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entitled 'Poorly Performing Nursing Homes: Special Focus Facilities 
Are Often Improving, but CMS's Program Could Be Strengthened' which 
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Report to Congressional Requesters: 

United States Government Accountability Office: 
GAO: 

March 2010: 

Poorly Performing Nursing Homes: 

Special Focus Facilities Are Often Improving, but CMS's Program Could 
Be Strengthened: 

GAO-10-197: 

GAO Highlights: 

Highlights of GAO-10-197, a report to congressional requesters. 

Why GAO Did This Study: 

CMS established the Special Focus Facility (SFF) Program in 1998 to 
help address poor nursing home performance. States select a subset of 
homes as SFFs from a list of the 15 poorest performing homes in each 
state, but the program is limited to 136 homes nationwide because of 
resource constraints. CMS guidance directs states to survey SFFs twice 
as frequently as other homes and to propose more robust enforcement, 
including termination, for SFFs that fail to improve within about 18 
months. GAO was asked to (1) determine the factors states consider in 
selecting SFFs and how SFFs differed from other nursing homes, (2) 
evaluate CMS regional office and state adherence to program guidance 
and the program’s impact on homes’ performance, and (3) identify other 
strategies that have been used to improve poorly performing homes. In 
general, GAO’s analysis used CMS data from 2005 through 2009 on SFFs 
and other homes as well as interviews with officials in 14 states 
selected based on the number of SFFs in each state and other factors. 

What GAO Found: 

When selecting SFFs from the candidate list, state officials 
considered factors other than rank on that list, such as their own 
knowledge of each candidate’s circumstances. For example, state 
officials might not select a nursing home as an SFF if the home had a 
new owner they perceived as committed to addressing the home’s quality 
problems. GAO found that states selected SFFs from among the five 
worst-ranked candidates about 57 percent of the time from January 2006 
through February 2009. State discretion in selecting SFFs is key not 
only because of states’ familiarity with each candidate’s 
circumstances but because the list has limitations. Some officials 
from the 14 states that GAO interviewed noted that candidate lists 
included current SFFs, resulting in an insufficient number of homes 
from which to select new SFFs. The characteristics of SFFs differed 
from those of other nursing homes in terms of organization type and 
the number of beds and residents. For example, SFFs were more likely 
than other homes to be chain affiliated and for-profit and to have 
more beds and more total residents. 

GAO found that some states did not consistently follow CMS’s basic SFF 
Program requirements. When CMS began monitoring SFF survey frequency 
in fiscal year 2008, 8 states did not conduct twice as many surveys 
for SFFs as required—a significant improvement compared to 26 states 
in the previous fiscal year. GAO also found that CMS’s enforcement 
guidance is vague and results in inconsistent interpretations. For 
example, one SFF was assessed no civil money penalties (CMP) even 
though it was cited for consecutive deficiencies that could have 
resulted in fines of up to $825 per day of noncompliance while a home 
with a similar compliance history was assessed CMPs that increased 
from $300 to $600 per day of noncompliance. Most SFFs did eventually 
graduate, but not all met CMS’s graduation criteria, and some SFFs 
remained in the program well beyond CMS’s expected 18-month time frame 
for improvement. For example, 17 percent of active SFFs as of February 
2009 had been in the program for 25 months or longer—some since 2005. 
However, most graduates showed significant improvement while in the 
program but some failed to sustain that improved performance after 
graduation. 

CMS and states have used a variety of additional strategies to help 
address care problems identified at SFFs and other nursing homes. For 
example, a few CMS regional offices have negotiated agreements 
requiring SFFs to take specific actions, such as hiring quality 
improvement consultants. In addition, each year one SFF per state can 
volunteer to work with an organization under contract with CMS to deal 
more directly with the root causes of poor quality. Some states have 
adopted their own quality improvement strategies that offer assistance 
to both poorly performing and other homes, including on-site technical 
assistance from nurse consultants or monthly training opportunities 
for nursing home staff on the most frequently cited care problems. 
Further, one state charges homes for the cost of additional surveys 
that it conducts under a program that resembles the SFF Program. 

What GAO Recommends: 

GAO is recommending that the CMS Administrator take six actions to 
strengthen the SFF Program, including (1) notifying homes that are on 
the SFF candidate list and (2) seeking legislative authority to charge 
SFFs for the costs of conducting additional surveys. HHS generally 
agreed with five of GAO’s recommendations and said it would consider 
the other. 

View [hyperlink, http://www.gao.gov/products/GAO-10-197] or key 
components. For more information, contact John Dicken at (202) 512-
7114 or dickenj@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

States Considered Factors Other Than Rank When Selecting SFFs, Which 
Were More Likely to Be Chain Affiliated and For-Profit Than Other 
Nursing Homes: 

State and Regional Office Adherence to SFF Program Guidance Was 
Uneven, but Most SFFs Improved Their Performance While in the Program: 

Other Quality Improvement Strategies to Assist SFFs Have Merit, and 
Some Could Inform CMS Efforts: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Special Focus Facility Financial Performance: 

Appendix II: Scope and Methodology: 

Appendix III: Characteristics of Special Focus Facilities and Other 
Nursing Homes: 

Appendix IV: Chronological Summary of All 10 Systems Improvement 
Agreements (SIA): 

Appendix V: Comments from the Department of Health and Human Services: 

Appendix VI: GAO Contact and Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: Scope and Severity of Deficiencies Identified during Nursing 
Home Surveys: 

Table 2: Points Assigned to Deficiencies in the SFF Methodology: 

Table 3: Average Compliance Histories of Selected SFFs Compared to 
Those of Other Nursing Homes: 

Figures: 

Figure 1: CMS's Allocation of SFFs, by State: 

Figure 2: Operation of the SFF Program: 

Figure 3: SFF Score Ranges for the 15 Program Candidates in Each State: 

Figure 4: Percentage of SFFs, SFF Candidates, and Other Nursing Homes 
That Had at Least One CMP and DPNA Implemented from 2006 through 2008: 

Figure 5: Average Number and Range of Months Nursing Homes Spent in 
the SFF Program, by Status and Year Added to the Program: 

Abbreviations: 

AEM: Automated Survey Processing Environment Enforcement Manager: 

CIA: Corporate Integrity Agreement: 

CMP: civil money penalty: 

CMS: Centers for Medicare & Medicaid Services: 

DPNA: denial of payment for new Medicare or Medicaid admissions: 

HHS: Department of Health and Human Services: 

NHIN: Nursing Homes in Need: 

OIG: Office of Inspector General: 

OSCAR: On-Line Survey, Certification, and Reporting system: 

QIO: Quality Improvement Organization: 

SFF: Special Focus Facility: 

SIA: Systems Improvement Agreement: 

SQC: substandard quality of care: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

March 19, 2010: 

The Honorable Herb Kohl: 
Chairman: 
Special Committee on Aging: 
United States Senate: 

The Honorable Charles E. Grassley: 
Ranking Member: 
Committee on Finance: 
United States Senate: 

The nation's 1.4 million nursing home residents are a highly 
vulnerable population of elderly and disabled individuals who rely on 
nursing homes to provide high-quality care. The Centers for Medicare & 
Medicaid Services (CMS) contracts with state survey agencies to 
conduct inspections, known as standard surveys, and complaint 
investigations to determine whether nursing homes are complying with 
federal quality standards.[Footnote 1] Nursing homes must meet those 
standards to participate in Medicare and Medicaid.[Footnote 2] Our 
prior reports have found that some nursing homes are chronically 
noncompliant; that is, they have been cited repeatedly by state survey 
agencies for serious deficiencies such as residents having preventable 
pressure sores that harmed them or put them at risk of death or 
serious injury.[Footnote 3] In 1998, CMS developed the Special Focus 
Facility (SFF) Program to monitor two poorly performing nursing homes 
per state, as one way to address issues of chronic noncompliance and 
improve the performance of these nursing homes. CMS's program guidance 
directs states to conduct more extensive oversight of SFFs and the 
agency's regional offices to monitor state implementation of the SFF 
Program. CMS expanded the program's size in 2005 to 136 SFFs and up to 
6 per state--less than 1 percent of the nation's roughly 16,000 
nursing homes--and since then has issued additional guidance to states 
regarding the operation of the SFF Program.[Footnote 4] The agency has 
not further expanded the SFF Program, with officials citing resource 
constraints.[Footnote 5] 

You expressed interest in CMS's efforts to influence the performance 
of poorly performing nursing homes. Our August 2009 report estimated 
the number and characteristics of homes in the United States that 
could be considered the most poorly performing.[Footnote 6] We found 
that (1) about 580 (4 percent) of the nation's nursing homes could be 
considered the most poorly performing and (2) the homes selected as 
SFFs are not necessarily the most poorly performing homes in the 
nation but rather are among the poorest performers in each state. To 
improve the targeting of scarce resources, we recommended that the 
Administrator of CMS consider an alternative approach for allocating 
the 136 SFFs across states by placing more emphasis on the relative 
performance of homes nationally rather than on a state-by-state basis, 
which could result in some states having only one or not any SFFs and 
other states having more than they are currently allocated. In 
response, CMS noted that it would evaluate a hybrid approach that 
would assign some SFFs using homes' performance in each state and 
other SFFs on their relative national ranking. 

In this report, we examined the operation of the SFF Program. 
Specifically, we (1) determined the factors states consider in 
selecting homes for the SFF Program and how such homes differ from 
other nursing homes; (2) evaluated the extent to which the CMS 
regional offices and states followed CMS guidance in implementing the 
SFF Program and the program's impact on homes' performance; and (3) 
identified other strategies that have been employed to improve the 
performance of poorly performing homes, including SFFs. You also asked 
us to provide information on the financial performance of SFFs, which 
can be found in appendix I. 

To determine the factors that states consider in selecting SFFs and 
how such homes differ from other nursing homes, we analyzed (1) the 
scores for all nursing homes as determined by CMS in January 2009 
using a methodology it employs for the SFF Program as well as the rank 
for all homes added to the program from January 2006 through February 
2009 using that same methodology, (2) deficiencies and revisit dates 
associated with standard surveys conducted in 2008 and deficiencies 
from complaint investigations conducted in the year prior to the 2008 
standard survey from CMS's On-Line Survey, Certification, and 
Reporting system (OSCAR), and (3) other CMS data, which describe 
nursing home characteristics as of December 2008 and January 2009. 
[Footnote 7] For the data analyses throughout this report on SFFs, we 
used a CMS list of homes that were placed in the SFF Program from 
January 2005 through February 2009. We limited our analysis to the 
period 2005 through 2009 because in late 2004 CMS announced 
significant changes to strengthen the SFF Program, which became 
effective in 2005. 

To determine the extent to which its regional offices and states 
followed CMS's SFF Program guidance and the program's impact on homes' 
performance, we analyzed CMS data on (1) survey dates and deficiencies 
as reported in OSCAR; (2) sanctions for SFFs, SFF candidates, and all 
other nursing homes using CMS's Automated Survey Processing 
Environment Enforcement Manager (AEM) for calendar years 2006 through 
2008; (3) dates SFFs were placed in and left the program through 
termination or graduation; (4) homes that terminated from Medicare and 
Medicaid as reported in the Provider of Service file dated December 
2008; and (5) scores of nursing homes from December 2005 through 
January 2009, which CMS determined using its SFF methodology. In 
addition, we used OSCAR deficiency data to identify SFFs that had 
serious deficiencies on consecutive standard surveys and reviewed 
enforcement reports that summarize data from AEM which we obtained for 
these homes from regional offices. 

To determine what other strategies have been employed to improve the 
quality of care provided by poorly performing nursing homes, including 
SFFs, we reviewed (1) Systems Improvement Agreements (SIA) between CMS 
and some SFFs, which require the homes to take specific steps to 
address quality of care problems; (2) quality of care Corporate 
Integrity Agreements (CIA) between the Department of Health and Human 
Services (HHS) Office of Inspector General (OIG) and nursing home 
corporations, which are intended to bring about quality improvements 
across the corporations' homes; and (3) the Nursing Homes in Need 
(NHIN) initiative, an element of CMS's August 1, 2008, through July 
31, 2011, contract with Quality Improvement Organizations (QIO) that 
requires QIOs to work with a limited number of homes, generally SFFs, 
to improve the care delivered to residents.[Footnote 8] 

Our three objectives were informed by interviewing officials from 
CMS's Survey and Certification Group, which we refer to as CMS's 
central office, all 10 of its regional offices, and 14 state survey 
agencies.[Footnote 9] CMS's central office is responsible for the SFF 
Program and for oversight of the 10 CMS regional offices, which in 
turn monitor states' nursing home oversight activities and their 
implementation of the SFF Program. In our interviews, we asked 
regional offices and states about their implementation of the SFF 
Program and other topics, such as whether states offer additional 
activities that may improve the performance of SFFs and other nursing 
homes. We also interviewed officials from (1) CMS's Office of Clinical 
Standards and Quality, the office responsible for oversight of the QIO 
contract; (2) the HHS OIG; and (3) an official with an independent 
monitoring association that assists HHS OIG in the monitoring of 
nursing home quality of care CIAs. In addition, we reviewed our prior 
reports and CMS's guidance to states on nursing home oversight 
activities and the SFF Program and analyzed information available at 
CMS's Providing Data Quickly Web site, which produces a variety of 
reports using data collected by CMS to oversee providers of Medicare 
and Medicaid services. For a more detailed discussion of our scope and 
methodology, see appendix II. To ensure the reliability of the various 
data we analyzed, we interviewed CMS officials, reviewed CMS 
documentation, conducted electronic testing to identify obvious 
errors, and traced a selection of records to another CMS reporting 
system. Based on these activities, we determined that CMS data were 
sufficiently reliable for our analysis. 

We conducted this performance audit from December 2008 through March 
2010 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Background: 

Titles XVIII and XIX of the Social Security Act establish minimum 
standards that all nursing homes must meet to participate in the 
Medicare and Medicaid programs, respectively. Provisions added by the 
Omnibus Budget Reconciliation Act of 1987 focused the standards on the 
quality of care actually provided by a home.[Footnote 10] To encourage 
improvement at nursing homes that demonstrate chronic noncompliance 
with these quality of care standards, CMS initiated the SFF Program in 
1998 and subsequently expanded and strengthened the program in 
December 2004. 

Ensuring Compliance with Federal Quality of Care Standards: 

To assess whether nursing homes meet federal quality of care 
standards, state survey agencies conduct standard surveys, which occur 
on average once a year, and complaint investigations as 
needed.[Footnote 11] A standard survey involves a comprehensive 
assessment of federal quality standards.[Footnote 12] In contrast, 
complaint investigations generally focus on a specific allegation 
regarding resident care or safety made by a resident, family member, 
or nursing home staff member. Deficiencies identified during either 
standard surveys or complaint investigations are classified in 1 of 12 
categories labeled A through L according to their scope (i.e., the 
number of residents potentially or actually affected) and severity 
(i.e., the potential for or occurrence of harm to residents). (See 
table 1.) An A-level deficiency is the least serious and is isolated 
in scope, while an L-level deficiency is the most serious and is 
widespread throughout the nursing home. Nursing homes with 
deficiencies at the A, B, or C levels are considered to be in 
substantial compliance with quality standards; homes with D-level or 
higher deficiencies are considered noncompliant. For most 
deficiencies, a home is required to prepare a plan of correction, and, 
depending on the severity of the deficiency, surveyors may conduct a 
revisit to ensure that the nursing home has implemented its plan and 
corrected the deficiency.[Footnote 13] 

Table 1: Scope and Severity of Deficiencies Identified during Nursing 
Home Surveys: 

Severity: Immediate jeopardy[A]; 
Scope: Isolated: J; 
Scope: Pattern: K; 
Scope: Widespread: L. 

Severity: Actual harm; 
Scope: Isolated: G; 
Scope: Pattern: H; 
Scope: Widespread: I. 

Severity: Potential for more than minimal harm; 
Scope: Isolated: D; 
Scope: Pattern: E; 
Scope: Widespread: F. 

Severity: Potential for minimal harm[B]; 
Scope: Isolated: A; 
Scope: Pattern: B; 
Scope: Widespread: C. 

Source: CMS. 

[A] Actual or potential for death/serious injury. 

[B] Nursing home is considered to be in substantial compliance. 

[End of table] 

Federal Enforcement: 

Nursing homes that fail to meet federal quality standards may be 
subject to federal enforcement actions known as sanctions. Sanctions 
can affect a home's revenues and therefore provide financial 
incentives to return to and maintain compliance. Enforcement of 
nursing home quality of care standards is a shared federal-state 
responsibility. In general, sanctions are (1) initially proposed by 
the state based on a cited deficiency, (2) reviewed and imposed by CMS 
regional offices, and (3) implemented--that is, put into effect--by 
the same CMS regional office.[Footnote 14] Homes may have an 
opportunity to correct deficiencies after the imposition of a 
sanction, which can result in the sanction being rescinded, that is, 
not implemented. At state and regional office discretion, sanctions 
may be imposed immediately without giving homes an opportunity to 
correct deficiencies after a required notice period.[Footnote 15] 
Sanctions are generally reserved for serious deficiencies--those at 
the G through L levels--that constitute actual harm and immediate 
jeopardy to residents.[Footnote 16] 

Sanctions include fines known as civil money penalties (CMP), denial 
of payment for new Medicare or Medicaid admissions (DPNA), and 
termination from the Medicare and Medicaid programs.[Footnote 17] 
Overall, two sanctions--CMPs and DPNAs--accounted for about 75 percent 
of federal sanctions from 2005 through 2008, while terminations were 
less than 1 percent. By statute, DPNA and termination are mandatory 
sanctions in certain circumstances, but discretionary DPNA and 
termination may also be imposed. 

