    Dialysis Facilities: Problems Remain in Ensuring Compliance with
    Medicare Quality Standards (08-OCT-03, GAO-04-63).

    Most patients with end-stage renal disease (ESRD) must rely on
    dialysis treatments to compensate for kidney failure. Currently,
    over 222,000 ESRD patients visit dialysis centers several times a
    week to have toxins removed from their bloodstreams. While
    dialysis care has improved overall, questions remain regarding
    the quality of care provided by some of the nation's roughly
    4,000 ESRD facilities. We examined (1) the extent and nature of
    quality of care problems identified at dialysis facilities, (2)
    the effectiveness of state survey agencies in ensuring that
    quality issues are uncovered, corrected, and stay corrected, and
    (3) the extent to which the Centers for Medicare & Medicaid
    Services (CMS) funds, monitors, and assists state survey
    activities related to dialysis care.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-04-63
        ACCNO:   A08680
      TITLE:     Dialysis Facilities: Problems Remain in Ensuring
    Compliance with Medicare Quality Standards
         DATE:   10/08/2003
      SUBJECT:   Diseases
    	     Health care facilities
    	     Health care services
    	     Health surveys
    	     Patient care services
    	     Inspection
    	     Noncompliance
    	     Performance measures
    	     Dialysis
    	     Quality-of-care
    	     Medicare Program

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    GAO-04-63

    United States General Accounting Office

    GAO

               Report to the Chairman, Committee on Finance, U.S. Senate

    October 2003

    DIALYSIS FACILITIES

         Problems Remain in Ensuring Compliance with Medicare Quality Standards

    GAO-04-63

    Highlights of GAO-04-63, a report to the Chairman, Committee on Finance,
    U.S. Senate

    Most patients with end-stage renal disease (ESRD) must rely on dialysis
    treatments to compensate for kidney failure. Currently, over 222,000 ESRD
    patients visit dialysis centers several times a week to have toxins
    removed from their bloodstreams. While dialysis care has improved overall,
    questions remain regarding the quality of care provided by some of the
    nation's roughly 4,000 ESRD facilities. We examined (1) the extent and
    nature of quality of care problems identified at dialysis facilities, (2)
    the effectiveness of state survey agencies in ensuring that quality issues
    are uncovered, corrected, and stay corrected, and (3) the extent to which
    the Centers for Medicare & Medicaid Services (CMS) funds, monitors, and
    assists state survey activities related to dialysis care.

    GAO suggests that Congress consider authorizing CMS to impose immediate
    sanctions, such as monetary penalties or denying payment for new Medicare
    patients, on dialysis facilities cited with serious deficiencies in
    consecutive surveys. GAO recommends that the CMS Administrator create
    incentives for facilities to maintain compliance with quality standards,
    increase use of expert staff in conducting ESRD facility surveys, and
    enhance the support and monitoring of state survey agencies. CMS did not
    indicate an intention to implement five of our six recommendations.

    www.gao.gov/cgi-bin/getrpt?GAO-04-63.

    To view the full product, including the scope and methodology, click on
    the link above. For more information, contact Leslie G. Aronovitz at (312)
    220-7600.

    October 2003

    DIALYSIS FACILITIES

    Problems Remain in Ensuring Compliance with Medicare Quality Standards

    A substantial number of ESRD facilities do not achieve minimum patient
    outcomes specified in clinical practice guidelines, with significant
    proportions of their patients receiving inadequate dialysis or treatment
    for anemia. Similarly, inspections of dialysis facilities by state survey
    agencies have uncovered numerous problems that put patient health at risk.
    Between fiscal years 1998 and 2002, these inspections, commonly called
    surveys, revealed that 15 percent of facilities surveyed had serious
    quality problems that, if left uncorrected, would warrant termination from
    the Medicare program. Serious deficiencies commonly found during surveys
    included medication errors, contamination of water used for dialysis, and
    insufficient physician involvement in patient care.

    Infrequent, poorly targeted, and inadequate inspections allow facilities'
    quality of care problems to go undetected or remain uncorrected.
    Specifically:

    o  	Although ESRD survey activity has increased in recent years, only nine
    state survey agencies consistently met CMS's goal to inspect 33 percent of
    ESRD facilities annually.

    o  	A substantial number of facilities go many years between inspections.
    In fiscal year 2002, 216 facilities nationwide went 9 or more years
    without an inspection.

    o  	Deficiencies may not have been detected during an inspection if the
    surveyors had little experience in assessing dialysis quality.

    Even when deficiencies are identified and facilities take corrective
    action, little incentive exists for these facilities to remain in
    compliance. Data show a pattern of repeated serious deficiencies in
    successive inspections of an individual facility. No effective sanctions
    are available to enforce compliance, short of terminating the facility
    from the Medicare program, which is rarely done.

    Federal monitoring of state agencies' performance of surveys and technical
    assistance provided is uneven across CMS regions. CMS substantially
    increased its funding for ESRD surveys from an estimated $3.1 million in
    fiscal year 1998 to $8.2 million in fiscal year 2002. At the same time,
    several CMS regional offices in our study did not actively oversee how the
    state agencies used these funds to improve survey activities. CMS has not
    taken steps needed to facilitate information sharing between federally
    funded ESRD networks and state agencies on the performance of individual
    dialysis facilities-information that could help states to target their
    inspection resources. In addition, CMS has not offered adequate training
    opportunities for surveyors inspecting ESRD facilities.

    Contents

      Letter

    Results in Brief
    Background
    Quality Problems Prevalent among Dialysis Facilities and Put

    Patient Health at Risk
    Limitations in the ESRD Survey Process Leave Quality Problems
    Undetected or Inadequately Addressed
    CMS Has Increased Funding for State Surveys, but Monitoring and

    Technical Support Are Uneven
    Conclusions
    Matter for Congressional Consideration
    Recommendations for Executive Action
    Agency Comments and Our Evaluation

                                           1

                                          3 5

                                           9

    15

    24 33 35 35 36

    Appendix I Scope and Methodology

    Appendix II 	Medicare Conditions for Coverage for Dialysis Facilities

    Appendix III 	State Agencies' Progress toward Meeting CMS Survey Goals

    Appendix IV 	Comments from the Centers for Medicare & Medicaid Services

    Appendix V GAO Contact and Staff Acknowledgments 56

    GAO Contact 56
    Acknowledgments 56

    Related GAO Products

    57

    Tables

    Table 1: Proportion of ESRD Facilities Recertified Within 3, 6, 9, or More
    Years, Fiscal Years 1998 to 2002

    Table 2: Association between Surveyor Specialization and Rate of
    Condition- and Standard-Level Deficiencies Cited in Fiscal Years 2001 and
    2002

    Table 3: Rates of Repeated Deficiencies in Consecutive Surveys Conducted
    from Fiscal Years 1998 through 2002

    Table 4: Federal Support for Provider Surveys, Fiscal Years 1998 to 2001

    Table 5: ESRD Facilities Recertified Annually by State, Fiscal Years 1998
    to 2002

    Table 6: Facilities to Be Recertified to Meet CMS 3-Year Goal, by State 18

    20 22 26 45 47

    Figures

    Figure 1: Projected Growth in the ESRD Population and Medicare Costs 6

    Figure 2: Number of Facilities Where Some Patients Receive Inadequate
    Dialysis Treatment and Anemia Management, 2000 10

    Figure 3: State Variation in the Rate of Condition-Level Deficiencies
    Cited in Recertification Surveys Conducted from Fiscal Year 1998 through
    2002 12

    Figure 4: ESRD Facility Survey Rate Compared to CMS Goal, Fiscal Years
    1998 to 2002 16 Figure 5: State Variation in the Proportion of Dialysis
    Facilities Surveyed for Recertification, Fiscal Year 2002 17

    Abbreviations

    CMS Centers for Medicare & Medicaid Services
    DFC Dialysis Facility Compare Web site
    EPO erythropoietin
    ESRD end-stage renal disease
    ICF/MR intermediate care facilities for the mentally retarded
    LTC long-term care
    OSCAR Online Survey Certification and Reporting system

    This is a work of the U.S. government and is not subject to copyright
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    separately.

    United States General Accounting Office Washington, DC 20548

    October 8, 2003

    The Honorable Charles E. Grassley
    Chairman
    Committee on Finance
    United States Senate

    Dear Mr. Chairman:

    Most patients with end-stage renal disease (ESRD)-a life-shortening,
    chronic illness-must rely on dialysis treatments to compensate for kidney
    failure. Currently, over 222,000 ESRD patients spend 3 to 5 hours at
    dialysis centers three times a week, where dialysis machines remove
    toxins from their bloodstreams. In addition to having permanent kidney
    failure, ESRD patients are likely to suffer from diabetes or heart disease
    and are at risk for developing illnesses during their course on dialysis.
    Therefore, the care of ESRD patients requires expertise in both the
    medical and technical aspects of maintaining patients on dialysis.

    While dialysis care has improved overall, according to a 2002 Department
    of Health and Human Services report, questions remain regarding the
    quality of care provided to Medicare beneficiaries by some of the nation's
    roughly 4,000 dialysis facilities. The HHS report noted that many ESRD
    patients do not receive treatment meeting the minimum standards
    established in the National Kidney Foundation's clinical practice
    guidelines, which, when not met, have documented adverse effects on
    patient outcomes. In 2001, 16 percent of dialysis patients did not have an
    adequate amount of toxins removed from their blood, 24 percent had
    anemia that was not brought under control, and 19 percent of patients
    were dialyzed for extended periods using catheters, the least effective
    and
    most risky method for connecting patients to dialysis machines.1

    ESRD is the one medical condition that confers eligibility regardless of
    age
    to the Medicare program, which otherwise pays for health care provided

    1Department of Health and Human Services, Centers for Medicare & Medicaid
    Services, 2002 Annual Report:EndStageRenal DiseaseClinical Performance
    Measures Project (Baltimore, Md.: December 2002). These assessments are
    based on the clinical performance measures developed by CMS, building on
    the National Kidney Foundation's 1997 Dialysis Outcome Quality Initiative
    Clinical Practice Guidelines.

    to people who are over 65 years of age or to those with disabilities. The
    Centers for Medicare & Medicaid Services (CMS), which oversees the
    Medicare program, has responsibility for ensuring that dialysis patients
    receive quality care. For this purpose, CMS contracts with state survey
    agencies that conduct onsite inspections. Following up on a report we
    issued in June 2000,2 you asked us to review CMS's system for enforcing
    Medicare's minimum quality and safety standards for ESRD facilities and to
    assess whether and how it might be strengthened. Specifically, we examined
    (1) the extent and nature of quality of care problems identified at
    dialysis facilities, (2) the effectiveness of state survey agencies in
    ensuring that quality issues are uncovered, corrected, and stay corrected,
    and (3) the extent to which CMS funds, monitors, and assists state survey
    activities related to dialysis care.

    To address these issues, we obtained data from existing national databases
    and original data from 10 states. We analyzed facility-specific
    information about quality measures reported on CMS's Dialysis Facility
    Compare, a consumer guide available on the Internet. For the nation as a
    whole and each of the states,3 we also analyzed data from CMS's Online
    Survey Certification and Reporting (OSCAR) system for the last 5 fiscal
    years, 1998 through 2002. This database provides information on the dates
    when surveys took place, the deficiencies cited, and the time spent
    conducting various survey activities. In addition, we interviewed
    cognizant officials at CMS's central office and reviewed changes in the
    CMS budget devoted to survey activities from fiscal years 1998 to 2002.

    To supplement available national data, we obtained additional information
    from 10 states-Alabama, California, Florida, Kansas, Maryland,
    Mississippi, Missouri, Nevada, New York, and Pennsylvania-which together
    accounted for more than one-third of all facilities in fiscal year 2001.
    They were selected to provide variation across a range of dimensions,
    including the proportion of ESRD facilities surveyed and deficiencies
    cited, number of ESRD facilities, and geographic diversity. We interviewed
    state surveyors and administrators, representatives from

    2U.S. General Accounting Office, MedicareQuality of Care: Oversight of
    Kidney Dialysis Facilities Needs Improvement, GAO/HEHS-00-114 (Washington,
    D.C.: June 23, 2000). This report highlighted the need for additional
    enforcement tools to ensure that corrections of quality problems
    identified in surveys of ESRD facilities would be sustained over time. It
    also urged improved cooperation and data sharing between state survey
    agencies and ESRD networks to improve targeting of facilities selected for
    inspection.

    3In this report, "states" refers to the 50 states and the District of
    Columbia.

    Results in Brief

    ESRD networks (organizations that promote quality improvement in ESRD
    services), and federal regional office officials responsible for
    monitoring ESRD facility surveys. In addition, we collected detailed
    information on several states' corps of ESRD surveyors, including their
    background, training, and experience. We also examined the written reports
    from numerous facility surveys conducted within the last 2 years. (App. I
    contains more detail on our scope and methodology.) Our work was conducted
    from August 2002 to September 2003 in accordance with generally accepted
    government auditing standards.

