Medicaid: Oversight of Institutions for the Mentally Retarded Should Be
Strengthened (Letter Report, 09/06/96, GAO/HEHS-96-131).

Pursuant to a congressional request, GAO reviewed the role of the Health
Care Financing Administration (HCFA), state agencies, and the Department
of Justice (DOJ) in overseeing quality of care in intermediate care
facilities for the mentally retarded (ICF/MR), focusing on: (1)
deficient care practices occurring in large ICF/MR; (2) whether state
agencies identify all serious deficiencies in these institutions; and
(3) weaknesses in HCFA and state oversight of ICF/MR care.

GAO found that: (1) serious quality-of-care deficiencies continue to
occur in some large public ICF/MR despite federal standards, HCFA and
state oversight, and DOJ investigations; (2) 122 ICF/MR had at least one
violation during the last four annual surveys; (3) these violations
included inadequate staffing, the lack of active treatment to enhance
independence and prevent degeneration, deficient medical and psychiatric
care, patient abuse and mistreatment, and insufficient protection of
residents' rights; (4) deficient care has led to residents' injury,
illness, physical degeneration, and death in some instances; (5) HCFA
and DOJ have identified more numerous and serious deficiencies than
state agencies, probably because of the state agencies' limited approach
and resources; (6) state agencies do not always sufficiently enforce
care standards and some institutions have been repeatedly cited for the
same serious violations; (7) HCFA has taken actions to improve its
oversight and the use of limited federal and state resources, but
weaknesses remain; (8) state surveys may lack independence because
states are responsible for surveying their own facilities; and (9)
concern over this lack of independence has increased, since federal
oversight of institutional care and state agencies' performance has
declined.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-96-131
     TITLE:  Medicaid: Oversight of Institutions for the Mentally 
             Retarded Should Be Strengthened
      DATE:  09/06/96
   SUBJECT:  State-administered programs
             Health care programs
             Mental care facilities
             Mental health care services
             Civil rights law enforcement
             Inspection
             Quality assurance
             Conflict of interest
             Monitoring
             Persons with disabilities
IDENTIFIER:  Medicaid Intermediate Care Facility for Mental Retardation 
             Program
             
******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO report.  Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved.  Major          **
** divisions and subdivisions of the text, such as Chapters,    **
** Sections, and Appendixes, are identified by double and       **
** single lines.  The numbers on the right end of these lines   **
** indicate the position of each of the subsections in the      **
** document outline.  These numbers do NOT correspond with the  **
** page numbers of the printed product.                         **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
** A printed copy of this report may be obtained from the GAO   **
** Document Distribution Center.  For further details, please   **
** send an e-mail message to:                                   **
**                                                              **
**                                            **
**                                                              **
** with the message 'info' in the body.                         **
******************************************************************


Cover
================================================================ COVER


Report to the Ranking Minority Member, Subcommittee on Post Office
and Civil Service, Committee on Governmental Affairs, and the
Honorable Ron Wyden, U.S.  Senate

September 1996

MEDICAID - OVERSIGHT OF
INSTITUTIONS FOR THE MENTALLY
RETARDED SHOULD BE STRENGTHENED

GAO/HEHS-96-131

Oversight of ICFs/MR

(101342)


Abbreviations
=============================================================== ABBREV

  CoP - condition of participation
  CRIPA - Civil Rights of Institutionalized Persons Act
  HCFA - Health Care Financing Administration
  HHS - Department of Health and Human Services
  ICF/MR - intermediate care facility for the mentally retarded
  ICFs/MR - intermediate care facility for the mentally retarded
  QMRP - qualified mental retardation professional

Letter
=============================================================== LETTER


B-265994

September 6, 1996

The Honorable David Pryor
Ranking Minority Member
Subcommittee on Post Office and Civil Service
Committee on Governmental Affairs
United States Senate

The Honorable Ron Wyden
United States Senate

Persons with mental retardation or other developmental disabilities
who live in large public institutions are often vulnerable to abuse
and neglect.  Such individuals' mental status can affect their
ability to communicate concerns, and many lack family members to
advocate on their behalf.  As of 1994, more than 62,000
developmentally disabled people lived in 434 large public
institutions certified to participate in Medicaid as intermediate
care facilities for the mentally retarded (ICF/MR).  These facilities
received more than $5.3 billion in Medicaid funds in 1994.\1

Advocacy organizations, the Department of Justice, and others have
identified continuing problems with quality of care and protection of
residents' rights in some large public institutions for people with
developmental disabilities.  Justice investigations have identified
serious injuries and deaths resulting from physical abuse of
residents, inadequate supervision, and failure to evaluate and treat
behavioral disorders.  Since 1990, Justice investigations have
identified dangerous conditions in 17 large public institutions in 10
states, all of which were certified to participate in Medicaid. 

Because ICFs/MR are financed mostly with Medicaid funds, the states
and the Health Care Financing Administration (HCFA) have primary
oversight responsibility for quality of care in these institutions. 
State agencies conduct annual inspections, called surveys, to assess
the quality of care provided and to certify that the institutions
continue to meet federal standards.  HCFA develops quality standards
and monitors state survey efforts to ensure that residents of
certified institutions receive adequate protection and care. 

Because of your concern that developmentally disabled individuals are
at risk of mistreatment in large public ICFs/MR, you asked that we
examine the role of HCFA, state survey agencies, and Justice in
overseeing quality of care in these public institutions.  This report
discusses (1) deficient care practices occurring in large ICFs/MR,
(2) whether state survey agencies identify all serious deficiencies
in these institutions, and (3) weaknesses in HCFA and state oversight
of quality of care. 

