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OCR for page 104
4
Monitoring Nursing Home
Performance
THE ISSUES
The federal and state governments share responsibility
for quality assurance in nursing homes. The performance
criteria are federal, but the federal government has
delegated to the states responsibility to inspect nursing
homes using these criteria and to certify their eligi-
bility to participate in the Medicaid program. For the
Medicare program, state governments inspect the facilities
on behalf of the federal government and make certification
recommendations to the federal government; the certifi-
cation decisions are made by the HCFA. The federal
government has authority in both the Medicaid and Medicare
programs to conduct independent inspections of certified
nursing homes to audit the states' certification activi-
ties. The federal government also can decertify subs-
tandard facilities.
The federal conditions and standards were designed for
use by state surveyors in inspecting nursing homes. The
survey process is supposed to identify and measure
performance deficiencies that result in poor-quality care
and should produce documentation of the deficiencies that
will support the government's case in contested
enforcement actions.
104
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MONITORING NURSING HOME PERFORMANCE / 105
State monitoring of the performance of nursing homes now
includes three types of activities:
1. Nursing home inspections (surveys) are conducted at
least once a year by staff of the state health facilities
licensure and certification agency to determine the extent
of compliance of facilities with federal conditions and
standards.
2. "Inspection of care" (IOC) is conducted either by
the state Medicaid agency, the state health facilities
licensure and certification agency, or a professional
review organization. By law, inspection of the care
provided to every Medicaid recipient must be done
annually. It is conducted for two purposes: (1) utili-
zation review, to be certain that the resident is eligible
for nursing home care and is placed in the right level of
care; and (2) quality of care, to be sure each resident is
receiving appropriate care of adequate quality.
3. Ad hoc complaints submitted by residents, their
families, or ombudsmen or other third parties are also
investigated. Complaints frequently concern possible
violations of federal conditions and standards or other
regulatory requirements.
Monitoring the performance of thousands of nursing homes
for quality assurance purposes has been difficult to carry
out effectively and reliably. The first set of problems
stems from the inadequacies of the criteria and of the
survey process used to determine the quality of care being
provided. The problems with the current criteria are
discussed in Chapter 3 and major changes are recommended
to make them more resident-centered and outcome-oriented.
The first set of issues discussed in this chapter covers
the inadequacies of the current survey process. Changes
are recommended that follow from the new conditions and
standards recommended in Chapter 3.
A second set of issues concerns federal-state and
intrastate role relationships. Four specific issues are
discussed: the relationship of inspection of care to the
survey process, the relationships of the survey process to
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106 / NURSING HOME CARE
the long-term-care ombudsman program, the elimination of
the differences in federal and state certification
responsibilities for Medicare and Medicaid facilities, and
shifts in the responsibility for surveying state-owned
facilities.
The third set of issues deals with both state and
federal capacity for effectively carrying out their
quality assurance responsibilities. These issues include
funding of federal and state survey units and the numbers,
qualifications, and training of surveyors.
PROBLEMS WITH THE SURVEY PROCESS
The survey process has several problems that should be
addressed to make it more effective: predictability,
inefficiency, emphasis on paper compliance, insensitivity
to resident needs, inconsistency, isolation from related
monitoring processes, and variable state regulatory
capacity.
Predictability
If the operators of a substandard facility know when it
will be surveyed, they not only can clean it up and bring
the records up to date, but they also may stock up,
improve the menus, bring in additional personnel, and take
other actions to bring the facility into temporary
compliance. The committee heard anecdotal accounts in the
public meetings and in case-study interviews of facilities
~.
_
being notified about impending survey visits. Prior
notice, either formal or informal, was the policy in some
states because it made the visit easier by ensuring the
presence of key personnel in the facility. Prior notice
was prohibited by the HCFA several years ago, but a few
states apparently still follow this policy.
