Long-Term Care:

Federal Oversight of Growing Medicaid Home and Community-Based Waivers Should Be Strengthened

GAO-03-576: Published: Jun 20, 2003. Publicly Released: Jul 7, 2003.

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Home and community-based settings have become a growing part of states' Medicaid long-term care programs, serving as an alternative to care in institutional settings, such as nursing homes. To cover such services, however, states often obtain waivers from certain federal statutory requirements. GAO was asked to review (1) trends in states' use of Medicaid home and community-based service (HCBS) waivers, particularly for the elderly, (2) state quality assurance approaches, including available data on the quality of care provided to elderly individuals through waivers, and (3) the adequacy of federal oversight of state waivers. GAO is recommending that the Administrator of CMS take steps to (1) better ensure that state quality assurance efforts are adequate to protect the health and welfare of HCBS waiver beneficiaries, and (2) strengthen federal oversight of the growing HCBS waiver programs. Although CMS raised certain concerns about aspects of the report, such as the respective state and federal roles in quality assurance and the potential need for additional federal oversight resources, CMS generally concurred with the recommendations.

From 1991 through 2001, Medicaid long-term care spending more than doubled to over $75 billion, while the proportion spent on institutional care declined. Over a similar time period, HCBS waivers grew from 5 percent to 19 percent of such expenditures--from $1.6 billion to $14.4 billion--and the number of waivers, participants, and average state per capita spending also grew significantly. Since 1992, the number of waivers increased by almost 70 percent to 263 in June 2002, and the number of beneficiaries, as of 1999, had nearly tripled to almost 700,000, of which 55 percent were elderly. In the absence of specific federal requirements for HCBS quality assurance systems, states provide limited information to the Centers for Medicare & Medicaid Services (CMS), the federal agency that administers the Medicaid program, on how they assure quality of care in their waiver programs for the elderly. States' waiver applications and annual reports for waivers for the elderly often contained little or no information on state mechanisms for assuring quality in waivers, thus limiting information available to CMS that should be considered before approving or renewing waivers. GAO's analysis of available CMS and state waiver oversight reports for waivers serving the elderly identified oversight weaknesses and quality of care problems. More than 70 percent of the waivers for the elderly that GAO reviewed documented one or more quality-of-care problems. The most common problems included failure to provide necessary services, weaknesses in plans of care, and inadequate case management. The full extent of such problems is unknown because many state waivers lacked a recent CMS review, as required, or the annual state waiver report lacked the relevant information. CMS has not developed detailed state guidance on appropriate quality assurance approaches as part of initial waiver approval. Although CMS oversight has identified some quality problems in waivers, CMS does not adequately monitor state waivers and the quality of beneficiary care. The 10 CMS regional offices are responsible for ongoing monitoring for HCBS waivers. However, CMS does not hold these offices accountable for completing periodic waiver reviews, nor does it hold states accountable for submitting annual reports on the status of waiver quality. Consequently, CMS is not fully complying with statutory and regulatory requirements when it renews waivers. As of June 2002, almost one-fifth of waivers in place for 3 years or more had either never been reviewed or were renewed without a review; for an additional 16 percent of waivers, reports detailing the review results were never finalized. Regional office personnel explained that limited staff resources and travel funds often impede the timing and scope of reviews. While regional office reviews include record reviews for a sample of waiver beneficiaries, they do not always include beneficiary interviews. The reviews also varied considerably in the number of beneficiary records reviewed and their method of determining the sample.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To strengthen federal oversight of the growing HCBS waiver programs and to ensure the health and welfare of HCBS waiver beneficiaries, the Administrator should ensure allocation of sufficient resources and hold regional offices accountable for conducting thorough and timely reviews of the status of quality in HCBS waiver programs.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Implemented

    Comments: In response to GAO's recommendation, CMS conducted a review of CMS resources and previous review strategies for waiver oversight. Following that review, the agency developed and implemented standardized procedural guidance in January 2004 for more thorough and timely completion of waiver reviews by regional offices. The agency claims that the standardization and streamlining of the process will make it more efficient while also strengthening the focus on critical areas in waiver quality. In order to hold regional offices more accountable for waiver oversight, the agency initiated a system of semi-annual quality and review training for regional office staff and added waiver oversight as a standing agenda item to monthly central/regional office conference calls. Monthly reports on the timeliness of reviews and the use of new procedures are prepared by CMS and shared with regional office staff. Regular updates on the results of CMS' tracking processes are shared with regional office administrators.

