirement to 
conduct a resident assessment has been satisfied and completed, then 
the administrative reporting requirement would simply and logically 
follow. Noncompliance that is repeated or which recurs intermittently 
becomes part of the facility's noncompliance history which is a factor 
when we or the State selects the appropriate enforcement response. We 
will sanction, accordingly, a facility that demonstrates little or no 
commitment to continual, rather than cyclical, compliance. A State will 
be easily able to ascertain whether a facility is transmitting the 
required information timely and in the manner that we prescribe, those 
facilities that fail to meet the standard may be subject to the full 
range of available remedies, including denial of payment for new 
admissions and civil money penalties. We do not expect perfection 
relative to compliance with this reporting requirement; we will 
incorporate limited tolerance into the compliance assessment process, 
whereby good faith efforts made by facilities will be considered. An 
additional level of tolerance will exist during early phases of 
implementation of the requirement.
    Comment: A number of commenters addressed a wide variety of issues 
relating to the computerization of MDS information. A State commenter 
stressed that we should emphasize the benefits to facility staff and 
residents. A consumer advocacy group expressed the belief that we 
should address how computerization will affect utilization of the RAPs 
and the individualization of the care planning process.
    Response: As mentioned in the previous discussion of data uses, we 
believe that the automation of this information will be extremely 
helpful to facilities. We note that computerization of resident 
assessment information does not relieve facilities of their 
responsibility to develop, by an interdisciplinary team, a 
comprehensive, individualized care plan. While software packages exist 
that will automatically print a plan of care based on responses to MDS 
items that trigger a RAP, an individual must still exercise 
professional clinical judgment in customizing the care plan to suit 
each resident's individual needs.
    Comment: Commenters proposed that we develop regulations and manual 
instructions relating to transmitting data. A State wanted a 
telecommunications program to be mandated. Another State expressed the 
belief that we should penalize facilities which do not comply with 
submission requirements.
    Response: Once we develop key specifications for data transmission, 
we will issue clarifying policy and give instructions to States and 
providers in a State Operations Manual transmittal. We will require 
that a facility comply with the policy and regulations covering this 
data base in order to participate in the Medicare and Medicaid 
programs. As mentioned above, we are requiring that a facility 
electronically transmit its data via telecommunications infrastructure 
to the State. Penalties for not complying with submission requirements 
are addressed with the comments on proposed Sec. 483.20(b)(6), 
Automated data processing requirement.
    Comment: Some commenters discussed software vendors who have 
developed RAI packages. Commenters suggested that we develop a program 
to test vendor software for minimal acceptability.
    Response: We are developing several aids to promote the accuracy of 
RAI software packages developed by commercial vendors. These efforts 
include the following documents and data files, being published on our 
World Wide Web site (at http://www.hcfa.gov/Medicare/hsqb/mds20/) and 
otherwise available from us.
     Detailed specifications for data validity (valid ranges 
and consistency requirements for MDS items).
     Detailed logic and a test data base for RAP determination.
     Detailed specifications for the file structure, record 
layout, and field formatting for MDS files submitted by facilities.
     Detailed logic, a test data base, and a test program for 
Resource Utilization Group calculation.
    We are also developing a standard State-level MDS processing system 
to be distributed to each State. One feature of this system allows RAI 
software developers to transmit test files of MDS data to the State and 
receive a detailed log of all data validity errors encountered in the 
test file.
    We will continue to promote processes for assuring the accuracy of 
software packages developed by vendors even though the approaches to 
this effort will change over time.
    Comment: In the preamble to the proposed rule, we encouraged 
comment on developing a mechanism for advising us on the need and 
method to update the MDS and RAPs. Commenters agreed that we do need a 
method to update the RAI. Several suggested that we establish a 
clinical advisory panel or commission similar to the project team, 
clinical panel and advisory committee that developed the RAI. Other 
ideas included an annual update schedule, including any changes in the 
MDS as an addendum; sending periodic questionnaires to providers, State 
agencies and organizations; and a yearly comment period.
    Response: We have always recognized that the RAI will need to 
reflect advances in clinical practice and assessment technology. We 
will be making periodic revisions to the RAI. In 1994, we awarded a 
contract to the

[[Page 67192]]

Hebrew Rehabilitation Center for Aged, under which we will revise the 
RAI over a few years. The contractor will convene representatives of 
States, provider organizations, professional associations, and consumer 
organizations. These groups will advise us regarding the need to add or 
refine items or definitions, and regarding areas that are less well 
understood, and require clarification. As in the past, the revision 
process will be one in which we seek input from the many interested and 
affected groups.
    Comment: We solicited comment on how to coordinate the assessment 
process with other assessment protocols such as home health assessments 
and the uniform needs assessment instrument (comments on coordinating 
with PASRR are discussed with the comments on proposed 
Sec. 483.20(b)(5), Coordination). Some who commented merely agreed that 
it is necessary to coordinate assessments. Others gave suggestions, for 
example, that we issue a stronger directive that a facility provide a 
copy of the MDS as part of their post-discharge care, use the RAI in 
all long-term care settings, and coordinate with the home and community 
based waiver MDS of OBRA '90.
    Response: We recognize the need to coordinate an individual's 
health care across various health care settings and the importance of 
assessments in this process. Currently, we have no statutory authority 
to require this coordination except in the case of coordination of the 
RAI with preadmission screening programs for individuals who are 
mentally ill and mentally retarded. However, there is great interest in 
the development of clinical data sets like the MDS for several provider 
types, including end-stage renal disease facilities and home health 
agencies. Work is well underway to develop screening tools in some of 
these areas.
Sec. 483.20(b)(1) Resident Assessment Instrument
    Comment: Commenters addressed the proposed requirement that the 
assessment process must include direct observation and communication 
with the resident, as well as communication with licensed and 
nonlicensed direct care staff on all shifts. Most supported the 
requirement. A few commenters were concerned with enforcement of the 
requirement. Some wanted us to require that the facility communicate 
with the resident only when clinically feasible, since the resident may 
not have the cognitive skills to verbally communicate.
    Response: The resident is a primary source of information when 
completing the assessment and may be the only source of information for 
many items. In the RAI User's Manual and in the State Operations 
Manual, Transmittal No. 272, we have instructed facility staff to talk 
with and observe the resident. It is still possible to interact with a 
resident, even if he or she is unable to communicate verbally. Staff 
can closely observe the resident and respond to many MDS items based on 
observation. We acknowledge that evaluating facility compliance may be 
difficult but we believe that this requirement is too important to 
delete. However, we do not want to require a specific process for 
documenting collection of data across shifts. This would burden 
facilities and limit their flexibility to implement a process that is 
most appropriate for each facility's specific situation and practices.
    Comment: A few commenters believed that only the direct care staff 
responsible for providing care to the resident on all shifts should be 
included in the assessment process. Others wanted us to require that 
the facility talk to other people, such as a resident's family members/
guardians, the attending physician, and other licensed personnel.
    Response: We did not limit the assessment process to only those 
staff members responsible for actually providing hands-on care because 
we believe that facility staff who are not the primary care-givers 
often have valuable, first-hand information about a resident. For 
example, housekeeping staff who routinely talk with residents may be 
aware that a resident prefers extra pillows on her bed because it 
alleviates her back pain. In the State Operations Manual Transmittal 
No. 272 and in the RAI User's Manual we suggest that information 
sources for the assessment should include, but are not limited to, 
discussion with the resident's attending physician, appropriate 
licensed health professionals and family members. Family members are a 
valuable source of information regarding the resident, particularly for 
cognitively impaired residents, for whom family is often the only 
source of information regarding the resident. For example; a resident's 
spouse may be the only person who knows what the resident was like 
prior to admission to the nursing home, and is able to provide 
background information that is necessary for staff to complete the 
Customary Routine section of the MDS.
    We require that a physician be a part of the interdisciplinary team 
that prepares the care plan. We acknowledge that a doctor's schedule 
may not allow consistent participation in the assessment process. While 
we encourage facilities to discuss the resident's status with the 
attending physician to gain and validate information, we are not 
requiring it. The statute is silent regarding the participation of 
individuals other than health professionals.
    Comment: Some commenters wanted us to clarify that communication 
with all shifts can be both verbal and written. For example, 
information could be exchanged at pre-shift meetings, through progress 
notes or other documentation in the clinical record, or by other means.
    Response: We agree that information can be exchanged in a number of 
ways, and discuss possible mechanisms in the RAI User's Manual. At this 
time we do not wish to mandate a communication process; rather, each 
facility should determine how to best exchange information about the 
    While we did not receive comments regarding the facility assessing 
the resident using the RAI specified by the State, we are adding to 
Sec. 483.315(c) that the State must obtain our approval of a State-
specified instrument. This is more consistent with sections 1819(e)(5) 
and 1919(e)(5) of the Act. Furthermore, we are specifying those domains 
or areas that the facility must assess. We listed these domains in the 
assessment requirement previously, and inadvertently omitted them at 
former paragraph (b)(2); a State suggested that removing the domains 
weakened the requirement. Additionally, surveyors use the regulatory 
tags for particular domains to cite deficiencies when a facility has 
problems only in certain assessment areas. The State is responsible for 
obtaining approval from us for its instrument and to specify its 
approved instrument to facilities. Facilities must therefore rely upon 
the State's assertion that the instrument is approved by the Secretary.
Proposed Sec. 483.20(b)(2) When Required
    Comment: Several commenters addressed our proposed requirement that 
a facility complete the comprehensive assessment within 14 days after a 
resident's admission. Some commenters agreed with the 14-day time 
period, and wanted us to emphasize that the RAI and quarterly review 
are a minimum, stressing that all the resident's needs must be 
identified and care planned as necessary. A commenter requested 
clarification regarding completion ``within 14 days after admission,'' 
stating that it could be interpreted differently. For example, the 
facility could construe the requirement

[[Page 67193]]

to mean ``14 days after admission'' or ``the fourteenth day of 
    Response: Completion of the RAI specified by the State does not 
necessarily fulfill a facility's obligation to perform a comprehensive 
assessment. As previously stated, Sec. 483.25 requires that a facility 
ensure that each resident attains or maintains his or her highest 
practicable well-being. A facility is responsible for assessing areas 
that are relevant for individual residents, regardless of whether they 
are included in the RAI. For example, in completing the MDS, the 
assessor simply indicates whether or not a factor is present. If the 
MDS indicates the presence of a potential resident problem, need, or 
strength, the assessor should then investigate the resident's condition 
in more detail. The RAPs may assist in this investigation.
    Other problems that are relevant for an individual resident may not 
be addressed by the RAI at all. For example, the MDS includes a listing 
of those diagnoses that affect the resident's functioning or needs in 
the past 7 days. While the MDS may indicate the presence of medical 
problems such as unstable diabetes or orthostatic hypotension, there 
should be evidence of additional assessment of these factors if 
relevant to the development of a care plan for an individual resident. 
Another example of resident concerns not addressed by the MDS is sexual 
patterns. Some facilities have responded by creating additional 
assessment tools which they complete for all residents in addition to 
the State RAI. This is not a Federal requirement. Additional assessment 
is necessary only for factors that are relevant for an individual 
resident. Facility staff have stated that many of the items added to 
version 2.0 of the MDS may eliminate the need for supplementation of 
items in facility specific assessments and will hopefully contribute to 
a more comprehensive assessment for each resident.
    A facility is also responsible for assessing and intervening in 
response to acute or emergent problems such as respiratory distress or 
fever. While this may seem obvious, surveyors have reported numerous 
instances in which this has not occurred.
    A facility must complete the initial assessment no later than 14 
days after a resident's admission. For example, if a resident is 
admitted on July 1, the assessment must be completed by July 15. 
Although Federal requirements dictate the completion of RAI assessments 
according to certain time frames, standards of good clinical practice 
dictate that the assessment process is more fluid, and should be on-
    Comment: A few commenters recommended that we require the 
assessment within the month that the annual is due and not a narrowly 
defined ``every 365 days.''
    Response: The statute requires that a facility conduct an 
assessment no less often than once every 12 months. The facility should 
use the completion date of the last assessment (in other words, the 
date the registered nurse coordinator has certified the completion of 
the assessment on the RAP Summary form in section V) to calculate when 
the annual assessment is due. Current policy is that the next 
assessment is due within 365 days. As we are not aware of any problems 
regarding this policy, it will remain unchanged.
    Comment: Commenters proposed alternatives to the requirement that a 
facility complete an initial assessment within 14 days of a resident's 
admission. A commenter suggested that a facility complete the MDS 
within 14 days of admission, and the RAPs and care plan within 7 days 
of completing the MDS (instead of completing the MDS and the RAP 
process in 14 days). This would allow adequate time to complete and 
document the in-depth assessment. Others believed that 21 days to 
complete the assessment and 30 days to complete the care plan is 
    Response: As mentioned above, the statute currently specifies the 
time frame for the initial assessment, which does not allow us any 
latitude. We have defined the RAI to include the MDS, triggers and 
utilization guidelines, including the RAPs. Since the RAPs are part of 
the comprehensive assessment, they too must be completed within 14 days 
after admission or detection of a significant change. Current care 
planning requirements allow 7 days after completion of the RAI for 
completion of the plan of care.
    Comment: A consumer advocacy group suggested that we require an 
assessment similar to the quarterly review upon the resident's return 
from a hospitalization, since some change in the resident's condition 
had necessitated the hospital visit. Another commenter recommended that 
we require an assessment when the use of restraints for an individual 
increased over a prescribed threshold.
    Response: We agree that it may be beneficial for the facility to 
complete another assessment upon return from hospitalization or upon an 
increase in restraint usage. An increase in restraint use is an example 
of a situation in which a significant change reassessment is probably 
necessary. If it becomes necessary to restrain a resident or increase 
restraint usage, it is likely that the resident's condition has 
deteriorated and there are behaviors of new onset or increased 
frequency. In this case, the facility must revise the care plan. If a 
resident's condition has significantly changed prior to or after 
hospitalization, the facility must complete a comprehensive, 
significant change assessment on the resident's return to the facility. 
Some facilities have instituted a policy requiring a comprehensive RAI 
assessment each time a resident is readmitted after hospitalization. We 
prefer, however, to leave our requirement so that it is based on what 
is clinically warranted (in other words, whether the resident's 
condition meets the definition of a significant change).
    Comment: Several commenters, including some State and national 
provider organizations, were concerned with the impact that the 14-day 
requirement would have on facilities whose residents are typically 
short-stay, such as residents in hospital-based SNFs. A few wanted us 
to exempt facilities which have an average length of stay less than 30 
days from having to complete the assessment. Others wanted all 
facilities to have 30 days in which to complete the assessment. Some 
commenters suggested that we develop an alternate instrument that 
pertains to the specific care needs of short-stay residents. For 
example, they maintained that the MDS does not contain enough detail on 
the rehabilitative aspects of care, nor does it capture important 
information about a post-acute resident's health conditions. Others 
proposed that we allow a facility to complete only those MDS items that 
are appropriate for short-stay residents and skip the rest. A few 
commenters wanted us to convene a clinical advisory panel that would 
assist in identifying the clinical characteristics of short-stay 
populations and determining which MDS elements are critical for them.
    Response: From the comments received, it is evident that there are 
a variety of strategies that people believe would be useful in dealing 
with the assessment of short-stay residents. We cannot, under the law, 
extend the time frame for completion of the RAI. Nor can we currently 
exempt any facility certified under the long term care facility 
requirements, even though it may provide care exclusively or primarily 
for individuals needing a short period of rehabilitation prior to 
return to the community. While we are aware that this has long been a 
concern voiced by some providers, various

