Medicaid Home- and Community-Based Services: Selected States' Program Structures and Challenges Providing Services

The need for LTSS to assist individuals with limited abilities for self-care is expected to increase, in part due to the aging of the population. Medicaid is the nation's primary payer of LTSS, with spending estimated at $167 billion in 2016. State Medicaid programs are generally required to cover LTSS provided in institutions, such as nursing homes, but coverage of the same services outside of institutions—that is, HCBS—is generally optional. In recent years there have been efforts to shift the balance of LTSS away from institutions through the expanded use of HCBS. National spending for HCBS has increased and now exceeds that for services in an institution. However, the extent to which Medicaid programs cover HCBS varies by state, as does the structure of states' HCBS programs.

GAO was asked to review the approaches states use to provide coverage for HCBS in the Medicaid program. For selected states, this report describes (1) decisions that influenced the structure of Medicaid HCBS programs, and (2) challenges providing HCBS to Medicaid beneficiaries and efforts to respond to these challenges. GAO reviewed information and conducted interviews with officials from a nongeneralizable sample of five states, which GAO selected to obtain variation in the percentage of total Medicaid LTSS expenditures used for HCBS, geography, and other factors. GAO also reviewed information and interviewed officials from four MCOs—two in each of the two selected states that used managed care to provide HCBS. The MCOs varied in enrollment size and population served.

All state Medicaid programs finance coverage of long-term services and supports (LTSS), which help beneficiaries with physical, cognitive, or other limitations perform routine daily activities, such as eating, dressing, and making meals. When these services are provided in beneficiaries' homes or other community settings instead of nursing homes, the services are known as home- and community-based services (HCBS). The structure of the 26 HCBS programs we reviewed in five states—Arizona, Florida, Mississippi, Montana, and Oregon—reflected decisions about which populations to cover, whether to limit eligibility or enrollment, and whether to use managed care.

Populations: Four of the five states had multiple HCBS programs that targeted specific populations. For example, Mississippi had separate HCBS programs for aged or physically disabled individuals and individuals with intellectual or developmental disabilities. The fifth state, Arizona, had one program that targeted two specific populations.

Eligibility: All five states had at least one HCBS program that limited eligibility to beneficiaries whose needs would otherwise require care in a nursing home or other institutional setting.

Enrollment: Four of the five states limited enrollment in one or more of their HCBS programs; 19 of the 26 programs had enrollment caps, and 12 of these programs maintained a waiting list.

Managed care: Two of the five states used managed care to provide HCBS, paying managed care organizations (MCO) a fixed fee for each beneficiary rather than paying providers for each service delivered.

State and MCO officials identified several challenges providing HCBS and described their efforts to respond to them:

HCBS workforce: Officials cited challenges recruiting and retaining HCBS providers, particularly given the low wages these providers typically receive. To respond to this, officials from Mississippi, Montana, and two of the MCOs reported offering providers higher payment rates.

Complex needs: Officials described challenges serving beneficiaries with complex medical and behavioral health needs, including individuals who display aggressive or other challenging behaviors. Officials from Montana and one MCO reported responding to this challenge by providing behavioral health training for providers.

HCBS funding: State officials reported that limitations on overall HCBS funding levels posed a challenge, which they responded to by providing their state legislatures with information on the projected need for HCBS to inform future funding decisions, and leveraging other available resources, such as federal grants.

The Department of Health and Human Services provided technical comments on a draft of this report, which GAO incorporated as appropriate.

In the coming decades, the need for long-term services and supports  (LTSS) to assist individuals with limited abilities for self-care is expected  to increase, in part due to the aging of the population. Medicaid, a federal- state health financing program for low-income and medically needy  individuals, is the nation’s primary payer of LTSS. LTSS comprise a broad  range of health care, personal care, and supportive services to help  individuals with physical, developmental, or cognitive disabilities maintain  their quality of life. For example, LTSS can help individuals perform  routine daily activities, such as eating, dressing, bathing, and making  meals. Many individuals prefer to receive LTSS in home- and community- based settings, rather than receiving care in a nursing home or other  institutional setting, because it can help them maintain their  independence and participate in community life to the fullest extent  possible. LTSS delivered outside of institutional settings are known as  home- and community-based services (HCBS), and include adult day  care, personal care services, and services provided in assisted living.

While state Medicaid programs are required to finance coverage for  beneficiary care in nursing homes, coverage for most HCBS is optional,  which creates incentives for Medicaid to deliver LTSS in institutional  settings. In recent years the Congress, the Centers for Medicare &  Medicaid Services (CMS)—the federal agency within the Department of  Health and Human Services (HHS) responsible for overseeing states’  Medicaid programs—and states have taken steps to expand the use of  HCBS and shift the provision of LTSS away from institutional settings.  For example, the Patient Protection and Affordable Care Act, enacted in  2010, created new options and provided additional funding for states to  make HCBS available to eligible Medicaid beneficiaries. In concert with  these efforts, the proportion of LTSS spending for HCBS has increased  nationwide. In fiscal year 2016, the most recent year of data available,  Medicaid spent an estimated $167 billion on LTSS. Of that amount, 57  percent—or $94 billion—was spent on HCBS. However, the extent to  which states cover HCBS in their Medicaid programs varies, as does the  proportion of LTSS spending used for HCBS; the proportion of Medicaid  LTSS spending on HCBS ranged from 27 percent to 81 percent among  states in 2016, a three-fold difference.

States have a number of different options to provide Medicaid coverage  of HCBS. As a result, states vary in the structure of their HCBS programs.  States can provide certain types of HCBS under their state Medicaid  plans. In addition, states may seek permission from CMS to provide  HCBS under waivers of traditional Medicaid requirements; for example, in  order to provide services to a specific population, such as individuals with  intellectual or developmental disabilities, or to limit the number of  beneficiaries who can receive HCBS.

Given the variety of options available for providing HCBS and the wide  variation in HCBS spending among states, questions arise about how  states are structuring their HCBS programs, as well as challenges they  may face in providing access to these services. You asked us to review  the approaches states use to provide coverage for HCBS in the Medicaid  program. This report describes  1.  decisions that influenced the structure of selected states’ Medicaid  2.  selected states’ challenges providing HCBS to Medicaid beneficiaries  and efforts to respond to these challenges.

To address these objectives, we selected a nongeneralizeable sample of  five states: Arizona, Florida, Mississippi, Montana, and Oregon. We  selected these states to obtain variation in several factors, including  geographic location, the percentage of the state’s population that resides  in a rural area, the proportion of the state’s LTSS spending for HCBS, and  the state’s use of various HCBS authorities and managed care. We  focused our work on the optional authorities the selected states used to  provide HCBS within Medicaid, including waivers and state plan options.  For the selected states, we reviewed documentation for the 26 HCBS  programs operated under these authorities at the time of our review,  including waiver applications, state plan amendments, and information  about program enrollment and waiting lists. We also conducted interviews  with state Medicaid officials in the five selected states and, as applicable,  officials from other state agencies, such as state aging or behavioral  health agencies that operate Medicaid HCBS programs, to understand  how states structured and delivered their HCBS benefits and any  challenges faced in providing HCBS. Additionally, we interviewed  officials from two managed care organizations (MCO) in each of the two  states (Arizona and Florida) that used a managed care delivery system to  provide LTSS, also referred to as managed long-term services and  supports (MLTSS). We selected the MCOs to include an MCO that serves  a large proportion of LTSS Medicaid beneficiaries in the state and to  achieve diversity in population served. To gather additional information  on factors and challenges that affect Medicaid HCBS programs, we also  interviewed CMS officials, the CMS contractor who produces an annual  report on LTSS expenditures in Medicaid, and representatives from two  aging and developmental disability professional groups.

