[Federal Register Volume 59, Number 217 (Thursday, November 10, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27703]
[[Page Unknown]]
[Federal Register: November 10, 1994]
_______________________________________________________________________
Part II
Department of Health and Human Services
_______________________________________________________________________
Health Care Financing Administration
_______________________________________________________________________
42 CFR Part 401, et al.
Medicare and Medicaid Programs; Survey, Certification and Enforcement
of Skilled Nursing Facilities and Nursing Facilities; Final Rule
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Parts 401, 431, 435, 440, 441, 442, 447, 483, 488, 489, and
498
[HSQ-156-F]
RIN 0938-AD94
Medicare and Medicaid Programs; Survey, Certification and
Enforcement of Skilled Nursing Facilities and Nursing Facilities
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule.
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SUMMARY: This final rule implements certain provisions of the Omnibus
Budget Reconciliation Act of 1987, as further amended by subsequent
1988, 1989, and 1990 legislation. These provisions make significant
changes in the process of surveying skilled nursing facilities under
Medicare and nursing facilities under Medicaid and in the process for
certifying that these facilities meet the Federal requirements for
participation in the Medicare and Medicaid programs. They also set
forth a number of alternative remedies which may be imposed on
facilities that do not comply with the Federal participation
requirements (instead of or in addition to termination), and specify
remedies for State survey agencies that do not meet surveying
requirements.
DATES: These regulations are effective July 1, 1995.
ADDRESSES: Copies: To order copies of the Federal Register containing
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FOR FURTHER INFORMATION CONTACT: Deborah Kaplan Schoenemann, (410) 966-
6771.
SUPPLEMENTARY INFORMATION:
I. Background
To participate in the Medicare or Medicaid programs, long-term care
facilities must be certified as meeting Federal participation
requirements. Long-term care facilities include skilled nursing
facilities (SNFs) for Medicare and nursing facilities (NFs) for
Medicaid. The Federal participation requirements for these facilities
are specified in HCFA regulations at 42 CFR part 483, subparts A
through C.
Section 1864(a) of the Social Security Act (the Act) authorizes the
Secretary to enter into agreements with State survey agencies to
determine whether SNFs meet the Federal participation requirements for
Medicare. Section 1902(a)(33)(B) of the Act provides for State survey
agencies to perform the same survey tasks for facilities participating
or seeking to participate in the Medicaid program. The results of
Medicare and Medicaid related surveys are used by HCFA and the Medicaid
State agency, respectively, as the basis for a decision to enter into,
deny, or terminate a provider agreement with the facility.
To assess compliance with Federal participation requirements,
surveyors conduct onsite inspections (surveys) of facilities. In the
survey process surveyors directly observe the actual provision of care
and services to residents and the effect or possible effects of that
care to assess whether the care provided meets the assessed needs of
individual residents.
SNFs that are approved for participation in the Medicare program
also meet the participation requirements for the Medicaid program.
However, the Medicaid State agency is not obligated to enter into a
Medicaid provider agreement with a facility just because the Secretary
has entered into a Medicare provider agreement with the facility.
Additionally, if a State imposes Medicaid requirements that exceed
those of Medicare, section 1863 of the Act provides that the higher
requirements must be met by the Medicare SNFs in that State.
Before the 1987 legislation, the only adverse actions available to
HCFA and the States against facilities that were determined to be out
of compliance with Federal participation requirements included
termination, nonrenewal, or automatic cancellation of provider
agreements; denial of participation for prospective facilities; and
denial of payment for new admissions in lieu of termination when the
facilities had deficiencies that did not pose an immediate and serious
threat to the health and safety of residents. (The denial of payment
action has been considered an ``alternative'' sanction because it is an
alternative to termination.)
The Omnibus Budget Reconciliation Act of 1987 (OBRA '87), Public
Law 100-203, enacted on December 22, 1987, amended the Act to
incorporate specific provisions for nursing home reform. These
provisions included specific revised requirements for the survey and
certification process (section 4202 for Medicare and section 4212 for
Medicaid) and for the enforcement process (sections 4203 and 4213).
Sections 4202 and 4212 of OBRA '87 added new sections 1819(g) and
1919(g) to the Act to revise and expand Medicare and Medicaid
provisions, respectively, on State and Federal responsibilities for
survey and certification, types of and requirements for surveys, survey
team composition and responsibilities, requirements for validation
surveys, procedures for investigating complaints and monitoring
compliance, disclosure of results of inspections and activities, and
provisions for penalties imposed on the States for failure to comply
with survey process requirements. Sections 4203 and 4213 of OBRA '87
added sections 1819(h) and 1919(h) to the Act to specify the Medicare
and Medicaid enforcement process, respectively, and specified remedies
for noncompliance to be used in lieu of or in addition to termination
of facilities' participation in the programs. Section 411 of the
Medicare Catastrophic Coverage Act of 1988 (MCCA), Public Law 100-360,
enacted on July 1, 1988, also included a number of technical and
correcting amendments affecting these OBRA '87 provisions. These
changes will be discussed in detail later in this preamble.
On August 28, 1992, we published a proposed rule in the Federal
Register (57 FR 39278) setting forth our proposal for altering the
requirements for surveying facilities and expanding the choice of
alternative remedies for HCFA and the Medicaid State agency to apply in
lieu of or in addition to termination of facilities that do not comply
with participation requirements. In the proposed rule we said that our
goal is to promote facility compliance by ensuring that all deficient
providers are appropriately sanctioned. Termination is still possible
any time a facility is identified as having deficiencies, and if a
facility continues to have deficiencies after a specified period of
time, the law requires that Federal payments for services in that
facility cease at that time.
In the proposed rule we indicated that we are implementing the
Congress' mandate, as indicated in OBRA '87, to abandon our traditional
hierarchical requirement system and develop a system capable of
detecting and responding to noncompliance with any requirement. The
system we proposed was built on the assumption that all requirements
must be met and enforced and that requirements take on greater or
lesser significance as a function of the circumstances and resident
outcomes in a particular facility at the time of survey. The surveyors
will determine the existence or nonexistence of immediate and serious
threat to residents as well as the severity and scope of a deficiency
to arrive at a conclusion as to the seriousness of that deficiency in
that facility. The proposed regulations incorporated scope and severity
surveyor guides for determining the remedy or remedies to apply. We
also proposed that the selection of a particular remedy be based on the
nature of the deficiencies and the remedy (or remedies) that either
HCFA or the Medicaid State agency believes is most likely to achieve
correction of the deficiencies. As we stated in the proposed rule, we
believe that remedies applied in the manner described within the
proposed regulations will deter violations as well as encourage
immediate response and sustained compliance.
The new system also proposed changes in the enforcement authority
for dually participating (Medicare and Medicaid) facilities. OBRA '89
provided the basis for decisions as to whether the State's or the
Secretary's determination of compliance or noncompliance or choice of
remedies is binding in the case of a dually participating facility.
Moreover, the statute at section 1919(h)(8), provides that whether
certification decisions and enforcement actions, as applied to
Medicaid, are those of the Secretary or the State, the same
certification decision and enforcement actions will also apply to
Medicare in a dually participating facility. In addition, the statute
specifies whether the Secretary's or State's certification decision and
enforcement remedies will prevail in the case of Federal validation
surveys. Our August 28, 1992 proposed rule reflected these changes.
II. Provisions of the Proposed Rule
In the proposed rule published on August 28, 1992 in the Federal
Register, we proposed to implement the provisions of OBRA '87, as
further amended by subsequent 1988, 1989, and 1990 legislation. The
specific proposals were as follows:
A. Routine Process of Certification and Enforcement
1. State-Operated Facilities
We proposed at Sec. 488.155 and Sec. 488.180 that in all State-
operated facilities, the State survey agency conduct the survey,
recommend to HCFA a certification of compliance or noncompliance and
recommend appropriate enforcement action(s). After the survey agency
forwards its survey findings and recommended certification and
enforcement action(s) to HCFA, HCFA in turn would certify facility
compliance or noncompliance and impose any enforcement action(s).
2. Non-State Operated Facilities
At Secs. 488.155 and 488.180, we proposed the following:
For non-State operated SNFs, to continue to use the
process in effect before October 1, 1990, whereby the State survey
agency conducts the survey and certifies compliance or noncompliance
with Federal requirements subject to HCFA approval. We also proposed
that the survey agency recommend appropriate remedies, and that, after
the survey agency forwards its survey findings and recommended
enforcement action(s) to HCFA for review, HCFA determines the
compliance or noncompliance of the facility and imposes any enforcement
action(s).
For non-State operated NFs, to continue to use the process
in effect before October 1, 1990, whereby the survey agency conducts
the survey, certifies compliance or noncompliance with Federal
requirements, and recommends appropriate enforcement actions to HCFA
and the Medicaid State agency. The certification of compliance or
noncompliance by the State is final except in the case of a complaint
or validation survey, or review of the State's findings by HCFA in
which the Secretary substitutes her judgment for that of the State.
Except where the Secretary intervenes, the State makes all enforcement
decisions and imposes remedies after consideration of the survey
findings and recommended enforcement remedies. Regardless of which
agency of the State exercises certification and enforcement authority,
however, we look to the Medicaid State agency to assure compliance with
Federal requirements.
For dually participating facilities, the survey agency
would conduct the survey, certify compliance or noncompliance with
Federal requirements, and recommend appropriate enforcement actions.
The certification of compliance or noncompliance and recommended
enforcement action(s) by the State would be sent to both HCFA and the
Medicaid State agency for review. In a new subpart F (Remedies for
Long-Term Care Facilities with Deficiencies), we proposed to add a new
Sec. 488.234, to set forth procedures for occasions when there are
State and Federal disagreements involving findings when there is no
immediate and serious threat to the residents. We view section
1919(h)(8) of the Act as calling for the application of the decision
for Medicaid NFs to Medicare SNFs when a facility is dually
participating.
B. Validation Surveys and HCFA Oversight
Sections 1819(g)(3)(A) and 1919(g)(3)(A) of the Act direct the
Secretary to conduct onsite surveys of a representative sample of
nursing homes within 2 months of the last day of survey when the
Secretary is validating the State survey agency's performance. If the
State determines that the facility is in compliance, but the Secretary
finds that the facility is out of compliance, the Secretary's
determination as to the facility's noncompliance is binding and
supersedes that resulting from the State survey as specified at
Sec. 488.234(a)(2) of our NPRM and section 1919(h)(6)(B) of the Act.
However, section 1919(h)(6)(A) specifies that when the State finds
noncompliance and the Secretary makes no such finding, the State's
noncompliance decision and enforcement actions control. We incorporated
this in Sec. 488.234(a)(1) of our proposed rule. At paragraph (a)(3) of
Sec. 488.234, we proposed that, when HCFA's survey findings take
precedence, HCFA could--
Impose any of the alternative remedies we specify in our
proposed Sec. 488.206 (Available remedies); or
Permit payments to continue to the NF and dually
participating facility if the applicable conditions at our proposed
Sec. 488.232 (Continuation of payments to a facility with deficiencies)
are satisfied.
These provisions proposed to specify the means to determine compliance
or noncompliance for the Medicaid NF which would then become the
compliance/noncompliance decision for the Medicare SNF.
In our proposed Sec. 488.234(b), we stated that, if both the
Secretary and the State disagree over the decision to terminate a non-
State operated NF or dually participating facility--
HCFA's decision to terminate the participation of a
facility takes precedence when--
+ Both HCFA and the State find that the facility has not met all
requirements; and
+ HCFA, but not the State, finds that the facility's participation
should be terminated. We proposed that HCFA would permit continuation
of payment during the period prior to the effective date of termination
not to exceed 6 months from the last day of the survey.
The State's decision to terminate a facility's
participation and the timing of termination would take precedence
when--
+ The State, but not HCFA, finds that a facility's participation
should be terminated; and
+ The State's timing for the termination is for no later than 6
months after the last day of survey.
In paragraph (c) of the proposed Sec. 488.234, we stated that when
the State and HCFA disagree over timing of termination of a facility,
the State's timing takes precedence if it does not occur later than 6
months after the date of the finding to terminate. Paragraph (d) stated
that when there is overlap of State and HCFA remedies, the HCFA
remedies apply, and paragraph (e) stated that, regardless of whose
decision controlled in paragraphs (b), (c), or (d), the compliance and
enforcement decision for the Medicaid agreement is binding on the
Medicare agreement in the case of a dually participating facility.
C. Hearings and Appeals
At Sec. 488.180(e)(1), we proposed that the State must impose
remedies on any Medicaid provider--
When the State identifies violations of Federal
requirements after notifying the provider of the deficiencies and
impending remedy; and
Except for civil money penalties, during the pendency of
any hearing that the provider may request.
At Sec. 488.180(e)(2), we proposed that appeal procedures under 42
CFR part 498 (Appeals Procedures for Determinations that Affect
Participation in the Medicare Program) apply when the provider requests
a hearing on HCFA's denial of participation, termination of provider
agreement, or the Secretary's certification of noncompliance leading to
an enforcement remedy, except State monitoring, against all State-
operated facilities, as a result of a HCFA validation survey or HCFA's
review of the State's survey findings and for non-State operated SNFs
and dually participating facilities. The State must impose the same
remedy, which is also subject to these appeal procedures. At
Sec. 488.180(e)(3) of our proposed rule, we proposed that the appeal
procedures under 42 CFR part 431 (State Organization and General
Administration) apply in cases when the provider requests a hearing on
the State's denial of participation, termination of provider agreement,
or certification of noncompliance leading to an alternative remedy
against a non-State operated Medicaid NF.
D. Prospective Providers
At Sec. 488.180(f), we proposed that prospective providers applying
to participate in the Medicare or Medicaid (or both) programs meet all
participation requirements as a precondition of their participation. As
we explained in the preamble of the proposed rule, we based this on
various provisions of the Act and the legislative history and on the
overall structure of the Act which differs significantly from the one
previously in effect.
E. Substandard Care
In Sec. 488.151 (Definitions), we proposed defining substandard
care as care furnished in a facility that has one or more deficiencies
in any area with a severity level of 3 or 4, regardless of scope; or a
level 2 in severity with a level 3 or 4 in scope in quality of care
requirements, as defined in Sec. 483.25 (Quality of care). We described
the levels for severity and scope in detail under the section of the
preamble entitled, ``Enforcement Options.'' That discussion is
summarized in section J.11 of this background statement.
F. Surveys
Sections 1819(g) (2) and (3) and 1919(g) (2) and (3) of the Act, as
added by sections 4202 and 4212 of OBRA '87, specify the requirements
for types and periodicity of surveys that are to be conducted for each
facility; including standard, special, partial extended, extended, and
validation surveys. These provisions include specific contents and
procedures, frequency, consistency, and team composition, and are
intended to protect residents' rights, health and safety and not unduly
burden the facilities or the survey agencies. We proposed to set forth
implementing regulations as follows:
Standard Surveys
At Sec. 488.155, we proposed that, for each SNF and NF, the State
survey agency must conduct standard surveys and stated what they must
include.
At Sec. 488.158, we proposed to require each SNF and NF to be
subject to a standard survey not later than 15 months after the last
day of the previous standard survey and that the statewide average
intervals between standard surveys must not exceed 12 months. We also
specified when and how the average intervals would be computed.
Special Surveys
Sections 1819(g)(2)(A)(iii) and 1919(g)(2)(A)(iii) of the Act, as
added by OBRA '87, specify that a standard survey or an abbreviated
standard survey may be conducted within 2 months of any change of
ownership, administration, management of a facility, or director of
nursing to determine whether the change has resulted in any decline in
the quality of care furnished by the facility. A survey conducted for
the purpose of investigating a complaint against a facility is also
considered a special survey. An abbreviated standard survey is a
partial survey that focuses on a specific participation requirement or
requirements. At paragraph (e) of Sec. 488.158, we proposed that the
decision of whether to conduct a standard or an abbreviated standard
survey under these circumstances be at a State survey agency's or the
Secretary's discretion, based on the individuals and facilities
involved and the State's concern that the quality of care may have
declined.
Extended and Partial Extended Surveys
In accordance with Sections 1819(g)(2)(B) and 1919 (g)(2)(B) of the
Act, we proposed to require that, during an extended survey, the survey
team must review and identify the policies and procedures for those
provisions of the regulations that produced the substandard quality of
care and must determine whether a facility complies with all
requirements of participation. The extended survey must also include an
expansion of the size of the sample of residents' assessments reviewed,
a review of the staffing levels and staff inservice training, and, if
appropriate, an examination of contracts with consultants.
These provisions were incorporated in the proposed rule at
Sec. 488.160 (Extended survey).
Validation Surveys
We proposed that the validation surveys must be conducted within 2
months of the date of the State's surveys and must be of sufficient
number to allow inferences about the adequacy of the State's surveys.
In addition, the Act requires us to conduct validation surveys in at
least 5 percent of the SNFs and NFs surveyed by each State during the
year but in no case less than 5 facilities in each State. The same
protocol used for the standard or extended survey must be used for the
validation survey. We proposed to incorporate these requirements in
paragraph (a) of Sec. 488.166 (Validation surveys).
In the proposed rule, we dealt with four other survey-related
issues:
Composition of Survey Teams
At Sec. 488.164, we proposed that--
--Surveys must be conducted by a multidisciplinary team of
professionals, which must include a registered nurse.
--A surveyor is disqualified for surveying a particular facility if
he or she currently serves or, within the previous 2 years has served
as a member of the staff of, or as a consultant to that facility, or if
a member of his or her immediate family has any financial interest or
any direct or indirect ownership interest in that facility.
Surveyors must receive comprehensive training, including the
application and interpretation of regulations for SNFs and NFs,
techniques and survey procedures for conducting standard and extended
surveys; and techniques and survey procedures for auditing resident
assessments and plans of care.
Consistency of Surveys
The proposed regulations at Sec. 488.162 specify that the State
must conduct ongoing studies and analyses, and/or implement new
programs to measure and improve consistency in survey results, such as
validation of surveyor findings, and the application of enforcement
remedies. The proposed regulations also specified that HCFA will
perform the same tasks.
Unannounced Surveys
While sections 1819(g)(2)(A)(i) and 1919(g)(2)(A)(i) of the Act
specifically require unannounced standard surveys, we proposed that all
surveys, whether abbreviated, extended, follow-up, validation or
otherwise, be unannounced and incorporated this provision in the
proposed regulations at Sec. 488.157. When a survey agency is found to
have notified a SNF or NF through its scheduling or procedural
policies, we are authorized to apply appropriate sanctions for
inadequate survey performance specified at the proposed Sec. 488.170
and described immediately below under the section entitled,
``Inadequate Survey Performance.''
Inadequate Survey Performance
If we find, as a result of the validation surveys, that the State
has failed to perform the standard and extended surveys properly or
that the State's performance is otherwise inadequate, we are authorized
to apply an appropriate sanction for inadequate survey performance.
Section 1819(g)(3)(C) of the Act requires the Secretary to provide an
appropriate remedy (which may include training) when the State has
failed to perform surveys required under the Act or when the Secretary
has decided survey performance is not otherwise adequate. At
Sec. 488.170, we proposed the following remedies to be applied as
appropriate:
For Medicaid facilities HCFA will--
+ Reduce FFP and if appropriate,
+ Provide for training of survey teams.
For Medicare facilities HCFA will--
+ Specify the inadequacy to the survey agency;
+ Require a plan of correction;
+ Provide for training of survey teams;
+ Provide technical assistance on scheduling and procedural
policies;
+ Provide HCFA-directed scheduling; or
+ Initiate action to terminate the agreement between the Secretary
and the State under section 1864 of the Act, either in whole or in
part.
G. Investigations of Allegations of Resident Neglect and Abuse and
Misappropriation of Resident Property
In Sec. 488.151, we proposed to define ``abuse'' as physical,
psychological, or verbal interaction with a facility resident,
including, but not limited to, ill treatment, physical violation, and/
or other disregard of an individual which could cause or result in mild
to severe, temporary or permanent mental or physical injury, harm, or,
ultimately, death. ``Neglect'' would mean a failure, through
inattentiveness, carelessness, or omission, of an individual, to
provide timely, consistent and safe services, treatment, and care to a
facility resident. ``Misappropriation of resident property'' would mean
the deliberate misplacement, exploitation, or wrongful, temporary, or
permanent taking or use of a facility resident's belongings or money,
or both, without the resident's consent.
Sections 1819(g)(1)(C) and 1919(g)(1)(C) of the Act, as added by
OBRA '87 and amended by section 411(a)(5)(C) of Public Law 100-360
(MCCA), require the State, through the agency responsible for surveys
and certification of nursing facilities, to develop a process for the
receipt and timely review and investigation of allegations of neglect
and abuse and misappropriation of resident property by a nurse aide of
a facility or by another individual used by the facility in providing
services to residents. These sections also provide, after notification
of the allegations, for the State to provide the opportunity for a
hearing to the individual against whom an allegation has been made; and
if the allegations are confirmed, for the State to notify the
individual, the nurse aide registry, and the appropriate licensure
authorities if applicable. In Sec. 488.185 (Action on complaints of
neglect, abuse, and misappropriation of property), we proposed
regulations that would implement these provisions.
H. Investigation of Complaints of Violations of Federal Participation
Requirements and Monitoring Compliance
In Sec. 488.182 (Investigation of complaints of violations:
Investigations and monitoring), we proposed that the survey agency be
required to conduct surveys as frequently as necessary to ascertain
compliance with the Federal requirements of participation or to confirm
the correction of deficiencies under the cited circumstances. The
proposed regulations would also incorporate the provisions of sections
1819(g)(4) and 1919(g)(4) of the Act that a State may maintain and use
a specialized team to identify, survey, gather, and preserve evidence
and to administer appropriate enforcement remedies against substandard
facilities.
I. Disclosure of Survey Information
At Sec. 488.175 (Disclosure of survey information), we proposed
regulations to implement sections 1819(g)(5) and 1919(g)(5) of the Act,
as added by OBRA '87. We proposed at Sec. 488.175 to accept oral as
well as written requests for information and to charge the public for
the cost of retrieval, reproduction, and mailing information in
accordance with regulations under the Freedom of Information/Privacy
Act. The disclosing entity (HCFA, the survey agency, or the Medicaid
State agency) would respond within 10 days with the requested
information, if releasable and already available, or with an interim
response explaining whether the information is releasable and when it
will be available for release.
OBRA '90 specified which information is releasable and when it is
available for release. Sections 1819(g)(5)(A) and 1919(g)(5)(A) of the
Act provide that each State, and the Secretary, shall make available to
the public information concerning all surveys and certifications of NFs
and SNFs, including statements of deficiencies, within 14 calendar days
after such information is made available to those facilities, and
approved plans of correction. We proposed to implement this provision
at Sec. 488.175(d)(3).
Sections 1819(g)(5)(B) and 1919(g)(5)(B) of the Act require State
survey agencies to notify the State's long-term care ombudsman of any
adverse actions imposed against a facility. We proposed at 488.175(e)
that the State survey agency be required to provide the State's long-
term care ombudsman with the report of noncompliance of a facility,
report of any adverse actions imposed, any written response by the SNF
or NF, and the results of any appeals.
As a result of sections 4008(h)(2)(E) and 4801(e)(5)(D) of OBRA
'90, sections 1819(b)(4)(C)(ii)(IV) and 1919(b)(4)(C)(ii)(IV) of the
Act require the Secretary and the State, respectively, to provide
notice to the State long-term care ombudsman and the State protection
and advocacy system for the mentally ill and mentally retarded of SNF
and NF waivers. Sections 1819(b)(4)(C)(ii)(V) and 1919(b)(4)(C)(ii)(V),
as added by OBRA '90, require the facility receiving such nursing
waivers to notify the residents of the facility (or, when appropriate,
the guardians or legal representatives of such residents) and a
resident's immediate family of the waiver. We proposed, at section
488.175 (f) and (g), that facilities give this notice within 10 days
from the date the SNF or NF is granted the waiver.
Under sections 1819(g)(5)(C) and 1919(g)(5)(C) of the Act, the
State is required to notify each attending physician and the State
board responsible for licensing nursing home administrators when a
facility has provided substandard quality of care. We proposed
requiring each SNF or NF to provide either HCFA or the State, no later
than 10 days after receiving a notice of substandard care, with a list
of each Medicare and Medicaid resident in the facility and the name and
address of his or her attending physician. We also proposed at
Sec. 488.175 requiring the State to notify the attending physicians and
the State licensing board within 30 days of the date the SNF or NF is
notified of a finding of substandard care. We recognized that this and
the notification requirement related to nurse waivers were the only
provisions in our proposed regulation which set forth requirements for
nursing homes. All other provisions in the proposed rule set forth
requirements for the Secretary and the State in the enforcement of
nursing homes requirements. We included these facility requirements in
the proposed rule because they directly or indirectly pertain to the
enforcement process. The same sections of the Act also required the
State survey agency to provide access to any information incidental to
a facility's participation in Medicare or Medicaid upon request by the
State Medicaid fraud control unit established under 42 CFR part 1002,
subpart C. We proposed incorporating this provision under paragraph (j)
of Sec. 488.175.
J. Enforcement Options
1. Overview
As stated earlier, before the passage of OBRA '87, the only adverse
actions available to HCFA and the States for imposition against long
term care facilities that were out of compliance with Federal
requirements were termination of participation, nonrenewal and
automatic cancellation, and denial of participation for prospective
providers. In addition, HCFA and the States had authority, in cases of
long-term care facilities, to deny payment for new admissions to
facilities rather than to terminate the provider agreements when
deficiencies did not present an immediate and serious threat to the
health and safety of residents of the facilities. The denial of payment
provision was considered both an alternative to the more severe
measures, as well as an intermediate step that HCFA or the State could
take prior to and possibly in lieu of termination from the Medicare and
Medicaid programs. The sanction afforded HCFA and the States the
opportunity to defer the decision to terminate. Thus, the terms
``alternative sanction'' and ``intermediate sanction'' came into use to
designate denial of payment for new admissions to facilities for a
period of up to 11 months after the month in which the sanction was
imposed. Former sections 1866(f) and 1902(i) of the Act were the
authority for the alternative sanction under Medicare and Medicaid
respectively. The Family Support Act of 1988, Public Law 100-345,
repealed the Medicare provision and MCCA made the Medicaid provision
applicable only to ICFs/MR.
OBRA '87 included revised and expanded authority for enforcement of
the Federal participation requirements for long-term care facilities.
We proposed adding a new subpart, subpart F (Remedies for Long Term
Care Facilities with Deficiencies) to part 488 to implement these new
provisions.
2. Determination of Deficiencies
Effective October 1, 1990, providers of nursing services
participating in the Medicare or Medicaid programs were subject to the
requirements of participation that were published on February 2, 1989
(54 FR 5316). These requirements focus more sharply on the resident
care practices and outcomes, and facility practices with respect to
resident rights.
In the proposed rule we explained that the collective exercise of
surveyor judgments, which has always been the vehicle for the
identification of deficiencies would remain unchanged. For this reason,
we concluded that there was no more reason to have specific regulations
governing this process than there had been in the past. Thus, we
proposed that, surveyors would gather information based upon direct
observations, record review, and interviews with residents, staff, and
family members. Based on their collection of information, they would
collectively compile and analyze it, and match the data to the legal
standards facilities are obliged to meet to determine if deficiencies
exist. As is true now, these conclusions would be based upon single
observations or groups of observations, either one of which may sustain
a finding that a requirement has not been met. We proposed that once
the survey team made its judgments about whether the facts supported a
conclusion that deficiencies exist, it would be the team's
responsibility to assess the scope and severity of those deficiencies
(in the manner described later in this preamble) in order to recommend
one or more remedies to either HCFA or the Medicaid State agency for
the enforcement of the requirements.
3. Remedies To Be Imposed as Alternative or Intermediate Sanctions
Consistent with sections 1819(h) and 1919(h) of the Act as added by
OBRA '87, we proposed to add a new Sec. 488.206, listing the available
remedies. It stated that, in addition to termination of the provider
agreement, the following remedies would be available:
Temporary management;
Denial of payment including--
+ Denial of payment for all new admissions;
+ Denial of payment for all new admissions in certain diagnostic
categories or requiring specialized care; and
+ Denial of all payment (to be imposed only by HCFA) to facilities,
for Medicare and to States, for Medicaid.
Directed plan of corrections;
State monitoring; and
Civil money penalties.
Section 488.206 also proposed other remedies for non-State-operated
Medicaid-only and dually participating facilities. They were:
Closure of the facility and transfer of residents; and
Additional or alternative State remedies.
Finally, we proposed at Sec. 488.153 that, if a State wishes to use
additional or alternative remedies, it must specify those remedies in
the State plan, and demonstrate to HCFA's satisfaction that those
remedies are as effective as those set forth in the Act.
At Sec. 488.208, we set forth proposed rules governing the choice
of remedies. We said that the survey agency or HCFA would assess
individual deficiencies or clusters of deficiencies first according to
the presence or absence of immediate and serious threat to resident
health and safety, the severity of the deficiency, and the scope of the
deficiency. We proposed that, following the initial assessment, HCFA
and the survey agency may consider the following secondary factors:
The relationship of one deficiency or group (cluster) of
deficiencies to other deficiencies; and
The facility's prior compliance history in general and
specifically with reference to the cited deficiencies.
We said that the selection of a remedy would be based on the nature
of the deficiencies or cluster of deficiencies. Proposed Secs. 488.210
and 488.212 set forth the rules for imposition of particular remedies
in specified circumstances. We said that, regardless of which remedy or
remedies are imposed, each facility that is out of compliance with a
program requirement would be required to submit a plan of correction
for approval by HCFA or the survey agency, except in the case of
deficiencies that HCFA or the State determines to be at a scope and
severity level of 1.
The choice of remedy, by either HCFA or the State, including the
manner in which HCFA or the State uses the scope and severity scales
specified in Sec. 488.204 would not be subject to review as part of the
appeals process set forth in part 431 or part 498.
4. Temporary Management as a Remedy
When alternative remedies are imposed instead of termination to
bring a facility into compliance with program requirements in an
immediate and serious threat situation, temporary management would
always be imposed immediately to remove the threat to residents in
accordance with sections 1819(h)(2)(A)(i), 1919(h)(1)(A), and
1919(h)(3)(B)(i) of the Act. We proposed that temporary management also
be available in addition to termination in an immediate and serious
threat situation while there is an orderly termination or closure of
the facility. In situations where deficiencies do not constitute an
immediate and serious threat, HCFA or the State also may appoint a
temporary manager to substitute as a manager or administrator. (Other
remedies in addition to temporary management may also be imposed in the
case of immediate and serious threat situations.)
The temporary manager would have the authority to hire, terminate
and reassign staff, obligate facility funds, alter facility procedures
as appropriate, or otherwise manage the facility as necessary to
correct deficiencies identified in the facility's operation. The
temporary manager would be required to be a licensed nursing home
administrator within the State or have a reciprocal agreement with the
State in which he or she is to serve, demonstrate prior competence as a
nursing home administrator, and have had no disciplinary action taken
against him or her by any licensing board of any State or by any
professional society in the past 5 years. We proposed as well that
neither the temporary manager nor his or her immediate family could
have a financial or ownership interest in the facility. The temporary
manager's salary would be paid by the facility. We proposed that the
salary for the temporary manager may not exceed an amount equivalent to
the prevailing salary paid by providers in the geographic area for
positions of this type, additional costs that would have reasonably
been incurred by the provider if such person had been in an employment
relationship, and any other costs incurred by such a person in
furnishing services under such an arrangement (for example, travel
allowance) or as otherwise set by the State.
We proposed that termination would be imposed if the facility does
not agree to this remedy or refuses to relinquish authority to the
temporary manager. In addition, if, despite the appointment of a
temporary manager, the immediate and serious threat is not removed
within 23 days of the appointment of the temporary manager or if non-
immediate and serious threat deficiencies are not corrected within 6
months from the last day of survey, the facility's participation would
be terminated.
We proposed incorporating the above provisions regarding temporary
management in Secs. 488.206, 488.210, and 488.215.
5. Denial of Payment for New Admissions As a Remedy
We proposed that a new Sec. 488.217 be added to part 488 to set
forth denial for payment for all new admissions as a sanction as
follows:
For all new admissions
--HCFA or the State may deny payment for new admissions. However,
HCFA will and the State must deny payment for new admissions if--
+ Any deficiency remains uncorrected within 90 calendar days after
the last day of survey identifying the deficiencies; or
+ The survey agency has cited a facility with substandard quality
of care on the last 3 consecutive standard surveys.
--If the facility achieves compliance with the requirements, HCFA
does or the State must resume payments to the facility prospectively
from the date that it determined that compliance has been achieved.
Denial of payment for new admissions in certain diagnostic
categories or requiring specialized care.
--HCFA or the State may deny payment for new admissions who have
certain specified diagnoses or special care needs when HCFA or the
State finds that--
+ The facility is not currently able to provide care for these
individuals; or
+ Caring for these individuals will adversely affect care provided
to other residents.
--If the facility achieves compliance with the requirements, HCFA
does or the State must resume payment to the facility prospectively
from the date that it determines that compliance has been achieved.
6. Directed Plan of Correction
Sections 1819(h)(2)(B) and 1919(h)(2)(A) permit the Secretary and
the State, respectively, to provide for other specified remedies. At
Sec. 488.224, we proposed adding a directed plan of correction as a
remedy in which a facility could be required to take action within
specified timeframes according to the plan of correction developed by
HCFA, the survey agency, or the temporary manager (with HCFA or survey
agency approval).
The directed plans of correction would set forth the expected
correction actions which the facility must take to achieve compliance
and the dates by which the actions must be taken.
7. Use of State Monitoring As a Remedy
In Secs. 488.206 and 488.222, we proposed that, if State monitoring
is used as a remedy, State monitors would be required to be onsite as
frequently as necessary to oversee the correction of specific
deficiencies cited. This remedy differs from traditional revisits by
the survey agency in that State monitors are onsite, as necessary,
while corrections are being made, as opposed to a revisit which occurs
after corrections are completed, and serve to confirm that the
deficiency has been removed. We said that State monitoring must be used
as a remedy when a survey agency has cited a facility with substandard
quality of care on the last three consecutive standard surveys.
We proposed that individuals serving as State monitors would be
required to be employees or contractors of the State survey agency, and
maintain professional qualifications needed to address the specific
nature of the deficiencies. The State would be responsible for ensuring
that the monitors are appropriate health care professionals. A State
monitor could not function as a consultant to the facility nor could
the State monitor be an employee of the facility. We concluded that a
monitor serving as a consultant to a facility would potentially put the
State in a situation of defending the monitor's recommendations rather
than making the facility responsible for correcting its deficiencies.
Additionally, a monitor employed by a facility and working for the
State would constitute a conflict of interest.
8. Civil Money Penalties
At Sec. 488.230, we proposed allowing civil money penalties to be
imposed for noncompliance regardless of whether or not the deficiencies
constitute immediate and serious threat to resident health and safety.
However, we proposed at Sec. 488.230(b) that civil money penalties
would not be imposed during the pendency of a hearing on the imposition
of that remedy.
We proposed that, if HCFA wants to impose a civil money penalty, it
must notify the provider in writing of the intent to impose a penalty.
The notice would include reference to the statutory basis for the
penalty, the amount of the penalty per day of noncompliance, any
circumstances that were considered when determining the amount per day
of the proposed penalty, and instructions for responding to the notice,
including a specific statement of the facility's right to a hearing and
implications of waiving a hearing.
If the State proposes to impose a civil money penalty, the State
would notify the facility in accordance with State procedures.
We proposed that a penalty amount would be permitted to be imposed
within the following ranges:
For deficiencies constituting an immediate and serious
threat (that is, a severity level of 4, regardless of scope)--$3,050 to
$10,000 per day;
For deficiencies constituting nonimmediate and nonserious
threat above a scope or severity level of 1--$50 to $3,000 per day.
For both levels, the amount of the civil money penalty
would be set at $50 increments within these ranges.
Removal of the immediate and serious threat, but not the
deficiencies, would justify the shift to the range of penalties that
are imposed for nonimmediate and nonserious threat above a scope or
severity level of 1. A penalty would be imposed at the immediate and
serious level for the number of days the immediate and serious threat
is present. We proposed that a provider may, in lieu of contesting the
deficiency which led to the imposition of the civil money penalty,
waive the right to a hearing within the specified timeframes and
procedures in the regulations under Sec. 498.40 (Request for hearing)
for Medicare and Sec. 431.221 (Request for hearing) for Medicaid. If
the facility were to waive the right to a hearing within 60 days from
the date of notice, HCFA or the State would be required to reduce the
civil money penalty by 35 percent. If the facility were to waive the
right to a hearing after the 60th day, HCFA's or the State's settlement
would be discretionary. The reduction in the civil money penalty would
reflect the savings to both the government and the provider of costs
that would otherwise be incurred to formally adjudicate the dispute.
The provider would be free to reject the option to waive the right to a
hearing. We proposed that the daily fine amount of a facility could be
increased if the facility alleges compliance, but on a revisit by HCFA
or the State survey agency, the facility is still found to be
noncompliant with the same requirements. The purpose of giving HCFA or
the State discretion to increase the daily fine, we believe, would be
to deter unfounded allegations of compliance. The amount of increase,
if any, would be effective the day following the resurvey.
In determining the amount of the penalty, section 1128A(d) of the
Act requires the Secretary to consider specific matters and also
provides authority to take into account any other items relevant to the
penalty determination. We proposed that the Secretary's
nondiscretionary and discretionary requirements be applicable to the
State as well to make the Medicare and Medicaid requirements equivalent
for SNFs and NFs. We do not believe that the Congress intended to have
two separate assessment methodologies in place between both enforcement
authorities when a civil money penalty from each could potentially be
imposed on a single facility. Our proposal included two additional
factors so that the noncompliance itself is considered when determining
the penalty amount.
In determining the amount of the penalty, we proposed at
Sec. 488.230(g) that HCFA or the State must take into account the
following factors:
The facility's degree of culpability;
The facility's history of prior offenses, including repeat
deficiencies;
The facility's financial condition;
The nature, scope, severity and duration of the
noncompliance; and
The category of requirement with which the facility is out
of compliance.
The effective date for a civil money penalty would be the 10th day
after the last day of the survey in the case of immediate and serious
threat deficiencies; or the 20th day after the last day of survey in
the case of non-immediate and non-serious threat deficiencies. These
timeframes permit time to notify the facility of the intent to impose a
civil money penalty 5 days after the last day of survey.
When HCFA's or the State's imposition of a civil money penalty is
upheld on appeal or the facility waives its right to a hearing, we
proposed that the civil money penalty would be for the number of days
between the effective date of the penalty and the date of correction of
deficiencies, or, if applicable, the effective date of termination.
Penalties would be computed after compliance is verified or the
facility has been sent notice of termination and the effective date. In
the case of the facility achieving compliance, HCFA or the State would
send a separate notice to the facility containing the amount of penalty
per day, the number of days involved, the due date of the penalty, and
the total amount due. In the case of a facility to be terminated, HCFA
or the State would send this penalty information in the termination
notice.
The daily accrual of civil money penalties would be imposed for no
longer than 6 months for non-immediate and non-serious threat
deficiencies after which HCFA would terminate a SNF provider agreement,
or stop Federal funding to the State for a NF, and the State may
terminate the provider agreement of the NF if deficiencies remain. In
the case of immediate and serious threat deficiencies, the daily
accrual of civil money penalties would continue until HCFA or the State
terminates the provider agreement or the deficiencies are corrected. If
the facility can supply documentation acceptable to HCFA or the State
survey agency that compliance with participation requirements was
attained on a date preceding that of the revisit, fines would only
accrue until that date.
Payments for civil money penalties would be due 15 days after--
Compliance is verified, if a hearing decision upholding
the imposition of the penalty had been rendered before compliance had
been verified, or the 60-day period for requesting a hearing has
expired and the facility has not requested a hearing or has waived its
right to a hearing;
A hearing decision upholding the imposition of the penalty
if compliance was achieved before the hearing decision; or
The effective date of termination if compliance has not
been achieved by that time.
Currently, Sec. 431.153 (Evidentiary hearing) does not specify the
number of days a facility has to request a hearing. We proposed
amending Sec. 431.153 to add a new paragraph (b) which specifies that a
NF or ICF/MR must file a request for hearing within 60 days of receipt
of the notice of denial, termination, nonrenewal, or imposition of a
civil money penalty or other remedies.
Consistent with the way other civil money penalties are recovered,
as provided in section 1128A(f) of the Act, we proposed that the amount
of any penalty, when determined, may be deducted from any sum then or
later owing by HCFA or the State to the facility against whom the
penalty has been assessed. Interest would be assessed on the unpaid
balance of the penalty beginning on the due date. We proposed that the
rate of interest to be assessed on the unpaid balance would be
negotiable and for that reason might vary on a case by case basis.
Funds collected by HCFA or the State as a result of a civil money
penalty would be returned to the Medicare Trust Fund or to the State,
respectively. Civil money penalties collected from dually participating
facilities would be returned to the Medicare Trust Fund and the State
in proportion commensurate with the relative proportions of the number
of Medicare and Medicaid beds actually in use at the facility at the
time the facility receives notice of the imposition of the civil money
penalty. Under section 1919(h)(2)(A)(ii) of the Act, funds collected by
a Medicaid State agency must be put into a common fund to be applied to
the protection of the health or property of residents of any NF that
the State or HCFA finds deficient, including payment for the cost of
relocating residents to other facilities, maintenance of operation of a
facility pending correction of deficiencies or closure, and
reimbursement of residents for personal funds lost. Oversight of the
collection and use of funds will be addressed through HCFA's State
agency evaluation program now in place.
With respect to SNFs, State-operated facilities, or HCFA validation
actions when HCFA's enforcement choice prevails, HCFA would have the
exclusive authority to settle any case at any time prior to a final
administrative law judge hearing decision. With respect to non-State-
operated NFs or dually participating facilities or HCFA validation
surveys when only the State's enforcement decision prevails, the State
would have the authority to settle any case at any time prior to the
hearing decision.
9. Closure of a Medicaid Facility and Transfer of Residents as a Remedy
Section 1919(h)(2)(A)(iv) of the Act allows the State to close a
Medicaid facility and transfer its residents as an available remedy in
emergency situations. This provision appeared in our proposed
Sec. 488.226 (Closure of a Medicaid facility and transfer of
residents). Notice and appeal rights would be in accordance with State
procedures.
10. Other Alternative or Additional State Remedies Other Than
Termination--Medicaid only
Section 1919(h)(2)(A) allows the State to develop alternative or
additional State remedies (other than denial of payment for new
admissions and State monitoring). At Sec. 488.228 (Alternative or
additional State remedies), we proposed that for Medicaid facilities,
the State may establish and impose alternative remedies if the State
demonstrates to HCFA's satisfaction that the alternative remedies are
as effective in deterring noncompliance and correcting deficiencies as
the remedies of temporary management, civil money penalties, and
emergency closure of the facility and transfer of residents. Regardless
of which alternative remedies the State establishes, we proposed that
they must include denial of payment for new admissions and State
monitoring as remedies. We reached this conclusion because section
1919(h)(2)(D) of the Act requires that denial of payment for new
admissions and State monitoring be imposed when a NF was found to have
provided substandard quality of care on three consecutive standard
surveys. We also required the State to include denial of payment for
new admissions because section 1919(h)(2)(C) of the Act requires this
remedy be imposed on a NF that has not complied with the participation
requirements within 3 months after the last day of the survey which
found the facility out of compliance with the requirements. We proposed
requiring that these alternative or additional remedies be approved by
HCFA and specified in the State plan.
11. Selecting an Enforcement Remedy
Once a State or HCFA determines that violations of nursing home
requirements have occurred, there is an obligation to assess what the
most effective remedy ought to be to assure the protection of the well
being of the resident population. At Sec. 488.208 (Choice of remedies),
we proposed that the survey agency or HCFA assess individual
deficiencies or clusters of deficiencies first according to the
following initial factors:
The presence or absence of immediate and serious threat to
resident health and safety;
The severity of the deficiency; and
The scope of the deficiency.
We also proposed that, following the initial assessment, HCFA and
survey agency could consider the following secondary factors:
The relationship of one deficiency or group (cluster) of
deficiencies to other deficiencies; and
The facility's prior compliance history in general and
specifically with reference to the cited deficiencies.
We said that the selection of a remedy would be based on the nature
of the deficiencies or cluster of deficiencies. In the proposed
Secs. 488.210 (Action when there is immediate and serious threat) and
488.212 (Action when there is no immediate and serious threat), we set
forth rules for the imposition of particular remedies in specified
circumstances. Regardless of which remedy or remedies are imposed, each
facility that is out of compliance with a program requirement must
submit a plan of correction for approval by HCFA or the survey agency,
except in the case of deficiencies that HCFA or the State determines to
be at a scope and severity level of 1.
We said that the choice of remedy, by either HCFA or the State,
including the manner in which HCFA or the State uses the scope and
severity scales specified in Sec. 488.204 (Determination of remedies)
would not be subject to review as part of the appeals process.
We set forth the proposed severity and scope scale in Sec. 488.204
(Determination of remedies). We said that, in order to determine the
seriousness of deficiencies, the survey team would apply the following
severity and scope scale guides:
Severity scale.
The four levels of the severity scale are as follows:
--Level 1. Any deficiency with respect to requirements for long
term care facilities that does not meet the criteria for severity
levels 2, 3, or 4.
--Level 2. Either a negative outcome or resident rights violation
has occurred, or, in the survey team's judgment, the ability of the
individual to achieve the highest practicable physical, mental, or
psychosocial well-being has been compromised, or both.
--Level 3. Potential physical harm, which could cause serious harm,
impairment or death. In the survey team's judgment, there is a
recognizable health or safety hazard, which if left unabated, is likely
to cause serious harm, impairment or death.
--Level 4. Actual physical harm, which has caused serious
impairment or death. Life threatening harm, severe impairment, or death
has occurred.
Scope scale.
The four levels of the scope scale are as follows:
--Level 1--Isolated. The survey team might conclude that a
deficiency is isolated if its perception is such that, it believed the
deficiency to exist only in a very limited number of cases.
--Level 2--Occasional. The survey team might conclude that a
deficiency is occasional if, in its combined judgment, the deficiency
is identified in a number of cases, but does not appear to reflect a
pattern of facility behavior.
--Level 3--Pattern. The survey team might conclude that a pattern
exists where, in its judgment, there are a sufficient number of
repeated observations that it is likely that the deficiency might exist
in cases not reviewed by the team.
--Level 4--Widespread. The survey team might conclude that a
deficiency exists in sufficient number that, in its judgment, the
deficiency represents a systemic or pervasive practice of the facility.
12. Application of Remedies
At Sec. 488.210, we proposed that, if a determination has been made
that a deficiency would present an immediate and serious threat to
resident health or safety, HCFA or the State would take immediate
action to appoint a temporary manager to remove the threat, impose
other remedies as it determines necessary to bring the facility into
full compliance, and/or terminate the facility's participation in the
program within 23 calendar days of the last day of survey. If the
facility does not accept temporary management, HCFA or the State would
immediately terminate the provider agreement within 23 calendar days of
the last day of survey. If the facility accepts temporary management
but does not remove the immediate and serious threat within 23 calendar
days of the appointment of the temporary manager, HCFA or the State
would terminate the provider agreement on the 23rd day from that
appointment. The 5-calendar day period for providing notice to
facilities of termination of a provider agreement as specified in
Sec. 489.53 (Termination by HCFA) of the regulations would be included
within this 23-day period.
At Sec. 488.212, we proposed that, if the facility is found, at the
time of the survey, to have deficiencies that do not pose an immediate
and serious threat to resident health and safety, HCFA or the State may
allow the facility to continue to participate for up to 6 months from
the date of the survey if--
The State finds that it is more appropriate to impose
alternative remedies than to terminate the facility;
The State survey agency has submitted a plan of correction
approved by HCFA; and
The facility (in the case of a Medicare SNF or the State
in the case of a Medicaid NF) agrees to repay to the Federal government
payments received if corrective action is not taken in accordance with
the approved plan of correction.
We said that, if a facility does not meet these eligibility
criteria for continuation of payment, HCFA would and the State must
terminate the facility's provider agreement. If any deficiency at any
severity or scope level remained uncorrected within 90 calendar days
after the last day of survey, HCFA would and the State must deny
payment for new admissions.
We proposed that HCFA terminate provider agreements for SNFs and
NFs, and stop FFP for NFs for which participation was continued, if
cited deficiencies were not corrected within 6 months of the last day
of the survey.
In the proposed rule, we also set forth specific rules on how to
apply both low severity and scope levels and all other severity and
scope levels as follows:
Low severity and scope levels
--If both the severity level and the scope level are 1, a
deficiency still exists, but no alternative remedies are imposed or
plan of correction required as long as correction is achieved within 90
calendar days from the last day of survey.
--The survey agency would be required to give the facility a
summary of the deficiencies.
--If the survey agency identifies a recurrence of these
deficiencies at the next standard survey, HCFA or the State would be
required to impose one or more remedies specified at Sec. 488.206
(Available remedies) due to the persistence of the deficiencies over
time.
All other severity and scope levels
--If the severity level is 1 and the scope is 2, 3, or 4, the State
must (and HCFA does) require a plan of correction and may impose one or
more remedies specified at Sec. 488.206.
--If the severity level is 2 and the scope level is 1 or 2, the
State must (and HCFA does) impose one or more of the remedies specified
at Sec. 488.206 paired with a plan of correction.
--If the severity level is 2 and the scope level is 3 or 4 in
quality of care, the State must (and HCFA does) impose one or more of
the remedies specified at Sec. 488.206 paired with a plan of
correction. The State would be required to notify the attending
physician of each resident to which such finding is made, as well as
any State board responsible for the licensing of the facility
administrator.
13. Procedures for the Imposition of Remedies Notice
HCFA or the State would give the facility notice of intent to
impose a remedy. At Sec. 488.202(f), we proposed that HCFA or the State
give the facility notice of the remedy at least 2 days but not more
than 4 days before the effective date of the remedy in immediate
jeopardy situations, and at least 15 days before the effective date of
the remedy when there is no immediate jeopardy. Therefore, in practice,
in immediate jeopardy situations, the remedy could be imposed anytime
after the minimum 2 day notification period, but not later than the
10th day after the last day of survey. This would allow up to 5 days
for HCFA or the State to send the notice and an additional 2 to 4 days
before the remedy is imposed.
14. Hearings: Medicare and Medicaid Consistency
We proposed revising Sec. 431.153 (Evidentiary hearing) to provide
that States must impose remedies, with the exception of civil money
penalties, against providers of services at the time that they identify
the existence of violations of Federal requirements, notwithstanding
any other provision of State law. We intended that, under this
provision, sanctions available under the program would become effective
immediately after the identification of program violations and
notification to the provider of the deficiencies and the impending
sanction(s).
