Nursing Homes: Efforts to Strengthen Federal Enforcement Have Not
Deterred Some Homes from Repeatedly Harming Residents (26-MAR-07,
GAO-07-241).							 
                                                                 
In 1998 and 1999 reports, GAO concluded that enforcement actions,
known as sanctions, were ineffective in encouraging nursing homes
to maintain compliance with federal quality requirements:	 
sanctions were often rescinded before being implemented because  
homes had a grace period to correct deficiencies. In response,	 
the Centers for Medicare & Medicaid Services (CMS) began	 
requiring immediate sanctions for homes that repeatedly harmed	 
residents. Using CMS enforcement and deficiency data, GAO (1)	 
analyzed federal sanctions from fiscal years 2000 through 2005	 
against 63 homes previously reviewed and (2) assessed CMS's	 
overall management of enforcement. The 63 homes had a history of 
harming residents and were located in 4 states that account for  
about 22 percent of homes nationwide.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-241 					        
    ACCNO:   A67245						        
  TITLE:     Nursing Homes: Efforts to Strengthen Federal Enforcement 
Have Not Deterred Some Homes from Repeatedly Harming Residents	 
     DATE:   03/26/2007 
  SUBJECT:   Appeals						 
	     Health care programs				 
	     Health surveys					 
	     Medicaid						 
	     Medicare						 
	     Noncompliance					 
	     Nursing homes					 
	     Sanctions						 
	     Policy evaluation					 
	     Policies and procedures				 

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GAO-07-241

   

     * [1]Results in Brief
     * [2]Background

          * [3]Ensuring Compliance with Federal Quality Requirements
          * [4]Range of Federal Sanctions
          * [5]Imposition of Sanctions
          * [6]State and CMS Roles in Sanctioning Homes
          * [7]CMS Enforcement Initiatives

     * [8]Number of Sanctions Has Decreased

          * [9]Sanctions Have Declined Nationwide
          * [10]Decline in Sanctions and Deficiencies for the Homes Reviewed
          * [11]Implementation Rate of Some Sanctions Has Declined for the H
          * [12]CMS Did Not Take Advantage of the Full Range of Sanctions fo

     * [13]Despite Changes in Federal Enforcement Policy, Many Homes Co

          * [14]Many Homes Cycled In and Out of Compliance, Continuing to Ha
          * [15]Relatively Few Homes Reviewed Were Cited for Double Gs
          * [16]Immediate Sanctions Often Not Immediate and Do Not Appear to
          * [17]Termination Used Infrequently

     * [18]Complex Immediate Sanctions Policy and Data Limitations Hamp

          * [19]Immediate Sanctions Policy Is Complex and Fails to Hold Some
          * [20]CMS Oversight Continues to Be Hampered by Data Limitations
          * [21]Other CMS Initiatives to Improve Enforcement

     * [22]Conclusions
     * [23]Recommendations for Executive Action
     * [24]Agency and State Comments and Our Evaluation
     * [25]Appendix I: Scope and Methodology
     * [26]Appendix II: Percentage of Nursing Homes Cited for Actual Ha
     * [27]Appendix III: Federal Sanctions for Nursing Homes Reviewed,
     * [28]Appendix IV: Examples of Homes Reviewed That Frequently Cycl
     * [29]Appendix V: Number of Days between Survey and Implementation
     * [30]Appendix VI: Comments from the Centers for Medicare & Medica
     * [31]Appendix VII: Comments from the California Department of Hea
     * [32]Appendix VIII: Comments from the Michigan Department of Comm
     * [33]Appendix IX: Comments from the Texas Department of Aging and
     * [34]Appendix X: GAO Contact and Staff Acknowledgments

          * [35]GAO Contact
          * [36]Acknowledgments

     * [37]Related GAO Products

          * [38]Order by Mail or Phone

Report to the Ranking Minority Member, Committee on Finance, U.S. Senate

United States Government Accountability Office

GAO

March 2007

NURSING HOMES

Efforts to Strengthen Federal Enforcement Have Not Deterred Some Homes
from Repeatedly Harming Residents

GAO-07-241

Contents

Letter 1

Results in Brief 4
Background 7
Number of Sanctions Has Decreased 17
Despite Changes in Federal Enforcement Policy, Many Homes Continued to
Cycle In and Out of Compliance 26
Complex Immediate Sanctions Policy and Data Limitations Hamper CMS
Management of Enforcement 40
Conclusions 51
Recommendations for Executive Action 54
Agency and State Comments and Our Evaluation 55
Appendix I Scope and Methodology 59
Appendix II Percentage of Nursing Homes Cited for Actual Harm or Immediate
Jeopardy, by State, Fiscal Years 2000-2005 64
Appendix III Federal Sanctions for Nursing Homes Reviewed, by State,
Fiscal Years 2000-2005 66
Appendix IV Examples of Homes Reviewed That Frequently Cycled In and Out
of Compliance 68
Appendix V Number of Days between Survey and Implementation Date of DPNA
for Homes Reviewed, Fiscal Years 2000-2005 70
Appendix VI Comments from the Centers for Medicare & Medicaid Services 71
Appendix VII Comments from the California Department of Health Services 79
Appendix VIII Comments from the Michigan Department of Community Health 84
Appendix IX Comments from the Texas Department of Aging and Disability
Services 89
Appendix X GAO Contact and Staff Acknowledgments 91
Related GAO Products 92

Tables

Table 1: Number of Nursing Homes Reviewed in 1999 That Were Included in
Our Analysis for This Report 3
Table 2: Scope and Severity of Deficiencies Identified during Nursing Home
Surveys 8
Table 3: Sanctions Available to Encourage Nursing Home Compliance with
Requirements 10
Table 4: Sanctions Implemented for Homes Reviewed, Fiscal Years 2000-2002
and 2003-2005 21
Table 5: Examples of Homes with Low Implemented CMPs 24
Table 6: Example of a Michigan Nursing Home That Frequently Cycled In and
Out of Compliance and Was Still Open as of November 2006 29
Table 7: Examples of Homes' Deficiency Histories and Termination Actions,
Fiscal Years 2000-2005 38
Table 8: Number of Nursing Homes Reviewed in 1999 That Were Included in
Our Analysis for This Report, by State 60
Table 9: Percentage of Nursing Homes Cited for Actual Harm or Immediate
Jeopardy during Standard Surveys, Fiscal Years 2000-2005 64
Table 10: Number of Sanctions Implemented Among Homes We Reviewed, Fiscal
Years 2000-2005 66
Table 11: Examples of Homes that Frequently Cycled In and Out of
Compliance 68

Figures

Figure 1: Federal-State Responsibilities in the Enforcement Process 15
Figure 2: Percentage of Implemented Sanctions for Homes Reviewed Over
Three Time Periods (July 1995-October 1998, Fiscal Years 2000-2002, and
Fiscal Years 2003-2005) 23
Figure 3: Frequency that Reviewed Homes Cycled In and Out of Compliance,
Fiscal Years 2000-2005 28
Figure 4: Number of Days between Survey and Implementation of CMPs and
DPNAs among Homes Reviewed, Fiscal Years 2000-2005 33
Figure 5: Lag Time between Survey and CMP Payment for a Michigan Nursing
Home 35
Figure 6: Number of Homes with One or More Double Gs, Fiscal Years
2000-2005 36
Figure 7: Impact of Intervening Periods of Compliance Rule on Immediate
Sanctions for One Pennsylvania Nursing Home, 2000 43
Figure 8: Impact of Clearing Effect Rule on Immediate Sanctions for One
Michigan Nursing Home, 2000-2002 45

Abbreviations

ACTS ASPEN Complaints/Incidents Tracking System
AEM ASPEN Enforcement Manager
ASPEN Automated Survey Processing Environment
CMP civil money penalty
CMPTS CMP Tracking System
CMS Centers for Medicare & Medicaid Services
DPNA denial of payment for new admissions
LTC Long Term Care Enforcement Tracking System
OBRA 87 Omnibus Budget Reconciliation Act of 1987
OSCAR On-Line Survey, Certification, and Reporting system
PDQ Providing Data Quickly
QIO Quality Improvement Organization

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separately.

United States Government Accountability Office
Washington, DC 20548

March 26, 2007

The Honorable Charles E. Grassley
Ranking Minority Member
Committee on Finance
United States Senate

Dear Senator Grassley:

The nation's 1.5 million nursing home residents are a highly vulnerable
population of elderly and disabled individuals for whom remaining at home
is no longer feasible. The federal government plays a key role in ensuring
that nursing home residents receive appropriate care by setting quality
requirements that nursing homes must meet to participate in the Medicare
and Medicaid programs and by contracting with states to routinely inspect
homes and conduct complaint investigations.^1 Moreover, to encourage
compliance with these requirements, Congress has authorized certain
enforcement actions, known as sanctions, including civil money penalties
(CMP) or termination from participating in these programs. With the aging
of the baby boom generation, the number of individuals needing nursing
home care and the associated costs are expected to increase dramatically.
Combined Medicare and Medicaid payments for nursing home services were
about $67 billion in 2004, including a federal share of about $46
billion.^2

In 1998 and 1999 reports, we identified significant weaknesses in federal
and state activities designed to detect and correct quality problems at
nursing homes.^3 A key finding was that sanctions imposed on nursing
homes, including those that repeatedly harmed residents, often did not
take effect. Instead, the sanctions were rescinded prior to their
effective dates because homes had a grace period in which they could and
often did correct deficiencies. We referred to this phenomenon as a
"yo-yo" pattern of compliance because homes cycled in and out of
compliance, harming residents while avoiding sanctions. Overall, we
concluded that the goal of the enforcement process--to help ensure that
homes maintain compliance with federal quality requirements--was not being
realized. In response to our recommendations, the Centers for Medicare &
Medicaid Services (CMS), the federal agency that manages these two public
health care programs, took several steps, including the introduction of an
immediate sanctions policy for homes found to repeatedly harm residents
and the development of a new data system to improve management of the
enforcement process. Under CMS's immediate sanctions policy, sanctions may
be imposed without giving homes an opportunity to correct serious
deficiencies that resulted in actual resident harm or put residents at
risk of death or serious injury. We also reported that the deterrent
effect of CMPs can be hampered by a backlog of appeals, which further
delays payment of CMPs; by statute, CMPs are not paid until appealed cases
are closed.

^1Medicare is the federal health care program for elderly and disabled
people. Medicare covers up to 100 days of skilled nursing home care
following a hospital stay. Medicaid is the joint federal-state health care
financing program for certain categories of low-income individuals.
Medicaid also pays for long-term care services, including nursing home
care.

^2Data for 2004 are the most recent available.

^3GAO, California Nursing Homes: Care Problems Persist Despite Federal and
State Oversight, [39]GAO/HEHS-98-202 (Washington, D.C.: July 27, 1998) and
Nursing Homes: Additional Steps Needed to Strengthen Enforcement of
Federal Quality Standards, [40]GAO/HEHS-99-46 (Washington, D.C.: Mar. 18,
1999). See a list of related GAO products at the end of this report.

You asked us to assess CMS's progress in improving the enforcement
process, particularly for homes with a history of harming residents. In
response to your request, we (1) analyzed federal sanctions from fiscal
years 2000 through 2005 against 63 homes with a history of harming
residents as well as nationwide trends in nursing home sanctions for the
same time period, (2) evaluated the extent to which the homes cycled in
and out of compliance and the impact of CMS's immediate sanctions policy,
and (3) assessed CMS's management of enforcement activities. The nursing
homes were located in California, Michigan, Pennsylvania, and Texas and
their prior compliance and enforcement histories formed the basis for the
conclusions in our March 1999 report.^4 These homes were selected for that
report because of their serious or sustained compliance problems prior to
1999 and are not representative of homes in those states or homes
nationwide.^5 The 63 homes we reviewed for this report participated in
Medicare and Medicaid for at least 6 months during fiscal years 2000
through 2005. Table 1 shows the number of homes that participated by
fiscal year. Changes in the number of homes from year to year are a result
of homes' closure, termination, or reinstatement of participation. For
example, the change from 61 homes in fiscal year 2000 to 59 homes in
fiscal year 2001 represents the voluntary closure of 2 homes, the
involuntary termination of 1, and the reinstatement of 1, for a net
decrease of 2 homes.^6

4See [41]GAO/HEHS-99-46 . The 1999 report focused on 74 homes. We excluded
11 of the original 74 homes from our current analysis because they either
closed before fiscal year 2000 or closed within 6 months of the beginning
of fiscal year 2000 and therefore had few or no deficiencies or sanctions
during the period we reviewed. Of the remaining 63 homes, 10 were located
in California, 16 in Michigan, 14 in Pennsylvania, and 23 in Texas (see
app. I).

^5Overall, the nursing homes in these four states account for about 22
percent of nursing homes nationwide.

Table 1: Number of Nursing Homes Reviewed in 1999 That Were Included in
Our Analysis for This Report

                                    Current report
                                      Fiscal year
                                                              Total number of 
                                                               homes with any 
1999                    Average                  Average  participation in 
report 2000 2001 2002 2000-2002 2003 2004 2005 2003-2005         2000-2005 
74       61   59   58        59   58   54   55        56                63 

Source: GAO.

Note: Some of the 63 homes only participated in the Medicare and Medicaid
programs for a portion of fiscal years 2000 through 2005 because they
either closed permanently or closed temporarily and were subsequently
reinstated. To be included in our analysis we required such homes to have
participated for at least 6 months of the fiscal year.

Our analysis relied primarily on (1) deficiency data from CMS's On-Line
Survey, Certification, and Reporting system (OSCAR) and the CMS Providing
Data Quickly (PDQ) Web site; (2) sanctions data from its Long Term Care
Enforcement Tracking System (LTC) and ASPEN Enforcement Manager (AEM);^7
and (3) CMP payment information from its CMP Tracking System (CMPTS).^8 We
also examined CMS regional office and state enforcement case files for the
nursing homes we reviewed. We analyzed deficiency and sanctions data to
identify the number and type of sanctions implemented and their
implementation rates; the extent to which homes cycled in and out of
compliance; the use of immediate sanctions for homes that repeatedly
harmed residents, including their deterrent effect; the use of
termination; and variability in state approaches to enforcement. To
identify trends, we compared deficiency and sanctions data across two time
periods: fiscal years 2000 through 2002 and fiscal years 2003 through
2005.^9 We focused our analysis on three types of sanctions--CMPs, denial
of payment for new admissions (DPNA), and terminations--which accounted
for about 81 percent of all sanctions from fiscal years 2000 through 2005.
Although termination was used infrequently--less than 1 percent of all
sanctions--we included it in our analysis because it is the most severe
sanction, resulting in the loss of Medicare and Medicaid revenue.^10 Based
on our assessment of the data from the case file review, we determined
that the sanctions data were sufficiently reliable to assess general
nationwide trends in implemented sanctions. Because we could not conduct
such checks of the data in all 50 states and the District of Columbia, we
did not analyze trends across the individual states.^11 We also reviewed
CMS enforcement policy and guidance and discussed the immediate sanctions
policy and data reliability issues with CMS and state officials. Finally,
we obtained perspectives from regional office and state officials on the
sanctions used for the homes we reviewed. Our findings on sanctions, such
as implementation rates and use of the available range of sanctions,
against these homes cannot be generalized to all homes in the 4 states or
to all nursing homes nationwide. However, we believe that the findings are
illustrative of the overall adequacy of federal and state responses to
nursing homes with a history of serious noncompliance with federal quality
requirements. Appendix I provides a more detailed description of our scope
and methodology, including steps taken to ensure the reliability of the
data used in this report. We performed our work from January 2005 through
January 2007 in accordance with generally accepted government auditing
standards.

^6By state, the number of homes active for at least 6 months in fiscal
years 2000 and 2005 did not change in California, decreased by one home in
both Michigan and Texas, and decreased by four homes in Pennsylvania (see
app. I). The year-to-year changes in the number of providers do not
materially affect our findings on enforcement trends.

^7ASPEN is an abbreviation for Automated Survey Processing Environment.

^8See appendix I for a more detailed description of our use of these CMS
databases.

Results in Brief

For the homes we reviewed in four states, the number of sanctions
implemented as well as the number of serious deficiencies cited declined
from fiscal years 2000 through 2005--trends that were also seen
nationwide. While the decline may reflect improved quality or changes to
enforcement policy, it may also mask survey weaknesses that understate
quality problems, an issue we have reported on since 1998. In general, the
homes were cited for more deficiencies that caused harm to residents than
other homes in their respective states. For example, the homes we reviewed
in California had three times as many serious deficiencies as other homes
in the state. We also found differences in the implementation rate of
various sanctions for the homes we reviewed. Comparing results from the
baseline period of July 1995 to October 1998 with the period fiscal years
2003 through 2005, the implementation rate of CMPs increased from 32
percent to 86 percent but declined for DPNAs by about 20 percent. However,
the deterrent effect of CMPs was diluted because CMS imposed CMPs at the
lower end of the allowable range for the homes we reviewed. For example,
the median per day CMP amount imposed for deficiencies that do not cause
immediate jeopardy to residents was $500 in fiscal years 2000 through 2002
and $350 in fiscal years 2003 through 2005; the allowable range is $50 to
$3,000 per day. Generally, CMS did not exercise its discretionary
authority to impose DPNAs and terminations for the homes; rather, it
waited until these sanctions could be imposed on a mandatory basis,
allowing the homes more opportunities to escape sanctions prior to
implementation. Moreover, in some instances, CMS extended the
implementation dates of imposed terminations, thus allowing homes
additional time to avoid being terminated by correcting deficiencies.

^9Our analysis of the implementation rate of sanctions includes a third
baseline time period of July 1995 to October 1998, which we previously
reported on in 1999. Our current analysis starts with fiscal year 2000,
excluding fiscal year 1999, because one of the major enforcement policies
we evaluated was modified in 2000.

^10Throughout this report, we use the term "termination" to refer to a
home's closure for cause, also known as involuntary closure. Homes can and
do close voluntarily.

^11In this report, we use the term "states" to include the 50 states and
the District of Columbia.

