California Nursing Homes: Federal and State Oversight Inadequate to
Protect Residents in Homes With Serious Care Violations (Testimony,
07/28/98, GAO/T-HEHS-98-219).

GAO discussed its findings on nursing home care in California, focusing
on: (1) identified in recent state and federal quality reviews that
California conducted in the last 2 or 3 years; (2) obstacles to federal
and state efforts to identify care problems; and (3) implementation of
federal enforcement policies to ensure that homes correct problems
identified and then sustain compliance with federal requirements.

GAO noted that: (1) despite the presence of a considerable federal and
state oversight infrastructure, a significant number of California
nursing homes were not and currently are not sufficiently monitored to
guarantee the safety and welfare of nursing home residents; (2) GAO came
to this conclusion by using information from California's Department of
Health Services (DHS) reviews of nursing home care covering 95 percent
of the state's nursing homes and Health Care Financing Administration
(HCFA) data on federal enforcement actions taken; (3) looking back at
medical record information from 1993, GAO found that, of 62 resident
cases sampled, residents in 34 cases received care that was
unacceptable; (4) however, in the absence of autopsy information that
establishes the cause of death, GAO cannot be conclusive about whether
this unacceptable care may have contributed directly to individual
deaths; (5) as for the extent of care problems currently, between July
1995 and February 1998, California surveyors cited 407 homes for care
violations they classified as serious under federal or state deficiency
categories; (6) moreover, GAO believes that the extent of current
serious care problems portrayed in the federal and state data is likely
to be understated; (7) the predictable timing of on-site reviews, the
questionable accuracy and completeness of medical records, and the
limited number of residents' care reviewed by surveyors in each home
have each likely shielded some problems from surveyor scrutiny; (8) even
when the state identifies serious deficiencies, the HCFA enforcement
policies have not been effective in ensuring that the deficiencies are
corrected and remain corrected; (9) California's DHS, consistent with
HCFA's guidance on imposing sanctions, grants 98 percent of noncompliant
homes a 30- to 45-day grace period to correct deficiencies without
penalty, regardless of their past performance; (10) only the few homes
that qualify as posing the greatest danger are not provided such a grace
period; (11) in addition, only 16 of the roughly 1,400 California homes
participating in Medicare and Medicaid have been terminated from
participation, most of them have been reinstated quickly, and many have
had subsequent compliance problems; and (12) recognizing shortcomings in
enforcement, California officials told GAO that they launched a pilot
program in July 1998 intended to target for increased vigilance certain
of the state's nursing homes with the worst compliance records.

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

 REPORTNUM:  T-HEHS-98-219
     TITLE:  California Nursing Homes: Federal and State Oversight 
             Inadequate to Protect Residents in Homes With Serious
             Care Violations
      DATE:  07/28/98
   SUBJECT:  Elder care
             Sanctions
             Elderly persons
             Nursing homes
             Surveys
             Noncompliance
             Medical records
             State programs
             Safety standards
IDENTIFIER:  California
             Medicare Program
             Medicaid Program
             
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Cover
================================================================ COVER


Before the Special Committee on Aging, U.S.  Senate

For Release on Delivery
Expected at 10:00 a.m.
Tuesday, July 28, 1998

CALIFORNIA NURSING HOMES - FEDERAL
AND STATE OVERSIGHT INADEQUATE TO
PROTECT RESIDENTS IN HOMES WITH
SERIOUS CARE VIOLATIONS

Statement of William J.  Scanlon, Director
Health Financing and Systems Issues
Health, Education, and Human Services Division

GAO/T-HEHS-98-219

GAO/HEHS-98-219T


(101753)


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

  DHS - Department of Health Services
  HCFA - Health Care Financing Administration
  HHS - Department of Health and Human Services
  OBRA87 - Omnibus Budget Reconciliation Act of 1987
  OSCAR - On-Line Survey, Certification, and Reporting

CALIFORNIA NURSING HOMES:  FEDERAL
AND STATE OVERSIGHT INADEQUATE TO
PROTECT RESIDENTS IN HOMES WITH
SERIOUS CARE VIOLATIONS
============================================================ Chapter 0

Mr.  Chairman and Members of the Committee: 

Thank you for inviting me to discuss our findings on nursing home
care in California.  The federal government has a major stake in
nursing home care, having paid the nation's roughly 17,000 homes $28
billion in 1997 through the Medicare and Medicaid programs.  While
the public relies on nursing homes to provide care to one of the most
vulnerable segments of our population, allegations were raised to
your Committee that some 3,000 residents died in more than 900
California nursing homes in 1993 as a result of malnutrition,
dehydration, sepsis from improperly treated urinary tract infections,
and other serious conditions for which they did not receive
acceptable care. 