    A substantial number of dialysis facilities do not achieve the minimum
    patient outcomes specified in clinical practice guidelines for a
    significant proportion of their patients. Data reported on Dialysis
    Facility Compare show that, in 2000, 512 facilities had 20 percent or more
    of their patients receiving inadequate dialysis treatment, and nearly
    1,700 facilities had 20 percent or more of their patients receiving
    inadequate care for anemia. In addition, the CMS-funded system of on-site
    inspections of facility conditions, equipment, and staffing has uncovered
    numerous problems that put patient health at risk. From fiscal year 1998
    through 2002, these inspections, generally called surveys, revealed that
    15 percent of facility surveys identified serious quality problems that,
    if left uncorrected, would warrant termination from the Medicare program.
    Serious deficiencies commonly found during surveys included medication
    errors, contamination of water used for dialysis, and insufficient
    physician involvement in patient care.

    Infrequent, poorly targeted, and inadequate inspections by state survey
    agencies allow facilities' quality of care problems to go undetected or
    remain uncorrected. Specifically:

    o  	Although ESRD survey activity has increased in recent years, state
    compliance with CMS's goal to resurvey 33 percent of ESRD facilities
    annually has been inconsistent. While 33 states met the goal in at least 1
    of the last 2 fiscal years, only 9 of the 33 states surveyed a third or
    more of their facilities in both years. Eighteen states failed to meet the
    goal in either fiscal year 2001 or 2002.

    o  	A substantial number of facilities go many years between inspections.
    In fiscal year 2002, 216 facilities nationwide (5.4 percent) went 9 or
    more years without an inspection, up from 53 facilities (1.6 percent) in
    fiscal year 1998.

    o  	Deficiencies may not have been detected during a survey if the
    surveyors who inspected the facilities had little experience in assessing
    dialysis

    quality. Data from several states showed that survey agencies where
    designated staff specialized in performing ESRD surveys uncovered a
    substantially larger number of deficiencies than agencies without such
    staff expertise.

    Even when deficiencies are identified and facilities take corrective
    action, little incentive exists for these facilities to remain in
    compliance with Medicare's minimum quality standards on a continuing
    basis. As shown in nationwide data, when quality problems were cited, the
    problems were corrected but often did not stay corrected. For example,
    from fiscal years 1998 through 2002, 18 percent of facilities found to
    have serious deficiencies were cited again for the same deficiencies in
    successive inspections. At present, there is no effective sanction to
    encourage a facility to avoid repeating prior deficiencies, short of
    terminating the facility from the Medicare program, which is rarely done.

    CMS has expanded funding to support state ESRD survey activities, but its
    monitoring of state agencies' performance of surveys and providing
    technical assistance is uneven across CMS regions. CMS substantially
    increased its aggregate funding for ESRD surveys from an estimated $3.1
    million in fiscal year 1998 to $8.2 million in fiscal year 2002. At the
    same time, several regional offices in our study did not actively oversee
    or assist in improving ESRD survey activities. In addition, CMS has not
    removed barriers between federally funded ESRD networks and state agencies
    that inhibit the sharing of information on the performance of individual
    dialysis facilities-information that could assist states in targeting
    their inspection resources. Furthermore, surveyors in several states
    reported that CMS has not offered adequate training opportunities for
    surveyors inspecting ESRD facilities.

    To encourage ESRD facilities to adhere to Medicare quality standards, we
    suggest that Congress consider authorizing CMS to impose immediate
    sanctions, such as monetary penalties or denying payment for new Medicare
    patients, on dialysis facilities cited with serious deficiencies in
    consecutive surveys. We are also recommending that CMS: conduct more
    frequent surveys of facilities with serious deficiencies; publicize
    facilities' survey results; encourage state agencies to use
    ESRD-specialized surveyors; expand ESRD surveyor training opportunities;
    require periodic, routine sharing of information between ESRD networks and
    state survey agencies; and enhance oversight of state agency performance.

    Background

    In its comments on a draft of this report, CMS affirmed its commitment to
    strengthening oversight of dialysis facilities and state survey agencies,
    but did not indicate an intention to implement five of our six
    recommendations. Instead, the agency highlighted its efforts to develop
    tools to assist states in selecting facilities for inspection and to make
    the survey process more uniform. We continue to believe that more focused
    efforts to evaluate compliance with Medicare requirements and stronger
    actions against poor performers are needed to ensure an effective,
    consistent, and timely ESRD survey and certification program.

    Individuals with ESRD, characterized by permanent kidney failure, must
    undergo either regular dialysis treatment or a kidney transplant to stay
    alive. In 2000, about 248,000 individuals received one of two modes of
    dialysis treatment-hemodialysis or peritoneal dialysis-both of which can
    be performed at a facility or at home.4 Most ESRD patients undergo
    hemodialysis.5 The number of hemodialysis patients enrolled in Medicare
    has risen sharply, from about 118,000 in 1991 to over 222,000 in 2000.
    With anticipated annual growth of over 7 percent, the dialysis population
    is projected to reach more than 520,000 by 2010.6 (See fig. 1.) This
    growth in enrollment has been attributed largely to improvements in the
    survival rate for people with ESRD and an increase in the number of
    Americans with conditions, such as diabetes or high blood pressure, that
    often lead to kidney failure.

    4In hemodialysis, a patient's blood is filtered through an external
    machine that acts as an artificial kidney to withdraw excess fluids and
    toxic materials before returning cleansed blood to the patient. The
    machine uses a semipermeable membrane, called a hemodialyzer, to filter
    out the toxins. In peritoneal dialysis, the patient's peritoneal membrane,
    located within the abdominal cavity, is used to remove excess fluids and
    toxins.

    5In 2000, about 222,300 patients received hemodialysis, 21,400 underwent
    peritoneal dialysis, and 4,400 underwent dialysis of an unspecified mode.
    In addition, approximately 74,700 beneficiaries were recipients of kidney
    transplants, for a total of approximately 322,800 individuals that
    received Medicare benefits as of December 31, 2000.

    6Projections are based on data for 1982 to 1997. See J.L. Xue, J.Z. Ma,
    T.A. Louis, and A.J. Collins, "Forecast of the Number of Patients With
    End-Stage Renal Disease in the United States to the Year 2010," Journal of
    theAmerican Society ofNephrology, vol. 12 (2001): 2753-2758.

    Figure 1: Projected Growth in the ESRD Population and Medicare Costs

    Growth in the ESRD population has been matched by growth in the number of
    dialysis facilities. In the decade between 1991 and 2001, the number of
    outpatient dialysis facilities doubled from about 2,000 to more than 4,000
    facilities. In 2001, 83 percent of all facilities were freestanding
    (nonhospital-based) and 79 percent of all facilities were for-profit. In
    2001, the four largest for-profit dialysis chains accounted for about
    two-thirds of all freestanding facilities.

    The rise in the ESRD population has been accompanied by an even more rapid
    increase in program spending. Medicare not only provides coverage

    to most beneficiaries with ESRD for all ESRD-related services but for
    their other health care needs as well.7 From 1990 to 2001, Medicare
    expenditures for beneficiaries with ESRD rose from about $5 billion to
    over $15 billion, and are forecast to grow to $28 billion in 2010.
    Spending growth has been fueled by an expansion of enrollees with greater
    medical needs-older beneficiaries and those with chronic
    comorbidities8-and the program's inclusion of new treatments, particularly
    erythropoietin (EPO)-a synthetic hormone widely used to manage anemia-and
    other injectable medications. While Medicare pays ESRD providers a set
    amount-a composite rate-including the nursing services provided and
    supplies used in each dialysis treatment, it pays separately for
    injectable drugs.9 The composite rate for dialysis services has remained
    virtually unchanged since the program's inception. However, payments to
    freestanding dialysis facilities for injectable drugs have grown
    considerably in recent years, increasing from 33 percent of total payments
    in 1997 to 40 percent in 2001.

    In 1976, CMS established minimum requirements that dialysis facilities
    must meet in order to receive Medicare payments. The regulations, referred
    to as "conditions for coverage," address 11 general areas, including the
    facility's physical environment and overall management by a governing
    body, as well as the adequacy of patient treatment plans.10 (See app. II.)
    One condition covers the detailed procedures that facilities must follow
    if they choose to reuse certain supplies, such as dialyzers, rather than
    replace them for each treatment.11 Under each condition are related
    "standards." For example, under the condition "physical environment,"

    7For individuals eligible for Medicare only because of permanent kidney
    failure, Medicare coverage starts on the fourth month of dialysis.
    Medicare will not pay for services during the first 3 months of dialysis
    unless the patient already has Medicare because of age or disability.
    After that, Medicare is the secondary payer for 30 months. During this
    period, private insurance or Medicaid pays first on health care bills and
    Medicare pays second. Full Medicare coverage begins with the 34th month of
    dialysis and any private insurer becomes the secondary payer. For those
    who are uninsured, Medicare is the primary payer.

    8The proportion of new ESRD patients 75 or older grew from 18 percent in
    1991 to about 25 percent in 2001, while the proportion of new ESRD
    patients with diabetes grew from 36 percent of all new patients to 46
    percent during the same period.

    9In 2002, the average composite rate was approximately $130 for
    freestanding dialysis facilities. Payments for injectable drugs averaged
    about $80 per treatment in 2001.

    10See42 C.F.R. Part 405 Subpart U (2002).

    11These requirements include appropriate methods for disinfection and
    steps to ensure that such supplies are only reused by the same patient.

    there are specific standards to maintain the purity of water used for
    dialysis. Even deficiencies found solely at the standard level indicate
    potential harm to patients. But, deficiencies cited at the condition level
    are the most egregious, as they indicate a problem that is widespread at a
    facility or serious in terms of its harm, or potential to harm patients.
    Typically, they are accompanied by multiple standard-level deficiencies
    under that condition.

    To ensure provider compliance with dialysis quality standards, Medicare
    contracts with state survey agencies.12 These agencies conduct initial
    on-site surveys of dialysis facilities when providers seek enrollment in
    the Medicare program. Subsequently, state agencies periodically conduct
    unannounced inspections, referred to as recertification surveys, to ensure
    that facilities are maintaining compliance with Medicare standards.
    Although no statutory or regulatory requirements exist regarding the
    frequency of recertification surveys, CMS has established goals for state
    survey agencies to ensure that facilities are surveyed within certain
    intervals. States are expected to survey 33 percent of their dialysis
    facilities annually, and each facility every 3 years. In addition, state
    survey agencies must respond to complaints that they receive concerning
    dialysis facilities and, when warranted, conduct on-site investigations.

    If the state agency determines that a facility is out of compliance with
    any condition or standard, CMS requires that the facility develop a plan
    to correct the deficiency. The state agency is then responsible for
    determining if the plan of correction is adequate to address the quality
    problems identified. Facilities that do not correct condition-level
    deficiencies within a reasonable amount of time, generally within 90 days,
    are subject to termination from the program. A much shorter time frame for
    termination applies in situations where a facility's noncompliance poses
    an immediate and serious threat to patient health or safety.

    CMS also contracts with 18 ESRD network organizations that are responsible
    for helping providers improve the quality of care patients receive in
    dialysis facilities. Rather than enforcing compliance with federal quality
    regulations, the networks recruit facility participation in national and
    regional quality improvement projects that focus on enhancing

    12These agencies are typically part of state health departments and are
    responsible for monitoring compliance with quality standards associated
    with several types of facilities, including nursing homes and home health
    agencies.

    specific clinical outcomes of dialysis patients. Networks collect data
    from individual facilities on numerous clinical indicators and provide
    them feedback on their performance. The networks also provide technical
    assistance to facilities and handle grievances concerning patient care.
    Each network has a medical review board composed of dialysis facility
    representatives, physicians, and dialysis patients, that oversees network
    operations.

    To assist beneficiaries with ESRD in deciding where to get dialysis
    services, CMS reports certain information on Dialysis Facility Compare, an
    Internet Web site. Initiated in 2001, the site provides information on
    specific characteristics-such as the location, operating hours, and size-
    of all Medicare-certified facilities. It also provides data on clinical
    outcomes related to several quality measures, but does not contain the
    results of state agency surveys. In contrast, CMS routinely posts survey
    results for nursing homes on a similar but separate Internet Web site
    called Nursing Home Compare.

    Data made public by CMS reveals that poor care is a problem at many
    facilities, with large numbers of patients receiving inadequate
    hemodialyis or treatment for anemia. Similarly, inspections of ESRD
    facilities continue to find evidence that serious health and safety
    problems exist for dialysis patients. From fiscal year 1998 through 2002,
    as many as one out of seven surveys identified problems sufficiently
    severe to initiate the process of terminating the facility from the
    Medicare program. These deficiencies, such as medication errors and
    contamination of water used for dialysis, put the health of patients at
    risk.