Despite changes in federal enforcement policy, almost half of the 63 homes
we reviewed--homes with prior serious quality problems--continued to cycle
in and out of compliance during fiscal years 2000 through 2005, causing
harm to residents. These homes corrected deficiencies only temporarily
and, despite having had sanctions implemented, were again found to be out
of compliance, including 8 homes that cycled in and out of compliance 7 or
more times. During this same time period, 27 of the 63 homes were cited 69
times for deficiencies that warranted immediate sanctions, but 15 of these
cases did not result in immediate sanctions. Moreover, the "immediate
sanctions" label is misleading because CMS's policy requires only that
homes be notified immediately of CMS's intent to implement sanctions, not
that sanctions be implemented immediately. When DPNAs are imposed, the lag
time between the occurrence of a deficiency that results in an immediate
sanction and the sanction's implementation date provides a de facto grace
period; if the home is able to correct the deficiency, it can escape
sanctions. Although the use of CMPs avoids this de facto grace period
because they can be implemented retroactively, by statute, payment of CMPs
may be delayed until after exhausting appeals of the underlying
deficiency, a process that can take years. Nor did CMS's implementation of
immediate sanctions appear to deter future repeat deficiencies--18 of the
27 homes with immediate sanctions had multiple instances of such sanctions
in fiscal years 2000 through 2005. Termination of a home from the Medicare
and Medicaid programs was infrequent. By the end of fiscal year 2005, only
2 homes were terminated involuntarily because of quality problems. Another
9 that closed did so voluntarily. In effect, these homes picked their own
closure dates and may have continued to harm residents before closing. For
example, 2 such homes were cited for harming residents 21 and 26 times,
respectively, and had sanctions implemented numerous times from fiscal
year 2000 until their voluntary closures in 2004.

In general, the effectiveness of CMS's management of nursing home
enforcement is hampered by the overall complexity of its immediate
sanctions policy, intended to deter repeated noncompliance, and by its
fragmented data systems and incomplete national reporting capabilities.
First, the complexity of the immediate sanctions policy allows some homes
with the worst compliance histories--the very homes the policy was
designed to address--to escape immediate sanctions. For example, homes
that do not correct deficiencies can avoid immediate sanctions because of
the requirement for an intervening period of compliance between the pair
of surveys that identify serious deficiencies--that is, a new serious
deficiency will not trigger an immediate sanction unless the prior serious
deficiency has been corrected. Thus, if a state survey agency cited a home
for a serious deficiency and 2 weeks later--before the first deficiency
was corrected--cited the home for another serious deficiency, the home
might not receive an immediate sanction. In addition, homes--even those
with a history of multiple serious deficiencies--may escape immediate
sanctions because a routine inspection without such a serious deficiency,
in effect, clears the home's record for determining if immediate sanctions
are applicable. The immediate sanctions associated with CMS's policy also
are often inequitable; multiple serious deficiencies during one inspection
may result in the same sanction as an inspection with a single serious
deficiency. Second, CMS's fragmented and incomplete data systems continue
to hamper its ability to monitor enforcement. We previously reported that
CMS lacked a data system that integrated enforcement data nationwide and
that the lack of such a system made it difficult for CMS to consistently
manage and monitor sanctions across states and its regional offices.
Although CMS has developed a new data system, the system's components are
not integrated, and the national reporting capabilities are not complete.
Finally, CMS is taking steps to improve its enforcement of nursing home
quality requirements. In addition to its new data system, the agency
piloted new guidance in 2006 designed to encourage more consistency across
states in the amount of CMPs, revised a program that provides enhanced
enforcement and monitoring of some homes with a history of harming
residents in each state, and funded studies to examine the effectiveness
of nursing home enforcement.

We are recommending that, to increase the deterrent effect of CMPs, the
Administrator of CMS develop an administrative process to collect CMPs
prior to exhaustion of appeals, seek legislation for the implementation of
this process, and address any due process concerns, as appropriate. We are
also recommending that the CMS Administrator take actions to (1) improve
the immediate sanctions policy to help ensure that homes that repeatedly
harm residents or place them in immediate jeopardy do not escape immediate
sanctions, (2) strengthen the deterrent effect of certain sanctions, (3)
expand a program of enhanced enforcement for homes with a history of
noncompliance, and (4) improve the effectiveness of the agency's data
systems used for enforcement. In commenting on a draft of this report, CMS
generally concurred with our recommendations but did not always specify
how it would implement them. In addition, CMS noted that implementation of
three of our recommendations raised resource issues and that others
required additional research. The four states in which the nursing homes
we reviewed were located generally concurred with our findings.

Background

Ensuring the quality and safety of nursing home care has been a focus of
considerable congressional attention since 1998. Titles XVIII and XIX of
the Social Security Act establish minimum requirements in statute that all
nursing homes must meet to participate in the Medicare and Medicaid
programs, respectively. With the Omnibus Budget Reconciliation Act of 1987
(OBRA 87), Congress focused the requirements on the quality of care
actually provided by a home.^12 To help ensure that homes maintained
compliance with the new requirements, OBRA 87 also established the range
of available sanctions, to include CMPs, DPNAs, and termination.^13

12Pub. L. No. 100-203, SS4201, 4211, 101 Stat. 1330-160, 1330-182.

^13Pub. L. No. 100-203, SS4203, 4213, 101 Stat. 1330-179, 1330-213.

Ensuring Compliance with Federal Quality Requirements

CMS contracts with state survey agencies to assess whether homes meet
federal quality requirements through routine inspections, known as
standard surveys,^14 and complaint investigations. The requirements are
intended to ensure that residents receive the care needed to protect their
health and safety, such as preventing avoidable pressure sores, weight
loss, and accidents. While a standard survey involves a comprehensive
assessment of federal quality requirements, a complaint investigation
generally focuses on a specific allegation regarding resident care or
safety; complaints can be lodged by a resident, family member, or nursing
home employee. Deficiencies identified during either standard surveys or
complaint investigations are classified in 1 of 12 categories according to
their scope (i.e., the number of residents potentially or actually
affected) and severity. An A-level deficiency is the least serious and is
isolated in scope, while an L-level deficiency is the most serious and is
considered to be widespread in the nursing home (see table 2).^15 When
state surveyors identify and cite B-level or higher deficiencies, the home
is required to prepare a plan of correction and, depending on the severity
of the deficiency, surveyors conduct revisits to ensure that the home
actually implemented its plan and corrected the deficiencies.^16

Table 2: Scope and Severity of Deficiencies Identified during Nursing Home
Surveys

                                                   Scope
Severity                             Isolated Pattern Widespread
Immediate jeopardy^a                        J           K    L   
Actual harm                                 G           H    I   
Potential for more than minimal harm        D           E    F   
Potential for minimal harm^b                A           B    C   

Source: CMS.

aActual or potential for death/serious injury.

bNursing home is considered to be in substantial compliance.

^14Every nursing home receiving Medicare or Medicaid payment must undergo
a standard survey not less than once every 15 months, and the statewide
average interval for these surveys must not exceed 12 months.

^15Throughout this report, we use the term serious deficiency to refer to
care problems at the level of actual harm or immediate jeopardy.

^16State survey teams generally consist of registered nurses, social
workers, dieticians, and other specialists.

Homes with deficiencies at the A, B, or C levels are considered to be in
substantial compliance with federal quality requirements, while homes with
D-level or higher deficiencies are considered noncompliant. A
noncompliance period begins when a survey finds noncompliance and ends
when the home either achieves substantial compliance by correcting the
deficiencies or when the home is terminated from Medicare and Medicaid.
Since 1998, the deficiencies cited during standard surveys have been
summarized on CMS's Nursing Home Compare Web site, and CMS subsequently
added data on the results of complaint investigations.^17 These data are
intended to help consumers select a nursing home that takes into account
the quality of care provided to residents.

Range of Federal Sanctions

CMS and the states can use a variety of federal sanctions to help
encourage compliance with quality requirements ranging from less severe
sanctions, such as indicating the specific actions needed to address a
deficiency and providing an implementation time frame, to those that can
affect a home's revenues and provide financial incentives to return to and
maintain compliance (see table 3).^18 Overall, two sanctions--CMPs and
DPNAs--accounted for 80 percent of federal sanctions from fiscal years
2000 through 2005.

^17See http://www.medicare.gov/NHCompare .

^18In addition to federal sanctions, states may impose their own sanctions
under their state licensure authority.

Table 3: Sanctions Available to Encourage Nursing Home Compliance with
Requirements

Sanction             Description                                           
CMP                  The home pays a fine for each day or instance of      
                        noncompliance.                                        
DPNA                 Medicare and/or Medicaid payments can be denied for   
                        all newly admitted eligible residents.^a              
Directed in-service  The home is required to provide training to staff on  
training             a specific issue identified as a problem in the       
                        survey.                                               
Directed plan of     The home is required to take action within specified  
correction           time frames according to a plan of correction         
                        developed by CMS, the state, or a temporary manager.  
State monitoring     An on-site monitor is placed in the home to help      
                        ensure that the home achieves and maintains           
                        compliance.                                           
Temporary management The nursing home accepts a substitute manager         
                        appointed by the state with the authority to hire,    
                        terminate, and reassign staff; obligate funds; and    
                        alter the nursing home's procedures, as appropriate.  
Termination          Termination from the Medicare and Medicaid programs.  
                        The home is no longer eligible to receive Medicare    
                        and Medicaid payments for beneficiaries residing in   
                        the home.                                             

Source: CMS.

Notes: Most of the above sanctions are authorized by statute (see 42
U.S.C. S1395i-3(h) and 42 U.S.C. S1396r(h)), while directed in-service
training is authorized by regulation (see 42 C.F.R S 488.406(a)).
Additional or alternative sanctions may also be used (see 42 C.F.R. S
488.406(c)).

aCMS may also deny payment for all Medicare- and/or Medicaid-covered
residents but seldom does so because it may severely limit the homes'
revenues for patient care.

The majority of federal sanctions implemented from fiscal years 2000
through 2005--about 54 percent--were CMPs. CMPs may be either per day or
per instance. CMS regulations specify a per day CMP range from $50 to
$10,000 for each day a home is noncompliant--from $50 to $3,000 for
nonimmediate jeopardy and $3,050 to $10,000 for immediate jeopardy. The
overall amount of the fine increases the longer a home is out of
compliance.^19 For example, a home with a per day CMP of $5,000 that is
out of compliance for 10 days would accrue a total penalty of $50,000. A
per day CMP can be assessed retroactively, starting from the first day of
noncompliance, even if that date is prior to the date of the survey that
identified the deficiency.

^19Federal statutes specify that CMPs may not exceed $10,000 for each day
of noncompliance. 42 U.S.C. S1395i-3(h)(2)(B)(ii) and 42 U.S.C.
S1396r(h)(3)(C)(ii).

Per instance CMPs range from $1,000 to $10,000 per episode of
noncompliance.^20 While multiple per instance CMPs can be imposed for
deficiencies identified during a survey, the total amount cannot exceed
$10,000. Per day and per instance CMPs cannot be imposed as a result of
the same survey, but a per day CMP can be added when a deficiency is
identified on a subsequent survey if a per instance CMP was the type of
CMP initially imposed. Unlike other sanctions, CMPs require no notice
period. However, if a home appeals the deficiency, by statute, payment of
the CMP--whether received directly from the home or withheld from the
home's Medicare and Medicaid payments--is deferred until the appeal is
resolved.^21

DPNAs made up about 26 percent of federal sanctions from fiscal years 2000
through 2005. A DPNA denies a home payments for new admissions until
deficiencies are corrected. In contrast to CMPs, CMS regulations require
that homes be provided a notice period of at least 15 days for other
sanctions, including DPNAs; the notice period is shortened to 2 days in
the case of immediate jeopardy. As a result, homes can avoid DPNAs if they
are able to correct deficiencies during the notice period, which provides
a de facto grace period. Unlike CMPs, DPNAs cannot be imposed
retroactively, and payment denial is not deferred until appeals are
resolved.

Although nursing homes can be terminated involuntarily from participation
in Medicare and Medicaid, which can result in a home's closure,
termination is used infrequently.^22 Terminations were less than 1 percent
of total sanctions from fiscal years 2000 through 2005. Four of the seven
types of sanctions described above were used less frequently than CMPs and
DPNAs--directed plan of correction, state monitoring, directed in-service
training, and temporary management--these sanctions accounted for about 19
percent of sanctions nationwide from 2000 through 2005.

^20Unlike for per day CMPs, CMS does not specify a particular per instance
CMP range for cases of immediate jeopardy.

^21If efforts to collect the CMP directly from the home fail, Medicare and
Medicaid payments are withheld.

^22Homes also can choose to close voluntarily, but we do not consider
voluntary closure to be a sanction. When a home is terminated, it loses
any income from Medicare and Medicaid, which accounted for about 40
percent of nursing home payments in 2004. Residents who receive support
through Medicare or Medicaid must be moved to other facilities. However, a
terminated home generally can apply for reinstatement if it corrects its
deficiencies.

Imposition of Sanctions

The statute permits and, in some cases, requires that DPNAs or termination
be imposed for homes found out of compliance with federal quality
requirements. Mandatory termination and DPNA are required, as follows:

           o Termination--Termination is required by regulations under the
           statute if within 23 days of the end of a survey a home fails to
           correct immediate jeopardy deficiencies,^23 or within 6 months of
           the end of a survey the home fails to correct nonimmediate
           jeopardy deficiencies.

           o DPNA--A DPNA is required by statute if within 3 months of the
           end of a survey a home fails to correct deficiencies and return to
           compliance or when a home's last three standard surveys reveal
           substandard quality of care.^24

           The statute also authorizes CMS to impose discretionary DPNAs and
           discretionary terminations in situations other than those
           specified above.^25 Federal regulations further stipulate that
           such discretionary sanctions may be implemented as long as a
           facility is given the appropriate notice period. By regulation,
           the notice period for implementing both discretionary and
           mandatory DPNAs and terminations is 15 days; in cases of immediate
           jeopardy, however, the notice period is 2 days.

           In imposing sanctions, CMS takes into account four factors: (1)
           the scope and severity of the deficiency, (2) a home's prior
           compliance history, (3) desired corrective action and long-term
           compliance, and (4) the number and severity of all the home's
           deficiencies. In general, the severity of the sanction increases
           with the severity of the deficiency. For example, for immediate
           jeopardy deficiencies (J, K, and L on CMS's scope and severity
           grid) the regulations require that either or both temporary
           management or termination be imposed, and also permits use of CMPs
           of from $3,050 to $10,000 per day or $1,000 to $10,000 per
           instance of noncompliance. Similarly, for deficiencies at the
           actual harm level (G, H, and I on the scope and severity grid) the
           regulations require one or a combination of the following
           sanctions: temporary management, a DPNA, a per day CMP of $50 to
           $3,000, or a per instance CMP of $1,000 to $10,000 per instance of
           noncompliance. In addition to these required sanctions, other
           sanctions can be included; for example, depending on the severity
           of the deficiency and a home's compliance history, it could have a
           combination of state monitoring, a DPNA, and a CMP. Finally, CMS
           is required to consider the immediacy of sanctions. The statute
           stipulates that sanctions should be designed to minimize the time
           between the identification of violations and the final imposition
           of the sanctions.^26
		   
		   State and CMS Roles in Sanctioning Homes

           Enforcement of nursing home quality-of-care requirements is a
           shared federal-state responsibility. In general, sanctions are (1)
           initially proposed by the state survey agency based on a cited
           deficiency, (2) reviewed and imposed by CMS regional offices, and
           (3) implemented--that is, put into effect--by the same CMS
           regional office, usually after a required notice period (see fig.
           1).^27 CMS regional offices typically accept state-proposed
           sanctions but can modify them. The regional office notifies the
           home by letter that a sanction is being imposed--that is, its
           intent to implement a sanction--and the date it will be
           implemented. State surveyors may make follow-up visits to the home
           to determine whether the deficiencies have been corrected. The CMS
           regional office implements the sanctions if the deficiencies are
           not corrected. Homes may appeal the cited deficiency and, if the
           appeal is successful, the severity of the sanction could be
           reduced or the sanction could be rescinded. Homes have several
           avenues of appeal, including informal dispute resolution at the
           state survey agency level or a hearing before an administrative
           law judge, as well as before the Department of Health and Human
           Services Departmental Appeals Board. Under CMS policy, homes
           automatically receive a 35 percent reduction in the amount of a
           CMP if they waive their right to appeal before the Departmental
           Appeals Board.^28

           Figure 1: Federal-State Responsibilities in the Enforcement
           Process

           Notes: States may impose lower-level sanctions, such as state
           monitoring, without federal approval. Some state survey agencies
           also have the ability to impose federal sanctions such as DPNAs.
           Nursing homes are notified of their appeal rights when CMS imposes
           a sanction.
		   
		   CMS Enforcement Initiatives

           In response to our earlier recommendations, CMS undertook a number
           of initiatives intended to strengthen enforcement, many of which
           we reported on in 2005.^29 For example, CMS (1) revised its
           revisits policy by requiring surveyors to return to nursing homes
           to verify that serious deficiencies had actually been corrected;
           (2) hired more staff to reduce the backlog of appeals at the
           Health and Human Services Departmental Appeals Boards, the entity
           that adjudicates nursing home appeals of deficiency citations; (3)
           began annual assessments of state survey activities, known as
           state performance reviews, which cover, among other things, the
           timeliness of sanction referrals from state survey agencies to CMS
           regional offices; and (4) revised its past noncompliance policy
           for citing and reporting serious deficiencies that were missed by
           state surveyors during earlier surveys of a home.

           A key CMS enforcement initiative was the two-stage implementation
           of an immediate sanctions policy. In the first stage, effective
           September 1998, CMS required states to refer for immediate
           sanction homes found to have a pattern of harming or exposing
           residents to actual harm or potential death or serious injury
           (H-level or higher deficiencies on the agency's scope and severity
           grid) on successive surveys.^30 Effective January 2000, CMS
           expanded the policy, requiring referral of homes found to have
           harmed one or a small number of residents (G-level deficiencies)
           on successive routine surveys or intervening complaint
           investigations.^31 After expansion of the immediate sanctions
           policy to include G-level deficiencies, it became known as the
           double G immediate sanctions policy.

           CMS also took steps to improve its ability to manage and oversee
           the enforcement process. Our 1999 report described how CMS regions
           and states were using their own systems to track sanctions rather
           than CMS's OSCAR database. Regional office systems ranged from
           manual, paper-based records to complex computer programs; none of
           the four states included in our 1999 report had tracking systems
           compatible with OSCAR or the regional office systems in use. Until
           it implemented a new enforcement data collection system, CMS used
           LTC, an interim enforcement tracking system developed and first
           used by its Chicago regional office. LTC was operational in all 10
           regions by January 2000. CMS's enforcement data collection
           system--AEM--replaced LTC and was implemented 4 years later, on
           October 4, 2004.