[[Page 67194]]

clinical experts have long believed that the majority of the RAI 
gathers useful information for short-stay individuals as well as long-
term residents. In 1992 and 1993, we consulted with several panels of 
expert clinicians and health professional, provider, and consumer 
groups to identify MDS items that were not pertinent for short-stay 
individuals. Of the few items that the panels proposed as not being 
relevant for short-stay individuals, there was no consensus on 
eliminating items, with all groups in agreement that all individuals in 
certified facilities would benefit from the RAI assessment process.
    We agree that the original MDS did not contain enough relevant 
information pertinent to short-stay populations. We have added some 
items to version 2.0 related to special therapies and care needs 
(previously included in the MDS+, an alternate RAI used by some States) 
that are very relevant for short-stay populations. A national 
association representing hospital-based skilled nursing facilities 
reported finding these MDS+ items useful in identifying nursing and 
therapy needs for short term stay residents and for determining 
Medicare coverage and subsequent reimbursement.
    We have also added an item to collect information on pain that will 
assist facilities in providing more focused care for short-stay 
residents. Furthermore, we will clarify and add material to several of 
the RAPs specific to short-stay populations as part of our contract 
with the Hebrew Rehabilitation Center for Aged to refine the RAI, in an 
effort to facilitate a more effective and efficient assessment for 
these residents.
    Moreover, as this concern has continued to be voiced by providers 
and as the number of individuals undergoing a short-term, generally 
rehabilitative stay in certified skilled nursing facilities has 
continued to increase, we have begun to revisit this issue. We are 
currently consulting with providers, consumer groups and professional 
associations for the purpose of informing them about our work on 
developing a module of assessment items that would be completed as an 
alternative to many of the core MDS items. In this way, probably 
through the use of the ``skip pattern'' logic in the MDS, facilities 
providing care for ``short term stay'' individuals could perform a 
standardized, reproducible assessment that is more relevant to the 
resident population, while still adhering to the statutory requirement 
to perform a comprehensive assessment based on the MDS.
    Comment: Several commenters expressed the belief that the MDS is 
not appropriate or does not collect enough information for special care 
populations, like pediatrics, individuals with AIDS, individuals with 
head injuries, individuals who are terminal and are receiving hospice 
care, and properly placed residents who have mental illness or mental 
retardation. The concerns were similar to those who addressed short 
stay residents. A State provider organization asserted that the MDS is 
designed for a homogeneous, chronic long term care resident and 
suggested that we develop a variety of assessment parameters. Another 
State organization stated that 70 percent of the MDS+ elements do not 
apply to children. The commenter went on to say that about one-fifth of 
those that do apply are demographic in nature. Commenters noted that 
facility staff need to know what kinds of behavior usually heralded the 
onset of a psychiatric crisis for a resident with mental illness, and 
that the MDS does not sufficiently capture behavioral disorders, mood 
disturbances, activity potential, and cognitive functioning for 
individuals with mental illness or mental retardation. To address these 
concerns, commenters recommended that we:
     Waive special care populations from the RAI requirement;
     Develop additional RAPs to address specific needs;
     Develop additional MDS elements in modules for ``special 
care'' residents;
     Have skip patterns; or
     Develop a new instrument.
    Response: We acknowledge that the MDS may not be completely 
responsive to the needs of special populations in nursing homes today. 
We expect to use MDS data to gain a better sense of the clinical 
characteristics and care needs of the diverse population of long term 
care facilities, and to refine the RAI as it appears warranted over 
time. In the meantime, some of the items that were added to the MDS are 
more responsive to the needs of these residents. For example, items 
that assess the presence, type, intensity, and treatment of pain were 
added to version 2.0; this is particularly important for residents in a 
hospice program. We have expanded significantly the MDS items 
associated with mood and behavior, and also included the use of 
programs for treatment of mood and behavior problems. Again, we note 
that the statute does not allow us to exempt certain populations.
    Comment: A State commenter requested that we exempt terminal/
hospice residents from RAI requirements since the philosophy of hospice 
care is vastly different from the rehabilitative approach of the 
typical nursing facility. Another State commenter noted that SNF/NF 
residents who are residents of a certified hospice will have two 
assessments and two care plans because of two sets of requirements; it 
is possible that the care plans may be conflicting.
    Response: When a resident of a Medicare participating SNF/NF elects 
the Medicare hospice benefit, the hospice and the SNF/NF must 
coordinate, establish, and agree upon a plan of care for both providers 
which reflects the hospice philosophy and is based on an assessment of 
the individual's needs and unique living situation in the SNF/NF. This 
coordinated plan of care must identify the care and services that the 
SNF/NF and hospice will provide in order to be responsive to the unique 
needs of the individual and his or her expressed desire for hospice 
care. The plan of care must include directives for managing pain and 
other distressing symptoms and be revised and updated by the SNF/NF and 
hospice, as necessary, to reflect the individual's current status.
    Our policy is that when a resident of a SNF/NF elects to receive 
Medicare coverage of services under the hospice benefit, both the 
Medicare hospice conditions of participation and the SNF/NF 
requirements apply. This means that the facility must assess a resident 
using RAI. Some confusion arose among the SNF/NF providers concerning 
the completion of RAPs that were not clinically appropriate. We have 
issued a clarification memorandum reminding providers that the RAPs are 
guidelines for assessment. They are not meant as prescriptive courses 
of actions. Rather, they are intended as frameworks for assessment that 
are clinically indicated depending on the needs of each individual 
resident. For example, some of the RAP guidelines may include content 
suggestive of an aggressive work-up to determine causal factors that 
may not be appropriate for individuals who are terminally ill (for 
example, an aggressive work-up to determine the cause of weight loss 
would generally not be appropriate or expected for a resident receiving 
hospice care.) Many of the RAPs, however, such as ``Activities'' or 
maintenance of the resident's ``Activities of Daily Living'' should 
lead to more aggressive assessment if they are useful in helping 
facility staff increase the resident's comfort level and ability to 
attain or maintain his or her highest practicable well-being and create 
an atmosphere in which the resident will be able to die with dignity.

[[Page 67195]]

It is important to remember that RAP documentation and the plan of care 
may also reflect a resident's right to refuse treatment or services.
    In summary, we developed the RAPs to assist facilities in planning 
appropriate and individualized care for residents. As we revise the RAP 
guidelines over the next few years, we intend to incorporate material 
specifically related to terminal care to better address the needs of 
the hospice residents residing in SNF and NFs.
    Comment: Some commenters wanted changes in the proposed definition 
of ``readmission.'' One asked for clarification of what a ``temporary'' 
absence meant, asserting that a 5-month absence could be temporary for 
someone who has lived in the facility for 10 years. A State provider 
organization thought that ``temporary absence'' should not be defined 
only as a hospitalization, but should allow for other absences like 
doctor's visits.
    Response: We do not consider it to be a temporary absence when a 
resident leaves a facility for a doctor's visit; we do not require that 
a facility conduct a new assessment merely because of such a visit. 
Readmission is defined as a resident returning to a facility from the 
hospital or therapeutic leave. We consider an absence to be temporary 
when the facility fully expects the resident to return. For example, if 
a resident leaves the facility for a few days during a holiday season, 
the nursing home would not need to complete a new assessment (unless 
there has been a significant change). If the resident is absent for an 
extended period of time, however, it may be difficult for the facility 
to determine if a significant change has occurred, and the facility may 
wish to conduct an assessment. Furthermore, if the resident is absent 
for a year or more, the facility must conduct its annual reassessment 
upon the resident's return. However, we are not attaching a time frame 
to temporary absence. This holds regardless of where the resident went 
and how long he or she was absent from the facility. This policy 
recognizes that there is variation in bed hold and discharge policies 
in the States.
    Comment: A few commenters expressed concern with the proposed 
provision in Sec. 483.20(b)(2)(i) that would allow a facility to amend 
assessment information up to 21 days after admission in some 
situations. One commenter thought the entire MDS was amendable. A 
national provider organization recommended that we permit a facility to 
correct ``technical'' items on the MDS beyond the 21st day because 
these items would not alter the triggers or RAP process.
    Response: In the past, we had not allowed a facility to correct 
non-factual errors once the assessment was completed. Rather, these 
non-factual errors were to be noted elsewhere in the resident's 
clinical record (for example progress notes). A facility corrected non-
factual errors on the next assessment (in other words quarterly, 
annual, significant change). A facility needs to complete a new MDS 
when the non-factual error would have an impact on the resident's care 
plan. In this case, a facility should perform another comprehensive 
assessment (in other words the MDS and RAPs) within 14 days of noting 
the error. We would note that non-factual errors associated with a 
resident's assessment and significant change associated with the 
resident are two different concepts; however, both can result in 
completing a new comprehensive assessment. As discussed below, we are 
deleting the 21-day provision.
    Comment: A State provider group disagreed with our proposed 
delineation in Sec. 483.20(b)(2)(i)(B) of categories within the MDS 
that can be amended, because the commenter did not believe that 
facilities and surveyors would be able to consistently differentiate 
which items on the MDS could be changed. The commenter proposed 
changing the requirement to read ``Further resident observation and 
interaction indicates a need to alter the initial assessment.''
    Response: The provision to amend certain sections within 21 days 
has been confusing for facilities. We are deleting the 21-day 
provision. We require that a facility complete the MDS and RAPs within 
14 days of a resident's admission, within 14 days of a significant 
change in a resident's status, and at least annually. By the fourteenth 
day, the registered nurse must sign and date the RAP Summary form to 
signify that the assessment is complete, within regulatory time frames. 
Within 7 days of completing the assessment, the facility must:
     Encode the MDS and RAP summary in a machine readable 
     Run the encoded MDS through edits specified by us. The 
facility must correct any information on the encoded MDS that does not 
pass HCFA-specified edits.
    Within 7 days of completing the assessment, the facility must be 
able to transmit the edited MDS and RAP Summary form to the State 
according to State or Federal time frames. Therefore, the facility 
     ``Lock'' the edited MDS record;
     Certify that the MDS meets HCFA-specified edits; and
     Print the edited MDS and RAP Summary form and place them 
in the resident's record. The hard copy of the assessment must match 
the assessment that the facility transmits to the State. A facility 
must, therefore, correct the hard copy to reflect changes associated 
with the edit correction process.
    We believe that this change eliminates the confusion for facilities 
as to what sections could be changed. It will also decrease the number 
of corrections the facility will have to make and subsequently transmit 
to the State due to changed assessment information.
    In Sec. 483.20 (b)(2)(ii) and (b)(2)(iii), we proposed that a 
facility must assess current residents of a nursing facility by October 
1, 1991 and residents of a skilled nursing facility by January 1, 1991. 
We are deleting paragraphs (b)(2)(ii) and (b)(2)(iii) because these 
requirements are no longer necessary. They were necessary when the 
proposed regulation was written to make sure that individuals already 
residing in long term care facilities were comprehensively assessed 
according to the new requirements.
    Comment: There were many comments related to the definition of 
significant change at proposed Sec. 483.20(b)(2)(iv). Commenters 
proposed amendments to the definition, deletions to the definition, and 
additions to the definition. These comments follow.
    Several commenters were concerned that the definition leaves too 
much room for interpretation and were particularly concerned about how 
this would be evaluated during the survey process. One commenter 
pointed out that the definition for significant change leaves much to 
the professional judgment of the surveyor to decide what constitutes a 
significant change. A few suggested that we delete ``or should have 
determined'' from the criterion for significant change because it 
invites surveyor second-guessing of facility multi-disciplinary staff 
judgment long after the fact.
    Other comments related to the notion of permanency in the 
definition. Commenters asserted that the distinction between acute and 
chronic changes is often difficult to determine, and that the emphasis 
on permanency of the change is too exclusive. Some commenters preferred 
the language in the State Operations Manual at Appendix R or in the 
original RAI Training Manual. They believed that there is inconsistency 
between the proposed regulation and the State Operations Manual 
training manual, for example, the definition of ``permanent.''

[[Page 67196]]

Commenters wanted us to clarify what permanent means. Another requested 
that we delete ``permanent'' and ``apparently permanent'' from the 
criterion, and that we add ``is significant (major) or likely to be 
permanent.'' The commenter believes that this will be more consistent 
with the State Operations Manual Transmittal No. 250, which contains 
surveyor guidelines and protocols.
    A commenter was concerned about whether the examples of significant 
change in the proposed regulation were intended to be all-inclusive, 
and believed they should be expanded and clarified. For example, the 
commenter believed that the regulation should clarify what a ``sudden 
improvement in resident status'' means.
    A few commenters, including a national and a State provider 
organization, recommended that we change proposed paragraph (b)(2)(iv) 
to read ``within 14 calendar days after the facility determines * * * 
that there has been a significant decline or improvement in the 
resident's physical or mental condition such that in the clinical 
judgment of the assessor the change in condition appears to be major or 
permanent.'' They believed that this wording would be more consistent 
with the original training manual.
    A few commenters believed that proposed paragraphs (b)(2)(iv) (A) 
and (G) are redundant. One commenter was confused as to which elements 
of the MDS the facility reviews in determining if a significant change 
has occurred according to the criterion at paragraph (b)(2)(iv)(A). A 
consumer advocacy organization wanted paragraph (b)(2)(iv)(A) to read 
``Apparent permanent deterioration or improvement in two or more 
activities of daily living or apparent deterioration or improvement in 
any combination of two or more activities of daily living, 
communication or cognitive abilities.''
    A few provider organizations wanted the criterion revised to read 
``Deterioration in behavior or mood to the point where daily problems 
arise or relationships have become problematic.'' This wording would be 
more consistent with the original training manual.
    A few recommended that we delete ``requires staff intervention'' or 
else clearly define the phrase. Commenters suggested that we change the 
wording to ``benefits from staff intervention.'' One believed that the 
criterion should not be limited to situations requiring staff 
interventions because there may be instances in which deterioration is 
not perceived by staff as disruptive or detrimental, and staff would, 
therefore, not intervene. For example, staff would not intervene, in 
the commenter's scenario, in a case in which a resident is depressed 
and whose behavioral presentation is passive.
    One suggestion was to reword paragraph (b)(2)(iv)(D) to read ``A 
marked or sudden deterioration in a resident's health status * * *''. 
This would clarify that this criterion does not include the expected 
clinical progression of a given diagnosis or condition.
    A few commenters suggested that we delete paragraph (b)(2)(iv)(D) 
because it is too subjective. One commenter stated that this criterion 
would have surveyors citing facilities for everything; for example, 
just the fact that the resident is old means that their life may be in 
danger of ending.
    A commenter suggested deleting ``a factor associated with'' at 
paragraph (b)(2)(iv)(E) because it does not add anything to the 
definition. Others offered suggestions for clarifying the criterion at 
paragraph (b)(2)(iv)(E). A few commenters proposed adding ``* * * that 
has not responded to treatment in the last 14 days,'' which would give 
the clinician a time frame in which to evaluate the effectiveness of an 
intervention. Another commenter proposed adding ``* * * that has not 
responded to treatment within clinically accepted time period 
    A national provider group proposed that we delete the criterion at 
paragraph (b)(2)(iv)(F) and replace it with ``improved behavior, mood, 
or functional health status to the extent that the established plan of 
care no longer matches what is needed by the resident.'' The commenter 
believed that this would confine the definition of change to a 
functional measure and focus the criteria on a positive outcome.
    A commenter suggested that we add two criteria to paragraph 
(b)(2)(iv): ``(iv)(H) Potentially reversible deterioration in mental 
functioning due to suspected delirium. (iv)(I) Deterioration in a 
resident's family or social circumstances which places the resident's 
psychosocial well being in danger.'' The commenter believed that the 
criteria, as published in the proposed rule, do not identify changes 
that may be temporary, but which could be noteworthy. Furthermore, the 
commenter does not believe that enough attention has been paid to the 
psychosocial aspects of change.
    One State commented that the definition should not be in the 
regulation text, but should remain in interpretive guidelines, 
asserting that it will affect the objectivity of the assessors in 
determining significant changes since these guidelines will become more 
    Response: These substantial comments regarding significant change 
assessments warranted extensive evaluation of the definition for 
significant change assessment. Over the past several years, we have 
been providing clarification regarding the significant change 
reassessment requirement in surveyor training and other training that 
we have conducted, as well as through verbal and written communication 
to States and providers. We believe that it is necessary to include the 
definition of significant change in the regulation text. However, the 
definition contained in this final regulation is dramatically altered 
from that which appeared in our proposed rule, largely in response to 
the comments we received and the collective experience of providers and 
States since implementing the RAI process in 1990. This changed 
definition will remain in the regulation text to reinforce a facility's 
responsibility to conduct significant change reassessments.
    A key to determining whether a significant change has occurred is 
whether the resident's status has changed to the extent that the plan 
of care no longer reflects the resident's needs and the facility's plan 
to address them.
    We are revising the definition of significant change, as follows: A 
significant change means a decline or improvement in a resident's 
status that will not normally resolve itself without intervention by 
staff or by implementing standard disease-related clinical 
interventions, that has an impact on more than one area of the 
resident's health status, and requires interdisciplinary review or 
revision of the care plan, or both. An example of a condition that will 
normally resolve itself without intervention by staff is a resident's 5 
pound weight loss, which would trigger a significant change 
reassessment under the old definition. However, if a resident had the 
flu and experienced nausea and diarrhea for a week, a 5 pound weight 
loss may be an expected outcome. If the resident did not become 
dehydrated and started to regain weight after the symptoms subsided, a 
comprehensive assessment would not be required. Generally, if the 
condition has not resolved at the end of approximately 2 weeks, staff 
should begin a comprehensive assessment.
    A significant change reassessment is probably indicated if decline 
or improvement are consistently noted in two or more areas of decline, 
or two or more areas of improvement:

[[Page 67197]]

     Any decline in activities of daily living physical 
functioning in which a resident is newly coded as 3, 4 or 8 (Extensive 
assistance, Total dependency, Activity did not occur);
     Increase in the number of areas where Behavioral Symptoms 
are coded as ``not easily altered'' (for example, an increase in the 
use of code 1 for E4B);
     Resident's decision-making changes from 0 or 1 to 2 or 3;
     Resident's incontinence pattern changes from 0 or 1 to 2, 
3 or 4, or placement of an indwelling catheter;
     Emergence of sad or anxious mood as a problem that is not 
easily altered;
     Emergence of an unplanned weight loss problem (5 percent 
change in 30 days or 10 percent change in 180 days);
     Begin to use trunk restraint or a chair that prevents 
rising for resident when it was not used before;
     Emergence of a condition or disease in which a facility 
judges a resident to be unstable;
     Emergence of a pressure ulcer at Stage II or higher, when 
no ulcers were previously present at Stage II or higher; or
     Overall deterioration of resident's condition; resident 
receives more support (for example, in activities of daily living or 
     Any improvement in activities of daily living physical 
functioning where a resident is newly coded as 0, 1 or 2, when 
previously scored as a 3, 4 or 8;
     Decrease in the number of areas where Behavioral Symptoms 
or Sad or Anxious Mood are coded as ``not easily altered;''
     Resident's decision-making changes from 2 or 3 to 0 or 1;
     Resident's incontinence pattern changes from 2, 3 or 4 to 
0 or 1; or
     Overall improvement of resident's condition; resident 
receives fewer supports.
    We may revise this list over time, eliminating or adding items as 
well as other situations that meet the significant change definition. 
In an end-stage disease status, a full reassessment is optional, 
depending on a clinical determination of whether the resident would 
benefit from it.
    We believe that this definition is clearer than the proposed 
definition. It also addresses many of the commenters' concerns, 
including noting that the change can be for improvement or 
deterioration, and eliminates the need to interpret whether a change is 
    A self-limited condition is a condition that will run its course 
without intervention. It is of limited duration. Because this implies a 
decline in status, we are retaining the phrase, ``a sudden or marked 
    Comment: Commenters requested that we specify that the time limits 
for reassessments begin once the assessor makes a clinical 
determination that the change in resident status is permanent, major, 
or both (in other words, within 14 days). This would prevent an 
inconsistent outcome.
    Response: In paragraph (b)(2)(iv), we proposed that the facility 
must conduct the reassessment within 14 days after the facility 
determines that a significant change has occurred. We are retaining 
this provision (in Sec. 483.20(b)(2)(ii)).
    Comment: Some commenters addressed the overall goal of 
reassessments due to significant change. One commenter stated that the 
clinical goal should be to identify functional changes and evaluate 
their source. Early identification of illness, injury, etc., may allow 
intervention to reverse and prevent permanent loss of function. The 
commenter cautioned that the evaluations can be expensive and counter-
productive. Others maintained that some changes are the natural result 
of the aging process or of disease processes like Alzheimer's disease. 
Some believed that these changes can be anticipated and care planned 
without conducting a new assessment. A commenter wanted us to add a new 
criterion to the definition for potentially reversible deterioration in 
mental functioning due to suspected delirium.
    Response: We believe the commenter's suggestion for a new criterion 
is included under the new definition. The primary role of the RAPs, 
which a facility also must complete for a significant change 
reassessment, is to help the facility to identify causal or risk 
factors that can be eliminated or minimized. Completing the RAP process 
helps the facility determine what services the resident needs. It would 
be more costly if the facility does not detect a significant change and 
the resident is allowed to decline. The resident could develop 
complications from the onset of a health problem or require 
hospitalization. Furthermore, significant change reassessments will 
help the staff to determine if a change is the expected result of a 
disease process or could be reversed. Such would be the case in a drug-
induced delirium.
    Comment: A few commenters thought that the final regulation should 
allow for consultation with a physician (the medical director, for 
example) to determine the significance or permanence of a resident's 
change. Therefore, they maintained, the facility staff would not have 
the responsibility to make the determination and would not be cited for 
    Response: We encourage consultation with physicians, but it is not 
our intent to absolve facilities from their responsibility to monitor 
resident status. The statute requires that a registered nurse conduct 
or coordinate the assessment. The registered nurse, by virtue of 
licensure requirements and State practice acts, has responsibility for 
assessing and monitoring an individual's status, and notifying a 
physician, as is warranted by changes in the individual's status.
Proposed Sec. 483.20(b)(3), Quarterly Review (Redesignated as 
Sec. 483.20(c))
    Comment: Several commenters discussed the proposed quarterly review 
requirements. Most agreed that a facility should assess a resident at 
least quarterly. A few, including a State, wanted us to mandate the use 
of a standard form. They believe that this would provide consistency.
    Response: OBRA '87 required that a long term care facility examine 
each resident no less frequently than once every 3 months and, as 
appropriate, revise the resident's care plan. We are accepting the 
recommendation to mandate a standard instrument. Not only will this 
provide consistency across the nation, but it will facilitate 
computerization of the quarterly review assessment items. In keeping 
with the Federal requirement for a uniform resident assessment 
instrument, the Quarterly Review form is considered part of the RAI. 
States may modify this form or use an alternate instrument by 
submitting a request to us. However, each State's Quarterly Review form 
must include at least those items on the HCFA Quarterly Review form.
    Comment: One commenter said that the requirement for a quarterly 
assessment should be taken in the spirit of four times a year and not a 
rigid every 90 days. This would allow the facility to be flexible so 
that a resident's health status or the facility schedule could be taken 
into account.
    Response: If a resident is experiencing a transient condition or is 
out of the facility when his or her quarterly review is due, the 
facility can wait until the resident's condition stabilizes or the 
resident returns to the facility. The facility should document the 
circumstances associated with the delay in conducting the quarterly 
review. Regarding timing of the quarterly review, we draw from the 
statutory language, which states that the facility must examine each 
resident no less

[[Page 67198]]

frequently than once every 3 months. This is also consistent with the 
regulations in effect prior to the publication of the proposed 
regulation. We would also point out that the calculation of when the 
quarterly review is due based on when the last assessment or quarterly 
review completed by the facility. For example, if a facility completed 
a quarterly review March 1, and completed a significant change 
reassessment April 15, the facility must complete the next quarterly 
assessment no later than July 15. If there had not been a significant 
change, the next quarterly assessment would have been due no later than 
June 1.
    Comment: A few commenters wanted us to provide that the quarterly 
review determines if a comprehensive reassessment is necessary. 
Furthermore, they stated that the care plan may need to be revised as a 
result of the quarterly assessment. One commenter proposed that 
quarterly reviews must also review any section of the MDS relevant to 
problems triggering or found in the assessment.
    Response: The purpose of the quarterly review is to ensure that the 
resident assessment data is accurate, and that the facility continues 
to have an accurate picture of the resident, in order to monitor and 
plan care. If the quarterly review indicates that a significant change 
has occurred, the facility needs to conduct a comprehensive 
reassessment. This also applies to the comment proposing a requirement 
to review other areas in the MDS if the quarterly review finds a 
problem. The facility is not limited to only reviewing the required 
portions of the MDS that comprise the quarterly review. While we 
encourage facilities to review any section that might be relevant to an 
individual resident, we are not requiring at this time that a facility 
review particular sections. We are providing in Sec. 483.20(d) that the 
facility must revise the plan of care when indicated by the assessment.
    Comment: Several commenters wanted additional MDS items or sections 
required as part of the quarterly review. One commenter thought that 
the quarterly review should include the entire MDS, providing 
additional longitudinal information for an outcome-based quality 
assessment system. Some commenters wanted all or a portion of Section 
N, Skin Condition, from the MDS+, added. One commenter noted that skin 
condition is a vital part of nursing care and the resident's 
psychosocial well-being. Others wanted at least one item added from 
former Sections B, Cognitive Patterns, C, Communication/Hearing 
Patterns, E, Physical Functioning and Structural Problems, F, 
Continence in Last 14 Days, H, Mood and Behavior Patterns, K, Health 
Conditions, L, Oral/Nutritional Status, and P, Special Treatments and 
    Response: We are not requiring that a facility complete the entire 
MDS on a quarterly basis, as we thought the additional burden this 
would impose was not warranted clinically. Based heavily upon 
suggestions submitted by commenters, we have added several items to the 
quarterly review, including an item on skin condition. The primary use 
of the quarterly assessments is to regularly ensure that the care plan 
is responsive to the needs of the resident. A secondary use of the 
information collected through quarterly assessments is that of quality 
monitoring at the resident and facility level. Some of the items on the 
quarterly review form have been identified as quality measures. An 
example of a quality indicator is urinary incontinence. The MDS item 
H.1 is one of the items that we use to monitor quality of care 
associated with urinary incontinence. A mandated quarterly review 
assessment will provide for the consistent collection and use of such 
    We are also requiring that a facility transmit its quarterly review 
assessment records to the State. There are several reasons for this. 
Analysis of resident-level data over time is necessary to generate 
quality measures (in other words, a quality indicator system requires 
quarterly assessment data for each resident). As noted in the 
discussion on establishment of the national data base, a facility can 
identify opportunities to improve its own outcome and care practices 
through the quality measures. Quarterly data will also help a facility 
in its quality assurance program. Furthermore, if MDS data is to be 
used for quality monitoring purposes by surveyors, it must be timely. 
This means that we must require facilities to transmit their quarterly 
review records, in addition to admission, annual and significant change 
assessments, in order to use MDS data in the long term care survey 
process. Leading researchers and survey experts in this area believe 
that quarterly data is absolutely necessary for the timely and reliable 
identification of resident outcomes, both at the facility level and the 
resident level.
Proposed Sec. 483.20(b)(4) Use (Redesignated as Sec. 483.20(d))
    Comment: A few commenters requested a definition of maintaining 
``all resident assessments.'' They were confused as to whether this 
meant just the MDS, or also the Identification Face Sheet, 
documentation of the quarterly reviews, the RAP Summary sheet, and 
information pertaining to the decision to proceed to care planning.
    Response: ``All resident assessments'' includes all the documents 
mentioned by the commenters--all MDS forms (Sections AA through R, and 
V--the RAP Summary Form), the Quarterly Review forms, and Discharge and 
Reentry forms. The RAP Summary form indicates which RAPs were 
triggered, whether care planning was done for each of the RAP 
conditions, and where data from the RAP assessment process is 
    We also require that a facility complete a subset of items when a 
resident is discharged, which includes identifying information about 
the resident, the type of discharge and the destination upon discharge. 
As mentioned in the discussion on the national data base, we are also 
requiring that the facility transmit this information to the State and 
to us. This will allow for the closure of a resident's current stay at 
the facility. Furthermore, we are requiring that a facility complete a 
subset of MDS items upon a resident's reentry to the facility 
(Sec. 483.20(f)). This will allow the facility to ``reopen'' the 
resident's record in the facility system as well as at the State and 
national levels.
    Comment: We requested that the public advise us on what the 
requirements should be for facilities to keep a hard copy of the MDS on 
a resident's file if the assessment is computerized. A few commenters 
urged us to allow flexibility. One pointed out that society is making 
large strides toward paperless environments, and a Federal regulation 
should not inhibit such progress. Other commenters thought that a hard 
copy should remain in the resident's record even if the assessment is 
computerized. Commenters recommended that hard copies stay in the 
record for 2 years, as the proposed regulation discussed. Another 
commenter suggested 1 year. A consumer advocacy group noted that hard 
copies should always be accurate because it is the copy most likely to 
be used by direct care staff. A State said that a hard copy on the 
record is essential because appropriate staff may not always be 
available to retrieve data from the computer. A few commenters did not 
want us to require that a facility keep a hard copy of the MDS in a 
resident's active record. Commenters believed that paper records are 
expensive to maintain, and it should be acceptable if a hard copy were 

[[Page 67199]]