To obtain this information, we interviewed HCFA officials, provider
representatives, advocates, researchers, and other experts in the
field and reviewed the relevant literature.  We analyzed HCFA data on
deficiencies in large public ICFs/MR and reviewed a sample of state
ICF/MR survey reports.  We also interviewed Justice officials and
reviewed Justice Department investigation reports and other
documentation.  We conducted our work between May 1995 and July 1996
in accordance with generally accepted government auditing standards. 
A more detailed description of our scope and methodology appears in
appendix I. 


--------------------
\1 Although Medicaid also pays for ICF/MR care in small public
facilities and private institutions, the majority of Medicaid funding
to support individuals in ICFs/MR goes to large public facilities
with at least 16 beds. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Despite federal standards, HCFA and state agency oversight, and
continuing Justice Department investigations, serious quality-of-care
deficiencies continue to occur in some large public ICFs/MR. 
Insufficient staffing, lack of active treatment needed to enhance
independence and prevent loss of functional ability, and deficient
medical and psychiatric care are among those deficiencies that have
been frequently cited.  In a few instances, these practices have led
to serious harm to residents, including injury, illness, physical
degeneration, and death. 

States, which are the key players in ensuring that these institutions
meet federal standards, do not always identify all serious
deficiencies nor use sufficient enforcement actions to prevent the
recurrence of deficient care.  Direct federal surveys conducted by
HCFA and Justice Department investigations have identified more
numerous and more serious deficiencies in public institutions than
have state surveys.  Furthermore, even when serious deficiencies have
been identified, state agencies' enforcement actions have not always
been sufficient to ensure that these problems did not recur.  Some
institutions have been cited repeatedly for the same serious
violations. 

Although HCFA has recently taken steps to improve the process for
identifying serious deficiencies in these institutions and to more
efficiently use limited federal and state resources, several
oversight weaknesses remain.  Moreover, state surveys may lack
independence because states are responsible for surveying their own
institutions.  The effects of this potential conflict of interest
raise concern given the decline in direct federal oversight of both
the care in these facilities and the performance of state survey
agencies. 


   BACKGROUND
------------------------------------------------------------ Letter :2

Most people with mental retardation, cerebral palsy, epilepsy, or
other developmental disabilities who reside in large public
institutions have many cognitive, physical, and functional
impairments.  Because their impairments often limit their ability to
communicate concerns and many lack family members to advocate on
their behalf, they are highly vulnerable to abuse, neglect, or other
forms of mistreatment. 

As of 1994, more than 80 percent of residents in large public
institutions were diagnosed as either severely or profoundly
retarded.  More than half of all residents cannot communicate
verbally and require help with such basic activities as eating,
dressing, and using the toilet.  In addition, nearly half of all
residents have behavioral disorders and require special staff
attention, and almost one-third require the attention of psychiatric
specialists. 

The Congress established the ICF/MR program as an optional Medicaid
benefit in 1971 to respond to evidence of widespread neglect of the
developmentally disabled in state institutions, many of which
provided little more than custodial care.  The program provides
federal Medicaid funds to states in exchange for their institutions'
meeting minimum federal requirements for a safe environment,
appropriate active treatment, and qualified professional staff. 

In 1994, more than 62,000 developmentally disabled individuals lived
in 434 large public institutions certified as ICFs/MR for
participation in Medicaid.\2 States operated 392 of these
institutions; county and city governments operated 42.  The average
number of beds in each facility was 170, though facilities range in
size from 16 beds to more than 1,000 beds.  These institutions
provided services on a 24-hour basis as needed.  Services included
medical and nursing services, physical and occupational therapy,
psychological services, recreational and social services, and speech
and audiology services. 

Compared with residents in years past, those in large public
institutions today are older and more medically fragile and have more
complex behavioral and psychiatric disorders.  In recent years,
states have reduced the number of people living in these large public
ICFs/MR by housing them in smaller, mostly private ICFs/MR and other
community residential settings.  Large public institutions generally
are not accepting many new admissions, and many states have been
closing or downsizing their large institutions. 


--------------------
\2 Some of these ICFs/MR are collocated on a single campus and may be
identified as a single institution for other than Medicaid purposes. 


      HCFA AND STATE AGENCY
      OVERSIGHT
---------------------------------------------------------- Letter :2.1

HCFA published final regulations for quality of care in ICFs/MR in
1974 and revised them in 1988.\3 To be certified to participate in
Medicaid, ICFs/MR must meet eight conditions of participation (CoP)
contained in federal regulations.  The regulations are designed to
protect the health and safety of residents and ensure that they are
receiving active treatment for their disability and not merely
custodial care.\4 Each CoP encompasses a broad range of discrete
standards that HCFA determined were essential to a well-run facility. 
The CoPs cover most areas of facility operation, including
administration, minimum staffing requirements, provision of active
treatment services, health care services, and physical plant
requirements.  (See app.  II for a more detailed description of the
ICF/MR CoPs.) The eight CoPs comprise 378 specific standards and
elements. 

HCFA requires that states conduct annual on-site inspections of
ICFs/MR to assess the quality of care provided and to certify that
they continue to meet federal standards for Medicaid participation. 
The state health department usually serves as the survey agency. 
These agencies may also conduct complaint surveys at any time during
the year in response to specific allegations of unsafe conditions or
deficient care. 

If the surveyors identify deficiencies, the institution must submit a
plan of correction to the survey agency and correct--or show
substantial progress toward correcting--any deficiency within a
specified time period.  For serious deficiencies, those cited as
violating the CoPs, HCFA requires that the institution be terminated
from Medicaid participation within 90 days unless corrections are
made and verified by the survey agency during a follow-up visit.\5 If
a facility meets all eight CoPs but has deficiencies in one or more
of the standards or elements, it may have up to 12 months to achieve
compliance as long as the deficiency does not immediately jeopardize
residents' health and safety. 