           Recognizing the need to focus more attention on homes that
           historically provided poor care, CMS designed and launched a
           Special Focus Facility program in January 1999, instructing states
           to select 2 homes each for enhanced monitoring. Surveys were to be
           conducted at 6-month intervals rather than annually. In September
           2000, CMS reported that semiannual surveys had been conducted at a
           little more than half of the original 110 facilities. In late
           2004, CMS modified the program by (1) expanding its scope to
           include more homes, (2) revising the selection criteria for homes,
           and (3) strengthening sanctions for homes that did not improve
           within 18 months. In a relevant but unrelated initiative, CMS
           established a voluntary program to help nursing homes improve the
           quality of care provided to residents. In 2002, Medicare Quality
           Improvement Organizations (QIO) began working intensively on
           issues such as preventing pressure sores and pain management with
           10 percent to 15 percent of nursing homes in each state.^32
           Responding to concerns that QIOs were not working with homes that
           needed the most help, CMS established a separate pilot program in
           2004; QIOs worked for 12 months with 1 to 5 nursing homes with
           significant quality problems in 18 states to help them redesign
           their clinical practices. Unlike the Special Focus Facility
           program, the participation of homes in the pilot was voluntary. To
           distinguish it from the Special Focus Facility program, the pilot
           was known as the Collaborative Focus Facility program.
		   
		   Number of Sanctions Has Decreased

           Among the homes we reviewed in four states, the number of
           implemented sanctions and serious deficiencies declined across two
           time periods--fiscal years 2000 through 2002 and fiscal years 2003
           through 2005. Federal data show similar declines for homes
           nationwide, a trend consistent with the decline in the proportion
           of homes cited for serious deficiencies that generally result in
           sanctions.^33 Despite the decline in the number of serious
           deficiencies, the homes we reviewed generally were cited for more
           deficiencies that caused harm to residents than other homes in the
           four states. While the numbers of implemented CMPs and DPNAs at
           the homes we reviewed declined across the two time periods, the
           amount of CMPs paid increased. Not all imposed sanctions for these
           homes were implemented, however, which may reduce the deterrent
           effect of sanctions; in fact, we found that the implementation
           rate of certain sanctions, such as DPNAs, decreased. The deterrent
           effect of sanctions for the homes was further eroded because CMS
           generally imposed CMPs on the lower end of the allowable dollar
           range and did not exercise its authority to use discretionary
           DPNAs and terminations, allowing the homes more opportunities to
           escape sanctions prior to implementation.
		   
		   Sanctions Have Declined Nationwide

           Among all nursing homes nationwide, sanctions declined across the
           two time periods--fiscal years 2000 through 2002 and fiscal years
           2003 through 2005.^34 Implemented terminations declined the most
           across the two time periods (about 41 percent) and CMPs declined
           the least (about 12 percent), while the number of DPNAs declined
           by about 31 percent. In the same time periods, the average number
           of serious deficiencies per home declined by about 33 percent
           nationwide, from about 0.8 to about 0.5. These downward trends are
           also consistent with the nationwide decline in the proportion of
           homes with serious deficiencies--from about 28 percent in fiscal
           year 2000 to about 17 percent in fiscal year 2005 (see app. II).
           While the reported decline in serious deficiencies and the
           proportion of homes cited for such deficiencies may be due to
           improved quality, our earlier reports noted similar declines that
           masked (1) understatement of serious quality problems, and (2)
           inconsistency in how states conduct surveys.^35 For example, our
           current analysis found that the proportion of homes cited for
           serious deficiencies ranged from a low of about 4 percent in
           Florida to a high of about 44 percent in Connecticut during fiscal
           year 2005.^36 Across the four states we reviewed, the proportion
           of homes with serious deficiencies in fiscal year 2005 ranged from
           8 percent in California to 23 percent in Michigan. As we
           previously reported, such disparities are more likely to reflect
           inconsistency in how states conduct surveys rather than actual
           differences in the quality of care provided by homes.^37 In
           addition, in commenting on a draft of this report, CMS noted
           concerns about whether the immediate sanctions policy has had a
           negative effect on state citations of serious deficiencies.
		   
		   Decline in Sanctions and Deficiencies for the Homes Reviewed Is
		   Consistent with Nationwide Trends

           The number of implemented sanctions at the homes we reviewed as
           well as the number of serious deficiencies cited in these homes
           declined across two time periods--fiscal years 2000 through 2002
           and fiscal years 2003 through 2005--consistent with nationwide
           trends.

           Deficiency trends. The average number of serious deficiencies per
           home we reviewed decreased from about 1.8 in fiscal years 2000
           through 2002 to about 0.7 in fiscal years 2003 through 2005, about
           a 61 percent decline; this decline was consistent with the
           national trend. During both time periods, however, the homes we
           reviewed generally performed more poorly than other homes in their
           states, having, on average, more G-level or higher deficiencies
           and more double Gs. For example, the Texas homes we reviewed had
           on average 1.3 times as many G-level or higher deficiencies as all
           other homes in the state and the California homes we reviewed had
           on average 3 times as many as all other California nursing
           homes.^38

           CMP trends. Due in part to the closure of some poorly performing
           homes and the citation of fewer serious deficiencies, the homes we
           reviewed had fewer CMPs in fiscal years 2003 through 2005 than in
           the prior 3 fiscal years, but the amount paid was higher (see
           table 4). Among the homes, the number of implemented CMPs declined
           by about 42 percent from the first to the second time period.
           Although the number of CMPs among the homes we reviewed decreased,
           the amount of CMPs paid in Michigan more than doubled between the
           two time periods, accounting for much of the increase in the
           amount of CMPs paid across the two time periods (see app. III).
           States' preferences for either state or federal CMPs may in part
           affect their use. In Michigan, state officials are more likely to
           use federal CMPs and implement them in greater amounts than other
           states we reviewed. In contrast, the homes we reviewed in
           Pennsylvania had only one implemented CMP and paid no federal CMPs
           from fiscal years 2003 through 2005; however, during the same
           period, the Pennsylvania state survey agency implemented seven
           state CMPs and collected $12,050.^39 A Pennsylvania state survey
           agency official said that the state prefers to use state sanctions
           because they can be implemented more quickly and are believed to
           be more effective than federal sanctions. The Texas state survey
           agency does not recommend more than one type of money penalty for
           the same deficiency and chooses among one of two state money
           penalties or a federal CMP.^40

23Instead of termination, a temporary manager may be appointed to remove
the immediate jeopardy.

^24According to CMS, substandard quality of care exists when a home is
cited for a deficiency at the F, H, I, J, K, or L level in any of three
areas: quality of care, which can include deficiencies such as inadequate
treatment or prevention of pressure sores; quality of life, which can
include deficiencies such as a failure to accommodate the needs and
preferences of residents; and resident behavior, which can include
deficiencies such as a failure to protect residents from abuse. This
definition excludes deficiencies at the G level (actual harm). For
purposes of this report, we define serious deficiencies as G-level or
higher deficiencies. The statute allows CMS to deny payment for all
residents; however, our analysis focuses on the denial of payment for new
admissions, a more frequently used sanction.

^25By implementing either a mandatory or discretionary termination, CMS is
acting to involuntarily terminate the nursing home.

^26See 42 U.S.C. S1395i-3(h)(2)(B) and 42 U.S.C. S 1396r(h)(2)(A).

^27While this description applies to the approximately 93 percent of homes
that receive either Medicare or both Medicare and Medicaid payments,
states are responsible for enforcing standards in the 7 percent of homes
that only receive Medicaid payments and may impose certain sanctions, such
as state monitoring and DPNAs. Notice periods for most sanctions are
required by CMS regulations.

^28See 42 C.F.R. S 488.436.

^29See GAO, Nursing Homes: Despite Increased Oversight, Challenges Remain
in Ensuring High-Quality Care and Resident Safety, [43]GAO-06-117
(Washington, D.C.: Dec. 28, 2005).

^30Although the policy requires the immediate imposition of sanctions, CMS
has not defined a time standard for "immediate." The policy only requires
that homes with a pattern of harming residents be denied a grace period to
correct deficiencies before the sanctions are imposed. Prior to the
policy, homes were given a grace period in which they could correct
deficiencies before sanctions were imposed.

^31CMS guidance also gives states and regional offices the option to
rescind a home's "opportunity to correct" based on (1) scope and severity
of the deficiency, (2) unwillingness and inability of the facility to
correct the deficiency, and (3) the effectiveness of the facility's
quality assurance and monitoring system to prevent recurrence of the
deficiency.

^32Under contract with CMS, QIOs (formerly known as Peer Review
Organizations) working in all 50 states and the District of Columbia help
to ensure the quality of care delivered to Medicare beneficiaries. Prior
to 2002, QIOs' work focused on care delivered in acute care settings such
as hospitals.

^33While the reported decline in the proportion of homes with serious
deficiencies could be due to improved quality, we have also documented the
underreporting of serious deficiencies. See GAO, Nursing Home Quality:
Prevalence of Serious Problems, While Declining, Reinforces Importance of
Enhanced Oversight, [44]GAO-03-561 (Washington, D.C.: July 15, 2003) and
[45]GAO-06-117 .

^34Although sanctions declined during the period we reviewed, they nearly
doubled from fiscal years 1999 to 2000.

^35See [46]GAO/HEHS-98-202 , [47]GAO-03-561 , or [48]GAO-06-117 .

^36This analysis excluded 13 states because fewer than 100 homes were
surveyed, and even a small increase or decrease in the number of homes
with serious deficiencies in such states may produce a relatively large
percentage point change.

^37CMS acknowledges that there is inconsistency in how states conduct
surveys and is trying to address this issue by piloting a revised survey
methodology. In commenting on a draft of this report, California noted
that until late 2004 its CMS regional office required evidence of
permanent harm in order for a deficiency to be cited as actual harm. After
California received new guidance on the definition of actual harm, we
noted that the number of determinations of harm increased.

^38Despite the poor performance histories of some of the 63 homes, only 1
of these homes was part of CMS's original Special Focus Facilities
program. In 2005, only 2 of the homes we reviewed were designated Special
Focus Facilities and in 2006, only 4 were so designated.

^39In addition to federal sanctions, states can impose state sanctions on
noncompliant homes. The revenue from state CMPs accrues to the state but
must be applied to the protection of the health or property of nursing
home residents.

^40According to Texas officials, this money penalty policy took effect on
September 1, 2003, as a result of a state statutory change. Prior to the
statutory change, the state survey agency could recommend both a state
money penalty as well as a federal CMP.

Table 4: Sanctions Implemented for Homes Reviewed, Fiscal Years 2000-2002
and 2003-2005

                  Fiscal years        Fiscal years                            
                   2000-2002           2003-2005                              
                                                         Percentage change in 
                        Duration/           Duration/ number between two time 
Sanction    Number amount paid  Number amount paid                 periods 
CMP^a,b         93    $534,527      54    $617,552                    -42% 
DPNA^c          52   2,451days      30  1,245 days                    -42% 
Involuntary                                                                
termination      1          NA       1          NA                      0% 

Source: GAO analysis of LTC data, AEM, CMS regional office and state
enforcement case files, and CMPTS.

Note: Includes homes that were open for at least part of the 6-year
period.

NA = Not applicable.

aIncludes per day and per instance CMPs.

bAmount paid for CMPs implemented in these fiscal years.

cIncludes mandatory and discretionary DPNAs.

DPNA trends. The number of DPNAs declined by 42 percent from fiscal years
2000 through 2002 to fiscal years 2003 through 2005 for the homes we
reviewed. Overall, the duration of the DPNAs decreased by 12 percent from
the first to the second time period. The duration of DPNAs among the Texas
homes we reviewed decreased the most--from an average of 46 days in the
first time period to an average of 26 days in the second time period. The
duration of DPNAs among the Michigan and Pennsylvania homes also decreased
(see app. III). In California, however, the DPNAs were in effect longer in
the second time period--from an average of 39 days in fiscal years 2000
through 2002 to an average of 63 days in fiscal years 2003 through 2005.
As a result, homes in California were out of compliance for longer periods
of time.

Termination trends. Only two of the homes we reviewed closed
involuntarily--that is, they were terminated for cause by CMS because of
health and safety issues. One of the two homes has since been certified to
participate in Medicare again.^41 An additional nine other homes closed
voluntarily, although four reopened at some point during fiscal years 2000
through 2005.^42 However, a home's voluntary closure may not accurately
reflect the degree to which the home had quality problems, such as a
history of harming residents, that put the home at risk of involuntary
termination. The reasons for closure, as recorded by CMS, are general and
do not always reflect that homes may have histories of harming residents
and may have been at risk of involuntary termination.

^41This home is located in Texas, where the state issues a license to the
person or entity operating the nursing home rather than the owner of the
real property. The majority of nursing homes in Texas are operated out of
leased property. When the home was recertified, the new operator was
licensed; there was no change in the owner of the real property.

Implementation Rate of Some Sanctions Has Declined for the Homes Reviewed

The implementation rate of DPNAs and terminations declined for the homes
we reviewed, while the implementation rate of CMPs increased across three
time periods (see fig. 2). Some sanctions are never implemented because
CMS rescinds them if homes correct deficiencies before the implementation
date, a situation we noted in our 1999 report.^43 Thus, sanctions may be
considered more of a threat than a real consequence of noncompliance.

We compared the implementation rates of CMPs, DPNAs, and terminations
across three time periods: (1) July 1995 to October 1998, the time period
covered in our March 1999 report;^44 (2) fiscal years 2000 through 2002;
and (3) fiscal years 2003 through 2005. From the first time period to the
third, the implementation rate for DPNAs declined by about 20 percent and
the implementation rate for terminations declined by about 97 percent. In
contrast, across the same time periods, the overall implementation rate
for CMPs increased from 32 percent in the first time period to 86 percent
in the third time period, an almost threefold increase. The timing of this
increase coincides with the January 2000 implementation of the immediate
sanctions policy, suggesting that the increase may in part be related to
the policy's implementation.

^42Although the homes were closed for some part of the period we reviewed,
fiscal years 2000 through 2005, we determined that there were sufficient
data to include the homes in our sample.

^43 [49]GAO/HEHS-99-46 .

^44 [50]GAO/HEHS-99-46 .

Figure 2: Percentage of Implemented Sanctions for Homes Reviewed Over
Three Time Periods (July 1995-October 1998, Fiscal Years 2000-2002, and
Fiscal Years 2003-2005)

CMS Did Not Take Advantage of the Full Range of Sanctions for the Homes Reviewed

Among the homes we reviewed, CMS did not use the full range of its
sanctions authority, generally imposing CMPs on the lower end of the
allowable range.^45 In addition, CMS imposes DPNAs and involuntary
terminations when they are mandatory, but generally not when they are
discretionary. Homes subject to such mandatory sanctions have more
opportunities to escape sanctions prior to implementation. The median per
instance CMP implemented was $2,000 in fiscal years 2000 through 2002 and
$1,750 in fiscal years 2003 through 2005, although the maximum per
instance CMP can be as high as $10,000. The median per day CMP implemented
for nonimmediate jeopardy deficiencies was $500 in fiscal years 2000
through 2002 and $350 in fiscal years 2003 through 2005, significantly
below the maximum of $3,000 per day. In cases in which homes were cited
for immediate jeopardy and the maximum potential per day CMP is $10,000,
the median per day CMP implemented was $3,050 in fiscal years 2000 through
2002 and $5,050 in fiscal years 2003 through 2005. According to one CMS
official, the agency generally hesitates to impose CMPs that are higher
than $200 per day, in part because of concerns that higher per day CMPs
could bankrupt some homes.^46 But the same official noted that the CMPs
being imposed are not enough to "make nursing homes take notice" or to
deter them from deficient practices. Another CMS official stated that some
homes consider CMPs a part of the "cost of doing business" or as having no
more effect than a "slap on the wrist." Table 5 provides examples of homes
we reviewed with implemented CMPs that were at the low end of the
allowable CMP range.

^45As previously described, the allowable range for a per day CMP is $50
to $10,000 for each day a home is noncompliant, and the allowable range
for a per instance CMP is $1,000 to $10,000 for each episode of
noncompliance.

Table 5: Examples of Homes with Low Implemented CMPs

Home's                            Summary of   CMP           Allowable CMP 
location Surveyors' comments      deficiencies implemented   range         
Michigan "A significant           1 G          $1,500 per    $1,000 -      
            medication error                      instance      $10,000 per   
            occurred when resident                              instance of   
            #8 was administered [the                            noncompliance 
            wrong medication] over a                                          
            three day period. The                                             
            resident experienced                                              
            hypoglycemia and                                                  
            required                                                          
            hospitalization. Upon                                             
            return from the hospital                                          
            there was evidence of                                             
            actual harm: a decline                                            
            in ability to perform                                             
            activities of daily                                               
            living."                                                          
Texas    "Facility nurse aides    3 F, 1 E     $250 per day  $50 - $3,000  
            failed to promptly                    for 150 days  per day for   
            report an allegation of                             noncompliance 
            possible sexual abuse.                              other than    
            Resident reported the                               immediate     
            incident to two nurse                               jeopardy      
            aides, however, it was                                            
            not reported. Also,                                               
            reference checks were                                             
            not documented for 4                                              
            employees and 4                                                   
            employees had not                                                 
            attended an inservice                                             
            [training session] on                                             
            abuse."                                                           
Texas    "There was an [immediate 1 L          Immediate     $3,050 -      
            jeopardy deficiency for  (immediate   jeopardy:     $10,000 per   
            staff mistreatment of    jeopardy), 9 $3,050 per    day for       
            residents]. There was a  G            day for 14    immediate     
            failure to monitor                    days          jeopardy      
            residents in distress."                                           
                                                  After         $50 - $3,000  
                                                  immediate     per day for   
                                                  jeopardy      nonimmediate  
                                                  removed: $400 jeopardy      
                                                  per day for                 
                                                  86 days; $300               
                                                  per day for                 
                                                  46 days; $50                
                                                  per day for 6               
                                                  days                        

^46An official in one state told us that a home's financial status should
not be considered when assessing CMPs because it could result in
inconsistent CMPs for similar quality problems.

Source: GAO analysis of CMS regional office and state case files and LTC.

Note: In addition to CMPs, CMS also imposed DPNAs and terminations--either
mandatory or discretionary. All of the DPNAs but none of the terminations
were implemented.

CMS is likely to impose DPNAs and terminations only when required to do
so. However, CMS also has broad authority to impose DPNAs and terminations
at its discretion, which can facilitate quicker implementation.
Discretionary DPNAs and terminations can be implemented any time after a
survey if the sanction is appropriate for the cited deficiencies and the
required notice period is met. In contrast, the soonest that mandatory
DPNAs and terminations for nonimmediate jeopardy can be implemented is 3
and 6 months, respectively, after the survey on which the deficiencies
were cited.^47 Despite the greater expediency of discretionary DPNAs, 64
percent of the DPNAs CMS imposed were mandatory for fiscal years 2000
through 2005 for the homes we reviewed. For example, CMS imposed a total
of six DPNAs during fiscal years 2000 through 2003 on a Pennsylvania home
with demonstrated compliance problems. Of those six DPNAs, the first five
were mandatory DPNAs. Only the last DPNA--imposed after multiple years of
repeated noncompliance at the G-level or higher--was a discretionary DPNA.