accessible to staff, residents, and surveyors. A State commenter 
thought that a coding system would need to be created to handle old 
assessments and reassessments. Commenters submitted other ideas. One 
suggestion was to keep the original MDS on the chart and not require a 
computerized copy. Another was to allow either the original or a 
computerized version. A State suggested printing a hard copy at the 
time of survey, and that all electronic assessment records should be 
created according to the intervals called for under the MDS. The 
commenter believed that the computerized system should be able to save 
or change information as needed. Another State said that we should 
require no further storage of a hard copy version once the facility 
produces and transmits a computer version.
    Response: In order to be used as intended, by clinical staff at all 
levels, we believe that it is necessary for the facility to keep a hard 
copy in the resident's record of all assessments for the past 15 
months. This issue is also discussed in responses to comments on 
Sec. 483.20(b)(5). We agree that direct care staff would be most likely 
to use a hard copy of the assessment, and believe that it would be 
problematic for clinical staff to be expected to retrieve assessments 
from the computer, both in terms of their ability and willingness to do 
so and also having the necessary equipment available on all clinical 
units. Unless all charting is computerized, we believe that a facility 
should maintain RAI assessments as a part of the resident's clinical 
record. However, if a facility has a ``paperless'' system in which each 
resident's clinical record is entirely electronic, the facility does 
not need to maintain a hard copy of the MDS. To qualify for this 
exception, the facility's MDS system must meet the following minimum 
     The system must maintain 15 months' worth of assessment 
data (as required in Sec. 483.20(d)) and must be able to print all 
assessments for that period upon request;
     The facility must have a back-up system to prevent data 
loss or damage;
     The information must always be readily available and 
accessible to staff and surveyors; and
     The system must comply with requirements for safeguarding 
the confidentiality of clinical records.
    Furthermore, the facility must maintain evidence that identifies 
the Registered Nurse Assessment Coordinator and other staff members 
that completed a portion of the assessment.
    Comment: Commenters expressed concern with the proposed requirement 
to maintain assessments from the previous 2 years on the resident's 
clinical record. One stated that the intent of this requirement is 
unclear, as it does not appear to serve any purpose for facility staff 
in care planning, in that facility staff will be using the most recent 
assessment information they have to aid them in the development of the 
care plans. According to commenters, maintaining 2 years' worth of 
assessment data in the resident's active record would be too bulky and 
cumbersome. It could even add to facility costs associated with 
purchasing large chart binders and chart racks. One commenter stated 
that the full 2-year cycle of a resident would have approximately 42 
pages of assessment documentation in the chart. If the resident had two 
episodes of ``significant change'' in that time period, this would add 
an additional 18 pages. Commenters maintained that a thick record would 
be prohibitive and intimidating, adding that quantity does not always 
translate into quality.
    Several commenters maintained that surveyors look at only the 
previous year's assessment information. Also, the MDS does not require 
that the assessor look back over more than 180 days, so 1 year's worth 
of data would be sufficient. They stated that earlier assessment 
information would be easily retrievable from the record if needed. 
Commenters asserted that medical information that is more than 12 
months old is likely irrelevant and outdated. A commenter believed that 
the regulation's intent could be met if historic materials were 
retrievable and available to the assessor during the reassessment and 
course of care. A commenter suggested that we require that the facility 
maintain all full comprehensive resident assessments completed within a 
12-month period in a resident record. One commenter wanted the 2-year 
requirement to be effective on the date of the final rule.
    Response: The original intent of the proposed requirement was to 
enable a facility to better monitor a resident's decline and progress 
over time. We are not able to determine if requiring that a facility 
maintain assessment information for a 2-year period has facilitated the 
analysis of this longitudinal data. We believe that the information is 
necessary to evaluate the resident's plan of care, but have decreased 
the required time period to 15 months of assessment records, since the 
survey cycle allows for up to 15 months between surveys. Additionally, 
computerizing MDS records will allow a facility to access prior 
assessments in a timely and more efficient manner.
    Comment: A professional organization did not believe that 2 years 
of assessment data was enough to capture a decline in the resident's 
status and thought that we should require a facility to maintain 3 
years of assessment data. Another suggestion was that we require a 
facility to maintain at least two comprehensive assessments in the 
record with the appropriate quarterly review and RAP summary forms.
    Response: Requiring that a facility maintain assessment data on a 
resident's record for 3 years would be too cumbersome for most 
facilities; however, a facility can maintain as many years of 
assessment information as it likes. It is possible that having this 
amount of longitudinal data would be helpful for a facility in tracking 
resident progress. However, we are only requiring that a facility keep 
15 months of the documentation associated with the RAI in the 
resident's active record.
    Comment: Commenters requested that we permit a facility to keep 
prior assessment data in a ``thinned'' chart or another appropriate 
location as opposed to on the active chart. A few commenters did not 
feel that we should mandate where the facility keeps documentation. 
Commenters suggested that we revise the requirement to provide that the 
facility must maintain in active status all resident assessments 
completed within the previous 2 years and use the results of the 
assessments to develop, review and revise the resident's comprehensive 
plan of care.
    Response: As stated above, we are revising the regulation to 
require that a facility maintain 15 months of assessment records. We 
would note, however, that a facility need not store assessment data in 
one binder to meet this requirement. A facility may choose to maintain 
the data in a separate binder or kardex system, as long as the 
information is kept in a centralized location and is accessible to all 
professional staff members (including consultants) who need to review 
the information to provide care to the residents. It is not acceptable 
for the assessment data to be stored where staff cannot easily use it.
    Comment: Another suggestion was we require the facility make 
available the 2 years of data within 1 hour of request.
    Response: We emphasize that the primary purpose of maintaining the 
assessment data is so that a facility can monitor resident progress 
over time. The information should be readily available at all times.

[[Page 67200]]

Proposed Sec. 483.20(b)(5) Coordination (Redesignated as 
Sec. 483.20(e))
    Comment: Commenters addressed the proposed requirement that the 
facility coordinate the assessment with any State-required preadmission 
screening program. Most who addressed this issue agreed that 
coordination was needed to prevent duplicative efforts, particularly as 
part of the Level II PASRR. Some, including States and provider 
organizations, stated that the responsibility for coordination should 
be a State function and not the facility's responsibility, noting that 
a facility has little or no control over the screenings. One commenter 
noted that the facility should not be penalized during a survey because 
the State mental health authorities are unable to do appropriate plans 
of care. A commenter requested that we not mandate this coordination 
because, in most States, coordination will be extremely difficult to 
accomplish. A commenter suggested that we provide, instead, that the 
facility coordinate assessments to the maximum extent possible.
    Response: We agree that coordinating the MDS with Federal PASRR 
requirements, to the extent practicable, will prevent duplicative 
efforts and the unnecessary expenditure of resources. The proposed 
regulation required that the facility coordinate ``to the maximum 
extent practicable'' with the PASRR program and we are retaining this 
language as is.
    With respect to the responsibilities under the PASRR program, the 
State is responsible for conducting the screens, preparing the PASRR 
report, and providing or arranging the specialized services that are 
needed as a result of conducting the screens. The State is required to 
provide a copy of the PASRR report to the facility. This report must 
list the specialized services that the individual requires and that are 
the responsibility of the State to provide. All other needed services 
are the responsibility of the facility to provide. The PASRR report 
also lists some nursing facility services the State PASRR evaluator 
recommends for the facility to consider including in the plan of care. 
We note that the survey agency should not cite a facility when the 
State fails to fulfill its responsibility. However, if a facility fails 
to fulfill its responsibilities to, for example, prepare fully 
developed care plans, then the survey agency may cite it.
    We would also like to point out that the requirements relating to 
the preadmission screening and annual resident review program were 
amended on October 19, 1996 by Public Law 104-315. In summary, the 
legislation amended section 1919(e)(7) of the Act by removing the 
Federal requirement for the annual resident review. Section 
1919(b)(3)(E) of the Act was also amended by the addition of a 
requirement that a nursing facility notify the State mental health 
authority, mental retardation, or developmental disability authority, 
as applicable, promptly after there is a significant change in the 
physical or mental condition of a resident who is mentally ill or 
mentally retarded. Finally, the legislation amended section 
1919(e)(7)(B) of the Act to require that the State mental health or 
mental retardation authorities conduct a review and determination after 
the nursing facility has informed them that there has been a 
significant change in the resident's physical or mental condition. In 
developing regulations to implement the new provisions of the law, we 
will try to ensure that States and facilities are not be subjected to 
duplicative requirements or the unnecessary expenditure of resources.
    Comment: Commenters were concerned that the condition of a resident 
may necessitate a new comprehensive assessment done earlier than 
annually, which would be administratively problematic for State mental 
health authorities trying to coordinate their reviews.
    Response: From the beginning of the PASRR program, a significant 
change in the condition of a resident with mental illness or mental 
retardation has required a judgement call to be made concerning whether 
an annual resident review was necessary. While this requirement may 
initially have caused some difficulty in scheduling, these procedures 
should already be in place.
    Comment: A few commenters submitted suggestions as to specific ways 
that the RAI and PASRR could be coordinated. One suggested that we 
expand items 11 and 12 in the former Section I, Identification 
Information, which pertain to mental health history and conditions 
related to mental illness or mental retardation. Another suggested that 
we grant psychologists the same status under these regulations to 
practice to the full extent of their licensure as has been recognized 
under the PASRR regulations. One commenter believed that Level II 
screening could serve as part of the cognitive, psychosocial, mood, and 
behavior RAPs. A State commenter recommended that the mental health 
authority use the MDS for nursing decisions to refer someone into the 
community mental health system for further review. Another commenter 
proposed that the facility forward a copy of the MDS to the State 
mental health authority, and that relevant information from hospital 
admissions be incorporated into the MDS.
    Response: There are several elements of the MDS that could assist 
in determining if the resident has mental illness or mental retardation 
and whether nursing home level of care or specialized services, or 
both, are necessary. We have changed the language in the Section AB, 
Demographic Information of the MDS to be consistent with PASRR language 
and definition regarding mental illness and developmental disabilities. 
We will further consider the coordination of the RAI and PASRR in the 
development of the regulations to implement the new legislation.
    Comment: A commenter suggested that we add paragraph (b)(5)(i), 
which would provide that State mental health and mental retardation 
authorities may determine for those residents whose mental status and/
or intellectual functioning has remained stable over a 2-year period, 
based on annual resident review criteria, as defined under subpart C, 
Sec. 483.100 et seq., and on-site evaluation and record review, whether 
the data contained in the annual RAI/MDS is sufficient to make a 
determination of continued need for NF services and/or specialized 
services, or whether further evaluation is required. The commenter 
believed that much of the information needed for Level II screening can 
be obtained from the RAI, especially for long-standing nursing home 
residents with mental illness or mental retardation. The State mental 
health authority would still be making the determination of level of 
services as required under the PASRR requirements.
    Response: We agree, as noted above, that the RAI data may serve as 
the basis for State mental health and mental retardation authorities to 
evaluate and make determinations about the need for NF care and for 
specialized services. However, section 1919(e)(7) of the Act prohibits 
a State mental retardation authority and a State from delegating their 
responsibilities to a nursing facility or to an entity that has a 
direct or indirect affiliation or relationship with a facility. 
However, those responsible for conducting the evaluations should use 
applicable up-to-date data from the MDS.
    Comment: A State commenter suggested including results of the PASRR 
reviews on the MDS, for example the dates of the reviews, special 
needs, dates of recent

[[Page 67201]]

hospitalizations, and whether the resident needs specialized services.
    Response: We encourage facilities to keep the results of a 
resident's PASRR with his or her MDS. We are not mandating that a 
facility record PASRR information on the MDS. The decision about how 
much information to share with a facility is up to the State's 
discretion, as is the choice of assessment instrument and the 
coordination of the various assessments. We believe that a State should 
have the flexibility to determine what a facility must retain.
    Comment: A State commenter submitted several MDS elements that help 
them identify residents who have mental illness or mental retardation 
(including a list of ICD-9 codes recorded in the former Section J that 
would indicate a developmental disability). The commenter noted that 
RAI software exists that enables them to make this determination. Other 
MDS items are useful in deciding if someone is exempt from PASRR 
because of terminal illness, dementia, or a severe medical condition.
    Response: We concur that several MDS items would be helpful in 
identifying residents with mental illness or mental retardation. We 
encourage States to develop or refine PASRR programs, or individuals 
performing surveys of the facilities, as well as those conducting 
preadmission screening under Public Law 104-315, to use the information 
to the maximum extent possible. We disagree with the commenter who 
suggested that an individual with a terminal illness, dementia or a 
severe medical condition is exempt from the screening requirements. We 
believe the commenter misconstrued the current requirement at 
Sec. 483.130, which permits a State to make advance group 
determinations when included in an approved State plan. Categorical 
determinations are categories for which the State mental health or 
mental retardation authorities may make an advance determination that 
nursing home services or specialized services are needed for an 
individual with mental illness or mental retardation. These categories 
may include cases in which the resident has received convalescent care 
after an acute physical illness that required hospitalization and do 
not meet the criteria for an exempt hospital discharge. Dementia is not 
considered a serious mental illness for the purposes of PASRR. 
Therefore, a person with a primary diagnosis of dementia would not be 
considered to have mental illness and would not be subject to PASRR 
screening (unless he or she is also mentally retarded).
Proposed Sec. 483.20(b)(6) Automated Data Processing Requirement 
(Redesignated as Sec. 483.20(f))
    Comment: Several commenters believed that the proposed October 1, 
1994 date for capability of computerization was unrealistic. A national 
provider organization stated that, based on the regulation process and 
time frames, it was possible that we would require that the systems be 
in place before the final rule was published, and this would be unfair. 
Commenters offered alternative dates, which included an implementation 
date of October 1, 1995; at least 2 years from the effective date of 
the final rule; and postponing implementation until a reimbursement 
mechanism is in place. Another suggestion was that we publish a rule 
specifically on computerization.
    Response: We agree that an implementation date for facility 
computerization of October 1, 1994 should be deferred until June 22, 
    To redesignated Sec. 483.20(f), we are adding the requirement that 
a facility transmit at least monthly to the State all assessments 
completed in the previous month. This includes admission assessments, 
significant change reassessments, annual reassessments, quarterly 
reviews, and information captured upon reentry to the facility, 
transfer, discharge and death. We are requiring the latter information 
for a number of reasons. States that are already computerized have 
noted that this information is required to close out the resident's 
record at the State level for the facility from which the resident was 
discharged. We are aware that there are some States which, for Medicaid 
payment purposes, must know where Medicaid recipients are every 24 
hours. Information upon reentry, transfer, discharge and death will 
allow State and Federal agencies to analyze long term trends in 
resource utilization, particularly in regards to movement across 
various types of care providers. Additionally, discharge information 
will permit facilities to close out residents' records on their system. 
In the State Operations Manual, we will provide facilities with 
instructions on which MDS items must be completed to document this 
information. Furthermore, as discussed elsewhere, we believe that the 
information will provide facilities with invaluable data they can use 
in a variety of ways.
    Comment: A State commenter asserted that we should develop 
penalties for non-compliance regarding the computerization requirement. 
The commenter questioned whether the penalties would fall on individual 
facilities, States, or both. The State suggested that, as an alternate 
to penalties, we could provide monetary incentives for timely and 
accurate submission.
    Response: The requirements to encode the assessments in a machine 
readable format and transmit the information to the State are like all 
other requirements that a facility must meet to participate in the 
Medicare and Medicaid programs. We believe that computer-aided data 
analysis facilitates a more efficient, comprehensive and sophisticated 
review of health data. Manual record reviews, on the other hand, are 
labor intensive and more time consuming, and may, therefore, tend to be 
more occasional or anecdotal. Additionally, utilization of the quality 
measures and other types of quality monitoring, such as observation of 
trends and patterns, is enhanced through computer aided data analysis.
    Facility noncompliance with requirements established by this final 
rule will be subject to the full range of enforcement remedies set 
forth in part 488, subpart F, Enforcement of Compliance for Long-Term 
Care Facilities with Deficiencies. However, at a minimum, we will 
require that a facility complete a plan of correction and we will 
impose the mandatory denial of payment for new admissions sanction if 
the facility has not achieved substantial compliance within 3 months 
from the date of the finding of noncompliance. Further, if the facility 
is still not in compliance within 6 months from the date of the 
finding, we will terminate its provider agreement. We may impose one or 
more other remedies, as determined by us or the State in accordance 
with part 488. Additionally, noncompliance that is repeated or that 
recurs intermittently becomes part of the facility's noncompliance 
history, which is a factor when we or the State selects the appropriate 
enforcement response. A facility that demonstrates little or no 
commitment to continual, rather than cyclical, compliance will be 
sanctioned by us accordingly. We are not offering incentives for timely 
and accurate submission at this time, but may consider such a concept 
as we revise the survey process.
Proposed Sec. 483.20(c) Accuracy of Assessments (Redesignated as 
Sec. 483.20(g))
    Proposed paragraph (c) described the requirements regarding who 
conducts and coordinates the assessment, certifying its completion and 