HCFA's 10 regional offices oversee state implementation of Medicaid
ICF/MR regulations by monitoring state efforts to ensure that ICFs/MR
comply with the regulations.  HCFA regional office staff directly
survey some ICFs/MR--primarily to monitor the performance of state
survey agencies.  In addition, regional office staff provide
training, support, and consultation to state agency surveyors. 


--------------------
\3 The current regulations were based in part on standards for
institutional care for the developmentally disabled developed by the
Accreditation Council on Services for Persons With Developmental
Disabilities in the early 1980s. 

\4 Medicaid regulations define active treatment as training,
treatment, and health and related services that are directed toward
(1) the individual's acquiring behaviors necessary for functioning
with as much independence as possible and (2) preventing loss of
current function. 

\5 In addition, HCFA requires that a facility be terminated from
Medicaid participation within 23 days for any deficiency judged to
immediately jeopardize residents' health and safety. 


      DEPARTMENT OF JUSTICE
      OVERSIGHT
---------------------------------------------------------- Letter :2.2

The Department of Justice also has a role in overseeing public
institutions for people with developmental disabilities.  The Civil
Rights of Institutionalized Persons Act (CRIPA) authorizes Justice to
investigate allegations of unsafe conditions and deficient care and
to file suit to protect the civil rights of individuals living in
institutions operated by or on behalf of state or local
governments.\6 Justice Department investigations are conducted on
site by Justice attorneys and expert consultants who interview
facility staff and residents, review records, and inspect the
physical environment. 

The Justice Department seeks to determine whether a deviation from
current standards of practice exists and, if so, whether the
deviation violates an individual's civil rights.  Unlike HCFA,
Justice has no written standards or guidelines for its
investigations.  Justice Department officials told us that the
standards they apply are generally accepted professional practice
standards as defined in current professional literature and applied
by the experts they retain to inspect these institutions. 

Since the enactment of CRIPA in 1980, Justice has been involved in
investigations and enforcement actions in 38 cases involving large
public institutions for the developmentally disabled in 20 states and
Puerto Rico.  As of July 1996, 13 of these investigations remained
ongoing, 17 had been closed or resolved as a result of corrections
being made, 7 continued to be monitored, and 1 litigated case was on
appeal. 


--------------------
\6 These rights include the right to shelter, clothing, and medical
care; the right to be free from harm; the right to freedom from undue
restraint; and the right to minimally adequate treatment. 


   DEFICIENT CARE PRACTICES
   CONTINUE TO OCCUR IN LARGE
   PUBLIC ICFS/MR
------------------------------------------------------------ Letter :3

State Medicaid surveys and Justice Department investigations continue
to identify serious deficient care practices in large public ICFs/MR. 
A few of these practices have resulted in serious harm to residents,
including injury, illness, physical degeneration, and death. 


      LARGE PUBLIC ICFS/MR VIOLATE
      MEDICAID COPS
---------------------------------------------------------- Letter :3.1

As of August 1995, 28 of the 434 large public institutions were out
of compliance with at least one CoP at the time of their most recent
annual state survey.  On the last four annual surveys, 122 of these
institutions had at least one CoP violation.  (See table 1.) These
serious violations of Medicaid regulations commonly included
inadequate staffing to protect individuals from harm, failure to
provide residents with treatment needed to prevent degeneration, and
insufficient protection of residents' rights. 



                          Table 1
          
               CoP Violations in Large Public
                        Institutions


                                                 Complaint
Condition of                                       surveys
participation        Last four   Most recent     1991-94\a
----------------  ------------  ------------  ------------
Governing body              53            10             5
 and management
Client                      35             6            22
 protections
Facility                    53             6            11
 staffing
Active treatment           115            18             6
 services
Client behavior/            10             1             3
 facility
 practices
Health care                  8             0             1
 services
Physical                     3             0             0
 environment
Dietetic                     5             1             0
 services
 Total CoP             282            42            48
 violations in
 facilities\b
----------------------------------------------------------
\a In response to specific complaints, state survey agencies may
conduct full or partial surveys in ICFs/MR in addition to the
required annual survey. 

\b Some institutions were cited for CoP violations more than once
during the 4-year period. 

Sources:  Annual survey data based on our analysis of HCFA's Online
Survey, Certification and Reporting System database containing the
results of the most recent and three prior annual surveys of each
ICF/MR.  These were conducted between December 1990 and May 1995. 
Complaint survey data for 1991 to 1994 provided by HCFA, Health
Standards and Quality Bureau. 

Lack of adequate active treatment was the most common CoP violation
cited in large public ICFs/MR.  Serious active treatment deficiencies
were cited 115 times in 84 institutions on the past four annual
surveys.\7 Eighteen institutions were cited for this CoP deficiency
on their most recent annual survey.  Serious active treatment
deficiencies cited on the survey reports included, for example,
staff's failure to prevent dangerous aggressive behavior, failure to
ensure that a resident with a seizure disorder and a history of
injuries wore prescribed protective equipment, and failure to
implement recommended therapy and treatment to maintain a resident's
ability to function and communicate. 

State surveyors also frequently found other CoP violations.  They
found, for example, residents of one state institution who had
suffered severe hypothermia, pneumonia, and other serious illnesses
and injuries as a consequence of physical plant deterioration,
inadequate training and deployment of professional staff, failure to
provide needed medical treatment, drug administration errors, and
insufficient supervision of residents.  Surveyors determined that the
state had failed to provide sufficient management, organization, and
support to meet the health care needs of residents and cited the
facility for violating the governing body and management CoP. 

