Medicaid. Non-Medicaid state funding. CMS Took Modest Steps to Address Recent Funding Trends and Manage Survey Funding Allocations

Federal funding for state surveys increased from fiscal years 2000 through  2002 but was nearly flat from fiscal years 2002 through 2007. In inflation- adjusted terms, funding fell 9 percent from fiscal years 2002 through 2007. CMS has used the budget analysis tool five times: (1) twice to distribute  annual increases in Medicare funds to states (after allocating a small  across-the-board inflation increase), and (2) three times to redistribute  Medicare funds at the end of the fiscal year to states that spent more than  their initial allocations by using state funds and had requested  supplemental funding. Almost All States Were Unable to Complete Their Survey Workload, and Pinpointing the Cause Is Difficult

Only one state, Arkansas, was able to complete all surveys in tiers 1  through 3 in fiscal year 2006, but pinpointing the cause is difficult because  (1) several factors such as workload, funding, staffing, and management  could have had an impact and (2) distinguishing the extent to which each  factor contributed to state completion rates and the quality of each states’  surveys is challenging. This decrease was due to a decline in the  number of the most frequently surveyed facilities that also require more  time to survey compared to other facilities. Although complaint investigations represent  a significant portion of state workload, CMS officials told us that the  agency lacks complete and reliable data on complaints received and  investigated. The workforce instability arises  mostly from noncompetitive salaries, which result in the hiring of less  qualified candidates, and hiring freezes. However, officials from 13 states are  concerned that any increase in surveyor salaries may not be sustainable in  the long-term without increases in state Medicare allocations. In one of these states, CMS told us that performance issues raised  concerns about the management of survey activities. CMS Oversight of States’ Use of Funds Is Limited

CMS oversight of states’ use of funds for survey activities is limited. Most told us that these  rates have not been reviewed in recent years, even though federal survey  and state licensure requirements may have changed over time. Regional  officials told us that they do not verify that states actually contributed  funds in a manner consistent with their shares, noting limits on their  authority to require state data and states’ refusal to provide it voluntarily. As a result, CMS does  not know if states are contributing their own funds appropriately (see   fig. 6). CMS has made limited progress in ensuring that federal Medicare  allocations reflect state workloads. The budget analysis tool that CMS developed to align survey  funding with state workloads has been used only incrementally to address  state funding inequities, rather than adjusting the mismatch between  federal allocations and states’ current survey workloads. For  example, seven states completed their nursing home surveys in fiscal year  2006, but CMS found that they missed serious deficiencies on more than a  quarter of federal comparative surveys. Non- Medicaid state shares for nursing homes vary widely across states, state  contribution rates are not determined consistently, and CMS officials do  not collect information on such state expenditures. The evidence is mixed on whether federal funding has kept pace with the  changes in states’ required survey workload—the workload that states  would have to complete to meet statutory and CMS survey frequency  requirements. On the other hand, most states told us that survey frequencies  of 6 to 10 years for many facilities could adversely affect beneficiaries. We believe that these and  other limitations of the current funding approach will continue to frustrate  CMS’s efforts to support and oversee state survey activities. Differentiating between Medicare and Medicaid. CMS oversight of states’ use of federal funds. Appendix III: Federal Funding for Survey Activities in Actual and Inflation-Adjusted Dollars, Fiscal Years 2000 through 2007

Appendix III: Federal Funding for Survey  Activities in Actual and Inflation-Adjusted  Dollars, Fiscal Years 2000 through 2007 Change from 2000 to 2007  Change from 2000 to 2007  (9.0%)

Appendix IV: Number of and Percentage Change in Facilities Subject to State Standard and Validation Surveys, 2000 to 2007