The information I am presenting today is based on our recently issued
report to your Committee.\1 Although I will begin with the care
problems found through reviewing medical records for a sample of 62
residents who died in 1993, the majority of my comments will focus on
our analysis of the current information on the quality of care in all
California nursing homes.  This analysis focused on care problems
identified in recent state and federal quality reviews that
California conducted in the last 2 or 3 years, obstacles to federal
and state efforts to identify care problems, and implementation of
federal enforcement policies to ensure that homes correct problems
identified and then sustain compliance with federal requirements. 
The federal and state agencies with oversight responsibility for
homes receiving funds from Medicare and Medicaid are the Health Care
Financing Administration (HCFA) and the state of California's
Department of Health Services (DHS).  Together, they oversee care in
the more than 1,400 California nursing homes, representing more than
141,000 resident beds.  Medicare and Medicaid paid these homes
approximately $2 billion in 1997 to care for nursing home residents. 

In brief, we found that despite the presence of a considerable
federal and state oversight infrastructure, a significant number of
California nursing homes were not and currently are not sufficiently
monitored to guarantee the safety and welfare of nursing home
residents.  We came to this conclusion, for the most part, by using
information from California's DHS reviews of nursing home care
covering 95 percent of the state's nursing homes and HCFA data on
federal enforcement actions taken. 

Looking back at medical record information from 1993, we found that,
of 62 resident cases sampled,\2 residents in 34 cases received care
that was unacceptable.  However, in the absence of autopsy
information that establishes the cause of death, we cannot be
conclusive about whether this unacceptable care may have contributed
directly to individual deaths. 

As for the extent of care problems currently, between July 1995 and
February 1998, California surveyors cited 407 homes--nearly a third
of the 1,370 homes in our analysis--for care violations they
classified as serious under federal or state deficiency categories. 
Moreover, we believe that the extent of current serious care problems
portrayed in these federal and state data is likely to be
understated.  The predictable timing of on-site reviews, the
questionable accuracy and completeness of medical records, and the
limited number of residents whose care was reviewed by surveyors in
each home have each likely shielded some problems from surveyor
scrutiny. 

Finally, even when the state identifies serious deficiencies, HCFA's
enforcement policies have not been effective in ensuring that the
deficiencies are corrected and remain corrected.  For example, DHS
surveyors cited about 1 in 11 California homes--accounting for over
17,000 resident beds--twice in consecutive annual reviews for
violations involving harm to residents.  (The national average was
slightly worse--about one in nine homes were cited twice
consecutively for violations of federal requirements involving harm
to residents.) Nevertheless, HCFA generally took a lenient stance
toward many of these homes.  California's DHS, consistent with HCFA's
guidance on imposing sanctions, grants 98 percent of noncompliant
homes a 30- to 45-day grace period to correct deficiencies without
penalty, regardless of their past performance.  Only the few homes
that qualify as posing the greatest danger are not provided such a
grace period.  In addition, only 16 of the roughly 1,400 California
homes participating in Medicare and Medicaid have been terminated
from participation, most of them have been reinstated quickly, and
many have had subsequent compliance problems.  Recognizing
shortcomings in enforcement, California officials told us that they
launched a pilot program this month intended to target for increased
vigilance certain of the state's nursing homes with the worst
compliance records. 


--------------------
\1 California Nursing Homes:  Care Problems Persist Despite Federal
and State Oversight (GAO/HEHS-98-202, July 27, 1998). 

\2 Our criteria for inclusion in the sample were that a case came
from a home with at least 5 of the allegedly avoidable deaths and at
least 5 such deaths per 100 beds.  The 62 cases in our sample were
drawn randomly and came from 15 nursing homes. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:1

The federal responsibility for overseeing nursing homes belongs to
HCFA, an agency of the Department of Health and Human Services (HHS). 
Among other tasks, HCFA defines federal requirements for nursing home
participation in Medicare and Medicaid and imposes sanctions against
homes failing to meet these requirements.  HCFA funds state survey
agencies to do the on-site reviews of nursing homes' compliance with
Medicare and Medicaid participation requirements.  In California, DHS
performs nursing home oversight, and its authority is specifically
defined in state and federal law and regulations.  As part of this
role, DHS (1) licenses nursing homes to do business in California;
(2) certifies to the federal government, by conducting reviews of
nursing homes, that the homes are eligible for Medicare and Medicaid
payment; and (3) investigates complaints about care provided in
licensed homes.  To assess nursing home compliance with federal and
state laws and regulations, DHS relies on two types of reviews--the
standard survey and the complaint investigation.  The standard
survey, which must be conducted no less than once every 15 months at
each home, entails a team of state surveyors spending several days on
site conducting a broad review of care and services with regard to
meeting the assessed needs of the residents.\3 The complaint
investigation involves conducting a targeted review with regard to a
specific complaint filed against a home. 