We also proposed to delete Sec. 442.40 (Availability of FFP during
appeals). This section has enabled States to continue to receive FFP,
under certain circumstances, for facilities whose provider agreement
has been terminated, for up to 120 days after the effective date of the
termination if a required administrative hearing decision has not been
reached. In light of our objective to be more aggressive in the
enforcement of nursing home requirements by requiring that States
provide only post-action hearings, just as is done under Medicare, we
see Sec. 442.40 as plainly inconsistent with this objective.
15. Continuation of Payment Pending Remedies
At Sec. 488.232, we proposed that HCFA may continue payments to a
facility with deficiencies if the following criteria are met:
The State finds that it is more appropriate to impose
alternative remedies than to terminate the facility;
The State has submitted a plan of correction approved by
HCFA; and
The facility in the case of a Medicare SNF or the State in
the case of a Medicaid NF agrees to repay the Federal government
payments received if corrective action is not taken in accordance with
the approved plan of correction.
We also proposed that HCFA or the State may terminate the SNF or NF
agreement before the end of the 6-month correction period if these
criteria are not met. We said that, if any of these criteria are not
met or agreed to by either the State or the facility, the facility
would receive no Medicare or Federal Medicaid payments, as applicable,
from the date of the determination of noncompliance by either HCFA or
the State.
If the criteria are met, HCFA or the State may continue payments to
a facility with deficiencies that do not constitute an immediate and
serious threat for up to 6 months from the last day of the survey. If
the facility does not correct deficiencies by the end of the period
specified, HCFA would--
Terminate the provider agreement for Medicare SNFs; and
Discontinue FFP to the State for Medicaid NFs. The State
may terminate the provider agreement for NFs.
We proposed that the required termination notice would be sent 15
days before the end of the 6-month period, and that the notice period
would run concurrently with the last 15 days of the 6-month period.
Medicare SNFs and dually participating facilities adversely
affected by the requirement to repay to the government all payments
received if corrective action is not taken could appeal the decision.
16. Resolution of Differences in Findings and Recommended Remedies
Between State and HCFA for non-State operated Medicaid Facilities and
Dually Participating Facilities.
Sections 1919(h) (6) and (7) of the Act set forth special rules for
when the State and Secretary do not agree on findings of noncompliance,
timing of termination or where remedies overlap. To implement these
provisions, we provided in Sec. 488.234 that, if HCFA finds that a non
State-operated NF or a dually participating facility has met all
requirements, but the State survey agency finds that the facility has
not met all requirements and the failure does not immediately
jeopardize the health and safety of its residents, the State survey
agency's finding will control (proposed Sec. 488.234(a)(1)). In this
instance the State's certification of noncompliance would control. The
dually participating facility would have its hearing rights met through
the procedures set forth at 42 CFR part 498. The non-State operated NF
would have its hearing rights met through the procedures set forth at
42 CFR part 431. If HCFA finds that a NF or a dually participating
facility has not met all requirements and the failure does not
immediately jeopardize the health or safety of its residents, but the
State survey agency has not made such a finding, HFCA's finding could
control. In this case, HCFA would impose the remedies and would permit
the State to continue payments to the facility during the correction
period (proposed Sec. 488.234(a) (2) and (3)). These provisions specify
the means to determine compliance or noncompliance for the Medicaid NF
which will then, by virtue of section 1919(h)(8) of the Act, become the
compliance/noncompliance decision for the Medicare SNF.
If both HCFA and the State find that a facility has not met all
requirements and neither find that the failure immediately jeopardizes
the health or safety of its residents, the following procedures would
apply:
If both HCFA and the State find that a facility's
participation should be terminated, the State's timing of any
termination (as specified in proposed Sec. 431.153(c)) would control so
long as the termination date does not occur later than 6 months after
the date of the finding to terminate (Sec. 488.234(b)).
If HCFA, but not the State finds that a facility's
participation should be terminated, HCFA's decision to terminate would
prevail and HCFA would permit continuation of payment during the period
prior to the effective date of termination, not to exceed 6 months from
the last day of survey (Sec. 488.234(b)(l)).
If the State, but not HCFA finds that a facility's
participation should be terminated, the State's decision to terminate
and the timing of the termination (as specified in proposed section
431.153(c)) would control (Sec. 488.234(b)(2)).
If HCFA or the State, but not both, would impose one or
more remedies that are additional or alternative to termination, the
additional or alternative remedies would also be applied
(Sec. 488.234(d)(l)).
If both HFCA and the State would impose one or more
remedies that are additional or alternative to termination, only the
additional or alternative remedies of HCFA would apply
(Sec. 488.234(d)(2)).
17. Termination of Provider Agreements and Discontinuation of FFP
At Sec. 488.238, we said that termination of the provider agreement
would end payment to the facility and any alternative remedy. We
proposed that HCFA and the State may terminate a facility's provider
agreement if a facility--
Fails to correct deficiencies within the specified time;
Fails to submit a plan of correction within the time
specified by HCFA; or
Does not meet the eligibility criteria for continuation of
payment.
We said that HCFA and the State would terminate a facility's
provider agreement if a facility with immediate and serious threat
deficiencies refuses temporary management, if that remedy is offered by
HCFA or the Medicaid agency. In addition, we proposed that, before
terminating a provider agreement, HCFA does and the State must notify
the facility and the public--
At least 2 and not more than 4 calendar days before
termination for a facility with immediate and serious threat
deficiencies; and
At least 15 calendar days before termination for a
facility with non-immediate and serious threat deficiencies.
The current termination notification requirement at
Sec. 489.53(c)(1) requires HCFA to give notice to any provider at least
15 days before the actual effective date of a termination of a provider
agreement, irrespective of whether the situation poses an immediate and
serious threat, except in the case of Medicare SNFs. Section
489.53(c)(2) provides that SNFs with deficiencies that pose an
immediate and serious threat are entitled to notice of the termination
at least 2 days before the effective date of the termination of the
provider agreement. Since the existing regulations do not discriminate
between immediate and serious and nonimmediate and serious threat
situations except in the case of Medicare SNFs, we proposed to amend
Sec. 489.53(c)(2) to require at least 2 and not more than 4 calendar
days notice to all providers of a termination action involving an
immediate and serious threat.
If HCFA or the State terminates the provider agreement, we would
require the survey agency to arrange for the orderly transfer of all
Medicare and Medicaid residents to another SNF or NF. If there is a
closure of a Medicaid NF or dually participating facility by the State,
we proposed at Sec. 488.240 that the State would be required to arrange
for an orderly transfer of all residents.
18. Conflict Resolution
In the proposed rule, we sought public comment about the
desirability and feasibility of establishing a conflict resolution
system whereby facilities dissatisfied with a certification of
noncompliance would be afforded a formal mechanism for disputing
deficiencies prior to the administrative and judicial review processes.
We also requested comments on the best way for such a system to be
implemented.
K. Incentives for High Quality Care
Section 1919(h)(2)(F) of the Act, as added by section 4213 of OBRA
'87, provides that, in addition to the remedies discussed, a State may
establish a program to reward, through public recognition, incentive
payments, or both, nursing facilities that provide the highest quality
care to residents who are entitled to Medicaid. A State would
incorporate such an incentive program in its State plan. We proposed
incorporating this provision in our proposed Sec. 488.153(b).
L. Educational Program
Sections 1819(g)(l)(B) and 1919(g)(1)(B) of the Act provide that
each State must conduct periodic educational programs for the staff and
residents (and their representatives) of nursing homes in order to
present current regulations, procedures, and policies on the survey and
certification and enforcement processes. We proposed incorporating this
provision in Secs. 488.153(c) and 488.184.
M. Conforming Changes
In addition to changes already discussed in this preamble, we
proposed making other conforming changes to regulations under part 431,
442, and 489.
III. Summary of Major Provisions in Final Rule
In response to public comments, we made numerous technical changes
and some major policy changes, which are explained in detail in the
following section. In summary, the major changes include the following:
We reconfigured the criteria used to determine enforcement
remedies when facilities are out of compliance with Federal
requirements, so that there is a clearer correlation between levels of
noncompliance and types of remedies imposed. We have also grouped the
remedies into three remedy categories ranging from least to most
severe. In this final rule, we present an enforcement scheme in which
States may use their own methods for interpreting terms that describe
the relative frequency or seriousness of deficiencies, other than
immediate jeopardy, as long as they are consistent with the guidance
presented in the regulation.
We provide that remedies may cease when substantial
compliance is achieved, and define substantial compliance as ``a
measure of compliance with the participation requirements such that no
deficiencies exist which pose actual harm or have the potential for
more than minimal harm.'' The only exceptions to this rule are those
involving temporary management and State monitoring and denial of
payment imposed for repeated noncompliance. In these cases, in addition
to achieving substantial compliance, the facility must prove to HCFA's
or the State's satisfaction that it will remain in substantial
compliance.
We also revise or add definitions for abuse, neglect,
immediate jeopardy, substandard quality of care, standard survey,
validation survey, extended survey, partial extended survey,
abbreviated standard survey, deficiency, nursing facility, skilled
nursing facility, substantial compliance, noncompliance and revisit.
We clarify the term ``professionals'' as it relates to the
members of a survey team by setting forth examples and by stating that
the State, subject to HCFA approval, determines what constitutes a
``professional.''
We modify the qualifications for temporary managers and
set a salary floor.
We expand the financial, employment, and familial
circumstances that disqualify a surveyor from surveying a particular
facility.
We limit the instances in which a reduction in FFP is
taken for inadequate survey performance to situations when a State
demonstrates a pattern of failure to identify deficiencies in Medicaid
facilities.
We redefine what constitutes inadequate survey
performance.
We amend the regulations text at Sec. 488.312
(Sec. 488.162 of the proposed rule), consistency of survey results, to
require that State survey agencies study surveyor accuracy as well as
consistency.
We clarify that the survey agency will review complaint
allegations and conduct a standard or abbreviated standard survey if
the survey agency concludes that a deficiency in one or more
requirements may have occurred and only a survey can confirm the
existence of the deficiency or deficiencies.
We limit HCFA's and the State agency's discretion to
conduct an extended or partial extended survey to situations in which
substandard quality of care has been identified. HCFA or the State
will, however, continue to have complete discretion to examine any and
all aspects of a facility's performance in order to determine
compliance with the requirements.
We add directed in-service training as a new remedy.
We expressly state that denial of all payment for all
Medicare residents in a facility may be imposed by HCFA and that HCFA
may deny payment to the State for all Medicaid residents in a facility.
We clarify that one or more remedies may be imposed for
one or more deficiencies.
We eliminate as a remedy denial of payment for certain
diagnostic categories.
We add the following to clarify the civil money penalty
provisions:
+ The amount of the civil money penalty can be adjusted to reflect
changes from non-immediate jeopardy to immediate jeopardy and from
immediate jeopardy to non-immediate jeopardy.
+ A civil money penalty is increased for repeated deficiencies
within the same regulatory grouping of requirements in those cases
where a civil money penalty was imposed as a remedy for the first
occurrence of the deficiency;
+ The interest rate for civil money penalties is in accordance with
the rate fixed by the Secretary of the Treasury and used by the
Department for Medicare and determined by the State for Medicaid;
+ The HCFA notice of the imposition of the civil money penalty does
not have to be sent by mail;
+ The HCFA notice of intent to impose the civil money penalty
includes more information regarding the nature of the noncompliance,
dates of accrual and dates of collection;
+ The State's notice to non-State operated NFs when the State takes
action must include at a minimum the information specified in the HCFA
notice;
+ If the facility waives its right to a hearing in writing within
60 days from the date of the notice of intent to impose the civil money
penalty, HCFA or the State reduces the civil money penalty by 35
percent.
+ The civil money penalty may start to accrue as early as the date
the facility was first found out of compliance, as determined by HCFA
or the State. This may be the last day of the survey or, in certain
situations, before that date.
When the basis for imposing a civil money penalty exists,
the administrative law judge or State hearing officer may not set a
penalty of zero, reduce the penalty to zero, or review the exercise of
discretion to impose the civil money penalty.
In the case of civil money penalties, facilities may
challenge the level of noncompliance found by HCFA or the State if a
successful challenge on the issue would affect the range of civil money
penalty amounts from which HCFA or the State could collect a civil
money penalty.
We add a provision to direct the State during a complaint
investigation to follow the specific procedures found at Sec. 488.335
(Sec. 488.185 of the proposed rule), action on complaints of resident
neglect and abuse, and misappropriation of resident property, when
there is reason to believe that an identifiable individual neglected or
abused a resident or misappropriated a resident's property.
We add a requirement that the State must have written
procedures for the timely review and investigation of allegations of
resident neglect and abuse and misappropriation of resident property.
In addition, we have required that the State should take appropriate
precautions to protect a complainant's anonymity and privacy, if
possible.
If arrangements have been made with other State components
for investigation of complaints, we require that the State have a means
of communicating information among appropriate entities, and that the
survey agency retain the responsibility for the investigation process.
We require that findings of investigations be included in
the nurse aide registry within 10 working days of the findings.
We require that the survey agency determine if complaints
violate any requirements of part 483, subpart B and take appropriate
enforcement action as necessary if the allegation of neglect, abuse or
misappropriation of property against an individual is a complaint
against the facility.
We require the notification of physicians of those
residents identified as receiving substandard quality of care.
We clarify that survey findings are reported with
recommendations for corrective action to officials in the enforcing
agency who determine what remedies to impose.
With respect to the disclosure of survey information, we
revise the provisions on fees, charges, and timeframes for release of
information to provide that, with certain exceptions, HCFA or the State
will disclose survey-related information and may charge the public in
accordance with pre-existing Federal regulations and State procedures.
We eliminate 120 days of FFP for a Medicaid NF and retain,
for now, 120 days of FFP for an ICF/MR while the facility waits for a
post-termination hearing.
We formalize the opportunity for informal dispute
resolution currently in the State Operations Manual for providers to
raise unresolved issues to the State agency or the respective HCFA
regional office after the provider's receipt of the official deficiency
statement, and have prohibited challenges by providers from postponing
or otherwise delaying the effective date of any enforcement action.
We specify that a provider in substantial compliance at
the end of 6 months may continue to participate without repayment of
Federal funds.
We delete the section on validation surveys from the
regulation text because the statutory provisions are self- implementing
and regulatory interpretation is not needed to clarify them. The few
elaborations on the requirements in sections 1819(g)(3) and 1919(g)(3)
of the Act are duplicated elsewhere in the regulation and there is
little reason to repeat them.
We renumber proposed Secs. 488.150-488.185 and proposed
Secs. 488.200-488.240 as Secs. 488.300-488.335 and Secs. 488.400-
488.456, respectively, to take into account existing section numbers
already included in part 488, subpart D.
We incorporate the provision of proposed Sec. 488.240,
Transfer of residents, into Sec. 488.426 in the final rule. We revise
the title of Sec. 488.426 to Closure and/or transfer of residents.
We incorporate the provisions of proposed Sec. 488.228
into Sec. 488.406 of the final rule.
IV. Discussion of Public Comments
We received more than 27,900 timely letters in response to our
August 28, 1992 proposed rule. Most were from the owners and operators,
administrators, staff, and attorneys of long term care facilities.
Others were from professional organizations, chains of long term care
facilities, employee unions, and vendors that supply facilities. We
also heard from consumer advocates and ombudsmen, Federal, State, and
local governments, consumer organizations, and residents of long term
care facilities. Families of residents and their guardians and other
legal representatives commented as well. A discussion of the comments
follows. We do not discuss sections of the rule on which the public had
no comment.
Normally, a final rule is not effective until 30 or 60 days after
it is published in the Federal Register. Because implementation of the
complex and far-reaching provisions of this final rule will require a
major, nationwide training effort to train surveyors, their supervisors
and related personnel, this rule is effective June 1, 1995.
Effective Date
Comment: One commenter stated that HCFA must provide nursing homes
with a reasonable education and retraining grace period of no less than
one year before implementing the new survey standards so that
facilities can adjust to the enormous changes. The States and HCFA
should provide reasonable funding to ensure that training is completed
before the new requirements take effect. There is a precedent for this
in HCFA's recent recognition that State certification requirements for
home health care aides should be accompanied by State funding to help
facilitate retraining.
Response: HCFA routinely provides a long lag time for the effective
date of particularly complicated regulations and has done so for this
regulation as well. The new long term care requirements were published
in the Federal Register on September 26, 1991 (56 FR 48826), and were
effective April 1, 1992. This final enforcement rule should have no
effect on the requirements for long-term care as stated in the
September 1991 regulation and the facilities should have had ample time
to become familiar with its requirements. Our primary concern is to
provide oversight for the protection of residents in nursing homes who
are dependent upon others for the care they receive. It would serve no
purpose to allow facilities to have additional time to become familiar
with requirements of which they are already aware. Our responsibility
is to continue to move forward in enacting the enforcement provisions
for long term care facilities.
Part 431 State Organization and General Administration
Comment: In response to our proposed revisions to part 431, most
opposing comments concerned the effect on ICFs/MR of withdrawing FFP
during appeals. Some commenters noted that OBRA '87 specifically
exempted ICFs/MR from its scope, and stated that it is not appropriate
to change the ICF/MR rules in implementing a law that applies to other
facilities. Some commenters stated that the discussion on ICFs/MR was
lost within the SNF/NF regulations, and there was no discussion in the
preamble concerning applicability to ICFs/MR. Some stated that HCFA
provided no rationale for this change in the ICF/MR rules, and
therefore a proposed rule should be published which allows for full
notice and comment rulemaking. Some commented that if the proposal had
been written in a more direct manner, more groups would have written to
object.
Response: We agree that it would be preferable to include the
provisions applicable to ICFs/MR at a later date in rulemaking focused
on ICFs/MR. Therefore, we are adopting the commenters' proposals that
the 120 days of FFP continue for ICFs/MR until this issue may be more
fairly resolved in such a rulemaking. Therefore, at this time, we are
leaving the existing appeals system in place for ICFs/MR. There were
other comments concerning ICFs/MR that are outside the purview of this
regulation, and are therefore not addressed in this discussion.
For the reasons stated directly above, we are revising
Secs. 431.151, 431.153, and 431.154 to delete reference to SNFs and
ICFs as follows:
Sec. 431.151 (``Scope and applicability.'') is revised so
that subpart B of part 431 specifies the appeal procedures the State
must make available to an ICF/MR for which the State denies,
terminates, or fails to renew certification or a provider agreement for
the Medicaid program.
Sec. 431.153 (``Evidentiary hearing.'') is revised to
state that
--An ICF/MR whose certification or provider agreement is denied,
terminated, or not renewed must be given an opportunity for a full
evidentiary hearing on the denial, termination or nonrenewal;
--If the facility requests a hearing, it must be completed either
before the effective date of the denial, termination or nonrenewal or
within 120 days after that date; and
--The hearing must, at a minimum, include the provisions of
Sec. 431.153(e).
Comment: Several commenters responded to our specific request for
comments on whether States, adversely affected by the repayment
statutory provisions of section 1919(h)(3)(D), should have the right to
appeal resulting disallowances to the Departmental Appeals Board (DAB)
in addition to appealing a provider's certification of noncompliance
under part 498. The commenters said that States should have this right
to appeal but believed that few States would find it necessary to
exercise this right.
Response: We agree that States probably would not often find it
worthwhile to challenge a decision that had withstood the test of an
appeal in accordance with part 498. However, because section 1116(d) of
the Act provides States with a statutory right to reconsideration
whenever HCFA takes a disallowance, and regulations at 45 CFR part 16
provide States with a hearing before the DAB when disallowances are
made, we agree that appeal to the DAB should be an option for the
States. At any such DAB hearing, the decision of the ALJ upholding
HCFA's adverse action against the provider would, of course, be part of
the evidence.
Comment: A few commenters noted that State hearings will
significantly increase, and stated that the regulatory impact statement
fails to consider the amount of time surveyors and other staff,
including attorneys, will need to prepare for and participate in
hearings. They commented that overall costs for which HCFA must
reimburse the states will be increased.
Response: We recognize that the revised regulations expand the
initial determinations for which States are required to grant an
appeal. However, we have no program experience upon which to base a
prediction of appeal volume or costs. There is not even a precedent to
follow from the Medicare program, inasmuch as the expanded initial
determinations are also new in the Medicare regulations. We anticipate
that, in many cases, providers will be able to meet the necessary
requirements before remedies are to be imposed, thus obviating the need
for a hearing. Moreover, we are finding that the percentage of
facilities with no deficiencies continues to increase, thereby causing
us to predict fewer facilities facing some form of appealable
enforcement action than has been the case previously. Because of these
factors which may affect the increased number of initial determinations
that are appealable, we can offer no valid prediction as to effect on
volume or costs of appeals. However, we expect that the informal
dispute resolution process will reduce the number (or scope) of adverse
actions that lead to a hearing. Any increased net costs to States that
are found to occur will be reflected in the budget process.
Because we are now providing for an informal dispute resolution, we
are revising Sec. 431.154 (``Informal reconsideration'') to delete
references to SNFs and NFs and state that--
If the State decides to provide an ICF/MR with an
opportunity for an evidentiary hearing required by Sec. 431.153(a) only
after the effective date of a denial of participation or termination,
the State must offer the ICF/MR an informal reconsideration, to be
completed before the effective date of the adverse action; and
The informal reconsideration must, at a minimum, include
--Written notice to the facility of the denial of participation or
termination, and the findings upon which it was based;
--A reasonable opportunity for the facility to refute those findings in
writing; and
--A written affirmation or reversal of the denial, termination, or non-
renewal.
Section 442.40 Availability of FFP During Appeals
We proposed deleting Sec. 442.40, which presently provides for
continuing FFP for up to 120 days after the effective date of
termination of a Medicaid provider agreement if an appeal is pending.
(See the discussion of comments on part 431 above.)
Comment: Several commenters wanted to retain the current provisions
which allow for up to 120 days of FFP during a State's appeal process.
A few wanted Federal funding to continue until a final decision is
issued after a hearing. A few stated that elimination of the current
rule would provide no benefit to the overall process.
Response: As we stated in the proposed rule, it is our belief that
the needs of individual residents are best served by the availability
of prompt and effective remedial action that will motivate the fastest
efforts by providers to comply with Federal program requirements. The
Congress has already set the maximum time for a termination at 6
months. Because a State could be paid for perhaps as long as 4 months
after the effective date of provider termination, the State would have
no incentive to challenge NFs to promptly comply with all program
requirements. This is because, in all likelihood, the State would
continue funding the Medicaid facility while receiving Federal
payments. If we eliminate Federal funding to the State on a more
accelerated schedule, States are likely to stop funding the NF once we
stop Federal payments to the State. Thus, a greater incentive will
exist for NFs to promptly comply with program requirements. Moreover,
because the 120-day provision would significantly delay the imposition
of certain remedies, it would not be consistent with section 1919(h)(2)
of the Act, which calls for States to minimize the period of time
between the identification of deficiencies and the imposition of
remedies. In our opinion, the residents will benefit because the
facilities in which they reside will come into substantial compliance
faster. However, for the reasons previously explained, we have decided
to continue FFP to ICFs/MR whose agreements have been terminated for up
to 120 days after termination while we work on the publication of a
separate rulemaking on ICF/MR policy.
Comment: A few commenters stated that if pre-hearings were
provided, the 120 day regulation would not be necessary for SNFs and
NFs, but that if pre-hearings were not provided, the 120 regulation
should be retained in order to give a facility time to present its side
of the story before suffering irreparable harm.
Response: As discussed elsewhere in this preamble, we are providing
for dispute resolution beginning with the provider's receipt of the
official Statement of Deficiencies, in order to give facilities an
opportunity to rebut survey findings early in the process. By adding
this feature to the enforcement process, we are balancing the needs of
facilities to avoid unnecessary disputes and protracted litigation, on
one hand, with the interests of facility residents, which we believe to
be paramount, in assuring the most rapid correction of deficiencies. In
so doing, we believe that the continued application of the 120- day
rule would upset this balance of interests that we believe the Congress
intended us to have.
Comment: A few commenters predicted that the courts would be
clogged with pretermination or presanction hearings if FFP were denied
during the State appeal procedures.
Response: Post-termination hearings have been upheld by all the
circuit courts that have analyzed the issue of whether post-termination
hearings satisfy the due process clause of the Constitution (see
discussion titled, ``Hearings: Medicare and Medicaid Consistency'').
Moreover, we do not believe that the courts will be eager to entertain
legal challenges from providers that have failed to exhaust their
administrative remedies.
We note that the Federal courts are not clogged with pre-
termination challenges when Medicare agreements are terminated and
Federal funding ceases on the effective date of termination. Under both
Medicare and Medicaid, 30 days of funding will be available, as it is
now, to provide a period of time for orderly transfer of residents.
Comment: A few commenters believed that HCFA would be punishing
those States that aggressively implement the Act, and some noted that
States would have a financial incentive to ``settle'' during the survey
process.
Response: Because the Medicaid program is a joint Federal-State
program, we do not believe that States have an incentive to spend their
own State money on nursing care provided in a facility that does not
meet the statutory requirements.
Comment: Some wondered why HCFA's finding of noncompliance takes
precedence over a State survey agency's finding of compliance, yet HCFA
has no obligation to provide FFP during the appeal.
Response: HCFA's finding of noncompliance takes precedence over a
State's finding of compliance because the Act mandates this result in
sections 1919(h)(6) and 1919(g)(3)(A). The Congress provided detailed
procedures for resolving differences between a State and HCFA, but did
not provide that FFP should continue merely because HCFA and a State
disagree about a facility's compliance status. If HCFA's termination
determination is overturned as a result of the appeal process, the
State would receive FFP based on the reinstated provider agreement
should the State have continued to make Medicaid payments to the
facility.
Comment: Some commenters apparently equated the availability of 120
days FFP during the hearing process with providing a pre-termination
hearing. These commenters noted that Medicare's post-termination
hearing does not cause concern to most providers because Medicare pays
for only a small portion of days, whereas, to require post-termination
hearings for Medicaid will cause greater concern because more money is
at stake.
Response: As we explain more fully elsewhere in this preamble, we
believe it is important that, in light of the great similarity between
facility requirements in Medicare and Medicaid and the fact that such a
large percentage of facilities participate in both programs, appeal
procedures ought to be the same for both programs. Additionally,
because of the informal opportunities to resolve differences in the
form of an informal dispute resolution mechanism, we believe that a
facility's concerns for due process are more than adequately protected
when balanced with the interests of nursing home residents in the swift
correction of deficiencies.
Redesignation of Sections
A new Subpart D of part 488, consisting of Secs. 488.201-488.211,
became effective on August 31, 1992, shortly after the proposed rule
was published on August 28. This requires that we designate Subpart E,
which was to consist of Secs. 488.150-488.185, with subsequent numbers.
To assist the reader, we are publishing the new table of contents for
Subpart E, with designations of the proposed rule shown in parenthesis.
In the following discussions, we refer to the sections as renumbered,
with the proposal's identification included only if distinction is
necessary.
Sec.
488.300 Statutory basis. (Sec. 488.150)
488.301 Definitions. (Sec. 488.151)
488.303 State plan requirement. (Sec. 488.153)
488.305 Standard surveys. (Sec. 488.155)
488.307 Unannounced surveys. (Sec. 488.157)
488.308 Survey frequency. (Sec. 488.158)
488.310 Extended survey. (Sec. 488.160)
488.312 Consistency of survey results. (Sec. 488.162)
488.314 Survey teams. (Sec. 488.164)
488.318 Inadequate survey performance. (Sec. 488.168)
488.320 Sanctions for inadequate survey performance. (Sec. 488.170)
488.325 Disclosure of results of surveys and activities.
(Sec. 488.175)
488.330 Certification of compliance and noncompliance.
(Sec. 488.180)
488.331 Informal dispute resolution. (Not in proposal)
488.332 Investigation of complaints of violations and monitoring of
compliance. (Sec. 488.182)
488.334 Educational programs. (Sec. 488.184)
488.335 Action on complaints of resident neglect and abuse, and
misappropriation of resident property. (Sec. 488.185)
Section 488.301 Definitions
Comment: Many commenters were concerned that the proposed
definition of ``abuse'' is too broad and ambiguous. Unless the
definition is amended, they believe it will generate inconsistency in
the survey process and overburden the system with complaints of abuse.
Other suggestions and recommendations are as follows:
Willfulness and/or deliberate intent should be
incorporated into the definition;
Change ``and/or otherwise disregard of an individual which
could cause or result in mild to severe harm'' and replace with ``has
caused or creates a high probability of causing serious harm'';
Physical harm should be defined; include a definition of
assault suggested by a particular State's definition;
The phrase ``otherwise disregard of an individual'' should
be deleted as this statement more accurately describes neglect;
Incorporate the definition of abuse as found in the Older
Americans Act.
Response: We have considered the above comments and are revising
the definition of abuse in Sec. 488.301 to address some of the
aforementioned concerns. However, we do not believe it appropriate to
adopt any one State's definition as there is no evidence to suggest
that one definition is superior to another. We are adopting the major
concepts of the definition in the Older Americans Act. Therefore, the
modified definition of abuse now reads: Abuse means the willful
infliction of injury, unreasonable confinement, intimidation, or
punishment with resulting physical harm, pain or mental anguish.
Comment: Some commenters suggested that we require that the
resident perceive the conduct as abusive.
Response: We do not accept this comment. Our obligation is to
protect the health and safety of every resident, including those that
are incapable of perception or are unable to express themselves. This
presumes that instances of abuse of any resident, whether cognizant or
not, cause physical harm, pain, or mental anguish.
Comment: Some commenters believed that the definitions of abuse and
neglect should also apply to nurse aides in hospitals as well as in
nursing facilities.
Response: This comment falls outside the purview of this
regulation. This rule specifically pertains to the survey,
certification and enforcement of requirements of participation for SNFs
and NFs.
Comment: Some commenters thought that the proposed definition of
abuse was inconsistent with that in Sec. 483.13.
Response: Section 483.13(b) does not provide a definition of abuse.
What it does provide is a list of the types of abuse from which
residents have a right to be free. The definition, a statement as to
the meaning of the term ``abuse,'' is offered at Sec. 488.301.
Comment: Several commenters thought the proposed definition of
``neglect'' was too broad and ambiguous. They contend it is necessary
to narrow the definition in order not to inundate the system with
complaints. Some commenters requested that the terms ``willful'' and
``intent'' be inserted into the definition to limit the scope of
actions that could be considered neglect.
Response: In order to promote consistency in the survey process,
there needs to be a common definition of neglect for a variety of
applications. We have, therefore, adopted the concept of the definition
used in the Older Americans Act, as we explain below. That definition
does not incorporate the terms ``willful'' or ``intent.'' While an act
of neglect can be intentional, neglect can also occur unintentionally.
However, we are specifying at Sec. 488.335(e) that a State must not
make a finding that an individual has neglected a resident if the
individual demonstrates that such neglect was caused by factors beyond
his or her control. If the inattentiveness is due to factors within
that person's control, intentional or unintentional, he or she can be
considered to have neglected the resident(s). Therefore, while
willfulness and intent may be considered when a State finds that an
individual has neglected a resident, we believe the terms ``willful''
or ``intent'' should not be included in the definition because neglect
can occur unintentionally.
Comment: Some commenters perceived that, in order for a finding of
neglect to be made against an individual, the alleged neglect must be
within the individual's control or job responsibility. It was suggested
that a provision be added to the proposed definition that includes the
individual's ``breach of duty to provide * * * needed * * * services.''
The commenters contend that the proposed definition places the blame
upon the individual and excludes the extent of the culpability of the
facility to provide the necessary services or goods.
Response: We agree that an employee should not be found to have
neglected a resident if the neglect was caused by factors beyond the
control of the employee. As this provision is already addressed in
Sec. 488.335(e), we do not believe it needs to be restated in
Sec. 488.301.
Comment: Other commenters suggested their own State definition of
neglect should suffice in order not to confuse facilities with separate
definitions.
Response: As noted earlier, there has been no evidence to suggest
that any State definition is preferable to ours. In fact, we believe
allowing each State definition to stand, as is, would increase
confusion among the providers and promote inconsistency from State to
State.
Comment: Many commenters wished to add the phrase: ``Each resident
should be free from * * *,'' prior to the proposed definition of
neglect.
Response: We agree that each resident should be free from neglect
as well as other forms of mistreatment. This prohibition of neglect is
inherent in Sec. 483.13(c). We do not believe the phrase suggested by
the commenters defines the term. Therefore, we did not include it in
Sec. 488.301.
Comment: Other commenters requested that we require (within the
definition of neglect) that evidence be presented that physical,
emotional or psychological harm or some other negative outcome had
occurred.
Response: We do not accept this comment because neglect may be
determined even if no apparent negative outcome has occurred. The
potential for negative outcome must also be considered. For example,
instances of neglect may include, but are not limited to, being left to
sit or lie in urine or feces, isolating dependent residents by leaving
them in their rooms or other isolated locations, or failing to answer
call bells to provide needed assistance.
Comment: Many commenters believed that ``timely'' should be removed
from the definition of neglect or else be defined, as it is overly
broad. Other commenters wish to add the language incorporated within
section 102(37) of the Older Americans Act.
Response: Although the term ``timely'' does not appear in the final
definition, we believe timeliness is an integral component in
determining neglect. A delay in providing needed services for a
resident has the potential to cause physical harm and/or mental
anguish. Such a delay (or lack of timeliness) can be considered neglect
under the definition we are incorporating in the final regulation. We
are adopting the concept from the Older Americans Act which provides
that neglect means failure to provide goods and services necessary to
avoid physical harm, mental anguish, or mental illness.
Comment: Many commenters asked that HCFA include the following
occupations in the proposed list of licensed health professionals:
Clinical Nurse Specialist;
Medical Records Specialist;
Dietitian;
Social Work Assistant;
Speech Pathologist or Audiologist;
Recreational or Activities Specialist;
Respiratory Therapist;
Dentist or Dental Hygienist;
Optometrist;
Podiatrist;
Pharmacist;
Psychologist;
Chiropractor;
Nursing Home Administrator; and
All other licensed health professionals.
Other commenters believed that licensed practical nurses (LPNs)
should not be included on the list because, although licensed, LPNs are
not professional nurses by education or by legal accountability and
must work under the supervision of a registered nurse or a medical
doctor. It was also suggested that the term be changed to ``licensed
health personnel.''
Response: We are deleting the definition of ``licensed health
professional'' as it is not used in this part.
Comment: Several commenters recommended changing the proposed
definition of ``misappropriation of resident property'' to apply to the
resident's ``real or personal property,'' as opposed to ``belongings or
money,'' because they believe the current language is not broad enough
to encompass every type of resident property. Other commenters
recommended that the definition include ``attempted'' misappropriation
or the ``intent to deprive.''
Response: We do not discern any substantial difference between the
terms ``belongings or money'' and ``real or personal property.'' We
believe the terms ``belongings or money'' are sufficient to implement
the statutory requirement in sections 1819(g)(1) and 1919(g)(1) of the
Act. Additionally, the concept of ``intent to deprive'' is inherent
within the phrase ``deliberate misplacement'' in the definition.
Therefore, we are not accepting these comments as we believe the
suggested changes do not substantially enhance the proposed definition.
Comment: Some commenters proposed to limit the definition of
misappropriation to that incurred by a nurse aide.
Response: We disagree. Limiting the definition of misappropriation
to a specific individual would exempt all others from the provisions of
the Act which explicitly states in sections 1819(g)(1)(C) and
1919(g)(1)(C):
* * * allegations of * * * misappropriation of resident property
[is] by a nurse aide of a resident in a nursing facility or by
another individual used by the facility in providing services to
such a resident.'' (emphasis added)
Comment: Some commenters wanted our definition to set a minimum of
$50 on the amount of money or property which can be deliberately
misplaced or wrongfully used without the resident's consent in order to
be considered misappropriation of resident property.
Response: We disagree because we believe that it is impossible to
quantify the value of some personal items. Moreover, possessions,
regardless of their apparent value to others, must be treated with
respect, for what they are and for what they may represent to the
resident. As no such limitations are dictated by the Act, we interpret
misappropriation to apply to any belongings or money, regardless of
their actual value.
Comment: Some commenters questioned whether the proposed definition
of ``nurse aide'' includes dietary aide or private duty paid
individuals. They recommended that the definition of nurse aide be
amended to read ``provides personal care and nursing related services
under the supervision of licensed nurses.'' Additionally, commenters
wanted a list of distinct duties required of nurse aides to be added to
the final definition.
Response: We do not adopt these comments because the definition of
a nurse aide is specified by sections 1819(b)(5)(F) and 1919(b)(6)(F)
of the Act and by implementing regulations at Sec. 483.75(e).
Comment: Some commenters stated that the phrase ``substandard
quality of care'' was specifically used in the Act and that HCFA should
recognize and adopt the same language.
Response: We agree with the above comment. To be consistent with
the Act, we are using that terminology throughout this final rule,
where appropriate.
Comment: Some commenters wanted HCFA to include ``any violation of
the requirements that leads to, or is likely to lead to a failure of
the resident to achieve the highest practicable physical and mental
well-being'' in the definition of substandard quality of care.
Response: We are not accepting this suggestion. We believe that any
infringement of any requirement could be construed to compromise some
ability of a resident to achieve his or her highest practicable well-
being. The definition proposed by the commenter could encompass every
deficiency under every regulatory requirement. Given the ramifications
a determination of substandard quality of care has for a provider (loss
of NATCEP, notification of licensing boards and physicians), we are
limiting the definition of substandard quality of care to reflect the
most egregious situations related to participation requirements under
Secs. 483.13 (``Resident behavior and facility practices''), 483.15
(``Quality of life''), and 483.25 (``Quality of care''). However, we
are not minimizing deficiencies in other participation requirements. As
discussed later under the response to public comments for Sec. 488.401,
it is possible that a deficiency under any requirement can encompass
any degree of seriousness. Deficiencies under the remaining
requirements can be more appropriately addressed through specified
remedies rather than through the loss of NATCEP which would be
precipitated by a substandard quality of care determination.
Comment: Several commenters thought that the scope and severity
grid should not be a determining factor in defining substandard quality
of care.
Response: As we discuss later at Sec. 488.404, we are removing
references to the scope and severity grid from the definition of
substandard quality of care. We are retaining, however, concepts of
seriousness and frequency which we believe are important to determining
this type of deficient facility practices.
Comment: Other commenters wished to include compliance history in
the final definition of substandard quality of care.
Response: We do not agree with this comment. Our first priority is
to protect the health and safety of the residents. If violations are
identified, the problem must be rectified, regardless of the facility's
compliance history.
Comment: Some commenters wanted us to explicitly state in the
definition of substandard quality of care that deficiencies of
immediate jeopardy are regarded as substandard quality of care.
Response: We are not adopting this comment. Given the ramifications
a finding of substandard quality of care has for a provider, we are
limiting the definition of substandard quality of care to those
requirements mentioned previously. The only immediate jeopardy
deficiencies considered substandard quality of care are those
determined under the participation requirements of Secs. 483.13
(``Resident behavior and facility practices''), 483.15 (``Quality of
life''), and 483.25 (``Quality of care''). Because we are removing
references to the scope and severity scales from the definition of
substandard quality of care we believe that it is necessary to amend
the definition. We are now defining substandard quality of care as care
furnished in a facility that has one or more deficiencies related to
participation requirements under Secs. 483.13 (``Resident behavior and
facility practices''), 483.15 (``Quality of life''), or 483.25
(``Quality of care'') that constitutes immediate jeopardy, a pattern of
widespread actual harm that is not immediate jeopardy, or widespread
potential for more than minimal harm, but less than immediate jeopardy
with no actual harm.
Comment: Some commenters wanted compliance and correction to be
defined as ``substantially meeting all applicable certification
requirements.''
Response: While we do not agree with the suggested definition, we
do agree with the intent of the commenters that there should be some
range of compliance within which prospective and current providers may
participate. This concept is discussed further in Sec. 488.330
``Certification of compliance''. Accordingly, in Sec. 488.301, we
define ``substantial compliance'' to mean a level of compliance with
requirements of participation such that any identified deficiencies
pose no greater risk to patient health and safety than the potential
for causing minimal harm.
As we discuss later in this preamble, a facility may avoid a remedy
even if it has failed to comply perfectly with all statutory
requirements. However, the facility still has the duty to provide the
care to each resident which enhances the chances for positive outcomes
and avoids negative ones. If a single resident experiences any harm, no
matter how minimal, the facility will not have satisfied its statutory
obligations.
We acknowledge that there might be many definitions that we could
have chosen, but in our view, the definition we have settled on best
implements the Act and accommodates both facility and resident
concerns.
Additionally, since we are incorporating the concept of substantial
compliance, we believe it is necessary to provide a definition of
noncompliance at Sec. 488.301. Noncompliance with the requirements of
participation is any deficiency that causes a facility to not be in
substantial compliance.
Section 488.303 State Plan Requirement
Comment: There were several comments concerning the requirement for
and content of incentive programs.
Some commenters suggested that the incentives to reward
quality care be required and implemented on a national scale by HCFA as
well as the States.
A few commenters suggested that the States develop
incentive programs with consultation from residents, families and the
ombudsman.
One commenter presented an elaborate process including
applications, group evaluations and resident participation for any
award.
One commenter said that the regulation should define the
rewards for quality to support quality improvement.
Response: Section 1919(h)(2)(F) of the Act does not permit HCFA to
require the States to establish a public recognition or incentive
payment system for nursing facilities that provide high quality care.
If the commenters mean that the same public recognition or incentive
payment system be permitted for Medicare SNFs, the Act does not
authorize such recognition. In addition, a HCFA program for nursing
facilities would be duplicative.
Section 1919(h)(2)(F) of the Act gives States the flexibility to
decide if an incentive program would be appropriate and how they will
implement the program. If a State decides to implement an incentive
program, the State should have the option to consult those individuals
and organizations it thinks necessary. In the same vein, it would be
inadvisable to restrict the States' programs to elaborate regulatory
procedures because, in so doing, we may inadvertently discourage States
from establishing such programs. Although we encourage States to
develop effective incentive programs, we are not making any changes to
Sec. 488.303 because we want to preserve the States' flexibility in
establishing such incentive programs.
Comment: A few commenters suggested that the Medicaid program
should fund the incentive payments through civil money penalties.
Response: The Act provides that State expenses for the
implementation and maintenance of an incentive program is an authorized
Medicaid administrative expense: the Act does not permit the use of
funds collected from civil money penalties for this purpose. Indeed,
section 1919(h)(2)(A)(ii) of the Act provides that when the State uses
the specified civil money penalty remedy, the State must apply funds
collected through civil money penalties to the protection of the health
or property of nursing home residents. Therefore, we reject this
comment.
Comment: Several commenters suggested that the regulation should go
beyond the Act and specify certain topics and methods of training.
Some wanted mandated educational programs for assessment
and care planning, resident rights and quality of care issues as well
as those in subparts E and F of part 488.
Other commenters believe that the scope of the educational
program should include a section on complaint investigation and
resolution.
A few commenters asked that States work with the ombudsman
program to develop and present training.
Another commenter believes that literature and/or video
presentations would be more effective than State presentations.
Response: Sections 1819(g)(1)(B) and 1919(g)(1)(B) of the Act
require that States conduct educational programs for staff and
residents of facilities regarding current regulations, procedures and
policies of the long term care survey and certification process. We
agree with the commenters that the proposed regulation unnecessarily
restricts the scope of the mandated educational programs. We are
revising it to permit the education programs to cover all aspects of
the long term care survey process so that the States have the
flexibility to structure the educational programs to the needs of the
facilities. The methods to develop the programs (for example,
consultation with the ombudsman program) and the methods of
presentation are being left to the States.
Comment: A few commenters suggested that these requirements be met,
in part, by giving facility staff and residents access to HCFA and
State agency surveyor training sessions.
Response: We believe that this suggestion, if done at the
participant's expense, may have merit. Traditionally, we have not had
the ability within available resources to accommodate all providers or
other interested parties wanting to attend training; our available
resources are devoted, for the most part, to providing timely training
for surveyors. However, being able to offer surveyor training
universally to providers and interested others at their own cost, and
if space allows, may help improve understanding and cooperation between
surveyors and the other parties. We are, therefore, seriously
considering what changes in policy and legislation will be necessary to
allow this.
Comment: One commenter suggested that a review of the State
educational activities be made a part of HCFA's State agency evaluation
program which would assure its implementation.
Response: The HCFA State Agency Evaluation Program (SAEP) currently
is undergoing substantial review and revision. We are unable, at this
time, to assert that a review of State educational activities will
become a part of the revised SAEP. Nonetheless, the HCFA regional
offices will continue to have the responsibility to monitor and assess
the States' educational activities.
Comment: Several commenters suggested that the States be directed
to include bans on all new admissions as a required remedy because a
ban on only Medicaid admissions is discriminatory. A majority of those
commenting suggested that a directed plan of correction also be
included as a required remedy.
Response: We do not have statutory authority to allow the States
the option of banning all new admissions. States are free, however, to
enact their own laws regarding facility licensure that may extend
enforcement options beyond the reach of the Act.
Section 1919(h)(2)(A)(i) of the Act expressly gives States the
authority to impose payment denials with respect to new Medicaid
admissions. While the Act also provides States with the opportunity to
design other remedies, subject to Federal approval, that are as
effective as those enumerated in the Medicaid law, we believe that it
would be inappropriate for us to evaluate a remedy that would be aimed
at the admissions of persons over whom the Medicaid law provides no
jurisdiction. We believe it would be more appropriate to leave to State
law remedies that extend as far as the commenters suggest. In any
event, while a denial of payment for new Medicaid admissions does not
reach all potential admissions, it will provide an incentive to a
facility to correct deficiencies rapidly, which would serve to benefit
not only Medicaid residents but all those persons who are receiving
care at the facility regardless of payment source. Also, States may
provide public notice of the imposition of the denial of payment for
new admissions remedy which would alert potential residents to the
situation in the facility.
We are not accepting the suggestion that directed plans of
correction be a required remedy. As discussed under ``Factors to be
considered in selecting remedies'' later in this preamble, we have
provided a revised enforcement scheme in this final rule that
correlates the seriousness of noncompliance with the selection of
remedies from within specified enforcement remedy categories. While we
do not intend to mandate the specific selection of the directed plan of
correction remedy from among the available enforcement actions for any
specific level of actionable noncompliance, in other words, when the
facility is not in substantial compliance, we note that it is always an
enforcement option and it may be the only remedy used for lower level
deficiencies.
Comment: Some commenters requested that we require States to submit
any alternative or additional remedies to a full State rulemaking
process with an opportunity for comment. Other commenters believed that
States should be allowed to implement additional or alternative
remedies unless HCFA can demonstrate that the State remedies are not as
effective as the HCFA remedies.
Response: The States must follow any internal State procedures
which govern the development and submittal of a Medicaid State plan
amendment. The Act does not require nor do we believe our regulations
should require specific procedures that would limit State prerogatives
for promulgating enforcement policies. Similarly, section
1919(h)(2)(B)(ii) of the Act states that the State must demonstrate
that any alternative remedies are as effective as the remedies
specified in the Act.
Comment: Commenters suggested that the effective remedies
established by the States be made applicable to dually participating
facilities.
Response: We are accepting this comment with some clarification.
Since States may establish their own sanctions through their respective
State plan amendment, and since HCFA will be the entity imposing
sanctions for dually participating facilities, it is highly likely that
a State may choose to impose one of its own remedies on a Medicaid NF
which HCFA would have no authority to impose against the Medicare
provider agreement. It would not be rational for us to proceed with an
enforcement scheme whereby a single facility, by virtue of
participating in both Medicare and Medicaid, would be subject to a dual
enforcement track. Also, and more importantly, since HCFA will be
taking the lead on enforcement actions against dually participating
facilities under part 498, we have concluded that HCFA needs to have
the authority to impose these alternative or additional remedies
against Medicare facilities in the States that have established these
remedies. While we acknowledge that this would not permit consistency
nationally relative to remedies available for dually participating
facilities, we conclude that it is a realistic and necessary response
to statutory intent that enforcement decisions made regarding the
Medicaid agreement, which could include imposition of these ``other''
State remedies, will be applied by the Secretary to the Medicare
agreement as well. Therefore, under the Secretary's general rulemaking
authority, this final rule provides that, if the State's remedy is
unique to the State plan and has been approved by HCFA, then that
remedy, as imposed by the State under its Medicaid authority, can be
imposed by HCFA against the Medicare provider agreement of a dually
participating facility.
Comment: One commenter suggested that the regulations create
penalties for States that fail to implement the State enforcement
rules.
Response: The Act provides no specific penalty for State failure to
implement the enforcement provisions of the Act, nor do we wish to add
one. However, there are existing Medicaid rules regarding the
submission of and adherence to State plan amendments. If a State does
not comply with the Medicaid rules, the failure could lead to Medicaid
administrative sanctions.
Section 488.305 Standard Surveys
Comment: A large number of commenters opposed the provision at
proposed 488.155(b) and suggested we delete it. This section states
that the State survey agency's failure to follow HCFA survey procedures
will not invalidate otherwise legitimate determinations that a
facility's deficiencies exist. Because the provision does not appear in
the Act, a few commenters questioned whether the Congress sanctioned
this policy, and certain commenters asked that facilities be allowed to
appeal surveyor noncompliance with the survey protocol. Many commenters
felt that this provision would encourage disregard of established
survey guidelines, and for this reason one commenter believed this
provision would cause the standard survey to violate the Fourth
Amendment.
Response: We believe the provision accurately reflects the intent
of the Act and are retaining it in Sec. 488.305(b). To invalidate
legitimate determinations of noncompliance and leave them unaddressed
would be in opposition to the mandate of OBRA '87 that all requirements
be met and enforced, and would lead to inconsistent application of the
law.
Sections 1819(g)(2)(C) and 1919(g)(2)(C) of the Act reveal the
intent of the Act very clearly. These sections state that standard
surveys must be conducted based upon a protocol, but add that the
failure of the Secretary to develop, test or validate such a protocol
will not relieve any State or the Secretary of the responsibility to
conduct surveys. Because the Congress intended for survey results to be
binding even when surveys were conducted in the absence of a formal
protocol, it is clear that the Congress views the substance of survey
findings to be of greater importance than the process used to identify
them. An appeal of a deficiency based on surveyor noncompliance with
the established protocol would be inconsistent with this position, and
as a result, we will not offer facilities an appeal on these grounds.
In particular, we wish to avoid situations where otherwise well
documented deficiencies are subject to challenge, and potentially
invalidated, simply because a surveyor did not follow every last detail
of the survey protocol. We believe this would be surrendering all
substance to form and would clearly thwart Congressional will.