* CMP. Unlike most other sanctions, CMPs require no notice period; in 
addition, they can be applied retroactively to the first date of 
noncompliance. CMPs may be either per day or per instance. CMS 
regulations specify a per day CMP range from $50 to $10,000 for each 
day a home is noncompliant--from $50 to $3,000 for nonimmediate 
jeopardy and $3,050 to $10,000 for immediate jeopardy. Per instance 
CMPs range from $1,000 to $10,000 per episode of noncompliance. In 
2007, CMS issued guidance to states and regional offices to encourage 
consistency in CMP amounts. 

* DPNA. A DPNA denies a home payments for new admissions until 
deficiencies are corrected. A DPNA is required by statute within 3 
months of the end of a survey if, for example, a home fails to correct 
deficiencies and return to compliance. In contrast, discretionary 
DNPAs can go into effect much sooner--after a 15-day notice period, 
which is shortened to 2 days in the case of immediate jeopardy. 
[Footnote 18] Unlike CMPs, DPNAs cannot be imposed retroactively. 

* Termination. CMS can terminate a nursing home by implementing either 
a mandatory or a discretionary termination. Mandatory termination is 
required by regulation if within 23 days of the end of a survey a home 
fails to correct immediate jeopardy deficiencies or within 6 months if 
it fails to correct nonimmediate jeopardy deficiencies. CMS may also 
impose discretionary terminations in situations other than those 
specified above, which require the same notice period applicable to 
discretionary DPNAs. In addition, nursing homes can and do terminate 
voluntarily, which may be related to the fact that the home is at risk 
of involuntary termination. 

The SFF Program: 

The objective of the SFF Program is to decrease the number of 
persistently poorly performing nursing homes by focusing more 
attention on a small number of nursing homes in each state with a 
record of poor quality performance. Since the program's inception, CMS 
has changed the SFF Program's scope and methodology to enhance the 
agency's goal of improving nursing home performance. 

CMS's SFF Methodology and Selection of SFFs: 

CMS uses its SFF methodology to identify a list of the 15 worst 
performing nursing homes in each state. The SFF methodology assigns 
points to deficiencies on standard surveys and complaint 
investigations, and to revisits associated with deficiencies cited on 
standard surveys.[Footnote 19],[Footnote 20] More points are assigned 
to deficiencies that are higher in scope and severity, and additional 
points are assigned to deficiencies classified as substandard quality 
of care (SQC).[Footnote 21] (See table 2.) For every nursing home, CMS 
sums the points associated with the deficiencies (including SQC) and 
the revisits to create a cycle score for each of the last three 
cycles.[Footnote 22] CMS then creates the total score by weighting the 
more recent cycle scores more heavily.[Footnote 23] Nursing homes with 
the highest number of points are the worst performing homes. 

Table 2: Points Assigned to Deficiencies in the SFF Methodology: 

SFF points: 
Scope and Severity: Potential for minimal harm: A: 0; 
Scope and Severity: Potential for minimal harm: B: 0; 
Scope and Severity: Potential for minimal harm: C: 0; 
Scope and Severity: Potential for more than minimal harm: D: 2; 
Scope and Severity: Potential for more than minimal harm: E: 4; 
Scope and Severity: Potential for more than minimal harm: F: 6; 
Scope and Severity: Actual harm: G: 10; 
Scope and Severity: Actual harm: H: 20; 
Scope and Severity: Actual harm: I: 30; 
Scope and Severity: Immediate jeopardy: J: 50; 
Scope and Severity: Immediate jeopardy: K: 100; 
Scope and Severity: Immediate jeopardy: L: 150. 

Additional SQC points: 
Scope and Severity: Potential for minimal harm: A: 0; 
Scope and Severity: Potential for minimal harm: B: 0; 
Scope and Severity: Potential for minimal harm: C: 0; 
Scope and Severity: Potential for more than minimal harm: D: 0; 
Scope and Severity: Potential for more than minimal harm: E: 0; 
Scope and Severity: Potential for more than minimal harm: F: 4; 
Scope and Severity: Actual harm: G: 0; 
Scope and Severity: Actual harm: H: 5; 
Scope and Severity: Actual harm: I: 5; 
Scope and Severity: Immediate jeopardy: J: 25; 
Scope and Severity: Immediate jeopardy: K: 25; 
Scope and Severity: Immediate jeopardy: L: 25. 

Source: CMS. 

Note: CMS agreed in principle with our recommendations to (1) assign 
points to G-level deficiencies in SQC areas equivalent to those 
additional points assigned to H-and I-level deficiencies in SQC areas, 
and (2) consider adopting the points used by CMS's Five-Star Quality 
Rating System for the SFF methodology. See GAO-09-689. 

[End of table] 

CMS refers to the resulting list of the 15-worst performing homes in 
each state as the SFF candidate list. The list is generally 
distributed quarterly to CMS's regional offices, which then distribute 
it to states as necessary. Except for Alaska, each state and the 
District of Columbia have between one and six SFFs at any time, 
depending on the total number of nursing homes in the state.[Footnote 
24] (See figure 1.) If there is an opening in the state's program 
because an SFF has graduated from the program or been terminated from 
Medicare and Medicaid, the state selects a new SFF from its candidate 
list. CMS allows states discretion in determining which of the 
candidates to choose for the program, and the CMS regional office 
concurs with the states' selections. 

Figure 1: CMS's Allocation of SFFs, by State: 

[Refer to PDF for image: map of the U.S.] 

Alabama: 2; 
Alaska: 0; 
Arizona: 2; 
Arkansas: 2; 
California: 6; 
Colorado: 2; 
Connecticut: 2; 
Delaware: 1; 
District of Columbia: 1; 
Florida: 5; 
Georgia: 3; 
Hawaii: 1; 
Idaho: 1; 
Illinois: 5; 
Indiana: 4; 
Iowa: 4; 
Kansas: 3; 
Kentucky: 3; 
Louisiana: 3; 
Maine: 2; 
Maryland: 2; 
Massachusetts: 4; 
Michigan: 4; 
Minnesota: 4; 
Mississippi: 2; 
Missouri: 4; 
Montana: 2; 
Nebraska: 2; 
Nevada: 1; 
New Hampshire: 1; 
New Jersey: 3; 
New Mexico: 1; 
New York: 5; 
North Carolina: 4; 
North Dakota: 1; 
Ohio: 5; 
Oklahoma: 3; 
Oregon: 2; 
Pennsylvania: 5; 
Rhode Island: 1; 
South Carolina: 2; 
South Dakota: 2; 
Tennessee: 3; 
Texas: 6; 
Utah: 1; 
Vermont: 1; 
Virginia: 3; 
Washington: 3; 
West Virginia: 2; 
Wisconsin: 4; 
Wyoming: 1. 

Source: GAO analysis of CMS data; copyright Corel Corp. All rights 
reserved (map). 

Note: Alaska does not participate in the SFF Program because it has so 
few nursing homes. 

[End of figure] 

SFF Program Guidance: 

In addition to specifying that states select SFFs from a list of 
candidate nursing homes, figure 2 shows that CMS's guidance to states 
on the operation of the SFF Program includes two other key 
requirements: 

* States are instructed to increase scrutiny of SFFs in the following 
ways: 

- Survey frequency. States provide additional scrutiny of SFFs by 
conducting two surveys per fiscal year for each SFF, which is twice as 
frequent as at other nursing homes. CMS measures each state's 
compliance with this requirement annually through state performance 
reviews.[Footnote 25] The state performance reviews emphasize three 
aspects of the survey program: survey timeliness, survey quality, and 
the enforcement and remedy of problems found during surveys. If a 
regional office determines that a state has not conducted two surveys 
for every SFF allotted to the state per fiscal year, the state must 
develop a corrective action plan.[Footnote 26] 

- Enforcement. States are required to impose sanctions that increase 
in severity and are more immediate when SFFs do not improve. For 
example, a state should propose a CMP or a DPNA with the minimum 
notice period. 

* After three standard surveys (approximately 18 months) in the SFF 
Program, one of the following three outcomes are expected: 

- Graduation. States determine if the SFF is eligible to "graduate" 
from the program by meeting CMS's criteria for improved performance: 
two consecutive standard surveys and any intervening complaint 
investigations must have no deficiencies at the F level or higher. In 
addition, an SFF cannot have a deficiency higher than the F level on 
the fire safety portion of its most recent standard survey. 

- Retention. States keep the SFF in the program if it does not meet 
the graduation criteria but is showing improvement. 

- Termination. States recommend that the SFF be terminated from 
participation in Medicare and Medicaid if it fails to make significant 
progress. 

Figure 2: Operation of the SFF Program: 

[Refer to PDF for image: illustration] 

SFF Selection: 
State, with CMS concurrence, selects a nursing home for the SFF 
Program from the candidate list. 

Increased scrutiny: 
SFF receives increased state scrutiny: 1) State conducts two surveys 
per fiscal year, which is twice as frequent as at other nursing homes. 
2) State imposes more robust enforcement actions when SFF does not 
improve. 

After three standard surveys (approximately 18 months): 

Graduation: 
State determines if the SFF meets CMS's criteria for graduation from 
the program. 

Retention: 
If an SFF cannot gradual state retains SFF in the program and 
increased scrutiny continues. 

Termination: 
If an SFF fails to make significant progress the state can recommend 
that the home be terminated from Medicare and Medicaid. 

When a home graduates or is terminated, the state makes a new SFF
selection. 

Source: GAO (data); Art Explosion (graphics). 

[End of figure] 

Additional Changes to the SFF Program in 2007 and 2008: 

CMS made several key changes to the SFF Program in 2007 and 2008 to 
increase both provider and public awareness of the program. In 2007, 
CMS began requiring states to notify the governing bodies, owners, 
operators, and administrators that a facility had been designated an 
SFF. CMS also issued a press release in 2007 listing those SFFs that 
had failed to significantly improve their care; previously, the 
identity of SFFs was not provided to the public. In an effort to 
increase transparency, CMS added the identity of all SFFs to its 
Nursing Home Compare Web site during 2008. That same year, information 
on the SFF methodology and on SFFs, such as those that failed to 
significantly improve their care after about one survey, was added to 
CMS's Web site.[Footnote 27] 

In 2008, CMS also added ratings from its Five-Star Quality Rating 
System to its Nursing Home Compare Web site to further assist 
consumers in judging nursing home quality. Every home in the United 
States is rated from one star (much below average) to five stars (much 
above average). The Five-Star System provides an overall quality 
rating based on individual ratings for three separate components: (1) 
health inspections--deficiencies cited on standard surveys and any 
associated revisits and complaint investigations;[Footnote 28] (2) 
nursing home staffing levels; and (3) quality of care measures, which 
are computed using data submitted to CMS by nursing homes on their 
residents' health, physical functioning, mental status, and general 
well-being. SFFs can have high ratings on any one of the three 
components, but their overall rating is capped at three stars. 
However, as of February 2009, no SFFs had a five star rating in the 
health inspection component of the Five-Star System. 

States Considered Factors Other Than Rank When Selecting SFFs, Which 
Were More Likely to Be Chain Affiliated and For-Profit Than Other 
Nursing Homes: 

When selecting SFFs from the candidate list, state officials 
considered factors other than rank, such as their own knowledge of 
each candidate's circumstances. Such discretion is key not only 
because of states' familiarity with each candidate's circumstances but 
also because the list has limitations. The characteristics of SFFs 
differed from those of other nursing homes in terms of the homes' 
organization type and the number of beds and residents. For example, 
SFFs were more likely than other homes to be chain affiliated and for-
profit and to have more beds and more total residents. 

States Exercise Discretion When Selecting SFFs by Considering Factors 
Such as Surveyor Workload or Nursing Home Ownership: 

Although rank and score play an important role in the selection of 
SFFs, the states we interviewed consider additional factors when 
making their selections, including the candidate's compliance and 
enforcement history, state surveyor workload, nursing home ownership, 
and financial concerns. We found that a majority of states selected 
SFFs from among their five worst performers. While the first-ranked 
candidate (the worst performing home) was selected about 17 percent of 
the time from January 2006 through February 2009, about 57 percent of 
SFFs selected during that period were among the five worst-ranked 
candidates.[Footnote 29] 

* Compliance and enforcement history. Most states we interviewed 
specified that they review the details of a nursing home's overall 
compliance with federal quality standards. For example, a state might 
review the scope and severity level, type, and repetitiveness of 
deficiencies for candidates it considers. When reviewing a nursing 
home's history, a few states indicated that they are likely to select 
candidates with more recent poor performance, which is also reflected 
in the SFF score beginning in 2008. In addition, some states we 
interviewed review and take into consideration a nursing home's 
enforcement history, such as any CMPs or DPNAs imposed for 
noncompliance with federal standards. 

* State surveyor workload. Some states we interviewed avoid 
concentrating SFFs in the same district in their state due to the 
additional workload associated with the SFF Program. For example, 
California tries to distribute SFFs geographically so that no state 
district office has more than one SFF at a time. To help accomplish 
this, the California state survey agency meets with the district 
offices to review the candidate list. 

* Nursing home ownership. Some states we interviewed consider the 
nursing home's ownership, including any recent changes or knowledge of 
other homes owned by the same chain. State officials explained that a 
recent change of ownership could influence their SFF selection. For 
example, if state officials are aware of a history of problems with 
the new owner, they may select the home for the SFF Program in order 
to scrutinize it more closely; on the other hand, they may not select 
a home if they perceive that the new owner has a good reputation, 
which would give the new owner adequate time to correct quality 
problems. 

* Financial concerns. Officials from three of the states we 
interviewed said they might consider any known financial concerns when 
making an SFF selection. In addition, regional offices told us that 
they may learn about nursing homes' financial difficulties on an ad-
hoc basis, such as through resident and staff complaints about 
inadequate services or the home's inability to meet its payroll or 
through a home's request to delay or reduce payments from CMPs due to 
financial hardship. 

Limitations in the Candidate List Highlight the Necessity for States' 
Discretion: 

The majority of state officials we interviewed told us that CMS's 
candidate list accurately identifies poorly performing nursing homes 
in each state, such as those homes that habitually cycle in and out of 
compliance with federal nursing home standards; however, we found that 
certain limitations in the list highlight the importance of states' 
discretion in selecting SFFs. First, because of lag times between when 
surveys are conducted and when the results are reflected on the SFF 
candidate list, some states and regions found that the candidate list 
may not reflect a home's most recent survey.[Footnote 30] 
Consequently, some candidates could appear to have a better or worse 
score than reflected in the most recent survey, or homes may be 
included or excluded inappropriately from the list. Second, some 
states told us that the candidate list does not provide them with a 
sufficient number of nursing homes from which to select new SFFs. 
Specifically, the list includes current SFFs if they are still ranked 
among the worst 15 homes in the state, which narrows the state's 
selection possibilities. Officials from Indiana, Illinois, and 
California, which are allocated 4, 5, and 6 SFFs, respectively, 
explained that having existing SFFs on their list left them with fewer 
than 15 nursing homes to consider for the program. 

Moreover, we found additional limitations to the list, including 
considerable variation in SFF candidate scores, that further highlight 
the importance of states' discretion. As noted in our August 2009 
report, the candidate list identifies poorly performing nursing homes 
in each state but does not necessarily identify the most poorly 
performing nursing homes in the nation.[Footnote 31] This limitation 
becomes apparent when comparing SFF scores for nursing homes on the 
candidate list both across and within states. As a result of the 
variation across states, some candidates may have the worst score in 
their state and yet not score among the worst homes in the nation. In 
addition, wide variation in candidates' scores is also found within 
individual states. For example, on the January 2009 candidate list, 
the score of the worst home in Tennessee was about 1,512. However, all 
SFF candidates in each of 22 states had lower scores than the 15th 
worst candidate in Tennessee, which had a score of about 253. (See 
figure 3.) 

Figure 3: SFF Score Ranges for the 15 Program Candidates in Each State: 

[Refer to PDF for image: horizontal bar graph] 

State: Tennessee: 
Maximum: 1512; 
Minimum: 253. 

State: Kentucky: 
Maximum: 925; 
Minimum: 185. 

State: Arkansas: 
Maximum: 863; 
Minimum: 241. 

State: Louisiana: 
Maximum: 743; 
Minimum: 249. 

State: South Carolina: 
Maximum: 698; 
Minimum: 117. 

State: New York: 
Maximum: 639; 
Minimum: 229. 

State: Oklahoma: 
Maximum: 605; 
Minimum: 167. 

State: Mississippi: 
Maximum: 574; 
Minimum: 139. 

State: Florida: 
Maximum: 571; 
Minimum: 165. 

State: Illinois: 
Maximum: 558; 
Minimum: 259. 

State: Texas: 
Maximum: 557; 
Minimum: 301. 

State: Wisconsin: 
Maximum: 547; 
Minimum: 125. 