The state and HCFA each has its own system for classifying
deficiencies that determines which remedies, sanctions, or other
actions should be taken against a noncompliant home.  For standard
surveys, California's DHS typically cites deficiencies using HCFA's
classification and sanctioning scheme; for complaint investigations,
it generally uses the state's classification and penalty scheme. 

Table 1 shows HCFA's classification of deficiencies and the
accompanying levels of severity and compliance status. 



                          Table 1
          
          HCFA's Deficiency Classification System

                                              Compliance
                                              status of
                                              home cited
                                Level of      for this
HCFA deficiency category        severity      deficiency
------------------------------  ------------  ------------
Immediate jeopardy to resident  Most serious  Noncompliant
health or
safety

Actual harm that does not put   Serious       Noncompliant
resident in immediate jeopardy

No actual harm, with potential  Less serious  Noncompliant
for more than minimal
harm

No actual harm, with potential  Minimal       Substantiall
for minimal harm                              y compliant
----------------------------------------------------------
HCFA guidance also classifies deficiencies by their scope, or
prevalence, as follows:  (1) isolated, defined as affecting a limited
number of residents; (2) pattern, defined as affecting more than a
limited number of residents; and (3) widespread, defined as affecting
all or almost all residents. 


--------------------
\3 The standard survey is used not only to meet HCFA's certification
requirement but also to ensure that a home continues to meet its
state licensing requirements. 


   REVIEW OF RECORDS FOR 1993
   DEATHS UNCOVERED SERIOUS CARE
   PROBLEMS
---------------------------------------------------------- Chapter 0:2

Our work indicates that 34 residents--more than half of our sample of
62 of California's nursing home residents who died in 1993--received
unacceptable care.  In certain of those cases, the unacceptable care
endangered residents' health and safety; however, without an autopsy
that establishes the cause of death, we cannot be conclusive about
whether the unacceptable care directly led to any individual's death. 
Nevertheless, the care problems we identified were troubling, such as
unplanned weight loss and failure to properly treat pressure sores. 
For example: 

  -- A resident lost 59 pounds--about one-third of his weight--over a
     7-week period.  Only a small share of the weight loss was
     attributable to fluid loss.  Until 2 days before the resident's
     death, the nursing home staff had not recorded his weight since
     the day he was admitted to the home or notified the physician of
     the resident's condition. 

  -- A resident was admitted to a nursing home with five pressure
     sores, four of which exposed the bone.  Although the physician
     ordered pain medication during treatments that removed the
     blackened dead tissue from her sores, the resident's medical
     record indicated that she received pain medication only three
     times during 5 weeks of daily treatments.  The resident, who was
     not in a condition to verbalize her needs, was reported in the
     nursing notes to moan whenever this procedure was done without
     prescribed pain medication. 


   STATE'S RECENT QUALITY REVIEWS
   REVEAL SIGNIFICANT CARE
   PROBLEMS IN NEARLY ONE-THIRD OF
   ALL HOMES
---------------------------------------------------------- Chapter 0:3

DHS surveyors identified a substantial number of homes with serious
care problems through their annual standard surveys of nursing homes
and through ad hoc complaint investigations.  Our analysis of these
data shows that, between 1995 and 1998, surveyors cited 407 homes, or
nearly a third of the 1,370 homes included in our review, for serious
violations classified under the federal deficiency categories, the
state's categories, or both.  (See fig.  1, "Caused Death or Serious
Harm.") These homes were cited for improper care leading to death (26
homes), posing life-threatening harm to residents (259 homes), other
serious violations involving improper care (111 homes), or falsifying
or omitting key information from medical records (11 homes). 

   Figure 1:  Distribution of
   1,370 California Nursing Homes
   by Seriousness of Violations
   Cited, 1995-98

   (See figure in printed
   edition.)

The four wedges in figure 1 correspond to the federal deficiency
categories shown in table 1 and include comparable-level deficiencies
cited using the state's separate classification scheme, as shown in
table 2. 



                          Table 2
          
           Categorization of Deficiencies by HCFA
                   and by California DHS

Description
of            HCFA
deficiency    deficiency
categories    category      State deficiency category
------------  ------------  ------------------------------
Caused death  Immediate     Improper care leading to
or serious    jeopardy      death, imminent danger or
harm                        probability of death,
              Substandard   intentional falsification of
              care          medical records, or material
                            omission in medical records.

Caused less   Actual harm   Violations of federal or state
serious harm                requirements that have a
                            direct or immediate
                            relationship to the health,
                            safety, or security of a
                            resident.

More than     Potential     California has no state
minimal       for minimal   citation directly equivalent
deficiencies  harm          to the federal category.

