Medicare and Medicaid Participating Facilities: CMS Needs to Reexamine Its Approach for Funding State Oversight of Health Care Facilities
GAO-09-64
Published: Feb 13, 2009. Publicly Released: Mar 19, 2009.
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Highlights
Americans receive care from tens of thousands of health care facilities participating in Medicare and Medicaid. To ensure the quality of care, CMS contracts with states to conduct periodic surveys and complaint investigations. Federal spending on such activities totaled about $444 million in fiscal year 2007; states are expected to contribute their own funds both through the Medicaid program and apart from that program. GAO evaluated survey funding, state workloads, and federal oversight of states' use of funds since fiscal year 2000 to determine if federal funding had kept pace with the changing workload. GAO analyzed (1) federal funding trends from fiscal years 2000 through 2007 and CMS's methodology for determining states' allocations and spending, (2) CMS data on the number of participating facilities and completed state surveys, and (3) CMS oversight of state spending. GAO interviewed state officials and collected data from 28 states.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Centers for Medicare & Medicaid Services | To address significant shortcomings in the current system for financing and conducting surveys of Medicare and Medicaid facilities, and to help ensure that those facilities that have not been surveyed in at least 6 years are in compliance with federal quality standards, the CMS Administrator should increase the survey priority assigned to such facilities in the annual instructions given to state survey agencies with the goal of surveying them as quickly as possible. | We shared our analysis with CMS showing that there was little change in the number of facilities that had not been surveyed in 6 years or more. CMS officials agreed to examine this issue. However, CMS officials did tell us that the agency had instituted a requirement for a 7.0 year maximum survey interval for all types of facilities. Previously, there was no maximum survey interval for all facility types, only a 6-year average. As a result, it was possible for states to meet the average but not survey some facilities for 10 years or more. Because, CMS believes that the FY 2010 survey budget only funded about 80 percent of the cost of surveying all providers within statutory and policy... mandated intervals, officials expect that a number of states still will not meet the 7-year maximum survey interval.
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| Centers for Medicare & Medicaid Services | To address significant shortcomings in the current system for financing and conducting surveys of Medicare and Medicaid facilities, and to help ensure that those facilities that have not been surveyed in at least 6 years are in compliance with federal quality standards, the CMS Administrator should monitor the progress made by state survey agencies that have a significant number of such facilities. |
CMS officials told us that, in 2009, the agency began to require states that had failed to meet established survey frequency standards to a significant extent for certain facility types to submit a plan of correction acceptable to the CMS regional offices. The regional offices must, in turn, notify CMS central office that they have received and approved such state plans. These actions should help to increase the survey frequency of facilities that have not been surveyed in some time, thereby decreasing the risk for quality problems at these facilities.
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| Centers for Medicare & Medicaid Services | To address significant shortcomings in the current system for financing and conducting surveys of Medicare and Medicaid facilities, and to ensure that Congress has adequate information on the impact of funding on facility oversight, the CMS Administrator should inform Congress of the projected cost of surveying all facilities that lack statutorily mandated survey frequencies a minimum of at least once every 3 years. | In 2012, CMS officials told us that, given the challenge that Congress currently faces on budgetary matters, they determined that their immediate efforts would best be devoted to designing, testing, and implementing additional efficiency initiatives (e.g., S&C memo 12-12 regarding their undertaking of a national Quality Assurance Efficiency & Effectiveness initiative). They told us that they still plan to develop a report, but expect that the timeline will continue to be stretched out, and that the eventual report will communicate not only the cost of surveying all facilities at a 3-year interval, but the savings made possible by their efficiency initiatives and other fiscal reforms,...
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| Centers for Medicare & Medicaid Services | To address significant shortcomings in the current system for financing and conducting surveys of Medicare and Medicaid facilities, and to ensure that Congress has adequate information on the impact of funding on facility oversight, the CMS Administrator should include information in the President's budget request on projected state complaints and the cost of completing the associated workload. | CMS officials told us they report to Congress each year in the Congressional justification of the budget and that in fiscal year 2012, Congress did not fully support the President's budget. They stated that the final appropriation for Medicare administration, including Survey and Certification, was significantly below the budget request. CMS officials told us they believe they have made ample information available to Congress regarding Survey and Certification workload and funding. We acknowledge that federal and state resources continue to be strained, although we continue to believe that it is difficult to determine the appropriate federal funding level for complaint investigations...
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| Centers for Medicare & Medicaid Services | To address significant shortcomings in the current system for financing and conducting surveys of Medicare and Medicaid facilities, and to help address state survey funding inequities, the CMS Administrator should use available tools to adjust the annual baseline Medicare allocations provided to each state. | To ensure that health care facilities participating in the Medicare and Medicaid programs provide high-quality care in a safe environment, the Centers for Medicare & Medicaid Services (CMS) contracts with state survey agencies to conduct periodic inspections known as surveys, among other activities. In general, survey activities are funded through a combination of Medicare, Medicaid, and non-Medicaid state funds. Typically, almost 60 percent of federal spending on survey activities comes from the Medicare Trust Funds, with the remaining 40 percent funded by the federal Medicaid share. Prior to each federal fiscal year, CMS notifies states of their projected Medicare budget allocations...