Other CoP violations found during this period include serious
staffing deficiencies and client protection violations.  Surveyors of
one state institution reported deficiencies such as excessive
turnover, insufficient staff deployment, frequent caseload changes,
and lack of staff training.  In this institution, surveyors also
found residents vulnerable to abuse and mistreatment by staff and
staff who failed to report allegations of mistreatment, abuse, and
neglect in a timely manner.  Other staff who were known to abuse
residents in the past continued to work with residents and did not
receive required human rights training. 

State agencies also conduct complaint surveys in large public ICFs/MR
in response to alleged deficiencies reported by employees, advocates,
family members, providers, or others.  State agencies' complaint
surveys found 48 serious CoP violations from 1991 through 1994.  The
most frequently cited CoP violations were client protections, cited
22 times, and facility staffing, cited 11 times.  (See table 1.)

State survey agencies generally certify that facilities have
sufficiently improved to come back into compliance with federal CoPs. 
When survey agencies find noncompliance with CoPs, they may revisit
the facility several times before certifying that a violation has
been corrected.  On average, it takes about 60 days for this to
occur. 


--------------------
\7 Some institutions were cited for CoP violations more than once
during the 4-year period. 


      DEFICIENT CARE CAN RESULT IN
      CIVIL RIGHTS VIOLATIONS
---------------------------------------------------------- Letter :3.2

Since 1990, the Justice Department has found seriously deficient care
that violated residents' civil rights in 17 large public institutions
for the mentally retarded or developmentally disabled in 10 states. 
Its investigations have identified instances of residents' dying,
suffering serious injury, or having been subjected to irreversible
physical degeneration from abuse by staff and other residents,
deficient medical and psychiatric care, inadequate supervision, and
failure to evaluate and treat serious behavioral disorders. 

Justice found, for example, that a resident died of internal injuries
in 1995 after an alleged beating by a staff member in one state
institution that had a pattern of unexplained physical injuries to
residents.  In addition, the Department found that in the same
facility a few years earlier, a moderately retarded resident suffered
massive brain damage and lost the ability to walk and talk due to
staff failure to provide emergency care in response to a
life-threatening seizure.  In another state institution, Justice
found facility incident reports from 1992 and 1993 documenting that
some residents were covered with ants and one resident was found with
an infestation of maggots and bloody drainage from her ear.  In
another facility, Justice found that a resident was strangled to
death in an incorrectly applied restraint in 1989. 

We reviewed Justice's findings letters issued since 1990 for 15
institutions.  The most common serious problems identified were
deficient medical and psychiatric care practices, such as inadequate
diagnosis and treatment of illness; inappropriate use of psychotropic
medications; excessive or inappropriate use of restraints; inadequate
staffing and supervision of residents; inadequate or insufficient
training programs for residents and staff; inadequate therapy
services; deficient medical record keeping; and inadequate feeding
practices. 

States rarely contest Justice's findings in court.  Only two CRIPA
cases involving large public ICFs/MR have been litigated.  Department
officials told us that the prospect of litigation usually prompts
states to negotiate with Justice and to initiate corrective actions. 
The Department resolved 11 CRIPA cases without having to take legal
action beyond issuing the findings letter because the states
corrected the deficiencies.  In another 12 cases involving large
public ICFs/MR, states agreed to enter into a consent decree with the
Department.\8 About half of these latter cases required a civil
contempt motion or other legal action to enforce the terms of the
decree. 


--------------------
\8 Consent decrees are judicially sanctioned agreements between
parties in dispute.  In these cases, they generally specify the
actions that the state agrees to take, the time frames for
implementing them, and the type and form of follow-up monitoring to
take place. 


   STATE SURVEY AGENCIES HAVE NOT
   IDENTIFIED ALL SERIOUS
   DEFICIENCIES
------------------------------------------------------------ Letter :4

State survey agencies may be certifying some large public ICFs/MR
that do not meet federal standards.  Although state survey agencies
have the primary responsibility for monitoring the care in ICFs/MR on
an ongoing basis, HCFA surveyors and Justice Department investigators
have identified more deficiencies--and more serious
deficiencies--than have state survey agencies. 

Federal monitoring surveys conducted by HCFA regional office staff
identified more numerous or more serious problems in some large
public ICFs/MR than did state agency surveys of the same
institutions.  According to HCFA, federal surveyors noted significant
differences between their findings and those of the state survey
agencies in 12 percent of federal monitoring surveys conducted in
large public ICFs/MR between 1991 and 1994.  HCFA surveyors determine
that significant differences exist when, in their judgment, they have
identified serious violations that existed at the time of the state
agency survey that the state surveyors did not identify. 

When conducting monitoring surveys, HCFA regional office staff use
the same standards and guidelines as state agency surveyors.  These
federal surveys are designed to assess the adequacy of state
certification efforts in ensuring that ICFs/MR meet federal
standards, and, for public facilities, the effectiveness of
delegating to states the responsibility for surveying and monitoring
the care provided in their own institutions. 

Justice also identified more deficiencies--and more serious
deficiencies--in some large public ICFs/MR than did state survey
agencies.  Although some deficient care practices found by Justice
were also noted on state agency surveys of the same institutions,
others were not noted by state surveyors.  For example, Justice found
seriously deficient care that violated residents' civil rights in 11
state institutions it investigated between 1991 and 1995.  Of these
11, state agency surveys cited only 2 for a CoP deficiency even
though the state surveys were conducted within a year of Justice's
inspection.  The types of serious deficiencies often cited in Justice
reports but not in state agency surveys of the same institution
included deficiencies in medical practices and psychiatric care,
inappropriate use of psychotropic medications, and excessive use of
restraints. 