We conducted our performance audit from July 2017 through August  2018 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.

Individuals who have a limited ability to care for themselves due to  physical, cognitive, or mental disabilities or conditions may require a  range of LTSS that include hands-on assistance with, or supervision of,  daily tasks. Individuals with LTSS needs range from young children to  older adults, and they have varying degrees of difficulty performing  without assistance (1) activities of daily living (ADL), such as bathing,  dressing, toileting, and eating, or (2) instrumental activities of daily living  (IADL), such as preparing meals, housekeeping, using the telephone, and  managing money; they may require full or partial assistance to complete  some—or all—of the ADLs and IADLs.

LTSS are generally provided in two settings: (1) institutional settings,  such as nursing facilities and intermediate care facilities for individuals  with intellectual disabilities; and (2) home and community settings, such  as homes or assisted living facilities. LTSS provided in home- and  community-based settings comprise a wide range of services and  supports to help individuals remain in or return to their homes or  communities. HCBS include personal care services to provide assistance  with ADLs or IADLs, adult day care services, certain home modifications  that allow beneficiaries to remain in their home, non-medical  transportation, respite care for caregivers, and case management  services to coordinate services and supports. Direct care workers— personal care aides, homemakers, companions, and others—provide the  majority of the paid care for individuals with LTSS needs.

Medicaid provides states with a number of options for providing HCBS,  including through state plan benefits and through waivers and  demonstrations. Since 1975, states have had the option to offer personal  care services under their state Medicaid plan, which covers assistance  with ADLs and IADLs, either at home or in another location. States also  have the option to cover HCBS for Medicaid beneficiaries through waivers  and demonstrations, under which states may, for example, provide  services not otherwise covered by Medicaid to designated populations  who may or may not otherwise be eligible for Medicaid services. States  have the option to seek approval for waivers and demonstrations that  allow them to target HCBS to specific populations or conditions, limit the  availability of those services geographically, and limit the number of  individuals served through the use of enrollment caps—actions that are  generally not otherwise allowed under Medicaid, but may enable states to  control costs. Table 1 below summarizes key characteristics of selected  state plan and waiver authorities that states can use to provide HCBS.

The 1915(c) waiver, named for the statutory provision authorizing it in the  Social Security Act, is the primary means through which states provide  HCBS coverage for Medicaid beneficiaries. Added as an option in 1981,  these waivers account for the majority of Medicaid HCBS expenditures.

Under 1915(c) waivers, states may cover a broad range of services for  participants, as long as these services are required to prevent  institutionalization. Therefore, to be eligible, individuals must demonstrate  the need for an institutional level of care by meeting state eligibility  requirements for services in an institutional setting, such as a nursing  facility. Prior to 2014, states were required to have multiple 1915(c)  waivers if they chose to target different populations—using, for example,  one waiver for individuals with developmental disabilities and another for  individuals with physical disabilities. However, beginning in March 2014,  CMS permitted states to combine target groups within a single 1915(c)  waiver as long as the services offered were the same for all groups.

States’ 1915(c) waivers are required by federal law to be cost neutral; that  is, states must show that the average Medicaid expenditures for the  services provided under the waiver are equal to or less than what  average expenditures would be if that same population were to be served  in an institutional setting. States may apply cost neutrality in the  aggregate across all waiver participants—meaning that some individuals  can be more costly to serve in home- and community-based settings than  in an institution—or individually, meaning that spending for each waiver  participant can be no more than what it would cost to serve the individual  in an institution. States also have the option to limit the number of  beneficiaries served under a 1915(c) waiver by establishing a predefined  enrollment cap. States with enrollment caps may establish a waiting list,  and a nationwide survey of state Medicaid officials estimated that there  were over 600,000 individuals on waiting lists for 1915(c) waiver services  in 2015.

The newest Medicaid option for covering HCBS—the Community First  Choice state plan option under section 1915(k) of the Social Security  Act—was established by the Patient Protection and Affordable Care Act  in 2010. Under this option, states must provide personal care services to  assist beneficiaries with ADLs and IADLs and services to support the acquisition of skills necessary for beneficiaries to accomplish these daily  activities, among other things. The Community First Choice option also  allows for the coverage of other services, such as the costs associated  with moving a beneficiary from an institution to a home- or community- based setting. Like the 1915(c) waiver, this option is limited to individuals  who meet the state’s institutional level-of-care criteria, but unlike the  1915(c) waiver, enrollment in a 1915(k) Community First Choice program  cannot be capped. States that offer this benefit receive a 6 percentage  point increase in their federal medical assistance percentage for services  provided under this option.

Medicaid spending on LTSS is significant, representing about 30 percent  of total Medicaid program spending in fiscal year 2016, and the  percentage of LTSS spending used for HCBS has grown over time.  CMS’s annual reports on LTSS expenditures have shown that national  spending for HCBS as a percentage of LTSS spending surpassed the  percentage spent on institutional care in fiscal year 2013 and has  continued to grow, climbing to 53 percent in fiscal year 2014, 54 percent  in 2015, and 57 percent in 2016. At the state level, 29 states spent more   on HCBS than institutional care in fiscal year 2016, but the percentage of  HCBS spending varied widely across states. (See fig. 1.)

As states’ options for providing HCBS within Medicaid and spending on  HCBS have grown, Congress has also authorized temporary programs  aimed at increasing the provision of HCBS.

Money Follows the Person was established by the Deficit Reduction  Act of 2005 as a demonstration grant program to support states’  transition of eligible individuals who want to move from institutional  settings back to the community. As of September 2016, CMS had  awarded a total of about $3.7 billion in grant funding to 44 states.  According to CMS, as of December 2016, funding from the program  had been used to support the transition of more than 75,000  individuals back into the community. Authorization for the Money  Follows the Person program expired at the end of fiscal year 2016,  but states have through fiscal year 2018 to transition new  beneficiaries and through fiscal year 2020 to spend any remaining  grant funds.

The Balancing Incentive Program was created by the Patient  Protection and Affordable Care Act to help states rebalance their  provision of LTSS toward greater use of HCBS. Under the program,  states that spent under 25 percent of their LTSS expenditures on  HCBS in fiscal year 2009 qualified for a 5 percentage point increase in  their federal medical assistance percentage for state HCBS  expenditures. States that spent between 25 and 50 percent were  eligible for a 2 percentage point increase. In return, states agreed to  increase the percentage of LTSS spending for HCBS to achieve a  specific benchmark. Under the program, CMS provided $2.4 billion  in enhanced federal matching payments over 4 years (October 2011 –  September 2015) to 21 states. According to CMS, 15 of the 21 states  met their balancing benchmark by September 2015, when the  program ended.