Moreover, since the source of binding requirements on facilities is not
in the survey protocol, but in the Act and regulations, the ultimate,
and proper, test of facility noncompliance will not rest on whether the
survey protocol was rigorously followed, but on whether a requirement
of the Act or the regulations has been violated.
The foregoing does not imply that HCFA encourages or condones
disregard of its established survey policy; on the contrary, HCFA
trains surveyors in survey policies and procedures and is responsible
for assessing State survey agency performance and applying sanctions
when there has been a failure to use Federal standards and protocols.
The guidance we provide to surveyors, and the expectation we have that
they adhere to our directives, contradict the claim that surveyors are
given unbridled discretion which would render the standard survey an
unreasonable administrative search in violation of the Fourth
Amendment. Once a facility seeks participation in the Medicare or
Medicaid programs, it must accept the responsibility of demonstrating
its compliance with Federal certification requirements which the
Congress has directed must be done through the survey process. A
facility cannot seek such participation, and accept program funds, and
then argue that Federal or State efforts to monitor compliance with
essential health or safety requirements constitute a violation of the
Fourth Amendment as an unreasonable search and seizure. In any event,
surveys that nursing homes experience in the Medicare and Medicaid
programs are reasonable. They advance the government's interest in
protecting the health and safety of individual residents, and because
of the various requirements for surveys in both the Act the Federal
regulations, no facility can be said to be unaware of its obligations
to permit onsite visits by State or Federal surveyors as a condition of
its participation in these programs. Commercial enterprises, such as
nursing homes, do not have the same expectation to be free of
warrantless searches as individuals in their homes do. Indeed, the
United States Supreme Court has ruled that warrantless searches of
closely regulated businesses do not pose a violation of constitutional
Fourth Amendment protections that commercial enterprises have.
We recognize that protocols and guidelines are necessary to promote
consistent survey practice. However, whether or not a surveyor follows
protocols must be subordinate in importance to whether or not a
facility meets Federal participation requirements. Violations must be
recognized and remedied appropriately if resident interests are to be
protected and integrity is to remain in the enforcement system.
Comment: One commenter questioned whether proposed
Sec. 488.155(a)(3) conflicts with subpart III of Appendix P of the
State Operations Manual, Transmittal No. 250. Section 488.155(a)(3)
would require the State survey agency to include in the standard survey
an audit of written plans of care and residents' assessments. Subpart
III states that a review of the accuracy of resident assessments is to
be performed as part of the extended survey which is triggered by the
identification of a deficiency in quality of care during the standard
survey.
Response: There is no conflict because a review of comprehensive
assessments and care plans is not limited to the extended survey. It is
also a major part of the Quality of Care Assessment performed during
the standard survey (see Task 5 in Appendix P of State Operations
Manual Transmittal No. 250). The review that occurs during the extended
survey is slightly different, though, in that surveyors are directed to
review more recent care plan and assessment information, and are given
more flexibility in choosing sample size than in the standard survey.
Comment: One commenter suggested that we require surveyors to
determine whether a facility attempted to accommodate both the exercise
of a resident's rights and the resident's health when there appears to
be a conflict. The commenter believed that accommodation should include
exploration of care alternatives through a thorough care planning
process in which the resident may participate.
Response: Surveyors are presently instructed to make such
determinations. At tag number F295 in the Interpretive Guidance to
Surveyors, the surveyor is directed to determine whether the care plan
reflects the facility's efforts to find alternative means to address a
problem if a resident has refused treatment. Additional guidance
concerning this matter is found at tags F174 and F158. We believe such
specific instructions are more appropriately located in the State
Operations Manual than in the regulation itself, so we are not
incorporating them into the regulation.
Comment: A few commenters suggested that we explicitly mention a
review of the quantity and quality of nursing services staff in
Sec. 488.305(a)(2) where we outline a survey of the quality of care.
Response: Inherent in an evaluation of the indicators of care and
services listed at Sec. 488.305(a)(2) is an examination of the quality
of the staff providing them. As part of the observational portion of
the Quality of Care Assessment, surveyors are directed to make
observations of staff/resident interactions which necessarily involve
evaluating the quality of care and services provided by the staff,
which is an indication of the quality of the staff itself. For this
reason we do not explicitly mention this assessment in the regulation.
We do specifically address a review of staffing in Appendix P of the
State Operations Manual Transmittal No. 250.
Comment: One commenter recommended that we include, as part of the
standard survey, private meetings between surveyors and family groups
during evening and or weekend hours and another conference at the
conclusion of the survey process to explain survey findings in lay
person language.
Response: We recognize the value of family input in the survey
process, and direct surveyors when interviewing to provide the
opportunity for all interested parties to give what they believe is
pertinent information. We expect this to include accommodating family
members who wish to speak with the survey team but are unable to be at
the facility at the time of the survey. It is possible for family
members to call surveyors at the facility and be either interviewed
over the telephone or scheduled for a personal meeting as the survey
schedule allows. The survey team is in a better position than HCFA to
know how to best accommodate these groups within the time and personnel
constraints of the standard survey, and for this reason it would be
unduly restrictive of us to require evening and week-end meetings.
Neither will we require that there be an exit conference
specifically for family groups. If survey teams conduct an exit
conference for facility residents, family members are not prohibited
from attending. If such a conference does not take place, family
members still have many other opportunities to learn about the outcome
of a survey. Survey results are available to family members whenever
they visit a facility, because facilities are required to accessibly
post the results of the most recent survey. These survey reports are
thorough and detailed, and if a family member has any difficulty
understanding the results, he or she may resolve it by contacting
either the long-term care ombudsman or the State survey agency.
Comment: One commenter proposed that we allow the survey team to
expand the standard survey when it identifies substandard quality of
care instead of requiring it to conduct an extended or partial extended
survey to investigate the extent of the facility's problems.
Response: We must reject this proposal. We are bound by sections
1819(g)(2)(B) and 1919(g)(2)(B) of the Act which require a facility to
be subject to an extended survey when it is found to have provided
substandard quality of care during the standard survey.
Comment: One commenter proposed that we specify that the audit of
written plans of care outlined at proposed Sec. 488.155(a)(3) must
include an investigation of whether the written plans were implemented
and subsequently reevaluated and revised, as necessary.
Response: In Appendix P of State Operations Manual Transmittal No.
250, surveyors are directed, when conducting an audit of written plans
of care, to determine whether care plans were consistently implemented,
evaluated, and revised as necessary. We believe such detailed
instruction is more appropriate in the manual than in the regulation
itself, and so we are not including it in the regulation.
Section 488.307 Unannounced Surveys
Comment: Many commenters agreed that all surveys should be
unannounced. Some commenters stated that survey schedules should be
more unpredictable and one suggested that there should be even more
unannounced inspections. Several commenters emphasized that many
nursing homes are aware that they are about to be surveyed. One
commenter stated that randomness of surveys has not yet been achieved
and that HCFA should require States to demonstrate through survey
scheduling that chronically substandard facilities have been targeted.
Another commenter stated that annual licensure cycles, such as billings
and certificates, may compromise unannounced surveys. Several
commenters suggested that we require that the States provide a
randomization plan or scheduling methods which would ensure that the
timing of inspections is not predictable.
Response: We realize that commenters, in many cases, feel it is
preferable to have unannounced surveys for the welfare of residents in
nursing homes. However, after careful consideration, we have concluded
that requiring all surveys to be unannounced is not mandated by the
Act. Moreover, doing so would, in some cases, undermine the efficiency
of the survey process in which, for example, the only thing necessary
to verify compliance is a request for documentation or an interview
with a particular part time employee who may, otherwise, not be at the
facility if a survey is not announced. We are, therefore, revising
Sec. 488.307(a) to require that only standard surveys be unannounced.
We agree that survey schedules should be more unpredictable and
have made this more possible at Sec. 488.308(a) by allowing the
flexibility of conducting standard surveys no later than 15 months
after the previous survey. We disagree with the recommendation that
there should be more unannounced inspections than presently required by
HCFA. The States are responsible for determining which facilities need
to be surveyed and when the surveys should be scheduled, subject to the
requirements of Sec. 488.307. The States already have the obligation to
conduct extended surveys and complaint surveys as the need arises.
Moreover, because of time and money constraints and the difficulty of
scheduling the surveys already required, it would be unfair to place an
additional burden on the States for conducting more surveys than
required by law.
We agree that complete randomness of surveys has not been achieved
but we believe that complete randomness should not be our goal.
Sections 1819(g)(2)(A)(iii) and 1919(g)(2)(A)(iii) of the Act provide
for a flexible survey cycle. While the law does not specify the
criteria to be used to determine intervals between consecutive surveys,
States will undoubtedly use past performance as a primary criterion. If
past performance is considered in determining how frequently to survey
specific facilities, the survey cycle can not be completely random.
Our intention is to strive to have surveys conducted on as random a
basis as possible consistent with effective enforcement. We are aware
that annual licensure cycles may compromise unannounced surveys.
However, we believe that, over time, State licensure cycles will not be
a factor in survey predictability since licensure and certification
surveys are generally conducted concurrently. In the event that States
do not move to a more flexible licensing schedule, this will not create
a problem because licensing schedules will not substitute for
certification requirements. We believe that it is unnecessary to
require States to provide a randomization plan for the timing of
surveys because we are already stating at Sec. 488.307(b) that we will
review States' procedures on at least an annual basis. In addition, the
law does not require States to demonstrate that substandard facilities
have been targeted, but in examining the States' scheduling practices
annually, we will look for logical scheduling criteria and past
performance will undoubtedly be one of the reasonable criteria States
can use.
Comment: Several commenters stated that it is unfair for surveyors
to come into a facility without any advance notice. Another commenter
stated that unannounced surveys are not more beneficial than announced
ones. This commenter stated that the Joint Commission on Accreditation
of Healthcare Organizations (JCAHO) announces its surveys and that this
practice is less stressful and avoids placing an unnecessary mystique
on the process since it is known that a survey must occur 90 days
before the license expires. (We assume the commenter is referring to
the expiration of accreditation.) This commenter feels that the same
objective is achieved. Another commenter stated that facilities should
always be given a warning that a survey will occur and ample time to
correct whatever is wrong.
Response: We cannot accept the comments advocating announced
standard surveys. To do so would be inconsistent with sections
1819(g)(2)(A) and 1919(g)(2)(A) of the Act. Moreover, warning
facilities in all cases of an upcoming survey can undermine the
accuracy of survey findings which sometimes is predicated on the
element of surprise.
Comment: Two commenters proposed that paragraph (a) of Sec. 488.307
be revised as follows:
``(a) Basic rule. All surveys must be unannounced and their timing
should be unpredictable. State survey agencies must adopt survey
schedules that maximize the element of surprise. Scheduling procedures
and practices must not have the effect of giving facilities notice of
inspections. For example, inspections should not occur around the same
time each year nor be conducted in a predictable sequential cycle.''
Response: We agree that the timing of surveys should be made as
unpredictable to long term care facilities as possible. However, at
this point, it does not seem practical or even possible to mandate, or
enforce the total unpredictability of surveys by States or to require
that all surveys be unannounced, as explained in the response to prior
comments in this section. We will be looking into the possibility of
incorporating some guidance on ways in which to maximize
unpredictability into manual instructions.
Comment: Two commenters suggested that Sec. 488.307(b) be changed
to provide that HCFA shall identify successful scheduling methods,
distribute them, then monitor State agency performance, taking
corrective action when necessary. One commenter thought that the way
the provision was written, an agency gets constructive suggestions
about scheduling surveys only after the surveys have been done and at
the time of a review of its procedures. Two other commenters suggested
it would be helpful if HCFA could put in the Regional Office Manual the
successful methods it has identified that assure that surveys are
unannounced.
Response: We disagree with these comments suggesting that HCFA
specify in regulations that it will provide successful scheduling
methods because we believe the States are better able than we are to
identify successful scheduling methods which may differ from one
locality or region to another. Each State uses the methods that work
best for it to schedule surveys within the required timeframes. We
believe that the controls in place at Sec. 488.307, which provide that
all standard surveys must be unannounced, and that we will review each
State's scheduling procedures on an annual basis, are sufficient.
Comment: One commenter asked what the term ``any individual'' means
in reference to penalizing someone who notifies a facility that a
survey is scheduled. Another commenter suggested that individuals other
than an employee of the Federal and State government should be held
harmless from fine if he or she notifies a facility that it is
scheduled to be surveyed. This commenter further suggests that any
individual who is fined for notifying a facility, should have the right
to contest the fine in a formal hearing.
Response: The Act, in sections 1819(g)(2)(A)(i) and
1919(g)(2)(A)(i), is clear that ``any individual'' who notifies a
nursing home of the time and date of a standard survey is subject to a
civil money penalty. We, therefore, disagree that only employees of the
Federal and State governments should be held responsible for notifying
a facility that it is scheduled to be surveyed; any individual who
knowingly advises a facility that a standard survey is scheduled will
be held accountable, according to the Act. Any individual who is fined
for notifying a facility is entitled to the appeals mechanisms
specified at section 1128A of the Act. The administrative appeals
policy for civil money penalties imposed against an individual
announcing a standard survey is not established by HCFA but rather by
the Office of Inspector General (OIG) and is already in place.
Comment: Two commenters suggested that ombudsmen should be informed
in advance of a survey in order to be able to participate fully,
provided ombudsmen are subject to the penalties mandated by law and to
loss of employment if they cause the time of the survey to be known.
One of these commenters suggested that advance notice of the survey
should be given to the local ombudsman by means of a letter from the
survey agency stamped ``CONFIDENTIAL.'' This commenter feels ombudsmen
should be informed in advance because they are currently notified on
the first or second day of three or four day surveys and may have
already scheduled appointments which cannot be changed in order to
accommodate the survey schedule. This commenter feels that advance
notice would guarantee better surveys by strengthening ombudsman/
consumer input.
Response: We disagree. Each additional individual or organization
that has knowledge of a scheduled survey decreases the likelihood that
the survey will remain unannounced. The ombudsman is contacted soon
after the survey team has entered the facility and can participate
meaningfully even if not present for the initial tour of the facility
or other early phases of the survey.
Comment: Two commenters stated that a $2,000 fine is not a severe
enough penalty for willfully disclosing in advance the timing of a
nursing home inspection or taking advantage of foreknowledge of an
inspection. Another suggested that this type of violation should also
be referred to the Department of Justice for prosecution for
obstruction of justice.
Response: The $2,000 fine is the maximum allowable under sections
1819(g)(2)(A)(i) and 1919(g)(2)(A)(i) of the Act. The exact amount of
the civil money penalty is determined by the OIG. In response to the
suggestion that this violation be referred to the Department of
Justice, OIG decides which cases are appropriate for such referral.
Comment: This commenter stated that Sec. 488.307(c) is weakened by
the use of the word ``standard'' and that civil money penalties should
be applied as a penalty for the announcement of any type of survey
including validation, complaint, or other surveys.
Response: Sections 1819(g)(2)(A) and 1919(g)(2)(A) of the Act are
applicable to standard surveys only, so that the civil money penalties
specified at sections 1819(g)(2)(A)(i) and 1919(g)(2)(A)(i) are imposed
for announcing standard surveys. We do not have the statutory authority
to require that civil money penalties be imposed for announcing
anything other than standard surveys.
Section 488.308 Survey Frequency
The nursing home reform provisions of OBRA '87 reconfigured the way
in which HCFA and the States would track nursing home compliance with
Federal requirements and approach enforcement remedies. The survey and
certification provisions, set forth at sections 1819(g) and 1919(g) of
the Act, require implementation of a flexible survey cycle for Medicare
skilled nursing facilities and Medicaid nursing facilities so that
standard surveys are conducted at intervals not later than 15 months
after the date of the previous standard survey with a statewide average
interval that does not exceed 12 months.
The legislative history of OBRA '87 and the National Academy of
Science's Institute of Medicine (IoM) study (1986) are plain in their
stated reasons for this change from the rigid, time limited system of
having surveys for all facilities follow a 12 month cycle. First, a
flexible survey cycle provides less predictability to the scheduling of
surveys, thus reducing the opportunities for certain providers, by
anticipating the survey, to achieve only temporary compliance for the
short term period around the time of survey. Second, flexible survey
cycles allow survey agencies to better allocate their limited resources
by increasing the frequency of surveys for problem facilities while
allowing other facilities with a better record of compliance to be less
rigorously monitored. Additionally, because time limited agreements
have automatic cancellation clauses, a significant paperwork and
recordkeeping burden results from the frequent need to conduct
resurveys as a means of avoiding provider agreement expirations. Third,
the enforcement provisions of nursing home reform, set forth at
sections 1819(h) and 1919(h) of the Act, are designed to work in the
context of provider agreements that do not have a fixed ending date.
Specifically, sections 1819(h)(2)(C) and 1919(h)(3)(D) of the Act
speak to the ability of the Secretary to continue payments for up to 6
months after the identification of deficiencies if certain criteria,
described in those sections, are met. Sections 1819(h)(2)(D) and
1919(h)(2)(C) of the Act require the Secretary and States to impose
denials of payment for new admissions should deficient facilities fail
to achieve compliance within 3 months after they have been determined
not to comply with Federal requirements. In both cases, these remedies
make sense only where a facility's provider agreement has no set
expiration date.
We reach this conclusion because under a time limited agreement
survey system in which surveys are typically conducted shortly before
the expiration of provider agreements, facilities would have only the
shortest period of time to correct deficiencies if they are to be
entitled to renewed agreements. The statutory remedies described above,
however, contemplate periods of time that far exceed what would be
available under a time limited agreement system for providers to
achieve compliance.
For HCFA and the States to attempt to fit this survey system into
the procedures described in sections 1819(h) and 1919(h) of the Act
would require the wholesale revamping of surveys so that they occur no
later than mid-way through the term of the 12 month provider agreement.
Such a radical departure from more than 20 years of practice would
require the kind of massive reallocation of survey resources that is
not possible under a time limited agreement survey system and would
likely cause many facilities to go unsurveyed by the time their time
limited agreements are scheduled to expire. Of equal significance, we
do not believe that the Congress would approve of a survey system in
which the decisions about renewal of a provider agreement are made as
far as 6 months prior to the expiration of that agreement, since
determinations of compliance made so far in advance may not be
reflective of the degree of facility compliance at the time the
agreement is set to expire.
Continued implementation of time limited agreement requirements for
skilled nursing facilities and nursing facilities frustrated many
aspects of nursing home reform and, in a practical way, rendered them
inoperable. For these reasons, a HCFA Ruling was signed on August 26,
1992 eliminating time limited agreements for skilled nursing facilities
and nursing facilities participating in the Medicare and Medicaid
programs and these regulations further adopt this position.
Section 488.308 implements sections 1819(g)(2)(A)(iii) and
1919(g)(2)(A)(iii) of the Act, which require that each skilled nursing
facility and nursing facility be subject to a standard survey not later
than 15 months after the last day of the previous standard survey and
that the statewide average interval between standard surveys not exceed
12 months. The regulation specifies when and how the average interval
is computed, specific conditions that may prompt a standard or an
abbreviated standard survey and HCFA's corrective action to ensure that
State survey agencies meet the 12 month average interval requirement.
These final rules also codify the substance of the HCFA ruling
described above by eliminating from the regulations the requirements
for time limited agreements for SNFs and NFs.
Comment: One commenter requested clarification of the 15 month
interval by asking if determination would be ``to the day'' or ``during
the 15th month.''
Response: We intend to calculate the 15-month interval by counting
days. The survey agency calculates the number of days between the last
day of the current standard survey and the last day of the facility's
previous standard survey.
Comment: Several commenters recommended that survey frequency be
related to the compliance/noncompliance history of the facility. A few
commenters suggested that States be required to conduct more frequent
inspections of nursing homes with poor care histories. One commenter
recommended that States take facility compliance history into account
when establishing survey cycles and conduct more frequent surveys of
nursing homes with a history of substandard quality of care.
Response: We are retaining this provision of the regulation as
written because we believe that the Act, as previously cited, provides
a framework within which the State survey agency can establish a
flexible survey cycle that effectively ensures that quality health care
is furnished in a safe environment. Without restricting this
flexibility, we expect that State survey agencies will consider a
facility's compliance history when scheduling standard surveys and
revisits. The survey agency may conduct surveys as frequently as
necessary to determine compliance with participation requirements, to
confirm that previously cited deficiencies have been corrected, to
investigate complaints and to ensure that certain changes do not cause
a decline in the quality of care furnished to the resident.
Comment: Several commenters recommended that an additional
provision be incorporated which would allow State survey agencies to
conduct tailored or abbreviated surveys in those facilities which were
deficiency-free in the previous standard survey. Some additional
commenters recommended that facilities with a record of deficiency-free
surveys be inspected less frequently than every 12 months. One
commenter specifically suggested that surveys not be conducted yearly
if there is in place good surveillance and monitoring from the State,
and that, perhaps, over time a survey would be conducted every third
year as hospitals are surveyed by the Joint Commission on the
Accreditation of Healthcare Organizations. One commenter recommended a
demonstration project that would test the possibility of an extended
survey cycle for excellent facilities.
Response: We cannot accept the comment to conduct abbreviated or
tailored surveys of facilities that were free of deficiencies in the
previous standard survey, because the Act does not include abbreviated
standard surveys in the computation of the 15 month interval between
standard surveys of a facility or in the computation of the 12 month
statewide average for all facilities in a particular State. Abbreviated
standard surveys are premised on complaints received, or a change of
ownership, management or director of nursing, or other indicators of
specific concern and, therefore, could be focused on certain specific
requirements, whereas, a standard survey is a periodic inspection to
gather information about the quality of service furnished in a facility
to determine compliance with the certification requirements for
participation. To use an abbreviated standard survey instead of a
standard survey in the computation of the 15 month survey interval or
the 12 month statewide average would not meet the intent of the Act,
nor would it be an accurate assessment of the State's ability to ensure
that each facility furnishes quality health care in a safe environment.
Sections 1819(g)(2) and 1919(g)(2) of the Act require that each
facility must have a standard survey no less frequently than every 15
months. With this constraint, we can accept the comment to conduct a
standard survey of facilities with good compliance histories less
frequently than every 12 months but not less frequently than every 15
months. Once we have had the benefit of experience under the new survey
process, we will consider whether it might be appropriate to approve a
demonstration project that would explore whether other survey
frequencies would be more effective.
Comment: A commenter stated that a State could survey small
facilities or facilities near the survey office most often to meet the
12 month average interval requirement.
Response: Existing procedures call for HCFA regional office review
of State survey agency workload planning. This review will continue and
can identify and respond to inadequate survey practices. We do not
believe a regulatory requirement is necessary to ensure the use of
meaningful criteria for determining survey intervals.
Comment: One commenter was confused about how HCFA can determine
which facility survey did not meet the 12 month average interval
requirement.
Response: The regulation specifies that it is the statewide average
interval between standard surveys that must not exceed 12 months,
rather than the interval between consecutive surveys of specific
facilities.
Comment: Several commenters suggested alternative language for
proposed Sec. 488.158(b)(2). These writers recommended that the
sentence which reads, ``If the provider is a Medicaid facility, HCFA
reduces FFP in accordance with Sec. 488.170'' be replaced with ``HCFA
will reduce FFP in accordance with Sec. 488.170 and may apply
corrective action which includes the following: * * *'' or ``HCFA
reduces FFP to the State in accordance with Sec. 488.170.'' Another
commenter recommended that HCFA's corrective action be limited to
technical assistance and inservice training during the first year and
only include FFP reduction if there is a gross violation.
Response: While we appreciate the merits of these suggestions, the
FFP reduction formula now specified at Sec. 488.320 has certain
limitations as it cannot logically be used to sanction a State for
failure to achieve a 12 month statewide average interval requirement
for standard surveys. This is because a survey agency's performance in
calculating the 12 month statewide average interval is unrelated to the
terms of the FFP reduction formula. The formula is comprised of two
terms: the total number of residents in nursing facilities surveyed by
HCFA during a quarter and the total number of residents in nursing
facilities found, in accordance with HCFA surveys, to be noncompliant.
Thus, the statutory formula does not lend itself to remedying problems
States might be experiencing in conducting timely surveys. However,
section 1919(g)(3) of the Act states that we may respond to inadequate
State survey performance in Medicaid facilities by providing for the
training of the State's survey teams. We are revising Secs. 488.308 and
488.320 in this final rule accordingly.
Comment: A commenter asked that we explain which date is used for
computation of the 12 month statewide average interval when an extended
survey follows a standard survey.
Response: The last day of the standard survey, not the last day of
the extended survey, is the date used in the computation of the
statewide average interval. Sections 1819(g)(2)(A)(iii)(I) and
1919(g)(2)(A)(iii)(I) of the Act specify the statewide average interval
between standard surveys shall not exceed 12 months.
Comment: In examining the criteria which trigger special surveys,
one commenter agreed that survey agencies may need to conduct a survey
when changes occur as specified in the regulation. A few other
commenters disagreed and indicated that an abbreviated or standard
survey within 60 days of a change in ownership, management, nursing
home administrator and/or director of nursing was stressful, wasteful
of taxpayer dollars or unnecessary. One commenter specifically stated
that the change of a director of nursing as a survey trigger was
inappropriate and should be removed.
Response: We are retaining this provision as written. Sections
1819(g)(2)(A)(iii)(II) and 1919(g)(2)(A)(iii)(II) of the Act use the
word ``may,'' thus permitting the State survey agency discretion in
deciding to conduct a standard survey or an abbreviated standard survey
within 60 days of any of the above stated changes to determine whether
these changes have caused a decline in the quality of care furnished by
the facility.
Comment: A few other commenters recommended that the regulation
specify that other surveys (Sec. 488.308(c)) must be conducted as
frequently as necessary to determine compliance with participation
requirements and to confirm the correction of previously cited
deficiencies.
Response: We are retaining this provision in which the decision to
conduct other surveys under the circumstances specified at
Sec. 488.308(c) be at the State survey agency's discretion. We expect
the survey agency to base its decision on the individuals and
facilities involved and the State's concern that the quality of care
may have declined, and to conduct a survey in those cases where one is
necessary to confirm compliance with participation requirements. The
correction of noncompliance will be monitored and verified by some type
of follow up activity which may or may not be a survey. Section 488.332
states that the State survey agency conducts on-site monitoring as
needed when: a facility is not in substantial compliance with the
requirements and is in the process of correcting deficiencies;
verification of continued substantial compliance is needed after
deficiencies have been corrected; or, the survey agency has reason to
question the substantial compliance of the facility with the
requirements of participation. (Please refer to the discussion at
Sec. 488.332, Investigation of complaints of violations and monitoring
of compliance.)
Comment: The proposed regulation indicates that the survey agency
may conduct a standard or an abbreviated standard survey to determine
whether certain changes have caused a decline in the quality of care
furnished by a facility. The commenter recommended that the phrase
``decline in the quality of care furnished by'' be modified to allow
special surveys for the purpose of determining whether the facility is
out of compliance with any conditions of participation.
Response: Since the language of concern to the commenter simply
reiterates the Act, at sections 1819(g)(2)(A)(iii)(II) and
1919(g)(2)(A)(iii)(II), we are not free to modify the language as
suggested. However, we believe the Act gives States ample authority to
conduct surveys any time they suspect that conditions at a facility may
be declining.
Comment: A commenter proposed amending the regulation to expressly
permit the survey agency to screen complaints to decide if they merit
an on-site investigation. Another commenter wrote that this rule goes
beyond the Act and requires a standard or abbreviated survey in every
instance, including those which may be an isolated complaint or abuse.
One commenter proposed revising Sec. 488.308(e)(2) to read, ``The
survey agency must conduct a standard or an abbreviated standard survey
to investigate complaints of violations of the requirements by SNFs and
NFs that the agency has reviewed and determined to provide a reasonable
basis for investigation.''
Response: We are clarifying the wording of this provision to say
the survey agency must review all complaint allegations and conduct a
standard or an abbreviated standard survey to investigate complaints of
deficiencies in requirements by SNFs and NFs if after reviewing the
allegation, the survey agency concludes that a violation of one or more
of the requirements may have occurred and only a survey can confirm
that a deficiency or deficiencies exist. A survey will not be conducted
if the complaint raises issues that are outside the purview of Federal
participation requirements.
Section 488.310 Extended Surveys
Comment: Several commenters advocated that HCFA mandate extended
surveys and/or more frequent surveys (every 6 months) whenever a
facility has a nurse staffing waiver. Commenters reasoned that
requiring extended surveys would protect residents through the process
of reviewing a facility's staffing, as required in sections
1819(g)(2)(B)(iii) and 1919(g)(2)(B)(iii) of the Act. One commenter
raised the presumption that in the case of nurse staffing waivers,
quality of care problems exist and need to be closely examined.
Further, the commenters fundamentally questioned the legality of
granting nurse staffing waivers because they believe it contradicts the
statutory definition of a SNF and NF.
Response: While we agree that facilities with nurse staffing
waivers should be carefully examined to ensure sufficient staffing, we
do not believe that conducting an extended survey is the only means
available to do so. The standard survey, as described in the Appendix P
of the State Operations Manual Transmittal No. 250, permits surveyors
to expand the standard survey ``as needed'' for any reason without
requiring an extended survey. Subpart I of the State Operations Manual,
Appendix P, Section A states, ``If in conducting the information
gathering tasks of the standard survey you identify a possible
noncompliant situation related to any requirement, investigate the
situation to determine whether the facility is in full compliance with
the requirements.'' Therefore, surveyors could review facility staffing
records during the standard survey to assure sufficient staffing. We
wish to reserve the use of extended surveys to those circumstances in
which we have found substandard quality of care.
We are not accepting the commenters' suggestion that we require
more frequent surveys for facilities with nurse staffing waivers. To do
so would undermine the State survey agency's ability to choose survey
intervals. We believe that the Congress intended State survey agencies
to have the flexibility to choose the survey intervals. The law
specifies that the interval between 2 successive standard surveys must
not exceed 15 months and that the State survey agency must maintain no
greater than a 12 month Statewide average for standard surveys.
We do not address the comments regarding the legality of nurse
staffing waivers. The requirements for nurse staffing waivers are
outside of the purview of this rule and were included in a final rule
published in the Federal Register on September 26, 1991 (56 FR 48826).
Comment: Several commenters questioned the use of the survey agency
and HCFA discretion to conduct an extended survey at any time for any
reason. Some commenters disagreed that the Act gives HCFA or the survey
agency the discretion to conduct an extended survey at any time. These
commenters urged HCFA to clarify that the purpose of an extended survey
is to identify policies and procedures that caused the facility to
furnish substandard quality of care.
Response: We disagree with commenters who believe that the Act does
not give HCFA or the survey agency the discretion to conduct an
extended survey at any time. Sections 1819(g)(2)(B)(i) and
1919(g)(2)(B)(i) of the Act specifically state, ``Any other facility
may, at the Secretary's or State's discretion, be subject to such an
extended survey (or a partial extended survey).'' However, we recognize
that when facilities are subject to an extended survey or partial
extended survey, they are disadvantaged because they automatically lose
approval of their nurse aide training and competency evaluation
programs (NATCEP) for two years. There may be other instances when a
facility would lose their NATCEP, for example, when a facility has a
nurse staffing waiver or has had a denial of payment for new admissions
remedy, or temporary manager remedy imposed. Therefore, as a matter of
policy, we do not expect to exercise our discretionary authority to
conduct an extended or partial extended survey unless we have found
substandard quality of care on a standard survey or abbreviated
standard survey and we will advise the State survey agencies in manual
instructions to adopt the same policy.
We have built into our survey process the ability of the survey
team to expand a standard survey at any time. The expanded standard
survey can be tailored to the unique situation in a particular facility
and need not include all of the tasks listed at Sec. 488.310(b). It
allows more thorough investigation of specific areas in order to
confirm noncompliance when the initial scope of the standard survey is
not adequate to substantiate a particular deficiency. But it does not
penalize a facility with loss of approval of a NATCEP.
We are not including proposed Sec. 488.160(c)(2) which would spell
out the State survey agency's and Secretary's discretion to conduct
extended surveys, as it is unnecessary given the explicit language of
sections 1819(g)(2)(B)(i) and 1919(g)(2)(B)(i) of the Act.
Comment: We received numerous comments urging us to amend the
purpose of an extended survey as stated in Sec. 488.310(a). One
commenter suggested the following revision:
The purpose of an extended survey is to determine the extent of
the problems and their effect on residents, when surveyors determine
or suspect that jeopardy exists, in order to document the problems
fully and determine the appropriate combination of remedies.
Extended surveys must be conducted whenever a facility has been
granted a waiver of nurse staffing requirements.
Response: We are not accepting this proposed change because it is
inconsistent with the Act. Sections 1819(g)(2)(B)(i) and
1919(g)(2)(B)(i) of the Act specify that an extended survey must be
conducted when the Secretary or State survey agency finds substandard
quality of care. Substandard quality of care does not necessarily pose
immediate jeopardy to residents. Therefore, the commenter's proposal is
more restrictive than the Act. As we discussed previously, we are not
requiring that the Secretary or the State survey agency conduct an
extended survey when a facility has a nurse staffing waiver.
We believe that adding ``to determine the extent of problems and
their effect on residents'' to the stated purpose of an extended survey
is not necessary because it is inherent in identifying policies and
procedures that caused substandard quality of care. For example, if
there are poor policies and procedures (rather than isolated practices
that don't conform to appropriate policies and procedures), the extent
of the problem in the facility could be potentially pervasive.
Comment: Other commenters suggested that random discretionary
extended surveys are a good idea. However, they do not believe that
penalties should be applied to facilities as a result of such random
surveys when the facility was not cited for substandard quality of
care.
Response: Sections 1819(f)(2)(B)(iii)(I)(b) and
1919(f)(2)(B)(iii)(I)(b) of the Act require that the approval of NATCEP
be withheld or withdrawn for 2 years when the State or HCFA conducts an
extended survey. The law makes no exceptions for extended surveys
conducted at the discretion of the Secretary or the State. However, we
believe that we can achieve the indepth random survey favored by
commenters through the standard survey. As we discussed above, the
State survey agency or HCFA may expand a standard survey at any time
without the threat of a loss of NATCEP.
Comment: Several commenters disagreed with or suggested
alternatives for the items included in an extended survey, as specified
in proposed Sec. 488.160(b). Some commenters asked that we add ``and
review sampled residents in more depth'' after paragraph (b)(1). The
majority of commenters asked that we delete paragraph (b)(5) which
requires that an extended survey include ``an investigation of any
participation requirement at the discretion of the survey agency.''
These commenters believe that the proposed language exceeds the concept
of the statutory language. In part the commenters stated:
It returns to the old methodology of checking everything in
contrast to the intent of the IoM study and resident-centered
outcomes. It would also waste fiscal resources that could be better
utilized elsewhere in the survey system.
Response: We are not accepting the proposed amendment to
Sec. 488.310(b)(1) which would add the requirement that the survey
agency review sampled residents in more depth. The purpose of an
extended survey is to look at the policies and procedures that produced
substandard quality of care. The Act only requires an expansion of the
size of the sample of resident assessments and not the depth of the
reviews of the residents themselves. A more indepth look at residents
will not facilitate an investigation of policies and procedures and
should, therefore, be accomplished through a standard survey if the
survey agency so desires. We also disagree with commenters that
Sec. 488.310(b) should not include ``an investigation of any
participation requirement at the discretion of the survey agency.''
Section 488.310(b) says ``all'' and paragraph (b)(5) says ``any
participation requirement at the discretion of the survey agency.''
This does not mean, as the commenter suggests, that every requirement
would be surveyed, rather, only those that the survey agency chooses.
Comment: One commenter asked that we indicate whether the 2 weeks
specified in Sec. 488.310(c) is 2 work or calendar weeks (that is, 10
work days or 14 calendar days). Another commenter asked that we define
``partial extended survey.'' One commenter wondered whether the survey
agency would notify facilities that they were going to receive an
extended survey.
Response: We are revising Sec. 488.310(c) to state that the 2 weeks
are computed in calendar days. We are defining the term ``partial
extended survey'' in Sec. 488.301 (``Definitions''). The survey agency
will not notify a facility when an extended survey will be conducted.
The survey team will let the facility know at the exit conference when
it finds substandard quality of care. Based on the finding of
substandard quality of care, the facility will then know that an
extended survey will be conducted any time within the next 14 calendar
days. In most cases, we expect that the survey team will conduct the
extended survey immediately following the standard survey especially
when it would be more cost effective for the State to complete both the
standard and extended survey while on site rather than scheduling
another visit.
Section 488.312 Consistency of Survey Results
We specifically asked in the preamble of the proposed regulation
for comments or suggestions for enhancing surveyor consistency.
Comment: Several commenters support efforts by HCFA to assure
consistency of survey results and the application of remedies. However,
it was stressed that consistency should not receive greater emphasis
than accuracy and efficiency. Increased accuracy of the citation of
deficiencies will lead to greater consistency within the survey
process.
Response: In the preamble of the proposed rule, we stressed that
surveyors should be trained to ``exercise consistency and accuracy.''
We agree that accuracy is as important as consistency and we are
including the term in the text of the final regulation. Additionally,
we believe that the recommendations of the studies and analyses
required by the regulation should be implemented to enhance consistency
and be monitored by each HCFA regional office. These changes are
reflected in the final text at Sec. 488.312.
Comment: Some commenters suggested the use of consumers, ombudsmen,
other resident advocates, and providers to evaluate the quality of the
survey process.
Response: This rule requires each State survey agency to implement
programs to enhance consistency. Each State survey agency is encouraged
to gather pertinent data and consider varied sources in its data
collection. While we agree with this suggestion, we do not want to
limit, in regulations, what data each State may consider.
Comment: Commenters also suggested that deference be given to the
data compiled on survey consistency by ``entities and their
associations.'' These commenters believe that these data are valuable
and often compiled in a manner which permits ``valid and reliable
statistical conclusions about the degree of inconsistency among
surveyor results.'' Additionally, these commenters wanted the final
regulation to require survey agencies to consult with the regulated
entities as part of the effort to reduce inconsistency among survey
teams.
Response: We assume that the commenters mean ``long-term care
facilities'' when they refer to ``entities and their associations.''
Sections 1819(g)(2)(D) and 1919(g)(2)(D) of the Act require that the
State (and the Secretary under section 1819) implement programs to
improve consistency in the interpretation and application of survey
results among surveyors. The intent of the Act is to assign the
authority to administer these programs to the States, not to
facilities. In fact, the compilation of data to allow statistical
conclusions about surveyor consistency may be a part of the programs
that the law requires the States and the Secretary to establish. As far
as mandating that the State survey agency must consult with facilities
in the effort to ensure consistency, we believe it is unnecessary to
require this in regulation as it is already inherent within the survey
process.
Comment: Other commenters wanted the required studies and programs
outlined within the final regulation or the State Operations Manual. A
few commenters wanted a written quality assurance program approved by
HCFA which would outline specific data to be included in the required
studies and programs.
Response: The only requirements that we are specifying in
regulations are that the State survey agencies must consider surveyor
accuracy as well as consistency. We believe that it is preferable for
individual State survey agencies to develop their own programs.
Comment: Some commenters believed increased surveyor training and
testing would enhance surveyor consistency.
Response: As previously stated in the preamble to the proposed
rule, HCFA has implemented an exhaustive surveyor training and testing
program that will ensure that surveyors are adequately trained and
competent at performing surveys. This requirement is in Sec. 488.314.
Comment: Some commenters advocate the review of every statement of
deficiencies by survey agency supervisory personnel for compliance with
the requirements before the statement is sent to the provider.
Response: As stated in the preamble of the proposed rule, surveyors
will, based upon their collective information, match the data to the
legal standards the facilities are obligated to meet in order to
determine if deficiencies exist. Most State survey agencies already
employ some type of supervisory review for all statements of
deficiencies prior to provider notification. However, we will not
require a 100 percent supervisory review in all State survey agencies.
Comment: A few commenters suggested that a procedure for
maintaining and monitoring records of individual surveyor's proficiency
should be initiated and these records should be considered in the
preparation of deficiency reports for facilities.
Response: We are not making changes suggested by this commenter
because there is no statutory basis for using the records of individual
surveyor's proficiency in the preparation of deficiency reports.
Compliance is something achieved or not achieved by the facility;
therefore, individual surveyor proficiency records do not obviate the
obligation of each facility to abide by Federal regulations. All
decisions regarding the preparation of deficiency reports are made as a
team, rather than by individual members. In fact, we require team
decision making and provide comprehensive training on the regulations
and documentation techniques in order to enhance consistency.
Comment: One commenter claimed the section of the proposed
regulation regarding consistency violates the Congressional mandate to
establish new programs to improve consistency by stating ``* * * the
collective exercise of surveyor judgements, which has always been the
vehicle for the identification of deficiencies, will remain
unchanged.'' (57 FR 39290)
Response: We do not agree with this comment. The above passage
refers to the method by which the survey team collects the data for the
identification of deficiencies. Following the above passage, as stated
in the preamble of the proposed rule, this ``collective exercise'' is
described as how ``* * * surveyors will gather information based upon
direct observations, record review, and interviews with residents,
staff, and family members'' (emphasis added). (57 FR 39290) Through
training, surveyors are instructed on this method of information
gathering which assists them in identifying situations that are
indicative of a facility's compliance with the regulations.
Additionally, the Congressional mandate refers to the ``establishment
of new programs, studies and analyses'' (emphasis added), not to the
method in which the information is gathered.
Comment: A few commenters stressed the importance of consistency
being sought in the application of enforcement remedies as well as the
survey procedures.
Response: We agree with the commenters. The final regulation
requires that State survey agencies conduct programs designed to
enhance consistency in the application of enforcement remedies as well
as in survey results.
Comment: A few commenters questioned the inclusion of the
application of remedies as part of the evaluation of survey
consistency. They assume it is not the surveyors who would be
responsible for the selection and implementation of remedies.
Response: We recognize that the surveyors are not ultimately
responsible for the selection and implementation of remedies. As stated
in the preamble of the proposed rule, it is the surveyor's
responsibility to ``* * * recommend one or more remedies to either HCFA
or the SMA [State Medicaid agency] for the enforcement of the
requirements.'' (emphasis added) However, we disagree with the comment
questioning the inclusion of the application of remedies as part of the
evaluation of survey consistency. As it was the intention of the
Congress to ``* * * measure and reduce inconsistencies in the
application of survey results * * *,'' (emphasis added) we interpret
sections 1819(g)(2)(D) and 1919(g)(2)(D) of the Act to include both
inconsistencies in survey findings as well as inconsistencies in the
application of enforcement remedies. In order for each State survey
agency to measure accuracy and consistency in the application of survey
results among surveyors, it must first ensure that these results are
consistent across surveyors, and then determine that the enforcement
actions precipitated by the survey results are consistently applied.
Comment: One commenter suggested that facilities be requested to
fill out a questionnaire after their survey to give feedback on the
quality, competence and attitude of their survey teams.
Response: We believe that it is unnecessary to require a
questionnaire because feedback is inherent in the survey process. There
are numerous times throughout the survey process for the provider to
comment upon the performance of the survey team. Providers have the
opportunity to question survey findings during the survey, at the exit
conference, while awaiting receipt of the official deficiency
statement, upon receipt of the same, and through dialogue with the
State survey agency and HCFA regional officials.
Section 488.314 Survey Teams
Comment: Virtually everyone who commented on this proposed section
emphasized the importance of ensuring that surveyors have the
appropriate professional credentials for the job and that they receive
adequate training. For the most part, the only differences were over
exactly what constitutes ``appropriate'' professional credentials and
``adequate'' training. Opinion ran the gamut from maintenance/safety
experts to physicians with experience in geriatric medicine or long
term care. Some suggested that trainees work under the supervision of
an experienced surveyor.
Numerous commenters offered suggestions regarding team composition.
Two examples included--
A nurse, licensed administrator, pharmacist, nutritionist,
and social services/activities therapist; and
A nurse, a maintenance/safety expert, and a social worker.
One commenter suggested that one team member must be ``a physician
trained in geriatric and psycho-pharmacology,'' and said that, ``To the
extent the new survey process incorporates new guidelines for chemical
and physical restraints, a physician (MD/DO) team member must be
included.'' Some said that nurse surveyors should have, as a minimum
qualification, a B.S.N. One commenter said that the nurse on the team
should have spent 2 or 3 years as a director of nursing at a long term
care facility. Other disciplines that commenters said should be
represented in the ranks of surveyors include speech-language
pathologists, sanitarians, gerontologists, and dietitians. A number of
commenters suggested a specific requirement that all surveyors must
have at least 1 year of experience with geriatric populations in a
health care or related setting or experience in long term care. Some
said that this experience should be ``hands on'' experience, and a few
commenters suggested that we set forth the size of the team in
regulations, with the size being proportional to the number of beds in
the facility or increasing in certain instances such as a historical
pattern of serious deficiencies or complaints.
Many commenters asked for clarification of the meaning of
``multidisciplinary'' and ``professionals,'' and one suggested we use
the word ``interdisciplinary'' instead of ``multidisciplinary.''
Finally, one commenter said that surveyors should be sent to the
same facilities year after year so that they become more familiar with
the facility and its staff. This would, the commenter suggested, enable
the team to do a better job. Another commenter said that surveyors
should be rotated among facilities to maintain their objectivity.
Response: We are deleting the modifier, ``health,'' and clarifying
the term, ``professionals,'' in Sec. 488.314(a)(1) by setting forth
examples. Examples of professionals include physicians, physician
assistants, nurse practitioners, physical, speech, or occupational
therapists, physical or occupational therapy assistants, registered
professional nurses, dieticians, licensed practical nurses,
sanitarians, engineers, and social workers, but are not completely
inclusive; the State, subject to HCFA's approval, determines what
constitutes a ``professional.'' We are deleting the word ``health''
because it may be appropriate in some cases to include other types of
professionals on a survey team. For example, if the facility has or may
have structural problems or other physical plant facilities, an
engineer may be needed.
We have chosen to continue to use the term ``multidisciplinary,''
rather than change it to ``interdisciplinary.'' Dictionary definitions
of the prefixes ``multi-'' and ``inter-'' are very broad, with the
former generally meaning ``more than one,'' and the latter generally
meaning ``between or among.'' Therefore, we believe that
``multidisciplinary'' is the more appropriate choice. Furthermore,
``multidisciplinary'' is the term used in the Act.
Different States have different licensure requirements and
different staffing patterns. Also, it is difficult to recruit qualified
professionals in certain areas of the country. Therefore, other than
requiring that there at least be a registered nurse on the team, we do
not believe dictating to the States in Federal regulations the precise
composition of survey teams is necessary at this time. (The registered
nurse member of the team is necessary because SNFs and NFs are
primarily engaged in providing skilled nursing care and/or related
services.) The most important considerations are that the surveys be
conducted by professionals and that the survey guidelines be followed.
All surveyors must pass HCFA's ``Surveyor Minimum Qualifications Test''
(SMQT), which is in itself, a test of several disciplines directly
related to the survey of health care facilities.
Cogent cases can be made both for and against surveyor rotation, as
is evidenced by the comments themselves. For this reason, we are
considering this an administrative matter and leaving it to the
discretion of the States.
Comment: One commenter thought that Sec. 488.314(a)(2)(i) should be
expanded to include surveyors who serve, or within the previous 2
years, have served as a member of the staff or as a consultant to the
chain of which the facility is a part (if applicable). Another
commenter said that we should also disqualify surveyors who work or who
have worked in the previous 2 years as agency staff. The commenter said
that, in many States, nurses who work for agencies and are sent to
nursing homes for discrete periods of time are not always considered to
be ``staff.''
Other suggestions were to revise Sec. 488.314(a)(2)(ii) to
disqualify surveyors who--
Own a part of any nursing home in the State;
Own a part of any nursing home in the United States;
Have a financial interest or any direct or indirect
ownership interest in the facility to be surveyed, or in any related
facility, company, or chain; or
Have an immediate family member who is a resident or an
employee of the facility.
Finally, one commenter wants to prohibit any surveyor from
accepting a job with a facility for 1 year after the individual has
last surveyed it.
Response: In response to comments, to preclude conflicts of
interest and to ensure survey objectivity, we are expanding
Sec. 488.314(a)(2) to disqualify anyone from surveying a facility if he
or she works, or, within the previous 2 years, has worked as an
employee, as employment agency staff at the facility, or as an officer,
consultant or agent for the facility to be surveyed. The surveyor is
also disqualified if a member of his or her immediate family has, or,
within the previous 2 years has had, such a relationship with the
facility or if a member of his or her immediate family is, or within
the previous 2 years has been, a resident of the facility.
In Sec. 488.314(a)(2), we continue to disqualify surveyors who have
a financial interest or any ownership interest in the facility but have
deleted the modifying phrase ``direct or indirect'' to preclude
misunderstandings. One commenter, for example, interpreted the
restriction against ``indirect'' financial interest to mean that a
surveyor would be disqualified if he or she held shares in a broad-
based mutual fund which included ownership in health care facilities.
(This was not our intent.) The issue of what constitutes disqualifying
financial interest must be discussed in considerable detail, and our
manuals provide the most appropriate vehicle for this discussion.
However, we have broken out the parallel restriction on surveyors whose
family members have direct or indirect ownership interest and placed it
in a new Sec. 488.314(a)(2)(iii). We are also extending the
Sec. 488.314(a)(2)(i) disqualifying requirement to family members in
paragraph (a)(2)(iii). Finally, in a new paragraph (a)(2)(iv), we
disqualify any surveyor who has an immediate family member who is a
resident of the facility.
We believe that these safeguards are sufficient to ensure
objectivity and that nothing beyond these is warranted. Finally, in our
view, prohibiting any surveyor from accepting a job with a facility for
1 year after he or she has last surveyed it is unnecessary and would be
difficult to enforce. Whether or not the ex-surveyor has surveyed that
particular facility before would be of less benefit to the facility
than the in-depth knowledge of Federal requirements that the individual
could share with the facility. We believe that such knowledge can help
the facility achieve and maintain compliance which ultimately serves
the residents. The protection of the residents' health, safety,
dignity, and general interests is our primary goal.