Minimal or    Potential     California has no state
no            for minimal   citation directly equivalent
deficiencies  harm/no       to the federal category.
              deficiencies
----------------------------------------------------------
Within the "caused death or serious harm" group are homes cited for
several types of federal violations, including "improper care leading
to death" and "life-threatening harm." Following is an example from
the 26 homes California surveyors cited for improper care leading to
death:\4

  -- A resident who was admitted to a home for physical therapy
     rehabilitation following hip surgery died 5 days later from
     septic shock, caused by a urinary tract infection.  The home's
     staff failed to monitor fluid intake and urine output while the
     resident was catheterized and afterwards.  Nursing home staff
     failed to notify a physician as the resident's condition
     deteriorated.  When his family visited and found him
     unresponsive, they informed the staff and his physician was
     contacted.  His physician ordered intravenous antibiotics, but
     the staff were unable to get the intravenous line in place and
     continuously functioning until 8 hours had passed.  The resident
     died 3 hours later. 

The next example is from the 259 homes California surveyors cited for
life-threatening harm: 

  -- Because the home lacked sufficient licensed nursing staff on
     duty, residents did not receive treatments, medications, or food
     supplements as ordered.  One resident's medical record indicated
     that, although a licensed nurse had noted the individual's
     deteriorating physical condition a half hour before she died,
     there was no evidence that the nurse continued to assess the
     resident's vital signs, administered oxygen as prescribed by a
     physician's order, or notified the attending physician and
     family about the resident's deteriorating condition. 

We also determined that cases of poor care were not limited to the
407 homes noted.  State surveyors documented instances of serious
quality problems that they categorized as federal deficiencies in the
range of "actual harm" or "potential for more than minimal harm" or
as lower-level state violations.  Examples of these are included in
our report. 


--------------------
\4 The subclassification "improper care leading to death" does not
include all residents who died in homes cited for violations related
to residents' care, because the category "life-threatening harm" can
also include such violations and associated deaths. 


   PREDICTABILITY OF SURVEYS,
   QUESTIONABLE RECORDS, AND
   SURVEY LIMITATIONS HINDER
   EFFORTS TO IDENTIFY CARE
   PROBLEMS
---------------------------------------------------------- Chapter 0:4

The deficiencies that state surveyors identified and documented only
partially capture the extent of care problems in California's homes,
for several reasons.  First, some homes can mask problems because
they are able to predict the timing of annual reviews or because
medical records sometimes misrepresent the care provided.  In
addition, state surveyors can miss identifying deficiencies because
of limitations of the methods used in the annual review--methods
established in HCFA guidance on conducting surveys--to identify
potential areas of unacceptable care. 


      PREDICTABILITY OF ON-SITE
      REVIEWS
-------------------------------------------------------- Chapter 0:4.1

One problem masking the extent of poor care involves the scheduling
of standard surveys.  The law requires that a standard survey be
unannounced and that it be conducted roughly every year.\5 Because
many California homes were reviewed in the same month--sometimes
almost the same week--year after year, homes could often predict the
timing of their next survey and prepare to reduce the level of
problems that may normally exist at other times. 

At two homes we visited, we observed that the homes' officials had
made advance preparations--such as making a room ready for survey
officials--indicating that they knew the approximate date and time of
their upcoming oversight review.  After we discussed these
observations with California DHS officials, they acknowledged that a
review of survey scheduling showed that the timing of some homes'
surveys had not varied by more than a week or so for several cycles. 
DHS officials have since instructed district office managers to
schedule surveys in a way that will reduce their predictability. 

The issue of the predictable timing of surveys is long-standing. 
More than a decade ago, the Institute of Medicine called for
adjusting the timing of the surveys to make them less predictable and
maximize the element of surprise.\6 Subsequently, the Omnibus Budget
Reconciliation Act of 1987 (OBRA 87) nursing home legislation and
HCFA's implementing guidance attempted to address the predictability
issue.  However, a subsequent HCFA-conducted poll of nursing home
resident advocates in most states and a 1998 nine-state study by the
National State Auditors Association found that predictable timing of
inspections continues to be a problem. 


--------------------
\5 Technically, the standard survey must begin no later than 15
months after the last day of the previous standard survey, and the
statewide average interval between standard surveys must not exceed
12 months. 

\6 Institute of Medicine, Improving the Quality of Care in Nursing
Homes (Washington D.C.:  Institute of Medicine, 1986), pp.  32-33. 


      QUESTIONABLE RECORDS
-------------------------------------------------------- Chapter 0:4.2

Inaccurate or otherwise misleading entries in medical records can
mask care problems or make it more difficult for surveyors to prove
that care problems exist.  We found such irregularities among the
medical records we reviewed, a problem widely recognized in
long-term-care research.\7 Discrepancies appeared in about 29 percent
of the 1993 records we reviewed.  The following two examples of such
discrepancies were found in these records: 

  -- During the hospital stay of a nursing home resident, doctors
     discovered that the resident was suffering from a fractured leg
     and that the fracture had occurred at least 3 weeks before the
     hospitalization.  The nursing home's records were missing the
     clinical notes for the same 3-week period preceding the
     resident's hospital stay, thus omitting any indication that an
     injury had occurred, how it might have occurred, or how it might
     have been treated. 