   SEVERAL FACTORS WEAKEN HCFA AND
   STATE OVERSIGHT EFFORTS
------------------------------------------------------------ Letter :5

Several factors have contributed to the inability or failure of HCFA
and state survey agencies to identify and prevent recurring
quality-of-care deficiencies in some large public ICFs/MR.  First,
states have not identified all important quality-of-care concerns
because of the limited approach and resources of Medicaid surveys. 
Second, enforcement efforts have not been sufficient to ensure that
deficient care practices do not recur.  Third, because states are
responsible for both delivering and monitoring the care provided in
most public institutions, state agency surveys of these institutions
may lack the necessary independence to avoid conflicts of interest. 
Finally, a decline in direct HCFA oversight has reduced HCFA's
ability to monitor problems and help correct them.  Although HCFA has
recently begun to implement several initiatives to address some of
these weaknesses, others remain unresolved. 


      MEDICAID SURVEYS' APPROACH
      AND RESOURCES MAY HINDER
      PROBLEM IDENTIFICATION
---------------------------------------------------------- Letter :5.1

Differences between the approach and resources of Medicaid surveys
and Justice Department investigations may explain why Medicaid
surveys have not always identified the serious deficiencies that
Justice investigations have.  State surveyors examine a broad range
of facility practices, environmental conditions, and client outcomes
to ensure minimum compliance with HCFA standards.  Surveys are
generally limited to a review of the current care provided to a
sample of residents in an institution, are conducted annually, and
may last 1 to 2 weeks at a large public institution. 

In contrast, Justice Department investigations are intended to
determine whether civil rights violations exist.  They generally
focus on deficient care practices about which Justice has received
specific allegations, often related to medical and psychiatric care. 
Such investigations may include a review of care provided to all
individuals in a facility, extend over several months, and include an
examination of client and facility records covering several years to
assess patterns of professional practice. 

The professional qualifications and expertise of individuals
conducting state agency surveys and Justice's investigations also
differ.  State surveyors are usually nurses, social workers, or
generalists in a health or health-related field.  Not all have
expertise in developmental disabilities.  Although HCFA recommends
that at least one member of a state survey team be a qualified mental
retardation professional (QMRP), 17 states had no QMRPs on their
survey agency staffs as of March 1996.\9 Justice's investigators are
usually physicians, psychiatrists, therapists, and others with
special expertise in working with the developmentally disabled. 
According to HCFA and Justice officials, Justice Department
investigators generally can better challenge the judgment of
professionals in the institution regarding the care provided to
individual residents than can state surveyors. 

HCFA officials acknowledged that the differences between Medicaid
surveys and Justice investigations could explain some of the
differences between their findings.  They told us, however, that they
have begun to implement several changes to the survey process to
increase the likelihood that state surveys will identify all serious
deficiencies.  These include new instructions to surveyors for
assessing the seriousness of deficiencies, increased training for
surveyors and providers, and implementation of a new survey protocol
intended to focus more attention on critical quality-of-care elements
and client outcomes. 

The new survey protocol reduces the number of items that must be
assessed each year and places greatest emphasis on client
protections, active treatment, client behavior and facility
practices, and health care services.  The new protocol gives
surveyors latitude, however, to expand the scope of a facility's
survey if they find specific problems.  HCFA's pilot test of the new
protocol showed that although surveyors identified fewer deficiencies
overall than with the standard protocol, they issued more citations
for the most serious CoP violations.  HCFA is conducting training for
state surveyors and providers on this new protocol and plans to
monitor certain aspects of its implementation. 


--------------------
\9 Medicaid regulations define a QMRP as an individual who (1) has at
least 1 year of experience working directly with people with mental
retardation or other developmental disabilities and (2) is a
physician, registered nurse, or an individual with a bachelor's
degree in a health or human services-related discipline. 


      MEDICAID ENFORCEMENT EFFORTS
      ARE INSUFFICIENT
---------------------------------------------------------- Letter :5.2

Even when state survey agencies identify deficiencies in large public
ICFs/MR, state enforcement efforts do not always ensure that
facilities' corrections are sufficient to prevent the recurrence of
the same serious deficiencies.  Although state survey agencies almost
always certify that serious deficiencies have been corrected, they
subsequently cite many institutions for the same violations.  For
example, between December 1990 and May 1995, state survey agencies
cited 33 large public institutions for violating the same CoP on at
least one subsequent survey within the next 3 years.  Moreover, 25
were cited for violating the same CoP on one or more consecutive
surveys. 

HCFA officials told us that the sanctions available to the states
under Medicaid have not always been effective in preventing recurring
violations and are rarely used against large public ICFs/MR.  Only
two possible sanctions are available under the regulations for CoP
violations:  suspension--that is, denial of Medicaid reimbursement
for new admissions--or termination from the program.\10 Medicaid
regulations do not contain a penalty for repeat violations that occur
after corrective action. 

Denying reimbursement to large public institutions for new admissions
is not a very relevant sanction because many of these institutions
are downsizing or closing and are not generally accepting many new
admissions.  Furthermore, terminating a large institution from the
Medicaid program is counterproductive because denying federal funds
may further compromise the care of those in the institution.  No
large public institutions were terminated from Medicaid for reasons
of deficient care and not reinstated from 1990 through 1994, the
period for which data were readily available. 