Comment: Commenters were generally critical of surveyor training
and skills, and most offered specific suggestions on how training could
be enhanced. Some examples follow:
There should be provider and/or ombudsman input for
surveyor training and/or testing;
``Activity professionals'' or ``individuals with
significant clinical and investigative skills'' should teach at least
part of the surveyor training course;
Training should include----
--Interviewing and investigatory skills;
--Quality of care standards;
--Communication skills, particularly for communicating with residents
who may have communication barriers;
--How to identify outcomes;
--How to identify iatrogenic declines;
--How to identify care conditions that could lead to decline or failure
to improve if not properly addressed;
--Standards of care for the professional disciplines involved;
--More training on long term care issues;
--Rules of evidence;
--120 hours or more field work experience in a long term care facility;
--Pharmacology;
--Gerontology;
--Therapeutic recreation;
--Training to produce or to update clinical competency in each
surveyor's area of expertise;
--Residents' rights;
--Resident assessment and care planning;
--Mental health care and services;
--Rehabilitation;
--Correct application of the applicable statutes and regulations; and
--Proper documentation;
Some of the training should be done in the field;
There should be annual in-service training for surveyors;
Training should be held not only for surveyors, but for
other State personnel with related duties;
There should be a continuing education requirement for
surveyors;
Surveyor training must stress that only the established
Federal survey methodology may be used in determining facility
compliance;
The techniques taught in surveyor training courses should
be published for public comment;
Providers, at their own expense, should be permitted to
take surveyor training courses;
The number of training slots must be increased so new
survey agency employees do not have to wait so long to receive HCFA
surveyor training;
Training should be made available locally or through
interactive video;
A passing score on a pre-test should not exempt a surveyor
from the final test; all should be required to take and pass the final
test;
All Federal and State surveyors should be trained by
qualified, national HCFA staff;
Survey agencies should have built in mechanisms for
quality assurance and supervision;
The survey agency's leadership should include health
professionals and attorneys;
There should be a formal complaint mechanism that
providers may use without fear of reprisal to challenge the actions and
activities of ``rogue'' surveyors;
No one should be a member of a survey team unless he or
she has successfully completed a training and testing program, not only
on how to conduct a standard survey, but on how to conduct an extended
survey as well. Proof of successful completion of this training must be
made available to the facility prior to the initiation of a survey; and
Before a citation is given, the surveyor must be able to
demonstrate a negative outcome.
One commenter said that the HCFA policy that surveyors are not to
be consultants is a great disservice; surveyors should adopt a role
like the JCAHO surveyors. Another said that HCFA should convene a
national group of experts, including State and Federal surveyors with
extensive experience, nursing facility providers, and consumers, to
identify the knowledge and skills needed by survey teams.
Some said that surveyors should pass not only the initial
examination, but be tested annually. The passing scores for the tests
should be 85 percent or more, commenters said, and the results of the
testing and remediation must be made available to the public.
One commenter said that, when surveyors are cross-trained, their
expertise in the new area is not good enough to survey facilities'
performances in that area. For this reason, the commenter suggested
that Sec. 488.314 be revised ``* * * to preclude the use of surveyors
without demonstrated professional training and experience in the
substantive area being surveyed. By professional training and
experience,'' the commenter said, ``we do not mean on-the-job or inter-
agency in-service training. Rather, we mean graduates of accredited or
approved educational institutions.''
One commenter said that there should be no ``grandfathering'' of
surveyors. Another asked the following three questions:
What validity and reliability studies were conducted to
ensure the test measures the ability of surveyors to perform their
functions in a consistent manner?
Has the test been validated to allow States to meet their
affirmative action plans?
Are the results of the tests in line with the State's
requirements for merit systems and collective bargain contracts?
Response: The listing of suggested topics for surveyor training was
extensive. Some of the items (for example, correct application of the
applicable statutes and regulations, quality of care standards, and
proper documentation) are already covered in surveyor training. We
believe others are inappropriate to require as part of survey training;
they should be provided as part of each team member's initial and
continuing training within the context of training for his or her area
of professional expertise.
We would encourage, but do not require, States to allow surveyors
in training to act as observers on actual surveys in the field, and are
taking all possible measures to meet the demand for surveyor training.
For example, we are planning to use satellite transmissions for
training courses. We have already begun to move ahead with one of the
other suggestions, interactive video training. As for provider and/or
ombudsman input for surveyor training and testing, we have convened a
national workgroup which includes provider organization and consumer
advocacy group representatives to assess the surveyor training program
and make recommendations for changes. Finally, we will listen to all
reasonable suggestions from providers and ombudsmen, but do not agree
that the regulations need to be revised to require this input.
The qualifications for surveyors, other survey agency personnel,
and HCFA trainers, we believe, are already high. In our operating
experience, we have seen no reason to believe otherwise. Even if we
required that each team include a physician, as some commenters
recommended, we are not certain that some providers would be any more
pleased with the survey results than they are now. We remain
unconvinced that one must be a physician or an acknowledged expert in a
clinical specialty in order to perform a valid survey. We believe that
the heart of the survey process consists of clear guidelines and a
detailed review of the results.
The suggestions that survey training materials be published for
public comment are addressed under the ``Determination of a
Deficiency'' section of this preamble.
The suggestion that providers be permitted to attend survey
training courses at their own expense has merit. Traditionally, we have
had no provisions for accommodating all providers interested in
attending: our resources are taxed enough by simply trying to provide
timely training for surveyors. However, being able to offer surveyor
training universally to providers at their own cost may help improve
understanding and cooperation between surveyors and providers. We are
therefore seriously considering the changes in law necessary to allow
this.
We do not accept the suggestion that surveyors present providers
with proof of the successful completion of surveyor training. The fact
that a surveyor is sent by the State or HCFA is, in itself, evidence
that the bearer meets the requirements to be a surveyor.
A number of the commenters did not make any suggestions with
respect to the proposed rule. Instead, their comments were in the
context of denigrating surveyors with whom they had had unpleasant
experiences, declaring that running a facility is costly, frustrating,
and unappreciated, or protesting the whole survey process in general.
Because no specific suggestions were made concerning the proposed rule,
we are unable to respond to these kinds of broad complaints.
Comment: Two commenters suggested revising the end of the sentence
at proposed Sec. 488.164(c) as follows: * * * completed the required
training and competency testing program.'' Another said that, at the
onset of each survey, facilities should be told which surveyors are
serving as observers, and regulations should stipulate that these
individuals should be excluded from active participation in the survey
process.
Some other commenters said that surveyors-in-training should be
allowed to participate in the survey process as long as they are
appropriately supervised. They said that, historically, these
individuals have been used to ``* * * collect information to be used by
qualified surveyors during the deficiency decision making process.''
Further, two commenters said, not allowing surveyors-in-training to
observe would mean that new surveyors would face significant periods of
nonproductive time while waiting for courses to be offered.
Response: We agree that surveyors must not only complete the
required training, but the competency testing program as well. However,
paragraph (c) already requires that a surveyor successfully complete
``* * * a training and testing program.'' We do not agree that the
survey team should, at the outset of a survey, identify which of its
members (if any) have not yet completed the required training and
competency testing program. We also disagree that surveyors who have
not yet completed the training and testing program should ``be excluded
from active participation.'' We do not want to prohibit the
``historic'' role of observers mentioned by two of the commenters, that
is, to ``* * * collect information to be used by qualified surveyors
during the deficiency decision making process,'' or forbid individuals
from making valuable contributions to the survey process if they are in
a position to do so. We are, therefore, amending this section
(Sec. 488.164(d) in the proposed rule) redesignated as
Sec. 488.314(c)(3) in the final rule, to provide that the survey agency
may permit an individual who has not completed a training program to
participate in a survey as a trainee if accompanied onsite by a
surveyor who has successfully completed the required training and
testing program.
Proposed Sec. 488.166 Validation Surveys
We have reconsidered the necessity of including this section in the
text of the regulation, and have concluded that it would be pointless
and redundant to retain it. We believe that the statutory provisions
upon which this section is based are self-implementing, and that
regulatory interpretation is not needed to clarify them. In addition,
the few elaborations on the requirements in sections 1819(g)(3) and
1919(g)(3) of the Act, which are found at Sec. 488.316 are duplicated
elsewhere in the regulations, and we believe there is little reason to
repeat them. Appeals applicable to certifications of noncompliance
based on validation surveys will be conducted according to
Sec. 488.330, Certification of compliance or noncompliance.
In the absence of a regulatory section devoted to validation
surveys, we are adding a definition of a validation survey to
Sec. 488.301, Definitions, to serve as a reference because the term is
used elsewhere in the regulations.
Our decision to not finalize proposed Sec. 488.166 does not make
the public comments we received on this section any less valuable for
they are still pertinent commentary on validation survey policy and we
are responding to them, accordingly.
Comment: Several commenters insisted that HCFA validation surveys
should be conducted concurrently with the State survey. Other
commenters encouraged HCFA to use the Onsite Performance Assessment and
Training Survey (OSPATS) as the validation survey method. Still other
commenters said the HCFA validation survey should be as soon as
possible after the State survey, but no more than 2 weeks, 3 weeks or
30 days after the State survey. Most commenters noted that survey
findings may vary slightly from day to day and that it was essential
that both survey teams were viewing the same set of facts. In addition,
concurrent surveys cause less disruption to facilities and residents
and enable HCFA to provide immediate feedback to State surveyors. One
commenter recommended that HCFA validation surveys not be concurrent;
another said the unexpected nature of the validation survey was
important in that the facility will return to its ``normal daily
routine'' after the State survey; and one commenter said the HCFA
validation surveys were a waste of time.
Response: We agree with the commenters as to the advantages of a
validation survey concurrent with the State standard recertification
survey. To that end, HCFA has developed the OSPATS. The OSPATS long
term care survey process has Federal surveyors assessing the facility
while evaluating State survey agency performance. This process, which
is fairly new for long term care surveys, is believed by some providers
to be less disruptive to facilities and residents. It does ensure that
both Federal and State surveyors observe the same conditions in the
facility. It is our intent to expand the use of the OSPATS process for
validation surveys. We also agree that when the validation survey is
not concurrent with the State survey, it should occur as soon as
possible after the State survey. Sections 1819(g)(3)(A) and
1919(g)(3)(A) of the Act permit a 2 month period; in practice HCFA
attempts to schedule the surveys closer to the State survey. However,
often there are scheduling and/or travel difficulties, which make
minimum intervals between the two surveys difficult to achieve. We want
to retain the flexibility to use whatever survey process best achieves
the goals of the Act. The commenters who said that the validation
surveys should not be concurrent or were a waste of time presented no
reasons or alternative proposals. We can say only that validation
surveys, concurrent or not, are mandated by sections 1819(g)(3) and
1919(g)(3) of the Act.
Comment: Several commenters proposed that HCFA establish procedures
that would enable resident advocates, families and the interested
public to request validation (complaint) surveys for specific
facilities. These procedures should include public notice including a
regulatory requirement that a poster notice be displayed in facilities.
HCFA would be required to respond to such requests and investigate
complaints against facilities and allegations of poor performance of
State agencies.
Response: Disclosure of survey-related information is in accordance
with Sec. 488.325, and it is also discussed in detail under the section
of this preamble entitled, ``Disclosure of Survey Information.''
We understand the concerns expressed by the commenters who would
like HCFA to perform complaint investigations and validation surveys at
the request of advocates and other individuals. The Act and current
regulations ensure that the State survey agencies will respond to
allegations of poor care or abuse and will investigate these
allegations according to State law and HCFA requirements. Most
complaints directed to HCFA are referred to the State agencies for
investigation. HCFA is not staffed sufficiently to respond directly to
complaints and/or requests for validation surveys. The small HCFA
survey staff is occupied fully in the assessment of State agency
performance of its survey and certification responsibilities under
section 1864 of the Act. Because of these constraints, we are unable to
accept the commenters' suggestions.
Comment: Certain commenters asked that we give a facility that is
dissatisfied with the State survey the ability to request a validation
survey and receive it within a reasonable time period.
Response: As mentioned above, we do not have the resources to
conduct validation surveys upon every request. If a provider believes
that the State survey was done in an inappropriate manner, it may file
a complaint with the HCFA regional office at whose discretion a
validation survey may be, but need not be, performed.
Comment: One commenter was concerned that when selecting facilities
for validation surveys, HCFA will not draw a random sample but will
select inferior facilities in order to cut its Medicaid obligations to
the States.
Response: This fear is groundless. It is not the quality of the
facility that determines whether the State will be sanctioned for
inadequate State survey agency performance, but rather the quality of
the State's assessment of the facility which is relevant. Facility
noncompliance does not reflect poorly upon the State unless the State
has failed to identify it.
Comment: One commenter believed that the identities of facilities
on which validation surveys are to be performed should not be disclosed
to the State survey agency.
Response: There is no justification for such a policy. Currently,
HCFA notifies States of an impending validation survey either 3 days
before a nonconcurrent Federal validation survey or 3 weeks before a
Federal/State OSPATS survey. In the case of the nonconcurrent Federal
validation survey, this allows the State to arrange to have a surveyor
present to observe the Federal survey and take advantage of the
instructional opportunities that it presents.
Comment: Several commenters with recent experience with validation
surveys noted that the State and Federal surveys were very different;
the Federal surveys stressed concepts (for example, use of restraints)
not emphasized by the State.
Response: The primary emphasis of the Federal validation survey is
on assessing State survey performance. Therefore, the Federal review
may stress certain areas of compliance in which an evaluation of State
performance is particularly important. In addition, the long term care
survey protocol has only been in effect since October 1990, with
appropriate instruction enhancements for the final long term care
regulations which were effective April 1, 1992. It is not unusual that
some variation in emphasis will occur in a new survey process. HCFA is
committed to a survey process that produces accurate and consistent
findings. To that end, we have organized numerous educational sessions
for Federal and State surveyors, held regional training conferences in
the HCFA regions and produced the ``Principles of Documentation'' which
is an attempt to standardize the writing of deficiency citations.
Despite all of these continuing efforts, some variation will remain as
long as human beings perform surveys and statutory requirements involve
the making of professional judgments. As far as the use of restraints
is involved, the decrease of restraints has been a HCFA priority since
the inception of the new survey protocol.
Comment: One commenter suggested that HCFA perform validation
surveys of all facilities that have a waiver of the RN director of
nursing or other licensed nursing requirements for a year or more.
Others suggested that HCFA list the criteria it uses to select
facilities for validation surveys and that the validation sample should
reflect the State's diversity in location, size and ownership of
facilities.
Response: The selection of facilities for validation surveys
depends upon which facilities the State has surveyed recently or
intends to survey imminently. Within those constraints, the typical
sampling process for selecting facilities for a validation survey
ensures that a wide variety of facilities are selected. Because of this
and the heavy demands placed upon HCFA survey staff, we do not accept
these suggestions that add survey responsibilities not mandated by the
Act. Moreover, we do not see the necessity of targeting facilities with
waivers for validation surveys because an annual review of the
appropriateness of each waiver will be conducted whether the facility
to which it was granted is subject to a validation survey or not.
Comment: Several commenters suggested that HCFA validation surveys
be required to use the ``methods, procedures, and forms prescribed for
use by the survey agency.''
Response: The language used in the proposed rule (that HCFA conduct
validation surveys ``using the HCFA protocol prescribed for use by the
survey agency'') was derived from sections 1819(g)(3)(A) and
1919(g)(3)(A) of the Act, which require that the Secretary conduct
validation surveys using ``the same survey protocols as the State is
required to use * * *.'' We do not believe that there is any meaningful
difference between the phraseology suggested by the commenter and that
used in the proposed rule.
Comment: A few commenters said that when HCFA conducts a focused
review at its discretion, it should not exceed the authority contained
in the Act.
Response: HCFA's authority to conduct a survey at its discretion is
pervasive in the Act.
Comment: One commenter suggested that all validation surveys should
be conducted by special teams dispatched from and responsible to the
HCFA headquarters office.
Response: The HCFA survey staff is located in the ten HCFA regional
offices. Although there are staff persons in the HCFA headquarters
qualified to conduct surveys, surveying is not their primary function.
Comment: One commenter stressed that the HCFA surveyors should meet
with the State surveyors if the Federal survey findings disagree with
the State findings. Another commenter said that the Federal validation
survey team should not review the State survey findings until after the
Federal survey.
Response: It is HCFA practice to meet with the State survey agency
whenever possible if there is a significant difference of findings
between a State survey and the Federal validation survey. Often this is
not possible because of time and travel constraints. In these cases, we
notify the State survey agency of the findings and begin discussions
regarding the appropriate enforcement remedy to apply. We agree with
the commenter that a face to face meeting is the best practice. Current
instructions to Federal and State surveyors are to review all pertinent
documents regarding the performance of the facility before starting the
survey. In practice, this review seldom covers the most recent State
survey, because it is not available, as these survey reports are not
sent routinely to the HCFA regional offices. We appreciate the apparent
concerns of the commenter; however, it will be difficult to prevent
Federal surveyors from seeing the most recent State report at some time
during the Federal survey because, in accordance with
Sec. 483.10(g)(1), survey results must be made available in the
facility. Despite the concerns of the commenter, we believe that the
accuracy of the Federal survey is not compromised by the knowledge of
what the State findings were. In any case, the increased use of the
OSPATS process should reduce the concerns of both commenters.
Comment: One commenter said that the statutory provision that
requires no fewer than five validation surveys in each State is
discriminatory to small States.
Response: We understand the commenter's concerns. However, sections
1819(g)(3)(B) and 1919(g)(3)(B) of the Act are explicit that HCFA must
conduct surveys in no fewer than five facilities in each State.
Comment: A few commenters said that validation surveys should be
focused on State survey performance, not facility compliance. Unless
the HCFA survey discovers a serious threat to residents, the findings
should be directed toward the State. For egregious failures of State
survey performance, HCFA should consider contracting with another
professional survey entity.
Response: The primary purpose of the validation survey is to assess
State survey performance. In the process, we do determine facility
compliance and must take action consistent with this information.
Therefore, the validation survey can result in actions against non-
compliant facilities and against the State. Section 488.320 provides
the sanctions authorized by the Act to be imposed against the States.
Comment: One commenter said that validation surveys should focus on
the validity of State deficiencies cited as well as the failure to cite
deficiencies. If the focus is on only the State's failure to cite
deficiencies, it may lead State surveyors to cite more deficiencies as
a means of preventing Federal sanctions.
Response: We agree with this comment. The HCFA focus is now and
will continue to be on the accuracy of the State survey. Part of that
focus is to alert the State survey agency to situations where State
surveyors are failing to cite valid deficiencies. We are aware of the
possibility that some State surveyors might cite more deficiencies in
order to avoid sanctions against the State. We have no concrete
evidence that any actually have done so. In any case, our education
efforts, including training on the ``Principles of Documentation,'' are
directed to the writing of accurate, well documented deficiencies. Well
documented deficiencies are more likely to prompt corrective action and
avoid unnecessary contentiousness between providers and survey agencies
than poorly documented deficiencies.
Comment: One commenter said that HCFA should provide for two
separate hearings because the deficiency determinations and the
remedies selected are based on two sets of facts. Other commenters said
it would be better to have one hearing; either State or Federal. One
commenter suggested that the closer the validation survey was to the
State survey, the easier it would be to hold one hearing.
Response: The Act is constructed so that a facility subject to a
validation survey is entitled to only one hearing, either State or
Federal. The provisions at section 1919(h)(7) of the Act furnish the
means for resolving disagreements between HCFA and the State over whose
enforcement action will control, which in turn, determines whether the
facility is entitled to a hearing under part 431 or part 498. Moreover,
HCFA excludes from the validation sample any facility against which
adverse action has been initiated by the State survey agency.
Therefore, if HCFA imposes remedies against a provider on the basis of
noncompliance identified during a validation survey, HCFA's remedies
are the only ones imposed, and the provider can contest the
determination of noncompliance leading to the enforcement remedy in one
Federal hearing.
Section 488.318 Inadequate Survey Performance
Comment: Some commenters asked how HCFA would determine
``inadequate survey performance'' by a State agency.
Response: We monitor State agency survey performance primarily by
reviewing State survey team findings and by conducting validation
surveys. Sections 1819(g)(3) and 1919(g)(3) of the Act, as added by
sections 4202 and 4212 of OBRA '87, require the Secretary to conduct
validation surveys of at least 5 percent of the SNFs and NFs in each
State that have been surveyed by the State survey agency (but in no
case less than 5 facilities). Prior to the effective date of OBRA '87,
HCFA, acting for the Secretary, monitored State performance by
conducting Federal monitoring surveys. OBRA '87 formalizes this
process. The validation surveys must be conducted within 2 months of
the date of the State's surveys and must be of sufficient number to
allow inferences about the adequacy of the State's surveys.
Comment: Several commenters said HCFA should sanction individual
surveyors when they make erroneous findings against facilities, whether
the errors are intentional or unintentional.
Response: Section 1864(a) of the Act authorizes the Secretary to
enter into agreements with State survey agencies to determine whether
SNFs meet the Federal participation requirements for Medicare. Section
1902(a)(33)(B) of the Act provides for State survey agencies to perform
the same survey tasks for facilities participating or seeking to
participate in the Medicaid program. HCFA assesses the performance of
each State's survey and certification program annually, and
Sec. 488.320 sets forth the sanctions that HCFA may impose upon the
States for inadequate survey performance. With respect to sanctions
against individuals, we note that, with the exception of the relatively
small number of HCFA staff who perform validation surveys, surveyors
are State agency personnel, appointed and paid by the State agency, and
supervised by State managers. For these reasons, HCFA considers that
any corrective or disciplinary action is a State matter. Whenever HCFA
validation surveys uncover errors on the part of any individual State
agency surveyor, the State is informed so it can take whatever action
is necessary.
As a final measure, formal mechanisms are in place which provide an
opportunity for facilities to appeal certifications of noncompliance
that lead to enforcement remedies, except State monitoring.
Comment: A few commenters said States may begin to cite more
deficiencies than usual in order to avoid sanctions by HCFA based on
failure to meet the requirement at Sec. 488.168(c) of the proposed
rule, which provided that HCFA would consider it inadequate performance
when a State agency fails to identify an immediate or nonimmediate
jeopardy situation, substandard care, or other deficiencies.
Response: HCFA monitors the accuracy of a State survey agency's
findings by performing validation surveys and reviews. Accuracy means
not only that the State team has appropriately cited all the
deficiencies that existed, but also that it has not cited a deficiency
when no violation of a requirement has occurred. HCFA conducts random
surveys concurrently with the State surveys as well as independent
surveys within 2 months of the States' surveys, and also conducts
indepth reviews of selected State survey documentation. If HCFA
discovers that a State is systematically citing unfounded deficiencies,
HCFA will consider there to be inadequate survey performance and may
apply any of the sanctions provided for at Sec. 488.320(b)(2) of the
proposed rule, Sanctions for Inadequate Survey Performance, in the case
of Medicare facilities. In the case of Medicaid facilities, HCFA cannot
reduce FFP as specified at Sec. 488.170(b)(1)(i) of the proposed rule
because we have concluded that section 1919(g)(3)(C) of the Act does
not accommodate such action under this scenario. The two terms of the
FFP reduction formula at section 1919(g)(3)(C) of the Act are: the
total number of residents in nursing facilities surveyed by HCFA during
a quarter; and, the total number of residents in nursing facilities
found pursuant to HCFA surveys to be noncompliant. The number of
residents in nursing facilities which HCFA found to be compliant but
which the State determined were noncompliant does not figure into the
calculation; therefore, no FFP reduction can be taken when the form of
the State survey inadequacy is the citation of unfounded deficiencies,
or indeed when the inadequacy is anything other than the State's
failure to identify deficiencies. However, the Act does allow the
Secretary to impose another sanction for the citation of unfounded
deficiencies in Medicaid facilities. Section 1919(g)(3) of the Act
states that the Secretary may also respond to inadequate State survey
performance in Medicaid facilities by providing for the training of the
State's survey teams. We are amending Sec. 488.320 of the regulation to
indicate this and to clarify that the citation of unfounded
deficiencies will be considered inadequate survey performance. An
additional safeguard against the citation of unfounded deficiencies
will be afforded to facilities by their opportunity to engage in
informal dispute resolution, as described in Sec. 488.331.
Comment: Some commenters said that Sec. 488.318 precluded
facilities from informally challenging or expressing disagreement with
survey findings.
Response: All States currently offer some opportunity for providers
to refute survey findings. In one State, the process is required by
State law. It is State policy in the rest. Although these policies vary
among States, they all apply to State surveys of Medicare and Medicaid
providers. In addition, HCFA's State Operations Manual requires that
States allow facilities to interact with the survey team during the
survey, to discuss findings at an exit conference, to raise unresolved
issues to the State survey agency or the HCFA regional office, or both,
and to record their disagreement on the HCFA-2567. If none of these
courses of action satisfy the provider, there are appeal mechanisms
available.
However, whenever possible, we want to provide every opportunity to
settle disagreements at the earliest stage, before much time and money
are spent by the provider, the State agency, and HCFA. Therefore, we
are requiring, at Sec. 488.331, that States offer an opportunity for
informal dispute resolution beginning with the provider's receipt of
the official statement of deficiencies. Although inadequate survey
performance will not invalidate adequately documented deficiencies,
neither the State's inadequate performance nor a resulting HCFA
sanction imposed on the State will prevent the facility from formally
or informally challenging or expressing disagreement with survey
findings.
Comment: One State was concerned that any disagreement between the
Federal and State agencies will equate to inadequate survey performance
on the part of the State.
Response: We will not automatically consider any disparity between
validation and State survey findings as inadequate survey performance.
For example, when Federal surveyors find a facility in compliance with
a requirement that the State cited as a deficiency, Federal surveyors
are directed to go through a decision making process to determine if
the disparity is due to facility correction or a flaw of the State
survey. When Federal surveyors find deficiencies that were not
previously cited by the State, we will consider whether the
discrepancies can be explained by changed facility conditions or by
other case specific factors before concluding that State survey
performance has been inadequate.
Comment: One commenter suggested we reverse the order of the
provisions of this section, making the reference to the failure to
identify poor resident care of greater importance.
Response: We do not imply that the way in which paragraphs (a),
(b), and (c) are ordered is of any relevance. All are of equal
importance.
Comment: One suggestion was that determinations of inadequate
survey performance be based on a State agency's overall performance
rather than on isolated instances. Commenters believed that a pattern
of noncompliance and noncorrection should be established before HCFA
concludes that there is inadequate survey performance, and that HCFA
should only consider State survey performance to be inadequate when the
State ``substantially'' fails to perform as required. Others requested
that we consider there to be inadequate survey performance only when
the State fails to identify serious deficiencies.
Response: Sections 1819(g)(3)(C) and 1919(g)(3)(C) of the Act
specify actions the Secretary may and must take if the State has failed
to perform surveys as required by the Act or if a State's survey and
certification performance is otherwise inadequate. Although the Act
requires us to apply sanctions for inadequate survey performance, it
gives us leeway when it comes to determining what inadequate survey
performance actually is. The Act does not specify the criteria by which
the Secretary is to make determinations of inadequate State
performance, and does not obligate us to sanction the State for every
survey shortcoming. It would be inappropriate and unduly harsh to
automatically consider any failure by a State to cite a deficiency or
to follow proper procedure to be inadequate survey performance. Rather,
we believe it would be preferable to reserve sanctions for States that
demonstrate a pattern of failure to identify deficiencies, or to follow
proper procedure, or whose isolated oversights are particularly
egregious. Changing facility conditions may account for many of the
discrepancies between Federal and State survey findings, and because
not every discrepancy or omission indicates systemic inadequate survey
performance, not every one should cause a State to automatically lose
FFP or be subject to other sanctions.
We reflect this policy in Sec. 488.320. Guidelines for making
determinations of inadequate survey performance will be forthcoming in
future manual instructions.
Comment: Some commenters said that any findings or remedies
resulting from inadequate survey performance should be rescinded.
Response: As we stated in Sec. 488.168(c) of the proposed rule
(which has been redesignated as Sec. 488.318(b) in this final rule),
``Inadequate survey performance does not relieve a SNF or NF of its
obligations to meet all requirements for program participation, nor
does it invalidate adequately documented deficiencies.'' (emphasis
added) In other words, a flawed survey can still validly document one
or many deficiencies; the facility is still liable for sanctions where
deficiencies, in fact, exist.
Section 488.320 Sanctions for Inadequate Survey Performance
Comment: Some commenters asked if the State Agency Evaluation
Program (SAEP) was going to be used to evaluate State survey agency
performance under this section. Certain commenters believe that it
should be.
Response: The SAEP is currently undergoing comprehensive
evaluation. We do not know if the program, in its future form, will be
designed to identify performance problems of individual States for
enforcement purposes, or whether the purpose of the program will be
more geared toward global evaluation of the State agency survey and
certification process as a whole. HCFA will, however, obtain
information on the adequacy of State agency survey activity through
validation surveys and otherwise through its general oversight
authority.
Comment: Certain commenters recommended that we limit
determinations of inadequate survey performance to the OSPATS. It was
their view that it is unfair to reduce FFP based on a comparison of
survey findings, as conditions in nursing homes change daily.
Response: As stated previously, we acknowledge that there are great
advantages to conducting a validation survey concurrently with the
State's standard recertification survey, and it is our intent to expand
the use of the OSPATS process for validation surveys. However, we
reiterate that it is necessary to continue to use nonconcurrent
validation surveys, despite the preference of the States and HCFA for
OSPATS, because Federal surveyors must have at least one year of
experience surveying before they are eligible to conduct an OSPATS.
Comment: Some comments suggested the rules should state whether or
not appeals under this section should stay the reduction of FFP action.
Response: Section 1919(g)(3)(C) of the Act requires that appeals of
sanctions under this rule are to be made according to section 1116 of
the Act. According to section 1903(d)(5) of the Act, if an appeal of a
disallowance is made, the State has the option of retaining the funds
disallowed pending a final administrative decision. If the final
decision upholds the disallowance and the State elected to retain the
funds during the appeal process, the proper amount of the disallowance,
plus interest computed in accordance with Sec. 488.442 will be offset
in a subsequent grant award.
Comment: Some commenters complained that FFP reduction is an
excessive measure, and suggested that FFP not be reduced as a sanction,
or be reduced only after other methods of addressing inadequate State
agency performance have been tried and failed. Other commenters asked
that the same sanctions be imposed against the State for inadequate
survey performance regardless of whether the inadequately surveyed
facilities participate in Medicare or Medicaid. An additional commenter
recommended that we levy financial penalties against the survey agency
instead of reducing FFP to the State.
Response: While we appreciate the merits of these suggestions,
section 1919(g)(3)(C) of the Act does not give us such flexibility.
Rather, it requires that, when HCFA finds, on the basis of validation
surveys that the State has inadequately surveyed Medicaid nursing
facilities, HCFA may provide for training of State survey teams, but
shall provide for a reduction of FFP according to a prescribed formula.
However, the FFP reduction formula specified at section
1919(g)(3)(C) of the Act and at Sec. 488.170(c) of the proposed rule
has certain limitations: it cannot be used to sanction a State when it
has cited unfounded deficiencies or when its survey findings are
appropriate but its survey scheduling, team composition or other
practices are unacceptable. However, these survey defects are no less
serious than a failure to identify deficiencies, and it is unlikely
that the Congress intended for us to disregard them. HCFA does have the
authority to provide for the training of survey teams in these
instances. We are revising Sec. 488.320(b)(2) to provide that when the
State's survey performance in Medicaid facilities is inadequate but the
inadequacy is not accommodated by the FFP reduction formula, HCFA will
provide for the training of State survey teams. In addition, HCFA has
the authority to consider the Medicaid provider agreement to be invalid
for failure to follow proper survey procedures, and may invoke the FFP
disallowance provision at Sec. 442.30, Agreement as evidence of
certification.
We are unable to make the sanctions for inadequate survey
performance parallel across facility type as commenters suggested. As
discussed above, the Act does not permit us to eliminate FFP reduction
as a sanction for inadequate survey performance in Medicaid facilities,
and neither does it allow us to expand the application of this sanction
to inadequate survey performance in Medicare facilities. The
conspicuous absence of Federal payment reduction in section
1819(g)(3)(C) of the Act, which lists sanctions for inadequate survey
performance in Medicare facilities, as opposed to the inclusion of FFP
reduction in section 1919(g)(3)(C), which specifies sanctions for
inadequate performance in Medicaid facilities, is a clear indication
that the Congress intended to restrict Federal payment reduction for
inadequate survey performance in Medicaid facilities alone. Likewise,
section 1819(g)(3)(C) gives us the flexibility to devise our own
sanctions for inadequate survey performance in Medicare facilities, but
no comparable authority exists in section 1919(g)(3)(C). Therefore, we
must assume that the Congress did not intend for us to impose sanctions
other than the two specified in the statute for inadequate survey
performance in Medicaid facilities.
Comment: One commenter asked that we convene a technical advisory
group composed of State agency and HCFA regional office personnel to
explore the possibility of a legislative amendment to the Act's FFP
reduction requirement.
Response: We do not see the necessity of requesting a legislative
amendment, but will not discourage the States if they choose to pursue
one.
Comment: A question was asked regarding whether the reduction of
FFP would be by audit exception or through a reduction in the amounts
of future budget approvals.
Response: Procedures for such actions will be written following
existing procedures found in section 3165, ``Non-audit Medicaid
Disallowances'', of the Regional Office Manual. As noted above, such
procedures will be in accordance with section 1116 of the Act.
Section 488.325 Disclosure of Results of Surveys and Activities
Comment: A few commenters suggested that Sec. 488.325(a)(1) be
expanded to require that the scope and severity levels of all
deficiencies, including those deficiencies with a scope and severity
level of 1, be recorded on and, therefore disclosable as part of, the
official deficiency statement, in an effort to promote facility
competition and quality. Some of these commenters argue that we must
disclose notice of all deficiencies, regardless of scope and severity
level, if we are to provide the public with a complete and accurate
report of a facility's current compliance status. Some propose that
another requirement be added under Sec. 488.325(a) to read: ``(9) The
summary of 1-1 deficiencies.''
Response: As discussed later in this preamble, we are revising the
scheme that appeared in the proposed rule by eliminating scope and
severity scales, as such, and by substituting instead a scheme in which
HCFA and the State will assess deficiencies by application of several
factors that will gear enforcement remedies to the seriousness of
noncompliance at facilities. However, we are accepting the second
comment with some modification. With the exception of isolated
deficiencies that HCFA or the State determines constitute no actual
harm with a potential for only minimal harm, all deficiencies will be
recorded on the HCFA-2567. Those isolated deficiencies will not be
recorded on the official deficiency statement, but will be recorded on
a separate document as discussed in the preamble of the proposed rule.
However, all of a facility's deficiencies, including those deficiencies
that HCFA or the State determines constitute no actual harm with
potential for minimal harm, will be disclosable. We are revising
Sec. 488.325(a)(2) to require the release of the summary of isolated
deficiencies that HCFA or the State determines constitute no actual
harm with potential for minimal harm deficiencies.
Comment: One commenter asked how this information will be disclosed
to the public and also wanted to know if facilities have any
responsibility relative to disclosure. The same commenter wasn't sure
what we meant by ``direct or indirect interest in a SNF or NF'' as used
at Sec. 488.325(a) (7) and (8).
Response: Existing procedural requirements at Secs. 401.133-136 and
431.115 as well as sections 3300-3320 in the State Operations Manual
remain in effect relative to public disclosure of Medicare and Medicaid
survey documents, respectively. While Sec. 431.115 provides only
minimum disclosure requirements for States, it directs that States have
a procedure for disclosing the specified survey information.
Sections 1819(g)(5) and 1919(g)(5) of the Act provide the statutory
bases for Sec. 488.325 regarding disclosure of inspection and other
information on SNFs and NFs by the States and HCFA. The only
requirement we are imposing on nursing home providers in this regard is
that, not later than 10 working days after receiving a notice of
substandard quality of care, a SNF or a NF must provide the State with
a list of each resident in the facility and the name and address of his
or her attending physician. Failure of the facility to disclose the
information timely will result in termination or alternative remedies
being imposed.
Due to an administrative oversight, the word ``ownership'' was
omitted from the proposed regulation text at proposed Sec. 488.175(a)
(7) and (8), clarifying ``direct or indirect interest.'' We are
revising both cites, which have been redesignated as Sec. 488.325(a)
(8) and (9), respectively, to specify ``ownership'' interest. We are
also cross-referring these cites to Sec. 420.201, which defines
``direct'' and ``indirect'' ownership interest.
Comment: Several commenters suggested that results of complaint
surveys be disclosable under this subpart.
Response: The regulation implementing sections 1819(g)(5) and
1919(g)(5) of the Act provides that information must be made available
by the State or HCFA for all surveys and certifications. Therefore,
information from any survey, including a complaint survey, is
disclosable under this subpart.
Comment: We received four distinct comments on Sec. 488.325(b),
which concerns charges associated with making information available.
First, some commenters believe that, while charges should be permitted,
they should not be required, nor should they, when imposed, exceed the
amount facilities charge residents for copies of records. They proposed
that the requirement to follow 42 CFR 401.140 regarding fees and
charges be reduced to a suggestion by changing the word ``will'' to
``may.'' Second, other commenters contended that Sec. 401.140 is
outdated, too restrictive, and in conflict with some States' Freedom of
Information laws. Since many States have adopted their own fee
schedule, they suggested that this provision be revised to permit
States to use their own fee schedule. Third, one commenter questioned
HCFA's authority to require States to impose any charges. Lastly, some
commenters proposed that the regulation allow for waiver of fees or
reduced fees so that survey information is truly accessible to all.
Response: We are not accepting the suggestion that fees imposed by
HCFA or the States relative to disclosure parallel those charged by
facilities to residents because we have no basis to develop a provider-
specific disclosure policy relative to fees. However, since
Sec. 431.115(d) requires only that the Medicaid agency ``have a
procedure for disclosing pertinent findings obtained from surveys made
by the State survey agency,'' and since we understand that most, if not
all, States have their own fee schedules, we are amending this
subsection to allow, but not require, States to use their respective
fee schedules for documents which they maintain and which they have
been asked to disclose. In response to the comments that fees be
permissible but not required, as well as the request for a fee
exception clause, we refer the commenters to Sec. 401.140(c), which
provides for waiver or reduction of fees for Medicare. That section
discusses when a waiver of fees and charges would be appropriate and
permissible; States are free to use any such waiver provisions within
their respective disclosure procedures in the same way that they are
free to use or not use a fee schedule at all.
Comment: Numerous commenters were strongly opposed to allowing oral
requests for information. Some say that this is clearly inconsistent
with past practice which has generally been that requests be in
writing. This claim is further substantiated by the Freedom of
Information Act which provides that all agencies generally stipulate
that requests for information be in writing. Some commenters say that
only written requests can substantiate specific charges and fees, while
others, specifically States, use the written requests as a record of
the distribution of information which is used for workload and
expenditure reporting, as well as for other administrative purposes.
Response: Since publishing the proposed rule, we have concluded
that it is not necessary to create a facility-specific requirement
relative to the method by which requests for survey information should
be made, and we are revising Sec. 488.325(c) to provide that such
requests are to be made in accordance with the Department of Health and
Human Services' regulations relative to disclosure at 45 CFR Part 5, in
other words, generally in writing.
Comment: Many commenters suggested that paragraph (d)(3) be
expanded to include providers' responses in order to be consistent with
Sec. 488.325(a)(1) as well as to ensure full disclosure of all affected
parties.
Response: With the exception of those isolated deficiencies that
HCFA or the State determines constitute no actual harm with potential
for minimal harm, which are recorded on a separate form and which can
be refuted by providers during the dispute resolution process, any
provider response to the deficiency statement itself would be noted on
the plan of correction (both of which are explicitly releasable under
the Freedom of Information Act), we are making explicit in
Sec. 488.325(d) that provider responses to the deficiency statements
are disclosable.
Comment: Some commenters believed that States and facilities should
be required to provide information immediately, especially when State
law or policy provides immediate access. Commenters also wanted to know
whose disclosure provisions apply (HCFA's or the State's) when there is
a difference about what is releasable and when. A few commenters asked
us to specify whether the 10 days referred to in paragraphs (d) (1) and
(2) are calendar or working days.
Response: As we have stated above, we have no basis to require
facilities to disclose any information other than that which is
statutorily mandated. OBRA '90 provided that each State and the
Secretary (HCFA), must make available to the public information
concerning all surveys and certifications of NFs and SNFs, including
statements of deficiencies, and approved plans of correction, within 14
calendar days after such information is made available to those
facilities. For procedures relative to release of information not
included in the OBRA '90 provision, HCFA or the State should defer to
Sec. 401.136 or State procedures, respectively. Also, we note that
Sec. 488.325(d) implements sections 4008(h)(2)(M) and 4801(e)(14) of
OBRA '90, which require release of information by HCFA and the States,
respectively, not by providers.
Since paragraphs (d) (1) and (2) of the proposed rule offered no
additional guidance to HCFA or the States beyond what is currently at
Sec. 401.136 or in State procedures, respectively, we are deleting
them. However, we are clarifying the 10-day timeframe at Sec. 401.136
as ``working'' days.
The question of whose regulations prevail when disclosure
requirements differ between HCFA and the State should not arise since
the State and Federal disclosure systems operate separately from one
another. It is possible that the same document could be releasable
under a State's disclosure laws yet not be releasable under Federal
law, or vice versa. It is also possible that a disclosable document may
be released by HCFA and the State subject to different disclosure
timeframes. In other words, documents maintained by Federal agencies
are subject to Federal regulations; those maintained by the State are
subject to the State's regulations.
Comment: A few commenters requested clarification regarding the 14
calendar days referenced in paragraphs (d)(3). They weren't sure
whether there was a single release of information that would occur 14
calendar days after some event, or whether more than one release of
information, each after 14 calendar days, was contemplated. Another
commenter wanted to know if the statement of deficiencies and plan of
correction are a single document.
Response: While the statement of deficiencies and the plan of
correction are recorded on the same form (Statement of Deficiencies and
Plan of Correction, Form HCFA-2567), the completion and disclosure of
each is separate, not concurrent. The deficiency statement, as well as
the separate sheet transmitting survey findings of isolated
deficiencies which constitute no actual harm with potential for minimal
harm, are notices that the certifying agency gives to a provider
transmitting its official survey findings. We have concluded that,
since the separate listing of a facility's isolated deficiencies which
constitute no actual harm with a potential for minimal harm supplements
the official deficiency statement, the listing must be disclosed along
with the official statement of deficiencies if we are to provide the
public with an accurate and complete report of that facility's
compliance status. This information is disclosable within 14 calendar
days after it is made available to the provider. Upon receipt of the
statement of deficiencies, the provider responds, on the same form,
with its plan and timetable for correction of cited deficiencies, as
well as any disagreement with the survey findings. Sections
1819(h)(2)(C) and 1919(h)(3)(D) of the Act require that a plan and
timetable for corrective action be approved by HCFA if alternative
remedies are the only remedies being sought, and if the facility is to
continue to participate with deficiencies that do not constitute
immediate jeopardy in either or both the Medicare and Medicaid
programs. Information about the plan of correction must be released to
the public, upon request, within 14 calendar days after the provider is
notified of the approval status of its plan. Therefore, each part, that
is, the deficiency statement and the plan of correction, is releasable
within 14 calendar days after the provider's notification of that part.
Comment: A few commenters believe that States should not charge the
State ombudsman for the notifications specified in this subsection.
Response: Since the information in this subsection is being
disclosed by the State, any fees and charges, or waivers thereof, would
be subject to the specific State's disclosure law.
Comment: Several commenters requested that proposed
Sec. 488.175(e)(4) (redesignated in this final rule as
Sec. 488.325(f)(4)), be expanded to include requests for appeals as
well as results of appeals. A few other commenters suggested that the
paragraph be revised to include facility cost reports, confidential
survey records, for example, surveyor notes, etc.
Response: We are accepting the first suggestion and are revising
redesignated paragraph (f)(4), to provide that the State must provide
the State's long term care ombudsman with requests for appeals and
results of appeals. We are not accepting the second suggestion. The
fact that the Congress explicitly provided that a facility's Medicare
and Medicaid cost reports are disclosable to the public in accordance
with applicable disclosure laws, and not routinely disseminated to any
specific party, demonstrates its intention that release of these
reports should be based on the requestor's right to know the
information. The State's long-term care ombudsman, as well as any other
member of the public, may request these cost reports, surveyors' notes,
and any other survey-related documents not included in this subsection
through the appropriate disclosure mechanism, for example, the Freedom
of Information Act, where they will be evaluated accordingly.
Comment: Many commenters, mostly State agencies, were opposed to
routinely providing ombudsmen with the information required by this
subsection. They contend that this results in a costly and overwhelming
task especially in the larger States; for example, California has 1300
nursing homes and 42 ombudsman field offices. They propose that a more
reasonable approach to notification would be that in cases where a
specified degree of noncompliance exists, for example, substandard
care, notification would be automatic; in all other cases, notification
would be upon request. Another comment was that HCFA should develop a
report using data from current reporting systems to provide the needed
information.
Response: We cannot accept these suggestions. Sections
1819(g)(5)(B) and 1919(g)(5)(B) of the Act, as amended by sections
4008(h)(2)(N) and 4801(e)(15) of OBRA '90, specifically provide,
without exception, that ``States'' will notify ``the State long-term
care ombudsman'' of a State finding of noncompliance with ``any''
participation requirement as well as of ``any'' adverse action imposed
against a facility in that State. Regarding the number of ombudsmen
offices within a State to which notifications must be made, we note
that, since the statutory requirement to notify ``the State long-term
care ombudsman'' is singular, the State's central long-term care
ombudsman office within each State's organizational structure is the
intended contact point for satisfying such notification requirements.
While we see the function of disseminating the information further
among the district and other ombudsmen offices to be the responsibility
of the State's central long-term care ombudsman office, each State has
the flexibility to design its own system.
Comment: A few commenters wanted HCFA or the State to notify the
ombudsman of a nurse staffing waiver within 7 days of its approval.
Several commenters proposed that notice of nurse staffing waivers be
provided to prospective residents, their physicians, families or legal
representatives, the State licensure board for nursing and the State
and local medical societies. They based their proposal on the public's
need to know, not only from a consumer's perspective, but as taxpayers
who directly subsidize the affected facilities.
One commenter wanted to know who validates that nurse staffing
waiver information is actually provided to those required to receive
it.
A couple of commenters asked that the notice to residents about
nurse staffing waivers be in the form of a sign and be posted in a
prominent place in the facility to ensure that notice is received.
Response: Since publishing the proposed rule, we found that
disclosure of nurse staffing waivers is addressed in regulations at 42
CFR 483.30. Also, since sections 1819(g)(5)(C) and 1919(g)(5)(C) of the
Act are clear as to the individuals and organizations that would have
the greatest need for specified survey-related information, we believe
that all interests have been adequately represented and that such
information is easily accessible to any other interested parties either
through their respective professional affiliations, or through the
public disclosure mechanism. Therefore, we are eliminating
notifications specific to nurse staffing waivers from this final rule.
Comment: Some commenters urge that ombudsmen, protection and
advocacy systems for the mentally ill and mentally retarded, residents
or legal representatives and immediate family members, and the public
should be given an opportunity to comment on a proposed nurse staffing
waiver before it is granted.
Response: This comment is outside of the purview of this
regulation.
Comment: One commenter suggested that we delete the last sentence
of Sec. 488.175(h) (redesignated in this final rule as Sec. 488.325(g))
relating to enforcement consequences to a facility that fails to
satisfy the disclosure requirement timely because it is not necessary.
Response: We are not accepting this comment. We believe we must
retain this provision since this final rule provides HCFA's and the
State's enforcement strategy when facilities do not substantially meet
the nursing home participation requirements which are codified at 42
CFR Part 483, Subpart B. The requirement that facilities provide
information to the State relative to specified residents so that the
State can meet its statutory obligation to notify attending physicians
and licensing boards is in addition to the other participation
requirements at Part 483, Subpart B, and we believe that consequences
for facility noncompliance with this requirement are noteworthy.
Comment: Many commenters were opposed to our proposal implementing
sections 1819(g)(5)(C)(i) and 1919(g)(5)(C)(i) of the Act regarding
notice to physicians when the State finds that a nursing home has
provided substandard quality of care. All of these commenters objected
to the requirement that the attending physician of each Medicare and
Medicaid resident receive notification of the substandard quality of
care. Some believed that physicians of all residents in the facility
should be notified when such care is found because they contend that
all residents are vulnerable to such care and a program relationship
should not need to exist before notifications occur. An equal number of
commenters argued that this subsection exceeds the statutory
requirement that provides for notification of ``* * * the attending
physician of each resident with respect to which such finding is made *
* *''. These commenters suggested that the purpose of the statutory
requirement was to ensure that the physician of a resident who has
allegedly received substandard quality of care is apprised of the
situation in order to ensure appropriate medical interventions, if
needed.
Response: We are adopting a modified version of the above
suggestions and are requiring that the physician of each resident in
the facility who was found to have suffered substandard quality of
care, regardless of payment source, be notified of findings of
substandard quality of care. Findings of substandard quality of care
are indicative of the facility's inability or unwillingness to meet
specific participation requirements relative to the entire resident
population. While we have the statutory responsibility to ensure the
safety and well-being of program beneficiaries and recipients in
nursing homes that participate in one or both programs, noncompliance
frequently affects residents in a facility, other than just Medicare
and Medicaid residents. Moreover, the Act plainly applies to all
residents receiving substandard quality of care regardless of payment
source. Therefore, findings of substandard quality of care must be
communicated to the physician of each resident who was the subject of
such care.
Comment: A few commenters suggested that notification to the State
board responsible for the licensing of the facility administrator be
limited to those situations where the administrator is found culpable
for the violations identified. They describe situations in which a
reputable administrator is recruited to a problem facility in an effort
to turn the facility around. Shortly thereafter, a survey is performed
which identifies substandard quality of care, and as a result, the
newly hired administrator is reported to the licensing board. They
point out that this situation provides a disincentive for quality
administrators to assume control of problem facilities due to the risk
to their reputation. A few commenters wondered why licensing boards
need to be notified, while others believed that notification should be
expanded to include State licensure boards for nursing and medicine as
well as the State and local medical societies.
Response: We are not accepting these suggestions. First, the
requirements to notify the licensing board, as well as physicians of
Medicare and Medicaid residents, when substandard quality of care is
identified, are statutory and do not provide for exceptions. Second, a
facility administrator, regardless of recency of appointment, is
ultimately accountable for the care and services provided in his or her
facility at the time of the survey. We would expect that this
consideration as well as others would be evaluated by a prospective
facility administrator.
Regarding the comment that notification should be expanded,
sections 1819(g)(5)(C) and 1919(g)(5)(C) of the Act are clear as to the
individuals and organizations that would have the greatest need for the
specified survey-related information. We believe that all interests
have been adequately represented and that such information is easily
accessible to any other interested parties either through their
respective professional affiliations, or through the public disclosure
mechanism. Therefore, we see no need to expand the list of parties the
State must notify about substandard quality of care.
Comment: Several commenters asked whether the State notification
requirements at sections 1819(g)(5)(C) and 1919(g)(5)(C) of the Act
apply to surveys performed by HCFA.
Response: States will provide the notification regardless of who
performed the survey that identified the substandard quality of care.
For all State-operated facilities, as well as non-State-operated
facilities which are subject to a Federal survey, HCFA will notify the
State of the finding of substandard quality of care so that the State
can fulfill the notification requirements. This requirement is based on
the rationale that the State ``finds'' noncompliance when it is
notified of it by HCFA. This approach permits use of existing State
systems and centralizes notification efforts.
