Every state, and the District of Columbia, has a State Survey Agency, that, among other tasks, is responsible for conducting compliance inspections of nursing facilities that provide care to Medicare and Medicaid beneficiaries  For facilities that participate in Medicare (and more than 96% of nursing homes nationwide did in 2006), State Survey Agencies make recommendations to the Centers for Medicare & Medicaid Services' (CMS) Regional Offices about civil money penalties (CMPs) that CMS should impose against nursing facilities found to be violating federal certification requirements.

Federal regulations call violations of federal requirements "deficiencies."  They categorize deficiencies by their scope (number of residents affected) and severity (seriousness of actual or potential harm to residents), using a 12-box enforcement grid, with letter A representing the least severe deficiencies and letter J representing the most severe.  The regulations authorize per day CMPs in two categories: $50 to $3,000 per day for non-jeopardy deficiencies (boxes D-I) and $3,050 to $10,000 per day for immediate jeopardy (boxes J-L).  Per-instance CMPs may range from $1,000 to $10,000, regardless of the scope and severity of the deficiencies.

The Center for Medicare Advocacy recently learned that in June 2007, CMS sent a memorandum to the State Survey Agencies about choosing CMP amounts.  The memorandum's "analytic tool" sets out a process for CMS Regional Offices to use in evaluating dollar amounts for per-day and per-instance CMPs that are recommended by states. The tool includes specific dollar "base" amounts for each box in the federal enforcement grid and a methodology for increasing the base amounts.  CMS, "Civil Money Penalty (CMP) Analytic Tool," Admin Info: 07-14 (June 22, 2007) (Memorandum from Thomas E. Hamilton, Director, Survey and Certification Group, to State Survey Agency Directors). 

Despite the fact that the Government Accountability Office (GAO) has repeatedly found over the past decade that CMPs are too small to influence facility behavior and improve care for residents, CMS's new tool and grid set the base rates at the low ends of the CMP scales described above and make increases to the base rates highly unlikely in most instances.  The GAO has repeatedly reported that deficiencies are often cited as less serious than they actually are and that the federal enforcement system is overly permissive and tolerant of poor care.  Nevertheless, the tool and grid, which are posted on a non-public CMS website, will ensure that CMPs continue to be low, and possibly lower than ever.

CMS directs Regional Offices to

• Identify, by letter, the deficiency with highest scope and severity level cited in the current survey.
   

• Identify the "base" CMP for that deficiency, by referring to the following grids

Per Day CMP

                               Isolated               Pattern           Widespread                

(Scope)

Per Instance CMP

       Isolated              Pattern             Widespread              

(Scope)
 

• Make upward revisions to the base CMP reflecting

• History of facility noncompliance (42 C.F.R. §488.438(f)(1)), but only for prior deficiencies at level G and above (only 18.1% of facilities received a G or higher deficiency in 2006)

• Seriousness of the current deficiencies (42 C.F.R. §488.404(b)), but only if substandard quality of care is cited (the regulations define substandard quality of care as violations in three regulatory groupings (restraints, quality of life, and quality of care) that are cited in boxes F and H-L)

• Number of deficiencies (42 C.F.R. §488.404(c)), but only if 10 or more deficiencies are cited and only for per day CMPs (the average number of deficiencies per facility was 7.5 in 2006)

• Repeated deficiencies (42 C.F.R. §488.438(d)(3)), but only for deficiencies in the same regulatory grouping

These restrictive criteria for increasing the base penalty amount mean that few, if any, deficiencies will meet them.  As a result, it seems likely that most CMPs will not exceed the base amounts.

The tool does not affect the automatic 35% reduction in a CMP that a facility receives if it waives its right to an administrative hearing to challenge the deficiencies and remedies.

CMS developed the tool and grid for use by Regional Offices in order to increase "national consistency in CMP amounts."  Although the memorandum says that "use of the tool is not mandatory for States," State Survey Agencies are likely to use the tool to determine CMP amounts that they recommend in order to have their recommendations implemented without controversy. 

CMS expects Regional Offices to use the tool and grid, "periodically," to review CMPs that are proposed by state survey agencies.  Amounts recommended by states that are "within 35 percent of the amount resulting from using the analytic tool" are "considered to be acceptable." 

The tool "was developed by a joint State-Federal workgroup and was pilot tested by all CMS [Regional Offices] for 90 days, from June 1 to August 31, 2006."  CMS found that "most State-recommended CMP amounts were within a reasonable range of the amount suggested by the tool."  In its most recent report on nursing home enforcement issues (March 2007), the GAO found that the median per day CMP for non-jeopardy deficiencies declined from $500 per day in fiscal years 2000-2002 to $350 per day in fiscal years 2003-2005.  The GAO pointed out that use of low CMPs dilutes the deterrent effect of the remedy.

CMS has advised the Center for Medicare Advocacy that "Admin Info" memoranda "are not published on a public website," but that they are not confidential and that their purpose is "generally to clarify administrative procedures to CMS Regional Offices and State surveyors."  To sign up to receive Admin Info memos, go to http://mailman.skybuilders.com/mailman/listinfo/cms-admin.

Conclusion

The analytic tool was not developed through a public process and is available on a website that is not generally available to the public.  The tool assures that CMPs will continue to be too low to improve care for residents.  CMS needs to discard the tool and to begin again, using a public process that incorporates the perspectives of consumers. 

For more information, contact attorney Toby S. Edelman (tedelman @ medicareadvocacy.org) in the Center for Medicare Advocacy's Washington, DC office at (202) 293-5760. Remove spaces in email.

References

Admin Info 07-14 in full in .pdf format: www.medicareadvocacy.org\SNF_08_02.21.CMPmemo.pdf

Nursing Home Reform Law, enforcement provisions

42 U.S.C. §§1395i-3(h), 1396r(h), Medicare and Medicaid, respectively

42 C.F.R. §488.430-.444

Government Accountability Office, Nursing Homes: Efforts to Strengthen Federal Enforcement Have Not Deterred Some Homes form Repeatedly Harming Residents, GAO-07-241 (March 2007), http://www.gao.gov/new.items/d07241.pdf

Charlene Harrington, Helen Carrillo, and Brandee Woleslagle Blank, Nursing Facilities, Staffing, Residents and Facility Deficiencies, 2000 Through 2006 (Sep. 2007), http://www.nccnhr.org/public/245_1267_14127.cfm