HCFA officials told us that they were particularly concerned about
institutions where surveyors found repeat violations of the same
CoPs.  Although the officials have not explored the usefulness of
other sanctions or approaches to enforcement for large public
ICFs/MR, they told us that the newly implemented survey procedure was
intended to better identify the underlying causes of facility
deficiencies, possibly reducing repeat violations. 


--------------------
\10 Termination includes not renewing an annual provider agreement or
discontinuing an agreement before its expiration date. 


      STATE OVERSIGHT OF ICFS/MR
      LACKS INDEPENDENCE
---------------------------------------------------------- Letter :5.3

A potential conflict of interest exists because states both operate
large public ICFs/MR and certify that these institutions meet federal
standards for Medicaid participation.  States can lose substantial
funds if care is found to be seriously deficient and their
institutions lose Medicaid certification.  The state survey agency,
usually a part of a state's department of health, conducts surveys to
determine whether ICFs/MR are in compliance with quality standards. 
It reports and makes its recommendation to the state Medicaid agency,
which makes the final determination of provider certification. 
Medicaid rules do not require any independent federal or other
outside review for a state's ICF/MR to remain certified. 

HCFA officials, provider representatives, and advocates have
expressed concern that this lack of independence compromises the
integrity of the survey process.  HCFA regional officials told us of
instances in which state surveyors were pressured by officials from
their own and other state agencies to overlook problems or downplay
the seriousness of deficient care in large state institutions.  Of
concern to the state officials in these instances was the imposition
of sanctions that would have cost the state federal Medicaid funds. 
HCFA regional office staff may mitigate the effects of potential
conflicts of interest by training surveyors, accompanying state
surveyors during their inspections, or directly surveying the
institutions themselves. 


      FEDERAL OVERSIGHT HAS
      DECLINED DRAMATICALLY
---------------------------------------------------------- Letter :5.4

Direct federal oversight has declined dramatically in recent years
despite its importance for independent monitoring of the care
provided in large public institutions and the performance of state
survey agencies.  HCFA's primary oversight mechanism has been the
federal monitoring survey, which assesses state agency determinations
of provider compliance.  As shown in figure 1, the number of federal
monitoring surveys conducted in large public ICFs/MR has declined
from 31 in 1990 to only 5 in 1995. 

   Figure 1:  Federal Monitoring
   Surveys in Large Public
   ICFs/MR, 1990-95

   (See figure in printed
   edition.)

Source:  HCFA's Online Surveys Certification and Reporting System. 

HCFA began surveying large public ICFs/MR in response to
congressional hearings in the mid-1980s that detailed many instances
of poor quality and abusive conditions in Medicaid-certified
institutions for the developmentally disabled.  In 1985, HCFA hired
45 employees, about half of whom had special expertise in working
with persons with developmental disabilities, to conduct direct
federal surveys.  Officials from HCFA and Justice, providers, and
experts told us that this effort helped improve the quality of care
in many institutions and stimulate improvements to the state survey
process. 

The recent decline in federal oversight, however, has increased the
potential for abusive and dangerous conditions in these institutions. 
HCFA officials told us that regional office staff have neither
conducted sufficient reviews nor acted on facility deficiencies in
recent years because of competing priorities and resource
constraints.  According to these officials, resources previously used
for federal surveys of ICFs/MR have been diverted to allow compliance
with requirements for increased federal monitoring surveys of nursing
facilities and for other reasons.\11

Regional office officials report that these resource constraints have
limited their current review efforts to mostly private ICFs/MR of six
beds or less. 

HCFA regional office staff are now less able to identify deficiencies
or areas of weakness and to provide targeted training or other
support to state surveyors.  State survey agencies have recently
reported a decline in the number of serious CoP violations in large
public ICFs/MR.  Yet without direct monitoring, HCFA cannot determine
whether this decline is due to real improvements in conditions or to
decreased vigilance or competence on the part of state agency
surveyors. 

Although HCFA officials have expressed concern about the current
level of direct federal oversight of state survey agencies and large
public ICFs/MR, they have no plans to increase resources for these
efforts.  Instead, HCFA officials told us they are examining ways to
better target their limited oversight resources.  While they are
planning to improve their use of existing data for monitoring
purposes, they also plan to develop a system of quality indicators to
provide information on facility conditions on an ongoing basis. 
These officials told us that they expect this system of quality
indicators to be operational in about 4 years. 


--------------------
\11 The Omnibus Budget Reconciliation Act of 1987 required HCFA to
conduct federal surveys in 5 percent of nursing facilities annually. 


   CONCLUSIONS
------------------------------------------------------------ Letter :6

The ICF/MR program--intended to provide a safe environment with
appropriate treatment by qualified professional staff--serves a
particularly vulnerable population of individuals with mental
retardation and other developmental disabilities in large public
ICFs/MR.  Most of these institutions comply with Medicaid
quality-of-care standards.  Serious deficiencies continue to occur,
however, in some institutions despite federal standards, oversight by
HCFA and state agencies, and continuing investigations by the
Department of Justice. 

States are the key players in ensuring that ICFs/MR meet federal
standards.  Although their oversight includes annual on-site visits
by state survey agencies to all large public ICFs/MR, these agencies
have not identified all instances of seriously deficient care.  HCFA
reviews and Justice Department investigations have identified some
instances of deficient care, including medical care, that were not
reported in state surveys.  Furthermore, serious deficiencies
continue to recur in some of these institutions. 