States can choose among delivery systems, such as fee-for-service and  MLTSS (i.e., managed care), to provide HCBS. Under fee-for-service,  states pay providers directly and on a retrospective basis for each  covered service they deliver. In contrast, in MLTSS, states contract with  MCOs to provide a specific set of covered services to beneficiaries in  return for one fixed periodic payment per beneficiary, typically per  member per month. These payments are referred to as capitation  payments. The use of MLTSS has increased over time; MLTSS spending  rose from $10 billion in fiscal year 2012 to about $39 billion in 2016.  According to a 2018 CMS report, 24 states had implemented 41 MLTSS  programs as of August 2017, and there were about 1.8 million Medicaid  beneficiaries enrolled in MLTSS programs.

Selected States’ HCBS Program Structures Reflect Decisions about Populations to Cover, Whether to Limit Eligibility or Enrollment, and Managed Care Preferences

The structure of the 26 HCBS programs we reviewed in selected states  reflected decisions about which populations states wanted to cover,  whether to limit eligibility for or enrollment in HCBS programs, and  whether the state wanted to provide HCBS through managed care (i.e.,  MLTSS). In two states, settlements resulting from litigation also affected  the structure of HCBS programs.

Decisions about Which Populations to Cover

Four of our five selected states—Florida, Mississippi, Montana, and  Oregon—had multiple HCBS programs (21 in total) that targeted specific  populations. The fifth state, Arizona, used one program to provide HCBS  to individuals who are aged or disabled and those with intellectual or  developmental disabilities. The remaining four programs were not  targeted to specific populations. (See appendix I for a list of the HCBS  programs and populations served in each of the selected states.)

All four of Florida’s HCBS waiver programs targeted specific  populations, such as individuals with intellectual or developmental  disabilities and individuals with familial dysautonomia. Florida’s  HCBS program for intellectually and developmentally disabled  individuals included an individual budgeting model through which the  beneficiaries and their guardians could choose which services they  received and which providers would deliver the services. Such  individual budgeting also allowed beneficiaries the flexibility to make  adjustments in services and providers as their needs changed.

All of Mississippi’s six HCBS programs provided services to targeted  populations, including the aged or disabled and individuals with  severe orthopedic and neurological impairment. Two of the programs  were targeted to individuals with intellectual or developmental  disabilities, including a state plan benefit that provided services that  help beneficiaries develop daily living and social skills, as well as  opportunities to participate in community activities, and promote an  individual’s ability to obtain and maintain employment.

Four of Montana’s six HCBS programs targeted specific populations,  including those with severe disabling mental illness and children with  autism. Officials from Montana told us that one of the reasons for  implementing the program for children with autism was to provide  early intensive treatment to lessen the degree of services needed  later in life. In addition to its programs for specific populations,  Montana also operated two programs that provided personal care  services to a broader Medicaid population requiring assistance with  ADLs and IADLs—the personal care state plan benefit and the  Community First Choice program. Montana officials told us that one of  the factors the state considered when implementing the Community  First Choice program was the 6 percent enhanced federal match for  this program; before implementing the program, Montana projected  that the increase in federal funds would allow the state to serve an  additional 150 beneficiaries per year.

Oregon had nine different HCBS programs, seven of which targeted  specific populations, including children with LTSS needs and different  populations of individuals with intellectual or developmental  disabilities. Like Montana, Oregon also had two personal care  services programs that served all eligible Medicaid beneficiaries—a  state plan benefit and a Community First Choice program. Oregon  officials explained that they were also attracted to the Community First  Choice option due to the enhanced federal match, as well as the  opportunity to expand the array of services available. For example, in  addition to providing personal care services, Oregon’s Community  First Choice program also covers costs associated with transitioning  beneficiaries from institutions to home- or community-based settings,  such as the first month’s rent, utility deposits, bedding, and basic  kitchen supplies.

Decisions about Whether to Limit Eligibility or Enrollment

All five of the selected states had at least 1 HCBS program that limited  eligibility to individuals who require an institutional level of care.  Specifically, 22 of the 26 HCBS programs we reviewed limited eligibility to  this population. The remaining 4 programs—in Mississippi, Montana, and  Oregon—were state plan HCBS or personal care services programs,  which were operated under authorities that do not permit limiting  enrollment to individuals with an institutional level-of-care need.

Four of the selected states—Florida, Mississippi, Montana, and Oregon— had enrollment caps for 1 or more of their HCBS programs, namely all of  the 19 HCBS programs operated under 1915(c) waivers. Some of the  state officials we spoke with told us that they used historical data on  utilization, cost-of-care per person, and the annual number of requests for  enrollment, as well as information on available funding, when determining  their enrollment caps. However, states can also obtain CMS approval to  change their enrollment caps over time to respond to increased demand  or to include additional populations. Oregon officials told us that the state  has generally been able to increase the enrollment cap for the aged or  disabled program as needed in order to meet demand. Montana officials  told us that the enrollment cap for their HCBS program for individuals with  intellectual or developmental disabilities—originally limited to children— was increased when the state decided to expand the program to serve  adults.

The four selected states maintained waiting lists for 12 of the 19 HCBS  programs that limited enrollment through enrollment caps. However,  because states differed on whether they determined eligibility before  adding individuals to the waiting list, information on the number of  individuals on these waiting lists is not comparable across states. For  example, Florida did not screen for eligibility prior to placing individuals on  the waiting list of its aged or disabled waiver, which totaled over 48,000  individuals as of December 2017. By contrast, individuals on Montana’s  much smaller aged or disabled waiting list were pre-screened for  eligibility. In addition, states varied on whether and how they set priorities  for enrollment in the waiver for individuals on the waiting list. For  example, the Montana aged or disabled waiver set priorities for an  individual’s enrollment according to various state criteria, including risk of  institutionalization, and an assessment of informal supports. By contrast,  in Mississippi, individuals on the intellectual or developmental disabilities  waiting list generally gained enrollment into the waiver in order of their  date of eligibility.

Two of the selected states we reviewed—Arizona and Florida—used  MLTSS for one HCBS program. Officials from these states told us the  ability to use managed care contracts to (1) set incentives aimed at  transitioning individuals from institutions to home- and community-based  settings and (2) increase oversight of providers were important factors in  choosing MLTSS to provide HCBS.

Setting incentives for transitions. State officials told us that they  used contract incentives to shift services from nursing facilities to  community-based care in their MLTSS programs. Specifically,  Arizona and Florida used blended capitation rates, meaning that the  rate or amount the states pay MCOs to cover expected costs for each  LTSS beneficiary is the same for all beneficiaries regardless of  whether they are in a nursing home or in a home- and community- based setting. Because HCBS is generally less expensive than LTSS  delivered in institutional settings, blended rates can create a financial  advantage for the MCO to serve as many beneficiaries as possible in  home- and community-based settings. Three of the MCOs we spoke  with provided examples of how they have responded to these  incentives to provide HCBS. For example, an official from one MCO  told us that the MCO had created new positions for “transition  clinicians,” registered nurses who use their medical knowledge to  systematically evaluate beneficiaries in an institution to determine if  they may be a candidate for transition to a community-based setting.  The official explained that after the transition clinician identifies a  potential candidate, the clinician will evaluate other factors, including  the candidate’s current housing options and level of familial support,  in order to ensure that necessary resources are in place when the  beneficiary leaves the institution. In addition, the official said they  facilitated transitions by providing beneficiaries leaving nursing  facilities with a one-time $2,500 transition allowance that can be used  for expenses such as security or utility deposits, furniture, or new  resident fees at an assisted living facility.