    Quality Problems Prevalent among Dialysis Facilities and Put Patient
    Health at Risk

    Many Facilities Do Not Provide Adequate Care to Their Hemodialysis
    Patients

    Data reported on the Dialysis Facility Compare Web site provides evidence
    that the care delivered at many facilities is substandard. The most recent
    information available indicates that, in 2000, a substantial number of
    facilities did not provide all of their Medicare patients with a level of
    care that meets minimum clinical practice guidelines. Figure 2 shows the
    extent to which facilities did not achieve two commonly accepted quality
    benchmarks based on the National Kidney Foundation guidelines: (1) the
    percent of the facility's patients not receiving adequate hemodialysis and
    (2) the percent of the facility's patients receiving EPO whose anemia was
    not adequately managed.13 Despite some measurement limitations, both of

    13EPO is used for the treatment of anemia for nearly all dialysis
    patients.

    these indicators are considered characteristics of patient care that
    reflect dialysis facility quality.

    Figure 2: Number of Facilities Where Some Patients Receive Inadequate
    Dialysis Treatment and Anemia Management, 2000

    1000

                                  Number of facilities

    800

    600

    400

    200 0

    Less than 5 5 to 9 10 to14 15 to19 20 to 24 25 or more Percentage of the
    facility's patients with inadequate hemodialysis

    1200 Number of facilities

    1000

    800

    600

    400

    200

    0 Less than 10 10 to 19 20 to 29 30 to 39 40 to 49 50 or more

          Percentage of the facility's patients with inadequate anemia control

    Source: CMS, Dialysis Facility Compare Web site.

    Notes: Adequacy of dialysis is measured as the percentage of the
    facility's hemodialysis patients that had the minimum recommended urea
    reduction ratio-a measure of the waste products removed from the blood-of
    65 or more. Data were reported for 3,158 facilities.

    Anemia management is measured as the percentage of the facility's patients
    who received EPO that had a hematocrit level-a measure of low red blood
    count-of 33 or greater. Data were reported for 3,325 facilities.

    Relatively few dialysis facilities reported meeting these two national
    guidelines for 100 percent of their patients. At about half of the
    facilities, fewer than 10 percent of their patients fell short of the
    hemodialysis guideline, but at 512 facilities, 20 percent or more of their
    patients received inadequate hemodialysis. Results for anemia treatment
    were less favorable overall. Nearly 1,700 facilities fell short of meeting
    the guideline for anemia management for 20 percent or more of the patients
    in their care; at 135 facilities, more than 50 percent of patients
    received inadequate treatment for anemia. Research has shown that
    variation in such patient outcomes as dialysis adequacy is largely
    attributable to factors at the facility-its policies governing dialysis
    care, associated practice patterns, and attention to individual patient
    problems-as opposed to patient-specific causes.14

    Facility Inspections Identify an Unacceptable Level of Serious Quality
    Problems

    The cumulative results of surveys conducted from fiscal years 1998 through
    2002 suggest that condition-level deficiencies-quality problems severe
    enough to warrant termination from the Medicare program unless corrected
    within 90 days-are still far from rare. Fifteen percent of recertification
    surveys conducted nationwide from fiscal year 1998 through 2002 reported
    one or more condition-level deficiencies. The distribution across states
    of condition-level deficiencies cited was substantially uneven. Several
    states reported no condition-level deficiencies during that 5-year period,
    whereas other states found such deficiencies in roughly 60 percent of
    their surveys. As shown in figure 3, most states were at the lower end of
    the range, with 39 states citing condition-level deficiencies in fewer
    than 20 percent of their surveys, and 21 states, in fewer than 10 percent
    of their surveys.

    14J.C. Fink, S.A. Blahut, A.E. Briglia, and others, "Effect of
    Center-Versus Patient-Specific Factors on Variation in Dialysis Adequacy,"
    Journal ofthe American Society ofNephrology, vol. 12 (2001): 164-169.

    Figure 3: State Variation in the Rate of Condition-Level Deficiencies
    Cited in Recertification Surveys Conducted from Fiscal Year 1998 through
    2002

                                  20 Number of states

                                           18

                                           18

    Our review of recertification survey reports from fiscal years 2001 and
    2002, collected from the 10 states in our study, identified
    condition-level deficiencies that were commonly cited among noncompliant
    facilities. Multiple instances were found of inadequate clinical
    management, medication errors, improper use of reusable dialysis
    equipment, contamination of water used for dialysis, and insufficient
    professional medical involvement in the dialysis patients' care. State
    surveyors documented these problems after reviewing facility personnel
    files, policies, procedures, and the facility's overall environment. In
    addition, surveyors reviewed a random sample of medical records from 10
    percent of the facility's patients.15 The vignettes presented below-which
    illustrate the types of problems found in 35 percent of all surveys
    conducted from fiscal year 1998 through 2002-were extracted from
    surveyors' findings

    15A patient's medical record contains required information on identified
    problems, a plan of care, and documentation tracking the treatments
    actually provided. The record must show ongoing assessments of patient
    needs as well as evidence that patients participate in developing their
    treatment plans and are informed of outcomes.

                                           16

                                           14

                                           12

                                          10 8

                                           6

                                           4

                                           2

                        0 0 1 to 9 10 to 19 20 to 29 30 or more

    Percentage of the state's surveys that found condition-level deficiencies

                        Source: GAO analysis of CMS OSCAR data.

    Problems Cited at ESRD Facilities Create the Potential for Harm to
    Patients

    reports. Registered nurses with substantial ESRD survey experience, who we
    asked to comment on the clinical implications of these findings, indicated
    that the deficiencies could lead in some cases to severely adverse patient
    outcomes.

    o  	Failure to monitor laboratory values and medication supply. A Maryland
    surveyor found that for 31 days, one facility did not provide any of its
    patients with EPO, a medication routinely used to stimulate the production
    of red blood cells that are compromised by chronic kidney disease. Upon
    reviewing patients' medical records, 8 out of 10 sampled records indicated
    that the patient's red blood cell count was below normal, thus requiring
    EPO. In addition, 5 of these records showed that the patient's red blood
    cell level decreased over a 4-month period. The facility's head nurse did
    not monitor and report the patients' abnormal laboratory values to the
    physicians and did not respond to the patients' complaints of feeling
    tired and lacking energy.

    According to our nurse reviewers, patients who have a diminished red blood
    cell count for an extended period of time can develop health-related
    complications, including heart irregularities and a decrease in brain
    function.

    o  	Failure to administermedication as prescribed. A California surveyor
    cited a condition-level deficiency when she found that physician orders
    were not being followed. One patient's medical record documented that
    6,000 units of EPO were prescribed for each dialysis treatment but that
    the patient received only 600 units at each treatment for 20 treatments.
    Staff confirmed that the patient was receiving the wrong dose, and when
    questioned by the surveyors, could not provide an explanation. Another
    patient's medical record revealed that, despite a physician-ordered
    increase in EPO, the patient received an incorrect dosage of the
    medication for almost 2 months. Again, staff acknowledged that the order
    to increase the dosage was not carried out. A review of two more patients'
    medical records showed written orders for Venofer, a medication to treat
    iron deficiency. The records documented that both patients failed to
    receive this medication for a week or more. Staff acknowledged that there
    was a period of time during which the facility ran out of the medication.

    Our nurse reviewers reported that a reduction of Venofer or EPO could
    increase the dialysis patients' risk for anemia, a condition that, as
    noted above, can cause a patient to experience extreme fatigue and
    eventually clinical impairments to the heart and brain.

    o  	Failure to administer dialysis treatments as prescribed. A
    recertification survey in Pennsylvania discovered that, for over half of
    the medical records reviewed, the facility did not ensure that diagnostic
    and therapeutic orders were followed. Specifically, documentation in
    patients' medical records revealed that the duration of dialysis
    treatments deviated from the amount of time prescribed by a physician. One
    patient's medical record indicated that dialysis treatments were ordered
    for 3.5 hours in duration. However, actual treatment periods were all less
    than the prescribed amount-by 20 to 90 minutes. Similarly, another
    patient's record indicated that dialysis treatments were ordered for a
    duration of 3 hours and 45 minutes but most treatments were for shorter
    duration-as much as an hour less.

    Nurse reviewers indicated that when the dialysis treatment period is
    reduced, the patient retains toxins and other fluids that have not been
    removed adequately from the blood stream. This condition can adversely
    affect the patient's overall general health and lead to loss of appetite,
    swelling, fatigue, shortness of breath, and possibly heart failure.

    o  	Failure to monitor concentration of chemicals in the water system. A
    New York surveyor found that a facility did not monitor the purity of
    water used for dialysis. The water used to prepare dialysate, a solution
    that removes wastes from the blood during dialysis, contained chemical
    contaminates in excess of allowed concentrations. For at least 8 months,
    fluoride levels were 1.0-five times greater than the maximum allowable
    limit of 0.2. In addition, two water tests showed that calcium levels were
    above 5.25, well above the maximum allowable limit for calcium of 2.0. The
    facility medical director did not monitor the results of water tests
    conducted and did not ensure that the facility's staff took appropriate
    action, such as reporting abnormal values or resampling the water.

    Nurse reviewers told us that excessive amounts of fluoride could cause a
    dialysis patient's red blood cells to rupture and clot and that excessive
    amounts of calcium in the blood could increase the incidence of bone
    disease.

    o  	Failure to involvea transplant surgeon in the review of patients'
    long-term care plans. A recertification survey in Mississippi revealed
    that the facility did not involve a transplant surgeon, as required, in
    the review of patients' long-term care plans. All of the medical records
    reviewed in that facility had long-term care plans that were not updated
    within the required 6-month time frame. The surveyor interview with the
    facility's medical director confirmed that a transplant surgeon or his
    designee had not examined patients' long-term care plans.

    Limitations in the ESRD Survey Process Leave Quality Problems Undetected
    or Inadequately Addressed

    Nurse reviewers commented that, until screened by a transplant surgeon,
    the dialysis patient's potential for kidney transplantation cannot be
    properly assessed.

    Infrequent or poorly targeted inspections allow facilities' quality of
    care problems to go undetected or remain uncorrected. Although state
    survey activity increased from fiscal year 1998 to 2002, numerous state
    agencies did not meet the goal currently set by CMS to survey 33 percent
    of all ESRD facilities annually. An increasing number of facilities
    continued to operate 9 or more years between inspections. In addition,
    states that relied primarily on surveyors with limited experience in
    conducting inspections of ESRD facilities tended to report substantially
    fewer deficiencies than states using more experienced surveyors,
    suggesting that surveyors in the first group of states may have missed
    some quality problems. We also found patterns of repeated condition-level
    deficiencies, and particularly, citations for the same problem in
    successive inspections of an individual facility. Finally, facilities had
    little incentive to ensure continued adherence to Medicare's minimum
    quality standards in the absence of sanctions for noncompliance other than
    termination from the Medicare program-which, historically, has been rarely
    used.

    Increased CMS Goals Have Led to Greater Survey Activity, but Many States
    Fall Short

    In recent years, CMS has underscored the importance of conducting
    recertification surveys of ESRD facilities by raising its expectations for
    the state agencies regarding the frequency with which such surveys should
    take place. In fiscal year 2001, CMS increased the recertification goal
    for states to 33 percent of facilities each year, up from 10 percent in
    fiscal year 1999 and 17 percent in fiscal year 2000. Moreover, since
    fiscal year 2001, there has been a parallel goal for states to survey
    every dialysis facility within a 3-year period. Thus, by the end of fiscal
    year 2003, no dialysis facility should have gone more than 3 years since
    its last recertification survey.

    In response to CMS's heightened expectations, state agencies surveyed more
    ESRD facilities, but not enough to fully meet CMS's current goals. As
    shown in figure 4, the percentage of ESRD facilities undergoing
    recertification surveys annually grew substantially from fiscal year 1998
    to 2001. However, collectively, state agencies did not achieve the current
    goal, effective in 2001, of surveying 33 percent of all ESRD facilities
    each year. In fact, after increasing to over 28 percent in fiscal year
    2001, the survey frequency rate declined to about 27 percent in fiscal
    year 2002.

    Figure 4: ESRD Facility Survey Rate Compared to CMS Goal, Fiscal Years
    1998 to 2002

    Percent

    35 33 33

    30

    25

    20

    15

    10

    5

    0 1998 1999 2000 2001 2002

    CMS annual survey goal

    Facilities surveyed

    Source: GAO analysis of CMS OSCAR data.

    Underlying this aggregate trend are wide disparities in survey frequency
    rates across the individual state agencies, as shown in figure 5. State
    recertification survey rates ranged from zero to 89 percent in fiscal year
    2002. Even among the 13 states with the largest number of ESRD
    facilities,16 recertification survey rates varied widely-from 10 percent
    to 40 percent.

