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8 Actions Required and Cost Implications of the Recommendations The recommendations contained in Chapters 3, 4, 5, and 6 will require the following major implementing actions: (1) amending the Social Security Act and the Older Ameri- cans Act, (2) promulgating new survey anti certification regulations and major revisions of existing regulations, (3) designing and testing a standard procedure for resident assessment to be done by nursing home staff and then developing training materials and launching a major program to train all RNs and LPNs (LVNs) in nursing homes to conduct such assessments properly, and (4) designing and testing new survey and certification instruments and procedures and training state and federal regulatory personnel to conduct the new standard and extended surveys. The recommendations are likely to affect both the costs of regulation and the costs of resident care. Although insufficient information is available to make quantitative estimates, the implications of the recommendations for both types of costs are discussed in general terms in the last section of this chapter. 203

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204 / NURSING HOME CARE LEGISLATIVE ACTIONS REQUIRED Amendments to the Social Security Act The Social Security Act will have to be amended to implement the following recommendations: 1. Recommendation 3-1. Consolidate the two levels of care into one and have current SNF standards (with the other changes recommended) apply to all nursing homes. The two levels of care are now specified in Title XIX of the Social Security Act. Since the two levels of care are embedded in current state and federal policy, eliminating the distinctions between ICFs and SNFs will require changes in language in many sections of the law and also will require numerous changes in both federal and state regulations. 2. Recommendations 3-2 through 3-7. These recommen- dations involve major revisions in the language and structure of the existing regulations, including promul- gating new conditions of participation covering quality of life, quality of care, resident assessment, residents' rights, and administration. The following current conditions would be reclassified as standards under the administration condition: governing body and management, utilization review, transfer agreements, disaster prepared- ness, medical direction, laboratory and radiological services, and medical records. Ten of the current condi- tions of participation have statutory authorization either in Title XVIII or Title XIX of the Social Security Act. These are I. Compliance with Federal, State, and Local Laws II. Governing Body IV. Physician Services V. Nursing Services VII. Rehabilitation Services VIII. Pharmaceutical Services XIII. Medical Records XIV. Transfer Agreements XV. Physical Environment XVIII. Utilization Review

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ACTIONS REQUIRED AND COSTS / 205 It will be necessary to modify the statutory language in some cases to authorize the recommended revisions in the language and structure of the conditions and standards of participation. 3. Recommendation 4-7. The HCFA should increase the federal share of funding of state survey and certification activities from 75 percent to 100 percent. Between 1965 and 1972, Title XIX authorized federal funding of 75 percent of the states' costs of surveyor salaries, travel, and training for survey and certification of Medicaid facilities. This was increased to 100 percent between 1972 and 1980. In 1980, Congress reduced federal participation to 75 percent. Restoration of 100 percent federal funding will require an amendment to Title XIX. 4 Recommendation 4-11. This recommends that HHS be given authority to withhold a portion of a state's federal matching funds for Medicaid as a sanction to be used against any state that does not carry out its survey and certification responsibilities properly. Since this is a politically sensitive matter, statutory authority specifying the circumstances under which the sanction may be used seems necessary because the current law is not clear on this point. 5. Recor,~n~endation 4-14. The HCFA should use federal surveyors to inspect and certify state-owned institutions. 6. Recommendations 5-2 and 5-4. The HCFA should require states to have a standard, federally prescribed set of intermediate sanctions to be used in specified circumstances to improve enforcement of the conditions and standards. The HCFA also will need statutory authority to authorize states to decertify facilities that have a record of chronic or repeated violations of important conditions and standards, rather than accept another plan of correction. 7. Recommendation 5-3. The HCFA should have intermediate sanctions comparable to those available to the states. At present, the only federal intermediate sanction authorized by law (in 1981) is a ban on admissions, but, as of February 1986, the regulation for implementing this authority had not yet been promulgated.

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206 / NURSING HOME CARE 8. Recommendation 5-5. The HCFA should develop guidelines to make legal appeals of the Recertification process less permissive. Although this may not require statutory action, it probably would be more effective if explicitly authorized by law. Amendments to the Older Americans Act The following recommendation will require amendments to the Older Americans Act: Recommendation 6-2. The ombudsman program should be strengthened by the following statutory actions: i authorizing the ombudsman program as a separate title n the Older Americans Act; authorizing federal-state matching formula grants for the ombudsman program; authorizing a statutory national advisory council; authorizing access to nursing homes and to residents' records (with the residents' permission) by certified substate and local ombudsmen; authorizing state legal assistance for ombudsmen; and exempting ombudsmen from lobbying restrictions in OMB Circular A-122. REVISION AND ADDITION OF SURVEY AND CERTIFICATION REGULATIONS With acceptance of most of the recommendations, the process of revising the current regulations governing the survey and certification process would have to be done in three phases: (1) Drafting of the new conditions of participation covering quality of life, quality of care, resident assessment, and residents' rights, and revision of some of the existing conditions and standards could be started immediately, although they could not be formally proposed for issuance until the statutory changes have been enacted; (2) after the amendments to the Social Security Act have been enacted, their detailed