Oversight of MCOs. According to officials from Arizona and Florida,  the states chose to use MLTSS because it afforded better oversight of  providers and had the potential to improve patient outcomes.  Specifically, officials said that managing a limited number of MCOs,  who in turn have contracts with HCBS providers, allows for better  oversight and outcomes, and has led to service delivery  improvements, compared to paying providers on a fee-for-service  basis. For example, Florida officials explained that they recently  consolidated three smaller fee-for-service programs into their MLTSS  program. Prior to that consolidation, the three fee-for-service  programs provided HCBS to approximately 7,500 individuals with  AIDS, traumatic brain injury/spinal cord injury, and individuals with  cystic fibrosis. Officials said that they did not believe providers in  these smaller fee-for-service programs were providing good care,  based on service utilization analyses that showed some beneficiaries  were not accessing any services beyond one case management  service per month. Furthermore, the officials also told us that it was  harder to assess quality of care in the fee-for-service programs  compared to MLTSS. Officials said that now that these beneficiaries  receive care under the MLTSS waiver, there is more accountability  and improved quality of care.

Representatives from aging and developmental disability professional  groups we interviewed said that states may also choose to implement  MLTSS programs to achieve greater budget predictability and control  costs. CMS’s recent report on the growth of MLTSS also notes states’  desire for improvements in quality of care and outcomes; increased  access to HCBS providers; and better care coordination, among other  factors. We have previously reported that although MLTSS can provide  states with the opportunity to enhance and encourage the provision of  HCBS, oversight at the state and federal levels is critical to ensure that  individuals with LTSS needs are able to obtain needed care in a timely  fashion. In addition, our prior work on MLTSS payment rates found that  five states—including Arizona and Florida—set clear financial incentives  in their MCO payment rates for greater use of community-based care,  while one state’s rate structure included higher payments for beneficiaries  receiving institutional care. This state’s rate structure could have created  an incentive for MCOs to move higher-cost beneficiaries from the  community to an institution. Additionally, we found that most of the states  reviewed for that prior work were not specifically linking payments with  MLTSS program goals such as beneficiary outcomes and that federal  oversight of states’ MLTSS payment structures was limited. We made  several recommendations to improve CMS’s oversight of states’ payment  structures for MLTSS. CMS agreed with our recommendations and  reported actions it planned to take to address them.

Officials from the three selected states that do not use MLTSS cited  various reasons for this, such as stakeholder opposition and state law  restrictions on enrolling individuals receiving LTSS in managed care. For  example, officials in Oregon explained that stakeholders objected to the  profit motive they assumed an MCO would have, which the stakeholders  believed would compromise quality of care and reduce beneficiaries’  choice of providers. Officials in Montana said that because the state was  rural and had relatively few Medicaid beneficiaries, MLTSS would not be  cost effective.

The Effects of Litigation on the Structure of HCBS Programs

Officials from two of the selected states—Oregon and Mississippi—told  us that settlements resulting from litigation have shaped the structure of  their HCBS programs for certain populations. Oregon officials explained  that a legal settlement in 2001 resulted in the creation of an additional  HCBS program for individuals with intellectual or developmental  disabilities and the elimination of an HCBS waiting list for this population.  In Mississippi, officials explained that as a result of a legal settlement in  2005, the state increased enrollment in certain HCBS programs. As a  result of the settlement, officials said that state case managers contacted  all 1,900 individuals who resided in institutions at the time to determine  their interest in living in a home- and community-based setting. Those  who expressed interest were evaluated to determine if they could live  outside an institution and whether adequate familial or other support was  available. Based on this information, and as a result of additional funding  from the state legislature as a result of the lawsuit, the state was able to  add new beneficiaries to several of its HCBS programs.

Selected States Described Challenges Providing HCBS, Such As Workforce Issues, and Steps Taken to Respond to These Challenges

Officials from the five selected states and MCOs we interviewed  described challenges with providing HCBS, including workforce issues,  such as recruiting and retaining direct care workers; serving beneficiaries  with complex medical and behavioral health needs; and other challenges.  The officials also reported taking steps to respond to these challenges.

Officials from all five selected states and three of the four MCOs we  interviewed described workforce challenges, such as recruiting and  retaining direct care workers and ensuring the availability of HCBS  providers in rural and remote areas. For example, officials from Montana  and Oregon noted that the low wages paid to direct care workers, who  provide hands-on care and assistance with ADLs and IADLs, contribute to  workforce shortages. According to the officials, direct care workers can  typically earn more by working at a fast food restaurant. Officials from  Montana and Mississippi and officials from three of the MCOs said the  workforce shortages are often worse in rural or remote areas, where  travel across long distances is common. For example, the state officials  said that it can be hard to find a provider willing to drive a long distance  each way to work for only a few hours.

To respond to these workforce issues, officials from Montana and  Mississippi and two MCOs reported offering higher payment rates to  providers. In 2017, the Montana legislature approved special funding to  raise the hourly wage for direct care workers providing care in certain  Medicaid HCBS programs in state fiscal year 2019. Officials from  Mississippi said that based on a study of provider reimbursement rates in  one of their HCBS waiver programs, the state raised payment rates for  agencies that employ direct care workers and other providers in 2017.  Officials said they hoped the increase would create an incentive to recruit  and develop providers in more rural areas. Officials from Arizona and  Montana and one MCO also mentioned that Medicaid’s participant- directed options—which allow beneficiaries to draw paid caregivers from  among their family members, friends, and neighbors—had helped to  address HCBS workforce shortages. Arizona officials said that roughly  half of beneficiaries in its HCBS program who were receiving personal  care services got their care from family members, including spouses and  parents of adult children living in the home.

Serving HCBS Beneficiaries with Complex Needs

Officials from four of the five selected states and all four MCOs we spoke  with said they faced challenges providing HCBS for beneficiaries with  complex medical or behavioral health needs. Officials we interviewed said  that complex medical conditions can be hard to accommodate in home-  and community-based settings. For example, officials from Mississippi  and one MCO mentioned difficulties finding appropriate placements for  individuals requiring ventilator services. State and MCO officials also  reported that complex conditions that affect beneficiaries’ behavior, such  as co-occurring developmental disabilities and behavioral health  conditions, dementia, and traumatic brain injury can also create  challenges for providing HCBS, particularly when beneficiaries display  aggressive or other challenging behaviors. Officials from one MCO  explained that these beneficiaries’ challenging behaviors can cause  friction between beneficiaries and their providers and make it harder for  beneficiaries to sustain good relationships with providers.

Officials from the selected states and MCOs we interviewed said that they  have responded to the challenge of serving HCBS beneficiaries with  complex medical or behavioral health needs by (1) supporting the  development of locations in the community to serve individuals with  specific complex needs, (2) training providers, and (3) increasing care  coordination.