Appendix IV: Number of and Percentage  Change in Facilities Subject to State Standard  and Validation Surveys, 2000 to 2007 (percentage change)
Facilities subject to state standard surveys  906 (31) 1,099 (28) 577 (27)  1,340 (20)  447 (13) 17 (3)
Outpatient physical therapy or outpatient speech pathology services  42 (1) 101 (5)
Intermediate care facility for the mentally retarded   -324 (-5) -1,119 (-7) -125 (-19) 254 (N/A) 87 (N/A) 3,302 (7)
Facilities subject to state validation surveys  769 (138) 405 (614) 903 (534) 185 (N/A) -173 (-4) 2,089 (39) 5,391 (10)
The total number of organ transplant centers is as of January 2008; collectively these centers  operated 844 organ transplant programs. Appendix V: Change in States’ Required Survey Workload from Fiscal Year 2000 to Fiscal Year 2007

In order to determine how states’ required survey workload—the  workload that states would have to complete to meet statutory and CMS  survey frequency requirements—has changed from fiscal year 2000 to  fiscal year 2007, we analyzed OSCAR and CMS data for fiscal years 2000  and 2007. Nursing Home Deaths: Arkansas Coroner Referrals Confirm Weaknesses  in State and Federal Oversight of Quality of Care.
Why GAO Did This Study

Americans receive care from tens of thousands of health care facilities participating in Medicare and Medicaid. To ensure the quality of care, CMS contracts with states to conduct periodic surveys and complaint investigations. Federal spending on such activities totaled about $444 million in fiscal year 2007; states are expected to contribute their own funds both through the Medicaid program and apart from that program. GAO evaluated survey funding, state workloads, and federal oversight of states' use of funds since fiscal year 2000 to determine if federal funding had kept pace with the changing workload. GAO analyzed (1) federal funding trends from fiscal years 2000 through 2007 and CMS's methodology for determining states' allocations and spending, (2) CMS data on the number of participating facilities and completed state surveys, and (3) CMS oversight of state spending. GAO interviewed state officials and collected data from 28 states.

What GAO Found

Federal funding for state surveys increased from fiscal years 2000 through 2002 but was nearly flat from fiscal years 2002 through 2007. In inflation-adjusted terms, funding fell 9 percent from fiscal years 2002 through 2007. CMS has made incremental adjustments to improve its management of state allocations. It shifted federal funding from support contracts to surveys, increasing state allocations about 1 percent in fiscal years 2006 and 2007. For some facilities without statutory survey frequencies, CMS increased the time between surveys from 6 years to 10 years--a schedule that may further increase the chance of undetected quality problems. CMS also developed a budget analysis tool to help address the mismatch between federal allocations and states' current survey workloads, but use of the tool has been limited. Most states, including those that spent more than their initial federal allocations, did not complete CMS's survey workload priorities in fiscal years 2006 and 2007, though the required survey workload--the workload that states would have to complete to meet statutory and CMS survey frequency requirements--decreased about 4 percent nationwide from fiscal years 2000 to 2007. A decrease in the number of the most time-consuming and frequently surveyed facilities, such as nursing homes, offset the increase in other facilities. CMS lacked consistent and reliable data to measure workload changes in other areas such as complaint investigations. States reported that workforce instability due to noncompetitive surveyor salaries and hiring freezes hindered their workload completion but CMS has little influence over state hiring. Among seven states that completed their nursing home surveys, CMS found that 25 percent or more of some of their surveys missed serious deficiencies. According to CMS, the performance of one of these states raised concerns about the state's management of survey activities. There is little oversight of state non-Medicaid contributions intended in part to reflect the benefit states derive from participating in federally sponsored oversight of facilities. State contribution rates have not been reviewed in recent years. CMS officials told GAO that the agency does not collect information on state expenditures to help ensure that states are contributing funds consistent with those rates, noting limits on their authority to require submission of such data. CMS believes, however, that federal funding may not be sufficient and that state spending above the initial Medicare allocation represents state funds in addition to the non-Medicaid share. The evidence is mixed on whether federal funding has kept pace with the changing workload. The required survey workload decreased nationwide but most states told GAO that survey frequencies of 6 to 10 years for many facilities could adversely affect beneficiaries. Moreover, distinguishing the impact of funding, staffing, and management on state workloads is difficult. GAO believes that these and other weaknesses in CMS's current funding approach will continue to frustrate the agency's efforts to support and oversee state survey activities.