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| Centers for Medicare & Medicaid Services | To address significant shortcomings in the current system for financing and conducting surveys of Medicare and Medicaid facilities, and to improve CMS's ability to differentiate between funding and management issues and help ensure the quality of surveys, the CMS Administrator should identify appropriate methodologies to help evaluate the efficiency and effectiveness of state survey activities. One such methodology may be the new Quality Indicator Survey, developed to help ensure the consistency, efficiency, and effectiveness of state nursing home surveys. Explore the feasibility of using a similar methodology to survey other Medicare and Medicaid facilities. | CMS officials told us that in FY 2012 they have undertaken a national Quality Assurance Efficiency and Effectiveness initiative. As part of this initiative, CMS modified the survey process for end-stage renal disease facilities to incorporate a risk-based approach. Specifically, the intensity of each survey would vary based on an initial onsite risk assessment of the facility. In July through September 2012, CMS pilot tested the new process in 11 states. Based on positive results of the pilot test, CMS began rolling out the new process nationwide in November 2012. These actions should help to ensure the efficiency and effectiveness, and thereby increase the overall quality, of state...
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| Centers for Medicare & Medicaid Services | To address significant shortcomings in the current system for financing and conducting surveys of Medicare and Medicaid facilities, and to improve CMS's ability to differentiate between funding and management issues and help ensure the quality of surveys, the CMS Administrator should provide Congress with an estimate of the cost of implementing, over 3 years, the Quality Indicator Survey methodology for nursing homes. | In 2012, CMS officials told us that they have suspended further expansion of the Quality Indicator Survey (QIS), due to lower than expected funding for FY 2012 and variation in states' performance using QIS. Specifically, while the pilot states did not experience an increase in survey hours using QIS, the expansion states did. CMS is re-examining the QIS algorithms to determine if the survey hours can be brought back in line with the average hours for the traditional survey. The team will follow up next year. In June 2013, CMS officials told us they have suspended further expansion of the QIS to additional States until they are able to change the algorithms to reduce costs consistent...
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| Centers for Medicare & Medicaid Services | To address significant shortcomings in the current system for financing and conducting surveys of Medicare and Medicaid facilities, and to improve the oversight of state expenditures, the CMS Administrator should collect information about current state shares, including the methodologies used to determine them and the date that they were last reviewed. | According to a CMS memo (Admin Info: 09-32), a CMS regional office workgroup developed a standard operating procedure to guide each region in conducting its review of states' cost allocations. Changes to cost allocations resulting from these reviews will become effective when the results for all states are known and have been analyzed for national impact, which may occur on a rolling basis by provider type. According to the schedule in the memo, ROs were to complete their reviews of nursing home cost allocations by June 30, 2009. Reviews of state cost allocations for the remaining providers and suppliers (e.g., home health agencies, end-stage renal disease facilities, and hospitals) are...
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| Centers for Medicare & Medicaid Services | To address significant shortcomings in the current system for financing and conducting surveys of Medicare and Medicaid facilities, and to improve the oversight of state expenditures, the CMS Administrator should regularly review state shares to ensure that they are accurate, explore ways to obtain information from states on non-Medicaid expenditures where such information is relevant for ensuring that costs are actually shared on an equitable basis, and consider ways to simplify the process of determining state shares. | According to a CMS memo (Admin Info: 09-32), a CMS regional office workgroup developed a standard operating procedure to guide each region in conducting its review of states' cost allocations. Changes to cost allocations resulting from these reviews will become effective when the results for all states are known and have been analyzed for national impact, which may occur on a rolling basis by provider type. According to the schedule in the memo, ROs were to complete their reviews of nursing home cost allocations by June 30, 2009. Reviews of state cost allocations for the remaining providers and suppliers (e.g., home health agencies, end-stage renal disease facilities, and hospitals) are...
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| Centers for Medicare & Medicaid Services | Over the longer term, the CMS Administrator should undertake a broad-based reexamination of the current approach for funding and conducting surveys of Medicare and Medicaid participating facilities. This reexamination should consider issues such as (1) the source and availability of funding, including possible imposition of user fees, and (2) ways of ensuring an adequate survey workforce with sufficient compensation to attract and retain qualified staff. | In response to the first part of our recommendation, the President's Budget for fiscal year 2010 requested authority for CMS to charge user fees for revisits and a portion of recertification surveys. Specifically, $9.4 million was included in the budget for charging revisit user fees. Due to the time required to draft a regulation and implement the recertification fee, CMS did not expect to collect any such fees in fiscal year 2010 and, as such, did not include any funds for this purpose in the budget. If Congress provides CMS the authority to collect these fees, this could result in (1) Medicare Trust Fund savings and (2) somewhat more predictable funding to the extent the fees do not...
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Agency missionsAllocation (Government accounting)Budget outlaysData collectionFederal aid to statesFederal fund accountsFederal fundsstate relationsFinancial analysisFunds managementHealth care facilitiesHealth surveysMedicaidMedicareNursing homesProgram evaluationProgram managementSkilled nursing facilitiesStaff utilizationSurveysUser feesWork measurementCost estimates