State: Alabama: 
Maximum: 500; 
Minimum: 117. 

State: Maine: 
Maximum: 454; 
Minimum: 78. 

State: Kansas: 
Maximum: 435; 
Minimum: 161. 

State: California: 
Maximum: 431; 
Minimum: 215. 

State: Oregon: 
Maximum: 391; 
Minimum: 66. 

State: New Hampshire: 
Maximum: 390; 
Minimum: 37. 

State: Missouri: 
Maximum: 377; 
Minimum: 176. 

State: Georgia: 
Maximum: 363; 
Minimum: 127. 

State: New Jersey: 
Maximum: 356; 
Minimum: 112. 

State: New Mexico: 
Maximum: 321; 
Minimum: 87. 

State: North Carolina: 
Maximum: 320; 
Minimum: 91. 

State: Indiana: 
Maximum: 308; 
Minimum: 189. 

State: Michigan: 
Maximum: 307; 
Minimum: 159. 

State: District of Columbia: 
Maximum: 286; 
Minimum: 32. 

State: Vermont: 
Maximum: 278; 
Minimum: 42. 

State: Connecticut: 
Maximum: 254; 
Minimum: 86. 

All SFF candidates in the following 22 states scored better than the 
15th-ranked candidate in Tennessee. 

State: Nebraska: 
Maximum: 245; 
Minimum: 66. 

State: Wyoming: 
Maximum: 243; 
Minimum: 50. 

State: Rhode Island: 
Maximum: 238; 
Minimum: 29. 

State: Utah: 
Maximum: 230; 
Minimum: 27. 

State: Colorado: 
Maximum: 229; 
Minimum: 101. 

State: Massachusetts: 
Maximum: 229; 
Minimum: 67. 

State: Virginia: 
Maximum: 229; 
Minimum: 79. 

State: Arizona: 
Maximum: 209; 
Minimum: 84. 

State: Washington: 
Maximum: 204; 
Minimum: 113. 

State: Ohio: 
Maximum: 183; 
Minimum: 96. 

State: Minnesota: 
Maximum: 182; 
Minimum: 99. 

State: Iowa: 
Maximum: 174; 
Minimum: 100. 

State: Hawaii: 
Maximum: 173; 
Minimum: 22. 

State: Pennsylvania: 
Maximum: 171; 
Minimum: 94. 

State: West Virginia: 
Maximum: 170; 
Minimum: 75. 

State: Maryland: 
Maximum: 151; 
Minimum: 81. 

State: Montana: 
Maximum: 140; 
Minimum: 51. 

State: Delaware: 
Maximum: 126; 
Minimum: 52. 

State: Idaho: 
Maximum: 117; 
Minimum: 68. 

State: Nevada: 
Maximum: 111; 
Minimum: 31. 

State: North Dakota: 
Maximum: 79; 
Minimum: 16. 

State: South Dakota: 
Maximum: 68; 
Minimum: 30. 

Source: GAO analysis of CMS data, as of January 2009. 

Notes: (1) The left side of each bar (minimum) represents the candidate 
with the lowest score, and the right side (maximum) represents the 
candidate with the highest score. (2) This figure excludes Alaska, 
which does not have SFFs. 

[End of figure] 

SFFs Were More Likely to Be Chain Affiliated and For-Profit Than Other 
Nursing Homes: 

SFFs differed from other nursing homes not only in terms of their 
compliance history but also in terms of other key characteristics. We 
compared deficiencies from the 59 SFFs that (1) were added to the SFF 
Program in 2008 and (2) had a standard survey that occurred prior to 
their entry into the program to deficiencies from other homes that had 
a standard survey conducted in 2008. We included in this analysis 
deficiencies from complaint investigations that occurred in the year 
prior to the 2008 standard survey and revisits associated with the 
standard survey.[Footnote 32] Consistent with the SFF methodology, we 
found that, on average, these 59 SFFs had both a greater number of D- 
through L-level deficiencies, including more at each scope and 
severity level, and a greater number of deficiencies cited on standard 
surveys and complaint investigations than other nursing homes. 
[Footnote 33] For example, SFFs had, on average, 5.5 times more actual 
harm deficiencies and 19 times more immediate jeopardy deficiencies. 
In addition, these SFFs had, on average, a greater number of revisits. 
(See table 3.) 

Table 3: Average Compliance Histories of Selected SFFs Compared to 
Those of Other Nursing Homes: 

Compliance history: Total deficiencies at the D level or higher; 
Selected SFFs (59 homes)[A]: 19.9; 
Other nursing homes (14,686 homes)[B]: 7.5. 

Compliance history: Deficiencies at the D through F levels; 
Selected SFFs (59 homes)[A]: 15.8; 
Other nursing homes (14,686 homes)[B]: 7.0. 

Compliance history: Deficiencies at the actual harm level (G-I); 
Selected SFFs (59 homes)[A]: 2.2; 
Other nursing homes (14,686 homes)[B]: 0.4. 

Compliance history: Deficiencies at the immediate jeopardy level (J-L); 
Selected SFFs (59 homes)[A]: 1.9; 
Other nursing homes (14,686 homes)[B]: 0.1. 

Compliance history: Deficiencies by survey type (D-L); 
Selected SFFs (59 homes)[A]: [Empty]; 
Other nursing homes (14,686 homes)[B]: [Empty]. 

Compliance history: Deficiencies cited on standard surveys; 
Selected SFFs (59 homes)[A]: 14.0; 
Other nursing homes (14,686 homes)[B]: 6.3. 

Compliance history: Deficiencies cited on complaint investigations; 
Selected SFFs (59 homes)[A]: 5.9; 
Other nursing homes (14,686 homes)[B]: 1.3. 

Compliance history: Number of revisits[C]; 
Selected SFFs (59 homes)[A]: 0.7; 
Other nursing homes (14,686 homes)[B]: 0.2. 

Source: GAO analysis of CMS data. 

Notes: (1) We analyzed the standard survey in 2008, complaint 
investigations in the year prior to that standard survey, and revisits 
associated with that standard survey. (2) All differences between 
groups are significant at the 0.05 level. 

[A] "Selected SFFs" included 59 nursing homes that were added to the 
SFF Program beginning in January 2008 and had a standard survey in 
2008 prior to entering the program. 

[B] "Other nursing homes" excludes facilities that did not have a 
standard survey in 2008 and that were SFFs from 2005 through February 
2009. 

[C] The number of revisits excludes homes with only one revisit 
because those homes would not be assigned any points under the SFF 
methodology. Only homes with two, three, or four revisits are assigned 
points under the SFF methodology. 

[End of table] 

Additional key characteristics of SFFs also differentiated them from 
other nursing homes. Comparing the characteristics of 133 homes in the 
SFF Program as of February 2009 to those of other homes, we found that 
they differed in terms of type of organization and participation in 
Medicare and Medicaid, the number of beds and residents, nurse 
staffing levels, and ratings on CMS's Five-Star System.[Footnote 34] 
(See appendix III.) 

* Type of organization and participation in Medicare and Medicaid. A 
higher percentage of SFFs were part of a chain organization, for-
profit organization, or both. For example, about 55 percent of SFFs 
were for-profit and chain affiliated, compared to about 42 percent of 
other nursing homes. Furthermore, fewer SFFs participated in Medicaid 
only compared to other nursing homes--about 2 percent and about 5 
percent, respectively. 

* Beds and residents. On average, SFFs had more beds and total 
residents, but a lower occupancy rate, than other nursing homes. 
Specifically, SFFs averaged approximately 131 beds and 104 residents-- 
about a 79 percent occupancy rate; other nursing homes had 
approximately 106 beds and 90 residents--about an 85 percent occupancy 
rate. SFFs also had a greater share of Medicaid patients on average 
than other nursing homes--71 percent compared to 60 percent. 

* Nurse staffing. SFFs had fewer registered nurse hours per resident- 
day as a share of total hours per resident-day--about 9.0 percent 
compared to about 9.9 percent for other nursing homes.[Footnote 35] 

* CMS's Five-Star System. SFFs were much more likely than other 
nursing homes to be ranked lower on the overall quality rating and 
health inspection component rating of the Five-Star System.[Footnote 
36] Specifically, about 74 percent of SFFs received one star on the 
overall quality rating, and about 93 percent received one star on the 
health inspection component of the rating.[Footnote 37] In comparison, 
about 22 percent of other nursing homes received one star on the 
overall quality rating, and about 19 percent received one star on the 
health inspection component.[Footnote 38] 

State and Regional Office Adherence to SFF Program Guidance Was 
Uneven, but Most SFFs Improved Their Performance While in the Program: 

We found that some states did not consistently follow CMS's basic SFF 
Program requirements, such as surveying SFFs twice a year. We also 
found that CMS's enforcement guidance is vague and results in 
inconsistent interpretations. Most SFFs did eventually graduate, not 
all met CMS's graduation criteria, and some remained in the program 
well beyond CMS's 18-month time frame for improvement. However, most 
SFFs improved their performance while in the program, although many 
graduates failed to sustain their performance. 

Some States Did Not Meet CMS's Requirement to Survey SFFs Twice a Year: 

Some states did not meet CMS's requirement to conduct standard surveys 
of SFFs twice a year. While states improved their compliance with this 
requirement in fiscal year 2008--8 states did not conduct two surveys 
for SFFs, compared to 26 states in the previous fiscal year--some SFFs 
were still not receiving increased scrutiny through additional 
standard surveys, a fundamental component of the program. In addition, 
18 states had at least one SFF that had more than 10 months between 
surveys from calendar year 2005 through 2008. Further, between January 
2005 and February 2009, 15 states did not survey at least one of their 
SFFs within the first 7 months that the home was in the program. 

A CMS official told us the agency was aware that states were not 
always conducting two surveys per fiscal year for SFFs. In fiscal year 
2007, CMS began measuring states' adherence to this requirement as 
part of its annual state performance reviews. CMS required seven 
states that did not meet this standard in fiscal year 2008 to complete 
corrective action plans. 

CMS's Enforcement Guidance Is Vague and Results in Inconsistent 
Interpretations: 

CMS's SFF Program guidance on enforcement, under which states and 
regions must impose more robust enforcement on SFFs that do not 
demonstrate significant improvement, is vague and open to 
interpretations. According to CMS, "more robust" is intended to mean 
that homes with continued noncompliance should receive sanctions that 
both increase in severity and are immediate; that is, homes should not 
be provided with an opportunity to correct deficiencies before the 
sanction goes into effect.[Footnote 39] CMS guidance also allows 
states discretion in determining significant improvement, and 
therefore which homes receive more robust enforcement and which do 
not. In our interviews with CMS's central office, an official stated 
that CMS's SFF enforcement guidance could be more specific and noted 
that CMS plans to release descriptive guidance explaining exactly how 
states and regions should apply more robust enforcement. In addition, 
we found that officials in the regional offices and states we 
interviewed had inconsistent interpretations of the guidance. For 
example, some officials told us that when determining sanctions, they 
treat SFFs no differently than they would any poorly performing 
nursing home. For other officials, there was little consensus on the 
most appropriate sanctions for SFFs--CMPs, or other sanctions, such as 
discretionary DPNAs or discretionary termination.[Footnote 40] 

Despite the existence of SFF Program enforcement guidance, we found 
that SFFs were not necessarily more likely to be subject to CMPs and 
DPNAs--the most frequently cited sanctions--than SFF candidates, which 
are also poorly performing nursing homes. For example, about 28 
percent of SFFs had at least one CMP implemented in 2008, compared to 
about 34 percent of candidates in the same year. In addition, the 
rates of implemented CMPs and DPNAs decreased for SFFs relative to 
candidates from 2006 to 2008, while the rates of other nursing homes 
remained low.[Footnote 41] (See figure 4.) We found similar trends in 
the average CMP values; for example, SFF candidates received the 
highest average per day CMPs in 2008--approximately $4,262 per day--
compared to approximately $3,969 for SFFs and $1,990 for other nursing 
homes. However, it is unclear if improvement in SFFs' performance 
could explain the higher rates and average values we observed for SFF 
candidates compared to SFFs. 

Figure 4: Percentage of SFFs, SFF Candidates, and Other Nursing Homes 
That Had at Least One CMP and DPNA Implemented from 2006 through 2008: 

[Refer to PDF for image: 2 multiple line graphs] 

CMPs: 

Year: 2006; 
SFFs: 34.7%; 
SFF candidates: 29.7%; 
Other nursing homes: 11.8%. 

Year: 2007; 
SFFs: 25.1%; 
SFF candidates: 28.6%; 
Other nursing homes: 12.3%. 

Year: 2008; 
SFFs: 27.7%; 
SFF candidates: 33.5%; 
Other nursing homes: 11.7%. 

DPNAs: 

Year: 2006; 
SFFs: 28.7%; 
SFF candidates: 16.9%; 
Other nursing homes: 5.2%. 

Year: 2007; 
SFFs: 20.5%; 
SFF candidates: 19.3%; 
Other nursing homes: 4.9%. 

Year: 2008; 
SFFs: 17.1%; 
SFF candidates: 19.7%; 
Other nursing homes: 4.6%. 

Source: GAO analysis of CMS data. 

Note: For both CMPs and DPNAs, other nursing homes are significantly 
different from SFFs and from SFF candidates for all 3 years. However, 
for CMPs, SFFs and SFF candidates are significantly different from 
each other for only 2006 and 2008 and, for DPNAs, SFFs and candidates 
are significantly different from each other only in 2006. 

[End of figure] 

Our review of the detailed enforcement histories of six SFFs with 
consecutive noncompliance cycles at the G level or higher found that 
the sanctions imposed by regions and states on the homes ranged in 
terms of their immediacy and severity.[Footnote 42] For example, in 
three out of seven noncompliance cycles with G-level or higher 
deficiencies, one SFF was allowed an opportunity to correct its 
deficiencies before sanctions could go into effect. Still, this same 
SFF had sanctions of increasing severity imposed with each successive 
recurrence of noncompliance at the G level--the state and regional 
office increased CMPs from $300 per day of noncompliance to $600 per 
day of noncompliance. Conversely, another SFF was assessed no CMPs, 
even though it had a similar history of consecutive noncompliance 
cycles that could have resulted in CMPs ranging from $300 to $825 per 
day of noncompliance, suggesting that CMS's monitoring of enforcement 
is insufficient.[Footnote 43] However, both of these SFFs had 
immediate sanctions imposed; that is, the state and regional offices 
imposed discretionary rather than mandatory DPNAs and terminations. 
Discretionary DPNAs and terminations provide nursing homes with a 
shorter opportunity to correct deficiencies before the sanction goes 
into effect compared to mandatory DPNAs and terminations. Despite this 
shorter correction period, both of these SFFs were typically able to 
correct their deficiencies and avoid these sanctions. 

Most SFFs Did Eventually Graduate, but States and CMS Regions Kept 
Some SFFs in the Program beyond the Program's Expected 18-Month Time 
Frame: 

Although most SFFs eventually graduated, CMS regions and states often 
chose to keep SFFs in the program beyond the 18-month time frame. More 
homes have graduated from the SFF Program than were terminated, but 
some graduates did not meet CMS's criteria. States we interviewed 
indicated that some SFFs were able to improve their performance while 
others lingered in the program for various reasons, including not 
improving enough to meet the graduation criteria nor performing poorly 
enough to terminate from Medicare and Medicaid. As a result, other 
nursing homes whose performance may have been worse could not be 
selected for the program. 

Of the 355 nursing homes placed in the SFF Program from January 2005 
through February 2009, 181 graduated (51 percent) and 41 were 
terminated (12 percent).[Footnote 44] CMS terminated 21 SFFs 
involuntarily, and 20 left the program voluntarily.[Footnote 45] We 
found that nursing homes sharing the same physical location as 13 of 
the 41 SFFs that terminated have since been certified to participate 
in Medicare or Medicaid again. However, at least 24 of the 181 SFF 
graduates did not actually meet elements of CMS's graduation criteria--
two consecutive standard surveys and any intervening complaint 
investigations with no deficiencies at the F level or higher; 15 of 
these 24 SFFs should not have graduated because they had deficiencies 
at the F level or higher.[Footnote 46] For example, a Florida SFF had 
four deficiencies at the F level on the two standard surveys that 
occurred prior to its graduation. 

We found that CMS's regions and states often chose to keep SFFs in the 
program instead of terminating them, even though CMS's SFF Program 
guidance establishes the expectation that SFFs will be terminated from 
Medicare and Medicaid if they fail to make significant progress after 
being in the program for 18 months.[Footnote 47] The fact that some 
homes did not graduate or terminate after being in the program for 18 
months prevented other nursing homes whose performance may have been 
worse from being selected for the program. 

* SFFs added to the program from 2005 through 2007. Of the 254 homes 
that became SFFs during this time frame, 102 (40 percent) were in the 
program for 25 months or more as of February 2009. 

* Active SFFs. Of the 133 active SFFs as of February 2009, 23 (17 
percent) were in the program for 25 months or more, and 11 had been in 
the program since 2005. 