Officials from one MCO said that they worked with nurses in the  community to support the development of adult foster homes as an  alternative to institutional care for beneficiaries who require ventilator  services. Similarly, Montana officials said they had reached out to  community partners, such as assisted living facility owners, to educate  them on what Medicaid can and cannot pay for in order to aid them in  developing multiple funding streams for specialized programs for  individuals with traumatic brain injury.

Montana officials and officials from an MCO said they had offered  behavioral health training for providers; Montana offered a mental  health first aid class for providers, and MCO officials reported sending  behavioral health specialists into assisted living facilities to help train  staff on handling challenging behaviors in an effort to avoid  beneficiaries being moved out of the assisted living facility and into an  institutional setting.

Regarding care coordination, Arizona officials reported that the state  is planning to offer beneficiaries with intellectual or developmental  disabilities the choice of a model of care that integrates medical care,  behavioral health care, and certain LTSS, under a single,  comprehensive managed care contract beginning in October 2019.  Officials from one MCO said this model of care will help better identify  needs and coordinate care, for example, for children with autism and  a co-occurring behavioral health condition.

Officials from four selected states and officials from one of the MCOs in  the fifth state told us that limits on funding for HCBS programs were a  challenge, particularly in the context of the growing number of individuals  with LTSS needs.

Officials from Mississippi said that lack of funding from the state  legislature had affected the enrollment of beneficiaries in certain  HCBS waivers. Specifically, officials said that the state was unable  to enroll as many beneficiaries in certain waivers as were approved by  CMS, and that only a limited number of beneficiaries had been added  to these programs for the past 2 or 3 years.

Officials from one MCO in Arizona said that state budget constraints  had led to past reductions in the amount of certain HCBS, such as  respite care.

Oregon officials said that the state experienced budgetary pressures  as a result of implementing its 1915(k) Community First Choice state  plan program, namely, that the increase in federal funding the state  received did not fully cover the increased cost of serving all eligible  beneficiaries as required under this option.

Florida officials said that the state has experienced rapid growth in the  population with LTSS needs and that this growth, combined with  medical advances that prolong life and reduce attrition from waiver  programs, had contributed to a growing waiting list for HCBS.

Officials who cited HCBS funding as a challenge said that they responded  to these challenges by, among other things, providing information to their  legislatures on the projected need for HCBS to inform future funding  decisions. For example, Florida officials said that they educate the  legislature about funding needs by conducting estimating conferences  that produce information that is provided to the Governor and both  legislative houses to use when deciding funding amounts. The  information provided includes the growth in the population of frail elders,  the projected demand for Medicaid, the cost of providing HCBS, and the  cost avoidance achieved by keeping people out of nursing homes.

State officials have also leveraged alternative funding sources—including  federal grants—to help respond to funding limits for HCBS. Officials from  Montana and Mississippi said that CMS’s Money Follows the Person  grant program—which provided state Medicaid programs with funding for  beneficiaries to transition out of institutions—had helped them to serve  more individuals in home- and community-based settings. Montana  officials noted that Money Follows the Person provided the state with  extra help to transition beneficiaries who were the most difficult to serve  and often had multiple co-occurring conditions from institutions to  community-based settings. Mississippi’s Money Follows the Person  program—Bridge to Independence—resulted in a total of 540  beneficiaries moving from institutions to home- and community-based  settings, according to state officials. Mississippi officials also noted that  they maximize HCBS waiver funding by leveraging other potential funding  sources, such as charitable organizations, that could pay for items such  as a wheelchair ramp for a beneficiary before waiver funds were  expended.

State and MCO officials also mentioned other challenges providing  HCBS:

Affordable housing. Officials from Mississippi and Montana and one  MCO cited the lack of affordable housing as a barrier for beneficiaries  wishing to transition out of an institution. The MCO officials we spoke  with said their transitions team, which assists beneficiaries who are  moving out of an institution into the community, includes a housing  coordinator whose job it is to track available housing and help  beneficiaries find housing they can afford.

Limits on HCBS spending per beneficiary. Officials from one MCO  said that the state’s limit on HCBS waiver spending per beneficiary— requiring that spending for HCBS does not exceed the cost of  institutional care—was a challenge, particularly for beneficiaries with  high needs. The officials indicated that the MCO tracks HCBS  spending for each beneficiary and reviews plans of care when a  beneficiary reached 80 percent and 95 percent of the spending limit.  Beneficiaries whose spending exceeds 100 percent for more than a 6- month period can choose to move to an institutional setting, or to  continue to receive more limited HCBS that do not exceed the cost of  care in an institution. In cases where the MCO believed the  beneficiary could not be safely served in the community at that level of  spending, officials said that beneficiaries and their families were  required to sign a form acknowledging the safety risks.

HHS provided technical comments on a draft of this report, which we  incorporated as appropriate.

As discussed with your office, unless you publicly announce the contents  of this report earlier, we plan no further distribution until 30 days after its  issuance date. At that time, we will send copies of this report to the  Secretary of Health and Human Services and other interested parties. In  addition, the report will be available at no charge on the GAO website at  http://www.gao.gov.

If you or your staff members have any questions, please contact me at  (202) 512-7114 or yocomc@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Major contributors to this report are listed in appendix II.

Appendix I: Home- and Community-Based Services Programs in Selected States

Developmental Disabilities  Individual Budgeting Waiver  1915(c)  1915(c) and  1915(j)

Individuals diagnosed with familial  dysautonomia  1915(c)

Children under 21 years of age with  degenerative spinocerebellar disease   1915(c)   1915(c) 1915(c)

Intellectual Disabilities/  Developmental Disabilities  Waiver   1915(c)

Traumatic Brain Injury/Spinal  Cord Injury Waiver   1915(c)

Individuals with traumatic brain injury or  spinal cord injury   1915(i)

Individuals with intellectual or  developmental disabilities  1915(c)

Home and Community-Based  Waiver for Individuals with  Developmental Disabilities   1915(c)

Behavioral Health Severe and  Disabling Mental Illness HCBS  Waiver   1915(c)

State Plan Personal Care  Services   1905(a)(24)   N/A   1915(k)   1915(c)

Medically Involved Children’s  Waiver   1915(c)

Behavioral Intermediate Care  Facility for Individuals with  Intellectual Disabilities Model  Waiver   1915(c)

Intermediate Care Facility for  Individuals with Intellectual  Disabilities (ICF/IID)  Comprehensive Waiver   1915(c)

Intermediate Care Facility for  Individuals with Intellectual  Disabilities (ICF/IID) Support  Services Waiver   1915(c)

Individuals 18 years of age or older with  intellectual or developmental disabilities   1915(i)

State Plan Personal Care  Services   1905(a)(24)  N/A   1915(k)

Appendix II: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Michelle Rosenberg, Assistant  Director; Hannah Locke, Analyst-in-Charge; Romonda McKinney  Bumpus; Krister Friday; Vikki Porter; and Jennifer Whitworth made key  contributions to this report.

Medicaid Assisted Living Services: Improved Federal Oversight of  Beneficiary Health and Welfare Is Needed. GAO-18-179. Washington,  D.C.: January 5, 2018.