    Recommendation: To ensure that state quality assurance efforts are adequate to protect the health and welfare of HCBS waiver beneficiaries, the Administrator of CMS should ensure that states provide sufficient and timely information in their annual waiver reports on their efforts to monitor quality.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Implemented

    Comments: In response to GAO's recommendation, CMS developed a revised annual reporting form to gather more specific information on states' quality assurance monitoring. This effort was conducted in collaboration with its regional offices and national associations representing state Medicaid, aging, and developmental disabilities directors. In addition, CMS developed an electronic database allowing the agency to track the timeliness of annual report submissions. Once the revised annual reporting form is approved by OMB, anticipated in spring 2006, CMS will require states to submit their annual waiver reports electronically beginning in 2007.

    Recommendation: To ensure that state quality assurance efforts are adequate to protect the health and welfare of HCBS waiver beneficiaries, the Administrator of CMS should require states to submit more specific information about their quality assurance approaches prior to waiver approval.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Implemented

    Comments: In response to GAO's recommendation, CMS worked with national associations representing state Medicaid, aging, and developmental disabilities directors to identify key components of state quality management systems. Using that information as well as a national inventory of state quality assurance and improvement strategies issued in January 2004, CMS developed a revised application for all HCBS waivers which includes additional quality expectations. The application now includes a section requiring states to describe their systems for assuring, measuring, and improving quality in the waiver program. The revised draft application incorporating stakeholder comments was released for states' use in May 2005 while CMS proceeds with formal clearance and publication.

    Recommendation: To ensure that state quality assurance efforts are adequate to protect the health and welfare of HCBS waiver beneficiaries, the Administrator of CMS should develop and provide states with more detailed criteria regarding the necessary components of an HCBS waiver quality assurance system.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Implemented

    Comments: In response to GAO's recommendation, CMS refined and finalized the CMS quality framework in December 2003, providing states with a uniform format to describe components of their quality assurance and improvement program for HCBS waivers. CMS awarded grants to 19 states in 2004 for projects to improve state quality assurance and improvement systems for waivers. CMS also worked with experts and relevant stakeholders to identify key components of state quality management systems and developed a revised application for all HCBS waivers which incorporates additional quality expectations. The revised draft waiver application incorporating stakeholder comments was released for states' use in May 2005, with a web-based version to be available on-line in January 2006. CMS conducted six nationwide training sessions on the revised application and to clarify CMS's expectations for states' quality management approaches. In addition, CMS issued six "promising practices" briefs in July 2003 to disseminate information on effective quality assurance methods used by states, and two additional publications on components of quality management in early 2005.

    Recommendation: To strengthen federal oversight of the growing HCBS waiver programs and to ensure the health and welfare of HCBS waiver beneficiaries, the Administrator should develop guidance on the scope and methodology for federal reviews of state waiver programs, including a sampling methodology that provides confidence in the generalizability of the review results.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Implemented

    Comments: In response to GAO's recommendation, CMS developed and implemented standardized procedural guidance for use by regional offices in assessing HCBS waivers. The guidance specifies the evidence to be obtained from states, procedures for regional office review of the evidence, procedures for on-site collection of additional information if necessary, and criteria for determining whether the state's efforts are adequate to protect the health and welfare of waiver beneficiaries. As the guidance does not require on-site review of client records by the regional office, no discussion of a sampling methodology for regional office reviews is included. The original guidance was issued in January 2004 and revised in May 2004. Further revisions to the guidance will be developed following adoption of a new waiver application form and revised annual quality reporting form.

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