However, the length of time that SFFs spent in the program before 
graduating or terminating has decreased since 2005. (See figure 5.) 
For example, as of the end of February 2009, SFFs added to the program 
in 2005 graduated on average after 28 months, compared to an average 
of 20 and 13 months for SFFs that were added to the program in 2006 
and 2007, respectively.[Footnote 48] 

Figure 5: Average Number and Range of Months Nursing Homes Spent in 
the SFF Program, by Status and Year Added to the Program: 

[Refer to PDF for image: vertical bar graph] 

Graduated SFFs: Year: 2005; 
Minimum: 5.5; 
Maximum: 49; 
Mean: 27.5. 

Graduated SFFs: Year: 2006; 
Minimum: 4.6; 
Maximum: 34.7; 
Mean: 19.5. 

Graduated SFFs: Year: 2007; 
Minimum: 6.3; 
Maximum: 22.7; 
Mean: 13.4. 

Terminated SFFs: Year: 2005; 
Minimum: 0.6; 
Maximum: 47; 
Mean: 18.2. 

Terminated SFFs: Year: 2006; 
Minimum: 1.8; 
Maximum: 23.6; 
Mean: 15.4. 

Terminated SFFs: Year: 2007; 
Minimum: 4.2; 
Maximum: 14.5; 
Mean: 9.5. 

Active SFFs: Year: 2005; 
Minimum: 39.2; 
Maximum: 50.7; 
Mean: 49.7. 

Active SFFs: Year: 2006; 
Minimum: 28.9; 
Maximum: 37.3; 
Mean: 33.4. 

Active SFFs: Year: 2007; 
Minimum: 14.6; 
Maximum: 26.3; 
Mean: 19.9. 

Source: GAO analysis of CMS data, as of February 2009. 

Notes: (1) SFFs added to the program in 2008 and 2009 are not included 
in this figure because they had not yet been in the program for a full 
18 months--CMS's expected time frame for graduation--as of February 
2009. (2) Although the declining trend for active SFFs is consistent 
with the trend for graduated and terminated SFFs, it is unclear to 
what extent that trend is influenced by the amount of time since these 
SFFs entered the program. (3) Differences between years were 
significant for graduated and active SFFs at the 0.05 level but were 
not significant for terminated SFFs at the 0.05 level. 

[End of figure] 

Some CMS regions and states we interviewed offered several reasons 
that might help to explain why they chose to keep some SFFs in the 
program beyond 18 months. First, nursing homes may not improve enough 
to meet CMS's criteria for graduation, nor be performing poorly enough 
to terminate from Medicare and Medicaid. Second, closing a nursing 
home requires the state to transfer residents to another nursing home, 
and some residents with special care needs--such as children or those 
that have behavioral health issues--may be difficult to relocate. 
Third, if the SFF recently had a change in ownership, it may have the 
potential to improve and therefore should not be terminated: new 
management or capital investment in a poorly performing nursing home 
may bring about needed changes in quality. For example, officials in 
CMS's New York regional office described a case in which all three 
reasons influenced their decision to allow a nursing home to remain in 
the program for over 45 months.[Footnote 49] The home: 

* had initially demonstrated improvement until two consecutive surveys 
resulted in deficiencies at the F level or higher, 

* had a behavioral health population that was large, making it 
difficult to place them in other homes, and: 

* experienced two changes of ownership while in the SFF Program. The 
most recent owners invested millions of dollars to improve the 
physical environment at the facility and hired a nurse consultant. 

Regional office officials indicated that a more recent survey had 
shown improvement with no deficiencies higher than the D level, which 
they attributed to the investments made by the most recent owner. 

Conversely, some SFFs were able to improve enough to graduate in less 
than 19 months. Our analysis shows that between 2005 and February 
2009, 32 states graduated at least one facility in less than 19 
months. According to some state and regional office officials we 
interviewed, such SFFs showed improvement after being selected for the 
program because of factors such as the home's ability to establish 
stable leadership, a willingness to adopt new improvements, or the 
hiring of outside consultants. Some state and regional office 
officials indicated that homes might be able to graduate earlier if 
the graduation criteria were less stringent. For example, one regional 
office and one state did not think that F-level deficiencies in 
kitchen sanitation should prevent homes from graduating.[Footnote 50] 
Two regions suggested that a more appropriate graduation criterion 
would be to allow homes with F-level deficiencies to graduate as long 
as the deficiencies were not in SQC areas, rather than the current 
criterion of no F-level or higher deficiencies.[Footnote 51] We found 
that 27 percent of the 328 SFFs (90 homes) had at least one instance 
where one or more F-level deficiency prevented them from graduating 
and over half of those SFFs (54 homes) had F-level deficiencies in 
kitchen sanitation. 

Beginning in 2007, CMS introduced two program changes that may 
contribute to a decline in the amount of time that SFFs remain in the 
program. For example, CMS began identifying SFFs on its Nursing Home 
Compare Web site each month. The majority of CMS regional offices and 
states we interviewed believed CMS's identification of SFFs had a 
positive impact on the SFF Program because of the media and public 
attention. Florida indicated that there had been little concern by 
providers about being in the SFF Program until SFFs were publicly 
identified. An additional factor may also have influenced the amount 
of time SFFs remain in the program. As noted earlier, CMS began 
requiring states to formally notify homes in 2007 that they had been 
placed in the program, including each home's governing body, owner, 
operator, and administrator. Michigan has applied a more aggressive 
notification policy since 2005, sending a notification letter to each 
SFF candidate explaining that they are at risk of being selected as an 
SFF if they fail to address performance problems. A copy of the letter 
is also sent to the owner and operator of the nursing home the first 
time the home appears on CMS's candidate list. The Michigan official 
we interviewed believed that this notification policy has motivated 
the state's SFF candidates to improve. In December 2008, the state of 
Missouri also began notifying SFF candidates that they were at risk of 
being selected as SFFs. 

Most SFFs Improved, but Some Graduates Failed to Sustain Their 
Performance: 

While in the program, most SFFs improved their performance, but some 
failed to sustain their improved performance after graduation. The 
scores of SFF graduates showed a statistically significant improvement 
when compared to their scores before entering the program, as did the 
scores of active SFFs, but to a lesser degree than graduates.[Footnote 
52] Officials from some CMS regions and states told us that the SFF 
Program was helping nursing homes to improve their performance, but 
others were unsure of the program's effectiveness. For example, 
officials from New York, which graduated 8 of 13 SFFs from January 
2005 to February 2009, told us that more frequent surveys and the 
state's presence at the facilities had a positive effect on the 
behavior of SFFs. Conversely, officials in Alabama, which graduated 2 
of 5 SFFs in the same period, believed that it was difficult to say 
whether the program had improved nursing home performance. Alabama 
officials noted that while the program had motivated a few of the 
states' SFFs to take a closer look at their operations, SFFs did not 
always understand the consequences that might result for failing to 
improve their performance. 

Despite the improvement in scores, we also found that 75 (50 percent) 
of the 149 graduates from calendar years 2005 through 2008 that had a 
standard or complaint survey after graduation received at least one F- 
level or greater deficiency after graduation, which would have 
prevented their graduation had they still been SFFs.[Footnote 53] For 
example, one graduate had one F-level deficiency, two G-level 
deficiencies, and two J-level deficiencies on its first standard 
survey after graduating.[Footnote 54] A smaller subset of these 149 
SFF graduates--22 homes (15 percent)--received at least one J-through 
L-level deficiency (immediate jeopardy) on either a standard or a 
complaint survey after they graduated. 

Other Quality Improvement Strategies to Assist SFFs Have Merit, and 
Some Could Inform CMS Efforts: 

While the core of the SFF Program is more frequent surveys and 
stringent enforcement, CMS and others have adopted a variety of other 
quality improvement strategies to help address care problems 
identified at SFFs and other nursing homes; both the HHS OIG and state 
strategies hold potential lessons that could help inform CMS's 
efforts. Through Systems Improvement Agreements (SIA) and the Nursing 
Homes in Need (NHIN) initiative, CMS has attempted to deal more 
directly with the root causes of poor quality in a limited number of 
SFFs. In contrast to CMS's focus on individual facilities, the HHS OIG 
has identified corporations that own poorly performing homes and 
negotiated Corporate Integrity Agreements (CIA) to bring about quality 
improvements across the homes in the corporation. States have adopted 
quality improvement strategies that sometimes resemble CMS's efforts 
but that may also be offered to homes that have not exhibited 
performance problems. 

SIAs and the NHIN Initiative Hold Promise, but the Use of Such 
Interventions Has Been Limited: 

While both SIAs and the NHIN initiative have the potential to help 
SFFs improve the quality of care provided to residents, their use has 
been limited. More than 2 years after the first SIA was implemented, 
CMS's central office has not yet collected and shared information 
about this intervention with its 10 regional offices. Moreover, the 
measures used by CMS to monitor the impact of the NHIN initiative are 
inconsistent with those used to measure whether an SFF is improving. 

Systems Improvement Agreements with SFFs. SIAs are agreements between 
CMS and SFFs that identify concrete actions that the homes are 
required to take, generally within a specific time, in order to avoid 
termination and to improve and maintain quality. CMS did not develop 
the first SIA with an SFF until 2007--9 years after the creation of 
the SFF Program. Overall, four CMS regional offices have negotiated a 
total of 10 SIAs. SFFs that agreed to SIAs retained their SFF 
designation and were still subject to more frequent surveys than other 
homes. 

SIAs share some common requirements and sometimes describe similar 
elements using different terminology. SIAs may differ because regional 
offices attempt to craft agreements that reflect each SFF's particular 
circumstances or the specific regional office goals for the home. 
Common SIA elements include: 

* hiring an independent consultant to provide technical assistance 
with quality improvement activities at the home; 

* requiring the consultant to identify solutions to issues that were 
preventing the SFF from attaining or maintaining compliance, often 
referred to as a root-cause analysis, and to develop an action plan to 
address quality problems;[Footnote 55] and: 

* providing periodic reports prepared by either the consultant or the 
home to the regional office on the status of actions or 
recommendations to improve quality. 

Two of the SIAs required the SFFs to commit funds ranging from 
$850,000 to $956,000 for the improvement of clinical care systems or 
facility capital improvements. For example, one SIA required the SFF 
to dedicate $956,000, primarily for capital improvements such as a new 
roof and a heating and cooling system but also to go into an escrow 
fund to pay for quality improvements consistent with the consultant's 
root-cause analysis and action plan. 

In general, regional offices have used SIAs as an alternative to 
terminating homes that had been in the program for 18 months. Five of 
the 10 homes with SIAs had been in the SFF Program from 27 to 42 
months when they signed SIAs. (See appendix IV for a chronological 
summary of all SIAs as of August 2009.) One regional office negotiated 
an SIA to avoid bed shortages that would have resulted had the SFF 
been terminated from Medicare and Medicaid. Another SFF at risk of 
termination had recently undergone a change in ownership, and the new 
owner had made substantial clinical and capital improvements. With 6 
of the 10 SIAs, Dallas is the only regional office with an SIA that 
has established specific criteria for the use of the agreements. Any 
SFF that has failed to graduate from the SFF Program in 18 months and 
that has no deficiencies above the F level is given one last chance by 
signing an SIA.[Footnote 56] Dallas regional office officials stressed 
that in applying these criteria they have also begun to assess the 
SFF's commitment to improve through the SIA process. 

Whether or not the agreements result in improved nursing home 
performance, they have the potential to address the problem of homes 
that linger in the SFF Program for years. Although three of the 
regional offices with SIAs indicated that SIAs were effective, the 
Dallas regional office thought it was too early to say because the 
future performance of the homes was unknown. 

* Four homes met the terms of their SIAs and graduated from the SFF 
Program. As of August 2009, one of these homes was above average 
according to CMS's Five-Star System, and three were below or much 
below average. 

* Two homes were terminated, one for failing to meet terms of the SIA. 
The other home voluntarily left the Medicare and Medicaid programs 
before CMS could terminate it. 

* Two homes are still SFFs even though the SIAs have ended.[Footnote 
57] These homes were rated as below and much below average in August 
2009. 

* Two homes are still subject to the terms of their SIAs, and both 
were rated as much below average in August 2009. 

Although the first SIA was implemented more than 2 years ago, CMS 
central office officials told us they had not yet disseminated 
information to the regions describing the elements that should be part 
of SIAs or catalogued any lessons learned from their use. We found 
that most SIAs were initiated by regional offices with limited CMS 
central office involvement and varying levels of state involvement. 
[Footnote 58] As of May 2009, CMS's central office was not aware of 
some SIAs that we identified in an interview with officials in the 
Dallas regional office. According to officials at three of the six 
regional offices that have not used SIAs, they prefer other agreements 
to improve and maintain quality, including agreements between state 
licensing authorities and SFFs. Of the three remaining regional 
offices, two indicated they would be likely to develop an SIA when 
they have facilities deemed appropriate and the other had not heard of 
SIAs. 

Nursing Homes in Need Initiative. The technical assistance provided by 
QIOs to a limited number of nursing homes (one per year per state) 
from August 1, 2008, through July 31, 2011, under the NHIN initiative 
resembles the actions outlined in SIAs.[Footnote 59] For example, QIOs 
are required to conduct an on-site assessment of each home to identify 
the underlying causes of poor quality of care, prepare a root-cause 
analysis based on those findings, and develop an action plan to 
address the home's problems. Given the voluntary nature of the QIO 
program, SFFs must agree to work with QIOs; however, CMS did direct 
QIOs to contact SFFs recommended by state survey agencies instead of 
relying on homes to request QIO assistance.[Footnote 60] According to 
CMS, 44 QIOs assisted one SFF per state from August 2008 through July 
2009, the first year of the NHIN initiative, and the remaining 6 QIOs 
assisted other homes, including SFF candidates. CMS told us that these 
states' QIOs were not working with SFFs for various reasons, such as 
the SFFs were already showing improvement.[Footnote 61] Officials from 
a majority of the states we interviewed thought it would be beneficial 
for QIOs to work with every SFF instead of just one per state per 
year.[Footnote 62] 

In addition to the small number of SFFs that participate each year of 
the contract, the initiative's effectiveness is also limited by the 
misalignment between the measures CMS uses to monitor the effect of 
QIO assistance and those used to measure whether an SFF is improving. 
Specifically, CMS monitors the improvement in two quality of care 
measures to determine the effect of QIO assistance during the 
initiative--the percentage of long-term residents of a facility who 
were either physically restrained or were high risk and had pressure 
ulcers.[Footnote 63] An alternative approach would be to use the 
measures that CMS uses to evaluate whether homes in the SFF Program 
are improving, that is, the number or scope and severity of deficiency 
citations. CMS officials responsible for the QIO program indicated 
that they were aware of this discrepancy and would consider 
alternative methods for measuring QIO performance. 

HHS OIG's Experience with Quality of Care CIAs Is Relevant to CMS 
Activities to Address Poor Quality at SFFs and Other Nursing Homes: 

CMS officials told us that SIAs are not modeled on the HHS OIG quality 
of care CIAs--corporate-level interventions to address quality 
problems--and CMS and HHS OIG officials have indicated that they have 
had preliminary discussions regarding SIAs. SIAs and CIAs are similar 
in that they are intended to improve and maintain the quality of 
participating facilities in lieu of termination or exclusion, 
respectively, but quality of care CIAs are more commonplace, have been 
in use since 2000, and are generally in effect for longer periods. 
[Footnote 64] According to a 2009 HHS OIG report, by June 2008, 35 
nursing home corporations had entered into such agreements, which are 
generally in effect for 3 to 5 years.[Footnote 65] In its report, HHS 
OIG examined 15 of these nursing home corporations under quality of 
care CIAs, which collectively operated 1,104 nursing homes as of 
December 31, 2006. Both SIAs and quality of care CIAs require homes or 
corporations to seek outside technical assistance to identify changes 
that will help address quality problems. In addition, quality of care 
CIAs may require corporations to take other actions to help improve 
quality, such as the establishment of corporate-level compliance 
officers, quality assurance committees, and quality assurance 
monitoring committees. The HHS OIG requires the corporations to hire 
an independent entity, or monitor, to assess the quality assurance and 
quality improvement systems in place in the corporations' homes. 
According to an official with one such entity, staff members are 
embedded in the nursing home corporation to help ensure that planned 
quality improvements are actually implemented. In addition, the 
corporations must provide the HHS OIG with a list of all homes that 
belong to the same corporation at the beginning of the CIA and update 
the HHS OIG with information on the homes bought and sold; the 
independent quality monitor commonly contracts with a data analysis 
organization, subject to HHS OIG approval, to analyze state survey 
results and quality of care measures across the homes in the 
corporation[Footnote 66]. The 2009 HHS OIG report evaluated the extent 
to which required quality of care structures and processes were 
implemented through CIAs. Based on its review of 15 such CIAs, the OIG 
found that all 15 corporations had enhanced their quality of care 
structures and processes while subject to these agreements. As of 
September 2008, an HHS OIG official was aware of three corporations 
with quality of care CIAs that had homes that were also in the SFF 
Program, and two of these SFFs had SIAs. However, there is little 
coordination between CMS and the HHS OIG to determine whether there is 
overlap among homes with these agreements. 