    16This top quartile of states represents 60 percent of all ESRD facilities
    and 64 percent of all dialysis patients.

    Figure 5: State Variation in the Proportion of Dialysis Facilities
    Surveyed for Recertification, Fiscal Year 2002

    15

    15

    10

    5

    0 0 to 4 5 to 9 10 to 14 15 to 19 20 to 24 25 to 29 30 to 34 35 to 39 40
    or more

                     Percentage of the state's facilities surveyed

    Source: GAO analysis of CMS OSCAR data.

    While 33 state survey agencies met the expanded CMS survey frequency goal
    in at least 1 of the last 2 fiscal years-sometimes by substantial
    margins-only 9 of those states met the 33 percent goal in both years. (See
    table 5 in app. III.) By contrast, 18 state agencies failed to reach 33
    percent in either of the two most recent fiscal years, including some of
    the largest ESRD states, such as California, Michigan, Pennsylvania, and
    Virginia.

    As a result, many states may have difficulty meeting CMS's second goal for
    state recertification activity, to survey all their ESRD facilities within
    a 3-year period. Because this goal was established in fiscal year 2001,
    the first test of state compliance will come at the end of fiscal year
    2003. Based on the facilities surveyed in fiscal year 2001 and 2002, 35
    states will have to inspect more than a third of their ESRD facilities in
    fiscal year 2003 if they are to meet the 3-year goal. (See table 6 in app.
    III.) About one in five states has more than 60 percent of facilities left
    to survey. Alabama has the most facilities-89 percent-that need to be
    surveyed in the current fiscal year. Among the largest states, California
    and Virginia have the largest backlogs to overcome-around 76 percent.

    Despite improvement in the overall rate of ESRD facility surveys, a
    significant proportion of dialysis facilities continue to operate for long
    periods without inspections. For example, as of September 30, 2002, 466
    facilities had not been surveyed for 6 or more years, of which 216 had not
    been inspected for recertification in 9 or more years. Most of the effort
    to shorten the interval between recertification surveys has focused on

    reducing the number of facilities surveyed within 3 to 6 years. (See table
    1.) From fiscal year 1998 to 2000, the proportion of facilities not
    surveyed for more than 6 years rose sharply (from 9.8 to 17.4 percent) and
    then declined (to 11.6 percent). Those that operated 9 or more years
    without a recertification survey steadily increased from 1.6 percent (53
    facilities) in fiscal year 1998 to 5.4 percent (216 facilities) in fiscal
    year 2002. This aggregate result reflected highly variable survey rates
    across states. Four states-California, Texas, New York, and
    Missouri-accounted for 174 facilities that had not been surveyed within 9
    years by the end of fiscal year 2002.

    Table 1: Proportion of ESRD Facilities Recertified Within 3, 6, 9, or More
    Years, Fiscal Years 1998 to 2002

    Percentage of facilities subject to a recertification survey

    Length of time since
    last recertification 1998 1999 2000 2001 2002
    survey (n=3,250) (n=3,462) (n=3,679) (n=3,882) (n=4,011)

                  Less than 3 years      51.6   51.2     49.8     62.5       72.4
                      3 to <6 years      38.6   32.8     32.8     22.9       16.0
                      6 to <9 years       8.2   13.9     14.2     10.1        6.2
                    9 or more years       1.6   2.1      3.2      4.4         5.4

    Source: GAO analysis of CMS OSCAR data.

    State agencies have to balance their efforts to meet survey workload goals
    for ESRD facilities against the demands on inspection staff to meet other
    CMS survey requirements. In particular, state agencies are required to
    inspect nursing homes every 15 months,17 intermediate care facilities for
    the mentally retarded (ICF/MR) at least annually, and home health agencies
    at least once every 3 years. In its letter to state agencies on fiscal
    year 2003 program requirements and budget guidelines for survey
    activities, CMS made inspections of dialysis facilities and nine other
    types of providers lower in inspection priority, behind nursing homes,
    ICF/MRs, and home health agencies.18 ESRD recertifications also received
    lower

    17The statewide average interval between standard surveys must be 12
    months or less. See 42 C.F.R. S: 488.308(b).

    18Department of Health and Human Services, CMS, memorandum from the
    Director, Survey and Certification Group, "Fiscal Year (FY) 2003 State
    Survey and Certification Budget Call Letter - ACTION," July 2, 2002.

    priority than investigation of complaints filed against all types of
    providers.19 CMS officials asserted that they provide the state survey
    agencies with sufficient resources to fulfill expectations across all
    provider types. Nonetheless, several state officials we spoke with
    reported difficulty in meeting all of these expectations, especially those
    experiencing substantial growth in ESRD facilities in their states. They
    indicated that, given the relatively low priority assigned to ESRD
    recertifications, they would most likely cope by adjusting the number of
    dialysis facilities inspected.

    Lack of Surveyor Specialization May Contribute to Less Effective Surveys

    Even when facilities are inspected, some surveyors may be more adept than
    others at identifying quality problems. Because dialysis treatment is
    technically complex, surveyors who focus on ESRD surveys say that they
    become more proficient in detecting and properly documenting quality of
    care problems as a result. However, state agencies may be reluctant to
    designate a subset of surveyors who specialize in performing ESRD
    inspections as it limits their flexibility in scheduling inspections of
    nursing homes, home health agencies, and other provider types. Moreover,
    such specialization is less feasible for states with few ESRD facilities
    overall. In states without a specialist approach to facility inspections,
    many surveyors are likely to conduct no more than a few ESRD surveys each
    year. Among the nine state survey agencies from which we collected
    workload data, six typically assigned ESRD inspections to surveyors who
    spent most of their time surveying other provider types.20 The other three
    assigned most ESRD inspections to surveyors who often performed surveys of
    dialysis facilities.

    19CMS requires every state to establish a screening mechanism to evaluate
    complaints as they come in, and to apply explicit criteria to determine
    which ones need to be followed up with a survey as well as the time frame
    within which that survey must take place. Surveys prompted by complaints
    are intended to address a particular issue raised in the complaint, which
    often does not involve clinical issues. If during the course of the
    complaint investigation the surveyor discovers systemic quality problems,
    the inspection is usually converted into a recertification survey.

    20For each state, we calculated a specialization ratio that indicated the
    likelihood that any given ESRD survey would be conducted by a surveyor who
    frequently conducted surveys of dialysis facilities. (See app. I.) On a
    scale of zero to one, the values of the specialization ratio clustered
    into two groupings: the states with specialized ESRD staff included New
    York (0.68), California (0.63), and Maryland (0.57); the states without
    ESRD specialized staff included Pennsylvania (0.36), Missouri (0.27),
    Alabama (0.21), Florida (0.17), Kansas (0.14), and Nevada (0.11).

    A comparison of survey results between states that had a designated corps
    of ESRD surveyors and those that did not suggested that surveyors who
    frequently conduct ESRD inspections may be more effective in detecting and
    reporting deficiencies. Table 2 shows that the more specialized group of
    states was almost three times as likely to find a condition-level
    deficiency. Surveyors from these states cited a substantially larger
    number of deficiencies at the less serious "standard-level" as well. While
    other factors could have also influenced the number of deficiencies
    reported by surveyors in various states, the magnitude of the difference
    observed between states that did and did not specialize suggests that
    specialization has a major impact.21

    Table 2: Association between Surveyor Specialization and Rate of
    Condition- and Standard-Level Deficiencies Cited in Fiscal Years 2001 and
    2002

                         State surveyor specialization in ESRDa

          Percentage of Percentage of surveys in surveys in nonspecialized states
                                               specialized states (n=367) (n=261)

    Surveys with condition-level
    deficiencies 8.4 24.1

    Surveys with standard-level deficiencies numbering

    26.4 6.9

                                  1 to 5                 45.8                21.1
                                 6 to 10                 14.2                31.0
                                11 to 20                 11.4                28.4
                              21 or more                  2.2                12.6

    Source: GAO analysis of state-provided workload data and CMS OSCAR data.

    aNonspecialized states include Pennsylvania, Missouri, Alabama, Florida,
    Kansas, and Nevada. Specialized states include, California, Maryland, and
    New York.

    The importance of surveyor specialization for inspection results may be
    stronger for ESRD facilities than other types of providers. Although some
    general surveying skills apply across provider types, much of the content
    of ESRD standards is highly specialized, reflecting both the technological

    21Statistical tests (chi square) indicate that the difference in outcomes
    between these two groupings of states is highly significant (p=0.000).
    Thus, it is very unlikely that these differences could have occurred
    simply by chance.

    complexity of the dialysis process and the clinical complexity and
    vulnerability of the ESRD patient population. In a 184-page appendix
    devoted to ESRD surveys, CMS's State Operations Manual lays out the
    specific steps that surveyors are expected to follow. Presumably,
    surveyors who have the opportunity to focus on mastering this material
    develop greater proficiency in identifying quality of care problems,
    including proficiency in identifying indications of adverse patient
    outcomes and appropriate facility responses.

    Facilities with Prior Deficiencies Are Likely to Be Cited for Problems in
    Subsequent Surveys

    Our June 2000 ESRD report described the inability of Medicare's survey and
    certification system to ensure that problems identified in surveys and
    addressed by a facility's plan of correction will stay corrected for the
    long term. Once a facility has been recertified, it faces no adverse
    consequences should it fail to remain in compliance in the future. When
    the next survey takes place-usually several years later-the process will
    start over with deficiencies identified and a new opportunity for the
    facility to correct them. This allows facilities to cycle in and out of
    compliance with Medicare's quality standards.

    The results of surveys conducted from fiscal year 1998 through 2002 showed
    that a pattern of persistent noncompliance with quality standards was not
    uncommon. First, facilities cited for deficiencies in previous surveys
    were substantially more likely than other facilities to have deficiencies
    when surveyed again. Of surveys involving facilities that had a
    condition-level deficiency in their most recent prior survey, 29 percent
    had a condition-level deficiency in the subsequent survey as well,
    compared with 16 percent for those with only standard-level deficiencies
    in the prior survey and 12 percent for those with no prior deficiencies.

    Similarly, we found that repeated citations for the same deficiency
    occurred frequently. From fiscal year 1998 through 2002, 2,073
    recertification surveys (57 percent of the total) involved facilities that
    had received deficiencies in their most recent prior survey. Of those, a
    third found deficiencies that repeated one or more specific condition- or
    standard-level deficiency codes cited in that prior survey. Moreover, 18
    percent of the facilities with a condition-level deficiency on the prior
    survey were cited again for the same condition-level deficiency. (See
    table 3.) Another 44 percent repeated one or more standard-level
    deficiencies.

    Table 3: Rates of Repeated Deficiencies in Consecutive Surveys Conducted
    from Fiscal Years 1998 through 2002

    Percentage of subsequent surveys identifying the same deficiencies

                                    Condition-level

    Standard-level only

           Percentage of subsequent surveys not identifying the same deficiencies

    Prior survey with both
    condition- and
    standard-level
    deficiencies (n=271) 18.1 43.9 38.0

    Prior survey with only
    standard-level
    deficiencies (n=1,802) n/a 28.6 71.4

    n/a = not applicable

    Source: GAO analysis of CMS OSCAR data.

    ESRD surveyors in 6 of the 10 states in our study stated that they try to
    reduce the occurrence of persistent noncompliance by taking a facility's
    previous survey results into account when deciding which facilities to
    survey. Following this policy, facilities doing poorly on one survey
    should undergo a recertification survey more frequently. However, CMS's
    current goals for ESRD surveys, because they focus solely on the frequency
    of survey performance and not on the effectiveness of survey targeting,
    create a disincentive for states to give greater attention to previously
    noncompliant facilities. In particular, CMS's mandate to survey every
    facility within a 3-year period tends to discourage survey agencies from
    revisiting poorly performing facilities until all other facilities have
    been inspected.

    An analysis of survey activity from fiscal year 1998 through 2002
    indicates that targeting of facilities based on their past survey results
    occurred to only a limited extent in recent years. Only 5.9 percent of
    facilities surveyed from fiscal year 1998 through 2001 with
    condition-level deficiencies were resurveyed within a year, compared to
    3.9 percent of facilities that had no condition-level deficiencies that
    also were resurveyed within a year. The difference was somewhat greater
    over a 2-year period, with 20.8 percent of facilities having
    condition-level deficiencies in fiscal year 1998 through 2000 being
    resurveyed compared to 12.6 percent of facilities that had no
    condition-level deficiencies. Nonetheless, the large majority of
    facilities with condition-level deficiencies were not resurveyed on an
    accelerated 1-or 2-year schedule.