Even without direct notice, however, providers often can
predict the timing of an annual survey visit within
several weeks because certification lasts exactly 12
months and an annual survey is required by the regulations
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MONITORING NURSING HOME PERFORMANCE / 107
at least 90 days before certification expires. The case
studies found that some states routinely schedule visits
during the same week each year. Others send in a team of
auditors or the state fire marshal a specified number of
weeks before the survey visit.
Inefficiency
All nursing homes are subjected to the same survey
intensity regardless of their past record of compliance.
Most state survey agencies have very limited budgets.
They barely have enough staff to complete the round of
annual required surveys and do not always have enough
surveyors to follow up adequately on the major problem
facilities. A more efficient survey process would permit
them to spend more time in poor facilities and less time
in good facilities.
Paper Compliance
Not only are the current standards focused on
theoretical facility capability rather than actual per-
formance, but compliance is often determined on the basis
of record reviews rather than direct observation.
Insensitivity to Resident Needs
Nursing home residents have widely varying needs and
some facilities specialize, either formally or informally,
by accepting residents only of a particular type. The
severely demented and those requiring active rehabili-
tation are two groups of residents often cared for in
separate facilities or on separate floors. The existing
survey process makes no allowance for the observed
diversity among patients and across facilities. At
present, all SNFs are surveyed in the same manner; the
same is true for all ICFs with the exception of
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intermediate care facilities for the mentally retarded,
which are subject to a different set of standards.
Inconsistency
The case studies and survey of state licensure and
certification agencies conducted by the committee revealed
great variations among the states in the way they carry
out the survey process. HCFA data show wide variations in
the numbers and types of deficiencies typically cited from
state to state. For example, the proportion of a state's
SNFs having more than 25 deficiencies in 1983 ranged from
O in Delaware to 100 percent in Washington, D.C. (mean =
24 percent).3 Another study found that the most
common deficiencies in SNFs were very different from state
to state.4 Part of the variation in findings may
reflect real differences in facility characteristics from
state to state, but much of the variation is probably due
to differences in state agency interpretation of
conditions and standards and in survey processes.
In addition to state-level variations, numerous
anecdotes of inconsistencies from one surveyor to the next
were cited in the public meetings and case-study
interviews. These inconsistencies in surveyor judgments
are evidently random and appear as "noise" in national
survey statistics, but they are extremely annoying to
providers and confound state agency efforts to manage the
survey process effectively.
Isolation from Related Monitoring Processes
In some states, there is little or no sharing of
information or coordinated effort between the survey
process and the processes for monitoring and investigating
complaints, even though complaints can be an important
source of information about quality problems in nursing
homes. Relationships between the state survey agencies
and ombudsman programs are often undeveloped or even
adversarial. In addition, only 17 states combine or
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MONITORING NURSING HOblE PERFORMANCE / 109
coordinate the inspection-of-care reviews with the survey
process even though both involve annual inspections of
resident care.
Variable State Regulatory Capacity
The survey results and case studies of the state survey
and certification agencies revealed large differences in
the level of funding and staffing and in the types and
deployment of personnel relative to the number of
facilities. These differences result in part from the
absence of a federal formula for distributing survey and
certification funds and the absence of guidelines for
organizing and staffing the state agencies, but they also
reflect differences in state budgeting contributions and
inspection policies and practices. There also are
differences in state regulatory standarcls, due-process
rules, court interpretations, and availability of inter-
mediate sanctions.
REDESIGNING THE SURVEY PROCESS
These problems can be dealt with effectively by
redesigning the survey process to implement the
resident-centered, outcome-oriented conditions and
standards recommended in Chapter 3. The new conditions
and standards will require surveyors to scrutinize the
care being provided and its effects on residents, rather
than emphasize reviews of records, forms, and written
policies as is now the case. In conjunction with new
survey protocols and scoring procedures based on empirical
resident-outcome standards developed from standardized
resident assessment data, the new conditions and standards
should improve consistency of decision-making on
deficiencies, although surveyor judgment will still play
an important role. Development and use of a shorter
inspection procedure and use of an outcome-orienteci survey
protocol will permit surveyors to identify and concentrate
their efforts on facilities with problems. Also, the
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inspection-of-care reviews should be incorporated into the
survey process, permitting more efficient use of
regulatory capacity. Other problems, such as
predictability, could be solved by making minor changes in
standard operating procedures.