The HHS OIG's experience with quality of care CIAs is relevant and may 
contain lessons that could improve the effectiveness of CMS's efforts 
to deal with poorly performing nursing homes even though CMS central 
office officials told us that the agency's relationship is with the 
individual home and not the parent company. Thus, we found that some 
regional offices do interact with corporations. One SIA we reviewed 
was signed by the Vice President of Clinical Services of a large 
nursing home chain. Moreover, officials from two regional offices told 
us that they are aware of and monitor problems at chains operating in 
their regions, such as by conducting federal monitoring surveys at 
homes belonging to a problem chain.[Footnote 67] In fact, one of these 
regions indicated that CMS's central office had directed closer 
scrutiny of certain nursing home corporations in the past. Officials 
from two regions provided a concrete example of their interactions 
with officials from one corporation. These two regions noticed that 
several homes with compliance problems had a common name, and one 
regional office determined through a Google search that the homes were 
part of the same chain; this chain operated almost 50 homes in five 
states, and some of this chain's homes were SFFs. In one instance, 
regional office officials met with the chief executive officer and 
regional operations manager to discuss an improvement plan for one of 
the chain's homes after this home became an SFF. In another instance, 
officers from the same chain approached a regional office. Ultimately, 
the chain developed a quality improvement plan intended to cover all 
of its facilities across three CMS regions; however, regional office 
officials did not consider this plan to be an SIA because it did not 
provide for enforcement. 

Some States Have Also Adopted Nursing Home Quality Improvement 
Strategies That Are Relevant to CMS's Efforts to Address SFF Quality 
Problems: 

Officials from the majority of the 14 states we interviewed detailed 
strategies they use to promote quality improvement in nursing homes, 
including poorly performing homes. Their strategies have incorporated 
a range of activities, such as having nurse monitors visit all nursing 
homes, training nursing home staff on clinical best practices, 
conducting expedited or more frequent surveys of nursing homes with 
performance problems, and hiring consultants to provide technical 
assistance to homes. These activities can be voluntary, and some 
states target certain poorly performing nursing homes for 
participation. According to some states, the SFF Program is more 
effective when combined with state-based quality improvement 
activities, which may make it difficult to determine whether 
performance improvements are attributable to the SFF Program or to 
state activities. Officials from three states described the following 
noteworthy quality activities: 

* Florida. Florida law requires the state agency to survey nursing 
homes with serious performance problems more frequently (every 6 
months for 2 years).[Footnote 68] Such homes must pay a fine of $6,000 
in installments over the 2-year period to cover the expenses 
associated with the additional surveys.[Footnote 69] As of August 
2008, state officials told us that 26 nursing homes, including 3 SFFs, 
met these criteria. 

* Missouri. The state's Quality Improvement Program for Missouri's 
Long Term Care Facilities offers a voluntary nurse consultant program 
that provides in-person, on-site technical assistance for nursing 
homes deemed to be at risk. While any nursing home in the state can 
ask to participate in the program, the state also determines which 
homes it deems eligible to participate and has included SFFs in this 
determination since July 2008.[Footnote 70] As of October 2008, 85 
nursing homes were targeted for program participation because the 
state deemed them to be at risk. 

* Arkansas. Arkansas's Innovative Performance Program, which began in 
August 2005, provides most nursing homes with (1) monthly training 
opportunities, covering a variety of topics for nursing home staff, 
such as the top 10 most frequently cited deficiencies or clinical best 
practices; and (2) intensive reviews of a home's operations to help 
identify and correct systemic problems and put controls in place to 
ensure the changes are implemented. Under its contract with the 
Arkansas Office of Long Term Care, the state's QIO administers this 
voluntary program and helps identify the homes most in need of 
assistance.[Footnote 71] As of September 2009, 141 nursing homes were 
participating in the program, including 5 of 6 SFFs. 

Conclusions: 

Improving the performance of poorly performing nursing homes through 
efforts such as the SFF Program is essential to protecting highly 
vulnerable elderly and disabled residents. Paradoxically, we found 
that many SFFs improved their performance and graduated from the 
program even though some may not always have been surveyed as 
frequently as required or subjected to more robust enforcement--
actions called for in CMS SFF Program guidance to states and regional 
offices. Important program changes made by CMS since 2004, such as the 
2007 decisions to publicly report the names of SFFs and ensure that 
owners and boards of directors are explicitly informed of their 
facility's SFF status, have given homes additional incentives to 
improve their performance. The effectiveness of the SFF Program could 
be further improved if CMS implemented our August 2009 recommendation 
to target scarce resources by placing more emphasis on the worst homes 
nationally rather than on the worst homes in each state.[Footnote 72] 

We found that state discretion in selecting SFFs is a key element of 
the program, but that limitations in the candidate list restrict that 
discretion. For example, homes that are selected as SFFs remain on 
each state's list of 15 candidates, giving states with six SFFs, such 
as California and Texas, fewer options when homes graduate from the 
program or are terminated, compared to states with only one or two 
SFFs. Moreover, at least two states--Michigan and Missouri--have 
expanded on CMS's public disclosure strategy in an attempt to 
influence the performance of SFF candidates by informing them that 
they are at risk of being selected as an SFF if they fail to address 
performance problems. 

CMS's guidance to states regarding enforcement for SFFs is vague and 
interpreted inconsistently by regional offices and states. We found 
that for six SFFs with consecutive noncompliance, severe deficiencies 
did not consistently result in more severe or immediate sanctions. For 
example, one SFF received no civil money penalties even though it was 
cited for consecutive deficiencies that could have resulted in fines 
ranging from $300 to $825 per day of noncompliance, while a home with 
a similar compliance history received CMPs that increased from $300 to 
$600 per day of noncompliance, suggesting that CMS's monitoring of 
enforcement is insufficient. 

The significant percentage of SFFs that remained in the program for 
considerably longer than CMS's 18-month time frame for improved 
performance or termination is troubling because it prevents other 
poorly performing nursing homes from receiving enhanced attention by 
becoming SFFs since the program is limited by resources to 136 at a 
time. For a limited number of homes that failed to show improvement or 
where termination was seen as an option of last resort, 4 of CMS's 10 
regional offices have negotiated agreements requiring homes to address 
quality problems. Although the first SIA was implemented over 2 years 
ago, CMS has not disseminated information to the regional offices 
describing the elements that should be part of SIAs, or catalogued any 
lessons learned from their use. It is probably too early to evaluate 
the longer-term effectiveness of SIAs, but they do have the potential 
to address the problem of homes that linger in the program for 
extended periods. 

Other efforts also have the potential to help address performance 
problems at poorly performing nursing homes, and some may hold lessons 
for improving the operation of the SFF Program. 

* Nursing Homes in Need Initiative. QIOs are employing interventions 
similar to those used in SIAs at poorly performing nursing homes, 
primarily SFFs, at the rate of one home per state each year for 3 
years. However, the QIO measures used to monitor the effect of QIO 
assistance are inconsistent with the measures CMS uses to evaluate 
whether SFFs are improving. 

* Corporate Integrity Agreements. The HHS OIG has considerable 
experience negotiating legal agreements with corporations that own 
poorly performing nursing homes, agreements that also employ more 
direct interventions to address quality problems across the homes in a 
chain. Currently, there is little coordination between CMS and the HHS 
OIG, even though we found that some regional offices also work with 
chain corporate offices and a few homes were subject to both SIAs and 
CIAs. 

* State Quality Improvement Initiatives. Some states have adopted 
quality improvement strategies to address problems at poorly 
performing homes. For example, Florida requires homes with serious 
performance problems to pay $6,000 to cover the costs associated with 
more frequent surveys over a 2-year period. Although SFFs and other 
poorly performing nursing homes that frequently harm residents or 
place them in immediate jeopardy increase survey costs, CMS does not 
currently have the authority to charge them for additional survey 
activities.[Footnote 73] Charging such a fee could improve the linkage 
between the costs associated with more frequent surveys and the 
nursing homes that give rise to these costs. 

Recommendations for Executive Action: 

To increase the SFF Program's effectiveness in helping to address 
quality of care problems at poorly performing nursing homes, we 
recommend that the Administrator of CMS take the following five 
actions: 

* Expand the SFF Program's public disclosure strategy by directing 
states to notify nursing homes that have been identified as SFF 
Program candidates that they are at risk of being selected as an SFF. 

* Revise the SFF candidate list by removing homes that states have 
selected as SFFs and including additional homes so that states with a 
large number of SFFs have a full complement of candidates to choose 
from each time they select a new SFF. 

* Ensure that states impose more stringent enforcement, such as higher 
CMPs or termination; clarify SFF Program guidance regarding 
appropriate sanctions; and monitor SFF sanctions more closely. 

* Provide CMS regional offices with a description of the elements that 
should be part of SIAs and catalog any lessons learned from their use. 

* Coordinate more systematically with the HHS OIG regarding its 
experiences with CIAs. 

To offset the additional costs imposed by SFFs and create incentives 
for poorly performing nursing homes to improve resident care more 
quickly, we recommend that the Administrator of CMS seek legislative 
authority to charge SFFs for the costs associated with conducting 
additional surveys. 

Agency Comments and Our Evaluation: 

We obtained written comments on our draft report from HHS, which are 
reprinted in appendix V. HHS noted its commitment to further 
strengthening the SFF Program and indicated that our report would help 
to further improve what could work better and reaffirm what is already 
working well. HHS agreed fully with four of our six recommendations, 
agreed in principle with a fifth recommendation, and indicated that it 
would take a sixth recommendation under advisement. 

In its comments, HHS reported on additional analyses it had conducted, 
which found that in comparing SFF graduates to candidates, (1) a 
higher percentage of graduates had no deficiencies at the F-level or 
higher both 6 months and 12 months after graduation from the program, 
and (2) an average of 21.5 months and 15.6 months, respectively, 
elapsed before 50 percent of the homes in either group had an F-level 
or higher deficiency. HHS concluded that while these analyses did not 
suggest that SFF graduates had transformed into high-quality nursing 
homes, they did indicate that the greater efforts made by SFF 
graduates had some lasting and positive effects on quality of care. 
Despite the improvements demonstrated by SFFs, HHS expressed concern 
about those SFF graduates that relapse into a pattern of serious 
deficiencies. HHS noted that it will re-examine the 18-month time 
frame for SFFs to demonstrate improved performance given our finding 
that a significant percentage of SFFs remain in the program beyond 18 
months. 

HHS fully concurred with the following four recommendations: (1) 
directing states to notify SFF candidates that they are at risk of 
being selected for the SFF Program; (2) clarifying SFF Program 
guidance on appropriate sanctions and monitoring SFF sanctions more 
closely; (3) providing CMS regional offices with a description of the 
elements of an SIA and cataloging lessons learned from their use; and 
(4) coordinating more systematically with the HHS OIG regarding its 
experiences with CIAs. In addition, HHS agreed in principle with our 
recommendation that CMS revise the SFF candidate list by removing 
homes that have already been selected as SFFs and including additional 
homes so that states have a full complement of candidates from which 
to choose; however, HHS said that CMS will operationalize the 
recommendation in a different manner by sizably increasing the SFF 
candidate list for most states. If implemented, CMS's proposed 
approach would address our recommendation. Finally, HHS indicated it 
would take under advisement our recommendation that the Administrator 
of CMS seek legislative authority to charge SFFs for the costs 
associated with conducting additional surveys. 

HHS also provided technical comments, which we incorporated as 
appropriate. We also provided excerpts of the report to the HHS OIG 
and the three state survey agencies whose specific quality improvement 
strategies we described in the report--Arkansas, Florida, and 
Missouri--and incorporated technical comments from those agencies as 
appropriate. 

As we agreed with your offices, unless you publicly announce the 
contents of this report earlier, we plan no further distribution of it 
until 30 days from the date of this letter. At that time, we will send 
copies to the Administrator of the Centers for Medicare & Medicaid 
Services and appropriate congressional committees. The report also is 
available at no charge on the GAO Web site at [hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-7114 or at dickenj@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made key contributions 
to this report are listed in appendix VI. 

Signed by: 

John E. Dicken: 
Director, Health Care: 

[End of section] 

Appendix I: Special Focus Facility Financial Performance: 

This appendix addresses your interest in the financial performance of 
Special Focus Facilities (SFF).[Footnote 74] Officials from the 
Centers for Medicare & Medicaid Services's (CMS) central office told 
us that they do not attempt to determine whether poor financial 
performance contributed to the poor quality of care provided by SFFs. 
However, three of the four regional offices we interviewed did not 
believe that poor financial performance was more common for SFFs than 
for other nursing homes. An official from the remaining regional 
office did not comment because he told us the office assesses only 
quality of care. Regional offices told us that they may learn about 
homes' financial problems on an ad hoc basis. For example, they might 
learn that a home failed to meet payroll, that lenders were unwilling 
to extend credit to a home, or that a resident's complaint, such as a 
low building temperature or limited food supply, might indicate 
financial problems. In addition, regional offices are made aware of 
potential financial problems when a home requests a delay or reduction 
in payment on civil money penalties (CMP) based on poor financial 
condition. CMS guidance provides a suggested list of sources for 
information to determine if a CMP should be delayed or reduced due to 
a home's financial condition, but does not indicate how the regional 
office should make this determination. Furthermore, two regional 
offices told us that requests for delayed or reduced CMPs are rare. 

CMS's central office also has access to another source of financial 
information--annual Medicare cost reports, which nursing homes 
receiving Medicare payments are required to submit to Medicare 
Administrative Contractors.[Footnote 75] However, according to the 
Medicare Payment Advisory Commission (MedPAC), the financial 
information provided in these reports has several limitations for 
assessing total financial performance of nursing homes. For example, 
the cost reports do not follow the format of standard audited 
financial statements or receive serious audit attention. Despite these 
limitations, the Medicare Administrative Contractor we interviewed, 
which processes Medicare claims in addition to receiving Medicare cost 
reports, told us that it could conduct a financial analysis of nursing 
homes if CMS were to request and fund this activity, but noted that it 
would first want to verify their information. 

We did identify two entities that have initiatives that collect 
information about nursing home financial performance. First, Virginia 
passed legislation on health care data reporting in 1996, which 
resulted in the state's contracting with Virginia Health Information 
to report both nursing home financial information and an assessment of 
homes' efficiency and productivity, among other information, on its 
Web site.[Footnote 76] The financial information that providers, 
including nursing homes, are required to file annually includes 
details about revenue, expenses, and assets. This information is 
summarized from either certified audited financial statements or, if 
the nursing home is part of a publicly held company, unconsolidated 
unaudited financial statements submitted by the home. Second, the 
Department of Housing and Urban Development (HUD) classifies the 
financial performance of all facilities that participate in the 
Section 232 Mortgage Insurance for Residential Care Facilities 
program.[Footnote 77] According to HUD officials, 12 SFFs as of June 
2009 had insured mortgages and the officials classified 8 of them as 
financially troubled based on various criteria, such as the home 
making a late mortgage payment or concerns about the home's ability to 
make future mortgage payments. 

[End of section] 

Appendix II: Scope and Methodology: 

This appendix provides additional details regarding our scope and 
methodology. 

State interviews. We selected a nongeneralizable sample of 14 states 
to interview based on a combination of factors, including: (1) the 
number of SFFs allocated to the state, (2) the inclusion of at least 
one state from each CMS region, (3) states that had many homes with 
high SFF scores, (4) the number of SFFs that either graduated from the 
program or were terminated from Medicare and Medicaid for failing to 
improve their performance, (5) the use of Systems Improvement 
Agreements, and (6) the existence of state ranking methodologies. We 
interviewed officials from the following 14 states: Alabama, Arkansas, 
California, Colorado, Connecticut, Florida, Illinois, Indiana, 
Massachusetts, Missouri, New York, Pennsylvania, Texas, and Washington. 

SFF candidate lists. CMS provided us with 16 SFF candidate lists 
generated from December 2005 to January 2009, which contain the score 
and rank of all nursing homes using CMS's SFF methodology. Since 2006, 
CMS has issued candidate lists quarterly, but it generates additional 
lists when necessary. 

* To determine the factors that states considered in selecting SFFs 
from January 2006 through February 2009, we determined the rank of 
each home on the candidate list that was generated before, but closest 
to, the date of that home's selection for the program. 

* To determine the factors that states considered in selecting SFFs, 
we analyzed the scores of SFF candidates from CMS's January 2009 
candidate list. 

* To determine the SFF Program's impact on homes' performance, we 
analyzed the scores for each of the three cycles provided on CMS's 
candidate lists from December 2005 to January 2009 by calculating 
state average indexed scores. We then created a mean indexed score for 
all SFF graduates for three points in time--before the home entered 
the program, while the home was in the program, and after graduation--
and compared them to each other. For SFFs that were active in the 
program as of February 2009, we also compared the mean indexed score 
before the home entered the program to the mean indexed score while 
the home was in the program. 

OSCAR survey and deficiency data. We conducted several analyses using 
data from CMS's On-Line Survey, Certification, and Reporting system 
(OSCAR) for standard surveys and complaint investigations generally 
conducted between January 2005 and July 31, 2009. We analyzed survey 
dates, deficiencies cited on standard surveys and complaint 
investigations, and any revisits associated with the standard surveys. 
To be consistent with the SFF methodology and avoid potential double- 
counting, we did not include deficiencies that also appeared on 
complaint surveys conducted within 15 days of a standard survey 
(either prior to or after the standard survey).[Footnote 78] 

* To determine how SFFs differ from other nursing homes, we calculated 
the average number of deficiencies and revisits for certain SFFs 
compared to other nursing homes. We identified SFFs that were added to 
the SFF Program in 2008 and that also had a 2008 standard survey prior 
to their entry into the program. We compared these SFFs to other homes 
that had a standard survey conducted in 2008. Our analysis included 
deficiencies identified during the 2008 standard survey, deficiencies 
from complaint investigations that occurred in the year prior to the 
2008 standard survey, and revisits associated with the standard survey. 