Comment: Some commenters complained that in cases where the
facility fails to provide the list of residents and their physicians
required in proposed Sec. 488.175(h) (redesignated in this rule as
paragraph Sec. 488.325(g)), the State will be unable to comply with the
State notification requirements in proposed paragraph (i) (redesignated
in this rule as paragraph (h)). If the facility provides the list late,
the State will miss its 30-day deadline. These commenters believe that
this paragraph should be rewritten to require the State to issue notice
within 30 calendar days of receipt of the resident/physician
information from the facility.
Response: We are accepting this suggestion with some modification
and are revising redesignated paragraph (h) to read, ``Not later than
20 calendar days after a SNF or NF complies with paragraph (g), the
State must provide written notice of the noncompliance to--''. This
revision imposes the notification requirement on the State once the
State has received the necessary information from the facility. Also,
Sec. 488.325(g) provides that facilities that fail to provide the
information to the State timely will have termination or alternative
remedies imposed.
Comment: A few commenters questioned whether there would be a
revisit prior to the notification to physicians and licensing boards,
and, if so, and corrections had been made, whether notifications must
still occur.
Response: The Act does not require revisits, appeals or any other
pre-notification activity prior to notification to physicians and
licensing boards. If the facility does manage to correct the
deficiencies designated as substandard quality of care and have the
correction substantiated by State or Federal surveyors before the
notification, that notification should indicate that corrections have
been made. However, the Act is clear that physicians and licensing
boards are to be notified when the facility has provided substandard
quality of care. Therefore, substandard quality of care provided before
corrective action was taken, still must be reported.
Comment: A few commenters wanted to know how physicians will know
when a facility, previously found to have provided substandard quality
of care, has achieved compliance. Other commenters questioned whether
physician and licensing board notifications are subject to an appeal by
the facility, and if so, whether the results of the appeal will be
communicated to the physicians and licensing board. These commenters
also asked what becomes of this information.
Response: There is no statutory basis for notifying physicians more
than once about a facility's compliance status. However, there is
nothing to preclude facilities, physicians, or licensing boards from
following up on this matter absent a statutory or regulatory
requirement. Physicians are free to initiate inquiries into this
matter, just as facilities are free to contact physicians and licensing
boards about corrective action having occurred after the initial
notification by the State.
While the notification in and of itself is not appealable,
providers may appeal, in accordance with parts 431 or 498, as
applicable, a finding of noncompliance that caused a remedy or remedies
to be imposed. However, there is no statutory basis to require that
results of provider appeals be communicated to the physicians and
licensing board previously notified of the substandard quality of care.
Again, the providers are free to notify physicians and licensing boards
about the outcomes of these appeals and physicians and licensing boards
are free to inquire about such matters.
All information related to the survey and certification of Medicare
and Medicaid providers is retained in accordance with Federal and State
provider survey and certification records retention requirements.
Section 488.330 Certification of Compliance or Noncompliance
Comment: A small number of commenters suggested that HCFA delegate
to the State all enforcement responsibilities for the SNF portion of
dually participating facilities. Commenters believe that States have
better resources to perform the enforcement functions and this solution
would eliminate duplicative efforts and be more cost effective. One
commenter further suggested that the State handle all enforcement
responsibilities for all SNFs.
Response: We cannot accept this suggestion. Section 1819(h)(2) of
the Act requires the Secretary to take certain enforcement actions when
the Secretary finds either through his or her own survey, or through
the State's survey, that a SNF no longer meets the requirements set
forth in section 1819(b), (c) or (d) of the Act. Thus, we do not have
the authority to delegate the enforcement authority for SNFs to the
State.
Comment: A few commenters believed that HCFA, not the State, should
perform the on-site surveys of State-operated nursing homes.
Response: To the extent possible, we have attempted to use the
survey and certification process in effect before October 1, 1990,
whereby the survey agency would conduct the survey and certify
compliance or noncompliance with Federal requirements, subject to HCFA
approval as necessary for SNFs. The OBRA '87 legislation made a
distinction between State operated and non-State operated facilities.
Specifically, OBRA '87 provided that the Secretary would be responsible
for certifying State-operated facilities. To be as consistent as
possible with our present survey process, we proposed that the State
survey agency would conduct all surveys (with the exception of
validation surveys). We believe that requiring survey agencies to
survey all facilities will make surveys for all nursing homes in a
State more consistent since the same entity will conduct all surveys.
However, HCFA would maintain the certification responsibility, thus
assuring oversight as envisioned by the Act.
Comment: Some commenters were concerned that, although the
Secretary's determination of a facility's noncompliance takes
precedence over a State's finding of compliance, the regulation is
unclear about which agency's remedies control when both HCFA and the
State determine that the facility is not in compliance.
Response: When both the Secretary and the State survey agency agree
that a facility is not in compliance, the rules at proposed
Sec. 488.232 (redesignated as Sec. 488.452(b),(c),(d) and (e)) are
applied to determine whether the Secretary's or the State's timing and
choice of remedies control.
Comment: A few commenters were unclear about whether the validation
survey and the certification survey would be counted as separate
surveys for sanction purposes because the denial of payment sanction
must be imposed when the State or Secretary finds substandard quality
of care through three consecutive standard surveys.
Response: The Secretary's finding of noncompliance during a
validation survey would not be counted toward three consecutive
findings of substandard quality of care. Sections 1819(h)(2)(E) and
1919(h)(2)(D) of the Act refer to facilities being found to have
provided substandard care under three consecutive standard surveys
conducted under sections 1819(g)(2) and 1919(g)(2) of the Act,
respectively. Sections 1819(g)(2) and 1919(g)(2) of the Act describe
the State's standard survey of a facility.
Prospective Providers
In the proposed rule, we asked for public comments regarding our
requirement that prospective providers be in full compliance with the
requirements of sections 1819 (b), (c) and (d) and 1919 (b), (c) and
(d) of the Act in order to participate in the Medicare and Medicaid
programs, respectively.
Comment: Many commenters believe that HCFA's proposal ignores the
concept of substantial compliance because the proposed regulations
define any failure to comply with the regulations as a deficiency. The
commenters suggest that the regulation be rewritten to state that
facilities will be judged on substantial compliance. A few commenters
asked if a deficiency with a scope of 1 and a severity of 1 would
constitute noncompliance that is sufficient to exclude a prospective
provider from program participation.
Response: After carefully considering the matter, we are accepting
the commenters' suggestion to incorporate the concept of substantial
compliance in the regulation as the standard that prospective providers
and existing providers must meet in order to begin or continue to
participate in the Medicare and Medicaid programs. We arrived at this
conclusion for several reasons.
Based on public comments and further consideration on our part, we
believe that the notion of perfect compliance, as discussed in the
proposed rule, is an impractical and, perhaps, unrealistic standard for
providers or prospective providers to meet. This is because in lieu of
approximately 15 statutory requirements with which facilities had to
comply before OBRA '87, the Act now sets forth more than 100
requirements that facilities have to meet in order to participate in
the Medicare or Medicaid programs. In fact, in 1992 only 7.3 percent of
all nursing homes surveyed were deficiency-free. Under a regulatory
system defined by condition and standard level requirements, such as
the system in place for many years, we found that almost all facilities
that were experiencing only minor problems did retain program
eligibility since the system allowed for some noncompliance at the
standard level. That is no longer the case. By vastly increasing the
number of statutory requirements that facilities have to meet in order
to meet the statutory definition of a SNF or NF, and by directing the
Department to do away with its former hierarchy of requirements, the
Congress made it far more difficult for facilities to meet
prerequisites for program participation. As discussed above, however,
we do not believe that the Congress intended to write into law a set of
requirements that would eliminate almost all providers from the
Medicare and Medicaid programs. Accordingly, we have drawn upon the
principles enunciated by the Institute of Medicine in its study of
nursing home regulation that helped spawn nursing home reform.
A benchmark of the IoM study was its conclusion that the focus of
nursing home regulation should be on resident outcomes and not
procedural requirements that do not always accurately measure whether
quality care is being rendered. Sections 1819 and 1919 of the Act, and
the implementing regulations at 42 CFR Part 483, as well as our survey
process, reflect this focus.
We believe that the Act sets forth many examples of requirements
which, if violated by a facility, would not necessarily expose a
resident to the potential for anything more than minimal harm, much
less actual harm. For example, Sec. 1919(b)(3)(C) requires that a
facility conduct a resident assessment for each individual no later
than 14 days after admission. If a facility were to conduct almost all
of its assessments in compliance with this requirement, but failed in
the case of only one resident who was assessed on the 15th day after
admission, a very narrow reading of the statute would compel a
conclusion that the facility was out of compliance and thereby failed
to meet the statutory definition of a nursing facility under
Sec. 1919(a) of the Act. This kind of approach to nursing home
regulation, as we alluded to above, would be unduly harsh and
impractical where the facility's failure did not expose the resident to
any harm. Indeed, it may be the case that the facility prepared an
exemplary assessment for the one resident for whom it acted untimely.
The same type of analysis could be made for violations of the
requirement at Sec. 1919(c)(2)(B) regarding the requirement to be given
at least 30 days in advance notice of a resident's transfer. Where in a
given case, a facility gives 29 days advance notice, the question might
better be, was there a potential for minimal harm as a result of this
infraction rather than conclude that the Act was violated and expose
the facility to one or more remedies, even where the resident
experienced no more than the potential for minimal harm.
Accordingly, we are defining ``substantial compliance'' at
Sec. 488.301 as a level of compliance with requirements of
participation such that any identified deficiencies pose no greater
risk to patient health and safety than the potential for causing
minimal harm. Thus, while a facility may avoid a remedy even if it
fails to comply perfectly with all statutory requirements, it still has
a duty to each resident to provide care that enhances the chances of
positive outcomes and avoids negative outcomes. If a single resident
experiences any harm, a facility will not have satisfied its statutory
obligations. Given the statute's focus on each resident's right to
receive quality care, and the facility's mirrored obligation to provide
it, we believe that we could not adopt a less rigorous standard of
compliance.
We acknowledge that there might be many definitions that we could
have chosen from, but in our view the definition we have settled upon
strikes the appropriate balance that best implements the statute, the
IoM study, and accommodates both facility and resident concerns.
Second, as commenters suggested, we considered the fact that
section 1866(b)(2) of the Act allows the Secretary to enter into
provider agreements with facilities that ``substantially'' meet
applicable requirements. Although there is no analogous provision in
the Medicaid law for nursing facilities, we are exercising our general
rulemaking authority in section 1102 of the Act, to extend the
``substantiality'' concept to Medicaid providers. We believe that since
Congress stressed that it intended to adopt the IoM recommendation that
the same requirements apply to both Medicare and Medicaid facilities,
it is logical to recognize substantial compliance as an acceptable
standard to meet for participation in both programs.
As we discuss in more detail later in this preamble, the scope and
severity gradations that appeared in the proposed rule will only serve
as one example of how States can determine remedies. Furthermore, we
are removing the numerical designations from the scope and severity
measure. In response to the commenter who asked if a deficiency at a
scope of 1 and a severity of 1 would constitute noncompliance
sufficient enough to exclude a prospective provider from program
participation, the answer is no. While we are not mandating the use of
numerical ranges, if States use such ranges, and if a 1/1 designation
denotes a deficiency which is of limited scope and which has caused no
harm and is unlikely to cause more than minimal harm, a facility with
such a deficiency would not be precluded from participating in the
Medicare or Medicaid program.
Comment: Several commenters raised concerns with the provision that
facilities must meet all requirements because they wonder how many
follow-up surveys will be necessary to ascertain that a facility is in
full compliance.
Response: As we discussed earlier, we reconsidered our position
spelled out in the proposed rule that prospective providers had to
comply perfectly with all requirements to participate in the Medicare
and Medicaid programs. Instead, we are requiring that providers and
prospective providers be in substantial compliance with all
requirements in order to participate in both programs. If a State
survey agency is requested to conduct more than one initial survey of a
prospective provider because it was not in substantial compliance, the
State survey agency will have the flexibility to conduct follow-up
surveys up to three weeks after the facility alleges correction of the
noncompliance that disqualified it from Medicare and/or Medicaid
participation. This is consistent with section 2008 of the State
Operations Manual which established 3 weeks as the timeframe in which
the State should conduct an initial survey of a prospective provider
after its notification of full operation. The 3-week interval is
necessary to allow the State survey agency adequate time to schedule a
revisit, and gives the prospective provider who has corrected
noncompliance the opportunity to demonstrate that it is capable of
continued substantial compliance.
Comment: Some commenters suggested adding a phrase at the end of
the sentence in Sec. 488.330(b)(2)(ii) to require that when a provider
has achieved compliance, the State can only remove the remedy if the
State has reason to believe that compliance will be maintained.
Response: We accept this suggestion, but only with regard to the
denial of payment and State monitor sanctions imposed for repeated
substandard quality of care, as specified at sections 1819(h)(2)(E) and
1919(h)(2)(D) of the Act, and for the imposition of temporary
management as specified at sections 1819(h)(2)(B)(iii),
1919(h)(2)(A)(iii), and 1919(h)(3)(C)(iii) of the Act. Sections
1819(h)(2)(E) and 1919(h)(2)(D) of the Act provide that, if the State
or Secretary finds substandard quality of care on three consecutive
standard surveys, the State or the Secretary must impose a denial of
payment remedy and monitor the facility until the facility has
demonstrated to the satisfaction of the Secretary or State that it is
in compliance with the requirements of sections 1819 (b), (c), and (d)
and 1919 (b), (c), and (d), and that it will remain in compliance with
such requirements. Likewise sections 1819(h)(2)(B)(iii),
1919(h)(2)(B)(iii) and 1919(h)(3)(C)(iii) of the Act specify that
temporary management must not be lifted until the Secretary or State
has determined that the facility has the management capacity to ensure
continued compliance with all the requirements of sections 1819 (b),
(c), and (d) and 1919 (b), (c), and (d) of the Act. We are, as
explained earlier in this preamble, imposing a substantial compliance
standard for the purpose of imposing and lifting sanctions. Therefore,
for the above mentioned remedies, we are requiring that the remedies be
lifted when the facility achieves substantial compliance and the
facility has demonstrated to the Secretary or the State that
substantial compliance can be maintained. There is no statutory
authority for the continuation of any other remedies past the date that
a facility achieves substantial compliance. We are making changes to
Sec. 488.330(b)(2)(ii) accordingly and corresponding changes to
proposed Sec. 488.236 (redesignated as Sec. 488.454).
Comment: A few commenters recommended amending the proposed text to
provide that a facility that is certified meets all Federal
requirements, except that a facility may be considered to meet the
requirements if it has requested and been granted a waiver by either
HCFA or the State survey agency. Commenters further requested that we
clarify in the regulation that once a waiver is granted, the existing
situation which required the waiver is not considered a deficiency for
the purpose of remedies or repeat deficiencies.
Response: We do not believe the regulation needs to be changed.
Waiving requirements renders those requirements not applicable to a
particular facility for the duration of the waiver. If requirements are
not applicable to a particular facility, that facility cannot be out of
compliance with those requirements. Therefore, when a facility has been
granted a waiver of certain requirements, there would be no remedies
imposed nor would those waived requirements be considered when looking
at a pattern of repeated noncompliance.
Comment: Some State commenters believed that the proposed rule was
unclear about when the certification of compliance or noncompliance
would be issued. For example, in the case of a plan of correction,
would HCFA or the State certify compliance after an acceptable plan of
correction was received or would noncompliance be certified, and after
successful completion of the plan of correction, a subsequent
certification of compliance be issued.
Response: The certification of compliance or noncompliance is
issued by the State survey agency approximately 20 to 25 days after the
last day of the survey. A finding of substantial compliance is
considered within the range of compliance and would receive a
certification of compliance. A certification of compliance would be
issued after a certification of noncompliance if, as in the example the
commenter offers, a facility submits a plan of correction and achieves
substantial compliance. The exact mechanism by which the facility will
be notified of the subsequent certification of compliance will be
specified in manual instructions.
Comment: One commenter suggested that HCFA not terminate a Medicaid
provider agreement based on a validation survey unless there is
immediate jeopardy to resident health and safety.
Response: We continue to believe that there is ample authority in
the Act for the Secretary to terminate Medicaid provider agreements in
situations that do not pose immediate jeopardy. First, section
1919(h)(3)(B) of the Act provides that ``[n]othing in this subparagraph
shall be construed as restricting the remedies available to the
Secretary to remedy a facility's deficiencies.'' Second, section
1919(h)(3)(C) of the Act provides that the Secretary may provide for
other specified remedies. We view these provisions as statutory
authority and Congressional intent that the Secretary design
enforcement remedies that will assist in effectively assuring prompt
and lasting compliance by nursing facilities that serve the Medicaid
population. Third, the Act already expressly provides for terminations
by the Secretary in non-immediate jeopardy cases. Specifically,
sections 1919(h)(6) and 1919(h)(7) of the Act, by their own terms,
apply to findings of noncompliance by the Secretary when there is no
immediate jeopardy to resident health and safety. Each of these
provisions speaks to actions of the Secretary to terminate the provider
agreement of such facilities. Accordingly, we are not accepting the
commenter's suggestion.
Comment: A few commenters recommended that we revise
Sec. 488.330(d)(1) to remove ``nature of noncompliance'' and replace it
with ``basis for the determination.'' The commenters suggested that the
word ``nature'' was not specific enough and does not furnish the
provider with the necessary information to formulate an appropriate
plan of correction or response to deny the allegation. Some commenters
further suggested that the facility should be provided with full
information that supports each citation and the survey agency's
decisions including the underlying reason, basis or rationale for the
findings of noncompliance with a regulatory requirement.
Response: We are not accepting this suggestion because we believe
that the Statement of Deficiencies and Plan of Correction Form (HCFA-
2567) provide facilities with the specific information necessary to
formulate an acceptable plan of correction. To include such detailed
information regarding deficiencies in the notice of noncompliance would
be duplicative and administratively burdensome. We also are not
accepting the suggestion to replace ``nature of noncompliance'' with
``basis for the determination'' because we believe there is virtually
no substantive difference.
Comment: A few commenters suggested that the notice of a
certification of noncompliance should include all of the specified
items in Sec. 488.330(d) and not only some of them.
Response: We agree with the commenters and are amending
Sec. 488.330(d) to require that all of the information included in
proposed paragraph (d) must be included in the notice.
Comment: Many commenters supported our proposal to impose remedies
prior to the hearing, and noted that from the perspective of the
residents and their families this proposal is a strength of the
proposed rules. These commenters approved of applying remedies once the
violations are found. Consumer groups emphasized that imposing remedies
prior to appeals is essential to carrying out the statutory requirement
to ``minimize the time between identification of violations and the
final imposition of remedies''. They also commented that the IoM report
expressed a similar view, stating that HCFA ``should develop
regulations that would allow states to implement sanctions prior to
hearings and appeals.'' Many commenters stressed that delays in
enforcement could harm the residents, and that remedies should not be
delayed pending a hearing. One consumer group noted that immediately
imposing a restriction on admissions while a hearing is pending is
particularly effective.
Many commenters also indicated that facilities should initiate a
plan of correction immediately.
Response: We agree with the above comments, and are adopting
procedures that allow for the swift imposition of remedies prior to a
hearing. We believe that the intent of the Act was that remedies be
imposed as soon as possible in order to protect the residents.
Comment: Several commenters were concerned that providing hearings
only after imposition of remedies denied providers their rights to due
process. Many commenters recognized that in cases of immediate jeopardy
to resident health or safety, pre-hearings were not necessary, but in
cases in which there is no immediate jeopardy, they favored a hearing
prior to imposition of any sanctions. Some commenters wanted HCFA to
require the States to give an informal hearing prior to imposition of
alternative remedies if the deficiencies do not pose immediate jeopardy
to resident health or safety.
A few commenters recognized that the majority of courts that have
addressed the issue have found that providers are not constitutionally
entitled to pre-hearing relief, but that a minority of courts have
found that hardships are imposed on providers and residents when no
pre-termination process is afforded. These minority-view courts have
found facilities entitled to a pre-termination hearing on due process
grounds when no pre-termination procedures are available.
A few commenters challenged HCFA's reliance on the court cases
which have upheld post-termination hearings on the grounds that these
cases involved deficiencies analogous to immediate jeopardy situations.
These commenters concede that in immediate jeopardy situations, the
residents' interests are compelling enough to permit post-termination
relief to providers, but not otherwise.
Several providers noted that residents could suffer transfer
trauma, the facility's business could be destroyed, and facility
employees could lose their jobs, none of which could be restored if the
facility were ultimately successful on appeal. A few commenters noted
that a prior hearing is often the only safeguard against a mistake or
incorrect judgment of a less experienced surveyor.
A few people commented that when penalties become incrementally
more severe for repeated non-compliance, and imposition of penalties
takes into account a facility's compliance history, the need for
hearings becomes more critical.
A few commenters urged that facilities be given an opportunity to
correct deficiencies before any remedy is imposed.
Response: We believe that post-sanction hearings are entirely
compatible with due process. Courts that have addressed this issue have
concluded that, because the facility has numerous opportunities to
prevent mistakes from occurring and to present its side of the story
both during the survey process, at the exit interview, and by
submitting written statements and a plan of correction, due process is
satisfied by the availability of post-sanction hearings. See, for
example Case v. Weinberger, 523 F.2nd 602 (2nd Cir. 1975), Caton Ridge
Nursing Home v. Califano, 596 F.2d 608 (4th Cir. 1979), Green v.
Cashman, 605 F.2d 945 (6th Cir. 1979), Northlake Community Hospital v.
United States, 654 F.2d 1234 (7th Cir. 1981), Geriatrics, Inc. v.
Harris, 640 F.2d 262 (10th Cir. 1981), cert. denied 454 U.S. 832, 102
S.Ct. 1295. Although the Supreme Court has not directly decided the
issue of due process requirements when a provider is terminated, the
Court has decided in O'Bannon v. Town Court, 447 U.S. 773, 100 S.Ct.
2467 (1980), that residents are not entitled to a pre-termination
hearing. The Court reached this result notwithstanding the fact that
residents were the intended beneficiaries of the provider agreement
through their entitlement to high quality care. Moreover, consistent
with the balancing of interests formula first enunciated by the Supreme
Court in Mathews v. Eldridge, 434 U.S. 319 (1976), we have concluded,
first and foremost, that the private interest that facilities have in
their continued participation in the Medicare and Medicaid programs
must give way to the Government's interest in protecting the health and
safety of the resident population. Additionally, in light of the
opportunities available to providers to question the accuracy of survey
findings at various points during the survey process including during
the survey, exit conference, and through informal meetings with State
or Federal officials, we believe that the chances for an erroneous
deprivation are quite small when compared to the enormous delay in the
correction of noncompliance that could occur were hearings to be
routinely held prior to the institution of remedies. The use of an
informal dispute resolution process, to be discussed later in this
preamble, should serve to reduce even further the chances of an
erroneous deprivation.
Apart from the support of case law, the nursing home reform
statutory provisions clearly reflect the desire expressed in the
enactment's legislative history that remedies be applied swiftly once
deficiencies are identified. Specifically, sections 1919(h)(2)(A) and
(h)(3)(C) of the Act require that when States and the Secretary develop
criteria detailing the manner in which remedies are to be imposed that
they be designed so as to minimize the time between the identification
of violations and final imposition of the remedies. Additionally,
section 1919(h)(8) of the Act specifies that States may impose a denial
of payments for new admissions, temporary management, and facility
closures during the pendency of any hearing. We believe it would be
incompatible with these pronouncements were we to devise an appeal
scheme that would provide for hearings before the imposition of
remedies. Moreover, we conclude that this is the case regardless of
whether the facility's deficiencies pose immediate jeopardy to resident
health or safety since the Act makes no distinction on this basis and
because the delay in imposing remedies once noncompliance has been
identified could be considerable.
Comment: One commenter stated that residents should have the right
to remain in their nursing homes until after the alleged deficiencies
are substantiated.
Response: The Supreme Court has addressed the issue of the right of
residents to a pre-termination hearing when the nursing home in which
they reside loses its Medicaid agreement (O'Bannon v. Town Court, 447
U.S. 773, 100 S. Ct. 2467 (1980)). The Court noted that although
termination may be harmful to some residents, residents are moved to a
complying nursing facility for their own benefit, so that they can
obtain the care to which they are entitled as Medicaid residents. The
Court noted that Medicaid residents who are forced to move may have
difficulty locating other homes they consider suitable or may suffer
both emotional and physical harms as a result of the disruption
associated with their move, and might have a claim for damages against
the nursing home, yet they would not have any claim against the
government for deprivation of an interest in life, liberty or property
(Id. 447 U.S. at 788, 100 S.Ct. at 2476).
As discussed more fully below, residents do have opportunities for
giving information to the surveyors during the survey process.
Comment: One commenter believed that providing pre-hearings for
monetary penalties, without providing any hearing, formal or informal,
prior to imposition of harsher sanctions is irrational.
Response: Pre-sanction hearings are available when monetary
penalties are assessed because the provisions of section 1128A of the
Act apply. These procedures require pre-sanction hearings when civil
monetary penalties are assessed. As discussed above, the statute
clearly provides for the immediate imposition of remedies where civil
money penalties are not involved.
Comment: One commenter argued in favor of a written appeals process
prior to revocation of the facility's license.
Response: Termination of a provider agreement is not termination of
a license to do business; therefore, we do not accept the implication
that pre-termination hearings should be available on the grounds that a
license is being revoked, especially when the statute, legislative
history and case law so clearly point in the other direction.
Comment: A few commenters stated their belief that HCFA is
inappropriately extending its rulemaking authority to supersede State
laws which provide pre-sanction hearings. Some commenters noted that
current Medicaid regulations at Sec. 431.153(b) allow States the option
of providing pre-hearings.
A few commenters stated that there was no statutory basis for
HCFA's proposal to eliminate pre-sanction hearings in the Medicaid
program, and no indication that the Congress intended to eliminate this
State practice. These commenters noted that there is a material
difference between the Medicare and Medicaid programs in the impact of
not having a pre-hearing available because nursing homes usually have
many more Medicaid residents than Medicare residents. They stated that
loss of Medicaid reimbursement has a greater financial impact than the
loss of Medicare reimbursement.
A few people commented that the statutory requirement to minimize
the length of time between identification of deficiencies and
imposition of remedies is not a mandate to eliminate the time between
the two events.
A few people commented that the proposed regulation was making
terminations so easy to accomplish, by providing only for post-
termination hearings, that the Congressional intent to provide
alternatives to termination was being undermined.
One commenter noted that the legislative history of Public Law 96-
499, indicated that the Congress wanted providers to have an
opportunity to present their cases at an informal hearing prior to
imposition of a sanction, citing H.R. 1169 at 56, reprinted in 1980
U.S. Code, Cong. & Admin News, 5526, 5569.
Response: OBRA '87, as discussed more fully above, OBRA '87
specifically provides that the Secretary must ``minimize the time
between the identification of violations and final imposition of the
remedies'' (see sections 1819(h)(2)(B) and 1919(h)(2)(A) of the Act).
In addition, OBRA '87 provides that, ``It is the duty and
responsibility of the Secretary to assure that requirements which
govern the provision of care [* * * in both Medicare and Medicaid
facilities * * *] and the enforcement of such requirements, are
adequate to protect the health, safety, welfare, and rights of
residents and to promote the effective and efficient use of public
moneys.'' (Sections 1819(f) and 1919(f) of the Act, emphasis added).
As we stated in the proposed rule, we believe that there are
compelling reasons to provide for an appeals mechanism under Medicaid
that is triggered only after an adverse action has gone into effect. As
discussed above, we believe this scheme most accurately reflects
legislative intent. Additionally, we believe the Act gives us general
rulemaking authority to achieve this objective and that, in particular,
we have authority to regulate the timing of State Medicaid hearings
that may be provided in accordance with section 1919(h)(7) of the Act.
We also see no reason why the rules governing the Medicaid program in
this area should be any different than those governing the Medicare
program when the substantive requirements affecting providers are
exactly the same and the enforcement options are virtually identical.
For Medicaid, the only hearing a provider will receive is that
which is provided for in this final rule, as determined by
Sec. 488.330(e)(4). When States hear certification and licensure
appeals under the same process, that process can be used for Medicaid
purposes as long as it does not go beyond the scope of the hearing
procedures in part 431. Part 431 only provides for appeals of
deficiencies that lead to an enforcement remedy; therefore, appeals of
deficiencies that did not lead to an enforcement remedy will not be
recognized for Medicaid purposes.
As stated above, we believe that residents are the primary
beneficiaries of the Medicare and Medicaid program, and their interests
are paramount. The Second Circuit Court of Appeals stated as follows in
Case v. Weinberger, 523 F.2d 602, 607 (2nd Cir. 1975):
This anticipated damage to Mrs. Case, which is certainly
serious, does not compare favorably with the government's interest
in the safety of her patients. A nursing facility's ``need'' for
patients has nothing to do with the statutory benefits structure.
The facility's need is incidental. That a particular nursing
facility cannot survive without Medicaid participation was certainly
not Congress' foremost consideration in its creation of the Medicaid
program. This is not to derogate Mrs. Case's property interest in
her expectation of continued participation. We must, however, place
that right in proper perspective with regard to the health and
safety expectations of the patients, which expectations the
Secretary has a valid interest in protecting. The benefits to a
nursing home from its participation in Medicaid reimbursement result
from nothing more than a statutory business relationship.
The above comments on the relationship of providers to the Medicare and
Medicaid programs were cited with approval by the Tenth Circuit Court
of Appeals in Geriatrics v. Harris, 640 F.2d 262, 265 cert denied, U.S.
Supreme Court (1981).
Comment: Several commenters offered alternatives to the proposed
post-sanction hearings. Some accepted HCFA's goal of applying remedies
immediately, but proposed that States should be allowed the flexibility
to use pre-sanction hearings in limited circumstances.
Some wanted the option to use pre-sanction hearings in cases where
deficiencies are minor and States have a high caseload of appeals
(presumably making it difficult to obtain a speedy post-remedy
hearing); some wanted pre-sanction hearings in all cases unless the
facility was substantially out of compliance or the deficiency was
deemed life threatening.
Some stated that although the residents' interests prevail when the
deficiencies impair their safety, the facility's interests should
prevail when the deficiencies are less serious, thereby justifying pre-
sanction hearings. For example, some commenters agreed that substandard
care needed to be addressed expeditiously, prior to any hearing, but
other deficiencies could be addressed after an expedited appeals
process.
Some proposed a balancing test under which the procedures would
vary according to the interests at stake. The residents' interests
would specifically be balanced against the nursing home's interests on
a case by case basis. A post-sanction hearing would be held in cases of
immediate jeopardy, and pre-sanction hearings would be held when the
threat to residents was less extreme.
Some wanted States to have the option of providing pre-sanction
hearings in all cases. Some wanted to retain the present State option
in the Medicaid program to provide either pre-termination hearings or
post-termination hearings which must be completed within 120 days of
the effective date of the termination. A few commented that requiring
completion of the hearing within 120 days would alleviate HCFA's
concern that pre-sanction hearings would delay imposition of remedies.
One commenter proposed that an existing State procedure be adopted,
whereby the State schedules an appeal within 30 days of receiving a
request for a hearing; an impartial decision maker makes a
recommendation within 30 days of the hearing, and the Secretary makes a
final decision within 10 days. Another proposed a 10 day filing period
for requesting an appeal; a hearing held within 30 days of request; and
a decision within 30 days of the hearing.
A few commenters proposed minimizing the time between
identification of remedies and imposition of remedies by instituting
deadlines in an expedited hearing process. These commenters proposed
imposing time periods for filing of documents by all parties, and
mandatory deadlines for decisions by hearing officers.
Some commenters proposed allowing States to follow their own
Administrative Procedure Act provisions.
Some submitted State license laws for our consideration. For
example, under one State's license law, deficiencies are classified
based on whether there is a substantial probability of death or serious
mental or physical harm (Class A), a direct threat to health, safety or
welfare of a resident (Class B), or no direct threat to health, safety
or welfare of a resident (Class C). Class A violations require
immediate abatement, subject to a Court injunction for failure to
abate; Class B or C violations require a plan of correction within 10
days (extendable to 30). Timeframes are included, providing generally
for requesting hearings within 10 days after notice, and providing
hearings within 30 days of request.
Response: We are not accepting suggestions that would require pre-
sanction hearings because we continue to believe that residents are
best served if remedies are imposed promptly. The residents are the
beneficiaries of the Medicare and Medicaid programs, and their best
interests are the motivating force behind OBRA '87 and these
regulations. We are not mandating post-remedy hearings. We are merely
not requiring a hearing to be completed before imposing any sanction
but civil money penalties. Depending on the size of the case load and
processing times, a State could complete a hearing prior to the
imposition of a remedy, but to be consistent with these regulations any
hearing would need to be conducted and concluded very shortly after
noncompliance was identified. However, we acknowledge that the ability
to provide a pre-sanction hearing would be difficult for most States.
We are not accepting the various proposals on timing events within
the hearing process itself. With respect to Medicare, some of these
time periods are established by the Act, as is true, for example, for
the 60 day period in which to appeal. With respect to both Medicare and
Medicaid, hearings are held by independent hearing officers who are in
a far better position than HCFA to determine how quickly various
hearings can be held.
We do not believe that State license law is analogous to Medicare
and Medicaid provider agreements. As we stated above, providers have
entered into agreements with Medicare and Medicaid in which they have
agreed to comply with Federal requirements, including the requirements
applicable to remedies for noncompliance.
Comment: Several commenters proposed an explicit review period
during which the State survey agency's central office would give
providers an opportunity to question, clarify and develop the issues.
Response: We are adopting this proposal with some modification to
require dispute resolution by an official in the survey agency and/or
HCFA regional office. See discussion under the heading, Dispute
resolution. We believe that making an informal dispute resolution
process available alleviates many of the concerns expressed above, and
gives a provider an opportunity to present its side of the story to the
survey agency and/or regional office officials prior to imposition of
remedies.
Comment: Several commenters wanted a right to appeal all
deficiencies, even if no remedy was imposed.
Response: We are not accepting this suggestion because if no remedy
is imposed, the provider has suffered no injury calling for an appeal.
We agree that deficiencies that constitute noncompliance and that
result in a remedy imposed are appealable (except for minor remedies
such as State monitoring).
Comment: Several commenters approved our plan to provide a single
hearing for dually participating SNF/NFs. One commenter wanted two
hearings, if the same deficiency was cited by two survey agencies,
unless the provider requested a single hearing.
Response: We are adopting a single hearing, as proposed, in
accordance with procedures in 42 CFR part 498, because we believe that
it would be extremely burdensome and costly for the government to
participate in two hearings. Witnesses would need to testify twice, in
different locations. Attorneys would be required to prepare for two
separate proceedings, and respond to two different sets of procedural
rules. Further, because the two hearings would be based on the same set
of facts, a second hearing is not necessary. Before OBRA '87, the
practice was to provide one hearing for dually participating
facilities, in accordance with procedures at 42 CFR part 498, and this
proved to be satisfactory.
Comment: One commenter stated that the ombudsman should participate
in the hearing because sections 712(a)(3)(E), and 712(a)(5)(B)(iv) of
the Older Americans Act Amendments of 1992 authorize ombudsmen to
represent the interests of the residents before governmental agencies.
Response: We are not adopting this suggestion because residents are
not a party to the Medicare or Medicaid agreements between providers
and HCFA or the State agency. Moreover, the entire process of surveys,
determining compliance or noncompliance, and citing deficiencies is a
process designed to protect the interests of the residents. The
ombudsman can, of course, advise the survey agency of any concerns
relevant to a particular facility.
Comment: A few commenters suggested that States should be necessary
parties in any hearing, stating that when HCFA decertifies facilities
the results of the survey could be used as evidence that the State
survey agency was negligent in surveying the facility.
Response: This comment apparently refers to decertification of a
facility after a HCFA validation survey. We are not adopting this
proposal, because in any hearing the parties to the hearing are the
complainant (the provider, in this case) and the party who made the
decision about which the complaint is made (HCFA in the case of a
validation survey).
Comment: A few commenters recommended that residents be permitted
to be parties in any hearings, to ensure that terminations are used
only as a last resort. A few also wanted residents to be able to
initiate challenges through the appeal process when either HCFA or the
State failed to apply remedies when appropriate. A few wanted residents
to be notified of enforcement actions at the same time a nursing home
is notified.
Response: We are not adopting these suggestions, because we believe
that the needs of the residents to be heard are addressed in other
ways. As a threshold matter, the Supreme Court has already concluded in
the previously cited O'Bannon decision that residents do not have a
right to a pre-termination hearing when the facility in which they
reside faces a provider agreement termination. Whether residents might
testify to a facility's compliance or noncompliance, arguments on both
sides of the issue are already being made by either the government or
the provider. Certainly, a provider has every incentive to state its
case that it was in compliance with certification requirements and that
it ought not be the subject of an adverse action.
On the other hand, if residents were interested in contributing to
the case against a facility, whatever evidence they might have could be
shared with surveyors before, during, or after the completion of a
survey. Residents have always had, and will continue to have,
opportunities to discuss facility conditions with surveyors either
individually or in group meetings, and always have the right to comment
on the care they are receiving. Except when there is immediate jeopardy
to resident health or safety, the States and the Secretary have very
broad discretion under the Act to select among enumerated remedies.
Just as we believe it is not for facilities to choose what remedies
they should be subject to, we do not believe that facility residents
should make that choice either.
Comment: Many commenters favored an informal procedure to challenge
the survey agency's findings prior to making the Statement of
Deficiencies (HCFA-2567) final.
Response: As discussed in the section entitled, Dispute Resolution,
we are accepting this proposal and are providing for such a process in
Sec. 488.331. We believe that such a process will alleviate many of the
concerns expressed on providing only post-sanction formal hearings.
Comment: A few commenters noted that the existing appeals
regulations at 42 CFR part 498 should be amended to reflect the
additional issues which can now be appealed in addition to termination.
Response: We agree and are amending Sec. 498.3 to make it clear
that noncompliance leading to an enforcement remedy (other than State
monitoring) is appealable. These changes are identified in section V.
of this preamble, Additional Conforming Changes.
Comment: Several commenters proposed that we clarify when sanctions
are to be imposed. Some feared that sanctions would be imposed by the
survey team onsite as soon as a deficiency is cited. Some wanted
clarification that the State survey agency would be given a reasonable
period of time in which to review surveyor findings in order to decide
upon a sanction.
Response: It is not our intent that the survey team impose
remedies. Moreover, the appropriate agency for imposing remedies does
not do so prior to the time the facility receives written notice of the
noncompliance and written notice of the remedy(ies) to be imposed. The
survey agency will have time to review the findings and make a decision
as to compliance or noncompliance, and recommend a remedy or remedies
to the appropriate State entity or to HCFA, depending on whose decision
controls as specified at sections 1919(h)(6) and (7) of the Act.
Comment: A few commenters wanted clarification of the timing and
meaning of a certification of noncompliance specified in proposed
Sec. 488.180(d), the notice of hearing given specified in proposed
Sec. 431.153(e), and the notice of imposition of remedies specified in
proposed Sec. 488.202(f).
Response: Under section 1864 of the Act, the State survey agency
certifies to HCFA, in a document called a ``Certification and
Transmittal,'' the status of a facility's compliance with the statutory
and regulatory requirements. In certain situations, HCFA itself makes
the decision on whether a facility complies, as is the case for State
facilities and in the case of validation surveys. This certification of
compliance or noncompliance is a decision made by one of the
governmental agencies (HCFA or the State) prior to notification of the
provider.
If a certification of noncompliance is made, the provider is
notified in accordance with Sec. 488.330(c). It is usually notified in
a separate notice of remedies to be imposed, in accordance with
Sec. 488.402(f). (There may not be two separate notices in the case of
immediate jeopardy.) Except for the imposition of civil money
penalties, providers are given notice before the effective date of all
remedies. In the case of civil money penalties, providers are given a
pre-sanction hearing before civil money penalties can be collected. The
notice given to the provider includes a notice of the remaining
noncompliance, (even if there was a prior notice of deficiencies
constituting noncompliance found on the survey) and notice of an
opportunity to request a hearing, in accordance with Sec. 431.153(d)
and Sec. 498.20(a).
If a hearing is requested, the hearing must include the components
specified in Sec. 431.153(e). Note that the requirement in
Sec. 431.153(e) that the facility receive notice and a copy of the
statement of deficiencies is accomplished prior to the hearing, in
accordance with Sec. 431.153(d).
We do not believe that the regulations need to be re-written to
achieve the above intended result. Providers will be given notice of
any deficiencies if HCFA or the State survey agency determines, that
is, certifies noncompliance. They will also be given notice of any
remedies that are imposed, and notice of their right to request a
hearing.
Comment: A few commenters requested that the notice given to the
provider include not only the deficiencies found and the remedies
selected but also the severity/scope rating for each deficiency. These
commenters wanted an opportunity to appeal the severity/scope ratings.
Response: We are not accepting this comment. As we discuss later in
this preamble, with the exception of certain civil money penalties,
providers will not have the opportunity to appeal the scope and
severity of deficiencies.
Comment: Many States commenting on this section believe that the
HCFA finding of noncompliance should not supersede a State survey
agency certification of compliance when both are available. States
assert that State surveyors are more familiar with the operation of
specific facilities in the State and that HCFA's surveyors may impose
remedies because of their lack of familiarity with a particular
facility.
Response: Section 1919(g)(3)(A) of the Act mandates that the
Secretary's determination as to the facility's noncompliance is binding
and supersedes that of the State survey. Moreover, HCFA surveyors do
not impose remedies. Rather, the managerial staff in the HCFA regional
offices decide on the most appropriate remedy to be imposed. Therefore,
we are not accepting this suggestion.
Section 488.332 Investigation of Complaints of Violations and
Monitoring of Compliance
Comment: A few commenters said that the certification and
validation surveys constitute unreasonable administrative searches
which violate the Fourth Amendment. They stated that routine
inspections require a warrant unless the survey is initiated in
accordance with neutral criteria and the surveyor's discretion is
limited by an administrative plan defining the scope and procedure of
the inspection, citing Barlow's Inc., 436 U.S. at 323 and Donovan v.
Dewey, 452 U.S. 594 (1981).
A few commented that warrantless complaint investigations also
violate the Fourth Amendment because the proposed rule provides no
assurance that investigations are justified and because the proposed
rule contains no limits on time, place, scope and manner of any
complaint investigation.
Response: Providers have consented to certification and validation
surveys and to complaint investigations by choosing to participate as
providers in the Medicare or Medicaid programs, or both. As indicated
previously, the Supreme Court has long upheld warrantless searches of
closely regulated businesses, and the nursing home industry is no
exception. Moreover, section 1128(b)(12) of the Act provides for the
exclusion from the Medicare and Medicaid programs of an individual or
an entity who denies access to the Secretary or the State agency for
the purpose of a survey to determine a provider's compliance with
Federal requirements.
Comment: Some commenters suggested that we require coordination of
complaint investigations with the State or local ombudsman program.
Response: The Act does not require the State to coordinate
complaint investigations with ombudsman programs. However, under the
Act, each State is required to notify the State long-term care
ombudsman of its findings of noncompliance as specified on the HCFA-
2567, with any of the requirements pertaining to provision of services,
resident rights, or administration and other matters. The State also
provides the long term care ombudsman with any report of adverse action
(specified at Sec. 488.406 of this rule) imposed on a facility. We are
including the requirement for disclosing such information to long term
care ombudsman at Sec. 488.325.
Comment: Some commenters believed that Sec. 488.332 should include
procedures, including timing, evaluation of severity, and protocols, to
be used in the investigation of complaints of violations of
participation requirements. These commenters offered a variety of
specific procedures to be included in this regulatory section. Also,
commenters suggested that the State investigate all complaints
received, while other commenters suggested giving States flexibility to
determine whether there is a reasonable basis for an investigation.
Response: As explained fully in the preamble to the proposed rule,
sections 1819(g)(4)(A) and 1919(g)(4)(A) of the Act require each State
to maintain procedures to investigate complaints of violations of
Federal participation requirements. Additionally, the State Operations
Manual has prescribed procedures State agencies must follow if
complaints involve Medicare and/or Medicaid facilities. We believe
these procedures, which are subject to ongoing revisions, provide basic
minimum instructions, with sufficient flexibility, for State agencies
to follow when investigating complaints.
We do not believe that it would be reasonable or economically
feasible to require States, especially those with remotely located
facilities, to survey all facilities for which complaints are received.
The experience of State survey agencies has shown that many complaints
are either groundless or are not potential violations of requirements
for certification. This position, however, does not relieve the States
from their responsibilities to properly evaluate and investigate all
complaints that may affect a facility's certification.
To ensure these responsibilities are properly carried out,
Secs. 488.318 and 488.320 of these rules and sections 1819(g)(3)(C) and
1919(g)(3)(C) of the Act require that the Secretary provide appropriate
remedies when a State fails to perform survey and certification
responsibilities required under the Act. In addition, HCFA evaluates
the Medicare/Medicaid survey and certification performance of State
survey agencies with the State Agency Evaluation Program (SAEP). The
SAEP identifies, among other factors, State actions with regard to the
investigation of complaints. In Federal fiscal year 1992, the SAEP
assessment of the State agency's timely processing of general
certification related complaints indicated that on a national average
between 90 and 99 percent of all general certification related
complaints reviewed in the sample were processed in a timely manner.
The evaluation included determining if allegations which may involve
immediate jeopardy were investigated within two working days of receipt
and also determining if non-immediate jeopardy complaints were
processed in accordance with existing State agency procedures for
prioritizing and investigating general certification related
complaints. The SAEP data for fiscal year 1992 also confirmed that in
the sample of complaints reviewed, which included general certification
related complaints, complaints against accredited hospitals and
violations of section 1867 of the Act (Examination and Treatment for
Emergency Medical Conditions and Women in Labor), between 90 and 100
percent of complaints were collected, logged, referred and acknowledged
in accordance with the guidelines provided in the State Operations
Manual and specific policy memoranda. Any inappropriate State actions
are discussed with State survey agency management and reconciled
accordingly.
Comment: Some commenters suggested that the regulations state that
complaints may be accepted from anonymous sources or provide for the
anonymity of complainants if requested.
Response: We recognize there are instances when it is necessary to
protect the identity of a complainant to avoid possible reprisal. In
keeping with this, States are instructed in the State Operations Manual
to take appropriate precautions to protect a complainant's anonymity
and privacy, if possible. While we do not believe we can guarantee
anonymity should an adverse action result from the investigation, we
would expect that ultimately the issue before a trier of fact would be
the substantial compliance or noncompliance with certification
requirements, not the identity of the individual who brought the
allegation to the survey agency's attention. We are revising
Sec. 488.332 to provide that, if possible, the State survey agency
takes appropriate precautions to protect a complainant's anonymity and
privacy.
Comment: Many commenters asked for an explanation of the term
``monitoring'' used in this section. There seemed to be a pervasive
thought that the term as used in this section was analogous to the
remedy of ``State monitoring'' found in Sec. 488.406.
Response: We believe the term ``monitoring,'' as found in section
1819(g)(4) and 1919(g)(4) of the Act, is intended to encompass the
entire survey process, which is to ascertain whether a facility is in
substantial compliance with the requirements for participation in the
Medicare or Medicaid programs, or both. The use of this term in this
section of the rules should not be construed as to alter the protocols
for long term care surveys which are found in the State Operations
Manual.
Section 488.332(b) gives States flexibility to visit facilities at
their discretion in order to determine whether or not they are in
compliance with program requirements. It should not, as some commenters
felt, be an option whether or not to follow up on deficiencies cited on
previous visits. (Note the following comment and response regarding
follow up visits.)
Finally, we are changing the title of this section so that
``monitoring'' is distinct and separate from complaint investigation.
Comment: Commenters asked whether or not follow up visits for
determining correction of all cited deficiencies must be conducted.
Response: The proposed rules do not change our position regarding
the scheduling and conduct of follow up visits. This position is
described in the State Operations Manual. Correction of noncompliance
must be verified by some type of follow up activity; albeit, not
necessarily by an on-site visit. The timing of follow up visits must be
determined by factors such as the effect of the noncompliance on the
care of the facility's residents and the date of correction specified
in the provider's plan of correction.
Comment: Some commenters suggested that investigations of
complaints regarding violations of participation requirements be solely
the responsibility of the State survey agency. Other commenters
maintained that necessary referrals are not being made to other State
agencies.
Response: The Act provides that a State may maintain and utilize a
specialized team for the purpose of identifying, surveying, gathering
and preserving evidence and does not specify that such team be part of
the survey agency. However, if a State uses a specialized team that is
not part of the survey agency, the State survey agency is not absolved
of its responsibility to properly document complaints and their
findings and take required certification action with respect to a
facility's Medicaid or Medicare participation, or both.
In keeping with this responsibility, we are strengthening
Sec. 488.332 by requiring that, if arrangements have been made with
other State components for investigation of complaints, the State must
have a means of communicating information among appropriate entities,
and the State survey agency retains responsibility for the
investigation process.
Also, we are adding a paragraph to Sec. 488.335 requiring that
State survey agencies consider complaints of neglect, abuse or
misappropriation of resident property by an individual used by a
facility to provide services to residents as a potential reflection on
a facility's compliance with Medicaid and/or Medicare participation
requirements.
Comment: Some commenters expressed concern about the use of an
attorney on a specialized investigation team.
Response: The Act, at sections 1819(g)(4) and 1919(g)(4), refers to
an ``attorney'' as well as other professions (auditor, appropriate
health care professionals) to describe examples of various disciplines
that may be used to make up specialized teams to investigate violations
of requirements by nursing facilities or skilled nursing facilities
and, in a broader sense, to monitor all facilities for compliance with
the requirements of sections 1819(b), (c), and (d) and 1919(b), (c),
and (d) of the Act.
We did not intend that attorneys be a routine part of such teams;
however, the language of the Act and proposed rules gives States a
broad choice of occupations from which to choose for the survey and
certification process.
Comment: Several commenters requested that a facility have prior
notice of a complaint investigation to notify its attorney in those
instances when an attorney is part of the specialized complaint
investigation team.
Response: Notifying a facility in advance of a complaint survey so
that its attorney might be present is, in fact, announcing the survey.
To do so is inconsistent with HCFA policy, which intends that as many
surveys as possible be unannounced.
Comment: A few commenters identified specific areas of concern in
the complaint investigation process. These concerns stemmed from the
general comment that the complaint investigation team may not have
proper training.