  -- Although a resident's medical record showed that each day she
     consumed 100 percent of three high-caloric meals and drank four
     high-protein supplements, the resident lost 7 pounds--10 percent
     of her total
     weight\8 --in less than a month.  The implausibility of the
     resident's weight loss under these conditions raises major
     questions about the accuracy of the medical records regarding
     nutritional intake. 

California state surveyors have also identified serious discrepancies
in medical records.  The following example is one of the cases they
cited: 

  -- A home's treatment records named a staff member as having
     provided two residents with range-of-motion exercises nine
     separate times.  It was later determined that the staff member
     was not working at the home when the treatments were reportedly
     provided. 


--------------------
\7 Jeanie Kayser-Jones and others, "Reliability of Percentage Figures
Used to Record the Dietary Intake of Nursing Home Residents," Nursing
Home Medicine, Vol.  5, No.  3 (Mar.  1997), pp.  69-76, and John F. 
Schnelle, Joseph G.  Ouslander, and Patrice A.  Cruise, "Policy
Without Technology:  A Barrier to Improving Nursing Home Care," The
Gerontologist, Vol.  37, No.  4 (1997), pp.  527-32. 

\8 According to medical experts, a 5-percent weight loss in a month
is considered a significant loss. 


      HCFA'S PROTOCOL FOR
      IDENTIFYING POTENTIAL CARE
      PROBLEMS
-------------------------------------------------------- Chapter 0:4.3

A third monitoring weakness that can hinder surveyors' detection of
care problems involves HCFA's guidance on selecting cases for review
to help surveyors identify potential instances and prevalence of poor
care.  HCFA policy establishes the procedures, or protocol, that
surveyors must follow in conducting a home's standard survey. 
However, HCFA's protocol--designed to increase the likelihood of
detecting problems with care--does not call for randomly selecting a
sufficient sample of residents.  Instead, it relies primarily on the
use of the individual surveyor's professional expertise and judgment
to identify resident cases for further review. 

In contrast, our expert nurses, in reviewing current medical records
to identify areas with potential for poor care, took a stratified
random sample--cases from different groups of the home's more fragile
as well as average residents.  Each sample was of sufficient size to
estimate the prevalence of problems identified.  In addition, the
nurses used a standard protocol to collect and record quality-of-care
information from chart reviews, staff interviews, and data analyses
to ensure that the information was in a consistent format across the
various individuals interviewed and documents reviewed. 

For two homes receiving their annual surveys, we compared the
findings of the DHS surveyors, who followed HCFA's survey protocol,
with the findings of our expert nurse team, who accompanied the state
surveyors and conducted concurrent surveys.  The methodology our
expert nurses used examined primarily quality-of-care outcomes and
related issues, whereas state surveyors, following federal guidance,
reviewed this and 14 additional areas, such as social services,
resident assessment, and transfer and discharge activities.  As a
result, DHS surveyors sought and found deficiencies in some important
areas that our expert nurses did not document.  However, in the
quality-of-care area, our nurses found serious care problems that DHS
surveyors did not find, including unaddressed weight loss, improper
pressure sore treatment, and ineffective continence management. 


   HCFA'S ENFORCEMENT POLICIES
   INEFFECTIVE IN BRINGING HOMES
   WITH SERIOUS, REPEATED
   VIOLATIONS INTO SUSTAINED
   COMPLIANCE
---------------------------------------------------------- Chapter 0:5

We also examined the efforts of the state and HCFA to ensure that the
homes cited for serious deficiencies were correcting their problems
and sustaining compliance with federal requirements over time. 
Encouraging sustained compliance and appropriately sanctioning
deficient providers are among HCFA's stated enforcement goals. 
However, we found that, under HCFA's policies, enforcement results
often fall far short of those goals. 

Between July 1995 and March 1998, DHS surveyors cited 1 in 11 homes,
or 122 homes, in both of their last two surveys for conditions
causing actual harm, putting residents in immediate jeopardy, or
causing death.\9 These homes represent over 17,000 resident beds. 
The national compliance rate for about the same period and for the
same repeated, serious harm deficiencies was slightly worse:  about 1
in 9 homes, representing more than 232,000 beds, were cited. 

However, HCFA enforcement policies have led to relatively few federal
disciplinary actions taken against these homes in California.  Before
OBRA 87, the only sanction available to HCFA and the states to impose
against such noncompliant homes, short of termination, was to deny
federal program payments for new admissions.  OBRA 87 provided for
additional sanctions, such as denial of payment for all admissions,
civil monetary penalties, and on-site oversight by the state ("state
monitoring").\10 Nevertheless, these sanctions were seldom applied,
even to the 122 homes in our analysis cited twice consecutively for
serious harm deficiencies.  Specifically, only a fourth--33
homes--had any federal sanctions that actually took effect. 