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ACTIONS REQUIRED AND COSTS / 207 requirements will have to be reflected in the regulations, and (3) detailed specifications of the standards governing survey procedures and facility-administered resident assessment procedures will have to be deferred until completion of the design and testing of the instruments and procedures and training of thousands of state regulatory and nursing home personnel. This development phase may require 2 or 3 years to complete. Preliminary work on developing and testing the two new survey instruments and procedures--the standard survey and the extended survey--could begin promptly. Design of these instruments has to be based on the revised conditions of participation and standards. Policy decisions on the latter must be made before the scope of the instruments can be finally set. The survey procedures depend on access to standard resident assessment data, so that high priority should be given to developing the resident assessment data set, the procedures for collecting it, recording the data, prescribing standard case-mix definitions for survey purposes, specifying sampling procedures, and developing training programs and materials for nursing home staff who will be required to conduct resident assessments. DESIGN AND TESTING ACTIVITIES Resident Assessment Data Design, testing, and installation of a standard facility-administered resident assessment system is a large and complex undertaking. It involves several tasks, each of which requires considerable technical knowledge and skill. The main tasks are- 1. Standard assessment elements must be selected for recording in a prescribed way. A standard approach to resident assessment will be necessary to get comparable information on all residents in nursing homes. Fortunately, so much research has been done on resident assessment that this task can be accomplished quickly. The data probably will be a hybrid of several of the

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208 / NURSING IFIOME CARE instruments that already have been designed and tested and that have been shown to be effective and reliable. It is very important that the required standard data be viewed by facility professional staff as a subset of that considered to be essential for sound resident-care planning and facility management. (The amount of data on each resident needed by the facility for developing an individual's plan of care usually will be much more extensive than that needed for regulatory purposes.) 2. Standard assessment procedures must be designed for use by nursing home staff in assessing residents, scoring, and recording the data. Guidelines, an instruction manual, and problem resolution techniques will have to be developed and tested. 3. Methods must be developed to ensure the reliability of the data collectors. A training program and training materials for RNs and LPNs (LVNs) will have to be prescribed. Auditing procedures (including sampling procedures) will have to be developed and pass/fail criteria specified that are based on the results of interrater reliability tests. (The standards may vary for various aspects of the data--higher consistency of scoring might be required for functional status assessments than for mental or behavioral status.) Instruction manuals will then have to be developed and the surveyors in every state will have to be trained to audit the accuracy of facility resident assessments as part of the new survey process. 4. Policy decisions must be made on how frequently assessments are to be conducted on each resident. For example, the first assessment should be done on admission, then reassessments might be required once a month for the next 2 months, and once every 3 months thereafter. The frequency of regular assessments is a major issue and the decision should be based, ideally, on empirical evidence. 5. Case-mix groupings must be defined on the basis of resident assessment scores. The groupings will be needed for survey sampling purposes. The initial groupings are likely to be based on limited data and will need to be revised as empirical evidence from longitudinal assessment data become available and analysis reveals that alternate

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ACTIONS REQUIRED AND COSTS / 209 case-mix groupings would be more appropriate for sampling purposes. 6. Sampling algorithms must be developed for auditing the accuracy of the facility's resident assessment data and for conducting the standard survey. Statistically sound sampling is essential to establish both public and provider confidence in the validity of a somewhat abbreviated standard survey process. Once this manual system for resident assessment data has been introduced and implemented in nursing homes, the steps needed to gain ready access to the data for regula- tory purposes should be studied. Many nursing homes are likely to enter the data into their own computers to take full advantage of it for their own management purposes. But many others--probably most--are unlikely to do so at first. A study of the important regulatory and other government uses for the data, and ways to obtain access to it, will be needed. The study will have to examine and propose methods for dealing with numerous technical and policy questions inherent in handling large data sets about individuals. The product should be a proposed plan that would permit access to and analysis of the data on a regular basis to improve the precision and objectivity of the new regulatory system. Survey Instruments and Procedures The development of a short, resident-centered, outcome- oriented standard survey procedure and a complementary extended survey procedure must reflect the requirements of the new and revised conditions of participation and standards if the findings are to be enforceable. Although development of the survey instruments, the scoring criteria and pass/fail standards, and the procedures for conducting the surveys can be tested on the assumption that the revised conditions and standards will in fact be promulgated, they cannot be introduced until the proposed new and revised conditions and standards become official. Moreover, the new standard survey is tied to the