[[Page 67202]]

and penalties for knowingly and willfully falsifying the assessment. In 
this final rule, we are redesignating content of proposed paragraph (c) 
related to accuracy of assessments as paragraph (g), coordination, as 
paragraph (h), certification, as paragraph (i), and penalties for 
falsification, as paragraph (j).
Proposed Sec. 483.20(c)(1) Coordination (Redesignated as 
Sec. 483.20(h))
    Comment: Commenters requested clarification on the definition of 
``health professionals.'' Some, including a State commenter, wanted to 
know if nurse aides who are on the State's nurse aide registry could 
complete and document portions of the assessment.
    Response: A licensed health professional, as defined at 
Sec. 483.75(e), includes a physician, physician assistant, nurse 
practitioner, physical, speech or occupational therapist, physical 
or occupational therapy assistant, registered professional nurse, 
licensed practical nurse, or licensed or certified social worker. 
Furthermore, the definition of nurse aide, at Sec. 483.75(e), 
specifically excludes licensed health professionals.
    A facility may assign responsibility for completing the RAI to a 
number of qualified staff members. It is the facility's responsibility 
to ensure that all participants in the assessment process have the 
requisite knowledge to complete an accurate and comprehensive 
assessment. In most cases, participants in the assessment process are 
licensed health professionals. Some State licensure and practice acts 
specifically prohibit nursing assistants, and in some cases licensed 
practical nurses, from conducting assessments. While nurse aides 
certainly can and should contribute their knowledge of the resident to 
the assessment process, nurse aides typically are not trained in 
specific assessment skills, some of which require a significant amount 
of knowledge.
    Comment: A commenter stated that staff that are mandated to 
complete certain sections of the assessment, like gait and movement, 
behavior, and aspects of incontinence, do not have the appropriate 
skills, clinical experience, or training to understand and assess the 
issues involved. The commenter stated that surveyors lack this 
expertise and training also.
    Response: We are not requiring that specialized professionals 
complete any sections of the MDS. As stated in the previous response, a 
facility must ensure that staff conducting the assessment have the 
requisite knowledge to accurately complete the assessment. We disagree 
with the generalization that facility staff and surveyors do not have 
the skills and training necessary to accurately assess residents. We 
conduct a significant amount of training for surveyors on how to gauge 
the accuracy of assessments. Provider groups and facilities also 
conduct training in these areas.
    Comment: A commenter expressed concern that requiring the 
participation of professionals other than registered nurses could place 
a burden on a facility that does not employ staff in certain 
disciplines. The commenter recommended that the we combine the 
requirements for coordination and certification to provide that each 
assessment must be conducted or coordinated by a health professional, 
in cooperation with other health professionals, as desired, and that a 
registered nurse must review, sign and certify the completion of the 
    Response: See previous responses. We do not require the 
participation of specialized professionals other than registered 
nurses. The personnel participating in an assessment are determined by 
the needs of the individual resident. For someone who has significant 
rehabilitation potential, for example, it would be reasonable for a 
physical therapist to conduct part of the assessment. It is acceptable, 
though, for a registered nurse to conduct the entire assessment as long 
as it is accurate.
    Comment: A consumer advocacy organization suggested that we 
prohibit the use of assessment nurses hired solely for the purpose of 
completing the MDS and who have no relationship to care provided. This 
suggestion was based on a reference in the preamble to the proposed 
rule (p. 61633) to staff who have clinical knowledge about the 
resident, such as staff nurses.
    Response: The requirements for care planning state that a 
registered nurse with responsibility for the resident be a part of the 
interdisciplinary team that prepares the care plan. This implies that 
the registered nurse is directly involved in the resident's care and is 
fully knowledgeable about the resident. We believe that the assessment 
is conducted most accurately and efficiently in conjunction with the 
registered nurse who has primary responsibility for the resident's 
care. We believe that this is in line with the intent of Congress. 
However, it would be beyond our purview to prohibit ``assessment 
nurses.'' A facility is required by the statute to complete an accurate 
    An evaluation of the RAI process, conducted by the Research 
Triangle Institute in 1993, under contract with us, indicates that it 
is rare for a facility to designate a sole staff member to conduct the 
entire assessment. Registered nurses, who are often the primary 
assessors get substantial contribution from others in at least some MDS 
domains, even in facilities which designate an ``assessment specialist 
nurse.'' We cannot necessarily state that a nurse hired solely to 
conduct assessments does not have the necessary clinical knowledge. 
Additionally, the survey process would detect inaccuracies in the 
assessment if an assessor did not have the necessary clinical knowledge 
to accurately complete resident assessments.
Proposed Sec. 483.20(c)(2) Certification (Redesignated as 
Sec. 483.20(i))
    Comment: Commenters suggested that we require that an individual 
who completes portions of the assessment date his or her signature. 
This would also apply to the assessment coordinator when he or she 
signs and certifies the completion of the assessment.
    Response: We agree with this suggestion and have changed the form 
to reflect this.
Proposed Sec. 483.20(c)(3) Penalty for Falsification (Redesignated as 
Sec. 483.20(j))
    Comment: Commenters, including a national provider organization, 
supported the distinction between clinical disagreement and false 
statements. A commenter requested a definition of clinical 
disagreement. One commenter expressed concern regarding guidelines for 
surveyors and protections to ensure hard copy validity. For example, if 
there is oversight in completing a section of the MDS, but the 
registered nurse signs to certify completion, we could cite the 
facility for falsification. A commenter also suggested that clinical 
disagreement on the RAP Summary form does not constitute a material or 
false statement.
    Response: It is the responsibility of the nurse coordinating the 
assessment to make sure that the MDS is complete before he or she 
certifies completion. Failure to do so could result in a deficiency, 
based upon information gathered by the surveyor.
    For purposes of this regulation, clinical disagreement pertains to 
coding an item based on observation of the resident over time and on 
clinical judgment. If, based on observation, one nurse codes a resident 
as needing supervision for locomotion while another nurse codes the 
same resident as needing limited assistance based on her observation, 
we would consider that

[[Page 67203]]

to be clinical disagreement and not falsification. However, if an 
assessor were to complete the assessment without observing the resident 
and gathering data, we would consider that to be a material and false 
statement. Clinical disagreement applies to the entire RAI, including 
the RAP Summary form, and care planning decision making process. The 
survey process is not intended to usurp clinical decisions from the 
Sec. 483.315 Specification of Resident Assessment Instrument
    This section describes requirements for the States in specifying a 
resident assessment instrument. It also lists the components an 
instrument must contain if a State wishes to specify an instrument 
other than the Federally designated RAI.
    Our December 28, 1992 proposed rule placed the entire MDS and 
instructions for its use in the regulation text. The proposed rule also 
required that a facility encode the MDS in a machine-readable format, 
in accordance with HCFA-specified formats. We are removing the MDS from 
the regulation text. Because the law requires a standard assessment, 
the regulation mandates that a State instrument contain, in its exact 
form, the contents of our designated instrument, as set forth in the 
State Operations Manual. This instrument is comprised of the MDS and 
common definitions, the triggers and utilization guidelines (including 
resident assessment protocols (RAPs)). We will ordinarily not approve 
an instrument that does not contain the HCFA-designated resident 
assessment instrument (RAI). The States may add items to the Federal 
instrument, but may not change the MDS items, definitions or triggers, 
delete any items, or alter the utilization guidelines pertaining to the 
RAPs. This is necessary for the standardization and consistency 
required by law. We believe that removing the MDS from the regulations 
text is advantageous. It will allow us to easily modify the MDS so that 
it requires collection of information that is clinically relevant and 
meets evaluative needs as clinical practice evolves. By directly 
discussing and negotiating with affected parties, it will be possible 
to maintain a resident assessment process that reflects current 
standards of clinical practice while obtaining public comment.
    It has always been our intent that we would revise the RAI on an 
ongoing basis to reflect changes in clinical practice and advances in 
assessment technology. The first revision of the MDS and RAPs, known as 
version 2.0, was published in Transmittal No. 272 of the State 
Operations Manual in April, 1995, and is contained in the preamble of 
this rule. For the purpose of this rule, State and provider 
requirements related to the RAI pertain to the most current version of 
the RAI that has been published by us (that is, presently dated 10/18/
94H, but subject to future revision). We expect to publish revisions to 
the RAI, such as new or revised RAPs, in the State Operations Manual no 
more frequently than annually, in order to minimize the burden on 
providers of transitioning to a revised RAI.
    We believe that the regulatory provisions that we are including in 
the final rule adequately describe the fundamental MDS requirements and 
that the form and details of the MDS are best set forth in interpretive 
issuances. This will permit us to easily modify details such as the 
measurement scales for a particular condition, or the symptoms that may 
be relevant to that condition, and to respond to advances in clinical 
    We relied heavily on public comments received on the proposed rule 
in modifying the MDS and RAPs contained in version 2.0 of the RAI. We 
also drew on the expertise of a small work group comprised of 
representatives of three States that had extensive experience in 
working with the industry to successfully implement the RAI 
requirements. In this way, we were able to address ``real world'' 
concerns as well as misinterpretations regarding individual MDS items. 
We also received comments on a draft of the revised RAI during a public 
meeting with national associations representing nursing home providers, 
professional disciplines and consumers on December 10, 1993. Under HCFA 
contract, Dr. John Morris of the Hebrew Rehabilitation Center for Aged 
led the RAI revision effort from 1993 to 1994 and oversaw field 
Proposed Sec. 483.315(a)  State Responsibilities (Redesignated as 
Sec. 483.315(c))
    Comment: A State commenter noted that 30 days to specify an 
instrument after we designate or change its instrument is not enough 
time. The commenter stated that the survey agency would need to 
coordinate with the State Medicaid agency. Furthermore, any change to 
the HCFA-designated RAI would require the State to study the benefits 
and costs of modifying the State-specified RAI vs. the revised HCFA-
designated RAI, notifying and training facilities, modifying computer 
systems, etc. The commenter suggested 180 days. For the aforementioned 
reasons, a commenter recommended that providers have advance notice of 
changes to the RAI. Another commenter asked if we would extend the time 
without specifying the number of days.
    Response: We agree that 30 days may not be enough time for a State 
to decide whether to adopt our changes or seek approval for an 
alternate instrument. However, we believe that the commenter's 
recommendation of 180 days is too long. Therefore, we are changing the 
requirement to give States 90 days to decide whether they accept our 
changes or wish to specify an alternate.
    Comment: Commenters questioned whether the State would be required 
to seek approval from us to re-adopt our forms every time we make a 
revision to the forms. One commenter asked if a State that has already 
specified the HCFA-designated RAI will now have to respecify it. 
Commenters suggested that a State that has specified our instrument 
should be expected to automatically adopt any revisions without 
additional paper work.
    Response: Our State Operations Manual Transmittal No. 272 contains 
information on a State's responsibilities related to respecification of 
its RAI. We require that a State notify us of its intent to use our 
revised RAI or alternate instrument and specify the effective date for 
its use. A State will continue to respecify its instrument whenever we 
change the Federally-designated RAI. This enables us to monitor when a 
State decides that it no longer wishes to use our instrument. As the 
quarterly review form is now part of the Federally-designated RAI, we 
require a State to specify the form to their facilities or to include 
an alternative form in the package that it submits to us.
    Comment: Commenters suggested revisions to paragraph (a)(2). A 
commenter wanted to change ``* * * State must assure implementation'' 
to read ``must assist with implementation of RAI through training and 
technical assistance.'' The commenter stated that training and 
technical assistance does not ensure implementation, and proposed that 
we add paragraph (a)(2)(I), which would provide that States must assure 
implementation of RAI through the survey process. Another suggested 
that we require that the State ensure facility implementation by 
providing the necessary technical direction and education and training 
to facilities at least annually. This would accommodate changes in 
facility and surveyor staff, facilitate proficiency and maintenance of 
assessment skills.

[[Page 67204]]

    Response: We accept an amended version of the first two 
suggestions. We are providing in Sec. 483.315(c)(3) that, after 
specifying an instrument, the State must also provide periodic 
educational programs for facility staff to assist with implementation 
of the RAI. This parallels sections 1819(g)(1)(B) and 1919(g)(1)(B) of 
the Act. We acknowledge that training does not necessarily mean 
implementation. We do not wish to specify intervals at which training 
must be conducted. Training should be based on provider needs and 
should be targeted to focus on identified facility weaknesses. We do 
not wish to take away State discretion in this area. We are also 
providing in Sec. 483.315(c)(4) that a State must audit implementation 
of the RAI through the survey process. Furthermore, we are reordering 
the text to be more sequential in regard to the action the State must 
    Comment: A commenter stated that the proposed requirement at 
Sec. 483.315(a)(3) could have a negative impact on facility assessment 
and care planning schedules. The commenter suggested that we permit a 
facility to use its current RAI until we approve an alternative. 
Another commenter requested that we allow States 180 days to secure 
approval for an alternative instead of the proposed 4 months.
    Response: It appears that the commenter misunderstood when we would 
require a facility to implement a newly specified RAI. A facility does 
not have to use a newly specified RAI or State alternate RAI until the 
date that the State requires it, which would be well after the State 
receives approval from us. Once the State receives our approval for an 
alternate instrument, the State must specify the instrument for use in 
all Medicare and Medicaid certified long term care facilities. The 
State would need a realistic implementation time frame which would not 
unreasonably have an impact on facilities. This time frame should 
accommodate training and the absorption of change.
    With respect to the proposed requirement that States have 4 months 
to obtain our approval, we are eliminating the time frame entirely. The 
time frame was necessary initially when States were specifying 
instruments for the October, 1990 implementation of OBRA '87. 
Furthermore, our experience working with States that are developing 
alternate instruments is that a State may require more than 4 months.
    In Sec. 483.315(a)(4), we proposed that, within 30 days of 
receiving our approval of an alternate RAI, the State must specify the 
RAI for use by all Medicare and Medicaid facilities. We are changing 
the requirement to allow States 60 days to specify the instrument to 
their long term care facilities (redesignated Sec. 483.315(c)(2)). This 
will give the State time to contact each of their certified facilities 
as well as reproduce the form for distribution to them. Additionally, 
we are deleting the provision that says that HCFA approval of an 
alternate RAI continues for 2 years. Our experience shows that many 
States make changes to their instrument on a more frequent basis.
    Comment: A few commenters questioned whether a State would need to 
notify us if it redesigns the RAP Summary sheet.
    Response: Since the RAP Summary sheet is part of the State-
specified and HCFA-approved RAI, the State would need to obtain our 
approval to alter the sheet. Since we are removing the MDS from the 
regulations text, we are making substantial changes to Sec. 483.315, 
which addresses the contents of the HCFA-designated RAI. We are adding 
to the regulations text the major domains contained on the revised MDS. 
This reemphasizes the statutory mandate that alternate instruments 
contain at least all the MDS elements. For the same reason, we are also 
listing the assessment domains addressed in our RAPs.
Proposed Sec. 483.315(c) Secretarial Approval (Redesignated as 
Sec. 483.315(g))
    Comment: Commenters suggested that we delete this paragraph. 
According to commenters, if States are allowed to reorder sections of 
the MDS, use other RAPs, etc. it would be difficult to have consistency 
in data collection and submission to us. The commenter suggested that 
we require a State that wants an alternate instrument to include a HCFA 
section that would incorporate our system.
    Response: We agree with the commenters' suggestion to delete most 
of the content of proposed paragraph (c). We are replacing it with a 
provision that requires the State's alternate instrument to comply with 
the standard format, vocabulary and organization requirements set forth 
in the State Operations Manual (redesignated paragraph (g)). There are 
a number of factors that warrant consistent ordering of data and 
assessment items across all States. First, nursing home chains that 
operate facilities in a number of States would benefit from some 
consistency in the ordering of the MDS items, if not simply to 
facilitate effective use of their training and education resources. 
Second, software vendors would also welcome standardization of the 
ordering of the MDS items in all States, as many of them market their 
software to facilities throughout the country and to nursing home 
chains that operate in a number of States. It also would minimize the 
effort in revising their software. Third, we could also achieve 
consistency in training State surveyors on use of the RAI. Fourth, 
educational materials, resources, and education programs for nursing 
homes and schools that prepare health care professionals could be 
developed more cost-effectively and distributed more widely with some 
consistency in how the MDS is ordered. Finally, data submission to us 
and States will require standardization in the ordering of the MDS 
items. Therefore, to facilitate standardization across States, we are 
requiring consistent ordering of MDS sections. We will require that 
States desiring to add additional data and assessment items, add those 
items in section S of the MDS, which has been designated as the section 
for State-specific items.
    Comment: A few commenters thought that we should convene a clinical 
advisory panel to evaluate any alternate RAPs that States submit. They 
were concerned that the proposed supporting documentation could merely 
be the consensus of the same experts who designed the alternates. This 
would not protect the scientific integrity of the assessment system.
    Response: We will convene a clinical panel periodically to evaluate 
the need to modify the RAI, and to review and evaluate newly developed 
RAPs, including those developed both by us and States. The process by 
which State-developed RAPs are submitted for our approval is also 
described in the State Operations Manual. We intend to have an open, 
inclusive revision process.
    Comment: Commenters suggested that we require that any alternate 
instrument be cross-validated with the MDS on a large sample of 
residents. States should submit the data from the cross-validation to 
us for comparison of outcomes between States who use the HCFA-
designated RAI and those that do not.
    Response: Alternate instruments must contain all MDS items. This 
negates the need to cross-validate with the MDS. We have reviewed the 
revised items and new items added to the MDS for face validity, and we 
tested the individual items in early 1994. We encourage States to field 
test and validate the new items, as well as allow review by other 
qualified individuals prior to including the additional items on their 
instrument and submitting it for approval.