--------------------
\9 The data on deficiencies cited in standard surveys are contained
in the OSCAR (On-Line Survey, Certification, and Reporting) System, a
federal database maintained by HCFA. 

\10 Other sanctions include third-party management of a home for a
temporary period ("temporary management"); requirement for a home to
follow a plan of correction developed by HCFA, the survey agency, or
a temporary manager--with HCFA or survey agency approval--rather than
by the home itself ("directed plan of correction"); and mandatory
training of a home's staff on a particular issue ("directed
in-service training"). 


      HCFA POLICIES LEAD TO
      LENIENT ENFORCEMENT STANCE
-------------------------------------------------------- Chapter 0:5.1

HCFA's forgiving stance toward homes with a "ping-pong" history of
compliance helps explain how these homes could repeatedly harm
residents without facing sanctions.  Generally speaking, HCFA
sanctioning policy divides homes into two groups:  those that the
state agency is instructed to refer to HCFA immediately to initiate
sanctioning and those for which the state agency is permitted to
grant a grace period first to correct deficiencies without the
imposition of federal sanctions.\11

To qualify for immediate referral under HCFA policy, homes must have
been cited for deficiencies in the immediate jeopardy category or
rated as a "poor performer." The criteria for meeting HCFA's poor
performer definition include an intricate combination of immediate
jeopardy and substandard quality-of-care deficiencies.\12 Since July
1995, when the federal enforcement scheme established in OBRA 87 took
effect, 59 California nursing homes have been cited for immediate
jeopardy deficiencies and about 25 have been designated poor
performers.  HCFA guidance permits the state to broaden the
definition of poor performer, but California has chosen not to do
so.\13

Noncompliant homes that are not classified in the immediate jeopardy
or poor performer categories do not meet HCFA's criteria for
immediate referral for sanctioning, even though some may have
seriously harmed residents.  HCFA policy permits granting a grace
period to this group of noncompliant homes, regardless of their past
performance.  Between July 1995 and May 1998, California's DHS gave
about 98 percent of noncompliant homes a grace period to correct
deficiencies.  For nearly the same period (July 1995 through April
1998), the rate nationwide of noncompliant homes receiving a grace
period was higher--99 percent--indicating that the practice of
granting a grace period to virtually all noncompliant homes is common
across all states. 

Following HCFA policy, DHS is not required to and does not appear to
take into account a home's compliance history for the bulk of
noncompliant homes receiving a grace period.  Our report describes a
home that, despite being cited by DHS for the same violations--the
unacceptable treatment of pressure sores--4 years consecutively, has
continued to receive a grace period to correct its deficiencies
following each annual review.  We question the wisdom of granting
such homes a grace period with no further federal disciplinary
action. 

For the few California homes that have had federal sanctions imposed,
HCFA has been less than vigilant.  In principle, sanctions imposed
against a home remain in effect until the home corrects the
deficiencies cited and until state surveyors find, after an on-site
review (called a "revisit") that the home has resumed substantial
compliance status.  However, if some of the home's deficiencies
persist but are no more serious than those in the "potential for
harm" range, HCFA policy is to forgo a revisit and accept the home's
own report of resumed compliance status.  HCFA officials told us this
policy was put into place because of resource constraints.  In
California, however, this policy has been applied even to some of the
immediate referral homes that, on a prior revisit, had been found out
of substantial compliance. 

Our report describes the case of an immediate referral home for which
HCFA twice accepted the home's self-reported statement of compliance
without having DHS independently verify that the home had fully
corrected its deficiencies: 

  -- In an October 1996 survey, DHS cited the home for immediate
     jeopardy and actual harm violations, including improper pressure
     sore treatment, medication errors, insufficient nursing staff,
     and an inadequate infection control program.  By early November
     1996, however, surveyors had found in an on-site review that the
     problems had abated, although they had not fully ceased.  A week
     later, the home reported itself to HCFA as having resumed
     substantial compliance.\14 HCFA accepted this report without
     further on-site review.  About 6 months later (May 1997), in the
     home's next standard survey, DHS found violations that warranted
     designating the home as a poor performer.  On a revisit to check
     compliance in July 1997, surveyors found new, but less serious,
     deficiencies.  In August 1997, however, when the home reported
     itself in compliance, HCFA accepted the report without further
     verification.  Between October 1996 and August 1997, HCFA
     imposed several sanctions but rescinded them each time it
     accepted the home's unverified report of resumed compliance
     status.\15

Similarly, HCFA's level of vigilance appears to be inadequate for
homes that have been terminated and later reinstated.  HCFA has the
authority to terminate a home from participation in Medicare and
Medicaid if the home fails to resume compliance.  However,
termination rarely occurs and is not as final as the term implies. 
In the recent past, California's terminated homes have rarely closed
for good.  Of the 16 homes terminated in the 1995 through 1998 time
period, 14 have been reinstated.  Eleven have been reinstated under
the same ownership they had before termination.  Of the 14 reinstated
homes, at least 6 have been cited with new deficiencies that harmed
residents since their reinstatement, such as failure to prevent
avoidable accidents, failure to prevent avoidable weight loss, and
improper treatment of pressure sores. 