    CMS Has Few Options to Sanction Noncompliant Facilities

    State agencies are hampered in their ability to induce facilities to
    comply fully and consistently with Medicare quality standards by the
    paucity of sanctions available for cases of noncompliance. At present, the
    only penalty that CMS can impose on ESRD facilities that do not comply
    with these requirements is revoking their eligibility to participate in
    the Medicare program. However, facilities typically are given a grace
    period- usually 3 months-in which to correct any problems identified in a
    survey. As long as these deficiencies have been addressed when surveyors
    revisit the facility, the provider suffers no adverse consequences from
    having failed to maintain compliance with Medicare quality standards.22
    Consequently, very few ESRD facilities are terminated from Medicare, and
    those that are can apply for readmission to the program. From fiscal years
    1998 through 2002, only one dialysis facility was terminated from the
    Medicare program and stayed out of business.23

    Moreover, state survey agencies are often reluctant to press for the
    termination of dialysis facilities because such closures would force
    patients to find another provider and, in general, reduce patient access
    to care. Many surveyors expressed a need to have additional sanctions
    available to deal with poorly performing ESRD facilities. A number of such
    alternatives already exist for nursing homes, including a denial of
    payment sanction for new patients and civil monetary penalties. Denying
    Medicare payments for new patients would curb the facility's major source
    of revenue without eliminating, as a termination does, its ability to
    serve existing patients. However, the lost revenue from potential new
    patients, while the sanction is in effect, creates a concrete incentive
    for the facility to resolve its quality problems quickly and to stay in
    compliance thereafter. In addition, CMS requires states to refer for
    immediate sanctions nursing homes found to have actually harmed one or
    more residents or exposed them to potential serious injury on successive
    surveys. In this situation, no grace period is granted to the facility.
    Having

    22If surveyors find that the facility is still out of compliance at the
    first revisit, additional revisits are usually scheduled. Some facilities
    get as many as four or five separate opportunities to demonstrate that
    they have achieved compliance with Medicare's minimum quality
    requirements.

    23Adverse results on surveys could contribute to a provider's decision to
    close a facility, even without a termination from Medicare. An examination
    of OSCAR data for fiscal years 1998 though 2002 revealed six instances
    where facilities closed voluntarily within 6 months of a survey that had
    condition-level deficiencies. Five different facilities were recorded as
    voluntary terminations, but remained open at the same addresses, sometimes
    under new names and sometimes not.

    multiple sanctions available means that surveyors can recommend the one
    that best fits a given set of circumstances, taking into account the
    likely impact on both the facility and the patients it serves.

    In our June 2000 ESRD report, we noted that CMS had the authority to
    expand the enforcement tools available for addressing quality problems
    with ESRD facilities, but had not issued regulations and procedures to
    implement alternative sanctions. Other sanctions, notably civil monetary
    penalties, would require legislative changes by Congress. At that time, we
    recommended that CMS act to expand available penalties where permitted
    under its existing authority and that Congress consider authorizing civil
    monetary penalties for dialysis facilities comparable to those already in
    place for nursing homes. Since then, there have been no regulatory or
    legislative actions to expand available enforcement tools for ESRD
    facilities.

    The publication of survey results could provide another incentive for
    facilities to maintain compliance with Medicare quality standards. If ESRD
    patients were able to readily compare the outcomes of surveys for
    facilities in their area, they could choose to seek care from facilities
    with more favorable inspection results. CMS has not taken any steps to
    make survey results publicly available. By contrast, CMS routinely posts
    survey results for nursing homes on an Internet Web site called Nursing
    Home Compare. In 2001, when CMS created a comparable Web site covering
    ESRD facilities, Dialysis Facility Compare, it chose not to make survey
    results accessible.

    The limitations inherent in state survey processes have been compounded by
    inconsistent CMS oversight. On the one hand, CMS has substantially
    increased funding for ESRD surveys in line with its expectation that
    states survey a higher proportion of facilities each year. On the other
    hand, survey agencies do not always receive the monitoring and technical
    support that could enhance ESRD survey effectiveness. CMS regional offices
    vary widely in the extent to which they examine states' ESRD survey
    activities and provide related assistance. In addition, many state
    agencies do not routinely have access to information from ESRD networks
    that could assist them in selecting facilities to survey. Finally, the
    limited number of CMS courses has made it difficult for many state
    surveyors to obtain the training considered necessary to conduct ESRD
    surveys.

    CMS Has Increased Funding for State Surveys, but Monitoring and Technical
    Support Are Uneven

    Funding Has Increased to Support CMS's ESRD Survey Goals

    In recent years, financial support for state survey activities overall has
    grown substantially. According to the Director of CMS's Survey and
    Certification Group, the increases responded to concerns that financial
    support for survey activities was not keeping pace with the growth in
    facilities and was putting Medicare beneficiaries at risk. From fiscal
    year 1998 to 2002, total federal expenditures for state surveys increased
    about 60 percent, with spending for long-term care (LTC) and non-LTC
    facility survey activities growing 61 and 56 percent, respectively.24
    Non-LTC facility survey activities are supported almost entirely by
    federal funds, which must be allocated by states among home health
    agencies, hospices, ambulatory surgical centers, rehabilitation
    facilities, and other types of providers, as well as ESRD
    facilities-within a set of guidelines established by CMS. ESRD survey
    activities, therefore, must compete for funding with other non-LTC survey
    activities, including statutorily-required surveys for home health
    agencies that receive a higher priority. However, survey goals for ESRD
    facilities are more ambitious than those for hospices, ambulatory surgical
    centers, and many other non-LTC providers as CMS expects the agencies to
    survey ESRD facilities more frequently.

    Notwithstanding the competing survey priorities, the expansion in
    financial support allowed state survey agencies to increase funding for
    ESRD surveys to help meet higher survey goals. We estimated that federal
    expenditures for ESRD survey activities nearly tripled from fiscal year
    1998 to 2002, from $3.1 million to $8.2 million.25 Most of the increase
    occurred between fiscal years 2000 and 2001, when the ESRD survey goal
    almost doubled from 17 to 33 percent of a state's facilities each year.
    (See table 4.) Increased spending for ESRD survey activities was evident
    across nearly all states. From fiscal year 1998 to 2002, 42 states had an
    increase in spending for ESRD survey activities, and the median state
    experienced a 144 percent increase.

    24CMS allocates most funding for state survey activities by LTC and
    non-LTC categories. LTC funding covers surveys of nursing homes and
    ICF/MRs. Non-LTC funding supports surveys of dialysis facilities, home
    health agencies, accredited and nonaccredited hospitals, hospices,
    ambulatory surgical centers, outpatient physical therapy providers, rural
    health clinics, comprehensive outpatient rehabilitation facilities,
    portable x-ray suppliers, psychiatric residential treatment facilities,
    and psychiatric hospitals.

    25These estimates are based on workload and expenditure reports provided
    annually to CMS by state survey agencies, which combine all non-LTC survey
    activities. Several state governments also fund provider survey and
    certification activities for non-LTC providers. In fiscal year 2001, state
    support accounted for approximately 6 percent of total spending on non-LTC
    activities.

        Table 4: Federal Support for Provider Surveys, Fiscal Years 1998 to 2001

                                  Dollars in millions

    Non-long-term care provider surveys

                                         Total

    Long-term care provider surveys

                                                     Non-ESRD surveys (estimated)

    ESRD surveys (estimated)

                     1998    $ 253.2       $ 209.2a       $ 41.0a          $ 3.1a
                     1999     265.1         217.2b        44.5b,c          3.3b,c
                     2000     312.1         260.3          47.3d             4.6d
                     2001     350.6         288.9e         53.7e             8.1e
                     2002     405.2         336.6          60.5

    Source: CMS aggregate budget data for Medicare and Medicaid survey
    activities.

    Note: GAO estimates are based on the ESRD share of non-LTC survey hours
    reported to CMS. The three budgetary subcomponents do not sum to totals
    because of rounding.

    aExcludes Nebraska.

    bExcludes Tennessee.

    cExcludes Washington.

    dExcludes Arkansas.

    eExcludes Vermont and Virginia.

    In most states, the increase in ESRD spending outpaced the growth in
    spending for all non-LTC survey activities. As a result, the ESRD share of
    non-LTC expenditures also increased, from about 7 percent of non-LTC
    survey expenditures in fiscal year 1998 to about 12 percent in fiscal year
    2002. For fiscal year 2002, we estimated that the ESRD share of non-LTC
    survey expenditures across states ranged from about 0 to 35 percent. For
    the states with the largest number of dialysis facilities, the ESRD share
    ranged from 6 percent in Virginia to 25 percent in Georgia.

    Regional Office Monitoring Regional offices' review of agency surveys,
    referred to as federal and Assistance to State monitoring surveys, are
    conducted by CMS to monitor state agency Agencies Are Highly performance
    in interpreting and applying federal standards as well as to Inconsistent
    identify training or technical assistance needs of surveyors. Although CMS

    is required to conduct monitoring surveys that assess the adequacy of the
    state's survey for nursing homes, no similar legislative requirements
    apply

    to ESRD facilities.26 As such, CMS has used monitoring surveys for
    dialysis facilities that are observational in nature-regional office staff
    accompany state surveyors on inspections of dialysis facilities, observe
    them as the surveyors identify and document facility deficiencies, and
    provide feedback on the surveyors' performance. CMS has not specified the
    number of ESRD monitoring surveys that regional offices should conduct.
    Perhaps as a consequence, representatives for six regional offices that we
    contacted-responsible for 29 states-told us they have conducted very few
    such surveys over the last 2 fiscal years. In fiscal year 2001, the number
    of monitoring surveys each regional office performed ranged from 3 to 11;
    in fiscal year 2002, they ranged from 2 to 6. None of the regional offices
    in either year conducted a monitoring survey for every state in its
    jurisdiction.

    Even for the few monitoring surveys conducted, most CMS regional offices
    in our study provided little feedback to the states. At 3 of the 10 state
    survey agencies we contacted, representatives reported receiving only one
    monitoring survey in 5 years and were provided no feedback. Other survey
    agency representatives stated that regional offices provided verbal
    feedback on their monitoring surveys. In contrast, two CMS regional
    offices also provided written feedback that included evaluations of
    surveyors' decisions regarding specific conditions and standards.

    The regional offices in our study also have not taken full advantage of
    available data to monitor state agencies' survey performance for ESRD
    activities. CMS has instructed regional offices to use data from its OSCAR
    system as an integral tool to assess and compare state agency performance,
    particularly differences in the time required to conduct surveys and the
    types of deficiencies cited. According to CMS, such analyses can provide
    the information necessary to help state agencies improve their efficiency
    in conducting ESRD surveys and achieve consistency in their quality. For
    example, because OSCAR contains data on the number of hours spent on each
    ESRD survey, regional offices could use a benchmark to compare and assess
    survey times across their state agencies. CMS has indicated that similar
    analyses could be performed for the types of deficiencies cited by
    surveyors to determine whether there

    26For each state, CMS is required to perform validation surveys-on-site
    inspections of facilities, separate from those conducted by the state
    agency-for at least 5 percent of the nursing home surveys conducted
    annually, but no fewer than five homes in each state. See 42 U.S.C. S:
    1395i-3 (g) (3) (B) (2000).

    were any differences in state agencies' application of quality
    standards.27 Despite such potential uses of data to monitor state agency
    performance, most of the regional offices analyzed their available data on
    a more limited basis. They checked on past survey results for certain ESRD
    facilities and relied extensively on quarterly workload reports from each
    state agency to determine the number of recertification surveys conducted.

    In addition to monitoring and tracking ESRD survey activities, CMS
    requires regional offices to assist state agencies in fulfilling their
    survey responsibilities. Such assistance includes alerting the agencies to
    CMS policies and goals, coordinating communications with the CMS central
    office, helping surveyors obtain ESRD training, and consulting on a
    regular basis on program activities and achievement of survey goals. The
    performance of regional offices in our study varied from little contact
    with their state agencies to extensive collaboration. One CMS regional
    office had almost no contact with its state survey agencies or network and
    was not sure of the state agencies' performance in meeting ESRD survey
    goals. A survey agency representative in that region stated that contact
    with the regional office consisted primarily of a few calls the agency
    made to obtain clarification on a policy or procedure. In contrast, most
    of the regional offices included in our study, at a minimum, contacted
    state survey agencies to discuss CMS policies and goals, provided
    technical information or training on ESRD issues, and offered assistance
    in conducting select surveys.

    Among the most active regional offices in providing support on ESRD
    surveys was Region 9.28 Its efforts to improve state agency survey
    performance included a range of activities:

    o  	The office collaborated with state agencies and networks to provide
    ESRD training to state surveyors in addition to that provided by the CMS
    central office.

    o  	Through conference calls, the office contacted its state agencies
    monthly (including their district offices) to discuss current ESRD survey
    issues, relevant federal bulletins or alerts, instructions for more
    consistent coding of deficiencies, updates on training needs and slots
    available, and surveyor

    27Regional offices have used OSCAR data to prepare tracking reports on
    areas related to state and regional office performance for nursing home
    surveys, including facility terminations, number of surveys without
    deficiencies, and analyses of most-frequently cited deficiencies across
    states.