Moreover, CMS imposed significantly more mandatory terminations than
discretionary terminations; in fiscal years 2000 through 2005, 118
mandatory and 5 discretionary terminations were imposed on the homes we
reviewed.^48 None of the mandatory terminations were implemented, but 2
discretionary terminations were implemented--one each in Michigan and
Texas.^49 An official from the Texas state survey agency said that the CMS
regional office in Dallas prefers to impose mandatory terminations, unless
there is cause to believe there will be no improvements in the care
provided by the nursing home. Mandatory terminations give homes 6 months
to correct deficiencies before being implemented, as opposed to
discretionary terminations, which can be implemented more quickly.

^47By regulation, where no immediate jeopardy is found, CMS must provide
homes with 15 days' notice before implementing any DPNA or termination. In
cases of immediate jeopardy, however, the notice period is 2 days.

^48This analysis excludes Texas nursing homes because the data did not
always allow us to distinguish between mandatory and discretionary
terminations in Texas.

Even when CMS imposes terminations, their deterrent effect is weakened
because the agency sometimes extends the termination dates. For example,
CMS extended the discretionary termination dates for up to 6 months for
some of the Texas homes we reviewed if the nursing homes had lower-level
deficiencies on subsequent surveys. The termination date imposed on one
Texas nursing home we reviewed was extended three times in fiscal year
2001 from the original date of April 18 to June 26, then to July 26, and
finally to September 26. The first extension occurred because the home
corrected the deficiencies that caused immediate jeopardy cited during the
first survey. Therefore, despite the fact that this home continued to be
found out of compliance for deficiencies such as mistreatment or neglect
of residents during subsequent surveys, CMS extended the termination date
twice to give the home an additional opportunity to correct those
deficiencies and achieve substantial compliance. The termination
ultimately was rescinded because the home corrected the deficiencies, but
the home was subsequently cited for eight G-level deficiencies such as
inadequate treatment or prevention of pressure sores, employing convicted
abusers, and poor accident supervision or prevention. In 2004, the home
closed voluntarily.

Despite Changes in Federal Enforcement Policy, Many Homes Continued to Cycle In
and Out of Compliance

Despite changes in federal enforcement policy, almost half of the homes we
reviewed--homes with prior serious quality problems--continued to cycle in
and out of compliance, continuing to harm residents. These homes corrected
deficiencies only temporarily and, despite having sanctions implemented,
were again found to be out of compliance during subsequent surveys. Our
analysis also showed that in some cases the double Gs did not result in
immediate sanctions as required, even though about 40 percent of the homes
were cited for double Gs during fiscal years 2000 through 2005. In
addition, the term "immediate sanctions policy" is misleading because the
policy requires only that sanctions be imposed, that is, that homes be
notified immediately of CMS's intent to implement sanctions, not that
sanctions must be implemented immediately. Furthermore, when a sanction is
implemented for a double G citation, there is a lag time between when the
double G occurs and the sanction's effective date. CMS cited double Gs
multiple times at several of the homes we reviewed, suggesting that
immediate sanctions did not deter future noncompliance as intended.
Terminations of homes is infrequent, in part because of concerns such as
local access to other nursing facilities and the effect on residents if
they are moved, and in part because CMS allows some problem homes to
continue operating until the homes eventually close voluntarily.

^49Our case file review found that one discretionary termination was
implemented in Texas.

Many Homes Cycled In and Out of Compliance, Continuing to Harm Residents

Consistent with our earlier work, our current analysis showed that
sanctions appear to have induced homes to correct deficiencies only
temporarily because surveyors found that many of the homes we reviewed
with implemented sanctions were again out of compliance on subsequent
surveys.^50 Commenting on this phenomenon, state survey agency officials
said that improvements resulting from sanctions might last about 6 months.
From fiscal years 2000 through 2005, 31 of the 63 homes we reviewed (about
49 percent) cycled in and out of compliance more than once, harming
residents, even after sanctions had been implemented, including 8 homes
that did so seven times or more (see fig. 3).

^50 [51]GAO/HEHS-99-46 .

Figure 3: Frequency that Reviewed Homes Cycled In and Out of Compliance,
Fiscal Years 2000-2005

Note: This figure illustrates the concept of a yo-yo pattern of
compliance. While the time periods that a home is in or out of compliance
appear to be of uniform duration, the duration can vary.

Each of the 31 homes that cycled in and out of compliance more than once
during the period we reviewed had at least one G-level or higher
deficiency in at least one period of noncompliance; 19 had at least one
G-level or higher deficiency in every noncompliance period. Table 6 shows
the number and length of noncompliance periods for a Michigan home we
reviewed that cycled in and out of compliance nine times from fiscal years
2000 through 2005; the home remained open as of November 2006. Appendix IV
provides similar examples for homes in California, Pennsylvania, and
Texas. Homes' correction of deficiencies often was temporary, despite
receiving sanctions. Thus, once the homes we reviewed corrected
deficiencies, they maintained compliance for a median of 133 days and then
cycled out of compliance again. Some homes cycled out of compliance more
quickly--homes were again out of compliance in 30 days or less about 8
percent of the time and within 60 days about 28 percent of the time.

Table 6: Example of a Michigan Nursing Home That Frequently Cycled In and
Out of Compliance and Was Still Open as of November 2006

Noncompliance                           Summary of                         
period in fiscal    Examples of the     G-level or                         
years 2000-2005     nature of           higher         Enforcement action  
(no. of days)       deficiencies^a      deficiencies   implemented^b       
1^st (41 days)         o Inadequate     1 G               o Per instance   
                          treatment or                       CMP ($1,000)     
                          prevention of                                       
                          pressure sores                                      
                          o Poor quality                                      
                          of care                                             
2^nd (185 days)        o Poor nutrition 1 G               o 1^st per day   
                          o Poor quality                     CMP              
                          of care                            ($10,000/day)    
                                                             o 2^nd per day   
                                                             CMP ($100/day)   
                                                             o Per instance   
                                                             CMP ($1,500)     
                                                             o Mandatory DPNA 
                                                             (109 days)       
3^rd (176 days)        o Inadequate     5 G               o Per instance   
                          treatment or                       CMP ($10,000)    
                          prevention of                      o Mandatory DPNA 
                          pressure sores                     (85 days)        
                          o Poor accident                                     
                          supervision or                                      
                          prevention                                          
4^th (158 days)        o Resident abuse 1 J (immediate    o 1^st per day   
                          o Employing      jeopardy), 3 G    CMP ($850/day)   
                          convicted                          o 2^nd per day   
                          abusers                            CMP ($3,500/day) 
                                                             o 3^rd per day   
                                                             CMP ($1,000/day) 
                                                             o Discretionary  
                                                             DPNA (127 days)  
5^th (107 days)        o Resident abuse 3 H, 3 G          o Per day CMP    
                          o Failure to                       ($200/day)       
                          provide                            o Discretionary  
                          necessary                          DPNA (74 days)   
                          services for                                        
                          daily living                                        
6^th (94 days)         o Poor accident  1 G               o Per day CMP    
                          supervision or                     ($350/day)       
                          prevention                         o Discretionary  
                                                             DPNA (62 days)   
7^th (127 days)        o Failure to     1 J (immediate    o 1^st per day   
                          provide          jeopardy), 1 G    CMP ($3,550/day) 
                          necessary                          o 2^nd per day   
                          services for                       CMP ($450/day)   
                          daily living                       o Mandatory DPNA 
                          o Poor accident                    (35 days)        
                          supervision or                                      
                          prevention                                          
8^th (89 days)         o Inadequate     2 G               o Per day CMP    
                          treatment or                       ($500/day)       
                          prevention of                      o Discretionary  
                          pressure sores                     DPNA (59 days)   
                          o Employing                                         
                          convicted                                           
                          abusers                                             
                          o Medication                                        
                          errors                                              
9^th (83 days)         o Inadequate     1 H               o Per day CMP    
                          treatment or                       ($750/day)       
                          prevention of                      o Discretionary  
                          pressure sores                     DPNA (51 days)   
                          o Medication                                        
                          errors                                              

Source: GAO analysis of OSCAR, ETS, and AEM data.

Note: The table only includes federal sanctions imposed and implemented;
sanctions imposed but not implemented and state sanctions are not
included.

aExamples of the nature of deficiencies include D-level or higher
deficiencies.

bIn a number of cases, more than one per day CMP is listed because CMS can
raise or lower per day CMP amounts based on changes in deficiencies.

Relatively Few Homes Reviewed Were Cited for Double Gs

Despite the large number of G-level or higher deficiencies cited for the
homes we reviewed, relatively few of these homes were cited for double Gs,
and some double G citations did not result in sanctions. Over the 6-year
period, 27 of the homes we reviewed had 69 double Gs. However, 47 of the
homes had 444 G-level or higher deficiencies. We found no record that CMS
imposed a sanction for 15 of the 69 double Gs, but the data did show that
CMS implemented sanctions for the remaining double G cases.^51

Across the four states we reviewed, there was variation in the citation of
G-level or higher deficiencies and the implementation of immediate
sanctions. For example, from fiscal years 2000 through 2005, 35 percent of
G-level or higher deficiencies and 52 percent of double Gs among the homes
we reviewed were cited in Michigan, while 9 percent of the G-level or
higher deficiencies and 4 percent of the double Gs were cited in homes in
California. In California, complaints typically are investigated under
state licensure authority and the findings generally are not recorded in
the same manner as deficiencies cited under the federal process,^52 which
may contribute to lower double G citation rates in the state.^53 Thus,
California homes are not cited for a double G when the subsequent
deficiency equivalent to a G-level or higher deficiency was found during a
complaint investigation.^54 Complaint surveys with G-level or higher
deficiencies often lead to double Gs. One CMS official stated that if
complaints against California nursing homes were investigated under the
federal complaint investigation procedure, more double Gs would be cited
in California.^55 The California Department of Health Services conducted a
pilot to test the use of the federal complaint procedure in select
district offices, in part because of the low double G citation rate. As of
November 2006, the department decided not to expand or complete a formal
evaluation of the pilot; instead, the department is focusing on
eliminating its backlog of complaints and initiating complaint
investigations within required time frames.^56

51In July 2003, we reported that from January 2000 through March 2002,
states did not refer a substantial number of nursing homes with a pattern
of harming residents to CMS for immediate sanctions. See [52]GAO-03-561 .
Eight of the 15 cases occurred after March 2002. From fiscal years 2000
through 2005, 40 CMPs and 25 DPNAs were implemented during periods of
noncompliance in which there was a double G.

^52California records findings from complaints investigated under state
licensure in a separate and dedicated state-licensure component of the
federal system for tracking complaints. The state complaints are recorded
using the state system for classifying violations. According to the state,
complaints investigated under state licensure are recorded separately
because state law prohibits the issuance of both a state citation, which
carries with it a mandatory state civil monetary penalty, and the
recommendation that a federal CMP be imposed.

^53If, during a complaint investigation, state surveyors identify
deficiencies that would be equivalent to immediate jeopardy or substandard
quality of care, the surveyors automatically complete the investigation
under the federal enforcement process.

Immediate Sanctions Often Not Immediate and Do Not Appear to Deter Noncompliance

Although referred to as the "immediate sanctions" policy, the term is
misleading because (1) there is a lag between when the double G is cited
and when the sanction is implemented, negating the sanction's immediacy;
(2) the policy only requires that sanctions be imposed immediately, which
does not guarantee that the sanction will be implemented; and (3) homes
may not actually pay a CMP, the most frequently implemented sanction,
until years after citation of the double G because payment is suspended
until after appeals have been adjudicated. Delays in implementing DPNAs
and in collecting CMPs--which diminish their immediacy--coupled with their
nominal amounts may undermine their deterrent effect.

^54The violations and resulting sanctions are categorized according to the
state's classification framework. For example, a class AA violation is one
that, among other things, is a "direct proximate cause of death of a
patient or resident," and the resulting sanction is a fine from $25,000 to
$100,000. The state system for classifying violations and sanctions does
not directly correlate to the federal scope and severity grid, and there
is no direct equivalent to a G-level deficiency. According to a California
state survey agency official, a class A violation is approximately
equivalent to a G-level deficiency, but there may be instances in which
other classes of violations are also equivalent to a G-level deficiency.

^55Although California homes with histories of harming residents may not
be cited for double Gs and thus referred for immediate sanctions under
federal requirements, the state has it own policy for encouraging such
homes to improve quality of care--the state can triple CMPs for violations
that are repeated in a 12-month period. An assessment of the effectiveness
of California's approach under state licensure for sanctioning homes with
repeat violations was beyond the scope of this report.

^56The select district offices that participated in the pilot will
continue to cite federal deficiencies and impose federal sanctions; in the
uncommon situation where there is a violation of a state regulation but
not a federal regulation, the offices will use a state sanction. According
to comments from California, if complaint investigations find harm to
residents, all district offices are directed to complete the
investigations under state licensure authority or the federal complaint
procedure, depending on multiple variables.

Immediate sanctions often are not immediate because there is a lag time
between the identification of deficiencies during the survey and when a
sanction (i.e., a CMP or DPNA) is actually implemented.^57 CMS implemented
about 68 percent of the DPNAs for double Gs among the homes we reviewed
during fiscal years 2000 through 2005 more than 30 days after the survey
(see app. V). In contrast, CMPs can go into effect as early as the first
day the home was out of compliance, even if that date is prior to the
survey date, because, unlike DPNAs, CMPs do not require a notice
period.^58 About 98 percent of CMPs imposed for double Gs took effect on
or before the survey date. Figure 4 illustrates the lag time that can
occur between the survey date and the implementation date of the sanction,
especially with regard to DPNAs. For example, in fiscal years 2000 through
2005, 60 percent of the DPNAs in the homes we reviewed were implemented 31
to 60 days from the date of the survey citing deficiencies. In contrast,
nearly all CMPs were implemented on or before the survey date.

^57We excluded terminations from this analysis because terminations rarely
are implemented.

^58When the CMP goes into effect, the fine starts accruing as of that
date.

Figure 4: Number of Days between Survey and Implementation of CMPs and
DPNAs among Homes Reviewed, Fiscal Years 2000-2005

Note: CMPs can take effect prior to the date of the survey, if the date of
noncompliance can be established. In cases where an appeal has changed the
determination of the date of noncompliance, the implementation date of
CMPs would be modified accordingly. Some CMPs and DPNAs were not included
in this analysis because implementation dates were not available.

While the immediate sanctions policy requires that sanctions be imposed
immediately, it is silent on how quickly sanctions should be implemented.
A sanction is considered imposed when a home is notified of CMS's intent
to implement a sanction--15 days from the date of the notice. If during
the 15-day notice period the nursing home corrects the deficiencies, no
sanction is implemented. Thus, even under the immediate sanctions policy,
which is intended to eliminate grace periods for nursing homes repeatedly
cited for deficiencies at the actual harm level or higher, nursing homes
have a de facto grace period.

While CMPs can be implemented closer to the date of survey than DPNAs, the
immediacy and the effect of CMPs may be diminished by (1) the significant
time that can pass between the citation of deficiencies on a survey and
the home's payment of the CMP and (2) the low amounts imposed, as
described earlier in this report.^59 By statute, payment of CMPs is
delayed until appeals are exhausted.^60 For example, a Michigan home did
not pay its CMP of $21,600 until more than 2 years after a February 2003
survey had cited a G-level deficiency.^61 (See fig. 5.) The February
G-level citation was a repeat deficiency: less than a month earlier, the
home had received another G-level deficiency in the same quality of care
area. The delay in collecting the fine in this case is consistent with a
2005 report from the Office of Inspector General of the Department of
Health and Human Services that found that the collection of CMPs in
appealed cases takes an average of 420 days--a 110 percent increase in
time over nonappealed cases--and "consequently, nursing homes are
insulated from the repercussions of enforcement by well over a year."^62

Unlike the Social Security Act, the federal Surface Mining Control and
Reclamation Act of 1977 provides for the collection of CMPs prior to
exhaustion of administrative appeals.^63 Under this statute, mining
operators charged with civil money penalties have 30 days to either pay
the penalty in full or forward the proposed amount for placement in an
escrow account pending resolution of appeals. This provision, requiring
escrow deposit of a proposed penalty assessment, has been upheld by three
federal circuit courts of appeal, all citing the various procedural
safeguards as helping to ensure sufficient due process to affected
operators.^64 For example, these courts cited the availability of an
informal conference at which mining operators may present information
relevant to an assessment of a penalty. It is unclear whether the informal
dispute resolution process available to nursing homes would provide due
process similar to that provided under the Federal Mining statute.
Nonetheless, the Social Security Act would preclude a more expeditious
collection of nursing home CMPs.

^59As noted, unlike CMPs, payment denial for DPNAs is required upon
implementation, not after appeal.

^60See 42 U.S.C. SS 1395i-3(h)(2)(B)(ii), 1396r(h)(3)(C)(ii), and
1320a-7a.

^61In contrast, Pennsylvania nursing homes pay state CMPs upon
implementation, even if an appeal is pending. However, the state agency
may grant exceptions to this requirement for good cause.

^62See Department of Health and Human Services, Office of Inspector
General, Nursing Home Enforcement: The Use of Civil Money Penalties,
OEI-06-02-00720 (April 2005).

^63See the federal Surface Mining Control and Reclamation Act of 1977,
Pub. L. No. 95-87, S 518, 91 Stat. 499 (1977) (classified to 30 U.S.C. S
1268, as amended).

^64B & M Coal v. Office of Surface Min. Reclamation, 699 F. 2d 381 (7th
Cir. 1983); Graham v. Office of Surface Min. Reclamation, 722 F. 2d 1106
(3rd Cir. 1983); Blackhawk Mining Co., Inc. v. Andrus, 756 F. 2d. 755 (6th
Cir. 1983).

Figure 5: Lag Time between Survey and CMP Payment for a Michigan Nursing
Home

Despite the potentially negative consequences, CMS's implementation of the
immediate sanctions policy does not appear to deter homes from harming
residents in the future. Two-thirds (18) of the 27 nursing homes cited for
double Gs that subsequently had sanctions implemented went on to be cited
again for one or more additional double Gs. (See fig. 6.)