A home that applies for reinstatement is required to have two
consecutive on-site reviews--called reasonable assurance
surveys--within 6 months to determine whether the home is in
substantial compliance with federal regulations before its
eligibility to bill federal programs can be reinstated.  HCFA
officials told us that HCFA cannot prevent a home from being
reinstated if it is in substantial compliance during these reviews. 
However, HCFA has not always ensured that homes are in substantial
compliance before reinstating them.  Consider the following example: 

  -- A home terminated on April 15, 1997, had two reasonable
     assurance surveys on April 25 and May 28, 1997.  Although the
     nursing home was not in substantial compliance at the time of
     the second survey, HCFA considered the deficiencies minor enough
     to reinstate the home on June 5, 1997.  The consequence of
     termination--stopping reimbursement for the home's Medicare and
     Medicaid beneficiaries--was in effect for no longer than 3
     weeks.\16 About 3 months after reinstatement, however, the home
     was cited for harming residents.  DHS surveyors investigating a
     complaint found immediate jeopardy violations resulting from a
     dangerously low number of staff.  In addition, surveyors cited
     the home for providing substandard care.  Dependent residents,
     some with pressure sores, were left sitting in urine and feces
     for long periods of time; some residents were not getting proper
     care for urinary tract infections; and surveyors cited the
     home's infection control program as inadequate. 


--------------------
\11 Homes in the immediate referral group do not necessarily receive
sanctions.  If homes come into substantial compliance before
sanctioning is scheduled to take effect, HCFA rescinds the sanction. 

\12 Under HCFA's definition of poor performer, a home must have been
cited on its current standard survey for substandard quality of care
and have been cited in one of its two previous standard surveys for
substandard quality-of-care or immediate jeopardy violations.  HCFA
also has a special definition for "substandard quality of care," as
follows:  the deficiencies must constitute immediate jeopardy to
resident health and safety in one of three categories of
deficiencies, or belong to the same three categories and include the
following combination of severity and scope levels:  pattern of or
widespread actual harm that is not immediate jeopardy, or widespread
potential for more than minimal harm. 

\13 For example, California could include in the poor performer
definition a home's record of violations cited in the course of
complaint investigations.  Unlike standard surveys, complaint
investigations are generally unexpected and provide surveyors a
unique opportunity to gauge care issues in a home's everyday
environment.  Because these investigations can uncover serious
quality-of-care problems, including complaint-generated violations in
a home's poor performer record would give regulators a more complete
picture of a home's compliance history. 

\14 A home reports itself to HCFA as being in compliance by sending
HCFA a letter called a "credible allegation of compliance."

\15 In the October 1996 survey, HCFA imposed a civil monetary penalty
that went into effect October 3 and was stopped from further accrual
on November 8 when HCFA determined that federal requirements were
met, based on the survey that had found lower-level deficiencies.  In
the May 1997 standard survey, HCFA imposed a civil monetary penalty
to take effect in May 1997 and a denial of payment for new admissions
sanction to take effect in July 1997, both of which HCFA stopped in
August 1997 when the home reported that it was in compliance. 

\16 Under Medicare and Medicaid rules, terminated nursing homes may
be paid for care of residents in the home on the date of termination
for up to 30 days after the termination takes effect. 


      CALIFORNIA DHS IS PILOTING
      ALTERNATIVE ENFORCEMENT
      PROCEDURES TARGETING A SMALL
      GROUP OF MOST SERIOUSLY
      DEFICIENT HOMES
-------------------------------------------------------- Chapter 0:5.2

California DHS officials recognized that the state--in combination
with HCFA's regional office--has not dealt effectively with
persistently and seriously noncompliant nursing homes.  Therefore,
beginning in July 1998 and with HCFA's approval, DHS began a "focused
enforcement" process that combines state and federal authority and
action, targeting providers with the worst compliance records for
special attention. 

As a start, DHS has identified about 34 homes with the worst
compliance histories--approximately 2 in each of its districts. 
Officials intend to conduct standard surveys of these homes about
every 6 months, rather than the normal 9-to-15-month frequency.  In
addition, DHS expects to conduct more complete on-site reviews of
homes for all complaints received about these homes.  DHS officials
also told us that the agency is developing procedures--consistent
with HCFA regulations implementing OBRA 87 reforms--to ensure that,
where appropriate, civil monetary penalties and other sanctions
stronger than a corrective action plan will be used to bring such
homes into compliance and keep them compliant.  In addition, DHS has
begun to screen the compliance history of homes by owner--both in
California and nationally--before granting new licenses to operate
nursing homes in the state.  State officials told us that they will
require all homes with the same owner to be in substantial compliance
before any new licenses are granted. 