Medicaid: CMS Should Take Additional Steps to Improve Assessments of  Individuals’ Needs for Home- and Community-Based Services.  GAO-18-103. Washington, D.C.: December 14, 2017.

Medicaid Managed Care: CMS Should Improve Oversight of Access and  Quality in States’ Long-Term Services and Supports Programs.  GAO-17-632. Washington, D.C.: August 14, 2017.

Medicaid: CMS Needs Better Data to Monitor the Provision of and  Spending on Personal Care Services. GAO-17-169. Washington, D.C.:  January 12, 2017.

Medicaid Managed Care: Improved Oversight Needed of Payment Rates  for Long-Term Services and Supports. GAO-17-145. Washington, D.C.:  January 9, 2017.

Medicaid Personal Care Services: CMS Could Do More to Harmonize  Requirements across Programs. GAO-17-28. Washington, D.C.:  November 23, 2016.

Long-Term Care Workforce: Better Information Needed on Nursing  Assistants, Home Health Aides, and Other Direct Care Workers.  GAO-16-718. Washington, D.C.: August 16, 2016.

Older Adults: Federal Strategy Needed to Help Ensure Efficient and  Effective Delivery of Home- and Community-Based Services and  Supports. GAO-15-190. Washington, D.C.: May 20, 2015.

Medicaid: States’ Plans to Pursue New and Revised Options for Home-  and Community-Based Services. GAO-12-649. Washington, D.C.: June  13, 2012.

People who need long-term services to help with routine daily activities, such as bathing and eating, often prefer to remain in their homes and communities rather than receive care in nursing homes or other institutions. State Medicaid programs must cover nursing home care, but can choose to cover most home- and community-based care—and they’re increasingly opting to do so.

States have faced challenges in providing these services, however, including finding and keeping home care workers, due to the low wages for these services. We found that states have made efforts to respond to these challenges.


Nursing Home Quality: Continued Improvements Needed in CMS's Data and Oversight

Approximately 15,600 nursing homes participating in the Medicare and Medicaid programs provide care to 1.4 million residents—a population of elderly and disabled individuals. To help ensure nursing home residents receive quality care, CMS defines quality standards that homes must meet to participate in the Medicare and Medicaid programs. To monitor compliance with these standards, CMS enters into agreements with state survey agencies to conduct on-site surveys of the state's homes and also collects other data on nursing home quality.

Although CMS and others have reported some potential improvements in nursing home quality, questions have been raised about nursing home quality and weaknesses in CMS oversight.

This statement summarizes GAO's October 2015 report, GAO-16-33 . Specifically, it describes (1) trends in nursing home quality through 2014, and (2) changes CMS had made to its oversight activities as of October 2015. It also includes the status of GAO's recommendations associated with these findings. GAO recently obtained information from CMS officials about steps they have taken to implement the 2015 GAO recommendations.

GAO's October 2015 report found mixed results in nursing home quality based on its analysis of trends reflected in key sources of quality data that the Centers for Medicare & Medicaid Services (CMS) collects.

An increase in reported consumer complaints suggested that consumers' concerns about nursing home quality increased.

In contrast, trends in care deficiencies, nurse staffing levels, and clinical quality measures indicated potential improvement in nursing home quality.

GAO also found that data issues complicated CMS's ability to assess nursing home quality trends. For example:

CMS allowed states to use different survey methodologies to measure deficiencies in nursing home care, which complicates the ability to make comparisons nationwide. GAO recommended that CMS implement a standardized survey methodology across states, and in November 2017 CMS completed national implementation.

CMS did not regularly audit selected quality data including nurse staffing and clinical data (for example, on residents with pressure ulcers) to ensure their accuracy. GAO recommended CMS implement a plan for ongoing auditing of quality data. The agency concurred with this recommendation and has been conducting regular audits of nurse staffing data but does not have a plan to audit other quality data on a continuing basis. GAO continues to believe that regular audits are needed to ensure the accuracy and comparability of nursing home quality data.

GAO's October 2015 report found that CMS had made numerous modifications to its nursing home oversight activities. However, CMS had not monitored how the modifications might affect its ability to assess nursing home quality. GAO found that some modifications expanded or added new activities—such as creating new training for state surveyors on unnecessary medication usage—while others reduced existing activities. For example, CMS reduced the number of nursing homes participating in the Special Focus Facility program—which provides additional oversight of certain homes with a history of poor performance—by over half from 2013 to 2014. CMS officials told GAO that some of the reductions to oversight activities were in response to an increase in oversight responsibilities and a limited number of staff and financial resources. To help ensure modifications do not adversely affect CMS's ability to assess nursing home quality, GAO recommended that CMS monitor modifications of essential oversight activities to better understand the effects on nursing home quality oversight. CMS concurred with this recommendation and told us it has begun to take steps to address it. Such monitoring is important for CMS to better understand how its oversight modifications affect nursing home quality and to improve its oversight given limited resources.

I’m pleased to be here today to discuss our work on nursing home quality  and the Centers for Medicare & Medicaid Services’ (CMS) oversight of  nursing homes. Nationwide, approximately 15,600 nursing homes provide  care to about 1.4 million nursing home residents—a population of elderly  and disabled individuals. To help ensure this population receives quality  care, CMS defines the quality standards nursing homes must meet in  order to participate in the Medicare and Medicaid programs. To monitor  compliance with these standards, CMS enters into agreements with state  survey agencies to conduct required surveys, or evaluations, of the  state’s nursing homes.

For many years, we and the Department of Health and Human Services  (HHS) Office of the Inspector General (OIG) have reported on problems  in nursing home quality and on weaknesses in CMS’s oversight. As early  as 1998, GAO reported on residents in California nursing homes who  received unacceptable care that sometimes endangered their health and  safety. In the intervening two decades, across more than 20 reports,  GAO has repeatedly reported on shortcomings both in the care some  nursing home residents received and in the federal and state oversight of  nursing home care. For example, a 1999 report found that complaint  investigation processes were often inadequate to protect residents, and a  2008 report found federal oversight continued to demonstrate that state  inspections understated serious care problems. In response to identified  weaknesses, CMS and state survey agencies have made some changes in how they conduct oversight of nursing home quality, and some  potential improvements in nursing home quality have been reported in  recent years. For example, CMS has reported a decrease in the  percentage of homes that were cited for serious health deficiencies from  2006 to 2014. In addition, CMS and others have reported on  improvements in specific nursing home clinical measures, such as  reductions in the use of physical restraints, which can be a sign of  improved quality of care.

However, as you know, news stories and reports continue to identify  potential problems in nursing homes. For example, a July 2018 article  from Kaiser Health News highlighted that new data collected by CMS to  evaluate nurse staffing showed most nursing homes had fewer nurses  and caretaking staff than they had previously reported to CMS, with  frequent and significant fluctuations in day-to-day staffing. As part of its  ongoing work, the OIG determined CMS does not have adequate  procedures in place to ensure incidents of potential abuse or neglect of  Medicare beneficiaries in nursing homes are identified and reported. In  light of these concerns and a delay in enforcement of 2016 long-term care  regulatory reforms, as well as a reduction in civil money penalties for non- compliance with federal health and safety requirements, 17 state  attorneys general sent a letter urging CMS to implement the strengthened  regulations and maintain penalties for non-compliance in May 2018.