Figure 6: Number of Homes with One or More Double Gs, Fiscal Years
2000-2005

Termination Used Infrequently

Nursing homes, even those that repeatedly harm residents, are infrequently
terminated because of CMS's concerns about access to other sources of
nursing care and the impact of moving residents. Of the homes we reviewed,
two were terminated involuntarily for cause. Another nine homes closed
voluntarily,^65 which is not a sanction because the homes chose to close.
However, the actual reason for closure is not always clear; a home may
close to avoid involuntary termination because of quality problems cited
by state surveyors.^66 Allowing a problem home to close voluntarily rather
than terminating it may result in continuing harm to residents until the
home decides to close. For example, two homes we reviewed in Pennsylvania
and Texas closed voluntarily, but the histories of both homes show that
they were repeatedly cited for harming residents from fiscal year 2000
through the time of their closures, over 4 years later in January 2004.
The Pennsylvania home cycled in and out of compliance 4 times during the
period we reviewed and had noncompliance periods lasting an average of 170
days. The Texas home cycled in and out of compliance 10 times during the
period reviewed and had average noncompliance periods of 46 days. On
average, both homes had about 6 G-level or higher deficiencies per year in
areas such as inadequate treatment or prevention of pressure sores and
resident abuse.^67 The home in Pennsylvania had an average of 31 other
deficiencies per year and the Texas home had an average of 27.^68

65CMS classifies the reasons for voluntary closure as "merger/closure;"
"dissatisfaction with reimbursement;" "risk of involuntary termination;"
and "other reasons for withdrawal."

^66In commenting on a draft of this report, CMS noted that some of the
homes classified as voluntary terminations closed as a result of
coordinated CMS and state actions. In its comments, Michigan stated that
some voluntary terminations were the result of business decisions after
the homes received survey results that warranted serious sanctions.

Four homes we reviewed had similar deficiency histories. Two closed
voluntarily and two remained open as of November 2006 (see table 7).
Although the homes that remained open met the deadline to correct
deficiencies before the termination would have been implemented, a home's
ability to correct deficiencies in a specified period of time may not be
the strongest criteria upon which to determine whether a home should
remain open, because correcting deficiencies does not ensure that the home
will improve residents' quality of care and does not prevent the home from
again falling out of compliance. For example, the California and Michigan
homes in table 7 were still operating as of November 2006 but cycled in
and out of compliance four and seven times, respectively.

^67Nationwide, the average number of serious deficiencies per home from
fiscal years 2000 through 2005 was less than one.

^68This analysis includes cited deficiencies at the D, E, or F levels of
scope and severity. We include these deficiencies because, as we
previously reported, understatement by state surveyors of serious
deficiencies that cause actual harm or immediate jeopardy to residents
remains a concern. See [53]GAO-06-117 .

Table 7: Examples of Homes' Deficiency Histories and Termination Actions,
Fiscal Years 2000-2005

  Examples of                                                                    
  deficiencies                                                                   
  causing harm to    Deficiency       Enforcement                                
  residents^a        history          history^b        Current status            
  California home^c                                                              
     o A resident       o 173 D-level    o DPNA (142   In operation as of        
     choked to death    or higher        days)         November 2006.            
     when the           deficiencies     o CMP                                   
     suction            o Cycled in      ($193,780)                              
     machines that      and out of       o Mandatory                             
     should have        compliance 4     termination                             
     been maintained    times            imposed (4                              
     in working                          times)                                  
     order did not                       o                                       
     have the                            Discretionary                           
     requisite                           termination                             
     parts. Indeed,                      imposed (0                              
     during an                           times)                                  
     unannounced                                                                 
     inspection 2                                                                
     days following                                                              
     the death of                                                                
     this resident,                                                              
     it was noted                                                                
     that there were                                                             
     no functional                                                               
     suction                                                                     
     machines in the                                                             
     facility.                                                                   
  Michigan home                                                                  
     o The facility     o 95 D-level     o DPNA (58    In operation as of        
     failed to          or higher        days)         November 2006.            
     provide proper     deficiencies     o CMP                                   
     respiratory        o Cycled in      ($40,970)                               
     treatment and      and out of       o Mandatory                             
     care for a         compliance 7     termination                             
     resident,          times            imposed (7                              
     resulting in                        times)                                  
     the resident's                      o                                       
     hospitalization                     Discretionary                           
     for acute                           termination                             
     respiratory                         imposed (0                              
     failure.                            times)                                  
     o During an                                                                 
     inspection,                                                                 
     several                                                                     
     residents'                                                                  
     pressure sores                                                              
     were observed                                                               
     to be                                                                       
     untreated. For                                                              
     example, one                                                                
     resident had                                                                
     two areas of                                                                
     dead tissue on                                                              
     his feet. The                                                               
     facility                                                                    
     acknowledged                                                                
     that the                                                                    
     resident should                                                             
     have been                                                                   
     wearing                                                                     
     protective heel                                                             
     pads when in                                                                
     bed, and yet                                                                
     his bare feet                                                               
     were uncovered,                                                             
     both heels                                                                  
     rested directly                                                             
     on the                                                                      
     mattress, and                                                               
     he was not                                                                  
     wearing heel                                                                
     protectors,                                                                 
     which were                                                                  
     lying nearby.                                                               
  Pennsylvania home                                                              
     o "Resident        o 159 D-level    o DPNA (229   Closed January 2004.      
     eloped and was     or higher        days)                                   
     found on the       deficiencies,    o CMPs        Reason for closure:       
     courtyard froze    fiscal years     ($47,700)     voluntary-merger/closure. 
     (sic) to           2000-2004        o Mandatory                             
     death."            o Cycled in      termination                             
     o "A resident      and out of       imposed (6                              
     was found to       compliance 4     times)                                  
     have bruises on    times            o                                       
     the inner                           Discretionary                           
     thighs and arms                     termination                             
     and appeared to                     imposed (0                              
     be a victim of                      times)                                  
     abuse. The                                                                  
     staff did not                                                               
     report this to                                                              
     the local                                                                   
     police and                                                                  
     bathed resident                                                             
     prior to                                                                    
     assessment for                                                              
     sexual abuse."                                                              
  Texas home                                                                     
     o "Conditions      o 141 D-level    o DPNA (228   Closed January 2004.      
     remain poor,       or higher        days)                                   
     residents are      deficiencies,    o CMPs        Reason for closure:       
     not clean or       fiscal years     ($146,244)    voluntary-merger/closure. 
     groomed, drug      2000-2004        o Mandatory                             
     errors             o Cycled in      or                                      
     continue,          and out of       discretionary                           
     restorative        compliance 10    termination                             
     care is poor.      times            imposed (10                             
     Will give                           times)^d                                
     facility the                                                                
     full 6 months                                                               
     to try to come                                                              
     into                                                                        
     compliance,                                                                 
     continue all                                                                
     remedies."                                                                  

Source: GAO analysis of LTC, OSCAR, CMPTS, and CMS regional office and
state enforcement files.

aStatements are from surveyors' notes and are either paraphrased or direct
quotes.

bThe CMP amount reflects the amount payable by the home, but is not
necessarily the amount the home actually paid.

cThese data likely understate the quality problems at this home because
California primarily conducts complaint investigations under its state
licensure authority and did not record serious deficiencies identified
during such investigations in OSCAR. In commenting on a draft of this
report, California noted that this home did receive the highest state
deficiency citation and was assessed a state CMP of $60,000.

dBecause the Texas data did not always allow us to distinguish between
mandatory and discretionary terminations, we report the total number of
imposed terminations.

According to CMS and state officials, factors that may prevent or delay
termination of problem nursing homes include (1) concerns regarding lack
of access to alternate local nursing facilities, (2) the potential for
resident trauma as a result of transfer to another home, (3) the
preference of residents' families for homes located close by, and (4)
pressure to keep homes open from families and other stakeholders.^69 Our
analysis of alternatives to the 4 poorly performing homes in table
7--those that closed voluntarily or are still open--showed that there were
from 2 to 37 homes within 10 miles of these homes, and from 5 to 120 homes
within 25 miles.^70

69In commenting on a draft of this report, Michigan noted that relocation
is especially challenging in rural areas or for residents with special
care needs.

^70For this analysis we used CMS's Nursing Home Compare Web site
(www.medicare.gov/NHCompare), which permits users to search for nursing
homes by proximity to specific zip codes. We did not analyze the number or
availability of beds in the homes. There may have been some changes in the
number of nursing homes near the two homes that closed voluntarily in
January 2004 because of the time difference between when these homes
closed and the date we conducted our analysis (June 2006).

Complex Immediate Sanctions Policy and Data Limitations Hamper CMS Management of
Enforcement

While the goal of enforcement is to help ensure nursing home compliance
with federal quality requirements, CMS management of the process is
hampered by the complexity of its immediate sanctions policy and by its
fragmented and incomplete data systems. The agency's immediate sanctions
policy, intended to deter repeat noncompliance, fails to hold some homes
accountable for repeatedly harming residents. In addition, although CMS
has developed a new data system, the system's components are not
integrated and the national reporting capabilities are not complete,
hampering the agency's ability to track and monitor enforcement. Finally,
CMS has taken some steps intended to improve enforcement of nursing home
quality requirements, such as developing guidance to help ensure greater
consistency across states in CMP amounts, revising its Special Focus
Facility program, and commissioning two studies to examine the
effectiveness of nursing home enforcement. It is not clear, however, the
extent to which--or when--these initiatives will address the enforcement
weaknesses we found.

Immediate Sanctions Policy Is Complex and Fails to Hold Some Homes Accountable

The double G immediate sanctions policy is complex and fails to hold some
homes accountable. In 2003, we reported that the early implementation of
the policy was flawed.^71 We found that between January 2000 and March
2002 over 700 cases that should have been referred for immediate sanctions
were not because (1) the policy was misunderstood by some states and
regional offices, (2) states lacked adequate systems for identifying
deficiencies that triggered an immediate sanction, and (3) actions of two
of the four states were at variance with CMS policy. CMS developed an
on-line reporting tool for use by survey agency and regional office staff
to automate the identification of double Gs.^72 CMS also offered training
sessions and issued additional guidance to state survey agencies and
regional offices. While the on-line reporting tool and training were
useful, they did not address the underlying complexity of the policy. For
example, CMS staff told us that in developing the tool they had initially
misinterpreted the double G immediate sanctions policy. As a result, the
tool produced many false positives: that is, it identified deficiencies as
triggering an immediate sanction that in fact did not occur. Moreover, a
December 2005 report by the Office of the Inspector General of the
Department of Health and Human Services also reported that state survey
agency staff continued to have difficulty identifying double G cases.^73

71 [54]GAO-03-561 .

^72The on-line reporting tool known as Providing Data Quickly (PDQ) is
available through a Web site for use only by CMS and state survey agency
employees.

Furthermore, our analysis of CMS's application of the policy to the homes
we reviewed demonstrated that the policy's complex rules allowed homes to
escape immediate sanctions even if they repeatedly harmed residents; these
rules include (1) the requirement for an intervening period of compliance,
(2) the clearing effect of standard surveys, and (3) the lack of
differentiation between single and multiple instances of harm. Such rules
may in part explain why the homes we reviewed only had 69 instances of
immediate sanctions over a 6-year period, despite being cited 444 times
for deficiencies that harmed residents.

Intervening period of compliance. G-level or higher deficiencies only
count toward a double G immediate sanction if the home has an intervening
period of compliance between the two G-level or higher deficiencies. In
order to receive an immediate sanction, a home has to achieve substantial
compliance between the pair of surveys on which the G-level or higher
deficiencies are cited. As a result of this rule, homes that do not
correct deficiencies do not receive immediate sanctions, while homes that
do correct deficiencies do receive immediate sanctions. CMS officials
stated that the intent of the policy as written was to give nursing homes
a chance to correct deficiencies and achieve a period of compliance.
Without this provision, CMS officials believe that homes could get caught
in endless double G cycles.

The following example illustrates how the policy allows nursing homes to
escape immediate sanctions if they do not correct deficiencies and have
ongoing noncompliance periods.^74

           o In a 9-month time period, a Pennsylvania home had seven surveys,
           each with at least one G-level deficiency (a total of 19 G-level
           deficiencies).^75 However, double G immediate sanctions were
           triggered by only two pairs of surveys because the home had failed
           to correct some deficiencies before the next survey that again
           found actual harm.^76 Figure 7 illustrates how some pairs of
           surveys with G-level deficiencies do not count as a double G
           because of the intervening period of compliance rule. For example,
           both the March and April surveys cited G-level deficiencies.
           However, the pair of surveys did not result in a double G, which
           would have triggered immediate sanctions because the home did not
           correct the G-level deficiency cited on the March survey before
           the next G-level deficiency was cited in April. Following the
           April survey, the home corrected the deficiencies, resulting in a
           period of compliance. In July, another survey found a new G-level
           deficiency. Because of the intervening period of compliance, the
           March and July surveys resulted in a double G, for which immediate
           sanctions would have been warranted.

^73Department of Health and Human Services, Office of Inspector General,
State Referral of Nursing Home Enforcement Cases, OEI-06-03-00400
(December 2005).

^74This example only includes a limited portion of the home's compliance
history from fiscal years 2000 through 2005.

^75Three additional surveys conducted from March 27, 2000, through
November 29, 2000, were not included in this analysis because none of the
surveys had deficiencies at the G level or higher.

^76While immediate sanctions were not imposed, CMS may have continued an
existing sanction or imposed a new sanction, which was rescinded because
the home corrected the deficiency.

Figure 7: Impact of Intervening Periods of Compliance Rule on Immediate
Sanctions for One Pennsylvania Nursing Home, 2000

Clearing effect of standard surveys. Under the double G immediate
sanctions policy, a standard survey without a G-level or higher deficiency
"clears the home's record" for the purposes of determining whether a
double G occurred.^77 As a result of this rule, surveys with G-level or
higher deficiencies that occurred before the standard survey without a
G-level or higher deficiency are not considered in determining whether a
double G should be cited and an immediate sanction should be imposed. CMS
officials believe that it is appropriate for standard surveys without
G-level or higher deficiencies to clear the home's record for double G
purposes because standard surveys are comprehensive and occur regularly.
Yet, we have previously reported that weaknesses in the survey process
result in surveyors' missing serious deficiencies on standard surveys.^78
Moreover, variability among states in the citation of serious deficiencies
suggests that some states may not be citing deficiencies at the
appropriate scope and severity (see app. II). For example, according to
California officials, the guidance the state received from the CMS
regional office created confusion as to what constituted actual harm, and
this confusion contributed to the decline in citations of serious
deficiencies in California. The regional office clarified its guidance in
late 2004.

^77This aspect of the immediate sanctions policy does not affect the
retention of data on prior G-level or higher deficiencies in CMS's OSCAR
database.

The following example illustrates how a standard survey without G-level or
higher deficiencies affects double G determinations and how having
uncorrected deficiencies can prevent a home from receiving an immediate
sanction.^79

           o In approximately a 12-month period, a Michigan home had five
           surveys, four of which had one G-level deficiency. However, the
           G-level deficiencies triggered double G immediate sanctions only
           once instead of three times because in one instance a standard
           survey cited no G-level deficiencies and in the other there was no
           intervening period of compliance.^80 Figure 8 illustrates how some
           pairs of surveys with G-level deficiencies do not count as double
           Gs because of the clearing effect of standard surveys. For
           example, state surveyors found a G-level deficiency during a
           January 2000 complaint survey. However, on the home's standard
           survey a month later (February 2000), no G-level or higher
           deficiencies were found by surveyors. As a result, when surveyors
           found another G-level deficiency on a complaint survey several
           months later (November 2000), the G-level deficiency on the home's
           January survey was not considered, and no immediate sanctions were
           triggered. The pair of surveys in January 2000 and November 2000
           did not trigger immediate sanctions because, in effect, the
           February 2000 standard survey cleared the home's record.

^78See [55]GAO/HEHS-98-202 , [56]GAO-03-561 , and [57]GAO-06-117 .

^79This example only includes a limited portion of the home's compliance
history from fiscal years 2000 through 2005.

^80While immediate sanctions were not imposed, CMS may have continued an
existing sanction or imposed a new sanction, which was rescinded because
the home corrected the deficiency.

Figure 8: Impact of Clearing Effect Rule on Immediate Sanctions for One
Michigan Nursing Home, 2000-2002

Multiple instances of harm. Multiple G-level or higher deficiencies
identified on a survey that results in an immediate sanction are sometimes
treated the same, in terms of enforcement, as a single instance of harm or
immediate jeopardy cited on a survey. We examined the sanctions imposed
for a single versus multiple instances of harm and found that the
sanctions can be quite similar, despite the significant differences in the
number of deficiencies.^81 The following example involves two surveys of a
Michigan home with a history of repeated noncompliance. On a survey with
only 1 G-level deficiency, CMS implemented a $350 per day CMP and a
discretionary DPNA. On a different survey with 33 D-level or higher
deficiencies and 6 G-level or higher deficiencies, CMS implemented a $200
per day CMP and a discretionary DPNA. We found similar examples among
other homes we reviewed.

We discussed our concerns with CMS about how the double G immediate
sanctions policy allows some homes to avoid immediate sanctions. CMS
officials stated that regardless of the policy, state and regional office
officials retain the discretion to impose immediate sanctions even when
not required by the policy. However, based on a discussion with CMS
officials, we believe that, instead of imposing sanctions of appropriate
severity, state and regional office officials may impose weaker sanctions
for problem homes that have escaped immediate sanctions because of the
complexities of the policy. CMS agreed that this could happen.

CMS Oversight Continues to Be Hampered by Data Limitations

Fragmented data systems and incomplete national reporting capabilities
continue to hamper CMS's ability to track and monitor enforcement. In
March 1999, we reported that CMS lacked a system for effectively
integrating enforcement data nationwide and that the lack of such a system
weakened oversight.^82 Since 1999, CMS has made progress in developing an
enforcement data collection system called the ASPEN Enforcement Manager
(AEM). However, while AEM collects valuable data from the states and
regions, it is not fully integrated with other CMS systems used to track
nursing home survey and enforcement activities. For example, when regional
and state survey officials want to evaluate complaint and enforcement
data, they must access one system for complaint data and then access
another system, AEM, for enforcement data. Because there is no direct
interface between the two systems, CMS and states must rely on fragmented
data systems for tracking and monitoring enforcement. Furthermore, CMS
officials told us that the agency does not have a concrete plan to use the
enforcement data to improve monitoring and oversight but that some
national enforcement reports are under development.

^81To gain a sense of how frequently multiple instances of harm are
treated the same as single instances of harm, we examined the enforcement
history of some of the homes cited with double Gs. Over half of the
surveys examined with multiple G-level or higher deficiencies received
sanctions similar to homes with a single G-level or higher deficiency.

^82 [58]GAO/HEHS-99-46 .