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210 / NURSING HOME CARE availability of data from the assessment system--a system that will have to be developed and tested. The time required to complete each of the three sets of activi- ties--(l) enactment of amendments to the Social Security Act and promulgation of new and revised conditions, (2) development and introduction of the resident assessment system, and (3) development and introduction of the new survey and certification procedures--is likely to be 2 to 3 years. It therefore would be desirable to proceed simultaneously with all three activities, making scheduling and substantive adjustments necessary to fit the policy decisions as they are made. If all goes well, the entire system could be in place and functioning in 3 years. COST IMPLICATIONS OF THE RECOMMENDATIONS The effects of the recommendations on the costs of regulation and on the costs of providing care to residents are not easily calculated for two reasons: (1) The quantitative and qualitative changes in behavior of the various actors in the system, and the effects on efficiency of the regulatory agencies and nursing homes, cannot be predicted on the basis of current data; (2) current data about staffing and costs in nursing homes and in state regulatory agencies are not available in sufficient detail; and (3) some immediate costs are likely to produce long-term savings that cannot be estimated. Given these uncertainties, any estimates made--even with the assistance of a very elaborate cost model--would have to present a wide range of costs to account for interactions of varying assumptions. For this reason, the committee chose not to divert any of its limited time and resources to this purpose. It concentrated on developing recommendations that will improve the regulatory system's ability to ensure better quality of care and quality of life for nursing home residents.

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ACTIONS REQUIRED AND COSTS / 211 Regulatory Costs The combined effects on state regulatory agency staffing requirements of (1) the integration of inspection of care with the survey process, (2) the resident assessment system, (3) the use of the standard and extended survey system, and (4) increased enforcement capabilities is by no means clear. Most states now use, and are funded for, separate staff to conduct inspections of care (IOC). In those states, integrating the functions of surveying nursing homes with IOC would eliminate the requirements for separate staff and the additional travel, training, and overhead costs. However, the new system will require well-qualified and well-trained survey staff and this may, in some states, require larger survey agency budgets. How much larger will depend on the performance of the nursing homes. If the introduction of the resident assessment system and the standard survey improve performance of the poor and marginal facilities so that fewer extended surveys are necessary, there may be no significant requirement for additional staff. On the other hand, if many extended surveys should be necessary. this could lead to reauire- ments for staff increases. A, The experience is likely to vary widely among the states. Similar uncertainties pertain to the costs of strengthening enforcement capabilities. There will be costs for developing, testing, and conducting the training necessary to install the resident assessment system and the new survey instruments and procedures. These costs will have to be borne largely by the HCFA, both in its own operating budget and in larger federal grants to the states to carry out state survey and certification responsibilities. The federal regional offices will need more staff to strengthen their look-behind capabilities and to conduct surveys of state-owned facilities. On the other hand, they will be relieved of the responsibility for certifying Medicare facilities, so some of the staff devoted to those time-consuming activities could be shifted to the increased oversight activities. ,

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212 / NURSING HOME CARE The cost effects of strengthening the ombudsman program are not entirely clear. The federal and state contribu- tions to the ombudsman program are now too small; they will have to be increased if the program is to become more effective. But the effects of an improved ombudsman program on state survey agency costs are not clear. One possibility is that it could increase the number of complaints that have to be investigated by the survey agency. But another is that it could have the opposite effect: The volume of complaints could go down as ombudsmen work more effectively in resolving problems within nursing homes. Probably both types of effects will occur, but it is clearly impossible to make any quanti- tative forecasts of the net effect on costs. Program Costs The recommendation to eliminate ICFs will increase the costs of care in some states more than in others, but it is not clear by how much. In many states that have mainly ICE facilities, the actual average staffing is already well above the minimum federal requirements because the homes have had to accommodate a growing proportion of heavy-care residents. Nevertheless, requiring compliance with SNF standards almost certainly will increase costs in some nursing homes in some states. This may lead to increases in Medicaid budgets in some states. The costs to the nursing homes of the resident assessment system are not likely to be significant. All nursing homes should be doing resident assessments as a basis for care planning anyway. The good nursing homes have been conducting very comprehensive assessments of their residents as part of their normal resident care activities. The federal requirement to do so in a stan- dard way should not add significantly to resident care costs. In sum, the regulatory changes recommended in this report will increase both regulatory and program costs in the short term, but the benefits to society and to the nursing home residents will be well worth the additional costs.