The revised survey process should be resident-centered
and outcome-oriented where appropriate, although it should
not eliminate all concern for certain facility character-
istics that relate to life safety, cleanliness, sanitary
food service, basic capacity to provide proper care, or
the process standards for therapeutic diets or drug
administration. It should take into account the different
mixes of resident characteristics and service needs (case
mix) found in different facilities, spend less survey time
in the better facilities and more in the poorer
facilities, and decrease the predictability of survey
timing.
The new process outlined in this chapter would be more
efficient because it would use a shorter standard survey
that would permit survey agencies to spend less time on
good facilities and more time on substandard providers.
It would also relieve good providers from being subjected
to unnecessarily intensive inspections. More important,
the new survey process would be more effective because it
would rely on more appropriate indicators of compliance
with federal quality-of-care and quality-of-life
conditions and standards than the structurally focused
survey in use today.
The main features of the new survey process are
discussed in detail in the remainder of this chapter. The
following points are covered:
· consolidation of Medicaid and Medicare survey
procedures,
~ two-stage survey approach,
· ~ ~
case-mix ret erenclng,
key indicators of quality,
scoring and decision-making,
survey data sources,
coordination with complaint programs,
consumer involvement,
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MONITORING NURSING HOME PERFORMANCE /
· positive incentives, and
· continuous improvement of the survey process.
Consolidation of Medicare and
Medicaid Survey Procedures
The procedures for certifying Medicaid and Medicare
facilities are virtually identical. They should be
consolidated.
Recommendation 4-1: Medicare and Medicaid survey and
certification process requirements should be consolidated
in one place in the Code of Federal Regulations to promote
consistency.
Timing and Frequency of Surveys
Although some states have experimented with flexible
survey cycles, there is still no valid information on the
optimum periodicity of inspections for detecting
violations before they become serious. Even excellent
facilities may fall out of compliance very quickly after
key staff, ownership, or resident mix changes. The
consensus among consumer, regulator, and provider groups
is that annual surveys of nursing homes are both
reasonable and necessary.
The frequency and timing of standard surveys should be
determined by each facility's performance history and
should maximize the element of surprise. The objective is
to encourage continuing compliance with the federal
regulations. To ensure scheduling uncertainty, the actual
interval between surveys for a particular facility might
range from 9 to 15 months, depending upon past performance
and its latest survey findings. Some facilities may need
to be surveyed even more frequently if their performance
has been exceptionally poor.
This increased flexibility in the timing of surveys
should not, however, lead to an effective lengthening of
the average time between routine surveys across all
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1 12 / NURSING HOME CARE
facilities in each state. That should remain constant at
12 months.
As a general principle, surveys should be unannounced
and unanticipated by facilities, with the exception of
followup visits to determine whether satisfactory
corrections have been made. Whatever their record, all
facilities should be at risk for a random, full-scale
extended survey at any time.
Facilities also should be surveyed within a specified
period of time after key events occur that are likely to
affect the quality of care and quality of life in a
facility, for example, change in ownership, administrator,
or director of nursing. (Surveys after changes in
ownership are already required by current regulations.) A
high rate of nursing staff turnover or extensive use of
nursing pools also might trigger an inspection.
Similarly, multiple validated complaints about a facility
should warrant an immediate survey.
The introduction into the survey cycle of flexibility
that is tied to performance and key events should enable
survey resources to be targeted to those facilities most
in need of attention: problem or marginal facilities and
facilities where new circumstances could adversely affect
residents. Facilities that are performing well would be
rewarded for their good behavior by less-intense
monitoring. That will allow survey agency staff to be
used for more urgent tasks. The time-limited agreement
requirement that was dropped in 1981 legislation, but is
still required by regulation, should be eliminated to
allow the annual survey to take place as late as 15 months
after the previous annual survey. In practice, the
time-limited agreement provisions have not made it easier
to terminate facilities, because the courts have imposed
the same due-process prior hearing requirements for
., . . ~
terminating facilities with expired agreements as apply to
facilities with agreements in force. For this reason, a
group of providers, consumers, and regulators convened by
the HCFA in 1983 to develop a consensus on regulatory
changes recommended elimination of mandatory time-limited
agreements.