[[Page 67205]]

State Requirement to Establish a Data Base of Resident Assessment 

    Consistent with the purpose of the proposed rule and, after 
considering the comments submitted, we are adding a new paragraph (h) 
to Sec. 483.315, which delineates State requirements in establishing a 
data base of resident assessment information. In the proposed rule, we 
posed questions about the State's role in collecting and maintaining 
the RAI data base, and we concluded that specific requirements are 
necessary to ensure uniformity. Furthermore, we believe these 
requirements are necessary to successfully design and implement a 
national data base of resident assessment information. Paragraph (h) 
includes provisions for specifying a transmission method for a facility 
to send information to the State, specifying edits that the data must 
pass, and provisions to transmit the data to us. A State will also be 
responsible for resolving incorrect data submitted by a facility. While 
the facility will edit the data before transmission to the State, the 
State, which has already computerized assessment information, may note 
that the data transmitted is not entirely complete or accurate, and 
must send it back to the facility for correction. Additional edits at 
the State level will help identify incorrect assessment information.
    A State must edit the data it receives from a facility according to 
formats we specify, but may add State-specific edits that do not cancel 
or interfere with HCFA-specified edits. This will help ensure that the 
data we receive is uniform, complete and accurate. Furthermore, we are 
requiring that a State generate reports and analyze data, as specified 
by us. For example, we could require States to run a profile of each 
facility, which would allow the facility to analyze the prevalence of a 
certain medical diagnosis amongst its residents.
    For a number of reasons, as discussed below, we are requiring each 
State to use a complete system that is developed or approved by us. We 
will develop a single, open system by which States will manage and 
analyze data. We believe that there are a number of advantages to 
standardizing both the data analysis and the data management functions 
which outweigh potential disadvantages.
    Initial system costs will be substantially reduced by producing a 
single system versus funding the development of 50 different systems.
    Ongoing maintenance costs will be substantially higher if States 
implement their own proprietary MDS systems. The costs associated with 
modifying individual State systems to incorporate changes in the MDS or 
HCFA specifications, formats or edits would be 50 times those 
associated with modification of a standardized system and distribution 
of new software or other specifications to each State.
    Additional cost savings for data analysis activities will be 
realized by us. Given that we envision standardizing the State data 
analysis function, system standardization at the data management level 
will ensure that the necessary infrastructure to support data analysis 
is already in place. If States develop proprietary data management 
systems, we would probably have to fund additional system/structural 
costs when our proposed data analysis requirement becomes effective.
Data Reliability
    It would be difficult to maintain quality controls and ensure 
adequate data reliability across 50 State systems. For example, each 
time we issue a change in transmission specifications or data fields, 
each of 50 States would have to modify their proprietary systems to 
accommodate the requirement. Past experience with MDS software vendors, 
as well as other Federal systems, demonstrates that there is a great 
degree of variation in the ability of vendors or agencies to 
consistently implement system changes. This would pose a serious threat 
to the long term integrity of the national MDS data repository. 
Standardization would ensure that changes are implemented completely, 
reliably, timely and in a coordinated manner across all States.
Programmatic Needs
    Our desire to implement an MDS data-driven long term care survey 
process based on quality measures cannot be efficiently realized 
without standardization at the initial ``data management'' level. 
Assuming that we are redesigning our provider survey model as an 
automated, data-driven system, each survey agency will have to be able 
to integrate directly with the State MDS repository. If each State has 
a unique design for this repository, this integration will not be 
possible in a cost-effective manner. Each State would have to use HCFA-
developed MDS data format specifications to extract MDS data into the 
standardized survey system. Allowing the development of 50 State 
proprietary systems would also result in long term inefficiencies in 
that each State would be required to rewrite their data extraction 
procedures each time we want to make a change to the survey process, 
quality measures or in the MDS itself. Even if we had unlimited 
resources for State customization, this would have a serious impact on 
our ability to introduce changes in a timely and consistent manner.

HCFA Initiatives to Implement Standardized Clinical Data Sets

    These changes are an integral part of the Administration's efforts 
to achieve broad-based improvements in the quality of care furnished 
through Federal programs and in the measurement of that care, while at 
the same time, reducing procedural burdens on providers. Quality 
assessment and performance improvement rests on the assumption that a 
provider's own quality management system is the key to improved 
performance. Our objective is to achieve a balanced approach combining 
our responsibility to ensure that essential health and quality 
standards are achieved and maintained with a provider's responsibility 
to monitor and improve its own performance. To achieve this objective, 
we are now developing revised requirements for several major health 
care provider types. All of these proposals are directed at (1) 
improving outcomes of care and satisfaction for patients, (2) reducing 
burden on providers while increasing flexibility and expectations for 
continuous improvement, and (3) increasing the amount of, and quality 
of, information available to everyone on which to base health care 
choices and efforts to improve quality. We note that our revised 
approach to quality assurance responsibilities is closely linked both 
to the Administration's commitment to reinventing health care 
regulations and to our own strategic plan. These initiatives have three 
common themes. First, they promote a partnership between us and the 
rest of the health care community, including the provider industry, 
practitioners, health care consumers, and the States. Second, they are 
based on the belief that we should retain only those regulations that 
represent the most cost-effective, least intrusive, and most flexible 
means of meeting our quality of care responsibilities. Finally, they 
rely on the principle that making powerful data available to consumers 
and providers can produce a strong nonregulatory force to improve 
quality of care.
    The MDS is the first of several clinical data sets we envision 
creating and implementing in various care settings. Standardized 
information on clinical

[[Page 67206]]

status and health care outcomes is necessary for more objective and 
focused quality monitoring. Consequently, interest in standardized 
clinical data sets has skyrocketed, with much activity occurring in 
this arena in both the public and private sectors. We view our efforts 
with the MDS as a prototype for the next several years, during which we 
propose to build and implement clinical data sets across several 
provider types. These data sets will feed into quality indicator 
systems, which will supplement our traditional survey processes. At 
this point, we are beginning work on designing a comprehensive 
standardized assessment tool for home health agencies as well as field 
testing the uniform needs assessment instrument, which we are 
evaluating for use by all providers and view as forming the ``core'' of 
all care-setting specific data sets. Additionally, we propose 
development of standardized patient process and outcome measures for 
the End Stage Renal Disease program and a standardized instrument for 
the Intermediate Care Facility for the Mentally Retarded program in 
fiscal years 1996-97. In view of these initiatives, it would be much 
more economical and efficient to put in place now, within each State, 
standardized system designs and structures to support increased 
clinical data management and analysis. Otherwise, we will be 
responsible for funding and coordinating State efforts to implement 
data systems for each provider type as we implement new requirements.
    In the system design process we explored several options, 
particularly regarding State systems and gathered a significant amount 
of information about current status of State systems. For example, we 
sent two questionnaires to the States to determine whether they had 
developed an MDS system, what the configuration might be, and what sort 
of direction and assistance non-computerized States would want from us. 
We convened several meetings across the country which were attended by 
more than 45 States. At these meetings we presented the concept of 
standardization. Reaction was quite supportive. We are aware that 
States which already have systems will have to make significant 
adjustments and will provide assistance in the process.

III. Provisions of the Final Rule

    In summary, in this final rule, we are adopting, without change, 
the provisions of the proposed rule with the exception of the 
     We are adding greater specificity to the proposed 
requirement that each facility establish a data base of resident 
assessment information and transmit MDS data to the State at least 
monthly (Sec. 483.20(f)).
     We are adding a new requirement that each State establish 
a data base of resident assessment information received from 
facilities, using a system to manage and analyze data that is developed 
or approved by us, and transmit that information to us at least monthly 
(Sec. 483.315(h)).
     We are adding a definition of ``significant change'' in a 
resident's physical or mental condition to clarify when a facility must 
conduct a comprehensive assessment of a resident (Sec. 483.20(b)(2)).
     Instead of including the entire content of the MDS, the 
utilization guidelines for resident assessment instruments, common 
definitions, resident assessment protocols and instructions in the 
regulations text or in an appendix to the text, we are providing 
descriptions of the RAI, the MDS, and RAPs. We are providing a 
description of the assessment areas included in the MDS 
(Sec. 483.315(e)), and a description of the domains addressed in the 
RAPs (Sec. 483.315(f)), both of which must be included in the RAI 
specified by a State (Sec. 483.20(b)(1)).
     To address concerns about confidentiality of resident 
data, we are providing that a facility and a State may not release 
resident-identifiable information to the public, and may not release 
the information to an agent or contractor without certain safeguards 
(Secs. 483.120(f)(5) and 483.315(j)).
     In this final rule, we are not adopting the proposed 
technical revisions to part 456 concerning inspection of care reviews 
of SNFs and ICFs. We will include these revisions in another document.

IV. Regulatory Impact Statement

A. General

    Consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 
through 612), we prepare a regulatory flexibility analysis unless we 
certify that a rule will not have a significant economic impact on a 
substantial number of small entities. For purposes of the RFA, all 
nursing homes are considered to be small entities. Individuals and 
States are not included in the definition of a small entity.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. Such 
an analysis must conform to the provisions of section 604 of the RFA. 
For purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 50 beds.

B. Affected Entities

    We require that all certified nursing homes assess residents using 
a standardized data set known as the MDS. Nursing homes have been 
collecting this information manually since October 1990. Most States 
implemented a second generation assessment instrument, known as MDS 
2.0, on January 1, 1996. The use of the MDS as the core of the 
comprehensive assessment requirement has improved the quality of 
nursing home services by ensuring that the assessment is consistently 
based on all information that is necessary to evaluate a resident's 
needs. Accurate and comprehensive resident assessments have improved 
the accuracy of the care planning process and, ultimately, the care 
provided by the nursing home. The myriad benefits associated with the 
MDS have been well documented in a study we commissioned to evaluate 
the outcomes of using the MDS. One of the more striking changes 
documented by the study was an association of the use of the MDS with a 
significant reduction in hospitalization among more cognitively 
impaired nursing home residents, without a concomitant increase in 
mortality. The study also identified major reductions in rates of 
decline (especially among various types of residents) in important 
areas such as nutritional status, vision, and urinary incontinence. 
However, in order to realize the full benefits of the MDS, the 
information needs to be computerized, and configurable as an analytical 
tool. Publication of this rule will allow this goal to be realized.
    The automation and transmission of MDS data by nursing homes and 
States to us will improve the delivery of quality care in the nation's 
nursing homes in several ways. An automated MDS data base will provide 
information that will benefit both the policy and operational 
components of State and Federal governments, as well as furnish 
valuable information to long term care providers. The MDS system will 
also establish a means of providing consumers with quality-related 
information to make health care decisions.
    More specifically, the MDS data base will enable us and the States 
to provide nursing homes with aggregated State and national resident 
status information and trends. This will allow nursing

[[Page 67207]]

homes to compare themselves to similar homes and is consistent with a 
quality improvement model. Furthermore, by establishing their own in-
house quality assurance analyses from these computerized data, nursing 
homes will be able to evaluate the effectiveness of treatment 
modalities given a certain outcome. This type of information will 
assist nursing homes in making better use of their staff and other 
resources, and also eliminate the allocation of resources that do not 
achieve desired outcomes. In short, the MDS data base will provide 
nursing homes with the information to identify and correct their own 
    States will have access to timely MDS data that will improve their 
ability to focus on-site inspection activities associated with the long 
term care survey process. Since we require MDS data for all residents 
regardless of payor source in nursing homes, these data elements can be 
configured into quality measures. The quality measures flag individual 
residents and facilities when there may be a problem with the quality 
of care provided. For example, the indicators may identify those 
residents who were admitted to a nursing home without pressure sores, 
but who developed sores in the nursing home. Similarly, a nursing home 
that has a relatively high percentage of residents with pressure sores 
may indicate a problem when compared to other facilities. This resource 
will significantly improve States' ability to identify areas of 
potential quality concerns in an effective and efficient manner, and 
facilitate the partnership of States and industry in identifying 
opportunities to improve care. At both the Federal and State level, 
information from the MDS data base will provide a valid and reliable 
tool for evaluating and improving the efficacy and effectiveness of 
survey and certification activities.
    States have also identified a myriad of other intended uses for MDS 
data that include Medicaid payment, utilization review, preadmission 
screening and resident review, Medicaid coverage authorization, and 
State policy analysis and trending. It is our intention that a 
standardized MDS data system will support States' unique needs and 
should not necessitate the creation of distinct and duplicative data 
bases at the State level.

C. Costs Associated With Automating the MDS

    We anticipate that both nursing homes and States will incur some 
incremental costs from computerizing and transmitting the MDS. We 
estimate total start-up costs of $20.3 million, which represents costs 
incurred by nursing homes (we will be supplying the MDS systems 
directly to the States). We also estimate total ongoing annual costs of 
about $34.7 million, which includes $27 million in costs for nursing 
homes and $7.7 million in costs for States. Total costs include 
Medicare benefit costs of $9.5 million. Total costs also include an 
annual administrative cost of $3.5 million that will be absorbed within 
HCFA's program management appropriation. However, the benefits 
associated with computerizing the MDS far outweigh the additional costs 
of automating the data. The following represents our estimates of the 
individual costs associated with this effort.
Nursing Homes
    Upon publication of this rule, all nursing homes must computerize 
the MDS. Most costs associated with computerizing the MDS will be 
related to hardware and software. At the current time, we estimate that 
approximately 70 percent of the nation's 17,000 Medicare, Medicaid or 
dually certified nursing homes have already computerized the MDS or 
have the capability to do so. Another 16 percent of nursing homes 
already have some kind of computer system that will require upgrading 
to meet the requirements for MDS, and only 14 percent have no computer 
system at all. Additionally, some facilities with currently operating 
MDS systems may require hardware and software upgrades to support 
aspects of the national MDS system (for example, a faster modem or 
installation of the Windows operating system).
    Under the Balanced Budget Act of 1997, nursing homes will be 
reimbursed for Medicare under a prospective payment system for cost 
reporting periods beginning on or after July 1, 1998. Prior to July 1, 
1998, costs incurred by nursing homes associated with computerizing the 
MDS will be paid on a reasonable cost basis. Generally, these costs are 
considered capital costs and are subject to the applicable Medicare 
rules. Additionally, it is likely that nursing homes will also incur 
certain routine services costs which will also be paid on a reasonable 
cost basis. These costs are subject to cost limits. In the past, the 
routine cost limits have included an add-on to account for the costs 
associated with the Omnibus Budget Reconciliation Act of 1987 (OBRA 
1987), including the cost of conducting resident assessment. When a 
provider incurs cost related to OBRA 1987 that exceed its limit 
(including the add-on), we have allowed the fiscal intermediary to make 
an adjustment to the costs limits. This policy is described in a notice 
published in the Federal Register on October 7, 1992 (57 FR 46177).
    The Balanced Budget Act of 1997 also prescribes a public process 
for the determination of rates for payment under Medicaid State Plans 
for nursing home services in which the proposed rates, the 
methodologies underlying the establishment of such rates, and the 
justifications for the proposed rates are published, thereby giving 
providers, beneficiaries and their representatives, and other concerned 
State residents an opportunity for review and comment. States have 
flexibility in designing the details of their payment systems for NF 
care, and to the extent that NFs incur costs in computerizing the MDS 
(such as the acquisition of hardware or software, staff training, or 
additional staffing), the State may take these costs into account in 
setting its rates.
     Hardware: We estimate total hardware costs associated with 
automating the MDS to be approximately $2,500 for a typical nursing 
home, which includes the computer and communications components capable 
of running MDS software and transmitting MDS assessments, and a laser 
printer. This estimate is based on the most recent cost data available 
for a system that includes an Intel Pentium processor. As noted earlier 
in this rule, we expect that only 14 percent of all nursing homes will 
need to buy an entirely new system. Seventy percent of all nursing 
homes are already using an automated MDS collection tool (although some 
may require upgrading in order to transmit the MDS data), and the 
remaining 16 percent already have some sort of computer system that 
simply requires upgrading.
    The aforementioned cost estimate is based on the type of system 
that we anticipate many nursing homes will choose to purchase. At a 
minimum, a nursing home should have at least a 486 personal computer, 
either connected to a network or as a stand-alone, with 8 megabytes of 
RAM, at least 100 megabytes of available hard disk space, a 14 inch 
color monitor, keyboard, mouse, a 3.5 floppy drive and a laser printer. 
To operate the transmission software, this machine must run the Windows 
operating system, version 3.1 or higher. All nursing homes will also 
need a 28.8 Kbps modem for telecommunication of data, as well as a 
common data communications software package to transmit MDS assessments 
to the State. This communications package must meet our specifications 
related to