    28Region 9 includes state survey agencies for Arizona, California, Hawaii,
    and Nevada.

    decisions related to inspection findings. The conference calls provided a
    mechanism for surveyors to pose questions directly to CMS officials and
    often receive an immediate response.

    o  	The office conducted quarterly conferences that included
    representatives from the networks and state survey agencies to provide
    updates on quality improvement programs underway by the networks, general
    issues related to ESRD, and issues specific to certain facilities.

    o  	The office joined state agencies and networks in a campaign to educate
    facility managers about ESRD regulations and the survey process.

    Disparities in regional office performance-not unlike the disparities in
    state survey agency performance-may reflect their ability to cope with
    CMS's survey priorities. Officials representing several regional offices
    noted that CMS's focus has been on nursing homes and other types of
    facilities that are a higher survey priority than ESRD facilities. Some of
    these officials indicated that, as a consequence, needed attention in
    monitoring state agencies and providing technical assistance for ESRD
    survey activities has lagged.

    Networks Do Not Routinely Share Facility Data with State Agencies

    State survey agencies are not routinely receiving information from ESRD
    networks-organizations authorized by statute to collect information on
    patient complaints, quality improvement projects, and clinical
    performance. The networks operate under contracts with CMS which, in
    fiscal year 2002, totaled $24.7 million, approximately three times the
    amount of federal funds we estimate were spent on state survey and
    certification activities for dialysis facilities.29 Networks use the
    information they collect to perform a wide range of quality improvement
    activities and to identify and address any quality issues that may arise
    with individual facilities. Under the terms of their CMS contract, they
    are to cooperate with state survey agencies by providing them
    facility-specific information upon request. However, our June 2000 study
    found that most CMS regional offices had restricted networks from sharing
    facility-specific information, contending that federal confidentiality
    regulations prohibited such exchanges. In response, we recommended that
    CMS establish procedures

    29Network responsibilities are established by the Social Security Act,
    which also authorizes the Secretary to prescribe other network duties and
    functions. SeeS: 1320c-9(b)(1) and S: 1395rr(c)(2). Current network
    responsibilities are set forth in contract: ESRD Network Organizations,
    Statement of Work, FY 1999-2003, Section C.4.F, Cooperative Activities
    With State Survey Agencies and Quality Improvement Organizations, CMS. The
    networks are funded through a fifty-cent charge on each Medicare dialysis
    treatment.

    to facilitate routine cooperation and information sharing between networks
    and state agencies. The HHS Inspector General made similar recommendations
    in June 2002.30 However, most of the states in our current review reported
    that they have seen little evidence of increased information sharing by
    ESRD networks.

    Most of the state agencies included in our study did not receive
    facility-specific information from networks on a regular basis. State
    agency officials indicated that the networks typically provided summary
    data for facilities, and that access to facility-specific information
    occurred on a case-by-case basis. Much of the information that was shared
    by networks came in response to inquiries from state agencies regarding
    specific providers. In addition, networks rarely identified facilities as
    candidates for inspection. For example, one state agency official noted
    that the area ESRD network rarely shared information on complaints and
    made only one recommendation over the last 5 years that identified a
    facility for inspection.

    Several state agency officials attributed the limited disclosure of
    facility-specific information to confusion in the ESRD community about
    requirements pertaining to safeguarding this information. The Social
    Security Act prohibits the disclosure of facility-specific information to
    any person subject to several exceptions, for example, where federal
    regulation authorizes the disclosure in order to protect the rights and
    interests of patients.31 Although their contracts with CMS indicated that
    the agency wanted them to share facility-specific information with state
    survey agencies, the networks are hesitant to follow this directive
    because the agency regulations do not identify such disclosure as a
    specific exemption from the general statutory prohibition. Reportedly,
    network officials are concerned that the release of such information could
    undermine their quality improvement efforts and collaborative
    relationships with facilities.32 CMS acknowledged that confusion exists in
    this area and convened a workshop to promote more understanding and

    30Department of Health and Human Services, Office of Inspector General,
    External Quality Review of Dialysis Facilities: A Call for Greater
    Accountability, OEI-01-00050 (Washington, D.C.: June 2000).

    31See42 U.S.C. S:S: 1320c-9(a) and (b).

    32CMS policy stipulates that state agencies may not release confidential
    information that they receive from ESRD networks to third parties, even
    under subpoena.

    cooperation between the networks and the state agencies.33 However, CMS
    has not required networks to routinely share facility-specific
    information.

    The potential benefits that can be achieved from increased sharing of
    network information are well illustrated by the recent experience of the
    California state survey agency. The state agency routinely receives
    facility-specific information from its two corresponding networks
    verbally-no facility-specific data are sent to the state agency in written
    form. Regardless of the method, the networks and the state agency agreed
    that they need to be able to share such information, considering its
    potential benefits in improving facilities' quality of care, and have
    conveyed this to the ESRD facilities' managers. Consequently, the networks
    regularly contact the state agency to share different types of quality of
    care information on individual facilities, including complaints the
    network received and the results of related investigations. The networks
    now routinely make suggestions regarding potential facilities for the
    state agency's attention. This relationship improved markedly after years
    of little communication between the state agency and the networks, largely
    as the result of increased trust derived from working together on a series
    of joint projects.34

    States Report Insufficient ESRD Training Opportunities

    According to state officials, scarcity of ESRD training opportunities has
    impeded state agencies' efforts to improve surveyor performance. Because
    most surveyors do not have prior training or experience in dialysis, state
    survey agencies have for years relied on the courses that CMS has
    organized to train ESRD surveyors in the technical aspects of dialysis and
    the application of ESRD quality standards. The need for specialized
    training is consistent with the highly technical nature of ESRD surveys
    relative to surveys of other provider types. CMS offers basic ESRD
    training for surveyors who are not experienced with ESRD surveys and
    advanced training for others. Officials at the state agencies in our study
    generally

    33To encourage data sharing, CMS has begun work on a draft Memorandum of
    Understanding that the state agencies and ESRD networks could adopt.

    34In 2000, the state agency and the network participated in a special
    project intended to increase the number and quality of ESRD surveys. The
    networks, along with the state agency and the CMS regional office, jointly
    provided ESRD training to surveyors who had limited experienc with ESRD
    surveys. All three then worked together to help facilities correct
    deficiencies and have since collaborated on educating facility managers
    about ESRD standards and the survey process.

    commended these courses, noting that they provided surveyors with the
    knowledge and skills needed to conduct ESRD surveys effectively.

    Three of the state agencies we reviewed require that surveyors complete
    CMS's basic ESRD training before they are allowed to perform surveys
    unassisted. State agency officials emphasized that they try to get
    surveyors trained as quickly as possible after they have been assigned
    ESRD survey responsibilities. This not only permits the surveyors to gain
    expertise in conducting ESRD surveys at the appropriate time, but it also
    allows them to begin conducting surveys unassisted in a timely fashion.
    Delays in getting surveyors scheduled for basic training delays their
    readiness to conduct surveys unassisted, which in turn has an impact on a
    state agency's performance in the number of surveys it conducts during the
    year.

    For most of the state agencies in our study, the limited number of CMS
    training classes offered has been problematic. In particular, the
    infrequency of classes at the introductory level for ESRD training has had
    the greatest impact on state agency operations. From fiscal year 1999 to
    2002, CMS offered only one course each year for basic training, always
    given at the same time of year, and since fiscal year 2000, always in
    Denver. In light of this schedule, state agencies were particularly
    concerned about the delay in training surveyors who were new to ESRD. At
    times, state agencies sent these surveyors to take advanced courses when
    openings in the basic course were unavailable. However, these courses
    dealt largely with selected topics and did not explain the core technical
    and regulatory concepts covered in the basic course. As a result,
    surveyors who had previously taken basic training and had some experience
    in conducting ESRD surveys found the advanced courses most informative and
    useful. Officials of several state agencies also indicated that CMS could
    help accommodate surveyors by offering basic ESRD training at multiple
    sites, taking into consideration the location of class enrollees. Some
    officials added that this would provide the additional benefit of helping
    their agencies save funds used for travel.

    CMS has highlighted the value to surveyors of attending its basic ESRD
    training course by instituting a new policy that requires all newly
    appointed ESRD surveyors to complete it. Effective fiscal year 2003, all
    newly hired ESRD surveyors, or surveyors who have not previously performed
    ESRD surveys, must complete the course before they can serve in a capacity
    other than a trainee. However, CMS has chosen not to fill this gap for
    surveyors who took advanced courses as a substitute for the basic course
    in years past. For surveyors who performed ESRD surveys prior to

    Conclusions

    fiscal year 2003, other CMS ESRD training courses are considered
    equivalent. Experienced ESRD surveyors who have not received any ESRD
    training from CMS have until fiscal year 2004 to complete either ESRD
    basic or advanced training.

    CMS fielded a questionnaire to state agencies to determine current
    training needs in light of the new training requirement. Although the
    results of this survey are still being reviewed and analyzed by CMS,
    preliminary tabulations indicate that at least 21 percent of experienced
    ESRD surveyors met the training requirement through one of the presumed
    equivalent courses and had never taken the CMS basic course. In at least
    six states fewer than half the surveyors had taken the basic ESRD
    training. The extent to which experience in conducting ESRD surveys
    compensates for a lack of formal training is an open question. Until that
    process is complete, the scarcity of training opportunities in the past
    could continue to constrain the effectiveness of many ESRD surveyors.

    As a result of critical weaknesses in the system established to monitor
    and enforce compliance with Medicare's quality standards for ESRD
    facilities, full and consistent compliance with these standards has become
    more the exception than the rule. Despite increased surveying goals
    recently set by CMS, many facilities continue to escape the attention of
    state surveyors for long periods of time. This is especially problematic
    for facilities that have performed poorly in the past and are therefore
    relatively more likely to reveal deficiencies when surveyed again. In
    addition, there are few if any negative consequences for facilities if
    they are surveyed and found out of compliance with Medicare's quality
    standards. Currently, facilities can escape negative publicity from having
    multiple deficiencies, despite the fact that the statement of deficiencies
    prepared by state surveyors is a public document.

    The wide variation across states in the number of condition-level
    deficiencies found indicates in part that some surveyors are more
    proficient than others in detecting quality problems. ESRD survey
    expertise can be enhanced through training and experience. Promoting
    surveyor specialization should lead to more thorough ESRD inspections and
    more accurate documentation of deficiencies. Similarly, were CMS to offer
    more basic level ESRD courses, at different locations and times, surveyors
    newly assigned to ESRD facilities could more quickly obtain the training
    they need to conduct effective inspections. In addition, a comparable
    expansion in advanced course offerings would enable a larger

    proportion of experienced surveyors to catch up with technical
    developments in dialysis treatments.

    State survey agencies could better target their survey activities if they
    had access to information from ESRD networks on the extent of serious
    quality problems at individual facilities. However, CMS regulations that
    require networks to safeguard the confidentiality of data that they obtain
    from dialysis facilities has generated confusion among the networks as to
    what facility-specific information they legitimately can and should share
    with state survey agencies. CMS could remove this long-standing impediment
    by revising those regulations to clearly make such data sharing with state
    agencies mandatory.

    Moreover, the magnitude of variation across states in the level of survey
    activity and survey results underlines the need for more intensive
    monitoring of, and support to, the individual state agencies. However, CMS
    has not addressed the enormous variation among its own regional offices in
    the extent to which they undertake these activities. The highly
    inconsistent performance in the number of ESRD surveys conducted by state
    agencies and surveyors' detection of deficiencies may reflect uneven
    monitoring and support provided to them by CMS regional offices-some of
    which devoted considerable attention to ESRD survey activities, and
    others, virtually none.

    Ultimately, no quality assurance system can be effective unless providers
    face real consequences when they are cited repeatedly for deficiencies.
    Because they are routinely given multiple opportunities to demonstrate
    that they have corrected any problems found, ESRD facilities have no
    strong incentive to adhere to those standards until a survey takes place.
    Facilities are likely to continue cycling in and out of compliance until
    state agencies have a broader range of enforcement tools, especially ones
    that take effect even if deficiencies are subsequently corrected. CMS
    could implement some additional sanctions by regulation. However, as we
    noted in our June 2000 report, CMS did not have the authority to expand to
    ESRD facilities the range of alternative sanctions available for use
    against noncompliant nursing homes. We therefore suggested at that time
    that Congress consider authorizing CMS to impose civil monetary penalties
    on dialysis facilities. Our current work supports consideration of this
    suggestion.