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MONITORING NURSING [IOME PERFORMANCE / 113
Recommendation 4-2: The timing of surveys should
maximize the element o) surprise; the standard! annual
survey should be conducted somewhere between 9 and 15
months after the previous annual survey, with the average
, . , , ~
across all facilities within each state remaining at 12
months. Additional standard surveys also should take
place whenever there are key events, such as a change in
ownership. Independent of the survey cycle, all
facilities should be required to pass rigorous life safety
code and food inspections at regular intervals.
Two-Stage Survey Approach
After an initial audit of a sample of resident
assessment records, each annual survey would begin with a
short standard survey protocol. The standard survey would
be designed to use "key indicators" of performance to
identify facilities with poor resident outcomes that might
have resulted from substandard nursing home performance.
If a facility had problems on the key indicators
(discussed below), it would be subjected to an extended
survey protocol entailing observation and interview of
additional residents to determine the extent to which
staffing and other structural features of the facility,
and the way care is being provided, may have caused the
poor resident outcomes. The main purposes of the
two-stage process are to relieve good facilities from the
burden of a lengthy regular survey and to permit survey
agencies to concentrate their efforts on poor and marginal
facilities.
The Resident Assessment Audit
Surveyors would audit, by using the same resident
assessment protocol the facilities are required to use, a
sample of all residents to test the accuracy of the
facility's assessment reports. A determination would then
be made of whether the facility's resident assessment
reports meet acceptable standards of accuracy. If
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1 14 / NURSING HOME CARE
surveyors find that a facility's assessments of resident
status differ from their own by more than a predetermined
rate, they would conclude that the facility's misclassi-
fication of residents reflects either professional
incompetence or deliberate inaccuracy. In either case, a
complete extended survey of the facility would be called
for.
For facilities that pass the audit, a standard survey
would be conducted.
The Standard Survey
The standard survey would use a statistically valid,
case-mix-stratified sample of the residents in a nursing
home. (The case-mix definitions, sampling issues, and the
key indicators are discussed more fully below.) It also
would measure overall facility performance through such
environmental indicators as the personal grooming of
residents, cleanliness, and so on. To the extent
possible, the standard survey would use a short protocol
that would rely on "key indicators" of performance. Among
the key indicators that may be used, depending on the
availability of empirical evidence, are those elements in
a standard that have been shown to be highly predictive of
compliance with the other elements in that standard. Key
indicators also may be specific negative (although
sometimes unavoidable) or positive outcomes appropriate to
· ~
case-mix groupings.
Use of the standard survey should enable surveyors to
sort facilities into one of three categories: those that
are superior or clearly adequate, those that are clearly
inadequate or deficient in one or more areas of
performance, and those whose performance Is ambiguous.
Facilities in the superior/adequate group would normally
be exempt from further review at that time, except for
life safety code and sanitation inspections that will be
required for all facilities and scheduled independently of
the survey cycle. All other facilities will be required
to undergo a partial or complete extended survey.
~.
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MONITORING NURSING HO3lE PERFORMANCE / 135
for nursing home licensure and certification surveys vary
from $1,296 to $13,018 per nursing home (median =
$4,700~. This variation apparently has more to do with
the historical funding base provided by the HCFA and the
willingness of a state to add state funds than to the
current workload level (total number of facilities,
adjusted by bed size), or mix (mostly skilled vs. mostly
intermediate facilities, mostly large size vs. small, high
vs. low Medicaid admission criteria, and so on).