[[Page 67208]]

transmission of MDS data and represents current technology.
    Ongoing hardware maintenance costs for nursing homes are expected 
to average about $100 annually.
     Software: Nursing homes desiring to meet only the 
requirement for data submission can use a less costly software package 
to accomplish the basic encoding and formatting functions. A nursing 
home must submit MDS records to the State that conform to a specific 
ASCII layout and incorporate them into files with header and trailer 
records that conform to required formatting standards. However, we 
anticipate that most nursing homes, seeking to gain efficiency in 
general operations, will choose more capable programs, some of which 
could be used to meet (1) other clinical or operational needs (for 
example, care planning, order entry, quality assurance, billing) or, 
(2) other regulatory requirements for reporting resident information. 
The standardized record formatting specifications and additional 
policies on MDS automation that we developed should be used by 
individual nursing homes, multi-facility chains, and software vendors 
to develop products for encoding and transmission of MDS 2.0 data. This 
information has been available to the public for about two years 
through the Internet, and is located on the HCFA Web site.
    There are currently over 100 vendors marketing MDS software 
products. While we are not requiring record specifications and 
automation policies until this rule is published, we developed them 
earlier to provide guidance to the industry and to minimize the need 
for a facility to modify and replace systems once this regulation is 
published. At this time, we estimate that such software packages will 
be available on the market for approximately $1,250 for those nursing 
homes that have not yet become MDS automated. We expect that a nursing 
home's private sector software vendor will provide primary support to 
the facility in terms of MDS encoding and transmission to the State. 
State personnel, however, will work with facilities and software 
vendors in educating them about this process.
     Supplies: Supplies necessary for collection and 
transmission of data including diskettes, computer paper, and toner, 
will vary according to the size of the nursing home in terms of 
residents served and assessments required. Dividing the nursing homes 
into groups, supply costs are estimated at the following three levels: 
small facilities (with less than 145 residents), $175/year; medium 
facilities (with 145 to 345 residents), $225/year; and large facilities 
(with greater than 345 residents), $275/year.
     Maintenance: There are costs associated with normal 
maintenance of computer equipment, such as the replacement of disk 
drives or memory chips. Typically, such maintenance is provided via 
extended warranty agreements with the original equipment manufacturer, 
system reseller, or a general computer support firm. These maintenance 
costs are estimated to average no more than $100 per year.
     Training: Nursing home staff will need training on 
automating the MDS. Since many nursing homes will choose to have their 
staff input MDS data at the time of the resident assessment, we 
estimate that a typical nursing home will train two nurses for about 3 
hours each. We expect that this training will be supplied by the vendor 
supplying the MDS encoding software, and estimates that the training 
will cost an average nursing home about $144 based on an average hourly 
rate for nurses of $24.
    Other nursing home staff will need training in transmitting the 
data to the State and interpreting messages of record errors. We expect 
that this training will require about 3 hours of staff time, and will 
cost an average nursing home about $66, based on an average hourly rate 
of $12 for technical staff. This cost also includes travel expenses and 
travel time, since facility staff may need to travel to a centralized 
training site within the State (we anticipate that training will be 
provided in multiple sites in the State once the system is 
implemented). We expect that the State survey agencies will supply this 
     Data entry: Nursing homes will have flexibility in the 
method used to enter data, but the method must comply with our 
requirements for safeguarding the confidentiality of clinical records. 
Data can be entered directly by a clinical staff member (that is, the 
nurse responsible for coordinating or completing the assessment), from 
a hard copy of a completed MDS by a clerical staff member, or by a data 
entry operator with whom the nursing home may contract to key in the 
data. We estimate that data entry staff could require approximately 15 
minutes to enter each MDS. Nursing homes must collect and transmit MDS 
data, which for the admission assessment, annual updates, as well as 
significant changes in the resident's status, significant correction 
assessments, quarterly review assessments, which include a subset of 
the MDS items, discharge records, and reentry records. Additionally, 
nursing homes must allow time for data validation and preparation of 
data for transmission, as well as for correction of returned records 
that failed checks at the State data-editing level. We estimate that a 
100 bed facility will incur an annual data entry cost of $1,250, (or 
$12.50 per resident per year), based on an estimate of five MDSs per 
bed (annual plus ``significant changes'') and an hourly rate of $10.
     Data Transmission: The State agencies will fund the costs 
of transmitting data from the nursing homes to their respective States. 
However, nursing home staff time must manage the data transmission 
function, correct communications problems, and manage reports logs 
transmitted from the State agency. We estimate that it will take an 
additional hour of staff time to perform data transmission related 
tasks each month. This staff time will cost an average size nursing 
home about $144 per year.
    We expect that overall responsibility for fulfilling requirements 
to operate the State MDS system will rest with the survey agency. 
However, the State may enter into an agreement with the State Medicaid 
agency, another State component, or a private contractor to perform 
day-to-day operations of the system. If the State MDS system is 
operated by an entity other than the survey agency, the State must 
ensure that the survey agency has suitable access to this system to 
fully support all MDS-driven functions that the State will require of 
the survey agency (for example, quality indicator reporting, survey 
targeting). The State is also responsible for reporting MDS data to a 
central repository to be established by us.
    States will primarily use the MDS data to focus the long term care 
survey process and to provide nursing homes and consumers with MDS-
derived information. A State's MDS system includes the following 
components: computing hardware that includes data base, communication, 
supporting file, and print servers for client workstations; local and 
wide-area data networks; and application software for performing all 
aspects of MDS-related functions and tasks. As such, the MDS system 
will be designed and developed within a broad class of systems known as 
Client/Server architecture.
    We plan to provide each State with a standardized hardware 
environment scaled to meet each State's anticipated processing volumes. 
Additionally, a standardized suite of software applications will be 
provided to each State to perform all MDS-related

[[Page 67209]]

functions, including receipt and validation of MDS records, posting of 
records to the master repository, and analytical applications to be 
used to inform and support the long term care survey process. A HCFA 
contractor will work closely with each State to customize the ``turn-
key'' MDS system to integrate it into a State's current computer and 
network structure. The contractor will visit each State to install and 
test equipment, and ensure that the MDS system is fully operational. We 
currently plan to phase in State deployment of the system, roughly from 
August through December 1997.
    We will place this system in each State and it will be operated by 
personnel within the designated State agency. We are requiring that the 
State systems do the following: receive MDS records from nursing homes; 
authenticate and validate the records received from nursing homes; 
provide feedback to the nursing homes by indicating acknowledgment of 
the transmission of the data and specifying the status of record 
validation; store the MDS records in a permanent data base within the 
State; create system management reports and logs; generate provider 
performance reports including quality indicator reports designed to 
support a future data-driven survey process and provider survey 
targeting functions; perform other analytical functions, as defined by 
us; create ad-hoc reports; and retransmit validated MDS records from 
each State agency to a national MDS data repository developed and 
maintained by us.
    Just as in nursing homes, some States are already using some sort 
of an automated MDS collection tool. At least 12 States have already 
developed MDS data bases. In nearly all cases, the State Medicaid 
agency has been the driving force in getting MDS data to the State 
level. System designs and approaches have varied considerably (that is, 
while two States have recently moved to modem transmission, other 
States still perform data entry at the State level from hard copies 
forwarded by nursing homes).
    We are providing the MDS system to States primarily for use in the 
Survey and Certification program. As such, most Federally reimbursable 
costs incurred by the States for automating the MDS will be funded 
through that program. However, we anticipate that many States will also 
choose to use MDS data in administering their Medicaid programs. When 
that is the case, Federal reimbursement is applicable to the extent a 
State uses the MDS for administering its Medicaid program. As a result, 
it may be appropriate for a State to allocate some MDS costs to its 
Medicaid administrative cost claims.
    When a State does use MDS in administering its Medicaid programs, 
it should apportion Federal costs associated with automating the MDS 
and operating the data system between the Medicare and Medicaid Survey 
and Certification program, and the Medicaid program (as administrative 
costs, when applicable). The State should apportion MDS costs to these 
programs based on the State's determination of each program's 
utilization of the MDS system. Costs charged to the Medicare and 
Medicaid Survey and Certification program will be prorated in terms of 
the proportion of SNFs and NFs in the State that participate in the 
Medicare and Medicaid programs. Costs for SNFs and NFs are split 
equally between the two programs. The Federal financial participation 
rate for the Medicaid Survey and Certification Program is 75 percent. 
The Federal financial participation rate for costs apportioned as 
Medicaid administrative costs is 50 percent. When the State licensure 
program benefits from the automation of the MDS, the State should also 
share in the MDS automation costs.
    Several States asked if we could reimburse Medicaid administrative 
costs associated with the development of MDS at Federal financial 
participation rates greater than 50 percent, the rate used in computing 
Medicaid reimbursement for general administration of the program. 
Specifically, they asked if we will reimburse these costs at the same 
rates used to reimburse the costs of designing, developing, 
implementing and operating a Medicaid Management Information Systems 
    Section 1903(a)(3) of the Act and implementing regulations at 
Sec. 433.111 describe the MMIS as a mechanized claims processing and 
information retrieval system. Federal financial participation is 
available at 90 percent in expenditures for design, development, 
installation or enhancement of the system, while 75 percent is 
available for costs relating to its operations (namely, processing 
claims and producing related management information). The MDS is not a 
Medicaid claims processing and information retrieval system. We 
reimburse other systems not directly related to performing MMIS 
functions, such as the MDS, at the 50 percent level of Federal 
financial participation.
    Commenters asked whether automated systems to collect and analyze 
data for rate setting purposes meet the MMIS definition. Because rate 
setting is outside the claims payment and information retrieval 
processes required by section 1903(a)(3) of the Act, those costs are 
not eligible for enhanced Medicaid reimbursement under the MMIS 
definition. However, in those instances when specific data elements 
from a separate system like MDS must be transferred to the MMIS in 
order to calculate individual provider payments, the cost of modifying 
and operating the MMIS to accept and use the data from the outside 
source qualifies for enhanced Federal financial participation if the 
State follows the regulations and guidance found in Secs. 433.110 
through 433.112, 433.116 and in Part 11 of the State Medicaid Manual.
    For example, a major function of the MMIS is to produce both 
beneficiary and provider profiles for program management and 
utilization review purposes. NF resident and provider profiles are 
required by Sec. 433.116(g). However, both NF resident and NF provider 
profiles historically have been very limited because the data elements 
on a nursing facility claim provide few details of services provided. A 
State may wish to improve the MMIS profiling capability by importing 
MDS data to prepare augmented profiles of nursing facility and nursing 
facility residents. If the State does that, the enhanced Federal 
financial participation will be available for the costs of modifying 
and operating the MMIS to accept and use the data from MDS if the State 
acts in accordance with the regulations in Secs. 433.110 through 
433.112, 433.116 and the guidance in Part 11 of the State Medicaid 
Manual. Please note that we currently encourage States to modify their 
MMIS to accept encounter documents from Medicaid managed care 
organizations to extend the MMIS profiling capability to cover both 
managed care and fee-for-service providers and patients. Therefore, it 
seems appropriate that we would reimburse the cost of modifying MMIS to 
accommodate MDS usage also at the enhanced MMIS rates, if the State 
meets the conditions in the aforementioned regulations and State 
Medicaid Manual.
    The following is our estimate of State costs for automating the 
     Hardware: We will hire a contractor to purchase, deliver, 
and install the MDS equipment in each State. Since we will be providing 
the equipment to the States, the States will not incur any cost for 
hardware. This equipment will include both a communications server and 
a data base server. The number of nursing homes within each State will 
be the driving factor in determining each State's computer needs. We 
will scale

[[Page 67210]]

system requirements to meet the data storage and transmission needs of 
the individual State.
     Software: Since we are developing the software for each 
State's MDS system, we will pay the costs associated with this system 
and supply the system directly to the States. Software that we will 
supply to the States will include communications software and data base 
software, as well as customized analytical software to generate 
reports. When a State develops its own customized MDS applications, the 
costs of developing and maintaining these additional software 
applications (and any related hardware components) will not be 
Federally funded.
     Operational Staff Time: States may plan to reassign 
existing staff or hire additional full-time equivalents to manage the 
automation project and perform day-to-day operation of the standardized 
MDS system. The staff members assigned to MDS automation tasks will 
need to have skills in a variety of areas: technical computer, network, 
and telecommunication skills; data processing operations; and, user 
support and training (including support for both State and facility 
users). In hiring or reassigning staff, we encourage States to recruit 
generalists who can perform a wide range of the above tasks.
    Each State's actual staffing requirements will vary depending on 
the State's size (that is, as measured by the number of nursing homes 
regulated). To assist in determining staffing requirements within 
particular States, we assigned States to one of three categories based 
on the number of certified nursing homes in their jurisdiction: less 
than 144, 144 to 356, and those greater than 356 facilities. We 
estimate that 1.5 full-time equivalents will be required to manage all 
MDS-related operations for each of the three categories; for instance, 
States in the smallest group should budget for 1.5 full-time 
equivalents, 3 full-time equivalents in the second group, and 4.5 full-
time equivalents in the largest group. This includes an MDS Automation 
Project Coordinator.
    Specifically, an average sized State regulating about 300 nursing 
homes will require about three full-time equivalents to fulfill the 
following MDS-related tasks: MDS project coordination (oversight of 
daily operations); technical operations (systems management, 
configuration and troubleshooting); training and support operations 
(facility and MDS software vendor startup training); and operations 
(functions associated with transmission logging and error tracking and 
resolution). We estimate that MDS-related staffing costs for an average 
size State will be about $133,000 per year.
     Supplies and Maintenance of Equipment: States can expect 
about $600 per year in additional costs for products that are consumed, 
such as printer toner and paper. The MDS data management and analysis 
equipment to be installed within each State is comprised of standard 
``off-the-shelf'' hardware and software components that are generally 
covered under typical service agreements that the States may already 
have in place. We will ask States to extend these agreements to cover 
hardware components delivered as part of the MDS project. These costs 
will again vary according to the size of the State requirements, but on 
average, the typical State will incur about $750 per year in additional 
cost for systems maintenance. We will maintain and upgrade centrally 
the standardized MDS software components that we develop and distribute 
to States.
     Training: We plan to centralize training of State 
personnel who will be responsible for administrative and technical 
aspects of system operations. Additionally, we will provide separate 
training on the technical aspects of the system including its 
communications, networking, data base and software application 
functions, daily operations and on-going systems management.
    In order to promote national consistency in MDS system operations 
and troubleshooting, we request that each State designate one 
individual as the MDS Automation Project Coordinator. This person will 
be our key contact within each State for managing MDS system issues. We 
are planning to convene at least one national meeting of the MDS 
Automation Project Coordinators each year. We will use this forum to 
present new information, gather suggestions for system improvements, 
exchange ideas on MDS system operations, administration and 
troubleshooting issues, and to discuss objectives for future system 
development and refinement.
    With our technical support and guidance, States will work closely 
with the provider community in providing information on specific 
requirements related to the submission of MDS assessments to a 
repository maintained by the State. The standardization of the State 
MDS system extends back to the provider communications function, in 
that nursing homes will use a common data communications software 
package to transmit MDS assessments to the State. State personnel will 
work with the nursing homes and software vendors in educating them 
about this process. We expect that the commitment of staff resources to 
this task will be most intensive during the first 6 months of this 
process. However, States should also expect some ongoing allocation of 
full-time equivalents to support this process on an ongoing basis.
    We anticipate annual travel costs associated with training for an 
average size State to be about $2,700 per year.
     Data Transmission: States will incur data communication 
costs for transmission of MDS assessments from nursing homes. These 
costs have two basic elements:
    (1) Fixed monthly line fees of approximately $32.50 per line per 
month. The number of lines required varies from 4 to 16 according to 
the number of nursing homes supported by a State. On average, a State's 
fixed line cost will be $3,806 per year.
    (2) Line connect and long distance charges of approximately $.27 
per minute. We estimate that the typical nursing home will require, on 
average, 5 minutes ($1.35) of connection time per month for MDS 
submissions. This translates into an average connection cost of $5,376 
per year per State.
    We will fund the cost of the States transmitting their MDS data to 
our central repository. Therefore, we do not expect that States will 
incur data transmission costs to us.