Effective federal oversight of large public ICFs/MR and the state
survey agencies that inspect them requires that the inspection
process be well defined and include essential elements of health
care, active treatment, and safety; that enforcement efforts prevent
the recurrence of problems; that surveyors be independent; and that
HCFA officials have sufficient information to monitor the performance
of institutions and state survey agencies.  The approach and
resources of Medicaid surveys, the lack of effective enforcement
mechanisms, the potential conflicts of interest occurring when states
are charged with surveying the facilities they operate, and the
decline in direct federal monitoring efforts have all weakened
oversight of large public ICFs/MR and state survey agencies. 

HCFA has begun to implement changes to the structure and process of
state agency surveys of ICFs/MR.  The new approach to surveys may
result in identifying more serious deficiencies in large public
institutions.  This change, and others that HCFA is implementing to
more efficiently use limited federal and state resources, may also
reduce the impact of some of the other weaknesses we have identified. 
Nonetheless, the lack of independence in state surveys coupled with
little direct federal monitoring remains a particular concern.  HCFA
needs to strengthen the oversight of its ICF/MR program and collect
sufficient information in a timely manner to assess the effectiveness
of the new approach in identifying and ensuring the correction of
deficient care. 


   RECOMMENDATIONS
------------------------------------------------------------ Letter :7

To improve HCFA's oversight of large public ICFs/MR, we recommend
that the Administrator of HCFA

  -- assess the effectiveness of its new survey approach in ensuring
     that serious deficiencies at large public ICFs/MR are identified
     and corrected;

  -- take steps, such as enhanced monitoring of state survey agencies
     or direct inspection of institutions, to address the potential
     conflict of interest that occurs when states are both the
     operators and inspectors of ICFs/MR; and

  -- determine whether the application of a wider range of
     enforcement mechanisms would more effectively correct serious
     deficiencies and prevent their recurrence. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :8

HCFA and the Justice Department reviewed a draft of this report and
provided comments, which are reproduced in appendixes III and IV. 
Both agencies generally agreed with the information provided in this
report.  In their comments, HCFA and Justice recognized the need for
improvements in government oversight of the ICF/MR program to ensure
adequate services and safe living conditions for residents of large
public institutions.  HCFA also provided technical comments, which we
have incorporated as appropriate. 

HCFA is implementing a new survey approach and in its comments agreed
with our recommendation that it should assess the effectiveness of
this approach.  To monitor the implementation of its new approach,
federal surveyors will accompany state surveyors on a sample of
facility surveys, including a minimum of one large public institution
in each state.  HCFA plans to analyze the results of these monitoring
surveys to determine, among other things, whether the new protocol,
as designed, is applicable to large public institutions.  These are
steps in the right direction.  Given the serious problems we have
identified in ICFs/MR and in state survey agency performance, we
believe HCFA must move quickly to determine whether the new survey
process improves the identification of serious deficiencies at large
public institutions and make appropriate adjustments if it does not. 

In its comments, HCFA did not propose specific measures to address
our recommendation on the potential conflict of interest that occurs
when states are both operators and inspectors of ICFs/MR.  HCFA
stated that resource constraints have resulted in a significant
reduction of on-site federal oversight of state survey agencies and
of care in large public ICFs/MR.  We believe that HCFA's plan to
increase its presence in the field as part of monitoring
implementation of the new survey protocol may reduce the impact of
potential conflicts of interest at some institutions.  However, HCFA
must find a more lasting and comprehensive solution to strengthen the
independence of the survey process by program improvements or
reallocation of existing resources to enhanced monitoring or direct
inspection of institutions. 

HCFA agreed with our recommendation that it determine whether a wider
range of enforcement actions would bring about more effective
correction of serious deficiencies and prevent their recurrence. 
HCFA plans to assess whether a wider range of mechanisms would be
appropriate for the ICF/MR program on the basis of an evaluation of
the impact of alternative enforcement mechanisms for nursing homes
due to the Congress in 1997. 


---------------------------------------------------------- Letter :8.1

As arranged with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this report
until 30 days from its date of issue.  We will then send copies to
the Secretary of the Department of Health and Human Services; the
Administrator, Health Care Financing Administration; the U.S. 
Attorney General; and other interested parties.  Copies of this
report will be made available to others upon request. 

If you or your staff have any questions about this report, please
contact me at (202) 512-7114 or Bruce D.  Layton, Assistant Director,
at (202) 512-6837.  Other GAO contacts and contributors to this
report are listed in appendix V. 

William J.  Scanlon
Director, Health Financing
 and Systems Issues


SCOPE AND METHODOLOGY
=========================================================== Appendix I

To address our study objectives, we (1) conducted a review of the
literature; (2) interviewed federal agency officials, provider and
advocacy group representatives, and national experts on mental
retardation and developmental disabilities; (3) analyzed national
data from inspection surveys of intermediate care facilities for the
mentally retarded (ICF/MR); and (4) collected and reviewed HCFA,
state agency, and Justice Department reports on several state
institutions. 

We interviewed officials or representatives from the Health Standards
and Quality Bureau of HCFA; HCFA regional offices; the Administration
on Developmental Disabilities; the President's Committee on Mental
Retardation in HHS; the Civil Rights Division in the Justice
Department; the National Association of State Directors of
Developmental Disabilities Services, Inc.; the National Association
of Developmental Disabilities Councils; the National Association of
Protection and Advocacy Systems; the Accreditation Council on
Services for People With Disabilities; and the Association of Public
Developmental Disabilities Administrators. 

Data reviewed at HCFA consisted of automated data and reports
submitted by states and regional offices.  We analyzed national data
from HCFA's Online Survey, Certification and Reporting System for
state and federal ICF/MR surveys conducted between December 1990 and
May 1995.  Information from surveys conducted before December 1990
was not available at the time of our review.  We limited our analysis
of HCFA and state data on deficiencies to information about
institutions participating in Medicaid as of August 1995.  We also
reviewed state agency survey reports for 12 large public ICFs/MR, 5
of which were also the subject of Justice investigations between 1991
and 1995. 