The recommendations made earlier in this report for a
resident assessment system and a new survey process and
procedures will require extensive training for all
surveyors, training of nursing home staff, and improved
and better supervision of surveyors by state licensure and
certification agencies. This will require larger budgets
for the state licensure and certification agencies. To
facilitate cooperation by the states in introducing the
new survey process and the resident assessment system and
enhancing their survey staff supervisory capabilities, the
Congress should once again authorize 100 percent federal
support for state survey and certification activities (in
nursing homes). This authority should be extended for 3
years to facilitate installation of the new system. After
3 years, the matching ratio should be reviewed and a
permanent ratio involving some state participation
reinstated.
Recommendation 4-15: Title XIX of the Social Security Act
should be amended to authorize 100 percent federal funding
of costs of the nursing home survey and certification
activities of the states. This authority should be
extended for 3 years, after which time a federal-state
matching ratio should be reestablished. The HCFA should
develop a standard formula for distributing funds to the
states under this authority so that each state is funded
on an equal basis in proportion to its federal
certification workload.
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State Surveyor Qualifications
Federal regulations and the State Operations Manual are
very general regarding survey agency staffing levels and
qualifications. In practice, there are significant
variations in the experience and educational backgrounds
of the surveyors and the composition of the survey teams
in each state, for example, how many nurses, generalists
or sanitarians, and other specialists such as pharmacists,
nutritionists, physicians are on the teams. Nationally,
about half are nurses, a fifth are sanitarians, and most
of the rest are engineers, administrators, and
generalists 23,24
Surveyors come from a variety of backgrounds, and few
have previous nursing home or long-term-care experience.
Federal guidelines for survey staff composition permit
states a great deal of latitude, and the HCFA's data on
surveyors indicate that some states are not staffed
adequately to conduct surveys that are more oriented to
resident care. For example, at least one state had no
nurses on its survey staff in 1982.23 In 1983,
eight states had only one or two licensed nurses on
staff.24
Recommendation 4-16: The HCFA should revise its
guidelines to make them more specific about the
qualifications of surveyors and the composition and
numbers of survey team staff necessary to conduct adequate
resiclent-centeredt, outcome-orientecl inspections of nursing
homes. At a minimum, every survey team should include at
least one nurse. For use on extended surveys, the survey
agency should have specialists on staff (or, in small
states, as consultantsJ in the clisciplinary areas coverer!
by the conditions and stanalarcis (for exur,~ple, pharmacy,
nutrition, social services, and activitiesJ.
Federal Training Support
Federal training requirements are minimal and federal
training programs were cut back substantially in 1980-1981
because of budget constraints. According to the case
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MONITORING NURSING HOME PERFORMANCE / 137
studies, the states vary greatly in the scope of their
training efforts. Three-quarters of the surveyors had at
least 10 hours of in-service training in 1982, but
one-quarter had less than 10 hours and, of those, a third
had none.24
Recommendation 4-17: Federal training efforts and support
of state-level training programs shout/ be increased,
especially during the period! of transition to the new
survey process, and cluring the implementation of the new
resident assessment condition of participation.
Dissemination of Research and
Evaluation Results
Information about survey operations and their results
are inadequate at the state and federal levels.4
Evaluation of the new survey system will depend on the
availability of performance data. At the same time, the
federal government should continue to sponsor experiments
in improving the survey process.~2~22~25 The
federal government- should disseminate the results of
experiments sponsored by it or the states to the other
states.
Recommendation 4-18: National data about survey
operations anc! results, and from any experiments and
demonstrations sponsored! by the HCFA or the states, should
be collected, analyzed, and disseminated by the federal
government to facilitate continued improvement in survey
method s.
Federal Oversight and
Sanctioning Responsibilities
The HCFA regional offices have not been able to carry
out their monitoring responsibilities effectively in part
because of inadequate resources and procedures. Regional
office personnel devoted to certification work totals
about 300, or about 30 per regional office.