From 2000 to 2004, CMS tracked sanctions with LTC, a data system developed
in the Chicago region that became operational in all 10 CMS regions in
2000. LTC was a relatively simple system designed to collect sanctions
data, automatically generate sanction imposition letters, and
automatically calculate the 35 percent reduction in CMPs for homes that
waive the right to appeal deficiencies. LTC was not always useful for
enforcement oversight because it was sometimes incomplete. Data entry into
the LTC system was optional, and many regional and state surveyors
continued to rely on their own, state-specific tracking systems. Moreover,
during the time LTC was in use, states and regions were expected to
continue updating the enforcement component of OSCAR, which duplicated
some of the information in LTC. This required separate manual data entry
into both LTC and OSCAR. We were told by regional office officials that
sometimes only one of the files would be updated. Furthermore, LTC had no
internal quality control checks for ensuring all fields were completed or
that the data were accurate; in its design of LTC, CMS chose flexibility
in modifying the data to accommodate special circumstances over a more
rigid field edits system that would have controlled the data more tightly.

Since October 1, 2004, CMS has used AEM to collect state and regional data
on sanctions and improve communications between state survey agencies and
CMS regional offices. Specifically, AEM was designed to provide real-time
entry and tracking of sanctions, issue monitoring alerts, generate
enforcement letters, and facilitate analysis of enforcement patterns. CMS
expects that the data collected in AEM will enable states, CMS regional
offices, and the CMS central office to more easily track and evaluate
sanctions against nursing homes as well as respond to emerging issues.
Developed by CMS's central office primarily for use by states and regions,
AEM is one module of a broader data collection system called ASPEN. There
are a number of other modules under the ASPEN umbrella, including the
ASPEN Complaints/Incidents Tracking System (ACTS) module. The ASPEN
modules--and other data systems related to enforcement such as the
financial management system for tracking CMP collections--are fragmented
and lack automated interfaces with each other. As a result, enforcement
officials must pull discrete bits of data from the various systems and
manually combine the data to develop a full enforcement picture. For
example, if regional office officials want to review a home's complaint
history, they must access ACTS to print a report on complaints, access AEM
to print a report on corresponding sanctions, manually compare the two
reports, and then access the CMP tracking system to determine whether a
corresponding CMP was paid. Each step adds to staff workload.

AEM collects potentially useful enforcement data from the states and
regions, but, as described, CMS has not integrated AEM with the other data
collection systems (e.g., ACTS); furthermore, the agency has not defined a
plan for using the AEM data to inform the tracking and monitoring of
enforcement through national enforcement reports. In a December 2004 CMS
report, the agency stated that AEM "will permit meaningful comparisons of
like measures and will serve as a primary tool on which to base policy
decisions, new initiatives and strategies for improving care to our
Nation's nursing home population."^83 While CMS is developing a few draft
national enforcement reports, it has not developed a concrete plan and
timeline for producing a full set of reports that use the AEM data to help
in assessing the effectiveness of sanctions and its enforcement policies.
In addition, while the full complement of enforcement data recorded by the
states and regional offices in AEM is now being uploaded to CMS's national
system, CMS does not intend to upload any historical data. Efforts to
track and monitor enforcement would be greatly enhanced by reports that
contain the historical data; for example, with historical data the agency
could generate reports that provide a longitudinal perspective of a home's
compliance history, compare trends across states and regions, and,
overall, help evaluate the effectiveness of sanctions and policies.
Finally, like LTC, AEM has quality control weaknesses. While AEM has some
automatic quality control mechanisms to ensure that the data entered are
complete and in a valid format, there are no systematic quality control
mechanisms to ensure that the data entered are accurate. For example,
while the system automatically requires the entry of valid survey dates,
CMS does not conduct periodic data audits to check that the survey dates
are correct.

CMS officials told us they will continue to develop and implement
enhancements to AEM to expand its capabilities over the next several
years. However, until CMS develops a plan for integrating the fragmented
systems and for using AEM data--along with other data the agency
collects--efficient and effective tracking and monitoring of enforcement
will continue to be hampered and, as a result, CMS will have difficulty
assessing the effectiveness of sanctions and its enforcement policies.

^83CMS's December 2004 "Action Plan (For Further Improvement of) Nursing
Home Quality."

Other CMS Initiatives to Improve Enforcement

In addition to its efforts to implement a new data system for managing
enforcement, CMS has taken other steps to improve its enforcement of
nursing home quality requirements. For example, the agency has developed
guidance to help ensure greater consistency across states in CMP amounts
imposed, revised its Special Focus Facility program, and commissioned two
studies to examine the effectiveness of nursing home enforcement.^84

To ensure greater consistency in CMP amounts proposed by states and
imposed by regions, CMS, in conjunction with state survey agencies,
developed a grid that provides guidance for states and regions. The CMP
grid lists ranges for minimum CMP amounts while allowing for flexibility
to adjust the penalties on the basis of factors such as the deficiency's
scope and severity, the care areas where the deficiency was cited, and a
home's past history of noncompliance. In August 2006, CMS completed the
regional office pilot of its CMP grid. The results of the pilot, which are
currently being analyzed, will be used to determine how the grid should be
used by states; its use would be optional to provide states flexibility to
tailor sanctions to specific circumstances.

CMS revised its Special Focus Facility program, an initiative intended to
increase the oversight of homes with a history of providing poor care. We
had previously reported that the program was worthwhile but that its
narrow scope excluded many homes that provide poor care.^85 Moreover,
according to CMS, the goal of two surveys per home per year was never
achieved because of the relatively low priority assigned to the program
and the lack of state survey agency resources. In December 2004, CMS
announced three changes in the operation of the program. First, CMS
expanded the scope of the program from about 100 homes nationwide to about
135 homes by making the number of Special Focus Facilities in each state
proportional to the number of nursing homes. Second, CMS revised the
method for selecting nursing homes by reviewing 3 years' rather than 1
year's worth of deficiency data. This change was intended to ensure that
the homes in the program had a history of noncompliance rather than a
single episode of noncompliance. Third, CMS strengthened its enforcement
for Special Focus Facilities by requiring immediate sanctions for homes
that failed to significantly improve their performance from one survey to
the next and by requiring termination for homes with no significant
improvement after three surveys over an 18-month period.^86 Despite these
changes, however, many homes that could benefit from enhanced oversight
and enforcement are still excluded from the program. As noted earlier, few
of the homes we reviewed were or are part of CMS's Special Focus
Facilities program. In 2005, only 2 were designated Special Focus
Facilities and in 2006, the number increased to 4. Of the 8 homes that
cycled in and out of compliance seven or more times (see fig. 3), 6 are
still open but only 1 is now a Special Focus Facility. Although CMS now
requires QIOs to work with poorly performing nursing homes, this
initiative also only targets a small number of homes--as few as 1 to 3
facilities in each state.

^84Additional CMS nursing home initiatives are described in CMS's 2007
"Action Plan for (Further Improvement of) Nursing Home Quality."

^85GAO, Nursing Homes: Sustained Efforts Are Essential to Realize
Potential of the Quality Initiatives, [59]GAO/HEHS-00-197 (Washington,
D.C.: Sept. 28, 2000).

To enhance its understanding of and ability to improve the enforcement
process, CMS has funded two studies that will examine the steps that lead
to sanctions as well as the impact of enforcement on homes'
quality-of-care processes.

           o Qualitative Enforcement Case Studies. This study, which began in
           the spring of 2003 and is scheduled to be completed in early 2007,
           required research nurses to visit 25 nursing homes in four states
           to evaluate how the survey and enforcement processes are carried
           out and assess the extent to which the enforcement process results
           in changes in nursing staff behavior and improved compliance with
           federal requirements.

           o Impact of Sanctions on Quality. The objective of this study is
           to test the effects of sanctions on facility behavior and resident
           outcomes. Researchers will identify and compare a group of nursing
           homes that had both deficiencies and sanctions to a group of
           nursing homes that had similar levels of deficiencies but no
           sanctions. A year later, researchers will review the nursing
           home's subsequent survey to determine whether the sanctions
           resulted in any significant changes in the quality of care
           delivered. The study began in the fall of 2004 and the first
           report is scheduled to be completed by mid-2007.
		   
^86In commenting on a draft of this report, Michigan noted that it
recommends termination dates of less than 6 months for its Special Focus
Facilities and has received support from the CMS regional office to do so.
Michigan also noted that after one of its homes with a history of cycling
in and out of compliance was designated a Special Focus Facility, the
home's performance improved, and it will likely be removed from the
Special Focus Facility list.

           Although CMS has taken several steps to improve its enforcement of
           nursing home requirements, its Nursing Home Compare Web site does
           not include information on sanctions. Thus, CMS does not indicate
           what sanctions have been implemented against nursing homes, nor
           does it identify homes that have received immediate sanctions for
           repeatedly harming residents.

           As noted throughout this report, we found variation among the
           states we reviewed in areas such as the number and amount of CMPs
           implemented and the proportion of homes with double Gs. In
           general, these differences reflect the state survey agencies'
           views on the effectiveness of certain sanctions and differences in
           state enforcement policies. For example, Pennsylvania state
           officials prefer state rather than federal sanctions because they
           believe the former are more effective, have a greater deterrent
           effect on providers, and are easier and quicker to impose.
           Pennsylvania requires homes to pay a state CMP prior to appeal,
           even if the home appeals the deficiency. In contrast, homes need
           not pay a federal CMP until after an appeal is resolved.
           Pennsylvania rarely implemented federal CMPs on the 14 state homes
           whose compliance history we reviewed, preferring to use state
           sanctions instead. In Michigan, state officials are more likely to
           use federal CMPs and implement them in greater amounts than other
           states we reviewed. Texas state officials often use state rather
           than federal sanctions for G-level or higher deficiencies, in part
           because they cannot propose a federal CMP if they impose a state
           sanction and because the total state money penalty that may be
           imposed may be higher than federal CMPs. California had fewer
           sanctions than Michigan. California typically investigates
           complaints under its state licensure authority, which may partly
           explain why California has fewer reported deficiencies and federal
           sanctions. We believe it is important for CMS to explore the
           differences in state enforcement approaches and policies so that
           it can both identify problem areas and identify best practices
           that could be disseminated nationwide.
		   
		   Conclusions

           Although CMS has taken steps to strengthen the nursing home
           enforcement process, our review of 63 homes in four states with a
           history of quality problems identified design weaknesses as well
           as flaws in the way sanctions are implemented that diminish their
           full deterrent effect. Some of these homes repeatedly harmed
           residents over a 6-year period and yet remain in the Medicare and
           Medicaid programs. Until these systemic weaknesses are addressed,
           the effectiveness of sanctions in encouraging homes to return to
           and maintain compliance will remain questionable and the safety
           and security of vulnerable residents will remain at risk.

           CMS's immediate sanctions policy fails to hold homes with a long
           history of harming residents accountable for the poor care
           provided. The policy's complexity, such as the requirement for an
           intervening period of compliance, prevents its use for the very
           homes it was designed to address--those with systemic quality
           problems. Furthermore, the immediate sanctions label is misleading
           because sanctions are not, in fact, immediate. The notice period
           required by CMS regulations for sanctions such as DPNAs and
           terminations provides homes with a de facto grace period during
           which they can correct deficiencies to avoid an immediate
           sanction. Moreover, in one state we reviewed, the immediate
           sanctions policy does not fully identify all homes with repeat
           serious deficiencies because most complaint deficiencies, which
           can often trigger a double G, were being cited under state
           licensure authority, not federal. Consequently, some problem homes
           in the state were not identified by the policy and thus were able
           to avoid double G immediate sanctions.

           Although CMPs and DPNAs were the most frequently used sanctions
           nationwide and for the homes we reviewed, their effectiveness was
           undermined by a number of weaknesses. The CMPs levied against the
           homes we reviewed were often nominal, significantly less than the
           maximum amounts Congress provided for in statute. To strengthen
           CMPs, CMS has been developing a CMP grid since 2004 to guide
           states and regional offices in determining appropriate CMP
           amounts, and CMS regional offices piloted the grid in 2006.
           However, its implementation is expected to be optional for states,
           once again contributing to interstate variation. Despite the
           nominal amounts, CMPs, unlike DPNAs, do not require a notice
           period and may be imposed retroactively before the date of the
           survey. However, these advantages are countered by the fact that,
           under the Social Security Act, payment by homes of federally
           imposed CMPs is deferred if they appeal their deficiencies, a
           process that can take years, diminishing the immediacy of the
           sanction and further undermining the sanction's deterrent effect.
           While there is precedent under the federal surface mining statute,
           which permits the collection of CMPs before exhaustion of appeals,
           it is unclear if the informal dispute resolution process available
           to nursing homes provides the same type of procedural safeguards
           that courts have pointed to in upholding the mining statute
           provision. Some states choose to use their own authority to impose
           state fines, which can sometimes be implemented faster than is
           possible under federal law. Although CMS has the authority to
           implement discretionary DPNAs after a 15-day notice period for the
           homes we reviewed, it did not generally do so. It imposes
           mandatory DPNAs when criteria are met, which provide homes a
           3-month de facto grace period to correct deficiencies. Because
           many homes we reviewed returned to compliance within 3
           months--though often only temporarily--the DPNAs frequently were
           rescinded.

           Termination--the most powerful enforcement tool--was used
           infrequently nationwide and for the homes we reviewed because of
           states' and CMS's concerns about potential access to care and
           resident transfer trauma. However, we found that some poorly
           performing homes are located in areas with several other nearby
           nursing homes. Even though some homes we reviewed cycled in and
           out of compliance numerous times while continuing to harm
           residents, CMS allowed them to determine for themselves whether
           and when to leave the Medicare and Medicaid programs. Even when
           terminations were imposed, their deterrent effect was undermined
           by extending some termination dates to give the homes more time to
           correct deficiencies. CMS's earlier termination of such troubled
           homes could have cut short the cycle of poor care. CMS's revamped
           Special Focus Facility program would provide for termination of
           poorly performing homes within 18 months if they fail to show
           significant improvement in the quality of care provided to
           residents. Despite the expansion of the program from about 100 to
           about 135 homes, the number of Special Focus Facilities is
           inadequate because, as our work has demonstrated, the program
           still fails to include many homes with a history of repeatedly
           harming residents.

           Although CMS has made progress in establishing a database to help
           it track and monitor the nursing home enforcement process, the
           development of AEM is not yet complete. AEM is not integrated with
           other important databases to help ensure that CMS has a
           comprehensive picture of a home's deficiency history, and CMS has
           not developed a concrete plan for using national enforcement
           reports--built off of AEM data--to help evaluate the effectiveness
           of sanctions and its enforcement polices. Having longitudinal
           enforcement data available for homes would enable CMS to pursue
           increasing the severity of sanctions for homes that repeatedly
           harm residents. Furthermore, CMS has not developed a system of
           quality checks to ensure the accuracy and integrity of AEM data.

           CMS's Nursing Home Compare Web site has been modified a number of
           times to add important quality information about nursing homes.
           While CMS now summarizes the results from both standard surveys
           and complaint investigations, the Web site contains no information
           about sanctions implemented against nursing homes, nor does it
           identify homes that have received immediate sanctions for
           repeatedly harming residents. Such information could be valuable
           to consumers who use the Web site to help choose a home for family
           members or friends.
		   
		   Recommendations for Executive Action

           To address weaknesses that undermine the effectiveness of the
           immediate sanctions policy, we recommend that the Administrator of
           CMS reassess and revise the policy to ensure that it accomplishes
           the following three objectives: (1) reduce the lag time between
           citation of a double G and the implementation of a sanction, (2)
           prevent nursing homes that repeatedly harm residents or place them
           in immediate jeopardy from escaping sanctions, and (3) hold states
           accountable for reporting in federal data systems serious
           deficiencies identified during complaint investigations so that
           all complaint findings are considered in determining when
           immediate sanctions are warranted.

           To strengthen the deterrent effect of available sanctions and to
           ensure that sanctions are used to their fullest potential, we
           recommend that the Administrator of CMS take the following three
           actions:

           o Ensure the consistency of CMPs by issuing guidance such as the
           standardized CMP grid piloted during 2006.

           o Increase use of discretionary DPNAs to help ensure the speedier
           implementation of appropriate sanctions.

           o Strengthen the criteria for terminating homes with a history of
           serious, repeated noncompliance by limiting the extension of
           termination dates, increasing the use of discretionary
           terminations, and exploring alternative thresholds for
           termination, such as the cumulative duration of noncompliance.

           To collect CMPs more expeditiously, which could increase their
           deterrent effect, we recommend that the Administrator of CMS
           develop an administrative process under which CMPs would be
           paid--or Medicare and Medicaid payments in equivalent amounts
           would be withheld--prior to exhaustion of appeals and seek
           legislation for the implementation of this process, as
           appropriate. Payments could be refunded with interest if the
           deficiencies are modified or overturned at appeal.

           To strengthen sanctions for homes with a history of noncompliance,
           such as a large number of deficiencies or a large number of actual
           harm and immediate jeopardy deficiencies, we recommend that the
           Administrator of CMS consider further expanding the Special Focus
           Facility program with its enhanced enforcement requirements to
           include all homes that meet a threshold, established by CMS, to
           qualify as poorly performing homes.

           To improve the effectiveness of its new enforcement data system,
           we recommend that the Administrator of CMS take the following
           three actions:

           o Develop the enforcement-related data systems' abilities to
           interface with each other in order to improve the tracking and
           monitoring of enforcement, such as by developing an automatic
           interface between systems such as AEM and ACTS.

           o Expedite the development of national enforcement reports,
           including longitudinal and trend reports designed to evaluate the
           effectiveness of sanctions and enforcement policies, and a
           concrete plan for using the reports.

           o Develop and institute a system of quality checks to ensure the
           accuracy and integrity of AEM data, such as periodic data audits
           conducted as part of CMS's annual state performance reviews.

           To improve public information available to consumers that helps
           them assess the quality of nursing home care, we recommend that
           the Administrator of CMS expand CMS's Nursing Home Compare Web
           site to include implemented sanctions, such as the amount of CMPs
           and the duration of DPNAs, and homes subjected to immediate
           sanctions.
		   
		   Agency and State Comments and Our Evaluation

           We obtained written comments on our draft report from CMS and
           three of the four states in which the homes we studied were
           located--California, Michigan, and Texas. We also received e-mail
           comments from the Director of the Division of Nursing Care
           Facilities in Pennsylvania. CMS's comments are reproduced in
           appendix VI. California's, Michigan's and Texas's comments are
           reproduced in appendixes VII, VIII, and IX, respectively. CMS
           generally concurred with our 12 recommendations in six areas
           intended to strengthen the enforcement process but did not always
           specify how it would implement the recommendations. In addition,
           CMS noted that implementation of 3 of our recommendations raised
           resource issues and that others required additional research.
           California concurred with our conclusions and recommendations,
           while Michigan and Pennsylvania indicated appreciation or general
           agreement. However, most state comments, including Texas's, were
           technical in nature. Our evaluation responds to CMS and state
           comments in the six areas covered by our recommendations.