* To determine whether states followed CMS's guidance to survey SFFs 
twice a year, we analyzed the dates of the standard surveys conducted 
while nursing homes were in the SFF Program. We determined the number 
of surveys that should have been conducted each year by multiplying 
the state's SFF allotment by two. We then summed the number of SFF 
surveys conducted by each state for fiscal years 2007 and 2008 and 
determined if the number of surveys conducted was fewer than the total 
number of surveys that should have been conducted. In addition, we 
calculated the number of states that did not survey at least one of 
their SFFs within the first 7 months after the home entered the 
program and that had at least one SFF with more than 10 months between 
surveys from calendar year 2005 through 2008. 

* To determine whether CMS regional offices and the states followed 
the agency's SFF Program graduation criteria, we analyzed survey dates 
and data on deficiencies from standard surveys and complaint 
investigations. We determined which SFFs did not graduate 
appropriately because (1) states conducted standard surveys zero or 
only one time while the home was in the SFF Program; (2) the home had 
deficiencies at the F level or higher on the two standard surveys 
preceding their graduation; or (3) the home had deficiencies at the F 
level or higher on any complaint surveys that occurred from the two 
standard surveys preceding their graduation through the date of their 
graduation. 

* To determine if SFFs had F-level deficiencies that may have 
contributed to the length of time they were in the SFF Program, we 
determined the number of SFFs that had various combinations of 
standard and complaint surveys that resulted in deficiencies at the F 
level and lower. 

* To determine the program's impact on SFF graduates, we analyzed 
deficiencies from standard and complaint surveys for SFFs after they 
graduated from the program. Specifically, we determined the number of 
SFFs that after graduation had F-level or higher deficiencies on any 
survey, F-level or higher deficiencies on consecutive standard 
surveys, and immediate jeopardy deficiencies. 

Nursing home enforcement. To determine whether CMS regional offices 
and states followed the agency's SFF Program enforcement guidance, we 
first identified homes that were SFFs as of January 1, 2007, and that 
had two consecutive standard surveys, both of which cited at least one 
G-level or higher deficiency; we then analyzed Nursing Home 
Enforcement History reports and Nursing Home Enforcement Case Profiles 
for these homes that we obtained from the regional offices and which 
summarize data from CMS's Automated Survey Processing Environment 
Enforcement Manager (AEM).[Footnote 79] In addition, we analyzed AEM 
data on CMPs and denials of payment for new Medicare or Medicaid 
admissions (DPNA) that were in effect for calendar years 2006 through 
2008 for each of three categories of nursing homes--SFFs, SFF 
candidates, and other nursing homes. We determined the percentage of 
homes in each category that had at least one CMP or DPNA by year. In 
addition, we calculated mean CMP amounts (per day and per instance) by 
home type and year by summing each home's CMPs for the year. For SFFs, 
we included only sanctions that occurred while the home was in the SFF 
Program. SFF candidates were those homes ranked as among the worst 15 
homes per state based on the CMS candidate lists for that same year. 

Termination. To determine the number of SFFs that were terminated-- 
voluntarily or involuntarily--and later became certified to 
participate in Medicare or Medicaid again, we analyzed information 
available from CMS's Provider of Service file dated December 2008. To 
do so, we identified the addresses of SFFs that terminated, and then 
we identified nursing homes that shared the same physical location as 
the terminated SFFs and that later began participating in Medicare or 
Medicaid. 

Nursing home characteristics data. To determine how SFFs differ from 
other nursing homes, we analyzed CMS data that describe the 
characteristics of nursing homes: a December 17, 2008, extract of 
OSCAR variables, such as type of organization and number of beds; 
nurse staffing hours, which were case-mix adjusted by CMS for use in 
its Five-Star Quality Rating System and which were dated January 2009; 
and nursing home ratings from the Five-Star System available from 
Nursing Home Compare, which were dated December 2008. Following are 
highlights of how we analyzed certain characteristics: 

* Nursing homes self-report their ownership type. We created the 
ownership type of for-profit by combining for-profit individual, for- 
profit partnership, for-profit corporation, and limited liability 
corporation; the ownership type of nonprofit by combining nonprofit 
corporation, nonprofit church-related, and nonprofit other; and the 
ownership type of government by combining the six government 
designations (state, county, city, city/county, hospital district, and 
federal). 

* CMS maintains a variable in its data called "multi-nursing home 
(chain) ownership," which is self-reported by nursing homes and which 
we refer to as chain affiliation. According to CMS, multi-nursing home 
chains have two or more homes under one ownership or operation. We 
determined the percentage of nursing homes that were for-profit and 
chain affiliated, nonprofit and chain affiliated, or government-owned 
and chain affiliated by combining the ownership types described above 
with CMS's designation of multi-nursing home (chain) ownership. 

* We used the number of beds certified for payment for Medicare and/or 
Medicaid to calculate the average number of beds per nursing home. 

* We calculated the percentage of residents by type (Medicare, 
Medicaid, or other) by dividing the number of Medicare, Medicaid, and 
other patients by the number of total residents. 

* We calculated the occupancy rate of nursing homes by dividing the 
total number of residents by the number of certified beds. 

* We analyzed the following case-mix adjusted nurse staffing hours: 
registered nurse hours per resident per day; licensed practical nurse 
and vocational nurse hours per resident per day; nurse aide hours per 
resident per day; and total staffing hours per resident per day. 
[Footnote 80] We calculated registered nurse hours as a share of the 
total. Unadjusted nurse staffing hours data are collected by CMS, are 
self-reported by nursing homes, and represent staffing levels for a 2-
week period prior to the state inspection. CMS case-mix adjusted the 
staffing data using the average minutes of nursing care used to care 
for residents in a given resource utilization group category as 
reflected in the Medicare skilled nursing facility prospective payment 
system.[Footnote 81] CMS acknowledges that the staff hours collected 
from nursing homes have certain limitations. In order to increase the 
accuracy and comprehensiveness of the staffing data, CMS has been 
investigating whether it can use nursing home payroll data to report 
staffing levels on Nursing Home Compare. 

[End of section] 

Appendix III: Characteristics of Special Focus Facilities and Other 
Nursing Homes: 

Participation type (percentage): 

Medicare and Medicaid: 
Special Focus Facilities: 97.7%; 
Other Nursing Homes: 90.3%. 

Medicare only: 
Special Focus Facilities: 0%; 
Other Nursing Homes: 5.2%. 

Medicaid only: 
Special Focus Facilities: 2.3%; 
Other Nursing Homes: 4.5%. 

Beds and residents: 

Average number of beds per home (number): 
Special Focus Facilities: 131.4; 
Other Nursing Homes: 105.8. 

Average number of residents per home (number): 
Special Focus Facilities: 103.7; 
Other Nursing Homes: 89.6. 

Occupancy rate (percentage): 
Special Focus Facilities: 78.6%; 
Other Nursing Homes: 84.5%. 

Share of resident type (percentage): 

Medicare: 
Special Focus Facilities: 12.0%; 
Other Nursing Homes: 15.8%. 

Medicaid: 
Special Focus Facilities: 70.8%; 
Other Nursing Homes: 59.6%. 

Other: 
Special Focus Facilities: 17.2%; 
Other Nursing Homes: 24.7%. 

Type of ownership (percentage): 

Ownership type: For-profit (individual, partnership, or corporation); 
Special Focus Facilities: 81.2%; 
Other Nursing Homes: 67.4%. 

Ownership type: Nonprofit (corporation, church, or other); 
Special Focus Facilities: 15.0%; 
Other Nursing Homes: 26.7%. 

Ownership type: Government-owned; 
Special Focus Facilities: 3.8%[A]; 
Other Nursing Homes: 5.9%[A]. 

Chain affiliation: 
Special Focus Facilities: 65.4%; 
Other Nursing Homes: 53.4%. 

For-profit and chain affiliated: 
Special Focus Facilities: 54.9%; 
Other Nursing Homes: 41.7%. 

Nonprofit and chain affiliated: 
Special Focus Facilities: 9.0%[A]; 
Other Nursing Homes: 11.0%[A]. 

Government-owned and chain affiliated: 
Special Focus Facilities: 1.5%[A]; 
Other Nursing Homes: 0.7%[A]. 

Type of staff (average hours per resident-day): 

Registered nurse: 
Special Focus Facilities: 0.31; 
Other Nursing Homes: 0.36. 

Licensed practical and vocational nurses: 
Special Focus Facilities: 1.04[A]; 
Other Nursing Homes: 0.99[A]. 

Nurse aide: 
Special Focus Facilities: 2.39[A]; 
Other Nursing Homes: 2.40[A]. 

Total: 
Special Focus Facilities: 3.48[A]; 
Other Nursing Homes: 3.55[A]. 

Registered nurse hours as a share of total hours (percentage): 
Special Focus Facilities: 8.95%; 
Other Nursing Homes: 9.94%. 

Five-Star System[B] (percentage): 

Overall quality rating: 1 star; 
Special Focus Facilities: 74.4%; 
Other Nursing Homes: 22.1%. 

Overall quality rating: 2 stars; 
Special Focus Facilities: 22.6%; 
Other Nursing Homes: 20.5%. 

Overall quality rating: 3 stars; 
Special Focus Facilities: 3.0%; 
Other Nursing Homes: 21.4%. 

Overall quality rating: 4 stars; 
Special Focus Facilities: 0%; 
Other Nursing Homes: 23.7%. 

Overall quality rating: 5 stars; 
Special Focus Facilities: 0%; 
Other Nursing Homes: 12.3%. 

Health inspection component: 1 star; 
Special Focus Facilities: 92.5%; 
Other Nursing Homes: 18.9%. 

Health inspection component: 2 stars; 
Special Focus Facilities: 5.3%; 
Other Nursing Homes: 23.4%. 

Health inspection component: 3 stars; 
Special Focus Facilities: 1.5%; 
Other Nursing Homes: 23.4%. 

Health inspection component: 4 stars; 
Special Focus Facilities: 0.8%; 
Other Nursing Homes: 23.7%. 

Health inspection component: 5 stars; 
Special Focus Facilities: 0%; 
Other Nursing Homes: 10.7%. 

Source: GAO analysis of CMS data. 

Notes: (1) All characteristics are percentages unless otherwise 
indicated. (2) SFFs enter and exit the program on an ongoing basis; 
therefore, there may be fewer than 136 SFFs at any given time. We 
compared the characteristics of the 133 SFFs that were active in the 
program as of February 2009 to those of other nursing homes, which 
excluded facilities that were SFFs from 2005 through February 2009. 
However, three of these SFFs were missing nurse staffing data. (3) 
Unless otherwise noted, all differences between groups are significant 
at the 0.05 level. (4) The data we analyzed were as of December 2008, 
except for the data on nurse staffing, which were as of January 2009. 

[A] The difference between SFFs and all other nursing homes for this 
variable is not significant. 

[B] Individual entries may not sum to 100 percent because of rounding. 

[End of table] 

[End of section] 

Appendix IV: Chronological Summary of All 10 Systems Improvement 
Agreements (SIA): 

State/SFF: SC 1; 
CMS region: Atlanta; 
Duration in SFF Program (prior to SIA)[A]: 25 months; 
Start and end date of SIA: 3/07-10/07; 
Duration of SIA[A]: 8 months; 
SFF status (date graduated/terminated)[B]: Graduated (10/08); 
CMS's Five-Star System Rating: Below average. 

State/SFF: TX 2; 
CMS region: Dallas; 
Duration in SFF Program (prior to SIA)[A]: 27 months; 
Start and end date of SIA: 3/07-8/07; 
Duration of SIA[A]: 5 months; 
SFF status (date graduated/terminated)[B]: Graduated (3/08); 
CMS's Five-Star System Rating: Much below average. 

State/SFF: DE 3; 
CMS region: Philadelphia; 
Duration in SFF Program (prior to SIA)[A]: 29 months; 
Start and end date of SIA: 5/07-5/09; 
Duration of SIA[A]: 24 months; 
SFF status (date graduated/terminated)[B]: Graduated (4/08); 
CMS's Five-Star System Rating: Below average. 

State/SFF: DC 4; 
CMS region: Philadelphia; 
Duration in SFF Program (prior to SIA)[A]: 34 months; 
Start and end date of SIA: 9/07-6/09; 
Duration of SIA[A]: 22 months; 
SFF status (date graduated/terminated)[B]: Active; 
CMS's Five-Star System Rating: Below average. 

State/SFF: CA 5; 
CMS region: San Francisco; 
Duration in SFF Program (prior to SIA)[A]: 18 months; 
Start and end date of SIA: 12/07-12/08; 
Duration of SIA[A]: 12 months; 
SFF status (date graduated/terminated)[B]: Active; 
CMS's Five-Star System Rating: Much below average. 

State/SFF: TX 6; 
CMS region: Dallas; 
Duration in SFF Program (prior to SIA)[A]: 42 months; 
Start and end date of SIA: 6/08-8/08; 
Duration of SIA[A]: 2 months; 
SFF status (date graduated/terminated)[B]: Graduated (3/09); 
CMS's Five-Star System Rating: Above average. 

State/SFF: OK 7; 
CMS region: Dallas; 
Duration in SFF Program (prior to SIA)[A]: 19 months; 
Start and end date of SIA: 6/08-11/08; 
Duration of SIA[A]: 4 months; 
SFF status (date graduated/terminated)[B]: Terminated (10/08); 
CMS's Five-Star System Rating: Not rated[D]. 

State/SFF: TX 8; 
CMS region: Dallas; 
Duration in SFF Program (prior to SIA)[A]: 16 months; 
Start and end date of SIA: 9/08-3/09; 
Duration of SIA[A]: 6 months; 
SFF status (date graduated/terminated)[B]: Terminated (3/09); 
CMS's Five-Star System Rating: Not rated[D]. 

State/SFF: OK 9; 
CMS region: Dallas; 
Duration in SFF Program (prior to SIA)[A]: 20 months; 
Start and end date of SIA: 6/09[C]; 
Duration of SIA[A]: Ongoing; 
SFF status (date graduated/terminated)[B]: Active; 
CMS's Five-Star System Rating: Much below average. 

State/SFF: AR 10; 
CMS region: Dallas; 
Duration in SFF Program (prior to SIA)[A]: 16 months; 
Start and end date of SIA: 8/09[C]; 
Duration of SIA[A]: Ongoing; 
SFF status (date graduated/terminated)[B]: Active; 
CMS's Five-Star System Rating: Much below average. 

Source: GAO analysis of SIAs, information obtained from CMS, and 
Nursing Home Compare data from August 2009. 

[A] Duration is rounded to the nearest month. Two homes were in the 
SFF Program for less than 18 months before entering into SIAs; 
however, both homes had three standard surveys between the time that 
they were added to the SFF Program and the beginning of their SIAs. 

[B] Active means that the nursing home was still in the SFF Program. 
Terminated means that the nursing home was terminated from Medicare 
and Medicaid. 

[C] SIA was in effect as of August 2009. 

[D] Nursing home was not rated by CMS because it terminated prior to 
August 2009. 

[End of table] 

[End of section] 

Appendix V: Comments from the Department of Health and Human Services: 

Department Of Health & Human Services: 
Office Of The Secretary: 
Assistant Secretary for Legislation: 
Washington, DC 20201: 

March 9, 2010: 

John E. Dicken: 
Director, Health Care: 
U.S. Government Accountability Office: 
441 G Street N.W. 
Washington, DC 20548: 

Dear Mr. Dicken: 

Enclosed are comments on the U.S. Government Accountability Office's 
(GAO) report entitled: "Poorly Performing Nursing Homes: Special Focus 
Facilities Are Often Improving but CMS's Program Could Be 
Strengthened" (GA0-10-197). 

The Department appreciates the opportunity to review this report 
before its publication. 

Sincerely, 

Signed by: 

Andrea Palm: 
Acting Assistant Secretary for Legislation: 

Enclosure: 

[End of letter] 

General Comments Of The Department Of Health And Human Services On The 
Government Accountability Office's (GAO) Draft Report Entitled, 
"Poorly Performing Nursing Homes: Special Focus Facilities Are Often 
Improving But Cms's Program Could Be Strengthened" (GAO-10-197): 

The Department appreciates the opportunity to review and comment on 
this draft report. In this report GAO examined operation of CMS' 
Special Focus Facility (SFF) Program for nursing homes. GAO described 
the factors that States consider in selecting homes for the SFF 
Program and how such nursing homes differ from other nursing homes. 
GAO also evaluated the extent to which the CMS regional offices and 
States followed CMS guidance in implementing the SFF Program and the 
program's impact on the homes' performance. Finally, GAO identified 
other strategies that have been employed to improve the performance of 
poorly performing homes, including SFFs. 

The CMS initiated the SFF Program to address important public policy 
challenges posed by certain nursing homes that persist over time in 
providing poor quality of care. In recent years CMS strengthened the 
program by improving enforcement provisions and expanding the number 
of nursing homes in the program (2005), expanding both provider and 
public awareness of the program (2007), and posting on the CMS Web 
site the identity of all SFF nursing homes (2008). 