Response: We appreciate the concern of these commenters who
recognize that the investigation and resolution of complaints is a
critical certification activity requiring properly trained
investigators, and we will consider these concerns as we strive to
continually improve our training courses. However, we believe that the
expertise of a special investigation team and the overall State survey
agency responsibility for complaint investigations provides a
coordinated effort that assures that the complaint investigation
process is executed by properly trained individuals. Sections
1819(g)(4) and 1919(g)(4) of the Act provide that the State may
maintain and utilize a specialized team which may include an auditor,
an attorney, and appropriate health care professionals to identify,
survey, gather and preserve evidence, and carry out appropriate
enforcement action against substandard facilities. The discipline,
specific training, and education of such a specialized team provides
the narrow focus that is often essential to conduct a comprehensive
complaint investigation. The State survey agency has the overall survey
and certification responsibility and expertise that assures that
surveyors can ascertain when Medicare and Medicaid facilities meet
participation requirements.
Comment: A few commenters recommended that a process for appeal by
the complainant be implemented.
Response: While we cannot deny that there may be instances in which
a complainant is dissatisfied with the findings of a complaint
investigation, we cannot accept the recommendation to include an appeal
process for the complainant in the regulation as the complainant is not
a party to the provider agreement.
Comment: A commenter asked what type of action could be invoked
when a complaint was received after the violation occurred and was
resolved by the time the surveyors arrived.
Response: Although we may have discretion with the selection of
remedies to address noncompliance with requirements that are corrected
by the time of a survey, it is likely that we would give serious
consideration to imposing a civil money penalty in such cases. Sections
1819(h)(1) and 1919(h) (1) and (3) of the Act expressly authorize the
impositions of these sanctions even if, at the time of the survey, the
facility is in compliance.
Comment: A few commenters recommended that the provision which
includes administering remedies to noncompliant facilities found during
a complaint investigation be revised to say that the State will carry
out appropriate enforcement remedies against chronically substandard
facilities.
Response: We do not agree. While the facility's compliance history
is a factor in general and specifically with reference to the cited
deficiencies in determining the appropriate remedy or remedies, we will
not limit the remedies to only those facilities which have chronically
provided substandard care. To do so, would be to allow many
deficiencies that constitute noncompliance to go unsanctioned. This
undermines the purpose of remedies that are intended to motivate prompt
compliance with participation requirements.
Section 488.334 Educational Programs
Comment: The consensus of those who commented on Sec. 488.334, with
the exception of the following two commenters, was that there is a
definite need for educational programs for facilities, residents, and
their representatives. The two commenters stated that it was
unrealistic to expect the States to conduct periodic educational
programs for the staff and residents of facilities either because of
the cost, because they felt the requirement was already met when
surveyors interviewed residents, or because the appearance of
objectivity would be jeopardized.
Response: The regulatory provision requiring the States to conduct
periodic educational programs stems from a statutory requirement at
sections 1819(g)(1) and 1919(g)(1) of the Act. The concept that the
requirement is met when surveyors interview residents is not acceptable
for two reasons: First, surveyors do not interview every resident.
Secondly, the responsibility of a surveyor is to survey nursing homes
and not to have attention deflected to educate staff and residents as
to regulations, procedures, and policies. In fact, even if surveyors
were to attempt an educational task, time and money constraints would
prevent them from being able to provide complete information to staff
and residents. As to the appearance of objectivity being jeopardized,
this is not an issue since the Act requires that States assume this
responsibility. However, irrespective of the Act, there is no reason
why a State's educational program, explaining the Federal requirements,
should jeopardize the State's objectivity in exercising its survey
function. We believe that well-informed staff and residents contribute
to nursing homes' being able to achieve and maintain compliance. If the
implementation of training programs is followed by a pattern of
increased facility compliance, one can just as easily conclude that
providers and their clients are becoming more knowledgeable about the
requirements to which they are subject, than that surveyors are losing
their objectivity.
Comment: Several commenters recommended that State educational
programs for consumers be expanded. Several commenters suggested that
we require State survey agencies to involve ombudsmen in the
development of educational programs and in the planning and
implementation of additional training of residents. Another commenter
suggested that we require State agencies to give NFs access to training
programs for State surveyors. Several commenters suggested that we
conduct joint continuing education programs for providers and
surveyors. A few commenters recommended that we make HCFA's inservice
training programs available to facilities. Another commenter
recommended adding to this regulation that the State make available to
staff and residents documents related to current regulations,
procedures, and policies.
Response: Sections 1819(g)(1)(B) and 1919(g)(1)(B) of the Act
require that States conduct educational programs for facility staff and
residents (and their representatives) regarding current regulations,
procedures and policies of the long-term care survey process. We
include ombudsmen as representatives of residents. Such information
will be provided during educational programs as they relate to the
content of the program. Such regulations, policies, and procedures are
also releasable under the Freedom of Information Act, and can be
requested outside of the scope of the educational program. There is no
statutory requirement to include ombudsmen in the development,
planning, and implementation of educational programs and we feel that
each State should develop its own program regarding these activities. A
State may or may not choose to include ombudsmen in the development of
its program. In any case, we are interpreting the Act to include
ombudsmen in educational programs as representatives of residents. The
suggestion has been made that providers be permitted to attend survey
training courses. Traditionally, we have had no provisions for
accommodating all providers interested in attending; our resources are
taxed enough by simply trying to provide timely training for surveyors.
However, being able to offer surveyor training universally to providers
at their own cost may help improve understanding and cooperation
between surveyors and providers. We are therefore seriously considering
changing our policy to allow this.
Comment: Two commenters representing consumer groups, suggested
that Secs. 488.303 and 488.334 be expanded to require State agencies to
provide education to residents and their representatives in a variety
of additional areas such as
How to participate in assessment and care planning.
Residents' rights.
Rights to rehabilitation and other services.
One of these commenters also recommended that States work with
residents and family councils to:
Solicit recommendations prior to any changes in the
requirements.
Evaluate the effectiveness of the survey process.
Receive consultation prior to and during imposition of
remedies to determine their effectiveness.
Receive consultation prior to determining whether to grant
a waiver of nurse staffing.
Another commenter suggested that residents' understanding is
critical and their education should be expanded to include:
How the survey process works and how to participate.
How the investigation process works and how to
participate.
How the care planning process works and how to
participate.
Response: These suggestions have considerable merit and are within
both the spirit and intent of the Act. We agree with the commenters
that the proposed regulation unnecessarily restricted the scope of the
mandated educational programs. The regulation is being revised to
permit the education programs to cover all aspects of the long-term
care survey process. We believe the States should have the flexibility
to structure the educational programs to the needs of the facilities.
The methods of developing the programs (for example, consultation with
the ombudsmen program) and the methods of presentation are best left to
the States. The comment that States should work with residents and
family councils to solicit their recommendations prior to any changes
in requirements goes beyond the educational process. In some respects,
this comment incorporates residents and families as participants in the
survey and enforcement processes. Whenever there is public rulemaking,
any member of the public is a participant in the process and can
comment and make recommendations on such matters. In addition, when
surveyors speak with residents during the survey, residents are free to
bring up comments about the survey process if they wish. Regarding the
comment that residents' understanding of the survey, investigation, and
the care planning processes should be expanded, we repeat that the
regulation is being amended to permit the educational programs to cover
all aspects of the long-term care process.
Comment: One commenter recommended that HCFA share central office
and regional office satellite training to provide training
simultaneously with nursing facility staff and consumers.
Response: It is beyond the scope of this regulation to institute
such detailed procedures as providing satellite training to consumers
or specifying any other training medium. It is beyond our technological
capabilities to provide training via satellite to every SNF and NF in
the country. The costs of installing the necessary equipment in each
facility would far exceed our budgetary resources.
Comment: One commenter stated that, although this section providing
education to residents and staff of facilities is an excellent idea, it
lacks specificity and oversight. Because of budgetary crises, this is
but another educational program at State expense and will receive low
priority. HCFA must ensure that the State will conduct educational
programs at particular time intervals or face sanctioning by HCFA.
Response: Although there is no statutory provision requiring HCFA
to oversee States to determine if they have failed to conduct
educational programs as required by the Act, we recognize that we have
some responsibility to do so. It is within the purview of the States to
decide how and when to conduct their educational programs. We believe
it is wiser to leave these decisions to the individual States since
they must design the educational programs the Act specifies. However,
we are looking into the feasibility of monitoring the States in some
way to assure that they are in compliance with this statutory
requirement. We plan to find an acceptable approach to evaluating State
efforts in providing educational programs to facilities and their
staffs, and residents and their representatives.
Comment: A commenter stated that further definition of the nature
and frequency of educational programs is needed and, for consistency,
HCFA should establish the nature and content of such programs. There
could be extensive new resource requirements if the program is not
considered adequate. Another commenter recommends that we define
``periodic'' and detail the process for State compliance.
Response: As previously mentioned, the nature and content could
cover any of the requirements of sections 1819 and 1919 of the Act.
When manual instructions are developed, they will provide guidelines on
topics such as frequency of educational programs.
Comment: One commenter questioned whether on-site presentations
were preferable to written communication.
Response: This is a detailed and specific matter. The methods of
training will be determined by the States, but HCFA will publish
guidelines in manuals to assist States in structuring their programs.
Comment: This commenter also recommends replacing the word
``conduct'' with ``provide'' to allow for the use of subcontractors,
and for the distribution of written and/or auto-visual materials toward
this end.
Response: We believe to make such a change could be interpreted as
changing the intent of the Act, which uses the word ``conduct.'' The
Act gives the responsibility for developing educational programs
specifically to the States.
Comment: Two commenters stated that funds must be made available to
the States for educational purposes.
Response: HCFA does make funding available to the States for the
required periodic education program through its budget process.
Section 488.335 Action on Complaints of Resident Neglect and Abuse,
and Misappropriation of Resident Property
Upon further analysis, we revised the title of this section to be
more explicit.
Comment: Some commenters suggested regulatory language requiring
coordination of investigations of complaints of neglect, abuse, or
misappropriation of property with the State or local ombudsman program.
Response: The Act does not require the State to coordinate
complaint investigations with the State long term care ombudsman.
However, under the Act, each State is required to notify the State long
term care ombudsman of its findings of noncompliance with any of the
requirements pertaining to provision of services, resident rights, or
administration and other matters. The State also provides the State
long term care ombudsman with any report of adverse action (specified
at Sec. 488.406 of this rule) imposed on a facility. We have included
the requirement for disclosing such information to the long term care
ombudsman at Sec. 488.325.
Comment: Some commenters felt procedures for investigating
complaints of neglect, abuse, or misappropriation of property should be
included in the final rule.
Response: As stated in the proposed rule, we believe such an
approach is inconsistent with our view that States should have the
flexibility to rely on State entities other than the State survey
agency to investigate and adjudicate these matters. States will likely
use an array of different licensing or investigative bodies to meet
their obligations in this area.
Comment: Several commenters suggested that investigations of
allegations of neglect, abuse, or misappropriation of property be
integrated into the comprehensive survey, certification and enforcement
process. Further, there were suggestions that investigations of these
complaints be conducted solely by the State survey agency.
Response: The Act requires that States must provide, through the
agency responsible for surveys and certification of nursing facilities,
for a process for the receipt and timely review and investigation of
allegations of resident neglect or abuse, or misappropriation of
resident property.
As pointed out in the preamble to the proposed rule, while the
State is free to delegate to other State agencies the adjudicatory
functions described in sections 1819(g)(1)(C) and 1919(g)(1)(C) of the
Act, we fully expect State survey agencies to retain ultimate
responsibility for compliance with these statutory requirements. If a
State uses an agency which is not part of the State survey agency, the
State survey agency cannot be absolved of its responsibility to
properly document complaints and take required certification action
with respect to a facility's participation in either the Medicaid or
Medicare programs.
In keeping with this responsibility, we are strengthening the rules
under Sec. 488.335(a) by cross referencing Sec. 488.332, which
specifies that the State survey agency retains responsibility for the
investigation process and requiring the State survey agency to have a
means of communicating information among appropriate entities if other
State agencies are involved in the investigation of these complaints.
In response to the above comments we are adding a new requirement
that State survey agencies consider all complaints of resident neglect
or abuse, or misappropriation of resident property as a potential
reflection on a facility's compliance with Medicaid and/or Medicare
participation requirements. This new requirement is at Sec. 488.335(h).
(The provisions in Sec. 488.185 (g) and (h) of the proposed rule are
revised and combined in Sec. 488.335(g) and are discussed later in this
preamble.)
Comment: Some commenters suggested that the words, ``by an
individual used by the facility'' be added to paragraph (a) of this
section as it requires the State to review all allegations of neglect,
abuse, or misappropriation of resident property. Commenters pointed out
that the suggested text is found in the Act and the preamble to the
proposed rule.
Response: We are revising and expanding Sec. 488.335(a), and in
doing so, incorporating the comment. This paragraph now specifies that
the State reviews all allegations of resident abuse and neglect and
misappropriation of resident property. The State also follows the
procedures of Sec. 488.332. We are adding that, if there is reason to
believe, either through oral or written evidence, that an individual
used by the facility to provide services to residents could have abused
or neglected a resident or misappropriated a resident's property, the
State must investigate the allegation. We also now specify in this
section that the State must have written procedures for the timely
review and investigation of these allegations.
Comment: Several commenters mentioned that the proposed rules do
not specify a timeframe for initiation of an investigation nor a time
limit on the length of an investigation of neglect, abuse, or
misappropriation of resident property.
Response: Our intent in writing this rule was to not be too
prescriptive of State investigation processes. However, manual
instructions to State survey agencies specify a timeframe for
situations of immediate jeopardy in which they should initiate
complaint investigations.
We chose not to regulate the time in which a State must complete
its investigation of these types of complaints. We thought a specific
time limit could, in some instances, compromise the outcome of the
investigation.
Comment: Some commenters suggested that the rules specify a
timeframe in which the State must notify an individual when there is
reason to believe that the abuse, neglect, or misappropriation of
resident property did occur. Also, some suggested that we notify the
administrator or owner of the facility employing such person, or both.
Also, some commenters suggested that we include in the notice to
the accused person the consequences of the hearing determination or
waiving the right to a hearing.
Response: We do not accept the comment to send a notice to the
individual implicated in an allegation of resident neglect or abuse or
misappropriation of resident property before the State has conducted an
investigation. To do so could possibly jeopardize the outcome of the
investigation and in some cases would be premature as the investigation
might find the allegation unsupported. However, we are revising the
final rule at Sec. 488.335(c) to require that a State must notify the
individual implicated in the allegation and the current administrator
of the facility in which the incident occurred, in writing within 10
working days of its preliminary determination, which is based on oral
or written evidence and its investigation, that resident neglect or
abuse, or misappropriation of resident property occurred. This
timeframe was selected to provide timely notice to the individual
involved and yet, give States sufficient time to provide such notice.
We are also revising the final rule to reflect that this notice to the
individual includes the consequences of a hearing finding and of
waiving the right to a hearing. We are adding that the notice includes
a statement to inform the accused individual of the right to be
represented by an attorney at the individual's own expense.
Comment: We received several comments suggesting that we establish,
by regulation, a more extensive ``due process'' appeal mechanism for
facility employees accused of neglect, abuse, or misappropriation of a
resident's property.
Response: We recognize the importance of the need for a fair and
impartial hearing whenever an individual used by the facility is
accused of resident neglect or abuse, or misappropriation of a
resident's property. However, we recognize that all States have
administrative procedure acts which allow for resolution of disputed
cases of this nature. Thus, we chose to allow the need for these
appeals to be addressed by State law.
Comment: Some commenters felt the provision to allow 120 days for
States to conduct hearings of staff accused of neglect, abuse, or
misappropriation of a resident's property was excessive and suggested
other dates, while other commenters felt the 120 day period did not
allow sufficient time for a State's administrative process to complete
the hearing.
Response: While we agree that a person accused of resident neglect,
abuse, or misappropriation of a resident's property is entitled to
swift determination of the accusation, we believe States must be given
reasonable time in which to schedule and conduct the hearing process
under their administrative procedure acts. Our experience with other
related State hearings indicates that 120 days is a reasonable
timeframe for scheduling and completing these appeals.
Comment: Several commenters suggested we modify the rules so they
specify who should be notified when a person accused of neglect, abuse,
or misappropriation of a resident's property waives the right to a
hearing or when a State hearing finds that such an individual did, in
fact, act as accused. In addition, some commenters suggested we specify
timeframes for such reporting.
Response: In response to these comments, we are rewriting
Sec. 488.335(f) and combining paragraphs (g) and (h) into (g) to
clarify the reporting process and to include timeframes for reporting.
We are specifying that the State survey agency, which may not delegate
this responsibility, must report in writing the finding that an
individual neglected or abused a resident or misappropriated a
resident's property within 10 working days of the finding to: the
individual; the current administrator of the facility in which the
incident occurred; the administrator of the facility currently
employing the individual, if different; the licensing authority for
individuals other than nurse aides; and the nurse aide registry. For
nurse aides, these findings must not only be reported to the nurse aide
registry but must be included in the nurse aide registry within 10
working days of the finding in accordance with Sec. 483.156(c)(iv)(D).
Comment: We received comments suggesting that if an allegation was
found to be untrue, that accusation be expunged from the nurse aide
registry.
Response: An allegation of resident abuse or neglect or
misappropriation of resident property that is not substantiated would
not be entered on the nurse aide registry. Only a finding of resident
abuse or neglect or misappropriation of resident property would be
entered on the nurse aide registry. Section 483.156(c)(1)(iv) specifies
the particular information that the registry must contain with regard
to any finding by the State survey agency of abuse, neglect or
misappropriation of property. This information includes documentation
of the State's investigation (including the nature of the allegation
and the evidence that led the State to conclude that the allegation was
valid), the date of the hearing and its outcome (if a hearing was
requested), and a statement by the individual disputing the allegation
(if the individual chooses to make one). The rule also provides that
this information must be included in the registry within 10 working
days of the finding and must remain in the registry permanently unless
the finding was made in error, the individual was found not guilty in a
court of law, or the State is notified of the individual's death.
Comment: We received several comments regarding the nurse aide
registry. Commenters offered suggestions for the contents of the
registry, its availability to the public and action taken as a result
of substantiation of abuse, neglect or misappropriation of property.
One commenter suggested that the report of findings provision
include notifying the appropriate law enforcement authorities in those
cases where a crime has been committed.
Another commenter suggested that HCFA offer guidance to facilities
concerning the treatment of employees who are awaiting the resolution
of a complaint.
Response: These specific comments fall outside the purview of this
regulation on the survey, certification and enforcement of skilled
nursing facilities and nursing facilities. However, a discussion of
these and other related issues can be found in a final rule titled
Medicare and Medicaid; Requirements for Long Term Care Facilities and
Nurse Aide Training and Competency Evaluation Programs, published
September 26, 1991 in the Federal Register at 56 FR 48880.
Comment: Several commenters suggested that every investigation seek
to identify facility practices which led to the neglect, abuse or
misappropriation of resident property.
Response: We believe that every investigation does seek to identify
facility practices which led to the resident neglect or abuse, or
misappropriation of resident property and this is evidenced by the
guidance currently provided to the States in manual instructions. These
guidelines include the general procedures for conducting complaint
investigations and stipulate that, if significant problems are
identified during an initial assessment or other observations, the
scope of the review is expanded as necessary. The procedures also
specify that when the team is investigating allegations of substandard
care, they are to evaluate not only the care of the individuals
involved in the allegation, but also to evaluate the facility's
patterns of related care. Also, noncompliance identified during the
survey is recorded on the Statement of Deficiencies and Plan of
Correction (HCFA-2567) and a plan of correction is requested. When the
facility is not in substantial compliance as a result of the
deficiencies identified, enforcement actions could include the
imposition of alternative remedies or termination of a facility's
provider agreement.
Comment: A few commenters suggested that in those cases where
neglect was found and determined to be caused by factors beyond the
control of the individual, the State agency must impose sanctions upon
the facility or document why such sanctions are inappropriate.
Response: We do not accept this suggestion to add a regulatory
requirement that obligates HCFA or the State to impose sanctions where
resident neglect was found and determined to be caused by factors
beyond the control of the individual. Regardless of the cause of the
noncompliance, a facility is not relieved of its responsibility to
correct its deficiencies. This responsibility assures that residents
consistently receive quality health care in a safe environment and it
exists whether or not a remedy is imposed. However, there are instances
in which a remedy will be imposed due to the egregious nature of the
deficiency and to encourage prompt compliance. Conversely, there are
situations in which a remedy might not be necessary because the
facility corrected the practice which led to the abuse. For example,
firing an employee who neglects a resident or residents could
immediately correct that deficiency.
We do not accept the suggestion to incorporate into the regulation
a provision that would require documentation for those cases in which a
remedy is not imposed. We are not required by the Act to document why
sanctions are not imposed and to require this through regulations would
impose a significant workload burden because, as stated above, there
are many cases in which deficiencies are corrected and remedies are not
imposed.
Redesignation of Subpart F
As noted earlier, a new Subpart D of part 488, consisting of
Secs. 488.201-488.211, became effective on August 31, 1992, shortly
after this proposed rule was published on August 28. Consequently, we
must designate Subpart F, which was to consist of Secs. 488.200-
488.240, with subsequent numbers. To assist the reader, we are
publishing the new table of contents for Subpart F, with designations
of the proposed rule shown in parenthesis. In the following
discussions, we refer to the sections as renumbered, with the
proposal's identification included only if distinction is necessary.
Sec.
488.400 Statutory basis. (Sec. 488.200)
488.401 Definitions. (Sec. 488.201)
488.402 General provisions. (Sec. 488.202)
488.404 Factors to be considered in selecting remedies.
(Sec. 488.204)
488.406 Available remedies. (Sec. 488.206)
488.408 Selection of remedies. (Sec. 488.208)
488.410 Action when there is immediate jeopardy. (Sec. 488.210)
488.412 Action when there is no immediate jeopardy. (Sec. 488.212)
488.414 Action when there is repeated substandard quality of care.
(Sec. 488.214)
488.415 Temporary management. (Sec. 488.215)
488.417 Denial of payment for all new admissions. (Sec. 488.217)
488.418 Secretarial authority to deny all payments.
488.422 State monitoring. (Sec. 488.222)
488.424 Directed plan of correction. (Sec. 488.224)
488.425 Directed inservice training.
488.426 Closure of a facility or transfer of residents, or both.
(Secs. 488.226 and 488.240)
488.430 Civil money penalties: Basis for imposing penalty.
(Sec. 488.230)
488.432 Civil money penalties: When penalty is collected.
488.434 Civil money penalties: Notice of penalty.
488.436 Civil money penalties: Waiver of hearing, reduction of
penalty amount.
488.438 Civil money penalties: Amount of penalty.
488.440 Civil money penalties: Effective date and duration of
penalty.
488.442 Civil money penalties: Due date for payment of penalty.
488.444 Civil money penalties: Settlement of penalties.
488.450 Continuation of payments to a facility with deficiencies.
(Sec. 488.232)
488.452 State and Federal disagreements involving findings not in
agreement in situations where there is no immediate jeopardy.
(Sec. 488.234)
488.454 Duration of remedies. (Sec. 488.236)
488.456 Termination of provider agreement. (Sec. 488.238)
Section 488.401 Definitions
It was brought to our attention that the term ``immediate family''
also appears in subpart E as well as subpart F. Therefore, in the final
regulation we are moving the definition of ``immediate family'' to
subpart E, Sec. 488.301, but we are stating the comments and responses
below.
Comment: A few commenters believe that the definition of
``immediate family'' should be expanded to include niece, nephew, and
domestic partner.
Response: We have not accepted this suggestion. Section 1004, part
1, of the Provider Reimbursement Manual defines ``immediate family''
for Medicare purposes. The commenters offered no compelling argument as
to why any individual should be added to the definition of immediate
family. In fact, we are amending our definition to be consistent with
the definition found in the Provider Reimbursement Manual by deleting
``spouse of grandparent or grandchild.''
Comment: Some commenters pointed out that the definition of
``immediate jeopardy'' should be located in subpart E instead of
subpart F because the term is first introduced in subpart E.
Comment: We agree with the commenters. In the final rule, we have
relocated the definition of ``immediate jeopardy'' from proposed
Sec. 488.201 in subpart F to Sec. 488.301 in subpart E. However, since
commenters concerned with responses regarding the definition of
immediate jeopardy will first look in this section, we have retained
the comments and responses below.
Comment: We received numerous comments about HCFA's or the State
survey agency's ability to assign resident rights and/or physical
environment violations at higher severity levels. These commenters
believe that any deficiency could be egregious enough to be considered
``moderate harm'' or ``immediate jeopardy.''
Response: We agree with these commenters and are allowing
violations of any participation requirement, including resident rights
and physical environment, to be assessed at any degree of seriousness.
Comment: Many commenters wanted clarification regarding cases in
which termination actions for immediate jeopardy would be applicable.
Response: Sections 1819(h)(2)(A)(i), 1819(h)(4), 1919(h)(1)(A),
1919(h)(3)(B)(i), and 1919(h)(5) of the Act specifically state that
termination of participation for a facility is possible with any
determination of noncompliance where the State or the Secretary finds
this noncompliance immediately jeopardizes the health or safety of the
residents. For example, immediate jeopardy to resident health or safety
may exist, but is not limited to, the presence of one of more of the
following:
Insect or rodent infestation indicative of food
contamination or the possible spread of contagion;
Failure to control infections as evidenced by the presence
of facility-acquired infections;
Patient abuse or poor resident care, including;
+ Instances of malnutrition or dehydration that are unrelated to
the resident's condition and are a result of patient care;
+ Neglect by the staff with the result that residents are often
left lying in urine, feces and other waste;
Drug or pharmaceutical hazards that directly affect
resident health and safety, such as:
+ Excessive drug errors or mishandling of drugs;
+ Failure to provide medications as prescribed;
+ Failure to monitor drugs as evidenced by lack of ordered
laboratory work, failure to take vital signs as indicated by drug
regimen, and lack of other nursing monitoring practices;
+ Gross mishandling of drugs such as leaving drug trays unattended
and available to residents and visitors.
+ Administration of drugs by unqualified staff; or
+ Administration of experimental drugs without the informed consent
of the resident (or responsible party). This list is not to be
interpreted as all-inclusive, but rather as examples of what may be
construed as immediate jeopardy situations warranting termination.
Comment: Other commenters were unclear about how the phrase ``at
any time'' constitutes ``immediate threat.''
Response: We agree that it is unclear and are removing the phrase
in Sec. 488.401.
Comment: Some commenters believe the definition in Sec. 442.2
conflicts with the proposed definition of immediate jeopardy.
Response: We agree that these definitions are in conflict. However,
the definition in Sec. 442.2 will no longer apply to nursing facilities
and is being revised to reflect this change. We are maintaining two
separate definitions of immediate jeopardy because of the different
regulations applicable to ICFs/MR and SNFs or NFs.
Comment: Some commenters suggested striking references to the scope
and severity scale and inserting the phrase ``creates imminent
danger.'' Other commenters recommended that immediate jeopardy should
represent the most severe or life threatening violation.
Response: We agree with the commenters and we have removed
references to the scope and severity scale from the definition of
immediate jeopardy. We are redefining immediate jeopardy to encompass
all situations that pose actual or potential life threatening harm,
death, serious injury or impairment. Therefore, a life threatening
situation or imminent danger will inevitably be considered immediate
jeopardy.
Comment: Many commenters were concerned that the definition of
immediate jeopardy pertains to only physical harm and not emotional
harm.
Response: We agree with the commenters that significant emotional
as well as physical harm may be considered immediate jeopardy. Every
determination of the seriousness of a deficiency includes the
consideration of whether a resident has failed to achieve his or her
highest practicable physical, mental, or psychosocial function.
Comment: Many commenters expressed the need for us to clarify the
definition of ``new admission'' to indicate whether or not residents
transferred to the hospital, with the intention of returning, are
considered new admissions. They are concerned that if denial of payment
for new admissions is imposed, those transferred residents will not be
covered if they return to the facility.
Response: New admission is described within Sec. 442.2 as well as
Sec. 488.401. We believe these descriptions are sufficient and further
clarification is not necessary.
Comment: Some commenters suggested that the definition of ``plan of
correction'' be amended to require the facility to identify the
systemic underlying problem, make restitution to the affected resident
or residents, contain measurable outcomes for all quality of care
deficiencies, and require the facility to take further measures to
ensure future compliance.
Response: The purpose of a plan of correction is to identify and
address the underlying problem or problems for the facility. Individual
residents have other legal means at their disposal to seek restitution.
It is impracticable to develop model thresholds for each and every plan
of correction as each situation is different and is evaluated
accordingly. Plans of correction are geared toward prospective
compliance to ensure the underlying causes of cited deficiencies do not
recur. As it is virtually impossible to afford retroactive restitution
to residents who have been injured or have been deprived of their
rights, we have not accepted these suggestions.
Comment: Many commenters wanted to have a definition of ``highest
practicable well-being.''
Response: The phrase ``highest practicable well-being'' was
established in sections 1819(b)(2) and 1919(b)(2) of the Act. We
believe the conspicuous absence of a definition demonstrates that the
Congress recognized the impossibility of establishing a single
definition of this phrase, as every resident, and his or her particular
needs and abilities, must be evaluated individually.
Comment: Some commenters wanted a definition of ``repeat
deficiency.''
Response: The Act, in section 1819(h)(2)(B) and 1919(h)(3)(C),
specifies that incrementally more severe fines must be imposed for
repeated or uncorrected deficiencies. Repeated deficiencies are
described in Sec. 488.438 as deficiencies in the same regulatory
grouping of requirements found at the last survey, subsequently
corrected, and found again at the next survey.
Comment: A few commenters wanted a definition of ``distinct part.''
Response: ``Distinct part'' is defined in sections 2110 and 2762 of
the State Operations Manual. As it is beyond the scope of this
regulation, we do not believe it is necessary to place this definition
in these regulations.
Comment: Some commenters wanted various other terms defined or
clarified.
Response: We define terms in regulations only if the use of those
terms, within the regulation, has a different application than that
which is accepted in common English usage.
Section 488.402 General Provisions.
Comment: We received a number of comments from the health care
industry, from consumer organizations, and from professional groups
regarding the purpose of the regulations as set forth in proposed
Sec. 488.202. The consensus of those who commented on paragraph (a) was
that protecting residents from ``actual or potential harmful outcomes
resulting from deficiencies'' is but one of many purposes of the
regulations. Other purposes commenters suggested we include were to--
Deter noncompliance;
Punish noncompliance through the use of appropriate
sanctions;
Ensure correction of deficiencies for residents whose care
is deficient;
Encourage sustained compliance; and
Protect patient rights.
Two commenters suggested we change paragraph (a) of proposed
Sec. 488.202 to read, ``The purpose of remedies is to encourage prompt,
rapid compliance with program requirements at the minimum level that
will achieve correction so as to protect residents from actual or
potential outcomes resulting from deficiencies.'' They said that, ``The
Congress made it clear that a purpose of enforcement remedies is to
render the time period between identification of deficiencies and
correction (emphasis in original) as short as possible. This intent
precludes punitive measures and promotes the least disruption to
facility operation. Based on Congressional intent, general consensus
now exists that the enforcement process should be corrective, not
punitive, and that enforcement remedies should be set at the minimum
level required to achieve the desired correction. Successively stricter
measures would be used as needed for failure to correct.''
Finally, one commenter said that ``prompt, rapid,'' is redundant.
Response: A number of these comments suggest to us that there is
some confusion between the purpose of these remedies and the expected
outcomes of the regulations. Therefore, in order to be absolutely
unequivocal, we are revising Sec. 488.402(a) to read, ``The purpose of
remedies is to ensure prompt compliance with program requirements.''
Comment: Two commenters suggested that the last sentence of
proposed Sec. 488.202(b)(1) be revised to read, ``Survey findings are
reported to the State and HCFA which will make recommendations for
corrective action.'' Their rationale was that the determination of
remedies to fit a particular deficiency or deficiencies should be made
by an objective party in the survey agency or HCFA who did not survey
the facility.
Another said that the same sentence should be revised to state,
``Survey findings are reported to the State or HCFA, as appropriate,
with recommendations for corrective action.'' Still another said that
we should clarify the fact that the survey findings are reported with
recommendations for remedies, and one commenter said that our proposed
paragraph (b)(1) appears to exclude the possibility of imposing
remedies based on HCFA's paper review of State survey agency findings.
Two commenters suggested a new paragraph (b)(1) to read
substantially as follows:
(b) Requirement for State enforcement plan.
(1) The State and HCFA shall develop a plan for imposing
intermediate remedies. The plan shall--
(i) Vary remedies with the scope and severity so that more
substantial remedies are imposed for more serious deficiencies;
(ii) Assure that the State and HCFA minimize the time between
identification of violations and final imposition of remedies;
(iii) Assure that remedies serve goals of requiring immediate
correction of deficiencies, protecting residents, correcting
deficiencies for specific residents who are harmed, punishing
violations and deterring violations;
(iv) Include rules and policies about when and how various
sanctions are imposed and when remedies are imposed singly or in
combination; and
(v) Develop procedures to solicit the active participation of
residents in the enforcement process, including permitting residents to
participate in any formal proceedings the State offers to providers to
contest imposition of an intermediate remedy.
The two commenters who made this suggestion also said that
enforcement under the reform law is not a collection of free-standing
remedies that States and the Secretary apply on an ad hoc basis;
enforcement under the law requires enforcement agencies to have a
systematic way of making decisions to apply sanctions. They cite the
Institute of Medicine (IoM) report, issued in March 1986, that says
that guidelines on when to initiate sanctions are necessary for
effective State enforcement. The commenters also cite the October 9,
1992 final settlement of Valdivia v. California Department of Health
Services which reads in part:
The enforcement system shall:
A. Define the purposes of the system and of the remedies;
B. Set forth guidelines for appropriately assessing monetary
penalties and other intermediate remedies (in lieu of or in addition to
termination) allowed under Federal requirements;
C. Identify guidelines for approving and monitoring plans of
correction;
D. Define the role of the complaint investigation process in the
comprehensive enforcement system;
E. Encourage and promote use of intermediate sanctions, as
appropriate, rather than termination, to achieve the purposes of the
comprehensive enforcement system;
F. Identify mechanisms to better inform the public as to actions
taken by the State against facilities that are not in compliance with
Federal Requirements of Participation;
G. Identify the factors to be considered in determining which
remedies may or must be imposed, assuring that more substantial
remedies are imposed for more serious deficiencies.
Finally, two of these commenters suggested that HCFA specify that
one of the bases for the imposition of remedies be interfering with the
work of a survey team, monitor, and/or temporary manager.
Response: We agree that it would be more accurate to say that
survey findings are reported with recommendations for remedies, and we
are making that change in this final rule. We do not, however, believe
that either the IoM study or OBRA '87 calls for an inflexible cookbook
approach to enforcement. As noted in the comment, the IoM study speaks
of establishing ``guidelines,'' and we believe that this term connotes
that there be a range of options available to the Secretary and the
States (including the option not to impose any remedies). In sections
4203 and 4213 of OBRA '87, the intent to provide a flexible range of
options is clearer still. Those sections amended sections 1819(h) and
1919(h) of the Act at several places to reflect this intent. For
example, the Act now provides:
``*** the Secretary may impose any of the remedies
described in subparagraph (B).'' (1819(h)(2)(A)(ii));
``Nothing in this subparagraph shall be construed as
restricting the remedies available to the Secretary ***''
(1819(h)(2)(A));
``The Secretary may take the following actions***''
(1819(h)(2)(B)); and
``The Secretary may impose a civil money penalty in an
amount not to exceed $10,000 ***.'' (1819(h)(2)(B)(ii)).
Further evidence of the need to retain flexibility in the choice of
remedies is found in the House of Representatives Committee on the
Budget report (H.R. Rep. No. 391, 100th Cong., 1st Sess. 472 (1987))
that accompanied OBRA '87. It states that, ``the Committee amendment
would specify a broad range of sanctions for use by both the Secretary
and the States.'' The committee report goes on to say that, ``The
Committee emphasizes that the remedies specified under the amendment
are not exclusive, and should not be construed to limit the use of
other remedies that may be available to either the States or the
Secretary under State or Federal law.'' It is clear that flexibility
was the statutory intent. Therefore, in order to ensure this intended
flexibility, we have set forth minimum remedies for deficiencies
according to their seriousness and offered several additional optional
ones.
We agree, for the most part, with the thrust of the final
settlement in Valdivia, and are making revisions to the relationship
between deficiencies and remedies which reflect aspects of the final
settlement of that case. However, these revised policies are not
appropriate for paragraph (b), which is intended only to succinctly set
forth the basis for the imposition of remedies, and not the outline for
the entire enforcement process. Rather, we have specified the linkage
between deficiencies and remedies imposed at Sec. 488.408, Selection of
remedies.
We do not believe that proposed Sec. 488.202(b)(1) excludes the
possibility of imposing remedies based on ``HCFA's paper review of
survey agency findings.'' Since HCFA's ``paper review'' is itself based
on survey findings, it is clear that remedies may be imposed as a
result.
Finally, in response to the commenters who suggested that HCFA
specify that one of the bases for the imposition of remedies be
interfering with the work of a survey team, monitor, and/or temporary
manager, there is authority at section 1128(b)(12) of the Act to
exclude a facility based on its failure to grant access to the
Secretary or to the State survey agency, and we believe this includes
not only a survey team, but a monitor. Our regulations at Sec. 488.415
set forth what happens if a facility does not relinquish control to a
temporary manager.
Based on the above discussion, we are revising Sec. 488.402(b)(1)
to state that in every instance of noncompliance, one or more remedies
are imposed based on deficiencies found during surveys conducted by
HCFA or by the survey agency. We are deleting paragraph (b)(2) because
we believe that manual issuances are the most appropriate places for
procedural information of this sort.
Comment: Two commenters suggested that we set forth at
Sec. 488.402(b)(2) the principle that termination of provider
agreements is a measure taken only as a last resort when the imposition
of intermediate remedies has failed to correct the deficiencies. One
commenter recommends that paragraph (b)(2) be amended to state that the
survey agencies should be allowed to impose one or more remedies for
each deficiency or cluster of deficiencies.
Finally, one commenter said that OBRA '87 stated that when
deficiencies constitute an immediate and serious threat to residents'
health and safety, neither HCFA nor the States have any discretion with
regard to remedies. Rather, the commenter said that, in such cases,
HCFA or the States must impose either temporary management or a
provider agreement termination.
Response: We agree that termination of provider agreements is a
serious measure, but not that it is a ``last resort'' in the strictest
sense. While we believe that the Congress wrote into the law the wide
array of alternative remedies to encourage their use, the Act does not
require that in every case the States or the Secretary may not choose
provider agreement termination until alternative remedies have been
used. We believe that the Act's alternative remedies offer States and
the Secretary a valuable opportunity to redress a wide variety of
facility shortcomings through means that will promote quick correction
without having to exclude the facility from program participation, and
it is our expectation not only that serious consideration will be given
for such opportunities when there is facility non-compliance, but that
they will be used far more frequently than they have in the past. It
would be an entirely erroneous impression of the Act, however, to
conclude that it deprives States and the Secretary from exercising
discretion to choose any remedy, including termination, whenever they
determine it appropriate to do so. The comment suggesting that the
proposed paragraph (b)(2) be amended to state that the survey agencies
should be allowed to impose one or more remedies for each deficiency or
cluster of deficiencies is inappropriate; the number of remedies that
may be imposed is covered in the proposed Sec. 488.202(c). We will
discuss this comment in connection with others on that paragraph.
It is true that, when no immediate jeopardy exists, the Congress
stated that the State or the Secretary may impose termination or may
impose one or more intermediate sanctions against the provider, or may
impose both, and that this is in contrast to the specific measures that
must be imposed when immediate jeopardy exists. However, it does not
follow that the State, rather than the Federal government, should have
the ability and the obligation to specify when and how each remedy is
to be applied. The Committee report that accompanied OBRA '87 clearly
states:
* * * it is the responsibility of the Secretary to take the
enforcement measures necessary to assure compliance by Medicaid
facilities with the requirements of participation as well as to
assure that State enforcement activities are adequate to protect the
health and safety of residents. To enable the Secretary to discharge
this responsibility, the committee amendment would greatly expand
the remedies available to the Secretary under current law.
* * * [I]f both the State and the Secretary decide that remedies
other than termination are appropriate, the Secretary's selection of
alternative remedies, and not those of the State apply. (H.R. Rep.
No. 391, 100th Cong., 1st Sess. 475-7 (1987)).
Moreover, section 1919(h)(2)(B) of the Act specifies that the
Secretary shall provide, through regulations, guidance to States in
establishing remedies.
However, when there is disagreement between HCFA and the State
regarding enforcement action, the disagreement is resolved in
accordance with the policy set forth in Sec. 488.452(d). For example,
paragraph (d) says that when HCFA or the State, but not both,
establishes one or more remedies, in addition to or as an alternative
to termination, the additional or alternative remedies will also apply
when--
Both HCFA and the State find that a NF has not met all the
participation requirements; and
Both HCFA and the State find that no immediate jeopardy
exists.
In this way, the sanction(s) proposed by the State can take effect.
Based on the above discussion and the need to make conforming
changes with other provisions of the regulation, we are revising
Sec. 488.402(b)(2) to indicate that the State or HCFA may apply one or
more of the remedies specified in Sec. 488.406 instead of terminating
the provider agreement, or in addition to termination procedures, to
continue until the effective date of the termination or until
substantial compliance is achieved, and, in some cases, until the State
or HCFA is assured that substantial compliance can be maintained.
Comment: As stated above, one State said that Sec. 488.402(b)(2)
should be amended to state that the survey agencies should be allowed
to impose one or more remedies for each deficiency or cluster of
deficiencies. The State's rationale is that the proposed paragraph (c)
would restrict both HCFA and the States in their efforts to encourage
prompt corrective action, and to protect residents' health and safety.
Another commenter said the application of a separate remedy for each
deficiency seems unduly harsh. A remedy or set of remedies should be
imposed relating to the entire universe on deficiencies cited. Still
another said that one incident should trigger the citing of no more
than one remedy.
Two commenters said that there is no statutory basis for paragraph
(c). Other commenters asked for clarification, suggesting that we use
examples, limits, and further guidelines to ensure consistency. Of
particular concern to many was the fear that, absent these guidelines
and limits, providers might incur multiple sanctions for single
deficiencies or for multiple deficiencies arising from a single act or
incident. Some suggested that HCFA and the State be directed to
consider whether a facility's deficiencies are ``clustered'' or
``bundled'' (we used the term ``interrelated'' in the proposed rule) or
scattered throughout the facility in deciding which remedy(ies) to
impose in particular situations.
A number of commenters wanted us to specifically set forth in
regulations exactly which sanctions should be imposed for each type of
possible deficiency or group of deficiencies.
One State expressed concern about the potentially large number of
separate follow-up visits required to verify corrections of the
deficiencies under each remedy. ``For example,'' it said--
If separate civil monetary penalties are imposed for several
deficiencies, or groups of deficiencies, it would be expected that
deficiencies would be corrected on different dates and that the
facility would insist on immediate followup on each deficiency or
group of deficiencies in order to immediately end the daily monetary
penalty. Additionally, a follow-up would be required at 90 days
after the survey to determine if denial of payments would be
required under [the proposed] 488.212(a)(3), and another followup
would be required at six months to determine if termination is
required under [the proposed] 488.212(a)(4).
Finally, one commenter wanted us to insert the words, ``Subject to
the provisions of this subpart,'' at the beginning of the paragraph,
and another wanted us to define interrelated deficiencies as
deficiencies caused by or resulting from the same action or occurrence.
Response: Sections 4203 and 4213 of OBRA '87 and subsequent related
legislation were enacted partially because of the Congress' recognition
that the Secretary and the States needed more flexibility in enforcing
regulations pertaining to Medicare SNFs and Medicaid NFs, and,
therefore, more choices of enforcement actions. The selection of a
particular remedy is based on the nature of noncompliance and the
remedy (or remedies) that either HCFA or the Medicaid agency believes
is most likely to achieve correction of the deficiencies. We believe
that this approach best fulfills the Congressional mandate to ``promote
compliance with the requirements of participation and assure high
quality care for nursing facility residents'' (H.R. Rep. No. 391, 100th
Cong., 1st Sess. 472 (1987)). In some instances, the most effective
remedy may be two or more remedies. Furthermore, section 1919(h)(1) (A)
and (B) of the Act clearly states that this is the case. The first
reads in part, ``* * * the State * * * may provide * * * for one or
more of the other remedies,'' and the second, ``* * * the State may
provide for one or more of the remedies.'' Consequently, we are
revising Sec. 488.402(c) to clearly state that more than one remedy may
be considered appropriate for noncompliance for each deficiency.
However, it may also be appropriate for one remedy to be imposed for
multiple deficiencies that constitute noncompliance, and the revised
regulation reflects this policy as well. In any case, the choice of one
or multiple remedies for each deficiency constituting noncompliance is
part of the decision making process. The actual imposition of a remedy
or remedies is imposed on a facility for noncompliance as a whole, with
participation requirements. We are deleting the limitation in the
proposed paragraph (c) that, for a single remedy for all deficiencies
to be imposed, the deficiencies must be interrelated and subject to
correction by the same remedy. This change offers more flexibility to
the State survey agencies and to HCFA, and is in keeping with the
statute.
Further, setting forth specific sanctions to be applied for each
deficiency constituting noncompliance or a group of deficiencies
constituting noncompliance would defeat the whole purpose of providing
maximum flexibility to both the Secretary and to the States. We are
adopting certain minimum sanctions that will be imposed according to
how serious the noncompliance is, but beyond that, there is enough
flexibility to tailor the remedy or remedies to the specific case at
hand.
The statutory authority for Sec. 488.402(c) is found at sections
1819(h) and 1919(h) of the Act. We have discussed this statutory
authority in both the proposed rule and elsewhere in the preamble of
this final rule.
The matter of a potentially large number of follow-up visits is a
possibility. If it materializes, State survey agencies and possibly
HCFA's regional offices may require additional resources. We will be
closely monitoring implementation of these regulations to determine the
resources needed for this task. However, not every deficiency will
require or even merit a separate revisit for certification of
substantial compliance. As stated above, sometimes several deficiencies
will lead to the imposition of only one remedy. Moreover, even if
different remedies can be traced to different deficiencies, the survey
agency is under no obligation to make multiple revisits. The
noncompliance which led to the imposition of remedies is due entirely
to facility performance. The survey agency is not responsible for the
noncompliance and is under no obligation to spend valuable resources on
multiple revisits. Furthermore, remedies are imposed for noncompliance
in a facility, rather than for deficiency ``a'' or ``b'' or ``c,'' etc.
The survey agency is generally obligated to revisit only when the
facility makes a credible allegation of compliance with all
requirements and, in some cases, no revisit is required even then.
Finally, we are not adding the phrase, ``Subject to the provisions
of this subpart,'' at the beginning of paragraph (c) because we believe
it to be unnecessary. Since we are revising this final rule to allow
HCFA or the State to impose one or more remedies for all deficiencies
constituting noncompliance whether they are interrelated or not, there
is no need to define ``interrelated deficiencies.''
For the reasons given directly above, we are revising
Sec. 488.402(c) to provide that HCFA or the State may apply one or more
remedies for each deficiency constituting noncompliance, or single or
multiple remedies for all deficiencies constituting noncompliance.
Comment: A number of commenters said that they opposed our proposed
exemption of deficiencies with scope and severity levels of 1 from the
requirement for a plan of correction. The consensus of these commenters
was that all deficiencies should require a plan of correction. As one
commenter remarked:
While we understand that it is inappropriate to punish or
sanction a facility for an isolated, minor deficiency, the
government should ask facilities to correct such problems and there
should be a public record of the facility's plan to do so. Since the
regulations and the reform law require compliance with all
requirements, there cannot be any exclusions from completing plans
of correction. Plans of correction are a management tool for both
the facility and the regulators, not a penalty or punishment.
Two commenters said the exception should be retained, but only if
HCFA applies a ``substantiality factor'' to the determination of what
constitutes a deficiency. By ``substantiality'' they meant that nothing
would be cited as a deficiency unless it is not an isolated or
occasional occurrence or unless it has a significant impact on resident
rights or quality of life. If this were the case, they said, then all
deficiencies should require a plan of correction.
One commenter asked, ``Why cite a deficiency at scope and severity
level 1?''
Regarding the issue of approval of the plans of correction, one
commenter suggested that HCFA approve all plans of correction. Another
suggested we add the following specific language:
HCFA will or the survey agency must approve the plan of
correction if it is reasonably calculated to result in substantial
correction of the deficiency within a reasonable time. Neither HCFA
nor the survey agency may disapprove a plan of correction because
the facility denies the existence of the deficiency, if the plan
otherwise meets the criteria specified by this paragraph. The
facility may submit an amended plan of correction at any time, and
HCFA will or the survey agency must approve the amended plan if it
meets the criteria specified in this paragraph. A facility's
submission of a plan of correction does not constitute an admission
that the deficiency exists.
Finally, one commenter said that there is a need for clearer plans
of correction, and another said that the plans need to be more specific
and focus on care issues.
Response: We agree that all deficiencies should require either a
plan of correction or an agreement to correct, and are revising this
final regulation at Sec. 488.408 (``Selection of remedies.'')
accordingly. One commenter expressed the rationale for this succinctly:
``* * * the government should ask facilities to correct [deficiencies]
and there should be a public record of the facilities' plan to do so.''
We do not accept the suggestion that the regulations specify that
HCFA will or the survey agency must approve the plan of correction if
it is reasonably calculated to result in substantial correction of the
deficiency within a reasonable time. We have discussed the meaning of
substantial compliance elsewhere in this preamble. As for the terms
``reasonably calculated'' and ``reasonable time,'' it has been our
experience that putting general language such as this in regulations is
not useful. Plans of correction are considered on a case-by-case basis
by both the States and by HCFA because circumstances vary greatly from
facility to facility. To state in the regulations that HCFA and the
States have a moral and legal responsibility to be reasonable in their
dealings with providers would be to belabor the obvious; there is no
need for such a pronouncement.
One of the commenters who proposed that plans of correction be
required for all deficiencies made the observation that some plans of
correction do nothing more than complain about the law, the surveyor,
or the circumstances, without ever describing how the violation will be
corrected. We agree and would only add that it is highly probable that
facilities submitting these plans considered them to be ``reasonable,''
and extremely improbable that these plans would be acceptable to HCFA
or the State.
Finally, we agree that plans of correction must be clear and
specific, but believe that there is no need to state this in
regulations.
Comment: Two commenters suggested that, in addition to cross-
referring to Sec. 488.234 of the proposed rule (redesignated as
Sec. 488.452, ``State and Federal disagreements involving findings not
in agreement in situations where there is no immediate and serious
threat''), we should refer the reader to proposed Sec. 488.212(a)
(``Action when there is no immediate and serious threat''), and to
Sec. 488.232 of the proposed rule (redesignated as Sec. 488.450,
``Continuation of payments to a facility with deficiencies'').