D. Conclusion

    While we acknowledge that nursing homes and States will bear some 
incremental costs associated with this proposal, these costs are well 
justified when considered within the context of the anticipated 
increased quality of care for nursing home residents, as well as the 
potential uses of the automated data by the facilities, States, and us. 
The foregoing estimates may actually overstate anticipated costs 
because they do not take into account cost-savings achieved by 
improving nursing homes' management information systems, as well as 
potential improvements in resident's overall health status. Nor do they 
represent the savings inherent in a more focused, uniform approach by 
both the States and us in assessing quality of care in the nation's 
nursing homes.
    For these reasons, we are not preparing analyses for either the RFA 
or section 1102(b) of the Act because we have determined, and we 
certify, that this rule will not have a significant economic impact on 
a substantial number of small entities or a significant impact on the 
operations of a substantial number of small rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 

[[Page 67211]]

was reviewed by the Office of Management and Budget.

V. Information Collection Requirements

    Sections 4204(b) and 4214(d) of OBRA '87 provide a waiver of Office 
of Management and Budget review of information collection requirements 
for the purpose of implementing the nursing home reform amendments. 
Therefore, the information collection requirements referenced in this 
rule are exempt from the Paperwork Reduction Act of 1995.

List of Subjects in 42 CFR Part 483

    Grant programs--health, Health facilities, Health professions, 
Health records, Medicaid, Medicare, Nursing homes, Nutrition, Reporting 
and recordkeeping requirements, Safety.

    42 CFR chapter IV is amended as follows:


    1. The authority citation for part 483 continues to read as 

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

    2. In Sec. 483.20, paragraphs (d) through (f) are redesignated as 
(k) through (m), respectively, paragraphs (b) and (c) are revised and 
new paragraphs (d) through (j) are added to read as follows:

Sec. 483.20  Resident assessment.

* * * * *
    (b) Comprehensive assessments.
    (1) Resident assessment instrument. A facility must make a 
comprehensive assessment of a resident's needs, using the resident 
assessment instrument (RAI) specified by the State. The assessment must 
include at least the following:
    (i) Identification and demographic information.
    (ii) Customary routine.
    (iii) Cognitive patterns.
    (iv) Communication.
    (v) Vision.
    (vi) Mood and behavior patterns.
    (vii) Psychosocial well-being.
    (viii) Physical functioning and structural problems.
    (ix) Continence.
    (x) Disease diagnoses and health conditions.
    (xi) Dental and nutritional status.
    (xii) Skin condition.
    (xiii) Activity pursuit.
    (xiv) Medications.
    (xv) Special treatments and procedures.
    (xvi) Discharge potential.
    (xvii) Documentation of summary information regarding the 
additional assessment performed through the resident assessment 
    (xviii) Documentation of participation in assessment.
    The assessment process must include direct observation and 
communication with the resident, as well as communication with licensed 
and nonlicensed direct care staff members on all shifts.
    (2) When required. A facility must conduct a comprehensive 
assessment of a resident as follows:
    (i) Within 14 calendar days after admission, excluding readmissions 
in which there is no significant change in the resident's physical or 
mental condition. (For purposes of this section, ``readmission'' means 
a return to the facility following a temporary absence for 
hospitalization or for therapeutic leave.)
    (ii) Within 14 calendar days after the facility determines, or 
should have determined, that there has been a significant change in the 
resident's physical or mental condition. (For purposes of this section, 
a ``significant change'' means a major decline or improvement in the 
resident's status that will not normally resolve itself without further 
intervention by staff or by implementing standard disease-related 
clinical interventions, that has an impact on more than one area of the 
resident's health status, and requires interdisciplinary review or 
revision of the care plan, or both.)
    (iii) Not less often than once every 12 months.
    (c) Quarterly review assessment. A facility must assess a resident 
using the quarterly review instrument specified by the State and 
approved by HCFA not less frequently than once every 3 months.
    (d) Use. A facility must maintain all resident assessments 
completed within the previous 15 months in the resident's active record 
and use the results of the assessments to develop, review, and revise 
the resident's comprehensive plan of care.
    (e) Coordination. A facility must coordinate assessments with the 
preadmission screening and resident review program under Medicaid in 
part 483, subpart C to the maximum extent practicable to avoid 
duplicative testing and effort.
    (f) Automated data processing requirement. (1) Encoding data. 
Within 7 days after a facility completes a resident's assessment, a 
facility must encode the following information for each resident in the 
    (i) Admission assessment.
    (ii) Annual assessment updates.
    (iii) Significant change in status assessments.
    (iv) Quarterly review assessments.
    (v) A subset of items upon a resident's transfer, reentry, 
discharge, and death.
    (vi) Background (face-sheet) information, if there is no admission 
    (2) Transmitting data. Within 7 days after a facility completes a 
resident's assessment, a facility must be capable of transmitting to 
the State information for each resident contained in the MDS in a 
format that conforms to standard record layouts and data dictionaries, 
and that passes standardized edits defined by HCFA and the State.
    (3) Monthly transmittal requirements. A facility must 
electronically transmit, at least monthly, encoded, accurate, complete 
MDS data to the State for all assessments conducted during the previous 
month, including the following:
    (i) Admission assessment.
    (ii) Annual assessment.
    (iii) Significant change in status assessment.
    (iv) Significant correction of prior full assessment.
    (v) Significant correction of prior quarterly assessment.
    (vi) Quarterly review.
    (vii) A subset of items upon a resident's transfer, reentry, 
discharge, and death.
    (viii) Background (face-sheet) information, for an initial 
transmission of MDS data on a resident that does not have an admission 
    (4) Data format. The facility must transmit data in the format 
specified by HCFA or, for a State which has an alternate RAI approved 
by HCFA, in the format specified by the State and approved by HCFA.
    (5) Resident-identifiable information. (i) A facility may not 
release information that is resident-identifiable to the public.
    (ii) The facility may release information that is resident-
identifiable to an agent only in accordance with a contract under which 
the agent agrees not to use or disclose the information except to the 
extent the facility itself is permitted to do so.
    (g) Accuracy of assessments. The assessment must accurately reflect 
the resident's status.
    (h) Coordination. A registered nurse must conduct or coordinate 
each assessment with the appropriate participation of health 
    (i) Certification. (1) A registered nurse must sign and certify 
that the assessment is completed.
    (2) Each individual who completes a portion of the assessment must 
sign and

[[Page 67212]]

certify the accuracy of that portion of the assessment.
    (j) Penalty for falsification. (1) Under Medicare and Medicaid, an 
individual who willfully and knowingly--
    (i) Certifies a material and false statement in a resident 
assessment is subject to a civil money penalty of not more than $1,000 
for each assessment; or
    (ii) Causes another individual to certify a material and false 
statement in a resident assessment is subject to a civil money penalty 
of not more than $5,000 for each assessment.
    (2) Clinical disagreement does not constitute a material and false 
* * * * *
    3. Subpart F consisting of Sec. 483.315 is added to read as 

Subpart F--Requirements That Must be Met by States and State 
Agencies, Resident Assessment

Sec. 483.315  Specification of resident assessment instrument.

    (a) Statutory basis. Sections 1819(e)(5) and 1919(e)(5) of the Act 
require that a State specify the resident assessment instrument (RAI) 
to be used by long term care facilities in the State when conducting 
initial and periodic assessments of each resident's functional 
capacity, in accordance with Sec. 483.20.
    (b) State options in specifying an RAI. The RAI that the State 
specifies must be one of the following:
    (1) The instrument designated by HCFA.
    (2) An alternate instrument specified by the State and approved by 
HCFA, using the criteria specified in the State Operations Manual 
issued by HCFA (HCFA Pub. 7) which is available for purchase through 
the National Technical Information Service, 5285 Port Royal Rd., 
Springfield, VA 22151.
    (c) State requirements in specifying an RAI.
    (1) Within 30 days after HCFA notifies the State of the HCFA-
designated RAI or changes to it, the State must do one of the 
    (i) Specify the HCFA-designated RAI.
    (ii) Notify HCFA of its intent to specify an alternate instrument.
    (2) Within 60 days after receiving HCFA approval of an alternate 
RAI, the State must specify the RAI for use by all long term care 
facilities participating in the Medicare and Medicaid programs.
    (3) After specifying an instrument, the State must provide periodic 
educational programs for facility staff to assist with implementation 
of the RAI.
    (4) A State must audit implementation of the RAI through the survey 
    (5) A State must obtain approval from HCFA before making any 
modifications to its RAI.
    (6) A State must adopt revisions to the RAI that are specified by 
    (d) HCFA-designated RAI. The HCFA-designated RAI is published in 
the State Operations Manual issued by HCFA (HCFA Pub. 7), as updated 
periodically, and consists of the following:
    (1) The minimum data set (MDS) and common definitions.
    (2) The resident assessment protocols (RAPs) and triggers that are 
necessary to accurately assess residents, established by HCFA.
    (3) The quarterly review, based on a subset of the MDS specified by 
    (4) The requirements for use of the RAI that appear at Sec. 483.20.
    (e) Minimum data set (MDS). The MDS includes assessment in the 
following areas:
    (1) Identification and demographic information, which includes 
information to identify the resident and facility, the resident's 
residential history, education, the reason for the assessment, 
guardianship status and information regarding advance directives, and 
information regarding mental health history.
    (2) Customary routine, which includes the resident's lifestyle 
prior to admission to the facility.
    (3) Cognitive patterns, which include memory, decision making, 
consciousness, behavioral measures of delirium, and stability of 
    (4) Communication, which includes scales for measuring hearing and 
communication skills, information on how the resident expresses himself 
or herself, and stability of communicative ability.
    (5) Vision pattern, which includes a scale for measuring vision and 
vision problems.
    (6) Mood and behavior patterns, which include scales for measuring 
behavioral indicators and symptoms, and stability of condition.
    (7) Psychosocial well-being, which includes the resident's 
interpersonal relationships and adjustment factors.
    (8) Physical functioning and structural problems, which contains 
scales for measuring activities of daily living, mobility, potential 
for improvement, and stability of functioning.
    (9) Continence, which includes assessment scales for bowel and 
bladder incontinence, continence patterns, interventions, and stability 
of continence status.
    (10) Disease diagnoses and health conditions, which includes active 
medical diagnoses, physical problems, pain assessment, and stability of 
    (11) Dental and nutritional status, which includes information on 
height and weight, nutritional problems and accommodations, oral care 
and problems, and measure of nutritional intake.
    (12) Skin condition, which includes current and historical 
assessment of skin problems, treatments, and information regarding foot 
    (13) Activity pursuit, which gathers information on the resident's 
activity preferences and the amount of time spent participating in 
    (14) Medications, which contains information on the types and 
numbers of medications the resident receives.
    (15) Special treatments and procedures, which includes measurements 
of therapies, assessment of rehabilitation/restorative care, special 
programs and interventions, and information on hospital visits and 
physician involvement.
    (16) Discharge potential, which assesses the possibility of 
discharging the resident and discharge status.
    (17) Documentation of summary information regarding the additional 
assessment performed through the resident assessment protocols.
    (18) Documentation of participation in assessment.
    (f) Resident assessment protocols (RAPs). At a minimum, the RAPs 
address the following domains:
    (1) Delirium.
    (2) Cognitive loss.
    (3) Visual function.
    (4) Communication.
    (5) ADL functional/rehabilitation potential.
    (6) Urinary incontinence and indwelling catheter.
    (7) Psychosocial well-being.
    (8) Mood state.
    (9) Behavioral symptoms.
    (10) Activities.
    (11) Falls.
    (12) Nutritional status.
    (13) Feeding tubes.
    (14) Dehydration/fluid maintenance.
    (15) Dental care.
    (16) Pressure ulcers.
    (17) Psychotropic drug use.
    (18) Physical restraints.
    (g) Criteria for HCFA approval of alternate instrument. To receive 
HCFA approval, a State's alternate instrument must use the standardized 
format, organization, item labels and definitions, and instructions 
specified by HCFA in the latest issuance of the State Operations Manual 
issued by HCFA (HCFA Pub. 7).
    (h) State MDS collection and data base requirements. (1) As part of 

[[Page 67213]]

survey responsibilities, the State must establish and maintain an MDS 
Database, and must do the following:
    (i) Use a system to collect, store, and analyze data that is 
developed or approved by HCFA.
    (ii) Obtain HCFA approval before modifying any parts of the HCFA 
standard system other than those listed in paragraph (h)(2) of this 
section (which may not be modified).
    (iii) Specify to a facility the method of transmission of data to 
the State, and instruct the facility on this method.
    (iv) Upon receipt of data from a facility, edit the data, as 
specified by HCFA, and ensure that a facility resolves errors.
    (v) At least monthly, transmit to HCFA all edited MDS records 
received during that period, according to formats specified by HCFA, 
and correct and retransmit rejected data as needed.
    (vi) Analyze data and generate reports, as specified by HCFA.
    (2) The State may not modify any aspect of the standard system that 
pertains to the following:
    (i) Standard approvable RAI criteria specified in the State 
Operations Manual issued by HCFA (HCFA Pub. 7) (MDS item labels and 
definitions, RAPs and utilization guidelines).
    (ii) Standardized record formats and validation edits specified in 
the State Operations Manual issued by HCFA (HCFA Pub. 7).
    (iii) Standard facility encoding and transmission methods specified 
in the State Operations Manual issued by HCFA (HCFA Pub. 7).
    (i) State identification of agency that collects RAI data. The 
State must identify the component agency that collects RAI data, and 
ensure that this agency restricts access to the data except for the 
    (1) Reports that contain no resident-identifiable data.
    (2) Transmission of data and reports to HCFA.
    (3) Transmission of data and reports to the State agency that 
conducts surveys to ensure compliance with Medicare and Medicaid 
participation requirements, for purposes related to this function.
    (4) Transmission of data and reports to the State Medicaid agency 
for purposes directly related to the administration of the State 
Medicaid plan.
    (5) Transmission of data and reports to other entities only when 
authorized as a routine use by HCFA.
    (j) Resident-identifiable data. (1) The State may not release 
information that is resident-identifiable to the public.
    (2) The State may not release RAI data that is resident-
identifiable except in accordance with a written agreement under which 
the recipient agrees to be bound by the restrictions described in 
paragraph (i) of this section.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program; and No. 93.773, Medicare-- Hospital Insurance)

    Dated: December 3, 1997.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.

    Dated: December 9, 1997.
Donna E. Shalala,
[FR Doc. 97-32828 Filed 12-22-97; 8:45 am]