Prior CMS analysis resulted in many improvements to the program. We 
expect that GAO's analysis will help us further improve what could 
work better and reaffirm what is already working well. We agree fully 
with five of the six GAO recommendations and will consider the sixth 
recommendation. 

The GAO found that most SFF nursing homes improved and that the 
"scores of SFF graduates showed a statistically significant 
improvement when compared to their scores before entering the program, 
as did the scores of active SFFs..." 

Figure 1: Percent of NHs with No F-Level or Higher Deficiency: 

[Refer to PDF for image: vertical bar graph] 

6 Months: 
SFF Graduates: 85%; 
Candidates: 72%. 

12 Months: 
SFF Graduates: 65%; 
Candidates: 54%. 

[End of figure] 

A further question is whether improvements made by SFF nursing homes 
are sustained over time after the nursing homes graduate. GAO, for 
example, found that about 50 percent of the SFF graduates from 
calendar years 2005 through 2008 later had a deficiency finding at the 
F-level or greater (systemic potential for harm, or greater). Since 
the SFF nursing homes begin with a very poor track record, it is 
difficult to determine whether this 50 percent figure is better or 
worse than would have occurred without the SFF Program. To address the 
question of sustained improvement, we compared the performance of 180 
SFF graduates that were enrolled in the program beginning January 2005 
and that graduated before March 2009 with performance of a comparison 
group composed of the highest-ranked (most poorly performing) nursing 
homes that were candidates but were not selected for the SFF 
Program[Footnote 1]. 

Since GAO's analysis found that SFF nursing homes had slightly worse 
initial track records than the other candidates, we would not be 
surprised if the SFF nursing homes continued to show
worse performance even after the SFF nursing homes graduate. Figure 1, 
however, shows the opposite - a higher percentage of the SFF graduates 
had no deficiency at the F-level or higher at 6 months after 
graduation (85 percent free of such deficiencies) compared to the 
comparison group of candidates (72 percent). Similarly, after 12 
months, 65 percent of the SFF graduates still had no deficiency at the 
F-level or higher, compared to only 54 percent of the candidates. 

Using the statistic employed by GAO, Figure 2 shows the same 
phenomenon of sustained, improved performance for the SFF graduates. 
Figure 2 asks: "on average, how many months elapse before 50 percent 
of each group has had at least one deficiency at the F-level or 
higher?" 

Figure 2: Average Number of Months Until 50% of NHs Have an F-Level or 
Higher Deficiency: 

[Refer to PDF for image: vertical bar graph] 

SFF Graduates: 21.5 months; 
Candidates: 15.6 months. 

In this case, 21.5 months elapsed on average before 50 percent of the 
SFF graduates had an F-level or higher deficiency, but only 15.6 
months elapsed for the candidate group until such a serious deficiency 
was identified. While the data do not suggest that the SFF graduates 
have transformed themselves into high quality nursing homes, they do 
indicate that the greater efforts made by nursing homes in order to 
graduate from the SFF initiative have had some lasting and positive 
effects on quality of care. 

Among other findings, GAO also observed that a significant percentage 
of SFFs remained in the program for considerably longer than CMS' 
expectation of an 18-month time frame for improved performance (or 
termination from Medicare/Medicaid). From interviews, GAO identified a 
number of reasons for this phenomenon, and we will therefore reexamine 
the time frame. 

While we are encouraged by data indicating that CMS's Special Focus 
Facility initiative is producing positive and enduring results, we 
remain concerned by those nursing homes in the program that do relapse 
into a pattern of serious deficiencies, and by the length of time it is
taking for some nursing homes to evidence improvement. During any 
period of relapse, nursing home residents suffer. During the time we 
await improvement, the affected nursing home residents endure poor 
quality of care and the potential or the reality of serious harm. We 
are therefore committed to further strengthening of the SFF nursing 
home initiative. 

The GAO issued six recommendations for executive action. We concur 
with five of them and will consider the sixth. Below are CMS' 
responses to each of the recommendations. 

GAO Recommendation 1: 

Expand the SFF Program's public disclosure strategy by directing 
States to notify nursing homes that have been identified as SFF 
Program candidates that they are at risk of being selected as an SFF. 

CMS Response: 

We agree with this recommendation. CMS will ensure that all SFF 
candidate facilities are notified that they are at risk of being 
selected as an SFF. 

GAO Recommendation 2: 

Revise the SFF candidate list by removing homes that States have 
selected as SFFs and including additional homes so that States with a 
large number of SFFs have a full complement of candidates to choose 
from each time they select a new SFF. 

CMS Response: 

We agree with this recommendation in principle, though we will 
operationalize it in a slightly different manner. Specifically, CMS 
will sizably increase the SFF candidate list for most States so that 
they will have an adequate number from which to choose. We will not 
continually adjust the candidate list by removing those nursing homes 
already selected, but the expanded list will address the problem that 
States have cited and obtain the same result as the GAO recommendation. 

GAO Recommendation 3: 

Ensure that States impose more stringent enforcement, such as higher 
civil money penalties (CMP) or termination; clarify SFF Program 
guidance regarding appropriate sanction; and monitor SFF sanctions 
more closely. 

CMS Response: 

We agree with this recommendation. CMS will clarify SFF Program 
guidance to emphasize more consistent application of CMS' policy of 
progressive enforcement. In addition, CMS will systematically review 
the enforcement remedies levied against SFF facilities to ensure that 
CMS guidelines are followed. 

GAO Recommendation 4: 

Provide CMS regional offices with a description of the elements that 
should be part of systems improvement agreements (SIA) and catalog any 
lessons learned from their use. 

CMS Response: 

We agree with this recommendation. CMS will issue guidance to States 
and regional offices on the use of SIA's. This guidance will include a 
model SIA to use as a template. 

GAO Recommendation 5: 

Coordinate more systematically with the Department of Health and Human 
Services (HHS) Office of the Inspector General (OIG) regarding its 
experiences with corporate integrity agreements (CIA). 

CMS Response: 

We agree with this recommendation. CMS will work with the HHS OIG to 
determine appropriate methods by which the two agencies can more 
systematically coordinate their efforts. 

GAO Recommendation 6: 

Seek legislative authority to charge SFFs for the costs associated 
with conducting additional surveys. 

CMS Response: 

The CMS will take this recommendation under advisement. Congress 
temporarily approved use of a "Revisit User Fee" in Fiscal Year 2007. 
The Revisit User Fee applied only to those nursing homes that had a 
deficiency such that a revisit was required to verify that corrections 
had been made and the facility was in substantial compliance with CMS 
requirements. Since SFF facilities have more serious deficiencies than 
other nursing homes (on average), and therefore have many more 
revisits, the cost of the Revisit User Fee was borne proportionately 
more by SFF facilities than others. SFFs paid about $1500 in revisit 
user fees on average, compared with about $1100 for non-SFF nursing 
homes. 

Appendix 5 Footnote: 

[1] The comparison group consisted of 301 nursing homes that were 
active for at least 18 months after their appearance on a SFF 
candidate list and that were ranked among the 5 worst performing 
candidates in a State. If a nursing home appeared on more than one 
candidate list, the selection date corresponding with the worst survey 
score was retained. 

[End of section] 

Appendix VI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

John E. Dicken, (202) 512-7114 or dickenj@gao.gov: 

Acknowledgments: 

In addition to the contact name above, Walter Ochinko, Assistant 
Director; Ramsey Asaly; Daniel Lee; Shannon Legeer; Jessica Morris; 
Roseanne Price; Jennifer Rellick; Kathryn Richter; and Jessica Smith 
made key contributions to this report. 

[End of section] 

Related GAO Products: 

Nursing Homes: Addressing the Factors Underlying Understatement of 
Serious Care Problems Requires Sustained CMS and State Commitment. 
[hyperlink, http://www.gao.gov/products/GAO-10-70]. Washington, D.C.: 
November 24, 2009. 

Nursing Homes: Opportunities Exist to Facilitate the Use of the 
Temporary Management Sanction. [hyperlink, 
http://www.gao.gov/products/GAO-10-37R]. Washington, D.C.: November 
20, 2009. 

Nursing Homes: CMS's Special Focus Facility Methodology Should Better 
Target the Most Poorly Performing Homes, Which Tended to Be Chain 
Affiliated and For-Profit. [hyperlink, 
http://www.gao.gov/products/GAO-09-689]. Washington, D.C.: August 28, 
2009. 

Medicare and Medicaid Participating Facilities: CMS Needs to Reexamine 
Its Approach for Funding State Oversight of Health Care Facilities. 
[hyperlink, http://www.gao.gov/products/GAO-09-64]. Washington, D.C.: 
February 13, 2009. 

Nursing Homes: Federal Monitoring Surveys Demonstrate Continued 
Understatement of Serious Care Problems and CMS Oversight Weaknesses. 
[hyperlink, http://www.gao.gov/products/GAO-08-517]. Washington, D.C.: 
May 9, 2008. 

Nursing Home Reform: Continued Attention Is Needed to Improve Quality 
of Care in Small but Significant Share of Homes. [hyperlink, 
http://www.gao.gov/products/GAO-07-794T]. Washington, D.C.: May 2, 
2007. 

Nursing Homes: Efforts to Strengthen Federal Enforcement Have Not 
Deterred Some Homes from Repeatedly Harming Residents. [hyperlink, 
http://www.gao.gov/products/GAO-07-241]. Washington, D.C.: March 26, 
2007. 

Nursing Homes: Despite Increased Oversight, Challenges Remain in 
Ensuring High-Quality Care and Resident Safety. [hyperlink, 
http://www.gao.gov/products/GAO-06-117]. Washington, D.C.: December 
28, 2005. 

Nursing Home Quality: Prevalence of Serious Problems, While Declining, 
Reinforces Importance of Enhanced Oversight. [hyperlink, 
http://www.gao.gov/products/GAO-03-561]. Washington, D.C.: July 15, 
2003. 

Nursing Homes: Public Reporting of Quality Indicators Has Merit, but 
National Implementation Is Premature. [hyperlink, 
http://www.gao.gov/products/GAO-03-187]. Washington, D.C.: October 31, 
2002. 

Nursing Homes: Federal Efforts to Monitor Resident Assessment Data 
Should Complement State Activities. [hyperlink, 
http://www.gao.gov/products/GAO-02-279]. Washington, D.C.: February 
15, 2002. 

Nursing Homes: Sustained Efforts Are Essential to Realize Potential of 
the Quality Initiatives. [hyperlink, 
http://www.gao.gov/products/GAO/HEHS-00-197]. Washington, D.C.: 
September 28, 2000. 

Nursing Home Care: Enhanced HCFA Oversight of State Programs Would 
Better Ensure Quality. [hyperlink, 
http://www.gao.gov/products/GAO/HEHS-00-6]. Washington, D.C.: November 
4, 1999. 

Nursing Home Oversight: Industry Examples Do Not Demonstrate That 
Regulatory Actions Were Unreasonable. [hyperlink, 
http://www.gao.gov/products/GAO/HEHS-99-154R]. Washington, D.C.: 
August 13, 1999. 

Nursing Homes: Proposal to Enhance Oversight of Poorly Performing 
Homes Has Merit. [hyperlink, 
http://www.gao.gov/products/GAO/HEHS-99-157]. Washington, D.C.: June 
30, 1999. 

Nursing Homes: Complaint Investigation Processes Often Inadequate to 
Protect Residents. [hyperlink, 
http://www.gao.gov/products/GAO/HEHS-99-80]. Washington, D.C.: March 
22, 1999. 

Nursing Homes: Additional Steps Needed to Strengthen Enforcement of 
Federal Quality Standards. [hyperlink, 
http://www.gao.gov/products/GAO/HEHS-99-46]. Washington, D.C.: March 
18, 1999. 

California Nursing Homes: Care Problems Persist Despite Federal and 
State Oversight. [hyperlink, 
http://www.gao.gov/products/GAO/HEHS-98-202]. Washington, D.C.: July 
27, 1998. 

[End of section] 

Footnotes: 

[1] Every nursing home receiving Medicare or Medicaid payment must 
undergo a standard survey not less than once every 15 months, and the 
statewide average interval for these surveys must not exceed 12 
months. See 42 U.S.C. § 1395i-3(g)(2)(A)(iii); 42 U.S.C. § 
1396r(g)(2)(A)(iii). CMS generally interprets these requirements to 
permit a statewide average interval of 12.9 months and a maximum 
interval of 15.9 months for each home. 

[2] Medicare is the federal health care program for elderly and 
disabled individuals. Medicaid is the joint federal-state health care 
financing program for certain categories of low income individuals. 
Combined Medicare and Medicaid payments for nursing home services were 
about $78 billion in 2007, including a federal share of about $54 
billion. 

[3] See GAO, Nursing Homes: Additional Steps Needed to Strengthen 
Enforcement of Federal Quality Standards, [hyperlink, 
http://www.gao.gov/products/GAO/HEHS-99-46] (Washington, D.C.: March 
18, 1999), and Nursing Homes: Proposal to Enhance Oversight of Poorly 
Performing Homes Has Merit, [hyperlink, 
http://www.gao.gov/products/GAO/HEHS-99-157] (Washington, D.C.: June 
30, 1999). 

[4] Prior to 2005, each state had two SFFs, including Alaska. Alaska 
no longer participates in the SFF Program because it has few nursing 
homes--only 15 in fiscal year 2008. 

[5] CMS's fiscal year 2010 survey and certification program budget 
request sought an increase of $53.8 million over the prior fiscal 
year. This request was approved by both the House and Senate 
Committees on Appropriations. H.R. Rep. No. 111-220, at 158 (2009); S. 
Rep. No. 111-66, at 137 (2009). In August 2009, the agency indicated 
that it expected to increase the number of SFFs (about one per state) 
if fiscal year 2010 funding reflected this increase. An increase in 
the number of SFFs would be consistent with our 2007 recommendation 
for CMS to expand the SFF Program. See GAO, Nursing Homes: Efforts to 
Strengthen Federal Enforcement Have Not Deterred Some Homes from 
Repeatedly Harming Residents, GAO-07-241 (Washington, D.C.: Mar. 26, 
2007). 

[6] See GAO, Nursing Homes: CMS's Special Focus Facility Methodology 
Should Better Target the Most Poorly Performing Homes, Which Tended to 
Be Chain Affiliated and For-Profit, [hyperlink, 
http://www.gao.gov/products/GAO-09-689] (Washington, D.C.: August 28, 
2009). 

[7] OSCAR data change continually as new surveys are conducted and 
entered into the database, but there can be a lag between the date a 
survey is conducted and the date when the results are entered into the 
database. 

[8] The statutory mission of the QIO Program is to improve the 
effectiveness, efficiency, economy, and quality of the services 
delivered to Medicare beneficiaries. QIOs are private, mostly not-for-
profit organizations that contract with CMS. They are staffed 
primarily by physicians and other health care professionals, who are 
trained to review medical care, help beneficiaries with complaints 
about the quality of care, and implement improvements in the quality 
of care delivered. 

[9] In this report, we use the term states to refer to state survey 
agencies, including the District of Columbia. We interviewed a 
nongeneralizable sample of 14 states, which were selected based on a 
combination of factors, including the number of SFFs allocated to the 
state and SFF scores. These states were Alabama, Arkansas, California, 
Colorado, Connecticut, Florida, Illinois, Indiana, Massachusetts, 
Missouri, New York, Pennsylvania, Texas, and Washington. 

[10] Pub. L. No. 100-203, §§ 4201, 4211, 101 Stat. 1330, 1330-160, 
1330-182 (codified in pertinent part at 42 U.S.C. § 1395i-3 and 42 
U.S.C. § 1396r). 

[11] In general, state survey activities are funded through a 
combination of Medicare, Medicaid, and non-Medicaid state funds. In 
the annual appropriation act for HHS, Congress authorizes the transfer 
of a specific amount from the Medicare Trust Funds to the CMS Program 
Management Account and includes an amount for the approximately 75 
percent federal share of Medicaid expenditures (states generally pay 
the remaining 25 percent). States also contribute non-Medicaid state 
funds for the benefit they derive from facilities meeting federal 
quality standards and the survey costs associated with meeting state 
licensing requirements. See GAO, Medicare and Medicaid Participating 
Facilities: CMS Needs to Reexamine Its Approach for Funding State 
Oversight of Health Care Facilities, [hyperlink, 
http://www.gao.gov/products/GAO-09-64] (Washington, D.C.: Feb. 13, 
2009). 

[12] The standard survey also includes an assessment of federal fire 
safety standards. The fire safety portion of a standard survey is not 
always conducted concurrently with the assessment of other standards. 

[13] Revisits are not required for most deficiencies below the actual 
harm level--A through F. However, revisits are required for G-level or 
higher deficiencies as well as certain F-level deficiencies. 

[14] Regional offices typically accept state-proposed sanctions but 
can modify them. 

[15] CMS requires states to refer for immediate sanction homes that 
receive at least one G-through L-level deficiency on successive 
standard surveys or intervening complaint investigations. Under CMS's 
immediate sanctions policy, sanctions may be imposed without giving 
homes an opportunity to correct serious deficiencies that resulted in 
actual resident harm or put residents at risk of death or serious 
injury. 