To help inform today’s discussion, my testimony will focus on the findings  from our October 2015 report examining CMS’s oversight of nursing  home quality. In particular, this statement will address:  1.  trends in nursing home quality through 2014, and  2.  changes CMS had made to its oversight activities as of October 2015.

In addition, I will highlight key actions that we recommended HHS take,  including HHS’s response and the current status of those  recommendations.

While my comments today focus on the findings of our October 2015  report, they are also informed by our large body of work examining  nursing home quality. (See Appendix I for a list of related GAO reports.)

In our October 2015 report, we analyzed four key sets of quality data from  CMS using the most recent data available at that time. We also reviewed  relevant oversight and data documents and interviewed officials from  CMS central office, CMS regional offices, and state survey agencies for a  selected group of states. The 2015 report includes a full description of our  scope and methodology. We also obtained information from CMS on the  status of our 2015 recommendations, as of 2018. We conducted the work  on which this statement is based 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.

Oversight of nursing homes is a shared federal-state responsibility, with  CMS central and regional offices overseeing activities completed by state  survey agencies. Specifically, CMS central office (1) oversees the federal  quality standards nursing homes must meet to participate in the Medicare  and Medicaid programs and (2) establishes the responsibilities of CMS’s  regional offices and state survey agencies to ensure federal quality  standards for nursing homes are met. CMS regional offices oversee state  activities and report results back to CMS central office. Specifically,  regional offices are required to conduct annual federal monitoring surveys  to assess the adequacy of surveys conducted by state survey agencies.  CMS regional offices also evaluate state surveyors’ performance on  factors such as the frequency and quality of state surveys. Finally, in each  state, under agreement with CMS, a state survey agency assesses  whether nursing homes meet CMS’s standards by conducting regular  surveys and investigations of complaints regarding resident care or  safety, as needed.

CMS collects data on nursing home quality through annual standard  surveys and complaint investigations, as well as other sources, such as  staffing data and clinical quality measures.

Standard surveys. By law, every nursing home receiving Medicare or  Medicaid payment must undergo a standard survey during which  teams of state surveyors conduct a comprehensive on-site evaluation  of compliance with federal quality standards. Nursing homes with  consistently poor performance can be selected for the Special Focus  Facility (SFF) program, which requires more intensive oversight,  including more frequent surveys.

Complaint investigations. Nursing homes also are surveyed on an  as-needed basis with investigations of consumer complaints. These  complaints can be filed with state survey agencies by residents,  families, ombudsmen, or others acting on a resident’s behalf. During  an investigation, state surveyors evaluate the nursing home’s  compliance with a specific federal quality standard.

Staffing data. Nurse staffing levels are considered a key component  of nursing home quality and are often measured in total nurse hours  per resident day. Higher nurse staffing levels are typically linked with  higher quality nursing home care.

Clinical quality measures. Nursing homes are required to provide  data on certain clinical quality measures—such as the incidence of  pressure ulcers—for all residents to CMS. CMS currently tracks data  for 18 clinical quality measures.

CMS publicly reports a summary of each nursing home’s quality data on  its Nursing Home Compare website using a five-star quality rating. The  Five-Star Quality Rating System assigns each nursing home an overall  rating and three component ratings—surveys (standard and complaint),  staffing, and quality measures—based on the extent to which the nursing  home meets CMS’s quality standards and other measures. In a 2016  report, we found that CMS did not have a systematic process for  prioritizing recommended changes to improve its Nursing Home Compare  website and that several factors limited the ability of CMS’s Five-Star  Quality Rating System to help consumers understand nursing home  quality and choose a home. We recommended that CMS establish a  process to evaluate and prioritize website improvements and add  explanatory information about the Five-Star System to Nursing Home  Compare.  HHS agreed and in 2018 completed actions on these  recommendations, but has not yet acted on the other recommendations,  including providing national comparison information that we maintain are  important to help enable consumers to understand nursing home quality  and make distinctions between nursing homes.

Nursing Home Quality Data Show Mixed Results, Although Data Issues Complicate Ability to Assess Quality Trends Data on Nursing Home Quality Showed Mixed Results

In our October 2015 report examining trend data that give insight into  nursing home quality, we found that four key data sets showed mixed  results, and data issues complicated the ability to assess quality trends.

Nationally, one of the four data sets—consumer complaints—suggested  consumers’ concerns over nursing home quality increased from 2005 to  2014. However, the other three data sets—deficiencies, staffing levels,  and clinical quality measures—indicated potential improvement in nursing  home quality (see Table 1). Specifically, we found consumer  complaints—which can originate from residents, families, ombudsmen, or  others acting on a resident’s behalf—had a 21 percent increase from  2005 to 2014. In contrast, nurse staffing levels increased 9 percent from  2009 to 2014 and selected quality measure scores showed decreases in  the number of reported quality problems, such as falls resulting in major  injury from 2011 to 2014.

In addition, we identified 416 homes in 36 states that had consistently  poor performance across the four data sets we examined. Of the 416  homes, 71 (17 percent) were included in the Special Focus Facility (SFF)  program at some point between 2005 and 2014.

Data Issues Complicated CMS’s Ability to Assess Quality Trends

In our October 2015 report, we found CMS’s ability to use available data  to assess nursing home quality trends was complicated by various issues  with these data, which made it difficult to determine whether observed  trends reflect actual changes in quality, data issues, or both. CMS has  taken some actions to address these data complications, however, more  work is needed.

Consumer complaints: The average number of consumer complaints  reported per nursing home increased in the 10 years of data we  examined, although it is unclear to what extent this can be attributed to a  change in quality or to state variation in the recording of complaints.  Some state survey agency officials explained that changes in how they  recorded complaints into CMS’s complaint tracking system could in part  account for the jump in reported complaints. In addition, officials at one  state survey agency explained the increase in complaints could also  reflect state-level efforts to provide consumers with more user-friendly  options for filing complaints. Similarly, in April 2011, we found differences  in how states record and track complaints.

Deficiencies cited on standard surveys: The decline in the number of  serious deficiencies—deficiencies that at a minimum caused a harm to  the resident—in the data we examined may have indicated an  improvement in quality, although it may also be attributed to  inconsistencies in measurement. For example, the use of multiple survey  types, such as both traditional paper-based surveys and electronic  surveys, to conduct the standard survey that every nursing home  receiving Medicare or Medicaid payment must undergo complicates the  ability to compare the results of these surveys nationally. In our October  2015 report, we recommended CMS implement the same survey  methodology across all states; HHS agreed with this recommendation  and in November 2017 completed its national implementation of this  electronic survey methodology.

Nurse staffing: CMS data showed the average total nurse hours per  resident day increased from 2009 through 2014, although CMS did not  have assurance these data were accurate. Many of the regional office  and state survey agency officials we spoke with expressed concern over  the self-reported nature of these data, noting that it may be easy to  misrepresent nurse staff hours. At the time of our 2015 report, CMS was  in the process of implementing a system to collect staffing information  based on payroll and other verifiable data and has now completed that  implementation, as required by law. We recommended in 2015 that CMS  establish and implement a clear plan for ongoing auditing of its staffing  data and other quality data. HHS agreed with this recommendation and in  July 2018 CMS provided us with documentation that it was conducting  regular audits of this new nurse staffing data. According to CMS, facilities  experienced challenges submitting complete and accurate data in the  early stages, however, as of April 2018 the agency has begun relying on  the payroll data to calculate the staffing measures that it posts in Nursing  Home Compare and uses in the Five-Star Quality Rating System.