Response: We believe this to be unnecessary. We try, to the
greatest extent possible, to avoid redundancy in regulations. When
trying to determine what to do when there is State and Federal
disagreement, it is most likely that the reader will consult
Sec. 488.452.
Comment: Another commenter suggested that the text of our proposed
Sec. 488.202(e) be revised to state, ``If the State and HCFA disagree
on the decision to impose remedies when HCFA has performed a validation
survey, the disagreement is resolved in accordance with [proposed]
Sec. 488.234.''
Response: Not allowing HCFA to impose remedies unless and until it
has performed its own validation survey would, in most cases,
significantly lengthen the amount of time between the facility's being
cited for a deficiency and the time when a remedy would be imposed.
This would not fulfill the intent of the Act, which states that
criteria as to when and how each of the remedies is to be applied
``shall be designed so as to minimize the time between the
identification of violations and final imposition of the remedies * *
*'' (sections 1819(h)(2)(B) and 1919(h)(2)(B) of the Act). In any
event, the Act does not limit the Secretary's ability to make findings
exclusively through the use of validation surveys. The Act says only
that the Secretary may impose sanctions if he or she ``finds''
noncompliance. There may be occasions, for example, when the Secretary
may choose to impose sanctions based on a State agency survey. We have
therefore concluded that the Act did not intend that the Secretary
exercise his or her oversight authority only through Federal onsite
validation surveys. Nonetheless, in some cases it will only be possible
to draw conclusions about facility compliance through onsite surveys.
Moreover, sections 1819(g)(3)(B) and 1919(g)(3)(B) of the Act require
the Secretary to conduct validation surveys for at least 5 percent of
the State survey agency's standard surveys, as long as the 5 percent
equals at least 5 facilities. Therefore, many times the Secretary's
enforcement decisions will arise as a result of Federal validation
surveys. However, this will not always be the case.
For the reasons listed immediately above, we are making no
revisions to proposed Sec. 488.202(e).
Comment: Some members of the health care community said that the
proposed 2-4 and 15-day periods are inadequate to allow facilities a
fair opportunity for correcting deficiencies. In addition, commenters
suggested that HCFA--
Specify whether the days are calendar days or business
days;
Specify that the time frames for correction will not begin
until the facility receives the notice, rather than when notice is
sent;
Specify that the notice must be sent by certified mail,
return receipt requested or by personal delivery, and that the State
must give the facility notice in the same manner; and
Provide an expedited hearing process to safeguard the
facility's ability to continue its business and protect its residents
from wrongful government action. This measure must be taken, the
commenter said, due to the short notice we proposed to give in the case
of immediate and serious threat.
Other commenters said that the time frames we proposed are too
long. One of these commenters expressed serious concern, noting that
the Act clearly requires that immediate action be taken to remove the
jeopardy in immediate and serious threat situations. This commenter
urged that no notice be given before the imposition of a sanction in
these cases, and suggested that, in nonimmediate and serious threat
situations, 5 days notice should be given. Another said that, in many
cases, it is obvious that the remedy should be imposed immediately.
This consumer organization asked why a State survey agency should ever
have to delay initiating monitoring visits to a facility or why a
facility with widespread quality of care problems should be allowed to
admit new residents for 15 days after such problems are discovered.
Other commenters cited the possible continuance of ``roller coaster
compliance'' unless we shorten the time frames. ``Roller coaster
compliance'' refers to the facility practice of coming into compliance
only long enough to stave off an impending remedy, then reverting to
noncompliant activities or practices until the next time the
deficiencies are cited, when the cycle begins all over again.
Other commenters said that our proposed time frames do not
adequately protect residents, referring to monitors as an example. One
said that in a case of jeopardy, the State might feel it necessary to
have a monitor in the facility as the survey team is leaving. Waiting
two days without outside scrutiny may be too long under some
circumstances.
Two commenters said that, in the case of civil money penalties,
notice before an effective date is meaningless, since the fine may be
imposed for a past violation that has already been corrected.
One commenter said that the ``not more than four days'' notice in
Sec. 488.402(f) conflicts with Sec. 488.410, and another that paragraph
(f) conflicts with Sec. 488.330(e)(1)(i) and (ii). Another said that
the clause, ``* * * the remedy could be imposed anytime after the
minimum 2 day notification period, but not later than the 10th day
after the last day of survey,'' is confusing.
Finally, one commenter suggested that residents and their
representatives be notified of enforcement actions and their
implications at the same time the nursing home is notified. Two other
commenters said that States should be required to compile, at least
monthly, a list of facilities against which they have taken adverse
action and imposed sanctions. They suggested that this listing be sent
to newspapers, to the State long-term care ombudsman, to the State
protection and advocacy agency, to acute care hospitals, and to public
and private agencies that regularly make referrals of individuals to
nursing facilities. They also suggested that States be required to
develop poster notices for each intermediate remedy, and require
facilities to post the notice in a prominent place.
Response: We are revising Sec. 488.402(f) to specify that the time
frames given are calendar days, and that they begin when the facility
receives the notice, but in no event will the effective date of the
enforcement action be later than 20 days after the notice is sent. We
are not accepting the suggestion that the notices be sent via certified
mail, with return receipt requested. This would preclude a valid notice
sent via other means, such as telefax, telegram, commercial overnight
delivery services, or other means that may be faster. This becomes an
especially important consideration in the case of immediate jeopardy
deficiencies.
The commenter who asks for an expedited hearing process due to the
short notice alleging immediate jeopardy seems to be suggesting that
the hearing take place before the effective date of a sanction to
safeguard the facility's ability to continue its business and protect
its residents from wrongful government action. In the case of immediate
jeopardy, this would mean a hearing would have to be held as early as
the first 48 hours after the survey. It is entirely possible that, when
a survey uncovers such jeopardy, the State or HCFA may immediately set
an effective date at the minimum required time after notice, that is, 2
days. It is virtually impossible to set up a hearing this quickly, and
expanding the time between the notice and the effective date of a
remedy to make it possible to hold a hearing before the effective date
would not be in the best interests of the residents. The whole point of
a short time frame is to safeguard the lives and the safety of
residents by taking immediate action. As discussed at proposed
Sec. 488.180 (now designated as Sec. 488.330), Certification of
compliance or noncompliance, it is not necessary to hold a hearing
before the effective date of termination to adequately protect a
facility's right to due process.
As noted above, we received comments saying our time frames were
too short, and others saying that they were too long. While we are
mindful of the Act's requirement that the Secretary take immediate
action in the case of immediate jeopardy (sections 1819(h)(4) and
1919(h)(4) of the Act), and to minimize the time between the
identification of violations and final imposition of the other remedies
(sections 1819(h)(2)(B) and 1919(h)(2)(B) of the Act), we have chosen
not to shorten them, except for the same day (if necessary)
installation of a State monitor in the case of an immediate jeopardy.
We believe that, for other available remedies when there is an
immediate jeopardy deficiency, the facility should be allowed at least
2 days before imposition of sanctions. This is because we believe that
even in cases of immediate jeopardy, providers are entitled to some
notice before the imposition of sanctions. We believe that, in the case
of non-immediate jeopardy, we should not allow any less than 15 days
for similar reasons.
We chose not to set the minimum amount of notice required any
higher than 2 days in the case of immediate jeopardy because the longer
immediate jeopardy persists, the greater the likelihood that actual
harm or even death may result or continue. We have, for the reasons
cited in the paragraph immediately preceding determined that a facility
be given no less than 2 days before imposition of sanctions. Besides,
it has been our experience that, as a practical matter, it takes longer
than 2 days to complete termination proceedings once they are begun. It
is our belief that we have struck a fair balance between giving
facilities fair notice and a reasonable chance to correct deficiencies
and fulfilling our responsibility to safeguard the health or safety of
residents.
We have chosen 15 days in the case of nonimmediate jeopardy by
carefully weighing the same considerations. It is important to
understand that we are bound by Federal law to minimize the time
between the identification of violations and final imposition of
remedies. While sections 1819 and 1919 of the Act do not require giving
specific notice before the imposition of remedies, constitutional
principles of due process generally do require such a notice of agency
adverse action. On the other hand, neither the Act nor the Constitution
require that providers have the opportunity to correct deficiencies
before sanctions are imposed. In other words, there is a need for prior
notice, but not an entitlement on the providers' part to an opportunity
to correct deficiencies. This policy, we believe, satisfies due process
concerns of providers. As we have said, the only exception is the
immediate imposition of a State monitor when there is an immediate
jeopardy situation, because, above all else, it is our responsibility
to protect the lives of residents. The facility will not be required to
pay the salary of the State monitor; nor will the State monitor have
managerial authority to obligate facility funds. (That authority is
reserved for the temporary manager who could be installed a couple of
days later.) The State monitor can be appointed immediately, while
other sanctions are pending during notice periods to protect residents.
With respect to civil money penalties, we do not believe that any
notice is required before HCFA or a State advises a facility that
noncompliance has occurred and that a penalty is to be imposed. As the
statute clearly suggests, civil money penalties may be imposed for past
periods of noncompliance even if a facility is currently in compliance.
Notice is required, however, before a civil money penalty can be
collected, and the regulations call for exactly this procedure. Like
any other commercial enterprise, nursing homes must structure their
debits and credits around their cash flow. We believe that notifying a
facility that it must pay a civil money penalty instantly is unfair,
unrealistic, and not in accordance with the basic principles of due
process.
In this final rule, we are removing the provision requiring a
maximum of 4 days notice before the imposition of a sanction in
Sec. 488.402(f). We may impose a remedy for immediate jeopardy, as
Sec. 488.410 allows, as long as we give the facility at least 2 days'
notice before the imposition of the remedy and no more than 23 days
from the last day of the survey to remove the jeopardy or be
terminated. In actual practice, the facility is notified that there is
an immediate jeopardy deficiency as soon as the survey has been
completed. It is only the official notice of the imposition of a remedy
that may not be sent until later, as long as it is received by the
facility at least two days before the effective date of the remedy.
As a result of our review of these comments, we are not making
final proposed Sec. 488.180(e)(1)(i), Certification of compliance or
noncompliance, because it appears to conflict with Sec. 488.402(f).
As proposed, we are providing in Sec. 488.325(f), that the State
must provide the State's long-term care ombudsman with any report of
adverse actions specified at Sec. 488.406 imposed on a facility. We
believe that this provision will keep residents informed about each
enforcement action. Whatever additional publicity States may wish to
give notices of adverse action is their decision.
We are also revising paragraph (f) to note the exceptions in
notification requirements for civil money penalties and restructured it
to clarify them.
Section 488.404 Factors To Be Considered in Selecting Remedies
We received comments on proposed Sec. 488.204, as well as on our
solicitation of comments in the preamble to the proposed rule, about
the scope and severity measures; specifically, we asked for comments on
how scope and severity values were described and how they were to be
assigned. We will address all of the comments we received on scope and
severity in this section of the preamble.
Comment: The majority of commenters did not comment on the scope
scale. Several commenters expressed support for using scope and
severity scales to determine the enforcement response to facility
noncompliance. Other commenters opposed using these scales. Of those
opposed, some believed that the scales, absent any measurable criteria,
introduce another opportunity for surveyor inconsistencies to occur.
Others thought the scope and severity level definitions were too
broad and vague to be applied consistently by surveyors, allowing too
much government discretion in the selection of remedies, while one
commenter believed that the determination of remedies should be left to
the judgment of the survey agency.
A few commenters argued that the scales were impractical because
they were either too complex or prescriptive and left no room for
surveyor judgment.
Several commenters argued that the use of scope and severity scales
conflict with Congressional intent to eliminate a hierarchy of
participation requirements. They contend that by ranking the
seriousness, that is, importance, of a facility's deficiencies, the
scope and severity scales foster the belief that some requirements are
more important than others.
One commenter questioned why the scope and severity scales were
being put into regulation. This commenter believed that codifying the
criteria used for determining remedies is inappropriate and will invite
additional legal challenges by nursing home providers dissatisfied with
severity and scope level determinations.
One commenter was concerned that the scope and severity scales
failed to provide enough regulatory guidance on the exact criteria that
will be used in making remedy determinations to ensure that the
enforcement response is appropriate to the nature of the noncompliance.
We received a variety of proposals for reconfiguring the scope and
severity scales from provider organizations, State governments and
consumer advocate organizations.
One consumer advocate organization proposed a scope and severity
scale with three tiers of severity (immediate jeopardy, substandard
quality of care, and other violations), while retaining the definition
of scope as we proposed.
This proposal called for a plan of correction for all level 1
deficiencies (other violations) regardless of scope and a mandatory
civil money penalty for scopes of 3 and 4. Additionally, the proposal
specified that the State or HCFA must impose a directed plan of
correction if the violation is repeated. All other remedies could be
imposed at the option of the State or HCFA.
The second tier (substandard quality of care) would require a civil
money penalty, public notice, a plan of correction and, at the State's
option, any other remedy. If repeated, the State or HCFA would require
a State monitor and a directed plan of correction. There were
additional mandatory remedies imposed at higher scope levels.
The third tier (immediate jeopardy) would require the statutorily
mandated temporary management and physician and nursing home
administrator licensing board notice, as well as a denial of payment
for new admissions and a plan of correction.
Another organization also proposed three severity levels (Actual
harm, impairment or death; potential harm, impairment and death; and
negative outcome). The scope levels were also pared down to three
levels (isolated, occasional and widespread/pattern). Substandard
quality of care would be defined as a severity of 2 with a scope of 3
in quality of care and all of severity level 3. For non-immediate
jeopardy, this proposal would require termination in 180 days from the
last date of survey unless compliance is achieved during the correction
period. For immediate jeopardy, termination would take effect in 23
days if no temporary manager is appointed or accepted. This proposal
would not require any mandatory fines but rather, would leave the
choice of remedy to the State or HCFA. Other statutorily driven
remedies have also been included in the proposed plan.
One State organization proposed a matrix which had five severity
levels (harm or death; negative outcome non-staff action; negative
outcome staff action; negative outcome likely; and no negative
outcome). As in some other proposals, the scope levels remained as we
had provided in the proposed rule. Under this plan, no remedies would
be imposed for severity level of 1 and scope of 1 or severity level of
1 and scope of 2 or severity level of 2 and scope of 1. A plan of
correction would be required for a severity and scope of 1-3, 1-4 and
2-2, respectively. A civil money penalty would be imposed for a
severity and scope of 2-3 and 2-4. No fine would be imposed for a scope
of 1, even if a deficiency is at the severity of 3 or 4. Denial of
payment for new admissions would only be imposed for severity levels of
4 and 5 (except severity 4 and scope of 1). This plan also would exempt
facilities from any remedies in certain situations where new
requirements had not been disseminated to nursing homes.
Another State organization proposed a scope and severity scale
using the four scope levels defined in our proposed rule, but defining
the severity levels differently. The four severity levels would be
defined as level 4--life threatening harm or death; 3--actual harm; 2--
potential harm; and 1--no harm or likelihood of harm. Severity and
scope of 1 would have no remedies imposed. Severity level of 1 and
scope of 2 and severity of 2 and scope of 1 or 2 would have no remedy
imposed the first time the deficiency was cited, but the State or HCFA
would impose a directed plan of correction if the same deficiency(ies)
was found at the next survey. This plan also requires the State or HCFA
to choose between a denial of payment for new admissions or a civil
money penalty for severity levels of 3 and 4.
Another State disagreed with our use of the term immediate jeopardy
relative to the scales because it believes that the term, as described
for the scales, carries no connotation of immediacy and is not
equivalent to the language ``likely to cause at any time'' we had
proposed in the definition of the term in Sec. 488.201 of the proposed
rule. Also, the State questioned our definition of substandard quality
of care in relationship to severity and scope. It believed that
substandard quality of care should not apply to one or two residents
but should reflect deficient patterns of care, policies or procedures
present in or used by the facility. The State recommended that HCFA
provide that a finding of substandard quality of care may be made (but
is not required) for scope levels of 1 and 2 and severity levels of 3
and 4.
Several commenters suggested that severity levels 3 and 4 should be
redefined. Specifically, these commenters found virtually no difference
in the application of remedies in the two levels. Other commenters
believed that a potential for life threatening harm should not be an
immediate jeopardy finding subject to harsher remedies.
Many commenters disagreed that facilities be furnished with a
separate summary of all level 1-1 deficiencies rather than receiving
notice of them on the official deficiency statement. They believed that
it would be confusing to have a facility's deficiencies recorded, in
parts, between two separate documents, as well as harder to track
repeat deficiencies at the next standard survey.
Many commenters made specific recommendations of required remedies
for various levels of severity and scope. Some suggested that HCFA or
the State only impose a plan of correction at the lower scope and
severity levels, while other commenters wanted HCFA to mandate civil
money penalties and other remedies.
Many consumer advocates expressed concern that the proposed scope
and severity scales did not represent the intent of the Congress to
make resident rights and physical environment requirements equivalent
to quality of care requirements. They contend that the way the scales
are currently written, resident rights and physical environment
deficiencies would never rise above severity level 2.
A few commenters believe that the scope and severity scales should
be predicated on a statistical analysis of probability and suggest that
this could be done by health care professionals who could factor into
the scales the predisposition of a given individual to a particular
incident. Many commenters asked that the ambiguous terms used within
the level descriptions be defined, for example, how many cases
constitute ``in a number of cases.'' One commenter suggested that a
numerical or percentage determination be made to clarify the terms, for
example, 1-3 instances = isolated, or less than 17 percent occurrences
= isolated.
One commenter suggested that the scope scale include only three
levels, combining the proposed levels 3 and 4 because there was no
distinction for the remedies. Another commenter observed that the scope
scale level descriptions were written in terms of the number of times
that the surveyors made a particular observation, and contended that
while this approach may be appropriate for certain types of problems,
it is not for others. For example, when surveying for life safety code
compliance, what scope would be assigned to a total sprinkler system
failure? This problem is a single observation, but it is one that
affects every resident in the facility. This commenter, therefore,
suggested that if we are to accurately reflect the extent of the
deficiency, then scope should be based on the number of residents who
are affected by the deficient practice. Overall, many commenters feared
that the scope and severity scales, as proposed, give the enforcing
agency virtually unlimited discretion in selecting remedies. They
contended that the proposed scheme does not limit imposition of the
most onerous remedies only to the most serious deficiencies and they,
therefore, suggest that a prescriptive approach be developed for
correlating deficiencies and remedies.
Response: Historically, the enforcement system was based on a
hierarchical set of requirements called conditions of participation,
standards, and elements. Each condition of participation included
groups of standards, and standards were made up of separate elements.
Enforcement was based on the level of the requirement for which a
deficiency was cited. For example, condition-level deficiencies in a
SNF resulted in the initiation of termination procedures or a denial of
payment for new admissions. However, if only standard-level
deficiencies were found, only a plan of correction was required. Since
the Congress has expressly eliminated the use of hierarchical
requirements in nursing homes, we needed an organized way to determine
how serious a facility's deficiencies are, as well as a consistent
approach to guide enforcing agencies in making enforcement decisions.
We believe that we have implemented the Congress' mandate to
abandon our pre-OBRA hierarchical requirements and to develop a system
capable of detecting and responding to deficiencies in any
participation requirement. The enforcement scheme provided in this
final rule is built on the assumption that all requirements must be met
and enforced and that requirements take on greater or lesser
significance depending on the circumstances and resident outcomes in a
particular facility. In addition, we wish to emphasize that measuring
the seriousness of deficiencies is only for the purpose of determining
the enforcement response most appropriate for specific degrees of
noncompliance.
In order to grant the statutory flexibility given to HCFA and the
States to design their own enforcement approaches (with guidance from
the Secretary), we are providing a modified enforcement scheme to be
used to assess the seriousness of deficiencies and then used to select
an enforcement response. The scheme requires that specified factors be
considered by HCFA or the State to assess the seriousness of a
facility's deficiencies, and it correlates seriousness to specific
enforcement responses. However, with the exception of the immediate
jeopardy level, the enforcing agencies may exercise the flexibility to
design their own methods of interpreting and applying the assessment
factors to the identified deficiencies. Historically, determinations of
immediate jeopardy to resident health or safety have been made by HCFA
and the States in accordance with guidance provided in Appendix Q of
the State Operations Manual. We conclude that there is no compelling
reason for States to redefine this level of noncompliance. The
enforcing agencies may also exercise their statutory authority to
determine whether an alternative remedy is or is not preferable to
termination. In determining the seriousness of Life Safety Code (LSC)
deficiencies, States are encouraged to apply the Fire Safety Evaluation
System (FSES), which is Appendix C of the 1985 edition of the LSC.
Since the FSES is an equivalency system based on point values, it is
possible to utilize the system to document the seriousness of
deficiencies on a quantitative basis in accordance with the revised
enforcement matrix. Once the seriousness of the deficiencies is
determined and the decision to impose alternative remedies instead of,
or in addition to, termination, HCFA or the State must make its remedy
selection from the remedy category associated with the specific level
of noncompliance. This correlation is provided in Sec. 488.408 of this
final rule.
This approach has the added benefit of promoting national
consistency because all systems will be considering the same initial
assessment factors, and the remedy choice will then be based on the
nature of the noncompliance and the corrective action most likely to
achieve correction and continued compliance. In other words, we
developed, for use by the States and by HCFA, an organized and
consistent method by which to first, determine how serious a facility's
deficiencies are, and second, to select an enforcement response from a
specified remedy category linked to that degree of noncompliance.
We believe that the enforcement scheme we are providing in this
final rule for HCFA and the States to use in rating deficiencies and
selecting remedies satisfies a variety of concerns posed by the former
scope and severity scale and the proposed rule in general. Under the
proposed rule, we set out two scales, one for scope and one for
severity, that HCFA and the States were to apply in determining which
remedy to apply once deficiencies were identified. While the rule
provided some definition for each of the levels of scope and severity,
HCFA and the States were essentially free to determine what constituted
a ``sufficient'' number of ``repeated observations'' in concluding
whether or not a ``pattern'' of deficiencies could be said to exist.
In the final rule, we have removed the scope and severity scales,
as such, and have replaced them with a set of criteria that must be
used (should a decision be made to impose alternative remedies at all)
to select an enforcement remedy. Specifically, while the enforcement
scheme in this final rule is conceptually the same as the former scope
and severity scales, it differs from that approach in numerous
significant ways:
It leaves to the judgment of both HCFA and the States
whether to impose alternative remedies at all, regardless of the
seriousness of a facility's deficiencies.
It incorporates the concept of substantial compliance,
whereby deficiencies found which constitute no more than a potential
for minimal harm are not sanctioned.
With the exception of immediate jeopardy, a State may use
its own method for interpreting terms that describe the relative
frequency or seriousness of deficiencies as long as it is consistent
with the guidance presented in the regulation.
It correlates, to a greater extent than in the proposed
rule, specific enforcement categories from which an enforcement
response must be selected with specified degrees of noncompliance.
It can be applied to physical environment deficiencies, as
well as to all others, and it should relieve commenters' fears that
resident rights violations and physical environment deficiencies could
not be considered as serious deficiencies.
Providers will have a clearer idea of the enforcement
consequences they could be subject to for specific degrees of
noncompliance because, in Sec. 488.408, we have correlated enforcement
categories with levels of noncompliance.
The establishment of these remedy categories will provide
regulatory guidance to HCFA and the States in selecting remedies and
will necessitate that States and HCFA clearly define the seriousness of
cited deficiencies in order to select an appropriate remedy.
We have not accepted any of the commenters' proposed revisions to
the scope and severity scales for inclusion in the modified enforcement
scheme in this final rule. After reviewing the proposals, we concluded
that, while the terminology may have been different, all of the
proposals were conceptually the same as the scales that were published
in the proposed rule. In addition, those commenting provided no
evidence (for example, success data) to indicate that their respective
proposed enforcement systems would be more effective than the scales we
published in the proposed rule. We, therefore, have not adopted any of
the commenters' proposals in place of the enforcement model we are
presenting in this final rule. In addition and equally noteworthy, we
spent considerable time meeting with various groups representing the
nursing home industry, State agencies and consumer organizations to
discuss and seek input on the various approaches to restructure and
refocus the survey and enforcement processes. The resulting approach
was presented in the notice of proposed rulemaking as well as in what
has been carried over into this final rule.
In response to concerns that repeated 1-1 deficiencies (now
referred to as isolated deficiencies that HCFA or the State determines
constitute no actual harm with a potential for minimum harm) would be
hard to monitor on subsequent surveys, we note that, while such
deficiencies are not cited on the official deficiency statement and are
not sanctioned, their existence is maintained in the official provider
file along with the official deficiency statement. The separate listing
of these deficiencies is also accessible to the surveying agency and
disclosable to the public.
While we intend that the enforcement scheme provide internal
guidance to States and to HCFA, we are including it in the regulations
to provide the public, and particularly regulated facilities and
facility residents, with full disclosure as to how enforcing agencies
will determine appropriate remedies for providers that have been found
out of compliance with Federal participation requirements.
Comment: One commenter wanted a remedy to be imposed for
insufficient nurse staffing.
Response: The law requires that nursing homes meet all
participation requirements. Should noncompliance with nurse staffing
requirements be identified, either during an extended survey or when a
waiver of RN and/or licensed nursing staffing has been requested or
granted, the facility would be subject to an enforcement response from
HCFA or the State, just as it would be for other instances of
noncompliance.
Comment: Some commenters wanted to remove the distinction between
initial and secondary factors in Sec. 488.404 (proposed at
Sec. 488.208) believing that the secondary criteria are equally
important as the initial assessment.
Response: The secondary factors are not less important; they just
come later in the process of selecting an appropriate remedy or
remedies. However, we are replacing the word ``secondary'' with the
word ``other'' to avoid any further confusion. The first step is to
assess the seriousness of the deficiency(ies), including the presence
or absence of immediate jeopardy, to determine the minimum recommended
categories of remedies to impose, as well as the suggested optional
categories from which to choose. The other factors (that is, the
relationship of one deficiency to other deficiencies, and the
facility's prior compliance history in general and specifically with
reference to the cited deficiencies) assist in making choices from
among all remedies available in any of the categories applicable to
specific deficiencies.
Comment: Other commenters want the compliance history of the
facility to remain secondary because facilities with a change of
ownership and/or personnel may not be able to otherwise emerge
positively due to poor compliance in the past. It was suggested that we
change Sec. 408.404 (proposed at Sec. 488.208) accordingly.
Response: We did not revise the regulations text to reflect this
suggestion. A facility's prior compliance history should be considered
regardless of a change in ownership. A facility is purchased ``as is.''
The new owner acquires the compliance history, good or bad, as well as
the assets. While we agree that after consideration of the facility's
compliance history, HCFA or the State may conclude that such history is
no longer a valid predictive factor of the facility's ability to
achieve and maintain compliance (for example, following a change of
ownership where the new owner ``cleans house'') the burden of proof is
on the new owner to demonstrate that poor past performance no longer is
a predictive factor.
Comment: Other commenters wanted additional factors to be
considered in addition to those outlined in Sec. 488.404 (proposed at
Sec. 488.208). The suggestions for additional factors are:
Whether the deficiency or deficiencies are directly
related to resident care;
The corrective, long-term compliance, resident protective,
and non-punitive outcomes sought by the agency;
The facility's degree of culpability;
The accuracy, extent, and availability of facility
records;
The facility's financial condition;
Any adverse effect that the remedy would have on the
health and safety of facility residents;
Whether there has been a change in ownership or operation
of the facility;
The facility's action to correct the deficiency prior to
the conclusion of the survey.
Response: While we are not expanding Sec. 488.404 to include these
additional factors, there is nothing to preclude HCFA or the State from
considering any other factors they believe to be relevant in the
decision-making process. We are, however, revising Sec. 488.404(b) to
clarify that the other factors that HCFA and the State may consider
include, but are not limited to, only those factors listed. Because we
do not want to limit valid assessment considerations unnecessarily, we
do not desire to provide an all-inclusive list. We realize that it is
impossible to predict every factor that would have a bearing on every
particular case. The two factors that we have included in the
regulatory model have a direct bearing on the determination of the most
appropriate remedy or remedies. We have explained above how the
interrelationships among deficiencies can impact the decision to impose
one as opposed to several remedies. The second factor, the facility's
prior compliance history, is pertinent because sections 1819(h)(2)(B),
1919(h)(2)(A), and 1919(h)(3)(C) of the Act provide for increased
penalty amounts for uncorrected or repeated noncompliance. Moreover,
sections 1819(h)(2)(E) and 1919(h)(2)(D) of the Act require the
imposition of the denial of payment remedy for repeated substandard
quality of care.
Comment: One commenter didn't believe that surveyors should make
binding decisions regarding remedies, but rather this authority should
be retained by the surveyors' supervisor in order to promote
centralization as well as consistency in decision making.
Response: Surveyors do not have the authority to make binding
enforcement determinations; rather, either HCFA or the State makes
binding enforcement determinations in accordance with criteria at
Sec. 488.452.
Section 488.406 Available Remedies
While analyzing the comments for this section, we again reviewed
the provisions of the Act to ensure conformance in the final
regulation. In doing so, we noted that proposed Sec. 488.206(c) did not
include the remedies of civil money penalties, temporary management,
and closure of the facility and transfer of residents, or their
equivalents, in the listing of available remedies. We have also
clarified that, regardless of what other additional remedies a State
may have approved, the State must establish, at a minimum, those
specified remedies, or an approved alternative to a specified remedy,
that is, termination, State monitoring, denial of payment for new
admissions, closure of a facility by the State in emergency situations
and/or transfer of residents, civil money penalties, and temporary
management. We are correcting this oversight in this final regulation.
In addition, during the process of reviewing and analyzing
comments, we added another remedy. This remedy, directed in-service
training, is described in the discussion of Sec. 488.425.
Also, since the proposed Sec. 488.228, ``Alternative or additional
State remedies'', contained virtually the same information as this
section, we are eliminating the proposed Sec. 488.228 and moving the
remaining non-duplicative provisions to this section. All comments
received in response to proposed Sec. 488.228 are being included and
addressed below.
Comment: One of the major concerns expressed throughout the
comments was that it should be possible to address many or most
instances of facility noncompliance through a traditional plan of
correction. Several commenters indicated that plan of correction should
be added to the list of possible remedies.
Response: A plan of correction is a minimum requirement for any
facility with deficiencies other than those isolated deficiencies that
HCFA or the State determines constitute no actual harm with a potential
for minimal harm, and, as for other providers and suppliers, it is not
considered an enforcement remedy. Therefore, while we are clarifying
the regulation to require that a facility complete and submit a plan of
correction each time deficiencies are noted (other than those isolated
deficiencies that HCFA or the State determines constitute no actual
harm with a potential for minimal harm), we are not adding plan of
correction to the listing of available remedies.
Comment: Many commenters expressed concerns that the proposed
remedies are punitive rather than corrective in nature, excessively
burdensome in relationship to the deficiencies, too harsh or that they
will direct the focus away from resident care, thereby having a
negative effect on long term care. Some commenters stated that the
remedies do not allow for one time digressions from a facility's
history of compliance. Others believed that the proposed remedies would
threaten job security for nursing home staff or the security of
facility residents.
Response: As indicated in response to the previous comment, many
commenters assumed that it was not possible to have a plan of
correction as the only corrective measure required in a facility, even
when the deficiencies were of a low degree of seriousness. In this
final regulation, we acknowledge that a traditional plan of correction
may be the only measure needed to correct deficiencies in some
facilities which have only lower level deficiencies. While we believe
that using plans of corrections in this fashion should alleviate some
of the concerns expressed by the commenters, we do not accept the
notion that the use of more severe remedies for more severe
deficiencies is excessive. There can be little question that the
Congress was concerned about what it concluded was an unsatisfactory
enforcement scheme prior to nursing home reform. As a result, it wrote
into the law a series of remedies that it expects to be used should
circumstances at individual facilities warrant. The driving force
behind the legislation in this context was to provide the Secretary and
the States with the authority to aggressively enforce the Act's new
requirements in a way that would discourage facility noncompliance that
the Congress believed to be widely evident between surveys, and
thereby, to encourage lasting compliance. The design of these
enforcement rules provides for incrementally more severe remedies as
cited noncompliance is more egregious. We do not believe that an
enforcement approach styled this way is harsh or excessive.
Comment: Six commenters suggested that the regulation include a
remedy which would allow a ban on all admissions to a facility,
regardless of the resident's source of payment. Three commenters
further indicated that this remedy should be mandatory in cases
involving immediate jeopardy.
Response: We cannot accept these suggestions. The Act does not
provide the authority to ban admissions for residents whose source of
payment is other than Medicare or Medicaid. The Act does provide for
the remedies of denial of all payment for SNFs and NFs by the Secretary
and for denial of payment for all new admissions for SNFs by the
Secretary, and for NFs, by the Secretary or the States. The proposed
rule included denial of payment for all new admissions in certain
diagnostic categories or requiring specialized care, but we have not
included that remedy in this final rule for the reasons discussed under
``Denial of Payment'' later in this preamble. We believe that these
remedies, along with the other available remedies for noncompliance,
should be sufficient to promote a shift from noncompliance to
substantial compliance.
Comment: Two commenters stated that the option of closing the
facility should be available for SNFs and not just for those facilities
that participate as NFs or SNF/NFs.
Response: For SNFs, HCFA has termination as an option for remedying
noncompliance. While HCFA can terminate a SNF's Medicare participation,
it cannot revoke a facility's license to operate within a State.
Therefore, actual closures of facilities and transfers of residents are
remedies which are options only for those facilities for which the
State is the enforcing agency because the State also has licensing
authority; closures of facilities are license related actions.
Comment: One commenter proposed that off-site monitoring be added
to the list of available remedies.
Response: We are not accepting this suggestion. Enforcement
remedies are designed to motivate providers to achieve and maintain
compliance with participation requirements. The motivation is provided
by the nature of the various available enforcement remedies that either
require some action to be taken by the provider or that involve
financial consequences directly or indirectly to the provider. Since
off-site monitoring would be performed by the State rather than imposed
on the facility, and since there would be no responsibility and,
therefore, no incentive for a facility response, we conclude that this
type of monitor is not an enforcement remedy to be imposed against
facilities with deficiencies.
Comment: One commenter proposed the addition of State and
Secretarial authority to order the hospitalization of residents in
cases involving immediate jeopardy, if the facility is unable or
unwilling to respond to the residents' needs.
Response: We do not believe an additional remedy is needed in order
to respond to this commenter's concern. As temporary management will be
imposed in those cases where immediate jeopardy is identified in a
facility that will not be terminated immediately, control of the
situation, including determinations as to the care of individual
residents, will be shifted away from the facility's own management
until the jeopardy is removed. Should the facility fail to relinquish
control to the temporary manager, termination will result and residents
will be transferred to facilities that are able to provide care in a
manner consistent with certification requirements.
Comment: One commenter proposed that public notice be included as
an available remedy.
Response: Public notices are already required by regulation for any
SNF termination. Public notices are also allowed, but not required
(unless the State has its own public notice requirement), for NFs that
will be subject to termination.
We do not believe that the regulation should expand the use of
public notices as a remedy for noncompliance by including them in this
section's listing. Public notices are frequently costly, and they do
not always serve the intent of notifying the widest possible audience
of a facility's noncompliance. Further, facilities are already required
to post the availability of the results of their surveys on their
premises. Accordingly, we are not adopting this suggestion in the final
regulation.
Comment: A few commenters indicated that the prohibition of nurse
aide training and competency evaluation programs (NATCEPs) is a penalty
which should be included in the listing of available remedies.
Response: The prohibition of a NATCEP is predicated on, among other
things, the existence of a nurse staffing waiver, the fact that a
facility has been subject to an extended or partial extended survey, or
the imposition of an adverse action, including termination of the
provider agreement. The enforcement remedies, on the other hand, are
the consequences of facility noncompliance once deficiencies have been
identified through the survey process. While the disapproval of a
NATCEP is automatic when criteria set forth in the Act are met, the
imposition of remedies is a matter requiring some discretion on the
part of HCFA or the State.
It is possible for a facility with a nurse staffing waiver to be
surveyed and have no deficiencies identified or have no deficiencies
found which cause the facility to be out of compliance. In these cases,
an enforcement action would not be in order, even though other
provisions of the Act and regulations would require that a prohibition
of a NATCEP be imposed. Further, it would be possible for a facility
with no nurse staffing waiver, which had not been subject to an
extended or partial extended survey, to have a civil money penalty
imposed as a remedy for deficiencies identified. In this latter case,
the civil money penalty is the enforcement remedy, and not the
prohibition of a NATCEP, which is an automatic statutory consequence of
the civil money penalty being imposed.
Because we believe that the Act, as well as regulations published
on September 26, 1991, separately address how the State arrives at the
disapproval of a NATCEP as opposed to how it or HCFA determines that an
enforcement action is in order, we are not adopting these comments in
the final regulation.
Comment: One commenter indicated that denial of payment for new
admissions for certain diagnostic categories is too difficult to
implement or monitor. Another stated that it is too broadly defined and
that it was not the intention of the Act to modify remedies included in
the Act.
Response: The first comment is discussed in detail under ``Denial
of Payment'' later in this preamble.
Regarding the comment that the Act does not allow for modifications
of its listed remedies, we point to the provisions of the Act at
sections 1819(h)(2)(B), 1919(h)(2)(A), 1919(h)(2)(B)(ii) and
1919(h)(3)(C), all of which indicate that remedies other than those
specified in the Act are allowed.
Comment: Two commenters asked that the proposed available remedy of
denial of payment for new admissions for certain diagnostic categories
be amended to ensure that it not promote discrimination against
residents a facility does not want to admit. Both indicated that a
directed plan of correction should be required in these situations, and
one comment further stated that the directed plan of correction should
direct the facility on how to regain the capability to care for
residents with the designated diagnoses.
Response: This issue is discussed in detail under ``Denial of
Payment'' later in this preamble.
Comment: Five commenters indicated that HCFA should specify in the
regulation the criteria by which the Secretary will determine whether a
State's alternative or additional remedies are as effective in
determining noncompliance and correcting deficiencies as the remedies
specified in the Act. Other commenters insisted that any alternative or
additional remedies must be made available for public comment before
adoption.
Response: We agree that there is a need for uniformity in the
process which is used to approve State remedies which are alternative
or additional to those included in the regulation. While we will
prepare manual instructions that will address how these reviews and
approvals should be processed, we believe such information is not
appropriate for the text of the regulation itself since it would be
impossible to contemplate the vast array of alternatives that States
might propose. The Act does not require and HCFA will not require
specific public notice procedures that limit State prerogatives in the
State plan amendment process.
Comment: One commenter indicated that States should be able to
develop and implement additional or alternative remedies unless HCFA
can demonstrate that the States' remedies are not as effective as the
HCFA remedies.
Response: We cannot adopt this comment. The Act provides, at
section 1919(h)(2)(B)(ii), that the State must demonstrate to the
Secretary's satisfaction that the alternative or additional remedies it
proposes are as effective in deterring noncompliance and correcting the
noncompliance as those included in the Act. To shift the burden of
proof to HCFA would be contrary to the Act's clear instruction.
Comment: One commenter indicated that any State remedies approved
as alternative or additional remedies should apply to SNF/NFs as well
as NFs, unless HCFA takes a different action based on a validation
survey.
Response: The determination of whose remedies prevail in a dually
participating facility is made in accordance with section 1919(h)(7) of
the Act and codified at Sec. 488.452 of this final rule.
Comment: One commenter indicated that the final rule should clarify
and refer to the relationship of these rules to the sanctions available
under section 1128 of the Act and to how the Office of Inspector
General's (OIG) actions will have an impact on enforcement actions
taken under this regulation.
Response: The provisions of sections 1819(h) and 1919(h) of the
Act, for which HCFA takes action, and the provision of section 1128 of
the Act, for which the OIG takes action, are two independent sources of
enforcement authority that are triggered by separate considerations.
Section 1128 of the Act contains mandatory and permissive exclusions
which are, for the most part, applied in cases of individuals and
entities who have been charged with or convicted of certain types of
behavior (such as fraud and abuse, and obstruction of investigation)
under Federal or State law. Section 1128 does not generally apply to
cases of facility noncompliance, which are covered under sections 1819
and 1919 of the Act that specify survey and enforcement provisions.
Section 1128A is cited in sections 1819 and 1919 to give guidance on
the imposition of civil money penalties which will be imposed in
accordance with common statutory provisions by HCFA and OIG for their
respective purposes. If a case happens to involve both noncompliance
and fraud, abuse or obstruction of investigation, each agency has the
authority to take separate action, independently of the other.
Comment: Commenters from several States indicated that their States
had effective remedies that should be adopted without change. One
commenter stated that HCFA approval of alternative or additional
remedies should not be required.
Response: The Act gives the States the option of requesting that
HCFA authorize the adoption of existing State remedies. The regulation
follows the Act, which leaves the decision to request the adoption of
these remedies up to each State. However, the Act provides that HCFA
approval is necessary and that the State must bear the burden of proof
that any alternative or additional remedies are as effective as the
remedies specified in the Act.
Comment: Several commenters were concerned that the State's ability
to impose alternative remedies instead of termination was impaired by
the proposed provision that would require the repayment of the Federal
share of the Medicaid payment (FFP) if the correction of the
deficiencies was not made in accordance with the approved plan and
timetable. These commenters said that the regulations should allow
States to enter into agreements under which the facilities would agree
to repay States, which would then repay the Federal government FFP if
compliance was not achieved according to the approved plan.
Response: Neither the Act nor the proposed or final regulations
prevent the States from entering into agreements with facilities to
repay States if the facility fails to adhere to its plan of correction.
The Act is silent on this issue. Therefore, it follows that the States
have the option to consider such agreements with facilities. Many
facilities may find such agreements preferable to termination.
Comment: One commenter stated that the authority to implement
alternative or additional remedies should rest within the single State
agency.
Response: The Act gives the States the authority to elect
alternative or additional remedies through the use of the Medicaid
State plan process. Medicaid regulations at Sec. 431.10 specify that a
single State agency administer or supervise the administration of the
State plan. In most States, the Medicaid agency is the single State
agency that implements the current transitional enforcement remedies
against Medicaid facilities. In some States, enforcement remedies, such
as civil money penalties, are implemented by the survey agency. We
believe that States should retain the flexibility to organize their
enforcement activity as they deem necessary as long as the
organizations meet Medicaid regulations.
Comment: One commenter believed that every State should implement
the same penalty system.
Response: We cannot accept this suggestion because the Act permits
the States to elect alternative or additional remedies if they can
demonstrate that the alternative or additional remedies are as
effective as the remedies specified by the Act. Further, section
1919(h)(2)(A) of the Act provides that the State shall specify
criteria, as to when and how each remedy is to be applied, the amount
of any fines, and the severity of each of these remedies, to be used in
the imposition of such fines.
Comment: One commenter suggested that the final rule include a list
of remedies other than termination which HCFA finds acceptable.
Response: Such a list is provided at Sec. 488.406(a) and (b).
Section 488.408 Selection of Remedies
The comments we received on this section, as it was proposed, which
relate to the factors considered when making remedy determinations,
have already been included and addressed in our discussion of
Sec. 488.404 of this preamble.
Comment: Some commenters were uncertain about how the
``determination'' of remedies in Sec. 488.404 and the ``choice'' of
remedies in Sec. 488.408 differ.
Response: We are retitling Secs. 488.404 and 488.408 to ``Factors
to be considered in selecting remedies'' and to ``Selection of
remedies,'' respectively, and are revising the content of both sections
as a result of the revision to the criteria for selecting among
enforcement options as discussed earlier in this preamble. After the
survey team has determined that a deficiency or deficiencies exist, it
is required to determine the seriousness of the violations. The factors
that HCFA and the States must and may consider in determining the
seriousness of a facility's deficiencies can be found at Sec. 488.404.
The optional process of determining the most appropriate enforcement
action is described at Sec. 488.408, which correlates the level of
noncompliance with a required and/or optional category of remedies.
Comment: A few commenters wanted HCFA to include a statement from
the preamble of the proposed rule that asserts ``the more pervasive or
severe the facility's shortcomings, the more severe the penalty.''
Response: We agree with the commenters, and are providing such a
linkage in the revised Sec. 488.408.
Comment: Some commenters wanted HCFA to explain the purpose of
intermediate sanctions.
Response: The purpose of an intermediate sanction (or alternative
remedy) is to motivate providers to achieve and maintain substantial
compliance before termination becomes necessary. Prior to OBRA '87, the
term ``intermediate sanction'' was limited to a denial of payment for
new admissions. Sections 1819(h) and 1919(h) of the Act specify that
remedies for noncompliance are to be imposed in lieu of, or in addition
to, the remedy of termination of a facility's participation in the
programs. This legislation expanded the range of alternative remedies
for the Secretary and the State to use as an incentive for correction
and as a way that might avoid termination of the provider agreement.
Comment: A few commenters wanted to revise Sec. 488.408 to require
that HCFA and the State make appropriate remedy selections, but not
select a specific remedy solely to punish the facility.
Response: Alternative remedies are designed to motivate providers
to comply quickly with the requirements of participation. While some
providers may view the remedies as punishment, our first responsibility
is to protect the health and safety of the residents. We are interested
in motivating providers to achieve and maintain compliance with health
and safety requirements so that they may continue to provide quality
services to the residents. Accordingly, the selection of an enforcement
action is based on that which is most likely to elicit a prompt
response from the facility to achieve and maintain compliance before
termination becomes necessary. We believe the proposed change does not
significantly add to the process of selecting remedies; therefore, we
are not incorporating it in the final regulation.
Comment: A few commenters wanted a definition of ``clusters of
deficiencies'' included in Sec. 488.408, which deals with the initial
assessment of the seriousness of deficiencies. Other commenters wanted
instruction on which deficiencies are cited as a cluster versus those
deficiencies cited individually.
Response: We have removed the reference to clusters in this final
rule because we do not want to limit the discretion HCFA and the States
have been given by the statute to make enforcement decisions. We
believe that the relationship between and among deficiencies is
inherent in remedy determinations and should be made on a case-by-case
basis. While we do not intend to include instructions in this final
rule on which deficiencies would be treated individually and which
would be consolidated, we will offer examples in the HCFA Regional
Office Manual and the State Operations Manual of how deficiencies could
be grouped together.
Comment: We received many general comments about how HCFA should be
more specific in its guidance on selecting an appropriate remedy. This
guidance must help determine the criteria for the selection of remedies
and must require the use of specific remedies for particular
deficiencies. Some of these commenters suggested a scope and severity
scale linked with specific remedies at specific levels.
Response: While we agree with the above commenters advocating more
guidance on the selection of remedies, and have developed an
enforcement scheme capable of doing just that, we are bound by the
statutory provisions giving HCFA and the States some discretion in
designing their own schemes within a Federal framework. Therefore, we
are providing the method by which facility deficiencies, including
physical environment deficiencies, will be measured, and we are linking
specific categories of remedies with certain levels of noncompliance.
We are revising Sec. 488.408 accordingly.
Comment: Many commenters believe that level 1-1 deficiencies, now
referred to as isolated deficiencies which HCFA or the State determines
constitute no actual harm with a potential for minimal harm, must be
cited and a plan of correction required. Additionally, these commenters
urge that every deficiency should be cited before leaving the facility.
They believe that unless each deficiency is cited, important patterns
of repeat noncompliance can be missed.
Response: We disagree. As we stated in the preamble to the proposed
rule, providers must be aware that they are responsible for complying
with all participation requirements. Notifying the facility of this
level of deficiency acknowledges that a problem could potentially occur
if the deficiency is permitted to go uncorrected. While no formal plan
of correction is required for this low level deficiency and no remedy
is applied, correction is necessary nevertheless.
The exit conference focuses primarily on the most serious
preliminary findings by the surveyors. While the survey team documents
its observations relative to the survey, the surveyors' findings are
not official until the provider receives the official deficiency
statement.
Comment: Many commenters commended HCFA for prohibiting facilities
from challenging the choice of remedy or remedies. These commenters
assert that giving the facility the right to challenge the existence of
deficiencies adequately protects their rights. A few commenters agreed
that the choice of the remedy should not be appealable but that the
scope and severity of a deficiency should be. Other commenters believed
providers should be permitted to formally appeal both the existence of
a deficiency as well as challenge determinations of scope and severity
and the remedy imposed.
Response: The most important issue on which to grant an appeal is
the existence of deficiencies which lead to a remedy. We are requiring
that such an appeal before an administrative law judge be offered, and
that dispute resolution procedures be applied first, at the request of
the provider.
Providers have the opportunity to appeal certifications of
noncompliance leading to an enforcement remedy but, with the one
exception noted below, do not have the opportunity to appeal either the
level of noncompliance or the enforcement choice made by HCFA or the
State. We have reached this conclusion for several reasons. First, as a
general matter, whether HCFA or a State chooses one remedy or another
to address facility noncompliance is a matter that we believe is a
prosecutorial prerogative of the government, not with the provider of
services. It is an inherent function of government in this context to
make choices as to which kind of enforcement action will best achieve
prompt compliance so that residents face noncompliant conditions for as
short a time as possible.
Second, in the case of provider agreement terminations, even if a
facility were able to successfully contest a conclusion that immediate
jeopardy exists, the agency could still proceed with the termination
action since the agency's authority to bring such an action is not
limited to immediate jeopardy cases, but may span all noncompliant
facility behavior. As has been agency policy for many years, the
determination of what remedy to seek is beyond challenge in light of
the government's fundamental necessity to protect the welfare of
facility residents as expeditiously as possible. This is especially the
case with respect to provider agreement terminations since residents
may be at considerable risk even where there is no immediate jeopardy.
Third, in the case of most alternative sanctions, the regulations
are structured so that whether a facility's noncompliance falls in
category 1 or category 2, HCFA and the States have complete discretion
to choose from either category. Thus, even if a facility were able to
successfully demonstrate that the agency had erred in its conclusion
that the noncompliance belonged in category 1, that fact would be
irrelevant since noncompliance in category 1 could still trigger the
same remedy. Only a showing that the facility was in substantial
compliance would enable the facility to avoid sanctions, and it is this
issue that we agree must be subject to challenge.
Fourth, with respect to the imposition of temporary management, a
facility facing this remedy would have the opportunity to argue during
informal dispute resolution that the agency had erred in concluding
that immediate jeopardy existed. Should it succeed in making this
showing, the remedy would not be imposed. On the other hand, should the
facility fail to convince agency officials that the noncompliance was
of a lesser nature, the facility would face temporary management well
before it could more formally challenge the agency finding of immediate
jeopardy. Thus, even if the facility ultimately prevailed in a hearing
in proving that its noncompliance posed less than immediate jeopardy,
the facility's appeal would not be effective since the remedy would
have already been imposed and the facility would either have achieved
substantial compliance or been terminated by the time of the hearing.