[16] The scope and severity of a deficiency is one of the factors that 
CMS may take into account when imposing sanctions. CMS may also 
consider a home's prior compliance history, desired corrective action 
and long-term compliance, and the number and severity of all the 
home's deficiencies. 

[17] Other sanctions include directed in-service training, state 
monitoring, and temporary management. For information on the use of 
temporary management, see GAO, Opportunities Exist to Facilitate the 
Use of the Temporary Management Sanction, GAO-10-37R (Washington, 
D.C.: Nov. 20, 2009). 

[18] Because of the notice period, discretionary DPNAs provide homes 
with a grace period during which they are able to avoid the sanction 
if they correct the deficiencies. 

[19] To avoid potential double-counting, deficiencies that appear on 
complaint surveys conducted within 15 days of a standard survey 
(either prior to or after the standard survey) are counted only once. 
If the scope or severity differs on the two surveys, the highest scope 
and severity combination is used. 

[20] From 1999 to 2004, the SFF methodology assigned a different 
number of points to deficiencies using only about 1 year of deficiency 
data. In 2005, CMS altered the number of points assigned to 
deficiencies and based a nursing home's numeric score on about 3 years 
of deficiency data, weighted equally. In 2007, CMS removed fire safety 
deficiencies from the SFF methodology, to provide an increased focus 
on quality of care deficiencies. 

[21] A nursing home with one or more deficiencies at the F through L 
level--but not G level--in Quality of Care, Quality of Life, or 
Resident Behavior and Facility Practices must be cited for substandard 
quality of care. 

[22] Each cycle consists of a standard survey, which occurs roughly 
annually, revisits associated with the standard survey, and 12 months 
of complaint investigations. 

[23] The most recent score is assigned a weighting factor of one-half, 
the second most recent score is assigned a weighting factor of one- 
third, and the third most recent score (from the earliest period) is 
assigned a weighting factor of one-sixth. 

[24] CMS allocated SFFs to states in December 2004 based on the number 
of nursing homes in each state at that time and does not reallocate 
SFFs as the number of nursing homes in each state changes. In 
addition, CMS increased the candidate list size from 4 to 15 per state. 

[25] CMS implemented state performance reviews in fiscal year 2001 and 
reorganized the reviews in fiscal year 2006. In fiscal year 2008, CMS 
began measuring states' adherence to this requirement. 

[26] The state performance reviews also specify that the state should 
conduct a standard survey within 6 months of the SFF's selection, but 
CMS does not measure adherence to this element. 

[27] CMS launched its Nursing Home Compare Web site in 1998 to provide 
information to consumers on nursing home performance. The Web site 
provides consumers with information intended to help them evaluate the 
quality of care provided by a nursing home, such as the number and 
type of deficiencies identified during state surveys. 

[28] As described in our August 2009 report, there had been only one 
significant variation between CMS's SFF methodology and the health 
inspections component of the Five-Star System as of March 2009: the 
Five-Star System assigns more points to D-through I-level deficiencies 
than does the SFF methodology. CMS has since made several other 
modifications to the health inspections component of the Five-Star 
System. See GAO-09-689 and Centers for Medicare & Medicaid Services, 
Design for Nursing Home Compare Five-Star Quality Rating System: 
Technical Users' Guide, October 2009, [hyperlink, 
http://www.cms.hhs.gov/CertificationandComplianc/Downloads/usersguide.pd
f] (accessed December 28, 2009). 

[29] Contrary to CMS guidance, states selected nursing homes not on 
their candidate list 10 times. The rank of these homes ranged from 22 
to 519. According to CMS officials, states are not allowed to select a 
nursing home ranked other than 1 to 15. Nine of the 10 homes were 
added to the SFF Program in 2006 or 2007. 

[30] Candidate lists are generated from deficiency and revisit data. 
According to data from CMS's Providing Data Quickly Web site, 11 
percent of surveys in fiscal year 2008 were updated in CMS's database 
70 days after the survey was conducted and the average amount of time 
between a state survey and database update was a month and a half. 

[31] See [hyperlink, http://www.gao.gov/products/GAO-09-689]. 

[32] We did not analyze the compliance histories of all SFFs because 
some had received standard surveys after being added to the program. 
"Other nursing homes" excludes facilities that were SFFs from 2005 
through February 2009. 

[33] The SFF methodology uses deficiencies from the three most recent 
standard surveys and from the three most recent 12 months of 
complaints, as well as the number of revisits associated with the 
three most recent standard surveys. Our analysis took a similar 
approach but looked only at the most recent period. 

[34] SFFs enter and exit the program on an ongoing basis; therefore, 
there may be fewer than 136 SFFs at any given time. We compared the 
characteristics of the 133 SFFs that were active in the program as of 
February 2009 to those of other nursing homes, which excluded 
facilities that were SFFs from 2005 through February 2009. However, 3 
of the 133 SFFs were missing nurse staffing data. 

[35] The nurse staffing hours data we analyzed were case-mix adjusted 
by CMS. SFFs averaged fewer total nurse staffing hours per resident 
per day compared to other nursing homes, but this difference was not 
statistically significant. 

[36] These differences in ratings are not surprising because the 
health inspection component is generally based on the SFF methodology 
and is the first step in determining the overall quality rating. 

[37] Of the remaining SFFs, about 23 percent received a 2-star rating 
and 3 percent received 3 stars on the overall rating. In technical 
comments provided on a draft of this report, HHS highlighted the 
report's findings regarding agreement in the SFF and Five-Star System, 
but expressed concern about those nursing homes that appear to be 
better performing under the Five-Star System when compared to the SFF 
Program. HHS suggested that understanding where the two systems 
diverge may help to clarify nursing home characteristics that require 
further attention. 

[38] There was no statistically significant difference between the 
number of stars SFFs and other nursing homes received for the nursing 
home staffing and quality measures components of the Five-Star System. 

[39] CMS requires states to refer for immediate sanction homes that 
receive at least one G-through L-level deficiency on successive 
standard surveys or intervening complaint investigations. In March 
2007, we reported that the "immediate sanctions" label is misleading 
because CMS's policy requires only that homes be notified immediately 
of CMS's intent to implement sanctions, not that sanctions be 
implemented immediately. See [hyperlink, 
http://www.gao.gov/products/GAO-07-241]. 

[40] CMPs can be imposed retroactively to the first date of 
noncompliance and do not require a notice period. CMS requires that 
nursing homes be provided a notice period for most other sanctions, 
which can result in homes avoiding the sanction if they are able to 
correct deficiencies during the notice period. However, discretionary, 
rather than mandatory, sanctions provide homes with a shorter 
opportunity to correct deficiencies before the sanction goes into 
effect. 

[41] Less frequently cited sanctions, such as temporary management and 
directed in-service training, are also infrequently implemented for 
SFFs and candidates. 

[42] A noncompliance cycle begins on the date of the survey finding 
noncompliance and ends when the home has achieved substantial 
compliance by correcting deficiencies. 

[43] To determine potential CMP values, we used CMS's CMP Analytic 
Tool, issued in June 2007. Regional offices use this tool to evaluate 
the reasonableness of state-recommended CMP amounts for all nursing 
homes. 

[44] There are generally 136 active SFFs in the program at any time, 
nationwide. As of the end of February 2009, only one state, the 
District of Columbia, had never graduated or terminated an SFF. 

[45] SFFs that choose to voluntarily terminate may do so because they 
are at risk of involuntary termination from Medicare and Medicaid. 

[46] For another four SFFs, about 1 year elapsed between the last two 
standard surveys which led to their graduation; therefore, while these 
homes met the graduation criteria, they were not surveyed twice in the 
last year they were in the SFF Program. 

[47] For fiscal years 2007 through 2010, CMS's state performance 
reviews also measured, but did not require states to implement 
corrective action plans for a failure to recommend termination from 
Medicare and Medicaid for SFFs that did not improve their performance 
within CMS's 18-month time frame. 

[48] Additionally, as of the end of February 2009, we found that 40 
SFFs (28 percent) that entered the program in 2005 were in the program 
for 36 months or more--twice the amount of time CMS intended. 

[49] As of August 2009, this home was still in the program, for a 
total of 55 months. 

[50] This kitchen sanitation requirement, which is not in an SQC area, 
involves the proper storage, preparation, distribution, and service of 
food. In fiscal year 2009 it was the third most frequently cited 
deficiency. 

[51] A nursing home with one or more deficiencies at the F through L 
level--but not G level--in Quality of Care, Quality of Life, or 
Resident Behavior and Facility Practices must be cited for SQC. 

[52] The differences between groups were significant at the 0.05 level. 

[53] However, during the same period a much smaller share of SFFs--7 
percent--received an F-level or greater deficiency on two consecutive 
standard surveys after they graduated. We analyzed data as of July 31, 
2009. 

[54] This home was terminated involuntarily in October 2008. 

[55] Five of the six Dallas regional office SIAs use the term 
"directed plan," calling for the facility to use a consultant to help 
it develop a resident-centered, outcome-measurement-based resident 
care system that can promptly identify and effectively and efficiently 
respond to any and all resident needs. This approach sounds analogous 
to "a directed plan of correction"--a CMS sanction requiring a home to 
take specified action within a certain time frame; however, Dallas 
officials said the "directed plan" called for in their SIAs was more 
far reaching than "a directed plan of correction," because it better 
ensured that the home developed tools to not only come into, but also 
stay in, compliance. Directed plans of correction were used about 
1,000 times from fiscal years 2006 through 2008. 

[56] If an SFF has a G-level or higher deficiency after 18 months in 
the SFF Program, the Dallas region generally notifies the home that it 
will be terminated from Medicare and Medicaid. 

[57] Completing the terms of the SIA does not ensure that the nursing 
home will graduate from the SFF Program; the home must also meet the 
SFF Program's graduation requirements--two consecutive standard 
surveys and any intervening complaint investigations with no F-level 
or greater deficiencies. 

[58] CMS's central office played an integral role in the development 
of the first SIA. 

[59] In our May 2007 report, we recommended that CMS increase the 
number of poorly performing nursing homes that QIOs assist 
intensively. See GAO, Nursing Homes: Federal Actions Needed to Improve 
Targeting and Evaluation of Assistance by Quality Improvement 
Organizations, [hyperlink, http://www.gao.gov/products/GAO-07-373] 
(Washington, D.C.: May 29, 2007). 

[60] CMS asked states to recommend SFFs that were most in need of help 
and most appropriate for the initiative by considering the following 
criteria listed in priority order: SFFs that had not improved; new 
SFFs; and SFFs that had improved. 

[61] Additionally, while Alaska does not have an SFF Program, the QIO 
in that state did work with a nursing home under this initiative. 

[62] States have from one to six SFFs. 

[63] CMS also monitors QIO performance by evaluating nursing home 
satisfaction. 

[64] Our analysis focused on quality of care CIAs for nursing homes 
and excluded the over 1,000 CIAs and similar agreements that the HHS 
OIG has developed in cases of financial fraud. HHS may exclude a 
nursing home from participating in Medicare or Medicaid for failure to 
furnish medically necessary services or for violating a variety of 
civil false claims statutes. See 42 U.S.C. § 1320a-7b. 

[65] Of the 35 agreements, 16 were original CIAs and 19 were initiated 
as successor agreements because the corporations under original CIAs 
sold nursing homes, split into two or more corporations, or 
reorganized as a new corporation. See "Nursing Home Corporations under 
Quality of Care Corporate Integrity Agreements," Department of Health 
and Human Services, Office of Inspector General, April 2009, OEI-06-06-
00570, [hyperlink, 
http://www.oig.hhs.gov/oei/reports/oei-06-06-00570.pdf] (accessed May 
4, 2009). 

[66] According to an individual with the data analysis organization 
contracted by most of the nursing home quality of care independent 
monitors, reports on the results of these analyses across the homes in 
the corporation are not shared with CMS. 

[67] Beginning in July 1998, CMS undertook a broad array of 
initiatives intended to improve nursing home oversight and 
enforcement, one of which involved seeking statutory authority to 
allow but not require states to immediately refer chain-owned homes 
with actual harm deficiencies for sanctions if any of the chain's 
homes had poor performance records. According to a CMS official, this 
initiative was not pursued because CMS was unable to obtain the 
necessary statutory authority. Another significant barrier to this 
initiative had been that CMS was unable to reliably identify homes 
that belong to nursing home chains. 

[68] See, Fla. Stat. §§ 400.118, 400.19(3). At the time of our 
interview with state officials, Florida law also required nurse 
monitors to visit all nursing homes at least quarterly to assess the 
overall quality of life in the nursing home as it relates to resident 
care. Monitors reported their findings to the state, and, if they 
determined the home needed additional assistance, the monitors worked 
directly with the nursing home, or referred the home to the state's 
QIO. More recently, this requirement was repealed. Fla. Stat. § 
400.118(2) (as repealed, effective 7-1-2009 by 2009-223, § 38). 

[69] Unlike Florida, CMS does not generally have the authority to 
charge nursing homes for survey activities. See 42 U.S.C. § 1395aa(e). 
CMS has not specifically sought authority to charge SFFs for the costs 
associated with conducting additional surveys. Following a request 
from CMS, in fiscal year 2007, Congress required the agency to charge 
user fees for revisit surveys and to use those fees to cover the costs 
of revisits. Revised Continuing Appropriations Resolution, 2007, Pub. 
L. No. 110-5, § 2, 121 Stat. 8, 33. A series of continuing resolutions 
extended CMS's authority to charge and retain fees into fiscal year 
2008 until the Consolidated Appropriations Act, 2008, which did not 
renew the authority, became law on December 26, 2007. See, e.g., Pub. 
L. No. 110-92, § 101, 121 Stat. 989 (2007). In its fiscal year 2010 
budget request, CMS requested the authority to charge user fees to 
cover the full cost of revisit surveys and about one-third of the cost 
of standard surveys. Congress, however, did not provide this authority. 

[70] Other criteria the state uses to determine which nursing homes to 
recommend for participation include the following characteristics: the 
home (1) is in the 85th percentile in terms of CMS's pressure ulcer 
quality of care measures, (2) is identified on CMS's SFF candidate 
list, (3) has had more than five complaints since the most recent 
survey, (4) is operating under a legally binding agreement with the 
state, or (5) has certain severe deficiencies based on the state's 
deficiency classification. 

[71] The state, the QIO, and certain provider organizations contribute 
data, such as data regarding compliance with the top 10 most 
frequently cited deficiencies, to identify homes that need the 
services provided by the state's program. 

[72] See [hyperlink, http://www.gao.gov/products/GAO-09-689]. 

[73] For further information on fee design, see GAO, Federal User 
Fees: A Design Guide, [hyperlink, 
http://www.gao.gov/products/GAO-08-386SP] (Washington, D.C.: May 29, 
2008). 

[74] To address this topic, we interviewed officials from (1) CMS's 
survey and certification group, which we refer to as the central 
office, and four of its regional offices--Atlanta, Chicago, Dallas, 
and Denver; (2) CMS's Office of Financial Management; (3) a Medicare 
Administrative Contractor; (4) the Office of Insured Health Care 
Facilities in the Department of Housing and Urban Development; and (5) 
Virginia Health Information, a contractor that manages a Virginia Web 
site that includes nursing home financial information. Medicare 
Administrative Contractors serve providers through paying claims for 
services and handling appeals of denied claims. 

[75] In addition to information from a home's financial statements, 
Medicare cost reports include information on facility characteristics, 
utilization data, cost and charges (in total and for Medicare), and 
Medicare settlement data. 

[76] The Virginia Health Information Web site is available at 
[hyperlink, http://www.vhi.org]. See Va. Code Amn. §§ 32.1-276.2-32.1-
276.11 (2009). 

[77] The Section 232 Mortgage Insurance for Residential Care 
Facilities program was established in 1959 by Section 232 of the 
National Housing Act, as amended, and expanded in 1987 by the Housing 
and Community Development Act. The program insures mortgages for 
certain nursing homes, assisted living facilities, board and care 
homes, and intermediate care facilities. According to HUD in June 
2009, approximately 1,500 nursing homes held these loans. See GAO, 
Residential Care Facilities Mortgage Insurance Program: Opportunities 
to Improve Program and Risk Management, [hyperlink, 
http://www.gao.gov/products/GAO-06-515] (Washington, D.C.: May 24, 
2006). 

[78] If the scope or severity differed on the two surveys, the highest 
scope and severity combination was used. 

[79] At the time of our analysis, six homes met our criteria and we 
analyzed sanctions data for all six of these homes. We subsequently 
learned that another home for which we did not analyze sanctions data 
had met our criteria. 

[80] Nurse staffing hours were not available for 6.5 percent of homes. 
Reasons these data were not available include that CMS deemed the data 
to be unreliable (e.g., very high nursing hours per resident per day) 
or that CMS had newly certified the nursing home. 

[81] See Centers for Medicare & Medicaid Services, Design for Nursing 
Home Compare Five-Star Quality Rating System: Technical Users' Guide, 
revised October 2009, [hyperlink, 
http://www.cms.hhs.gov/CertificationandComplianc/Downloads/usersguide.pd
f] (accessed December 28, 2009). This document also describes how CMS 
derived its overall quality rating and the health inspections 
component rating in its Five-Star System. 

[End of section] 

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