Selected quality measures: Nursing homes generally improved their  performance on the eight selected quality measures we reviewed,  although it is unclear to what extent this can be attributed to a change in  quality or possible inaccuracies in self-reported data. Like the nurse  staffing data used by CMS, data on nursing homes’ performance on these  measures were self-reported, and until 2014 CMS conducted little to no  auditing of these data to ensure their accuracy. In our 2015 report, we  found CMS had begun taking steps to help mitigate the problem with self- reported data by starting to audit the data in 2015; however, the agency  did not have clear plans to continue the audits beyond 2016. As such, in  our recommendation we indicated the need for ongoing auditing of data  used to calculate clinical quality measures. As of August 2018, CMS has  not provided us a plan for ongoing auditing of its clinical quality measures  and we continue to believe that CMS should establish and carry out such  a plan.

Collectively, these data issues have broader implications related to  nursing home quality trends, including potential effects on the quality  benchmarks CMS sets and consumers’ decisions about which nursing  home to select. Furthermore, data used by CMS to assess quality  measures are also used when determining Medicare payments to nursing  homes, so data issues—and CMS’s internal controls related to the data— could affect the accuracy of payments. Moreover, the use of quality data  for payment purposes will expand in fiscal year 2019 when a nursing  home value-based purchasing program will be implemented, which will  increase or reduce Medicare payments to nursing homes based on  certain quality measures.

CMS Had Modified Oversight Activities by 2015, But Had Not Monitored Potential Effect on Nursing Home Quality Oversight

Our 2015 report found that CMS had made numerous modifications to its  nursing home oversight activities in recent years, but had not monitored  the potential effect of these modifications on nursing home quality  oversight. Some of these modifications expanded or added new oversight  activities—for example, CMS expanded the number of tools available to  state surveyors when investigating medication-related adverse events,  increased the amount of nursing home quality data available to the public,  and created new trainings for surveyors on unnecessary medication  usage. However, other modifications reduced existing oversight  activities.

In 2015, we highlighted modifications that reduced two existing oversight  activities—the federal monitoring survey program and the SFF program.

Federal monitoring surveys: CMS reduced the scope of the federal  monitoring surveys regional offices use to evaluate state surveyors’  skills in assessing nursing home quality. CMS requires regional  offices to complete federal monitoring surveys in at least 5 percent of  nursing homes surveyed by the state each year. Starting in 2013,  CMS required fewer federal monitoring surveys to be standard  surveys and allowed more monitoring surveys to be the narrower  scoped and less-resource intensive revisits and complaint  investigations.

Special Focus Facilities: CMS reduced the number of nursing  homes participating in the SFF program. In 2013, CMS began to  reduce the number of homes in the program by instructing states to  terminate homes that had been in the program for 18 months without  improvement from participating in Medicare and Medicaid. As we  have previously reported, between 2013 and 2014, the number of  nursing homes in the SFF program dropped by more than half—from  152 to 62. In 2014, CMS began the process of re-building the number  of facilities in the SFF program; however, according to CMS officials,  the process would be slow, and as of August 2018 there were 85  SFFs.

In 2015, CMS said some of the reductions to oversight activities were in  response to an increase in oversight responsibilities and limited number  of staff and financial resources. Specifically, CMS officials said increasing  oversight responsibilities and a limited number of staff and financial  resources at the central, regional, and state levels required the agency to  evaluate its activities and reduce the scope of some activities. In the  October 2015 report, we recommended CMS monitor oversight  modifications to better assess their effects; HHS agreed with the  recommendation and told us they are beginning to take steps to address  this issue. We maintain the importance of monitoring to help CMS better  understand how its oversight modifications affect nursing home quality  and to improve its oversight given limited resources.

Chairman Harper, Ranking Member DeGette, and Members of the  Subcommittee, this concludes my prepared statement. I would be  pleased to respond to any questions that you may have at this time.

For further information about this statement, please contact John E.  Dicken at (202) 512-7114 or dickenj@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this testimony. In addition to the contact named above,  key contributors to this statement were Karin Wallestad (Assistant  Director), Sam Amrhein, Summar Corley, Pam Dooley, Will Simerl, and  Jennifer Whitworth.

Nursing Homes: Consumers Could Benefit from Improvements to the  Nursing Home Compare Website and Five-Star Quality Rating System.  GAO-17-61. Washington, D.C.: November 18, 2016.

Skilled Nursing Facilities: CMS Should Improve Accessibility and  Reliability of Expenditure Data. GAO-16-700. Washington, D.C.:  September 7, 2016.

Nursing Home Quality: CMS Should Continue to Improve Data and  Oversight. GAO-16-33. Washington, D.C.: October 30, 2015.

Health Care Transparency: Actions Needed to Improve Cost and Quality  Information for Consumers. GAO-15-11. Washington, D.C.: October 20,  2014.

Nursing Homes: More Reliable Data and Consistent Guidance Would  Improve CMS Oversight of State Complaint Investigations. GAO-11-280.  Washington, D.C.: April 7, 2011.

Nursing Homes: Complexity of Private Investment Purchases  Demonstrates Need for CMS to Improve the Usability and Completeness  of Ownership Data. GAO-10-710. Washington, D.C.: September 30,  2010.

Poorly Performing Nursing Homes: Special Focus Facilities Are Often  Improving, but CMS’s Program Could Be Strengthened. GAO-10-197.  Washington, D.C.: March 19, 2010.

Nursing Homes: Addressing the Factors Underlying Understatement of  Serious Care Problems Requires Sustained CMS and State Commitment.  GAO-10-70. Washington, D.C.: November 24, 2009.

Nursing Homes: Opportunities Exist to Facilitate the Use of the  Temporary Management Sanction. 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. 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.  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. GAO-08-517. Washington, D.C.: May 9, 2008.

Nursing Homes: Efforts to Strengthen Federal Enforcement Have Not  Deterred Some Homes from Repeatedly Harming Residents.  GAO-07-241. Washington, D.C.: March 26, 2007.

Nursing Homes: Complaint Investigation Processes Often Inadequate to  Protect Residents. GAO/HEHS-99-80. Washington, D.C.: March 22,  1999.

California Nursing Homes: Care Problems Persist Despite Federal and  State Oversight. GAO/HEHS-98-202. Washington, D.C.: July 27, 1998.

This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.

About 15,600 nursing homes participate in Medicare and Medicaid. To help ensure that residents receive quality care, the Centers for Medicare & Medicaid Services (CMS) collect data (such as nurse staffing levels) on these nursing homes.

We testified that CMS's data showed mixed results—they showed an increase in consumer complaints along with improvements in the quality of care. We found that data issues (e.g., different states using different data collection methods) complicated CMS’s ability to assess whether the results reflected actual changes. We made recommendations to address these issues in the report on which this testimony is based.