   CONCLUSIONS AND RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:6

The responsibility to protect nursing home residents, among the most
vulnerable members of our society, rests with nursing homes and with
HCFA and the states.  In a number of cases, this responsibility has
not been met in California.  We and state surveyors found cases in
which residents who needed help were not provided basic care--not
helped to eat or drink; not kept dry, clean, or free from feces and
urine; not repositioned to prevent pressure sores; not monitored for
the development of urinary tract infections; and not given pain
medication when needed. 

As serious as the identified care problems are, many care problems
may escape the scrutiny of surveyors.  Homes can prepare for
surveyors' annual visits because of their predictable timing.  Homes
can also adjust resident records to improve the overall impression of
the home's care.  In addition, DHS surveyors can overlook significant
findings because the federal survey protocol they follow does not
rely on an adequate sample for detecting potential problems and their
prevalence.  Together, these factors can mask significant care
problems from the view of federal and state regulators. 

HCFA needs to reconsider its forgiving stance toward homes with
serious, recurring violations.  Federal policies regarding a grace
period to correct deficiencies and to accept a home's report of
compliance without an on-site review can be useful policies, given
resource constraints, when applied to homes with less serious
problems.  However, regardless of resource constraints, HCFA and DHS
need to ensure that their oversight efforts are directed at homes
with serious and recurring violations and that policies developed for
homes with less serious problems are not applied to them. 

Under current policies and practices, noncompliant homes that DHS
identifies as having harmed or put residents in immediate danger have
little incentive to sustain compliance, once achieved, because they
may face no consequences for their next episode of noncompliance. 
Our findings regarding homes that repeatedly harmed residents or were
reinstated after termination suggest that the goal of sustained
compliance often eludes HCFA and DHS.  Failure to bring such homes
into compliance limits the ability of federal and state regulators to
protect the welfare and safety of residents. 

Our report makes recommendations to the HCFA Administrator to address
these issues.  Although our report focuses on selected nursing homes
in California, the problems we identified are indicative of systemic
survey and enforcement weaknesses.  Our recommendations therefore
target federal guidance in general so that improvements are available
to any state experiencing problems with seriously noncompliant homes. 
Thus, through HCFA's leadership, federal and state oversight of
nursing homes can be strengthened nationally and residents nationwide
can enjoy increased protection.  In summary, we are recommending that
HCFA revise its guidance to states in order to reduce the
predictability of on-site reviews, possibly by staggering the
schedule or segmenting the survey into two or more reviews; revise
methods for sampling resident cases to better identify the potential
for and prevalence of care problems; and, for those homes with a
history of serious and repeated deficiencies, eliminate the offer of
a grace period for resuming compliance and substantiate all of the
home's reports of resumed compliance with an on-site review. 

HCFA, DHS, and nursing home industry representatives have reviewed
our report.  Acknowledging that the findings were troubling, HCFA
officials informed us that they are planning to make several
modifications in their survey and enforcement process.  DHS also
suggested a number of changes--in addition to its new, focused
enforcement program--intended to improve the federal survey and
enforcement process.  Last week, the administration announced a
series of actions related to federal oversight of nursing homes,
including night and weekend survey visits and increased inspection of
homes with a record of noncompliance.  HCFA, DHS, and industry
representatives generally concurred with our recommendations,
although both HCFA and DHS expressed some reservations about
segmenting the standard survey.  They contend that dividing the
survey into two or more reviews would make it less effective and more
expensive.  However, we believe that this option--which could largely
eliminate the predictability issue and increase the frequency of
surveyors' presence at problem homes--warrants consideration of the
benefits to be derived relative to the disadvantages that were
raised. 

Finally, despite the survey and enforcement modifications promised by
HCFA and DHS, we remain concerned about the gap between stated goals
and results.  In 1995, HCFA enunciated its emphasis on encouraging
sustained compliance and appropriately sanctioning deficient
providers.  Its practices since that time, however, argue for swift
and significant changes, as illustrated in California by the
persistence of problem homes with little federal sanctioning.  We
support the administration's recent initiative to strengthen the
survey and enforcement process.  However, we also believe that
continued vigilance by the Congress is needed to ensure that the
promised changes in federal and state oversight of nursing home care
are implemented. 


-------------------------------------------------------- Chapter 0:6.1

Mr.  Chairman, this concludes my prepared statement.  I would be
happy to answer any questions you or the Committee Members may have. 


*** End of document. ***