    Moreover, the effectiveness of alternative sanctions would be greatly
    strengthened if they could also be imposed promptly, without allowing
    facilities a grace period to correct identified deficiencies. Such
    immediate

    sanctions could be applied when facilities are found to have
    condition-level deficiencies in successive surveys. For instance,
    immediate denial of payments for new patients could create a strong
    incentive to maintain compliance because the facility loses income from
    Medicare, which usually represents a substantial part of operating
    revenues.

    To encourage ESRD facilities to sustain their compliance with Medicare
    quality standards, Congress should consider authorizing CMS to immediately
    impose a sanction when a dialysis facility has condition-level
    deficiencies in successive surveys without providing the facility a grace
    period before the sanction takes effect. The immediate sanction options
    available to CMS should include denial of Medicare payments for new
    patients and civil monetary penalties.

    Matter for

                                     Congressional
                                     Consideration

    Recommendations for We recommend that:

    Executive Action 	To create incentives for facilities to maintain
    compliance with Medicare quality standards, the Administrator of CMS
    should

    o  	establish a goal for state agencies to reduce the time between surveys
    for facilities with condition-level deficiencies and

    o  publish facilities' survey results on its Dialysis Facility Compare Web
    site.

    To help surveyors identify and systematically document deficiencies, the
    Administrator of CMS should

    o  	strongly encourage states to assign ESRD inspections to a designated
    subset of surveyors who specialize in conducting ESRD surveys and

    o  	make ESRD training courses more available to state surveyors, which
    may include increasing the number of classes and slots available as well
    as varying class location.

    To enhance the support and monitoring of state survey agencies, the
    Administrator of CMS should

    o  	amend its regulations to require that networks share facility-specific
    data with state agencies on a routine basis and

    o  	ensure that regional offices both adequately monitor state performance
    and provide state agencies ongoing assistance on policy and technical
    issues through regularly scheduled contacts with state surveyors.

    Agency Comments
    and Our Evaluation

    In its written comments, CMS did not indicate an intention to implement
    five of our six recommendations. Nevertheless, it affirmed its commitment
    to ensuring adequate oversight of dialysis facilities and state survey
    agencies, and described a number of measures that it has initiated to
    strengthen this process. (CMS's comments are reprinted in app. IV.)
    However, two of these initiatives-a proposed survey of ESRD beneficiaries
    and the automation of data reporting by facilities to CMS- will only
    indirectly affect the survey and certification program that was the focus
    of our report. In our report, we identified several key limitations in the
    structure and implementation of this program that constrain its
    effectiveness in enforcing Medicare's quality standards for ESRD
    facilities. In addition to comments on each of our recommendations, CMS
    also provided technical comments that we incorporated where appropriate.

    With respect to our matter for congressional consideration, CMS affirmed
    its commitment to take action against ESRD facilities with serious quality
    problems. It also acknowledged that the agency needed to create strong
    incentives for facilities to provide quality care. The agency proposed to
    address this issue by initiating an evaluation of the effectiveness of
    sanctions on improving nursing home care. Although such an evaluation may
    produce useful information about nursing homes, it will have limited
    relevance for the quality of care provided to ESRD patients. We continue
    to believe that Federal oversight of dialysis facilities could be improved
    by strengthening the enforcement process. Therefore, Congress should
    consider authorizing CMS to impose immediate sanctions on dialysis
    facilities cited with serious deficiencies in consecutive surveys.

    CMS's response to the first of our recommendations for executive action-
    that it set a goal for more frequent surveys of facilities with a history
    of condition-level deficiencies-acknowledged the value of targeting
    surveys on poorly performing providers. Though it expressed a strong
    commitment to increased oversight of such facilities, CMS did not indicate
    a willingness to set this additional goal. Instead, CMS relies on the
    states to use the flexibility that it has built into its budget call
    letter to target their surveys on ESRD providers most likely to have
    quality problems. However, we found that the budget call letter placed
    ESRD facilities in a lower priority category, behind both nursing homes
    and home health agencies. Without a change in the priorities that CMS has
    communicated to the state agencies, it is unrealistic to expect most
    states to go beyond the goals currently set by CMS for ESRD survey
    activity.

    In its comment, CMS also highlighted its efforts to develop tools to help
    state agencies identify facilities that are most likely to exhibit quality

    problems. These include reports on individual facilities-produced from
    claims data and other administrative data files by CMS contractors-that
    describe their practice patterns and outcomes. CMS also stated that it
    distributes to the states an Outcomes List that ranks facilities for
    surveying priority based on their performance on dialysis adequacy, anemia
    management, and adjusted mortality rates. However, CMS's surveying goals
    for the states, as they are currently structured, do not focus on
    targeting of any sort. Our analysis of state survey activity found scant
    evidence that state agencies were conducting more frequent surveys of even
    the most obvious candidates-facilities that had condition-level
    deficiencies in their most recent prior survey. Our evidence and CMS's
    response indicates a need for CMS to go beyond its current efforts to
    developing inspection goals on poorly performing facilities.

    CMS did not directly respond to our second recommendation, that CMS
    publish survey results on its Dialysis Facility Compare Web site. Instead,
    the agency described various studies it has underway to develop better
    information for consumers, including efforts to make survey results more
    uniform across the country. While greater uniformity in survey results is
    a laudable objective, we would note that the results of surveys currently
    conducted are the basis for the agency's decisions to either recertify or
    (potentially) terminate ESRD facilities as Medicare providers. Therefore,
    the information we have recommended that CMS share with the public does
    not represent an abstract quality indicator of unknown validity. Rather,
    it conveys the actual status of the facility in terms of fulfilling its
    basic obligation to meet Medicare's conditions for coverage. In our
    opinion, these nominally public, but heretofore undisseminated, survey
    outcomes would convey useful information to interested ESRD patients
    trying to decide among alternative facilities.

    Our third recommendation was that CMS encourage state agencies to identify
    a subset of surveyors who would specialize in conducting ESRD facility
    inspections. In its comment CMS did not address our recommendation but
    responded that, in general, it encouraged states to have specialized
    surveyors when possible. However, the agency did not describe what
    specifically it had done to promote this practice. CMS did highlight other
    initiatives it has taken to enhance surveyor skills and improve the survey
    process more generally. These include its development of a new software
    system to help guide surveyors as they conduct surveys, the reports on
    practice patterns and outcomes of individual facilities, and increases in
    the surveyor training that CMS provides. CMS concluded that these steps
    were the most appropriate use of limited resources. We would note,
    however, that to the extent that states do not concentrate their ESRD

    surveys on a subset of specialist surveyors, more surveyors will need to
    receive CMS training in conducting ESRD surveys. That represents a less
    efficient use of CMS training resources. We continue to believe that
    surveyor specialization contributes to more thorough and effective
    inspections, in addition to whatever benefits accrue from other
    improvements such as expanded training and customized software.

    Our fourth recommendation was that CMS expand the number and slots
    available in training courses for ESRD inspections, as well as vary their
    locations. CMS responded that it has arranged to increase its offerings to
    a minimum of two basic ESRD training classes annually, with one course
    conducted in Denver and one in Minneapolis. According to CMS, more
    advanced ESRD training may also be increased, depending on demand. This
    expansion should lessen considerably the difficulty that state survey
    agencies have experienced obtaining the necessary training for their ESRD
    surveyors on a timely basis.

    In our fifth recommendation, we urged CMS to amend its regulations to
    require that ESRD networks share facility-specific data with state
    agencies on a routine basis. CMS responded that networks are currently
    required to share data with CMS, which can then provide appropriate
    information, such as the previously mentioned Outcomes List, to state
    agencies. CMS also stated that information that networks obtain through
    their quality improvement efforts has limited utility for quality
    assurance because it is not standardized (that is, the specific
    information collected will vary across networks and projects). On the
    contrary, we found that the networks' quality improvement projects collect
    new information directly from dialysis facilities which helps identify
    those facilities that perform poorly on one or more quality dimensions. As
    the experience of California has shown, such data can provide valuable
    guidance to state surveyors in their selection of facilities to inspect,
    regardless of whether identical information is collected by every network
    across the country.

    Our last recommendation stated that CMS should ensure that its regional
    offices provide adequate oversight of, and assistance to, state agency
    monitoring of ESRD facilities. As with several previous recommendations,
    the agency reaffirmed its commitment to the overall goal, but did not
    address the weaknesses that we found in its implementation. CMS's comment
    describes the resources available to the regional offices, including
    assigned ESRD specialists, regional data reports, and monthly conference
    calls with state agency officials. However, CMS did not address the large
    variation across regions in the extent to which they use these tools, and
    refers to no specific measures intended to stimulate greater

    effort in regions that have been less active to date. CMS stated that it
    is working hard to clarify its expectations for both state agencies and
    its own regional offices, but in its comment provides no explanation or
    examples of what this might entail.

    As agreed with your office, unless you publicly announce the contents of
    this report earlier, we plan no further distribution of it until 30 days
    from
    its date. At that time, we will send copies of this report to the
    Administrator of CMS and to other interested parties. In addition, this
    report will be available at no charge on GAO's Web site at
    http://www.gao.gov. We will also make copies available to others upon
    request.

    If you or your staff have any questions about this report, please call me
    at
    (312) 220-7600. An additional GAO contact and other staff members who
    prepared this report are listed in appendix V.

    Sincerely yours,

    Leslie G. Aronovitz
    Director, Health Care-Program

    Administration and Integrity Issues

                           Appendix I: Scope and Methodology

                                    Quality of Care

    To analyze variation in the clinical performance of individual facilities,
    we downloaded information available from CMS's Web site, Dialysis Facility
    Compare (DFC)-http://www.medicare.gov/Dialysis/Home.asp.1 DFC provides
    information on two clinical performance measures: the proportion of
    patients with adequate hemodialysis-defined as a Urea Reduction Ratio of
    at least 65-and the proportion of patients with adequate anemia
    control-defined as a hematocrit of 33 or better. DFC has data on the
    latter measure for patients taking the drug erythropoietin (EPO)-the
    therapy generally used to treat anemia among ESRD patients. The most
    currently available data for both measures came from information provided
    on Medicare claims submitted for treatment furnished in 2000. DFC reports
    the proportion of patients at each ESRD facility who achieved the
    designated threshold for these two measures.

    To provide a more concrete sense of the types of quality problems
    encountered by state surveyors, we selected five survey reports, known
    formally as a "statement of deficiencies" (Form 2567), that described in
    detail the deficiencies cited in inspections of individual facilities in
    five states. We abstracted from each survey report the justification
    written by the surveyor for one deficiency citation. The episodes we chose
    involved deficiency codes that are widely cited among survey reports
    nationwide. In the data we assembled from CMS's Online Survey
    Certification and Reporting (OSCAR) system, at least one of these six
    specific deficiency codes-111, 112, 118, 240, 264, and 423-was cited in 35
    percent of all recertification surveys conducted in fiscal years 1998
    through 2002.

    To more fully appreciate the clinical consequences of these deficiencies
    for patients, we shared our abstracted citations with three ESRD
    surveyors, each with at least 5 years of ESRD survey experience, whom we
    had previously interviewed in conjunction with our site visits to three
    different states. All were registered nurses. The three surveyors
    commented on each of the six vignettes that we sent them by describing the
    potential impact of these situations on patient health and well-being.
    Their analyses encompassed expected symptoms, such as fatigue, swelling,
    and shortness of breath, medical conditions that could result, such as
    heart failure and ruptured red blood cells, and related outcomes, such as
    shortened life expectancy.

    1Other clinical performance measures have only been reported from samples
    of patients, providing data on national and regional trends but without
    the ability to compare results across individual dialysis facilities.

                           Appendix I: Scope and Methodology

    Survey Frequency and Results

    To analyze the frequency and results of surveys conducted in the 50 states
    plus the District of Columbia, we obtained all the data stored on CMS's
    OSCAR system relating to standard surveys of ESRD facilities. Standard
    surveys include initial surveys-conducted when a facility first applies
    for Medicare certification-and recertification surveys-conducted at
    intervals subsequent to the initial survey for that facility.2 The OSCAR
    database is continuously updated and retains data for the four most recent
    surveys for each facility. Our analysis was not adversely affected by the
    potential loss of data if a given facility had more than four standard
    surveys conducted, because less than 1 percent of ESRD facilities had as
    many as four surveys from fiscal year 1998 through 2002, the period of our
    review.

    When state survey agencies complete their work on these surveys, CMS
    requires them to record in OSCAR information about the inspection
    including the dates that the surveys took place and the specific
    deficiency codes for each standard-level and condition-level deficiency
    cited. OSCAR also contains Provider of Service file information on ESRD
    facilities, including their name, address, chain ownership, date of
    Medicare enrollment, and the date of, and reason for, termination (if
    any).