We reviewed Justice's records since 1990, including findings letters,
consent decrees, court filings and actions, and other supporting
documentation and analyses related to enforcement of the Civil Rights
of Institutionalized Persons Act. 

We conducted our work between May 1995 and July 1996 in accordance
with generally accepted government auditing standards. 


CONDITIONS OF PARTICIPATION
========================================================== Appendix II

Following are the eight conditions of participation for intermediate
care facilities for the mentally retarded (ICF/MR), as prescribed by
the Secretary and contained in federal regulations. 

GOVERNING BODY AND MANAGEMENT

The standards that must be addressed under this condition include the
following:  the facility must (1) have a governing body that
exercises general control over operations; (2) be in compliance with
federal, state, and local laws pertaining to health, safety, and
sanitation; (3) develop and maintain a comprehensive record keeping
system that safeguards client confidentiality; (4) enter into written
agreements with outside resources, as necessary, to provide needed
services to residents; and (5) be licensed under applicable state and
local laws. 

CLIENT PROTECTIONS

To comply with this condition, the facility must (1) undertake
certain actions and provide mechanisms to protect the rights of
residents; (2) adequately account for and safeguard residents' funds;
(3) communicate with and promote the participation of residents'
parents or legal guardians in treatment plans and decisions; and (4)
have and implement policies and procedures that prohibit
mistreatment, neglect, or abuse of residents. 

FACILITY STAFFING

Standards for facility staffing include requirements that (1) each
individual's active treatment program be coordinated, integrated, and
monitored by a qualified mental retardation professional; (2)
sufficient qualified professional staff be available to implement and
monitor individual treatment programs; (3) the facility not rely upon
residents or volunteers to provide direct care services; (4) minimum
direct care staffing ratios be adhered to; and (5) adequate initial
and continuing training be provided to staff. 

ACTIVE TREATMENT

Regulations specify that each resident receive a continuous active
treatment program that includes training, treatment, and health and
related services for the resident to function with as much
self-determination and independence as possible.  Standards under
this condition include (1) procedures for admission, transfer, and
discharge; (2) requirements that each resident receive appropriate
health and developmental assessments and have an individual program
plan developed by an interdisciplinary team; (3) requirements for
program plan implementation; (4) adequate documentation of resident
performance in meeting program plan objectives; and (5) proper
monitoring and revision of individual program plans by qualified
professional staff. 

CLIENT BEHAVIOR AND FACILITY
PRACTICES

Standards under this condition specify that the facility (1) develop
and implement written policies and procedures on the interaction
between staff and residents and (2) develop and implement policies
and procedures for managing inappropriate resident behavior,
including those on the use of restrictive environments, physical
restraints, and drugs to control behavior. 

HEALTH CARE SERVICES

To meet the requirements of this condition, the facility must (1)
provide preventive and general medical care and ensure adequate
physician availability; (2) ensure physician participation in
developing and updating each individual's program plan; (3) provide
adequate licensed nursing staff to meet the needs of residents; (4)
provide or make arrangement for comprehensive dental care services;
(5) ensure that a pharmacist regularly reviews each resident's drug
regimen; (6) ensure proper administration, record keeping, storage,
and labeling of drugs; and (7) ensure that laboratory services meet
federal requirements. 

PHYSICAL ENVIRONMENT

Requirements under this condition include those governing (1)
residents' living environment, (2) size and furnishing of resident
bedrooms, (3) storage space for resident belongings, (4) bathrooms,
(5) heating and ventilation systems, (6) floors, (7) space and
equipment, (8) emergency plans and procedures, (9) evacuation drills,
(10) fire protection, (11) paint, and (12) infection control. 

DIETETIC SERVICES

Standards under this condition are designed to ensure that (1) each
resident receives a nourishing, well-balanced, and varied diet,
modified as necessary; (2) dietary services are overseen by
appropriately qualified staff; and (3) dining areas be appropriately
staffed and equipped to meet the developmental and assistance needs
of residents. 




(See figure in printed edition.)Appendix III
COMMENTS FROM THE HEALTH CARE
FINANCING ADMINISTRATION
========================================================== Appendix II



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)




(See figure in printed edition.)Appendix IV
COMMENTS FROM THE DEPARTMENT OF
JUSTICE
========================================================== Appendix II



(See figure in printed edition.)


GAO CONTACTS AND STAFF
ACKNOWLEDGMENTS
=========================================================== Appendix V

GAO CONTACTS

Bruce D.  Layton, Assistant Director, (202) 512-6837
Eric R.  Anderson, Senior Evaluator, (202) 512-7129

STAFF ACKNOWLEDGMENTS

In addition to those named above, the following team members made
important contributions to this report:  James Musselwhite and Anita
Roth, evaluators; Paula Bonin, computer specialist; Karen Sloan,
communications analyst; George Bogart, attorney-advisor; and Leigh
Thurmond and Jamerson Pender, interns. 

RELATED GAO PRODUCTS

Medicaid:  Waiver Program for Developmentally Disabled Is Promising
But Poses Some Risks (GAO/HEHS-96-120, July 22, 1996). 

Financial Management:  Oversight of Small Facilities for the Mentally
Retarded and Developmentally Disabled (GAO/AIMD-94-152, Aug.  12,
1994). 

Medicaid:  Federal Oversight of Kansas Facility for the Retarded
Inadequate (GAO/HRD-89-85, Sept.  29, 1989). 


*** End of document. ***