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The HCFA has three ways to judge state survey agency
performance, other than paper reviews of survey
documents. They are-
1. Validation surveys. Theoretically, the federal
surveyors are supposed to conduct validation surveys of a
5 percent sample of nursing homes assess state survey
performance. In practice, this goal rarely has been
attained. After the number of federal surveyors was cut
from 100 to 70 in 1981, the sample size was reduced to 3
percent. Moreover, the validation surveys are often not
performed until several months after the state survey,
making it difficult to prove that the state overlooked or
misinterpreted deficiencies found by federal surveyors.
The new outcome-oriented conditions and standards and the
new survey process should make it possible to judge state
performance in a more reliable and consistent way. This
will undoubtedly require an increase in the number of
federal surveyors.
2. Complaint investigations. Complaints pertaining
to possible violations of federal requirements are usually
referred to the appropriate state survey agency for
investigation but they may be conducted directly by
federal surveyors. In some cases, this should stimulate a
"look behind" survey.
3. Look behind. The HCFA has long had the
authority to review state survey and certification
decisions and to deny federal Medicaid reimbursement to a
facility that is improperly certified by a state survey
agency. Technically, under this "old look-behind"
provision, the HCFA did not have the authority to
decertify Medicaid-only facilities, only the authority to
recover from a state any federal funds paid to a certified
facility on the grounds that the state had not followed
correct procedures.
In 1981 the Omnibus Budget Reconciliation Act gave the
HCFA direct authority to cancel the agreement between the
Medicaid agency and the facility for not meeting federal
standards, as determined by an onsite survey by a federal
team. This is called "new look-behind." However, it
requires a full evidentiary hearing before an
administrative law judge before the effective date of
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MONITORING NURSING HOME PERFORMANCE / 139
termination (if the deficiencies do not pose an immediate
and serious threat to patient health and safety).
Termination can be further delayed pending appeal to an
appeals council, and judicial review. This requirement
for a prior hearing before an administrative law judge,
except in cases of immediate and serious threats to
residents, is not now required for other termination
procedures under Medicare and Medicaid law. In the view
of HCFA officials, it lessens the effectiveness of the new
procedure.
There have been several problems with federal
oversight. First, in recent years, insufficient numbers
of federal surveyors have precluded surveys of 5 percent
of nursing homes as called for in federal procedures.
Second, the nursing homes surveyed in each state are not
for the most part randomly selected; most are selected
because there has been a complaint or a pattern of
complaints about care in the homes.
Third, the lack of timeliness of these surveys further
reduces their value for evaluating state survey
performance. They often take place weeks or months after
the state visit and thus do not constitute a limited check
on the reliability of the state's results.
Fourth, the HCFA is very limited in what it can do to
states that do not carry out their federal surveying
responsibilities. It does not have effective sanctions,
short of terminating its agreement with the state (which
has never been done), to use against states that
underenforce or wrongly interpret federal standards. An
intermediate sanction, such as reducing the amount of
Medicaid matching funds, is needed.
Recommendation 4-19: The HCFA should increase its
capabilities to oversee state survey and certification of
nursing homes and to enforce federal requirements on
states as well as facilities by
· adding enough additional federal surveyors to each
regional office to ensure that the random sample of
nursing homes surveyed each year in each state is large
enough to allow reasonable inferences about the adequacy
of the state's survey and certification activities;
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140 / NURSING HO3IE CARE
· scheduling "look-behind" surveys so that valid
con~pc~risons can be node of the findings of federal anc!
state surveys; arid
· amending Title XIX of the Social Security Act to
authorize the HCFA to withhold a portion of Medicaid
matching funcis front states that perform inadequately in
their survey and certification of nursing homes.
ORGANIZATIONAL CHANGES
Incorporation of Inspection of Care
in the Survey Process
Federal law and regulations currently require each state
Medicaid agency to conduct at least one "inspection-of-
care" (IOC) review of all patients annually to determine
the appropriateness and quality of care given to
recipients. The inspection of care involves a look at the
care given to every Medicaid resident. It is done by a
team of nurses and social workers, often with access to
physician consultants. Traditionally, this inspection-of-
care process has been performed independently of the
facility surveys in all but a few states.