           Addressing weaknesses in the double G immediate sanctions policy.
           CMS agreed that homes that repeatedly harm residents should not
           escape immediate sanctions and stated that it would remove the
           limitation on applying an additional sanction when a home failed
           to correct a deficiency that gave rise to a prior sanction. CMS
           also agreed to reduce the lag time between citation and
           implementation of a double G immediate sanction by limiting the
           prospective effective date for DPNAs to no more than 30 to 60
           days. Reducing the lag time as much as possible is critical
           because it provides homes with a de facto grace period in which to
           correct deficiencies and avoid sanctions. Michigan commented about
           the need to increase the immediacy of DPNAs, noting that even the
           15-day notice period associated with discretionary DPNAs was
           outdated now that homes are notified electronically and delivery
           can be verified. Currently, CMS has an incomplete picture of
           serious deficiencies cited against homes that could result in
           immediate sanctions because California investigates many nursing
           home complaints under state licensure authority. CMS agreed to
           collect additional information on complaints for which data are
           not reported in federal data systems. We believe that CMS's
           commitment to do this will help better identify and deal with
           consistently poorly performing homes. CMS commented that the
           Social Security Act does not provide authority for CMS to require
           states to report enforcement actions taken under state-only
           authority if federal resources are not used for the complaint
           investigation; however, to the extent that federal funds are used
           for complaint investigations, our findings and recommendations
           remain valid. Michigan concurred that CMS needs the complete
           compliance history of a facility to assess its overall
           performance.

           CMS acknowledged that the complexity of its immediate sanctions
           policy may be an inherent limitation and indicated that it intends
           to either strengthen the policy or replace it with a policy that
           achieves similar goals through alternative methods. CMS noted that
           it is concerned about whether the immediate sanctions policy has
           negatively affected the rates of state deficiency citations and
           may ultimately be ineffective with the most problematic
           facilities. We believe the policy has merit but that its complex
           requirements have prevented many homes from receiving immediate
           sanctions.

           Strengthening the deterrent effect of sanctions. CMS agreed to
           issue a CMP analytic tool, or grid, and to provide states with
           further guidance on discretionary DPNAs and terminations. The CMP
           grid is a tool to help ensure national consistency in CMPs and to
           assist CMS regional offices in monitoring enforcement actions.
           Texas commented that it had been using the grid since June 2006
           and found it to be very helpful. Michigan noted that it had
           independently developed and implemented a CMP grid in 2000 but
           expressed disappointment that CMS had not mandated state use of
           the agency's grid. In addition, Michigan supported the need for
           additional CMS guidance on the use of discretionary termination.
           Such guidance, it commented, was necessary to ensure a consistent
           national approach. In response to our recommendation to increase
           the use of discretionary terminations, CMS stated that it will
           continue its research to design proposals that yield a more
           effective combination of robust enforcement actions but that do
           not penalize vulnerable residents. While we encourage CMS's
           commitment to further research to improve the effectiveness of
           enforcement actions, we believe that CMS must also be committed to
           protecting residents from actual harm in poorly performing
           facilities--including terminating homes from the Medicare or
           Medicaid programs--when other steps fail to ensure the quality of
           resident care.

           Collecting CMPs more expeditiously. CMS agreed to seek legislative
           authority to collect CMPs prior to the exhaustion of appeals,
           which could increase their deterrent effect. California commented
           that it supported this recommendation.

           Expanding the Special Focus Facility program. CMS agreed with the
           concept of expanding the program to include all homes that meet a
           threshold to qualify as poorly performing homes, but said it lacks
           the resources needed for this expansion because of decreases in
           its budget and increases in both the number of providers and
           quality assurance responsibilities for state and federal
           surveyors. CMS stated that it envisioned expansion of the program
           if Congress fully funds the President's proposed fiscal year 2008
           budget for survey and certification activities. CMS specified
           other initiatives it will implement to improve the Special Focus
           Facility program.

           Improving the effectiveness of enforcement data. CMS agreed to
           develop and implement a system of quality checks to ensure the
           accuracy of its data systems, including AEM. While the agency
           agreed to study the feasibility of linking the separate data
           systems used for enforcement and to develop other national
           standard enforcement reports, CMS indicated that available
           resources may limit its ability to take further action on these
           issues. CMS has already invested significant resources in
           developing potentially powerful data systems intended to improve
           the tracking and monitoring of enforcement, and we believe the
           agency should place a priority on ensuring that these systems
           operate effectively.

           Improving information available to consumers. Rather than agreeing
           to report all implemented sanctions on its Nursing Home Compare
           Web site, CMS proposed reporting implemented sanctions only for
           poorly performing homes that meet an undefined threshold. CMS's
           response was therefore not fully responsive to our recommendation.
           By only reporting sanctions for homes that meet a certain
           threshold--eight or more sanctions in a 3-year period, in an
           example provided by CMS--consumers might incorrectly assume that
           other homes have received no sanctions. Furthermore, CMS's plan to
           post such limited sanctions data in an accessible location on its
           Web site is vague. We believe that consumers must be able to
           easily link deficiency and sanctions data.

           CMS and three of the four states also provided technical comments,
           which we incorporated as appropriate.

           As arranged with your office, unless you publicly announce its
           contents earlier, we plan no further distribution of this report
           until 30 days after its issue date. At that time, we will send
           copies to the Administrator of the Centers for Medicare & Medicaid
           Services and appropriate congressional committees. We will also
           make copies available to others upon request. In addition, the
           report will be available at no charge on the GAO Web site at
           http://www.gao.gov .

           If you or your staff have any questions about this report, please
           contact me at (202) 512-7118 or [61][email protected] . Contact
           points for our Offices of Congressional Relations and Public
           Affairs may be found on the last page of this report. GAO staff
           who made major contributions to this report are listed in appendix
           X.

           Sincerely yours,

           Kathryn G. Allen
		   Director, Health Care
		   
		   Appendix I: Scope and Methodology

           This appendix provides a more detailed description of our scope
           and methodology and generally follows the order that findings
           appear in the report. We analyzed the fiscal years 2000 through
           2005 enforcement and deficiency history for a total of 63 of the
           74 nursing homes in four states--California, Michigan,
           Pennsylvania, and Texas--whose compliance history informed the
           conclusions of our March 1999 report.^1 These homes had a history
           of providing poor quality care to residents prior to 1999. We
           excluded 11 of the original 74 homes from our analysis because
           they either closed before fiscal year 2000 or closed within 6
           months of the beginning of fiscal year 2000 and had few or no
           deficiencies or sanctions.^2 Some of the remaining 63 homes
           participated in the Medicare and Medicaid programs for only a
           portion of fiscal years 2000 through 2005 because they either
           closed permanently or closed temporarily and were subsequently
           reinstated. For these homes, we set a criterion that required that
           the home participate for at least 6 months of the fiscal year in
           order for its enforcement data in that fiscal year to be included
           in our analysis. Table 8 shows the distribution of homes across
           the four states in our 1999 report, the distribution of those
           homes for this report, and the number of providers participating
           for at least 6 months by fiscal year. Although the table shows
           some year-to-year fluctuation in the number of providers, the
           changes do not significantly influence our findings. While the
           focus of our analysis was the compliance history of these 63
           homes, we also analyzed general trends in (1) implemented
           sanctions nationwide for the same 6-year period and (2) the
           proportion of homes in each state cited for serious
           deficiencies--that is, those at the actual harm or immediate
           jeopardy level.

^1See [62]GAO/HEHS-99-46 . Because the homes reviewed for this report were
selected based on their poor compliance histories, the findings of this
report cannot be generalized to nursing homes in the states in which the
homes are located or to nursing homes nationwide. However, we believe that
the findings of this report illustrate the adequacy of federal and state
sanctions taken against homes with histories of providing poor quality
care to residents.

^2Of the 11 original 74 homes we excluded, CMS involuntarily terminated 5,
and 6 closed voluntarily.

Table 8: Number of Nursing Homes Reviewed in 1999 That Were Included in
Our Analysis for This Report, by State

                                           Current report
                1999       Any participation in                               
State        report   fiscal years 2000-2005 2000 2001 2002 2003 2004 2005 
California       12                       10   10   10   10   10   10   10 
Michigan         18                       16   14   14   13   13   12   13 
Pennsylvania     17                       14   14   13   13   12   10   10 
Texas            27                       23   23   22   22   23   22   22 
Total            74                       63   61   59   58   58   54   55 

Source: GAO.

CMS deficiency data. To determine the number, scope, and severity of
deficiencies cited for the 63 homes, we analyzed OSCAR (On-Line Survey,
Certification, and Reporting system) deficiency data resulting from
standard surveys and complaint investigations. We also used OSCAR data on
deficiencies identified during standard surveys to analyze state trends in
the proportion of nursing homes cited for actual harm or immediate
jeopardy during fiscal years 2000 through 2005. Because a home may be
surveyed more than once a year, we counted a home only once if it was
cited for actual harm or immediate jeopardy on more than one survey during
the year. CMS officials generally recognize OSCAR data to be reliable. We
have used OSCAR data in our prior work to examine nursing home quality.

CMS enforcement data and reliability issues. Because CMS used multiple
data systems during the 6-year period we reviewed and because of data
reliability issues, such as incomplete or inaccurate data, we used several
sources to validate and analyze the enforcement history of the 63 homes.
Based on discussions with CMS regional staff who were responsible for
inputting the data, our primary data source for homes in California,
Michigan, and Pennsylvania for the period fiscal years 2000 through 2004
was the Long Term Care Enforcement Tracking System (LTC).^3 Because CMS's
Dallas regional office expressed concern about reliability of LTC data in
the region, we relied primarily on regional office and state enforcement
case files for the Texas homes we reviewed. CMS phased out use of LTC at
the end of fiscal year 2004 and began using Aspen Enforcement Manager
(AEM) to track sanctions. We obtained data for fiscal year 2005 sanctions
from the limited AEM data stored in the OSCAR enforcement file. To clarify
data from LTC or AEM and to perform some basic data checks, we relied on
regional office and state enforcement case files and made adjustments as
appropriate. We discussed the reliability of LTC and AEM enforcement data
with CMS and state survey agency officials. CMS informed us that the data
generally were reliable. We determined that the data were sufficiently
reliable to assess broad trends in implemented sanctions nationwide, and
to analyze sanctions among the 63 homes we reviewed because we could
conduct checks of the homes' enforcement data using CMS regional office
and state case files. Because we could not conduct such checks of the data
in all 50 states and the District of Columbia, we did not analyze trends
across the individual states.

^3We obtained the data from CMS on July 26, 2005.

Trends in sanctions. Based on our assessment of data reliability, we
determined that we could assess broad trends in implemented sanctions
nationwide, but because we could not conduct checks of the data in all 50
states and the District of Columbia, we did not analyze trends across the
states. For the homes we reviewed, using data from LTC, AEM, and regional
office and state enforcement case files as described above, we analyzed
the number of civil money penalties (CMP), denial of payments for new
admissions (DPNA), and terminations implemented over two 3-year time
periods--fiscal years 2000 through 2002 and fiscal years 2003 through
2005. We aggregated sanctions into fiscal years on the basis of their
implementation dates. To determine the duration of DPNAs across the two
time periods, we calculated the difference between the effective dates and
the end of the DPNAs. To determine the amount of CMPs paid, we used the
CMP Tracking System (CMPTS), a CMS financial management system,^4 and
aggregated CMPs into fiscal years according to the year in which they were
implemented. Based on discussions with CMS officials we determined that
data in CMPTS are generally reliable. They also stated that the system is
the primary system used by CMS for the collection of CMPs and is the only
source for CMP payment data used by CMS. We matched CMP data in LTC and
CMPTS based on their collection number. For fiscal year 2005, we relied on
regional enforcement files for the amount of paid CMPs.

^4We received CMPTS data from CMS on April 21, 2006.

Implementation rate of sanctions. We determined the implementation rate of
sanctions imposed for the homes we reviewed in fiscal years 2000 through
2005. The percentage of implemented sanctions was calculated by dividing
the number of implemented sanctions by the total number of imposed
sanctions. The total number of imposed sanctions included those that were
implemented, not implemented, and were pending. We used data from our
March 1999 report on imposed and implemented sanctions for the period July
1995 through October 1998.^5

Range of sanctions. CMS enforcement data allowed us to differentiate
between per day and per instance CMPs and mandatory and discretionary
DPNAs and terminations. We counted the number of sanctions by type and
aggregated the number by fiscal year based on the date of implementation.
The data provided the value of per day and per instance CMPs, which were
used to calculate the median values of CMPs across the two time
periods--fiscal years 2000 through 2002 and 2003 through 2005.

Cycling in and out of compliance. We analyzed the enforcement data from
LTC, AEM, and CMS regional office and state records to determine if the 63
homes we reviewed cycled in and out of compliance from fiscal years 2000
through 2005. To determine the number of times homes cycled in and out of
compliance, we counted the number of noncompliance cycles recorded for the
63 homes. A noncompliance cycle begins on the date of the survey finding
noncompliance and ends when the home has achieved substantial compliance
by correcting deficiencies. For noncompliance cycles for which sanctions
were implemented, we examined survey dates, the date substantial
compliance was achieved, and the sanctions that were implemented as a
result of the deficiencies cited. To determine how quickly homes were
again noncompliant, we calculated the difference between the date of the
first survey of the subsequent noncompliance cycle and the substantial
compliance date of the preceding noncompliance cycle. To quantify the
number of noncompliance cycles during which actual harm occurred, we
assessed whether homes were cited for G-level or higher deficiencies on
the surveys within the noncompliance cycle.

Immediate sanctions policy. We identified instances in which the 63 homes
we reviewed were cited for repeatedly harming residents to determine if
immediate sanctions were imposed and their effect on deterring subsequent
noncompliance. To identify sanctions imposed as a result of the immediate
sanctions policy, we first identified homes that qualified for immediate
sanctions using CMS's Providing Data Quickly (PDQ) system which prepares a
variety of reports using survey and certification data. CMS officials
indicate that the data in Providing Data Quickly are generally recognized
as reliable. We then matched the survey date in Providing Data Quickly
with the survey date in the enforcement data to identify the noncompliance
cycle during which qualifying deficiencies were cited.^6 This step enabled
us to identify the sanctions imposed. We reviewed each case individually
to verify that the sanction was the result of actual harm or higher-level
deficiencies that denied the home an opportunity-to-correct period or
simply resulted from another survey in the same noncompliance cycle. We
also compared the date of survey with the imposition and effective dates
of sanctions to assess how much time passed between identification of the
deficiency that led to the immediate sanction and the imposition and
implementation of the sanction. During the course of our work, we also
discussed the rationale behind the specific formulation of the immediate
sanctions policy with CMS officials.

^5See [63]GAO/HEHS-99-46 .

^6In a small number of cases, the survey date recorded in PDQ did not
match the survey date in the enforcement data. Mismatches generally
occurred because the survey date in PDQ erroneously reflected another
survey, usually the first of the noncompliance cycle, even if there was no
G-level or higher deficiency on that survey, rather than the survey on
which the G-level or higher deficiency was cited. After consulting with
CMS, we adjusted the survey dates to reflect the correct dates.

Appendix II: Percentage of Nursing Homes Cited for Actual Harm or
Immediate Jeopardy, by State, Fiscal Years 2000-2005

In order to identify trends in the proportion of nursing homes cited with
actual harm or immediate jeopardy deficiencies, we analyzed data from
CMS's OSCAR database for fiscal years 2000 through 2005 (see table 9).
Because surveys are conducted at least every 15 months (with a required
12-month statewide average), it is possible that a home was surveyed twice
in any time period. If a home was cited for a G-level or higher deficiency
on more than one survey during the fiscal year, we only counted it once.

Table 9: Percentage of Nursing Homes Cited for Actual Harm or Immediate
Jeopardy during Standard Surveys, Fiscal Years 2000-2005

                                                         Fiscal year
State                Number of homes, 2005^a 2000 2001 2002 2003 2004 2005 
Alabama                                  229 35.5 23.0 12.7 18.1 15.6 23.1 
Alaska                                    14 28.6 26.7 26.7  0.0  0.0  0.0 
Arizona                                  135 24.2 12.6  7.3  6.6  9.4  9.9 
Arkansas                                 245 38.1 27.7 22.3 24.7 19.5 15.9 
California                             1,329 24.1 10.9  5.1  3.7  6.1  8.0 
Colorado                                 215 20.4 26.4 32.7 20.9 25.9 40.4 
Connecticut                              247 41.9 51.6 45.8 43.1 54.4 44.2 
Delaware                                  42 47.5 14.6 10.8  5.3 15.0 35.7 
District of Columbia                      20 17.7 28.6 30.0 41.2 40.0 30.0 
Florida                                  691 22.8 20.2 14.9 10.2  7.8  4.2 
Georgia                                  370 19.5 21.0 23.7 24.6 16.6 18.0 
Hawaii                                    45 23.8 14.3 21.2 12.1 22.9  2.8 
Idaho                                     81 51.4 29.7 39.2 31.9 27.3 38.4 
Illinois                                 836 28.4 19.2 15.3 18.3 15.1 15.7 
Indiana                                  518 45.0 29.4 23.2 19.7 24.1 28.3 
Iowa                                     465 14.7 12.0  8.0  9.1 11.8 11.2 
Kansas                                   374 37.9 30.7 32.9 26.5 30.3 34.9 
Kentucky                                 297 26.8 29.1 23.2 26.1 14.6  7.7 
Louisiana                                321 21.8 29.9 21.7 16.2 12.0 15.4 
Maine                                    116 11.1 13.9  6.6 11.1 12.8  7.0 
Maryland                                 239 22.4 16.5 26.1 15.4 17.8  7.6 
Massachusetts                            466 29.1 24.4 24.6 25.9 16.7 22.6 
Michigan                                 432 42.8 24.5 29.7 26.9 22.9 22.9 
Minnesota                                411 30.4 17.3 22.3 18.3 14.3 14.4 
Mississippi                              210 33.0 19.8 18.7 16.0 18.9 18.1 
Missouri                                 532 19.8 13.0 15.6 12.5 11.7 15.4 
Montana                                  100 33.3 29.7 12.0 20.0 18.0 17.9 
Nebraska                                 235 19.2 21.1 20.1 14.8 15.3 14.4 
Nevada                                    47 34.8 14.6 11.9  9.1 17.5 19.6 
New Hampshire                             82 37.8 31.1 29.4 24.1 25.6 26.3 
New Jersey                               364 25.5 27.8 18.8 10.5 13.5 18.2 
New Mexico                                77 23.7 16.9 14.9 21.3 24.3 29.4 
New York                                 662 33.8 37.1 34.2 15.2 11.0 14.0 
North Carolina                           426 43.6 35.8 25.6 29.0 21.1 18.5 
North Dakota                              83 25.9 28.7 17.9 12.4 13.6 17.7 
Ohio                                     993 26.6 27.3 25.4 19.1 11.4 13.8 
Oklahoma                                 387 19.3 21.3 22.0 26.3 13.9 23.2 
Oregon                                   139 45.5 32.6 23.7 20.3 15.9 19.8 
Pennsylvania                             727 30.3 19.2 13.5 17.2 19.5 15.2 
Rhode Island                              92 14.3 12.9  5.6  6.7  9.3  9.5 
South Carolina                           177 26.4 17.2 19.8 29.6 32.7 24.8 
South Dakota                             112 27.1 26.7 26.8 32.1 21.6 12.8 
Tennessee                                337 28.2 20.2 20.7 21.8 22.9 17.3 
Texas                                  1,174 29.7 30.5 22.4 18.0 12.0 16.2 
Utah                                      93 19.5 14.1 25.6 19.0 11.1  8.4 
Vermont                                   41 22.5 18.2 15.0 10.0 19.5 23.7 
Virginia                                 281 19.2 14.3 11.6 13.7 10.2 15.5 
Washington                               251 46.9 38.3 37.0 30.9 28.1 27.2 
West Virginia                            133 12.1 17.7 20.4 12.7  9.8 15.0 
Wisconsin                                405 15.8 15.6 11.2 10.9 13.1 18.2 
Wyoming                                   39 52.8 32.4 25.0 22.9 17.1 11.8 
Nation                                16,337 28.4 23.3 20.2 17.8 15.7 16.8 

Source: GAO analysis of OSCAR and PDQ data.

aThese numbers illustrate the significant variation in the number of
active nursing homes across states.