    The data used in our OSCAR analyses was downloaded on April 2, 2003,
    providing a 6-month period following the end of fiscal year 2002 for state
    agencies to complete the process of data entry. To assess the completeness
    of the data, we compared the number of surveys we found in OSCAR for
    fiscal years 1998 through 2002 with the number of surveys that state
    agencies indicated that they completed in annual workload reports
    submitted to CMS. Although complete workload data were not always
    available, where they were, the numbers of ESRD surveys reported for most
    states matched the number recorded in OSCAR either exactly or nearly (plus
    or minus 3) in each of the 5 fiscal years.

    In analyzing the proportion of ESRD facilities resurveyed in fiscal years
    1998 through 2002, we determined the facilities that were available for
    recertification in each year. We excluded those facilities that were
    subject to an initial survey, and any that had either dropped out of
    Medicare prior to that year or that did not begin participating in the
    program until later.

    2Similar information is collected on complaint surveys but stored in
    separate data files.

                           Appendix I: Scope and Methodology

                                Surveyor Specialization

    To assess the effect of surveyor specialization, we analyzed the
    relationship of survey results statewide with the degree of surveyor
    specialization in that state. We defined specialization as assigning ESRD
    facility inspections to a subset of surveyors who spend much of their time
    focused on ESRD quality issues. We knew from our state site visits and
    interviews that some states promoted specialization while other states
    distributed ESRD assignments roughly equally among surveyors who spent
    most of their time inspecting nursing homes and home health agencies. From
    9 of the 10 states that we examined most closely, we obtained data on the
    number of ESRD and non-ESRD surveys conducted by each surveyor during
    fiscal year 2002. (We were not able to obtain this information from
    Mississippi.) From those data we calculated the proportion of total
    surveys that were of ESRD facilities, first for each individual surveyor,
    and then for the state as a whole. The statewide ratio combined the
    individual surveyor ratios, with each individual's ratio weighted by the
    proportion of ESRD surveys in fiscal year 2002 accounted for by that
    individual. The result was a state specialization score that had a
    possible range from almost 0 to 1. (A state would get a score of 1.0 if
    all of its ESRD surveys were done by surveyors who never inspected any
    other provider types.) This approach was designed to gauge the relative
    likelihood that any given ESRD survey in the state would be conducted by a
    surveyor whose survey activities focused on ESRD facilities.

    We assessed the strength of the relationship of surveyor specialization to
    survey results by comparing the aggregate results of states with low
    specialization scores with states that had relatively high scores.
    Specifically, we compared the proportion of surveys with condition-level
    deficiencies and the number of standard-level deficiencies cited in
    surveys. We applied chi-square tests to determine if observed differences
    between the two groups were likely to have occurred by chance, using the
    conventional 95 percent confidence interval. We were not able to link the
    results of individual surveys to the experience level of the surveyors who
    conducted them. Therefore, our analysis compared aggregate survey outcomes
    across two groups of states, distinguished by their overall level of
    surveyor specialization.

    Surveyor Training 	To assess the extent of state surveyor training to
    perform ESRD facility inspections, we drew on the results of a survey
    conducted by CMS of the state survey agencies. CMS solicited data on the
    titles and dates of all CMS-sponsored training on ESRD completed by each
    of the states' individual surveyors who had performed ESRD inspections
    prior to fiscal year 2003. It initially collected these data in January
    and February of 2003

                           Appendix I: Scope and Methodology

    and continued obtaining updated and corrected information through May
    2003. We analyzed the most recent data supplied to us by CMS at that time.

    Federal Funding for ESRD Surveys

    To assess federal funding for ESRD and other survey activities, we
    reviewed quarterly and annual expenditure reports submitted to CMS by
    state survey agencies for fiscal years 1998 to 2002. These reports specify
    the funds spent by state agencies for both long-term care (LTC) and
    non-LTC survey activities under the Medicare and Medicaid programs.
    However, because the reports aggregate expenditures for all non-LTC survey
    activities, we had to estimate the expenditures related to ESRD surveys.
    We developed our estimates based on additional CMS data that indicated the
    number of hours each state agency reported was spent on activities related
    to ESRD surveys, as well as activities related to non-LTC surveys overall.
    We then calculated the ESRD-related share of non-LTC survey hours and
    applied that percentage to the total non-LTC survey expenditures each
    state agency indicated on its annual expenditure report.

    Appendix II: Medicare Conditions for Coverage for Dialysis Facilities

                           Condition for coverage Description

    Compliance with federal, state, and local The facility and personnel
    employed by the facility must be licensed as required by

    laws and regulations 	federal, state, or local laws. This includes
    compliance with all public safety laws and requirements.

    Governing body and management 	The facility must be under the control of
    an identifiable body that adopts and enforces rules and regulations,
    including operational rules and patient care policies to safeguard the
    health and safety of individuals.

    Patient long-term-care program and A professional, multidisciplinary
    health care team and the patient must develop a written

    patient care plan 	long-term-care plan to ensure each patient receives the
    appropriate type of dialysis and care. Patient care plans, which have
    shorter time lines, must be personalized for each patient to address their
    specific medical, psychological, social, and functional needs. Both plans
    are to be regularly reviewed and updated to respond to changing patient
    needs.

    Patients' rights and responsibilities 	Dialysis facilities must have
    written policies describing the rights of the patients in order to ensure
    patients are fully informed about the services available, their medical
    condition, whether the facility reuses dialysis supplies, and whether the
    patient is a candidate for transplantation and home dialysis.

    Medical records 	Patient medical records must be maintained to document
    patient assessments, diagnosis, and treatment, and medical and nursing
    histories.

    Physical environment 	Dialysis services are to be provided in a setting
    that is functional, sanitary, safe, and comfortable for patients, staff,
    and the public.

    Reuse of hemodialyzers and other dialysis supplies

    Facilities that reuse hemodialyzers and other dialysis supplies must
    follow established protocols and standards to ensure patient and staff
    safety.

    Affiliation agreement or arrangement 	Agreements between dialysis
    facilities and inpatient dialysis centers must be in writing to ensure
    inpatient care and other hospital services are promptly available to
    dialysis patients.

    Director of renal dialysis facility 	Dialysis treatments must be under the
    general supervision of a qualified director, who is responsible for
    planning, organizing, conducting, and directing professional services.

    Staff of a renal dialysis facility or center 	Properly trained and
    qualified personnel must be present in adequate numbers to meet the needs
    of patients, including needs arising in emergencies.

    Minimal service requirements 	Dialysis facilities must provide dialysis
    services as well as laboratory, social, and dietetic services needed to
    address ESRD patient needs.

                      Source: 42 C.F.R. Part 405 Subpart U (2002).

    Appendix III: State Agencies' Progress toward Meeting CMS Survey Goals

    The table below shows the percentage of facilities surveyed, by state, in
    fiscal years 1998 to 2002. It indicates how the individual states
    responded to the increases in the goal for annual ESRD recertification
    rates set by CMS, from 10 to 17 percent per year in fiscal year 2000 and
    then to 33 percent each year starting in fiscal year 2001.

      Table 5: ESRD Facilities Recertified Annually by State, Fiscal Years 1998 to
                                          2002

    Percentage

                                1998 1999 2000 2001 2002

    CMS goal 10 10 17 33

                           State recertification survey rates

                                  Alabama        12    15        17         9
                                   Alaska        50     0        100          100
                                  Arizona         8    13        11            28
                                 Arkansas        11    50        16            32
                              Californiaa         2     4        12            12
                                 Colorado         7     6        24         6
                              Connecticut        17    28        27            39
                                 Delaware         0     9         0            15
                     District of Columbia         8     4        28            22
                                 Floridaa        10    14        22            37
                                Georgia a        12    12        17            37
                                   Hawaii        21    13         6            25
                                    Idaho        17    13        14            14

    a

    Illinois 29 21 22 41 32 Indiana 5 19 16 33 31 Iowa 911 17 2627 Kansas 14
    24 21 44 33 Kentucky 63 54 70 83 89

    a

    Louisiana 10 18 17 32 31 Maine 3838 8 3325 Maryland 17 16 5 26 28
    Massachusetts 8 13 14 37 31 Michigana 31 28 11 18 10 Minnesota 21 4 5 27
    33 Mississippi 8 9 36 69 9 Missouri 5 7 12 19 22 Montana 64 36 21 36 33

    Appendix III: State Agencies' Progress toward Meeting CMS Survey Goals

                                       Percentage

                                         1998   1999     2000     2001       2002
                           Nebraska        10    11       25       36          33
                             Nevada        20        0        8    38
                      New Hampshire        11    22           0    40
                         New Jersey         8    12       15       34
                         New Mexico        16        0    29       14
                          New Yorka         4        6    10       33
                   North Carolina a        16    15       21       23
                       North Dakota        21    31       31       46
                              Ohioa        13    11       17       38
                           Oklahoma        13    22       16       41
                             Oregon        22    65       19       33
                     Pennsylvania a         5    10       10       11
                       Rhode Island        10        0        0    15
                     South Carolina        18    16       17       32
                       South Dakota        13    19       18       42

    a

    Tennessee 11 9 23 47

    Texasa 2 7 3 2134 Utah 3530 30 1933 Vermont 00 25 0 33 0 Virginiaa 31 13
    12 12 13 Washington 26 18 42 33 32 West Virginia 14 17 13 33 26 Wisconsin
    10 16 21 28 30 Wyoming 14 0 0 33 22

    Source: GAO analysis of CMS OSCAR data.

    aIndicates the 13 states with the greatest number of dialysis facilities
    in 2002.

    Starting in fiscal year 2001, CMS also set a goal for states to survey all
    ESRD facilities every 3 fiscal years. The initial 3-year cycle will be
    completed at the end of fiscal year 2003. Table 6 shows the number of
    facilities available for recertification in each state at the start of
    fiscal year 2001 (and not terminated since then) and the percentage that
    remained to be surveyed in fiscal year 2003. In fiscal year 2003, 35 out
    of 50 states, plus the District of Columbia, need to survey over a third
    of their ESRD facilities to meet the cycle goal.

    Appendix III: State Agencies' Progress toward Meeting CMS Survey Goals

    Table 6: Facilities to Be Recertified to Meet CMS 3-Year Goal, by State

                            ESRD facilities needing Share of facilities that need
                               recertification in fiscal to be surveyed in fiscal
                               years 2001 through 2003 year 2003 to meet CMS goal
                                                      State (number) (percentage)

    Alabama 92

    Rhode Island 13

    California 347

    New Mexico 29

    Virginia 119

    Idaho 7

    Michigan 104

    Vermont 6

    Colorado 35

    Missouri 102

    Pennsylvania 216

    District of Columbia 23

    Hawaii 16

    Utah 20

    Arizona 78

    North Carolina 111

                     Page 47 GAO-04-63 Dialysis Facility Compliance
    Maryland 95 47 Iowa 47 47 Delaware 13 46 Texas 285 45 Wyoming 9 44 Nevada 16 44 Wisconsin 76 43  New   87 43 Maine 12 42 Oklahoma 57 40 New  205 40   West   23 39 Washington 43 37 Indiana 78 37 Minnesota 61 36 Louisiana 115 36 South
                                                                                                    Jersey                                  York        Virginia                                                                       Dakota 17 35

    Appendix III: State Agencies' Progress toward Meeting CMS Survey Goals

                            ESRD facilities needing Share of facilities that need
                               recertification in fiscal to be surveyed in fiscal
                               years 2001 through 2003 year 2003 to meet CMS goal
                                                      State (number) (percentage)

                         34                    Oregon       40                 35
                         35                      Ohio      149                 35
                         36            South Carolina       75                 33
                         37             Massachusetts       61                 33
                         38                  Arkansas       52                 29
                         39                   Montana       14                 29
                         40                  Nebraska       21                 29
                         41                  Illinois      126                 26
                         42               Mississippi       62                 26
                         43                    Kansas       39                 26
                         44                   Georgia      168                 24
                         45                 Tennessee      106                 23
                         46             New Hampshire       9                  22
                         47                   Florida      237                 22
                         48               Connecticut       26                 19
                         49              North Dakota       12                 17
                         50                    Alaska       2                   0

    51 Kentucky 45 0

    Source: GAO analysis of CMS OSCAR data.

    Appendix IV: Comments from the Centers for Medicare & Medicaid Services

    Appendix IV: Comments from the Centers for Medicare & Medicaid Services

    Appendix IV: Comments from the Centers for Medicare & Medicaid Services

    Appendix IV: Comments from the Centers for Medicare & Medicaid Services

    Appendix IV: Comments from the Centers for Medicare & Medicaid Services

    Appendix IV: Comments from the Centers for Medicare & Medicaid Services

    Appendix IV: Comments from the Centers for Medicare & Medicaid Services

    Appendix V: GAO Contact and Staff Acknowledgments

    GAO Contact Rosamond Katz, (202) 512-7148

    Acknowledgments 	Eric Peterson, Joel Hamilton, Loren Lieberman, and Behn
    Kelly made major contributions to this report.

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