Federal guidelines for IOC are general, and
inspection-of-care programs differ widely in the way they
are conducted, the size and qualifications of the
inspection teams, and the scope of the review. Many focus
on level-of-care determinations rather than
quality-of-care problems and do not have resident
assessment tools and techniques adequate to determine
quality of care for regulatory purposes.
In the past few years, some states have combined their
inspection-of-care and survey staffs, usually for
budgetary reasons. In some states, the processes are
fully integrated--done by the same team on the same
visit. In others, they are done separately, but the
information derived from the two processes is shared. The
responsible agencies regularly take joint action in some
states. In most states, however, the two processes
operate in isolation from each other.26~27
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MONITORING NURSING HOME PERFORMANCE / 141
In the 47 states responding to the committee's survey,
17 licensure and certification agencies were also
responsible for inspection-of-care reviews. In nine of
the states, the same team conducted both IOC and the
certification surveys on the same visit; in the other
eight states, IOC was conducted by a different team or on
a different visit? or both. Of the 46 states answering
the question of whether IOC should be integrated with the
survey process, 32 said they should be done by the same
team or at the same visit or both. Another seven thought
they should be separate functions under the same
supervisor. Only seven advocated keeping them as
separately administered functions.
Inspection of care, as it is currently conducted in most
states, provides resident-centered quality-of-care
information that is not always available to or used by the
certification surveyors. The survey and IOC should be
combined because they are somewhat duplicative and IOC
findings would help in the assessment of compliance with
resident care standards.
Combining IOC with the recommended new survey process
would require a statutory change to permit reviews of a
sample rather than of all residents. The transfer of IOC
also will affect utilization review and control
responsibilities. Currently, the regulations governing
IOC are included under the general subject of utilization
control. These regulations require each state Medicaid
program to have a surveillance and utilization control
program to (1) guard against unnecessary or inappropriate
use of services, (2) minimize excess payments, and (3)
assess the quality of those services. Utilization control
must include for each recipient a physician's
certification and periodic recertification of the need for
nursing home care, a medical evaluation and a
rehabilitation plan for admission, and a discharge plan.
In addition, there must be a utilization review (UR) plan
for each facility that includes periodic reviews of each
recipient's need for continuing stay in a nursing home,
medical care evaluation studies, and discharge plan
reviews. The state cannot receive the full federal share
of payments for Medicaid services provided in a facility
that does not have a proper utilization review program.
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142 / NURSING HOME CARE
In most states, utilization reviews, including the
continuing stay reviews, are done by facility-based UR
committees. The annual IOC visit, with its 100 percent
review of Medicaid recipients, is the means by which the
Medicaid agency monitors the performance of the UR
committees. With consolidation of ICFs and SNFs, UR
committees will be required to determine the need for
continued nursing home care. The annual IOC has been used
for this purpose. Accordingly, if IOC is transferred, the
survey agency would need to perform this audit function
for the Medicaid agency. The effort should be directed at
a sample of residents most likely to be discharged. This
function would be greatly facilitated by the availability
of the standard resident assessment data. The placement
of residents in the nursing home could be checked at the
time of the standard survey and reported to the Medicaid
agency. If the placement decisions for the sample are
wrong in too many cases, a review of all residents could
be triggered.
Recommendation 4-20: The inspection-of-care function
s1~o''1d be carried out as part of the new
resiclent-centered, outcome-oriented survey process. But
individual resident reviews should be required for a
sample of residents (private-pay as well as Medticaid)
rather than for all residents (although individual states
may elect to continue 100 percent reviews).
Restructuring of State and Federal Roles
and Responsibilities
The federal and state role relationships in nursing home
regulation must be clear and workable, because the two
levels of government share the responsibility for
maintaining the federal quality standards in nursing homes
participating in the Medicare and Medicaid programs. In
the past, federal statutes have given principal
responsibility to the states for determining whether
participating nursing homes comply with federal health and
safety standards. The states do this by conducting onsite
inspections and complaint investigations in all facilities
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MONITORING NURSING HOME PERFORMANCE / 143
participating in Medicare and Medicaid. They certify th
compliance or noncompliance of these facilities.