Appendix III: Federal Sanctions for Nursing Homes Reviewed, by State,
Fiscal Years 2000-2005

Table 10 provides the number of CMPs, DPNAs, and terminations implemented
in the nursing homes we reviewed, by state for fiscal years 2000-2002 and
fiscal years 2003-2005. It also provides the total amount of CMPs paid and
the total duration of DPNAs implemented during the two time periods. The
total amount of CMPs payable in the fiscal years may differ from what was
paid.

Table 10: Number of Sanctions Implemented Among Homes We Reviewed, Fiscal
Years 2000-2005

                                  FY 2000-2002                         FY 2003-2005          
                                                                                 Percentage  
                                                                                  change in  
                                                                                     number  
                            Average                    Average                   from first  
                             number            Amount   number            Amount  to second  
                           of homes             paid/ of homes             paid/       time  
State        Sanction      reviewed Number^a duration reviewed Number^a duration     period  
California                       10       10                                                 
             CMP^b                         5 $109,394        7 $166,480      40%             
             DPNA^c                        4 155 days        3 189 days     -25%             
             Involuntary                   0       NA        0       NA       NA             
             termination^d                                                                   
Michigan                         14       13                                                 
             CMP^b                        40 $186,313       35 $419,401     -13%             
             DPNA^c                       26    1,206       19 796 days     -27%             
                                                 days                                        
             Involuntary                   0       NA        1       NA     100%             
             termination^d                                                                   
Pennsylvania                     13       11                                                 
             CMP^b                         7  $62,400        1       $0     -86%             
             DPNA^c                        9 499 days        5 181 days     -44%             
             Involuntary                   0       NA        0       NA       NA             
             termination^d                                                                   
Texas                            22       22                                                 
             CMP^b                        41 $176,420       11  $31,671     -73%             
             DPNA^c                       13 591 days        3  79 days     -77%             
             Involuntary                 1^e       NA        0       NA    -100%             
             termination^d                                                                   

Source: GAO analysis of LTC, OSCAR, CMS regional office and state
enforcement case files, and CMPTS.

Note: Includes sanctions data from LTC as of July 26, 2005; OSCAR as of
November 22, 2005; CMS regional office and state enforcement case files;
and CMPTS data as of April 21, 2006.

NA = not applicable.

aNumber of sanctions implemented in the time period.

bIncludes per day and per instance CMPs.

cIncludes mandatory and discretionary DPNAs.

dIncludes mandatory and discretionary involuntary terminations.

eAlthough the home did not participate for 6 months of fiscal year 2001
because it was involuntarily terminated in February 2001, the involuntary
termination is counted because involuntary termination is the most severe
sanction and because it occurs so infrequently.

Appendix IV: Examples of Homes Reviewed That Frequently Cycled In and Out
of Compliance

This appendix provides additional examples of the compliance history of
homes we reviewed that frequently cycled in and out of compliance (see
table 6). The table also includes examples of the nature of the
deficiencies cited in each noncompliance period. The three homes in table
11 were cited for serious deficiencies--those at the actual harm or
immediate jeopardy level--and corrected these deficiencies only
temporarily, despite receiving sanctions; on subsequent surveys, they were
again found to be out of compliance, sometimes for the same deficiencies.
A noncompliance period begins on the first day a survey finds
noncompliance and ends when a home both corrects the deficiencies and
achieves substantial compliance or the home is terminated from Medicare
and Medicaid. Only federal sanctions that were imposed and implemented are
included in the table.

Table 11: Examples of Homes that Frequently Cycled In and Out of
Compliance

                                           Summary of                         
Noncompliance     Examples of the       G-level or                         
period (no. of    nature of             higher         Enforcement action  
days)             deficiencies^a        deficiencies   implemented^b       
California home^c                                                          
1^st (84 days)       o Resident abuse   10 G              o Per day CMP    
                        o Poor quality of                    ($500/day)       
                        care                                 o Discretionary  
                                                             DPNA (42 days)   
2^nd (131 days)      o Inadequate       1 G               o Per day CMP    
                        treatment or                         ($100/day)       
                        prevention of                        o Discretionary  
                        pressure sores                       DPNA (13 days)   
                        o Poor quality of                                     
                        care                                                  
3^rd (126 days)      o Resident abuse   2 G, 3 H          o 1^st per day   
                        o Inadequate                         CMP ($3,000/day) 
                        treatment or                         o 2^nd per day   
                        prevention of                        CMP ($500/day)   
                        pressure sores                       o Discretionary  
                                                             DPNA (87 days)   
4^th (181 days)      o Resident abuse   3 G               o Per instance   
                                                             CMPs (3 at       
                                                             $1,500/each)     
                                                             o Discretionary  
                                                             DPNA (89 days)   
Pennsylvania                                                               
home^d                                                                     
1^st (204 days)      o Inadequate       17 G              o Per day CMP    
                        treatment or                         ($1,000/day)     
                        prevention of                        o Mandatory DPNA 
                        pressure sores                       (74 days)        
                        o Poor accident                                       
                        supervision or                                        
                        prevention                                            
2^nd (147 days)      o Employing        1 G               o Per instance   
                        convicted abusers                    CMP ($10,000)    
                        o Inadequate                         o Mandatory DPNA 
                        treatment of                         (12 days)        
                        incontinence or                                       
                        unnecessary use of                                    
                        catheters                                             
3^rd (188 days)      o Employing        1 G               o Mandatory DPNA 
                        convicted abusers                    (82 days)        
                        o Medication                                          
                        errors                                                
4^th (140 days)      o Poor nutrition   2 H               o Discretionary  
                        o Poor accident                      DPNA (61 days)   
                        supervision or                                        
                        prevention                                            
Texas home^e                                                               
1^st (105 days)      o Staff            4 G               o 1^st per       
                        mistreatment of                      instance CMP     
                        residents                            ($6,000)         
                        o Inadequate                         o 2^nd per       
                        treatment or                         instance CMP     
                        prevention of                        ($2,500)         
                        pressure sores                                        
                        o Use of                                              
                        unnecessary drugs                                     
2^nd (1 day)         o Staff            1 K               o 1^st per day   
                        mistreatment of                      CMP ($3,050/day) 
                        residents                            o 2^nd per day   
                        o Employing                          CMP ($750/day)   
                        convicted abusers                                     
3^rd (11 days)       o Resident abuse   1 G, 1 J          o Per day CMP    
                        o Employing                          ($1,000/day)     
                        convicted abusers                                     
4^th (147 days)      o Medication       8 G, 2 H          o 1^st per day   
                        errors                               CMP ($3,050/day) 
                        o Employing                          o 2^nd per day   
                        convicted abusers                    CMP ($400/day)   
                                                             o 3^rd per day   
                                                             CMP ($300/day)   
                                                             o 4^th per day   
                                                             CMP ($50/day)    
                                                             o Discretionary  
                                                             DPNA (141 days)  
5^th (19 days)       o Inadequate       1 G               o Per day CMP    
                        treatment or                         ($500/day)       
                        prevention of                                         
                        pressure sores                                        
                        o Accident hazards                                    
6^th (98 days)       o Poor nutrition   2 G, 1 K          o 1^st per day   
                        o Employing                          CMP ($3,050/day) 
                        convicted abusers                    o 2^nd per day   
                        o Poor quality of                    CMP ($750/day)   
                        care                                 o 3^rd per day   
                                                             CMP ($50/day)    
                                                             o 4^th per day   
                                                             CMP ($500/day)   
                                                             o Discretionary  
                                                             DPNA (67 days)   
7^th (52 days)       o Poor nutrition   0 G-level or      o Per day CMP    
                                           higher; 1 E, 2    ($50/day)        
                                           F                 o Discretionary  
                                                             DPNA (20 days)   
8^th (19 days)       o Home failed to   4 K               o Per instance   
                        provide necessary                    CMP ($10,000)    
                        services for daily                                    
                        living                                                
                        o Employing                                           
                        convicted abusers                                     
9^th (1 days)        o Poor quality of  1 G               o Per instance   
                        care                                 CMP ($5,000)     
10^th (5 days)       o Poor nutrition   0 G-level or      o Per day CMP    
                                           higher; 1 E, 2    ($500/day)       
                                           F                                  

Source: GAO analysis of LTC, OSCAR, and CMS regional office and state
enforcement case files.

Notes: Enforcement actions listed were federal sanctions imposed and
implemented (sanctions imposed but not implemented and state sanctions are
not included). The total number of D-level or higher deficiencies includes
all deficiencies--not just the deficiencies that occurred during the
noncompliance cycles cited--for the period fiscal years 2000 through 2005.

aExamples of the nature of deficiencies include D-level or higher
deficiencies.

bIn a number of cases, there is more than one per day CMP listed as an
enforcement action because CMPs can be raised or lowered based on changes
in deficiencies.

cHome open as of November 2006.

dHome closed in January 2004.

eHome closed in January 2004.

Appendix V: Number of Days between Survey and Implementation Date of DPNA
for Homes Reviewed, Fiscal Years 2000-2005

Days              Number of DPNAs Percentage of total 
                                   1                   4 
1-15 days                       3                  12 
16-30 days                      4                  16 
31-60 days                     15                  60 
61-90 days                      1                   4 
More than 90 days               1                   4 

Source: GAO analysis.

Notes: This analysis only includes DPNAs for which survey and
implementation dates were available. DPNAs implemented less than 15 days
from the date of the survey were for deficiencies cited in a prior survey;
in these cases, CMS continued the DPNA as the sanction for the current
deficiencies.

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

Now on p. 35.

Appendix VII: Comments from the State of California--Health and Human
Services Agency Department of Health Services

Now on p. 31.

Now on p. 30.

Now on p. 19.

Now on p. 47.

Now on p. 44.

Now on p. 39.

Now on p. 38.

Appendix VIII: Comments from the Michigan Department of Community Health

Appendix IX: Comments from the Texas Department of Aging and Disability
Services 

Now on p. 20.

Now on p. 51.

Now footnote 41 on p. 21.

Appendix X: GAO Contact and Staff Acknowledgments

GAO Contact

Kathryn G. Allen, (202) 512-7118 or [64][email protected]

Acknowledgments

In addition to the contact names above, Walter Ochinko, Assistant
Director; Elizabeth Bradley; Jacquelyn Clinton; Joanne Jee; Elizabeth T.
Morrison; Colbie Porter; Jessica Smith; and Karin Wallestad made key
contributions to this report

Related GAO Products

Nursing Homes: Despite Increased Oversight, Challenges Remain in Ensuring
High-Quality Care and Resident Safety. [65]GAO-06-117 . Washington, D.C.:
December 28, 2005.

Nursing Home Deaths: Arkansas Coroner Referrals Confirm Weaknesses in
State and Federal Oversight of Quality of Care. [66]GAO-05-78 .
Washington, D.C.: November 12, 2004.

Nursing Home Fire Safety: Recent Fires Highlight Weaknesses in Federal
Standards and Oversight. [67]GAO-04-660 . Washington D.C.: July 16, 2004.

Nursing Home Quality: Prevalence of Serious Problems, While Declining,
Reinforces Importance of Enhanced Oversight. [68]GAO-03-561 . Washington,
D.C.: July 15, 2003.

Nursing Homes: Public Reporting of Quality Indicators Has Merit, but
National Implementation Is Premature. [69]GAO-03-187 . Washington, D.C.:
October 31, 2002.

Nursing Homes: Quality of Care More Related to Staffing than Spending.
[70]GAO-02-431R . Washington, D.C.: June 13, 2002.

Nursing Homes: More Can Be Done to Protect Residents from Abuse.
[71]GAO-02-312 . Washington, D.C.: March 1, 2002.

Nursing Homes: Federal Efforts to Monitor Resident Assessment Data Should
Complement State Activities. [72]GAO-02-279 . Washington, D.C.: February
15, 2002.

Nursing Homes: Sustained Efforts Are Essential to Realize Potential of the
Quality Initiatives. [73]GAO/HEHS-00-197 . Washington, D.C.: September 28,
2000.

Nursing Home Care: Enhanced HCFA Oversight of State Programs Would Better
Ensure Quality. [74]GAO/HEHS-00-6 . Washington, D.C.: November 4, 1999.

Nursing Home Oversight: Industry Examples Do Not Demonstrate That
Regulatory Actions Were Unreasonable. [75]GAO/HEHS-99-154R . Washington,
D.C.: August 13, 1999.

Nursing Homes: Proposal to Enhance Oversight of Poorly Performing Homes
Has Merit. [76]GAO/HEHS-99-157 . Washington, D.C.: June 30, 1999.

Nursing Homes: Complaint Investigation Processes Often Inadequate to
Protect Residents. [77]GAO/HEHS-99-80 . Washington, D.C.: March 22, 1999.

Nursing Homes: Additional Steps Needed to Strengthen Enforcement of
Federal Quality Standards. [78]GAO/HEHS-99-46 . Washington, D.C.: March
18, 1999.

California Nursing Homes: Care Problems Persist Despite Federal and State
Oversight. [79]GAO/HEHS-98-202 . Washington, D.C.: July 27, 1998.

(290440)

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Highlights of [87]GAO-07-241 , a report to the Ranking Minority Member,
Committee on Finance, U.S. Senate

March 2007

NURSING HOMES

Efforts to Strengthen Federal Enforcement Have Not Deterred Some Homes
from Repeatedly Harming Residents

In 1998 and 1999 reports, GAO concluded that enforcement actions, known as
sanctions, were ineffective in encouraging nursing homes to maintain
compliance with federal quality requirements: sanctions were often
rescinded before being implemented because homes had a grace period to
correct deficiencies. In response, the Centers for Medicare & Medicaid
Services (CMS) began requiring immediate sanctions for homes that
repeatedly harmed residents. Using CMS enforcement and deficiency data,
GAO (1) analyzed federal sanctions from fiscal years 2000 through 2005
against 63 homes previously reviewed and (2) assessed CMS's overall
management of enforcement. The 63 homes had a history of harming residents
and were located in 4 states that account for about 22 percent of homes
nationwide.

[88]What GAO Recommends

GAO recommends that the CMS Administrator (1) develop an administrative
process for collecting civil money penalties more expeditiously and seek
legislation to implement this process effectively, as appropriate; (2)
strengthen its immediate sanctions policy; (3) expand its oversight of
homes with a history of harming residents; and (4) improve the
effectiveness of its enforcement data systems. CMS generally concurred
with GAO's recommendations.

From fiscal years 2000 through 2005, the number of sanctions decreased for
the 63 nursing homes GAO reviewed that had a history of serious quality
problems, a decline consistent with nationwide trends. While the decline
may reflect improved quality or changes to enforcement policy, it may also
mask survey weaknesses that understate quality problems, an issue GAO has
reported on since 1998. Although the number of sanctions decreased, the
homes generally were cited for more deficiencies that caused harm to
residents than other homes in their states. Almost half of the homes
reviewed continued to cycle in and out of compliance; 19 did so 4 times or
more. These homes temporarily corrected deficiencies and, even with
sanctions, were again found out of compliance on subsequent surveys.
Several weaknesses appeared to undermine the effectiveness of the
sanctions implemented against the homes reviewed. First, civil money
penalties (CMP), which by statute are not paid while under appeal--a
process that can take years--were generally imposed at the lower end of
the allowable dollar range. For example, the median per day CMP ranged
from $350 to $500, significantly below the maximum of $3,000 per day.
Second, CMS favored the use of sanctions that give homes more time to
correct deficiencies, increasing the likelihood that the sanctions would
not be implemented. Thus, more than half of the denial of payment for new
admissions (DPNA) that CMS imposed were the type that give homes 3 months
to correct deficiencies rather than those that only give homes up to 15
days. Third, there was no record of a sanction for about 22 percent of the
homes reviewed that met CMS's criteria for immediate sanctions, a problem
GAO also identified in 2003; moreover, 60 percent of DPNAs imposed as
immediate sanctions were not implemented until 1 to 2 months after
citation of the deficiency. Finally, involuntary termination of homes from
participating in the Medicare or Medicaid programs was rare because of
concerns about access to other nearby homes and resident transfer trauma;
2 of the 63 homes reviewed were involuntarily terminated because of
quality problems.

CMS's management of enforcement is hampered by the complexity of its
immediate sanctions policy and by its fragmented and incomplete data. Its
policy allows some homes with the worst compliance histories to escape
immediate sanctions. For example, a home cited with a serious deficiency
and that has not yet corrected an earlier serious deficiency is spared an
immediate sanction. Such rules may in part explain why the 63 homes
reviewed only had 69 instances of immediate sanctions over a 6-year period
despite being cited 444 times for deficiencies that harmed residents.
Although CMS initiated development of a new enforcement data system 6
years ago, it is fragmented and has incomplete national reporting
capabilities. CMS is taking additional steps to improve nursing home
enforcement, such as developing guidance to encourage more consistency in
CMP amounts, but it is not clear whether and when these initiatives will
address the enforcement weaknesses GAO found.

References

Visible links
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