In the case of Medicaid-only facilities, which account
for 61 percent of the participating facilities and 53
percent of the beds,28 the state Medicaid agency
makes the final decision to enter into a provider
agreement with a certified facility. In the case of
Medicare-only or Medicare and Medicaid facilities,
however, it is the HCFA regional offices that make this
decision. In both instances, the federal government's
primary responsibility should be to monitor and assist the
states in the performance of their jobs. One result of
this difference in certification responsibilities for
Medicare and Medicaid facilities has been federal
preoccupation with Medicare SNFs and relative state
autonomy over Medicaid-only facilities. Another result is
state Medicaid certification of state-owned nursing homes
and hospitals. It is a potential conflict of interest for
a state to survey its own institutions. It puts the
survey agency in the position of criticizing the
performance of a sister agency (often in the same
department) and, if it requires major state expenditures,
it may come under pressure from the governor's office to
modify its findings. Moreover, the survey agency is put
at a disadvantage in taking a tough line with private
facilities when it is widely believed that state
facilities are borderline or worse.
The respective roles of the federal and state govern-
ments would be clarified and strengthened if the states
assumed responsibility for approving certification of all
(Medicare as well as Medicaid) facilities except
state-owned institutions. The latter should be certified
by the federal regional offices on the basis of inspec-
tions by federal surveyors. The primary role of the
regional offices would still be to monitor the activities
of the state survey agencies and to take steps, including
the use of the sanctions referred to in the previous
recommendation, to ensure adequate performance.
This recommendation concerning certification authority
should be implemented by overhauling the so-called "1864
agreement"--the contract between the Secretary of Health
and Human Services and each state health department to
Le
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144 / NURSING HOME CARE
carry out Medicare surveys--assuming the following other
recommendations of the committee are implemented: (1) the
development and adoption of more outcome-orienteci
conditions and standards anti of a new survey process to
implement them, (2) provision of adequate resources and
training to the states to carry out their certification
responsibilities, (3) increased and improved federal
monitoring of state survey performance, and (4) the
adoption of federal sanctions to use against states that
do not adequately apply or enforce federal requirements.
Section 1864 of the Social Security Act directs the
Secretary of Health and Human Services to make agreements
with any "able and willing" state under which the state
health department or other appropriate state agency
surveys health facilities wishing to participate in
Medicare and certifies whether or not they meet federal
definitions, standards of care, and other requirements.
In return, the secretary agrees to pay for the reasonable
costs of the survey and certification activities of the
state agency. Currently, 1864 agreements are open-ended
in duration, but they may be terminated under certain
conditions by either party.
Although the HCFA has been dissatisfied with the
performance of some states from time to time, it has never
terminated an 1864 agreement. Because section 1864
compels the secretary to enter into agreement with any
state that wants to, and does not provide for alternative
sponsorship of survey activities, the HCFA has not had
much leverage with states that do not strictly comply with
federal requirements.
The HCFA implemented a revised 1864 agreement on July 1,
1985, in an attempt to hold the states more accountable.
It should continue this effort to clarify the respective
roles of the federal and state levels in conjunction with
the other major recommendations cited above, that is,
implementation of a resident-centered, outcome-oriented
standards and survey process and increased resources at
the federal and state levels.
It should be noted that the federal cost savings
resulting from the elimination of the paper reviews of the
certification packages in the regional offices should
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MONITORING NURSING HOlIE PERFORMANCE / 145
offset in part the higher costs of the expanded federal
oversight function called for in the last recommendation.
Recommendation 4-21: The respective roles and
responsibilities of the federal anc! state governments
should be realigned as follows:
· The states should be responsible for certifying all
Med. icare and Med. icaid f acilities (exce pt state
institutions) according to federal requirements.
~ The HCFA should monitor state performance more
actively and be responsible for conducting surveys of, and
certifying, state-owned institutions directly.
Representative terms from entire chapter:
survey process