For this reason, we considered whether, in light of this sequence
of events, facilities should be given a prior hearing in temporary
management cases, but concluded that would completely undermine the
purpose of this remedy which is to resolve the most serious
noncompliance in the shortest possible time frame. This is particularly
the case when facilities facing such remedies have available to them an
informal means to contest agency action prior to the imposition of the
remedy and when, ultimately, it is the facility's choice to accept
temporary management rather than face termination. Accordingly, we
concluded that in the balancing of interest of facilities and residents
in such cases, the interests of residents must take precedence.
Only in the case of civil money penalties could we see the
necessity of allowing facilities the opportunity to challenge the level
of noncompliance since the amount of these penalties hinges upon
discrete levels of noncompliance rather than noncompliance as a whole.
Thus, it may be legally significant to a facility facing a $10,000 per
day civil money penalty to be able to prove that its noncompliance
belonged in category 2, rather than category 3, since in category 2 the
largest civil money penalty available to HCF or a State would be $3,000
per day. Accordingly, we are revising the rules to allow a facility to
challenge the level of noncompliance when a successful challenge on
this issue would affect the amount of a civil money penalty that HCFA
or a State could collect.
We believe that a provider's burden of upsetting survey findings
relating to the level of noncompliance should be high, however. As we
indicated in the proposed rule, distinctions between different levels
of noncompliance, whether measured in terms of their frequency or
seriousness, do not represent mathematical judgments for which there
are clear or objectively measured boundaries. Identifying failures in a
facility's obligation to provide the kind of high quality care required
by the Act and the implementing regulations most often reflect
judgments that will reflect a range of noncompliant behavior. Thus, in
civil money penalty cases, whether deficiencies pose immediate
jeopardy, or are widespread and cause actual harm that is not immediate
jeopardy, or are widespread and have a potential for more than minimal
harm that is not immediate jeopardy does not reflect that a precise
point of noncompliance has occurred, but rather that a range of
noncompliance has occurred which may vary from facility to facility.
While we understand the desire of those who seek the greatest possible
consistency in survey findings, an objective that we share, the answer
does not lie in designing yardsticks of compliance that can be reduced
to rigid and objectively calculated numbers. Survey team members and
their supervisors ought to have some degree of flexibility, and
deference, in applying their expertise in working with these less than
perfectly precise concepts. For these reasons, we have revised the
regulations to require an administrative law judge or appellate
administrative review authority to uphold State or HCFA findings on the
seriousness of facility deficiencies in civil money penalty cases
unless they are clearly erroneous.
Comment: A few commenters believe it is not sufficient to simply
state that the choice of a remedy is not appealable and recommend that
the regulation explicitly state that HCFA will not look behind or
``second guess'' the State's selection of remedy or remedies.
Response: We cannot accept these comments as sections 1919(h)(6)
and (7) of the Act specify the means to resolve any disagreement
between the State and the Secretary regarding noncompliance or
enforcement action.
Comment: Some commenters wanted sanctions imposed upon the facility
for interfering with the survey team, monitor or temporary manager.
Response: Section 1128(b)(12) of the Act permits the Secretary to
exclude SNFs from Medicare and to direct that NFs be excluded from
Medicaid for failure to grant access to the applicable survey agencies
performing survey and certification functions in accordance with
sections 1864(a) and 1902(a)(33)(B) of the Act. Failure to grant access
can certainly be regarded as interference with the activities of State
agency personnel. However, interference with the temporary manager is
different. Sections 488.410 and 488.438 specify that if the facility
does not agree to the conditions under which the temporary manager is
imposed, the facility may refuse to relinquish control to the temporary
manager, and, in so doing, opt for termination.
Comment: One commenter wanted HCFA to include a ``sole community
provider exception'' to allow States to oversee the operations of
noncompliant facilities with uncorrected deficiencies in rural areas,
where the closure would result in hardship to the residents and the
community.
Response: States have the authority to oversee (appoint a State
monitor) any noncompliant facility, regardless of the location.
However, if the commenter wants a provider in a rural area to be
exempted from correcting deficiencies, we do not have the authority to
grant such an exception. Waiver authority requirements are provided at
Sec. 483.70 and at Sec. 483.30(c) and (d), relative to the Physical
Environment and Nursing Services participation requirements,
respectively, and then only when specified conditions are met.
Section 488.410 Action When There Is Immediate Jeopardy
In conducting our review of the provisions of the regulation for
conformance with the Act, we noted that the Act uses ``immediate
jeopardy to resident health or safety'' to describe those situations in
which immediate corrections must be achieved and immediate enforcement
action must ensue, while the text of the proposed rule refers to such
situations as ``immediate and serious threat.'' We have attempted to
modify the terminology used in the final regulation to consistently
reflect the language of the Act.
Comment: Many commenters stated that the 23-day timeframe for
termination is not included in the Act, that it is too short and that
it does not allow adequate time for corrections. Some suggested that
other timeframes, such as 45 days or 90 days, be used, while others
indicated that the 23-day clock should not start until the facility has
been given a chance to undertake corrections.
Response: While the 23-day timeframe is not specified in the Act,
HCFA has for many years used a 23-day timeframe for addressing
immediate jeopardy situations encountered in other provider and
supplier types. In fact, the enforcement procedures which were in
effect for long term care facilities prior to the implementation of
OBRA '87 provisions called for processing termination actions within 23
calendar days when immediate and serious threat to patient health or
safety was documented. In these cases, if the immediate and serious
threat was resolved before the end of the 23 calendar days, the
termination action was lifted entirely, or if the threat was removed
but other serious deficiencies remained, the termination date was
extended to allow the facility additional time to correct the remaining
deficiencies.
Our experience in processing noncompliance actions against other
facilities and against long term care facilities (both before and after
OBRA '87 implementation) whose deficiencies constitute immediate
jeopardy indicates that 23 calendar days is a reasonable amount of time
for proper notice to the facility and to the public, as may be
required. Further, it provides the facility sufficient time to react to
the immediate jeopardy without unnecessarily lengthening the amount of
time the facility's residents are at risk because of the situation or
situations which constitute the immediate jeopardy.
While we appreciate the concerns expressed by the commenters, we
are not amending the 23-day timeframe in the final regulation.
Comment: Another group of commenters believed that the 23-day
timeframe is too long and that, for facilities in which immediate
jeopardy is identified, the requirement should be that corrections be
initiated immediately.
Response: The 23-day timeframe is not the amount of time the
facility has to begin making corrections. Rather, it is the maximum
amount of time available to the facility to resolve the immediate
jeopardy. It begins on the last day of the survey. A facility is
ordinarily advised of the existence of immediate jeopardy at the
conclusion of the survey which identified the immediate jeopardy. Most
facilities in this situation that want to remain in the Medicare or
Medicaid program will begin to make corrections immediately. Even for
those that do not begin making corrections on their own, some time must
be allowed for provision of proper notices, as required by regulation,
and/or the appointment of temporary management. In consideration of
these factors and the fact that it is also possible for the enforcement
process to be completed in less than 23 calendar days, we are not
adopting these comments in the final regulation.
Comment: Some commenters asked that the regulation be amended to
clarify that 23 calendar days is the maximum amount of time which a
facility will be given to resolve a finding of immediate jeopardy,
whether or not temporary management is utilized. One commenter said
that the facility should be given an additional 23 days beyond the
termination date during which a temporary manager would be utilized to
attempt to achieve compliance.
Response: We have accepted the first comment. We agree that 23
calendar days is the maximum time allowed for a facility with immediate
jeopardy to resolve the jeopardy. It is not possible for a facility to
first be given 23 calendar days to correct deficiencies pending
termination followed by another period of time during which temporary
management is utilized in an attempt to regain compliance.
Comment: Some commenters cited the 23-day timeframe as a
disincentive for the use of temporary management as an alternative
remedy.
Response: We do not believe that use of the 23-day timeframe is a
disincentive for use of temporary management based on the seriousness
of deficiencies identified at this level as well as the need to take
immediate corrective action.
Comment: A number of commenters indicated that the facility should
not be given the opportunity to refuse temporary management.
Response: As noted in the comments and responses for Sec. 488.415,
facilities will not be offered a formal choice of whether to accept or
refuse temporary management. When HCFA or a State chooses to implement
this remedy, a temporary manager will be installed unless the facility
refuses to relinquish control to the temporary manager, in which case,
immediate termination will be sought.
Comment: A few comments indicated that there should be an immediate
ban on admissions to the facility, large civil money penalties and/or
immediate assignment of a State monitor for these cases.
Response: While the Act does not allow for bans on all admissions
under these or any other circumstances, it is possible for the State or
HCFA to impose State monitoring as an additional remedy. While large
civil money penalties are also allowed, they may not be as likely to
result in immediate corrections, since they may not be collected until
the facility has the opportunity for a hearing.
Comment: Several commenters believed that the regulation as
proposed does not promote the use of alternative remedies in situations
involving immediate jeopardy and argued that this approach does not
follow the spirit of OBRA '87.
Response: The Act makes a clear distinction between how cases
involving immediate jeopardy will be handled as opposed to how all
other cases will be handled. The Act requires immediate action to
remove the jeopardy and correct the deficiencies through the use of
temporary management or termination, or both. While it allows for the
use of other remedies which are in addition to temporary management or
termination, it is clear that the penalty for a facility with
noncompliance which constitutes immediate jeopardy is intended to be
swift and severe. The regulation reflects the intent of the Act;
therefore, the use of alternative remedies in addition to temporary
management is allowed but not stressed for immediate jeopardy
situations.
Comment: Several commenters asked for a better definition of
immediate and serious threat. Others indicated that the scope and
severity scale, as issued for comment in the proposed rule, would lead
to many more instances of immediate jeopardy than are now being
identified.
Response: In response to the many comments received regarding the
proposed scope and severity scale, we are amending the definition of
immediate jeopardy in the final regulation (see Sec. 488.301). In
making decisions on the existence of immediate jeopardy, HCFA and the
States will continue to refer to the traditional guidance on this
subject which is contained in Appendix Q of the State Operations
Manual.
Comment: One commenter pointed out that the proposed regulation
does not address who will prevail (HCFA or the State) about whether or
not immediate jeopardy exists in a facility, and asked for
clarification.
Response: HCFA always has the option of reviewing the State's
compliance determination and making its own decision based on the
survey agency's survey findings. It is not necessary for HCFA to
conduct its own survey of a facility in order to make a decision as to
whether immediate jeopardy does or does not exist. Whether HCFA's
decision is based on its own survey or on a review of the State's
findings, the decision as to whether or not immediate jeopardy exists
is made pursuant to section 1919(h)(5) of the Act. Specifically, the
determination of immediate jeopardy, whether it is the survey agency's
or the Secretary's, will prevail.
Comment: One commenter asked that the facility and not the State be
responsible for notifying attending physicians and licensure boards, as
outlined in Secs. 488.410(e) and 488.325(h).
Response: As indicated in sections 1819(g)(5)(C) and 1919(g)(5)(C)
of the Act, Disclosure of Results of Inspections and Activities, the
responsibility for this notification lies with the State; it may not be
redelegated to the facility.
Comment: One commenter asked that we clarify Sec. 488.410(e) to
indicate that the notice should go to the licensing authority of the
nursing home administrator.
Response: We agree, and this comment is reflected in the final
regulation.
Comment: Two commenters asked that the text of
Sec. 488.410(c)(2)(i) be amended to indicate that the use of temporary
management is for the purpose of correcting the deficiencies that
resulted in a finding of immediate jeopardy.
Response: We are not adopting these comments, as we believe they
would provide for a more narrow interpretation than the Act specifies
at sections 1819(h)(4) and 1919(h)(5). These sections state that the
appointment of a temporary manager shall be for the purpose of removing
the jeopardy and correcting the deficiencies. Further, as indicated in
the comments and responses for Sec. 488.415, temporary management will
be removed when the facility is terminated, or when HCFA or the survey
agency has determined that the facility is in substantial compliance
and has the management capability to ensure continued substantial
compliance with all requirements. Consistent with sections 1819(h)(2),
1919(h)(2) and (h)(3) of the Act, temporary management would not
necessarily end as soon as deficiencies causing the immediate jeopardy
have been corrected.
Comment: Four commenters indicated that HCFA should adopt a
procedure utilized in Louisiana, whereby a facility may request
sanctions other than a temporary manager and the request may be granted
if the State determines that an adequate plan to correct has been
devised by the facility and the State can monitor the implementation of
the facility's plan.
Response: As presented, this procedure does not appear to meet the
requirements of the Act which call for immediate action to remove the
immediate jeopardy through termination or appointment of temporary
management, or both. It would appear that the proposed procedure would
allow something similar to a directed plan of correction and State
monitoring to replace termination or temporary management as the
remedies for immediate jeopardy cases. Such a policy would constitute a
violation of the Act.
Section 488.412 Action When There Is No Immediate Jeopardy
Comment: Many commenters said that the requirement for the State or
the facility to repay funds received from the Federal government if
corrective action was not taken in accordance with the approved plan of
correction conflicts with HCFA's intent to promote the use of
alternative remedies.
Response: Comments regarding the State and facility repayment
provision of Sec. 488.412(a) will be answered in our discussion of
proposed Sec. 488.232 (redesignated as Sec. 488.450, Continuation of
payments to a facility with deficiencies).
Comment: Several commenters objected to the requirement that a
denial of payment for new admissions be imposed if any deficiency
remains uncorrected 90 days after the survey. They believed that it is
illogical to cut off funds after 90 days because the funds might be
needed to make the corrections. Other commenters said that the
regulations should allow continued participation with substantial
compliance because the 100 percent compliance is impossible to achieve.
Still other commenters made the following points:
Major physical environment deficiencies may take longer
than 90 days to correct;
The regulations should permit an appeal of the decision to
deny payments for new admissions;
It is unclear whether mailing time is included in the 90
days and whether an appeal stops the action; and
It is unclear whether there is notice to the public
regarding the remedy at the 90th day.
Response: Sections 1819(h)(2)(D) and 1919(h)(2)(C) of the Act
stipulate that the Secretary or the State, respectively, must impose a
denial of payment for new admissions if the facility is not in
compliance 3 months after the date that the facility was noncompliant,
regardless of the requirement that is deficient. In answer to the
commenter who raised the issue of substantial compliance, we are
revising Sec. 488.412(c) to require a mandatory denial of payment for
new admissions when a facility is not in substantial compliance 3
months after the last day of the survey. Therefore, if a facility is in
substantial compliance, it would not be subject to the mandatory denial
of payment for new admissions remedy, or the denial of payment remedy
would be lifted if it had already been imposed. Substantial compliance
is discussed in detail earlier in this preamble. The fact that physical
environment deficiencies may take longer to correct than others is an
example of facility noncompliance which may not be wholly corrected
after the completion of the 6-month continuation of payment period, but
which could be considered substantial compliance if corrective action
had progressed in accordance with the approved corrective action plan
and timetable. With respect to the other points raised by the
commenters, Sec. 488.330(e) (3) and (4) specify that a facility may
appeal the certification of noncompliance leading to the denial of
payment remedy; Sec. 488.330, paragraphs (e)(1)(ii) and (e)(2)(ii)
specify that, except for civil money penalties, a pending appeal will
not stop the action. Mailing time is included within the 3 months
because the 3 months constitutes a statutory limit. There are neither
statutory nor regulatory public notice requirements with regard to the
denial of payment remedy.
Comment: A great many individuals and organizations commented upon
the requirement at proposed Sec. 488.212(b) which specifies that,
although deficiencies with a scope and severity level of 1 are
considered deficiencies, remedies or plans of correction are not
required as long as corrections are achieved by the 90th day.
Commenters' views varied widely as illustrated by the following--
There should be no deficiency if the scope and severity
level is 1;
If no plan of correction is required there is no apparent
reason for requiring correction in 90 days;
A follow-up visit should not be required if the scope and
severity level is 1;
If deficiencies with a scope and severity level of 1 are
to be treated differently than other deficiencies, then a new term
should be used for them, such as findings;
Deficiencies with a scope and severity level of 1 should
be given to the facility on a separate document and not be disclosable
to the public;
Deficiencies with a scope and severity level of 1 should
receive a plan of correction and be disclosable to the public;
Deficiencies with a scope and severity level of 1 should
not receive either a plan of correction or a remedy if substantial
compliance is achieved;
There is no such thing as an isolated problem. Excusing
certain deficiencies as inconsequential sets a disturbing precedent for
the health care industry;
All deficiencies must be corrected;
No deficiency should be found unless there is a quality of
care issue;
There doesn't appear to be a way for HCFA to track
deficiencies with a scope and severity level of 1 without a follow-up
visit;
HCFA should clarify when a citation becomes a ``repeat
deficiency.'' Remedies should be imposed in cases of repeated
noncompliance only after a facility is found, after three standard
surveys, to have furnished substandard care;
A recurrence of a deficiency with a scope and severity
level of 1 should be upgraded to a scope and severity level of 2;
The regulation at proposed Sec. 488.212(b)(3) should
specify continued noncompliance rather than recurrence;
The regulation at proposed Sec. 488.212(b)(1) should read
``both the severity level and the scope level are 2'' rather than 1;
The regulation at proposed Sec. 488.212(b)(3) should
impose a civil monetary penalty and one or more other remedies;
HCFA should provide guidelines regarding what is an
acceptable plan of correction;
If a deficiency with a scope and severity level of 1
recurs, HCFA or the State should impose a directed plan of correction
or State monitoring; and
The lack of appeal rights on recurring deficiencies with a
scope and severity level of 1 will put the State at risk of increased
informal administrative hearings, because of the requirement that
remedies be imposed.
Response: The issue of deficiencies at a severity and scope level
of 1 are discussed under Sec. 488.408 of this preamble.
We are retaining the definition of deficiency at Sec. 488.301. A
deficiency is failure to meet a participation requirement. All
deficiencies, with the exception of those isolated deficiencies that
HCFA or the State determines constitute no actual harm with a potential
for minimal harm, will be displayed on the HCFA-2567, Statement of
Deficiencies and Plan of Correction, and will require a plan of
correction to be tracked by the State survey agency. All deficiencies,
including those isolated deficiencies that HCFA or the State determines
constitute no actual harm with a potential for minimal harm, will be
disclosable to the public. However, these low level deficiencies will
not be recorded on the HCFA-2567 and will not precipitate any
enforcement action. We conclude that this approach is reasonable and
practical from both the provider's and the consumer's perspective. To
react to low level deficiencies with the same degree of concern as to
those that are more serious is not rational. We believe that providers
and consumers will agree that deficiencies which constitute no actual
harm with no more than a potential for minimal harm, and which bear no
relationship to poor care or negative resident outcomes should not
detract from actionable noncompliance.
Comment: Many commenters suggested modifications to the use of the
scope and severity scales for selection of remedies at proposed
Sec. 488.412(c). The following comments and suggestions were made:
Proposed paragraph (c)(3), (now paragraph (b)(3)), should
read ``If HCFA or the State determines the existence of substandard
care, the State must notify * * *'';
Expand proposed paragraph (c)(3), to include deficiencies
in quality of life, nurse staffing, and resident behavior and facility
practices;
For deficiencies with a severity level of 2, civil money
penalties should be required using scope and severity to determine the
size of the fine and other remedies should be applied according to
Sec. 488.408;
Provision should be made for remedies for deficiencies not
in the area of quality of care with a severity level of 2 and scope
level of 3 or 4;
A variety of specific schemes were proposed for
correlating each of the scope and severity levels to specific types of
remedies; and
Non-life threatening deficiencies should be exempted from
remedies and fines.
Response: As noted earlier, we addressed these issues under
Sec. 488.408 of this preamble. Also, in response to the many comments
we received advocating a clearer correlation between levels of
noncompliance and types of remedies imposed, we are making extensive
revisions to the scope and severity grid published in the proposed
rule. We are, in fact, correlating categories of remedies to various
categories of noncompliance. A revised grid appears below.
BILLING CODE 4120-01-P
TR10NO94.000
BILLING CODE 4120-01-C
Section 488.414 Action When There Is Repeated Substandard Quality of
Care
While analyzing the comments for this section, we again reviewed
the provisions of the Act to ensure conformance in the final
regulation. Through this process, we noted that this section does not
address the portions of the statutory provisions at sections
1819(h)(2)(E) and 1919(h)(2)(D) of the Act that specify that the denial
of payment and monitoring must continue until the facility has
demonstrated that it is in compliance and that it will remain in
compliance. Accordingly, we are modifying this provision to specify
that the mandatory denial of payment and State monitoring imposed for
the finding of substandard quality of care on three consecutive
standard surveys must continue until the facility has demonstrated that
it has achieved substantial compliance and can maintain substantial
compliance over the period of time specified by HCFA or the State.
We further noted that the remedy described in section
1819(h)(2)(B)(i) of the Act can be either denial of payment for all
Medicare residents or denial of payment for all new Medicare admissions
in a facility. In recognition of this fact, the regulation is being
amended to reflect this distinction.
Finally, because the provisions of the Act were in effect prior to
the effective date of this regulation, we have had actual experience
processing enforcement actions for facilities with substandard quality
of care noted in three consecutive standard surveys. Our experience
pointed out the need for further clarification in this section in two
respects. One of these related to the handling of actions against
facilities whose type of program participation changed during the
period of time spanned by the three consecutive standard surveys, and
the other related to whether remedies could be avoided through an
allegation of compliance or actual corrections which followed the
finding that there had been repeated substandard quality of care.
In reviewing actual cases, we concluded that the determination of
repeat substandard quality of care in a certified facility should be
made without regard to the type of program participation involved; that
is, any standard surveys conducted in the facility for Medicare,
Medicaid or both should be considered. Since the survey process is the
same for both Medicare and Medicaid participating facilities, there is
no reason to consider the facility's type of program participation in
the determination of whether repeated substandard quality of care has
occurred. These issues are being clarified in Sec. 488.414.
We also concluded that sections 1819(h)(2)(E) and 1919(h)(2)(D) of
the Act indicate statutory intent that specific remedies be imposed any
time substandard quality of care is repeatedly noted. Further, the
Congress specifically provided the authority for continuation of these
remedies after compliance has been achieved. The Congress' specific
description of how this type of noncompliance must be dealt with
clearly sets it apart from the handling of other cases. Therefore, we
have concluded that a facility's allegation of compliance or actual
attainment of compliance following the third consecutive standard
survey which found substandard quality of care will not stop the
imposition of the denial of payment or State monitoring. The remedy may
be lifted when the facility has demonstrated its ability to maintain
substantial compliance to the satisfaction of HCFA or the State. This
point is also being clarified in this section of the regulation.
Comment: A number of commenters asked for a clearer definition of
``substandard care.'' Some asked whether substandard care and
substandard quality of care are one and the same. Others pointed out
that sections 1819(h)(2)(E) and 1919(h)(2)(D) of the Act specify that
action is to be taken based on the provision of substandard quality of
care.
Response: We are changing the regulation to match the Act and
indicate that this provision will apply when substandard quality of
care is identified. For the purpose of this provision, substandard
quality of care is defined in Sec. 488.301.
Comment: Several commenters requested that the word ``standard'' be
inserted between ``consecutive'' and ``surveys.'' They pointed out that
the proposed regulation does not match the wording of the Act at
sections 1819(h)(2)(E) and 1919(h)(2)(D), both of which specify that
the substandard quality of care must be identified in three consecutive
standard surveys.
Response: We agree with the commenters. We are amending this
section to indicate that the repeated substandard quality of care must
have been noted through three consecutive standard surveys. Standard
surveys are those described in Sec. 488.305.
Comment: Four commenters asked for a clearer definition of repeated
noncompliance. Two commenters indicated that repeat noncompliance
should be defined as actual repeats of the same problem and the content
of the deficiency and not just a repeat of a deficiency at the same tag
number.
Response: Sections 1819(h)(2)(E) and 1919(h)(2)(D) of the Act
clearly indicate that action must be taken when repeat noncompliance in
the form of substandard quality of care is identified. The Act does not
narrow the scope to specify that the basis for finding substandard
quality of care in a facility must be identical from one standard
survey to the next or for all three of the consecutive standard surveys
considered in making the determination that repeated substandard
quality of care has occurred. Accordingly, we do not believe that the
regulation should more narrowly define what constitutes substandard
quality of care for the purpose of this provision.
The regulation is being modified to clarify that action must be
taken any time any deficiencies which constitute substandard quality of
care are identified in the last three consecutive standard surveys.
This provision will be applied solely on the basis of the repeated
finding of substandard quality of care, and no attempt will be made to
determine whether the substance of the noncompliance or the exact tag
numbers for deficiencies which constitute noncompliance were repeated.
Comment: One commenter stated that a facility's performance on
surveys which were conducted prior to the effective date of this
regulation should be counted in the determination of whether there is
repeated noncompliance.
Response: We agree with this comment. The survey process specified
in the OBRA '87 provisions was effective for all surveys conducted on
or after October 1, 1990. Even though the implementation of the
corresponding enforcement provisions was not concurrent, any standard
survey completed on or after October 1, 1990 must be considered in the
determination of whether there is repeated noncompliance that resulted
in substandard quality of care.
Comment: One commenter suggested that to be consistent with the
intent of the Act to have facilities maintain compliance, regulations
should require that facilities maintain compliance with the deficient
requirement after correction. The commenter recommended requiring
termination if a facility corrects the deficiency, but then falls out
of compliance with the same requirement during the same correction
period.
Response: The Act provides that when a facility has had findings of
substandard quality of care on three consecutive standard surveys, the
Secretary or the State must impose a denial of payment and a State
monitor. In addition, sections 1819(h)(2)(E) and 1919(h)(2)(D) of the
Act require that the denial of payment for new admissions and State
monitor remedies must remain in force until the facility not only
achieves substantial compliance but demonstrates that it can maintain
substantial compliance. As we have explained earlier, substantial
compliance constitutes compliance for the purpose of imposing or
lifting a remedy, as well as issuing a certification of compliance.
We do not foresee the situation described by the commenter as a
problem. If a facility has corrected a deficiency, or is at least
considered to be in substantial compliance, any remedy(ies) in effect
would be lifted as well as compliance certified. We would not normally
revisit a facility after compliance has been certified unless there is
a complaint or some other impetus. If, at some later date after
compliance has been certified, the facility is found to have a
recurrence of the same deficiency that causes the facility to be out of
substantial compliance, either a new continuation of payment period
would begin, or termination (or cessation of FFP payments) would occur,
depending on the seriousness of the noncompliance. However, any
termination would be based on the fact that the facility was not in
substantial compliance with sections 1819 (b), (c), and (d) and 1919
(b), (c), and (d) of the Act by the end of the correction period, and
not on the fact that the noncompliance was repeated. We have not
adopted the commenter's suggestion to terminate a facility solely on
the basis of repeated noncompliance.
Section 488.415 Temporary Management
Comment: One commenter asked that we clarify the term
``disciplinary action'' and state that the temporary manager must not
have been found guilty of misconduct by any licensing board or
professional society, and another commenter recommended that HCFA
maintain a national registry of nursing home administrator disciplinary
actions.
Response: To avoid confusion surrounding the interpretation of
``disciplinary action,'' we will not use the term in the requirement at
Sec. 488.415(b)(2) as we did in Sec. 488.215(b)(3) of the proposed
rule. Instead, we are structuring the provision to read that the
temporary manager must ``not have been found guilty of misconduct by
any licensing board or professional society in any State.'' We agree
that it may be beneficial to have a misconduct registry for nursing
home administrators, and we intend to examine the feasibility of
developing one.
Comment: Many commenters recommended that we include requirements
that the temporary manager must have had no adverse ties to the problem
facility, and must not have been fired from the facility in the past.
Another commenter proposed that we include a requirement that the
temporary manager have had no business or professional relationship
with the facility for a minimum of 3 years prior to his or her
appointment to operate the facility.
Response: We agree with the commenters that the individual chosen
to be temporary manager must not have been recently employed by the
facility to be managed. We believe that an individual's previous
employment relationship with a facility could positively or negatively
prejudice that individual in his or her present dealings with the
facility. Therefore, we are incorporating into the regulation, at
Sec. 488.415(b)(4), a requirement that the temporary manager must not
currently serve, or, within the past 2 years, have served as a member
of the staff of the noncompliant facility. This requirement is similar
to the requirement for surveyors, which we believe is appropriate,
since effective evaluation is a necessary tool of both surveyors and
temporary managers and requires their objectivity.
Comment: One commenter asked how prior competency will be judged.
Various commenters suggested that prior competency be defined by a
minimum of one year of continuous experience as administrator of a long
term care facility, by demonstrated expertise and experience in the
operation of a nursing facility similar to the one the temporary
manager is needed to manage, or by demonstrated experience in temporary
management. Another commenter suggested that a measure of competency be
whether the temporary manager served within the past 10 years as the
administrator of a facility which furnished substandard quality of
care.
Response: As explained below, we are no longer requiring that the
temporary manager be a licensed nursing home administrator or
demonstrate prior competency as one. Because the skills and experience
a temporary manager must have to correct deficiencies will vary on a
case by case basis, HCFA and the State need to have the flexibility to
appoint whoever is most suitable without the constraints of overly
prescriptive eligibility requirements.
When it happens that an individual interested in becoming a
temporary manager is or has been a nursing home administrator, the
compliance histories of the facilities managed by him or her will be
reviewed. We will provide in manual instructions that there be such a
review because we agree with the commenter that it would be
inappropriate to appoint as a temporary manager an administrator who
has had difficulty maintaining facility compliance in the past.
Comment: A number of commenters believed that the temporary manager
should not be a current competitor of the facility, have ownership
interest in a competitor, or have been recently employed by a
competitor. Commenters were concerned that these individuals would gain
an unfair competitive advantage if appointed temporary manager.
Response: We appreciate this concern, and we and the State will
attempt to select temporary managers who are not affiliated with
competitors of the facilities to be managed when the pool of temporary
manager candidates allows. However, the purpose of imposing temporary
management or any other remedy is to achieve and maintain substantial
compliance with Federal requirements. When the only temporary manager
candidate likely to accomplish this goal is affiliated with a
competitor of the problem facility, HCFA and the State will necessarily
consider that affiliation to be subordinate to the administrator's
competency. If the facility feels more threatened by compromised
competitiveness than it does by termination of its provider agreement,
it has the right to refuse to relinquish control to the temporary
manager selected by HCFA or the State, and subject itself to the
possibility of termination instead.
Comment: One commenter was concerned that persons interested in
acquiring a financial interest in a facility would be motivated to
serve as that facility's temporary manager in order to gain a
competitive edge in later negotiations. The commenter asked that we
prevent this possibility by precluding through contract with the
temporary manager the purchase or other acquisition of the facility for
a fixed period of time after completion of the temporary manager's
responsibilities.
Response: We do not have the authority to restrict a temporary
manager's future business activities. If the facility to be managed has
reason to believe that the temporary manager chosen by HCFA or the
State would use the financial information he or she would acquire in
the facility to the facility's disadvantage, the facility may raise
this concern to HCFA or the State, and HCFA or the State may attempt to
locate a temporary manager that is more acceptable to the facility.
Should a temporary manager acceptable to the facility not be located,
the facility may exercise its right to refuse to relinquish control to
the temporary manager and face termination of its provider agreement.
Comment: One commenter proposed that the temporary manager should
neither have been an employee of, nor have been associated with an
employee of HCFA, the Department of Health and Human Services, or any
State licensing or survey agency.
Response: We do not believe that a past affiliation with the
aforementioned organizations would reduce a temporary manager's
objectivity or effectiveness in any way. On the contrary, it is likely
that the temporary manager would be more knowledgeable about Medicare
and Medicaid participation requirements after having had exposure to
the agencies that set and enforce the Medicare and Medicaid
requirements, and we expect that the facility at which the temporary
manager is imposed would benefit from this knowledge.
Comment: A couple of commenters believed that the State must
compile and update a list of people or organizations that meet the
qualifications of temporary manager, and they asked that this list be
available for public inspection. Another commenter proposed that the
State or HCFA maintain a list of substantiated complaints or
allegations concerning the performance of temporary managers.
Response: We will not require that States catalogue complaints made
against temporary managers, but will allow them to process complaint
information in the way that they determine is most effective. Neither
will we require the States to compile, update, and release a list of
those qualified to be temporary managers. Because we have no authority
to require the release of individuals' qualifications or other
assignments, a list of temporary managers would contain no criteria by
which facilities would be able to evaluate the candidates, and would be
of little value. Moreover, HCFA and the State are not obligated to seek
facility approval of temporary managers. It is neither the facility's
responsibility nor right to select a temporary manager. (See additional
response below.)
Comment: A few commenters recommended that we allow a State or a
team of people to qualify as a temporary manager. They believed that
nursing guidance and expertise would be needed in addition to
administrative supervision in order to remedy serious deficiencies.
Response: Because a temporary manager has the authority to hire
additional staff, it is possible for him or her to assemble what would
be in essence a temporary management team. When the temporary manager
determines that successful correction of a facility's deficiencies
requires knowledge and skills in addition to his or her own, he or she
may engage the specialists necessary.
We have no statutory authority to require State survey agencies to
make their staff available to function as temporary managers. Their
role involves survey, certification, and monitoring, rather than the
management (albeit temporary) of nursing homes.
Comment: Several commenters asked that facilities be able to
participate in the selection of the temporary manager. One recommended
that the governing board of the facility be responsible for placing the
temporary manager at the facility, and others requested that facilities
be able to object to a particular temporary manager once selected by
HCFA or the State.
Response: The choice of a temporary manager will be made either by
the State or by HCFA and will be based on the recommendation of the
State survey agency. The State survey agency's geographic proximity to
the providers it surveys and its knowledge of available and competent
managers in the area place it in the best position to recommend a
temporary manager. Because facilities have the right to refuse to
relinquish control to the temporary manager, no facility will be forced
to submit to a temporary manager that it objects to, and it may decide
to subject itself to the possibility of termination instead.
Comment: Certain commenters were concerned that the qualifications
for a temporary manager will be hard to meet. A few commenters
suggested that HCFA and the State be given latitude to appoint as
temporary manager any qualified person, such as a registered nurse with
nursing home experience, instead of having to appoint a licensed
nursing home administrator.
Response: We agree that a nursing home administrator's license is
not the only valid indicator of an individual's fitness to serve as
temporary manager. Certain combinations of educational and vocational
achievement may also signify administrative competency. We are,
therefore, amending paragraph (b)(1) and deleting paragraph (b)(2) of
Sec. 488.215 as they appeared in the proposed rule to allow an
individual who does not hold a nursing home administrator's license to
serve as temporary manager if the State determines that he or she is
qualified to oversee correction of deficiencies on the basis of
experience and education. Because this change should expand the pool of
qualified temporary manager candidates, it should reduce the number of
terminations caused by inability to locate a temporary manager, a clear
benefit to both providers and residents.
Comment: One commenter believed that the State should be required
to conduct an orientation session for people on the list of qualified
temporary managers. That session would cover topics such as situations
warranting the appointment of a temporary manager, and the
responsibilities and authority of a temporary manager.
Response: We agree that a temporary manager would not be able to do
his or her job effectively without being oriented to the task, and will
direct the State survey agencies in our State Operations Manual to
provide an orientation, the form of which shall be determined by them.
Comment: Many commenters requested that we impose an enforceable
limit on the salary of the temporary manager, and a large number of
those recommended that we use the prevailing salary limit set forth in
the preamble to the NPRM. Other commenters proposed that we require
compensation for the temporary manager to be set at a rate sufficient
to attract people with the necessary qualifications, and they
recommended that we not limit the salary of the temporary manager to
the rate mentioned in the preamble. These commenters were concerned
that it would be unlikely to draw the expertise needed.
A few commenters requested that we identify who will determine the
salary of the temporary manager, and certain of those asked whether it
will be negotiable. Another commenter asked if the facility will be
obligated to provide benefits to the temporary manager.
Response: After reviewing the comments we received, we have
concluded that the salary limit put forth in the preamble to the
proposed rule would not be in the best interests of facilities or their
residents because it would make it difficult to attract qualified
temporary managers. The temporary managers that are available are
sometimes located long distances from the facilities which need them,
and unless the salary offered is sufficiently attractive, it will not
induce individuals to temporarily upset their normal routines and
accept the challenge of managing a severely deficient facility. If
temporary managers cannot be secured, we will have no choice but to
proceed with termination. In order to avoid this result and promote the
use of temporary management as an alternative remedy, we will give
facilities the flexibility to exceed the salary floor specified below
if the State is otherwise unable to attract a qualified temporary
manager and the facility considers a higher payment preferable to
termination. The salary of the temporary manager must be at least
equivalent to the prevailing salary paid by providers in the facility's
geographic area for positions of this type, plus the prevailing cost of
certain additional allowances. The additional allowances will include
costs that would have reasonably been incurred by the provider if the
temporary manager had been in an employment relationship, such as the
cost of a benefits package, prorated for the amount of time the
temporary manager is working in the facility. The facility will also be
responsible for any other costs incurred by the temporary manager in
furnishing services under such an arrangement or as otherwise set by
the State.
Because the State is in a better position than HCFA to determine
the prevailing salary and other employment related costs of a nursing
home administrator within what the State considers to be the facility's
geographic area, it will be responsible for setting the salary/benefits
floor of the temporary manager and for determining whether or not it is
necessary to exceed it. The State may consult with a provider while it
determines the appropriate salary, but we will not require that the
salary of the temporary manager be negotiable.
Comment: One commenter asked what would happen if a facility agreed
to temporary management, but then failed to pay the salary.
Response: We are considering requiring that facilities pay the
salary of the temporary manager before the remedy begins, which would
eliminate the need for a recoupment strategy. Until a decision is made,
the mechanism that is currently used to recover Medicare and Medicaid
funds from facilities which have been overpaid will be used to collect
money from any facilities that owe the salary of the temporary manager.
The amount owed would be withheld from future amounts due to the
facility from HCFA or the State. Because Medicare and Medicaid payments
may continue for up to 30 days after termination, salaries may be
recouped even when they are owed by terminated facilities.
Comment: A large number of commenters disagreed with the provision
that the temporary manager's salary be paid by the facility. A few
commenters stated that the money spent on temporary management would be
better spent by the facility on its own improvements. Certain
commenters complained that a lack of sufficient funds is often what
leads to noncompliance, and so they were concerned that this remedy
would be worthless without additional funding. A number of commenters
argued that a facility's inability to pay for temporary management
should not preclude its use as a remedy.
Many commenters recommended that the temporary manager's salary be
paid out of a fund composed of civil money penalties collected by the
State, and certain commenters cited 42 U.S.C. 1396r(h)(2)(A)(ii)
(section 1919(h)(2)(A)(ii) of the Act) as establishing the authority to
do so. Other commenters believed that States should be required to use
funds collected through imposition of civil money penalties to cover
the costs of correcting deficiencies incurred by the temporary manager,
but only if the facility cannot afford to pay these costs itself.
Certain commenters believed that the facility and its operators should
be liable to the fund for reimbursement of expenses. One commenter
recommended that the States should be authorized to impose liens on the
facility and other assets of the corporate entity until the facility
reimburses the fund. Another commenter believed that the States should
be charged with the duty of using all available collection methods
afforded by law to recoup expenditures from the fund.
One commenter noted that 42 U.S.C. 1396r(h)(2)(E) (section
1919(h)(2)(e) of the Act) provides that temporary management costs are
legitimately payable administrative expenses of the State. Therefore,
this commenter and others believed that the temporary manager's salary
and the costs that he or she incurs while managing the facility should
be borne by the State and reimbursed under the State's Medicaid
reimbursement system.
Other commenters were in favor of obligating facilities to bear the
cost of temporary management, and several asked that we state that the
cost of temporary management is not an allowable expense for Medicare
or Medicaid reimbursement. One commenter recommended that the salary
payment be funded by the facility but routed to the State which would
deliver the payment to the temporary manager. The commenter was
concerned that direct facility payment would undermine the objectivity
of the temporary manager.
Response: We will continue to require that facilities pay the
salary of the temporary manager, and we will not deem this cost to be
an allowable expense for Medicare or Medicaid reimbursement. We believe
that to do otherwise would undermine our enforcement efforts to
motivate corrective action and encourage sustained substantial
compliance. If we relieved facilities of their responsibility for
bearing the costs of correcting serious deficiencies, we would be
providing them with a clear disincentive to remain in substantial
compliance. We also believe that providing the services of a temporary
manager without charging for them would be an inappropriate response to
a facility's failure to meet the responsibility it assumed upon
entering the Medicare and/or Medicaid programs to meet participation
requirements. A noncompliant facility must be held accountable for
breaches of responsibility; therefore, it (and not HCFA or the State)
should bear the cost of the temporary management it has incurred.
Because responsibility for paying for the cost of the temporary
management is one condition of the remedy, a facility's unwillingness
to pay will be considered a failure to relinquish control to the
temporary manager, and will cause the facility to be subject to the
possibility of termination instead. A facility's inability to pay for
the cost of the temporary management will have the same result. A
provision has been added at paragraph (c)(4) to indicate this. The
conspicuous absence of consideration of a facility's financial
condition as a statutory criterion for imposing temporary management
(as opposed to its inclusion as a criterion for determining the amount
of a civil money penalty) implies that the Congress did not intend for
it to be a factor in imposition of the remedy. Consequently, we are
also compelled to proceed with action to terminate those facilities
that are unable to assume the cost of the temporary management.
We do not believe that our position conflicts with the statutory
references cited by certain commenters. Section 1919(h)(2)(A)(ii) of
the Act states that funds collected by a State as a result of
imposition of civil money penalties shall be applied to the protection
of the health or property of residents of nursing facilities that the
State or the Secretary finds deficient, including maintenance of
operation of a facility pending correction of deficiencies or closure.
A temporary manager does not maintain operation of a facility. Rather,
it is the facility ownership that is responsible for sustaining
facility operations. If the State assumes control of a facility after
it has been abandoned by its ownership, then it would be appropriate
for the State to use civil money penalty funds to pay the expenses of
maintaining the abandoned facility.
We also believe that commenters misinterpreted the provision of the
Act found at section 1919(h)(2)(E). This section states that the
reasonable expenditures of a State to provide for temporary management
shall be considered for Federal payment purposes to be necessary for
the proper and efficient administration of the State plan. We believe
this refers to the resources necessary to locate, orient, guide, and
monitor the temporary manager, and does not include the cost of the
temporary manager's service itself. When a facility pays for the
temporary manager, we believe that it would be unnecessarily circuitous
to route the salary payment to the State before delivering it to the
temporary manager, and disagree that direct payment would compromise
the temporary manager's objectivity. A facility would not be able to
use the temporary manager's salary as leverage to influence his or her
actions because a facility could not effectively keep the salary from
the temporary manager. The temporary manager would be paid even if the
facility attempted to withhold his or her salary because HCFA or the
State could recoup the amount owed to the temporary manager from
payments later made to the facility. Therefore, we are requiring that
the facility pay the salary of the temporary manager directly, and are
modifying the provision at Sec. 488.415(c) to reflect this.
Comment: A large number of commenters believed that facilities
should not be given the opportunity to refuse temporary management.
Commenters were concerned that facilities would reject temporary
management if given the choice, thereby subjecting residents to
continued substandard quality of care, promoting facility terminations,
and exposing residents to relocation trauma.
Commenters proposed various ways for HCFA and the State to obviate
facility consent when appointing a temporary manager. One suggestion
was that we appoint the temporary manager subject to court order.
Another recommendation was that we administratively appoint the
temporary manager in accordance with the State's police power.
Additional commenters proposed that we set limits on the duration of
the temporary management (for example, restricting the appointment to
two weeks), the circumstances under which the manager would be
appointed, and the funds that the manager could spend in order to make
the administrative appointment binding.
Other commenters proposed not only that facilities be required to
accept temporary management, but that HCFA and the State be required to
impose temporary management in immediate jeopardy situations without a
choice between it and termination.
Response: We agree that facilities should not be offered a formal
choice of whether to accept or reject temporary management because we
believe that more facilities will exercise the right to refuse if it is
explicitly offered. Therefore, once HCFA or the State has determined
that temporary management is the optimal enforcement response, we will
expect the facility to accept it, and we will proceed with the
appointment of the temporary manager without requesting facility
consent to do so. However, facilities will have the right to refuse to
relinquish control to the temporary manager since the administrative
process precludes us from forcing providers to relinquish control. A
facility's refusal will initiate termination. While we realize that, in
effect, the right of refusing to relinquish control to the temporary
manager is tantamount to the prerogative of rejecting temporary
management, we believe that the new arrangement will encourage the use
of the remedy. We are amending Secs. 488.410, 488.415, and Sec. 488.456
to delete references to a facility's choice of accepting or rejecting
the remedy.
We cannot force a facility to relinquish control to a temporary
manager because, ultimately, participation in the Medicare or Medicaid
program is voluntary under the Act, and we have no authority to compel
a facility to stay in the program should it, for its own reasons,
choose to withdraw. We will not seek judicial action to impose
temporary management because the Act does not require that judicial
intervention be a prerequisite for imposing this remedy.
We do not believe it is appropriate to rest appointment of
temporary managers upon the State's police power as described in State
law. First, the Act does not suggest that this be the case. Second,
this remedy is one imposed under the Act, not State law. Ultimate
authority for this remedy lies, accordingly, in the Medicare and
Medicaid laws and ought not look to State law without some indication
by the Congress that it expected this to be the case.
A facility's refusal to relinquish control to the temporary manager
will cause HCFA or the State to proceed with action to terminate the
facility's program participation. We share commenter concern about the
protection of the health and safety of residents when termination
proceedings have been initiated. Consequently, we will allow a State
monitor to be imposed at all facilities that have failed to relinquish
control to a temporary manager in cases of immediate jeopardy, and also
at those facilities for which no temporary manager could be located.
The monitor will notify HCFA or the State when the absence of temporary
management subjects residents to substantial risks, and HCFA and the
State may then opt to take additional enforcement action.
We note that the Act does not require that temporary management be
imposed when there is immediate jeopardy. Sections 1819(h)(2)(A)(i),
1919(h)(1)(A), and 1919(h)(5) of the Act give HCFA and the State the
option of using temporary management and/or termination to respond to a
situation that immediately jeopardizes the health or safety of
residents. In certain cases, facility shortcomings may be so severe and
the likelihood of a temporary manager being able to successfully remove
them so small, that HCFA or the State may decide that resident
interests would be better served by terminating the facility and
relocating the residents than by continuing to subject the residents to
substandard conditions that are unlikely to improve. Because we believe
there are situations where termination is more appropriate than
temporary management, we do not accept the suggestion that HCFA and the
State be required to impose a temporary manager in lieu of termination
in cases of immediate jeopardy.
Comment: Numerous commenters requested that we restructure the
relationship between the facility and the temporary manager. Certain
commenters believed that the temporary manager should act in a
consultant capacity, and not as a replacement for the facility
administrator. Others felt that the temporary manager should work under
the control of the facility's governing body, and that we should
require the temporary manager to consult with the governing body when
developing the plan of correction. Another commenter favored giving the
temporary manager legal but not financial control of the facility.
Many other limitations on the temporary manager's authority were
proposed. A number of commenters believed that the temporary manager
should not be able to make employment decisions, and they recommended
that we require the temporary manager to obtain approval from HCFA, the
State, or the facility's governing body before hiring or firing
facility employees. Other commenters proposed that there be limits on
the expenditures the temporary manager can make in order to correct
deficiencies, and they suggested that the regulation require that the
temporary manager obtain the consent of the provider to spend beyond
those limits. Another group of commenters requested that we limit the
time period for which the temporary manager may legally commit or
obligate the facility, and asked that we require the temporary manager
to seek facility approval before entering into long term contracts. A
few commenters recommended that facility ownership be able to appeal to
the State to stay the actions of the temporary manager, and another
requested that the facility have the right to object to the temporary
manager's business practices.
Response: Sections 1819(h)(2)(B)(iii) and 1919(h)(2)(A)(iii) of the
Act specifically provide that the temporary manager is to oversee the
operation of the facility and assure the health and safety of the
facility's residents while improvements are made to bring the facility
into compliance. Further, once the facility relinquishes authority to
the temporary manager, the Act prohibits the removal of the temporary
manager until the Secretary or the State has determined that the
facility has the management capability to ensure continued compliance,
assuming that the Secretary or State does not decide to terminate the
facility before that time. We believe that implicit in the reason that
the Act authorizes temporary management is the assumption that the
facility's management staff lacks the capability to bring the facility
into compliance. Therefore, the temporary manager needs to have the
authority to completely manage the entire facility with enough autonomy
to remove any immediate jeopardy and/or correct deficiencies. Imposing
the limits proposed by commenters would handicap the ability of the
temporary manager to make the necessary corrections, and thus
jeopardize the successful completion of the temporary manager's
mission.
We believe that requiring that the governing body of the facility
be allowed to become involved in the decision making process after it
has demonstrated that its management skills are deficient would defeat
the purpose of the remedy. The temporary manager may find it useful to
consult with facility officials, but the extent to which the temporary
manager interacts with the facility's management is at his or her
discretion. This does not mean that we will deny the facility the
opportunity to object to the actions of the temporary manager, or that
we will force the facility to submit to the temporary manager's reform
agenda against its will. At any time the governing body of the facility
is not in agreement with the decisions or actions of the temporary
manager, it may advise the owner or corporate official with appropriate
authority to refuse to continue with the remedy. Such action would, of
course, subject the facility to the possibility of termination instead.
Comment: Many commenters believed that facilities should have
recourse to HCFA or the State to express concerns regarding the
administrative competency of the temporary manager. One commenter was
worried that providers would not have the opportunity to lodge a
complaint about the temporary manager before his or her services ended.
Certain commenters proposed that HCFA and the State monitor the
performance of the temporary manager and replace any manager whose
performance is unsatisfactory. Another commenter asked that a provider
be able to replace the temporary manager if the provider can
demonstrate that the manager is incapable of correcting deficiencies or
is jeopardizing or impairing the facility's continued operation.
Response: HCFA and the State survey agency will monitor the actions
of the temporary manager, and we expect the facility to do the same. We
encourage an open dialogue with providers and invite them to
communicate to HCFA or the State on an ongoing basis any concerns that
they have with the decisions of the temporary manager. If HCFA or the
State is dissatisfied with the performance of the temporary manager, we
may respond by providing the temporary manager with remedial guidance
or by replacing him or her with an alternate. However, if these actions
are not possible or prove unsuccessful, we will have no choice but to
remove the temporary manager and proceed with termination of the
facility's provider agreement. The most appropriate and practical
response will vary, and it will depend upon factors such as the
availability of an alternate or the amount of time remaining in the 23
days after the last day of the survey allotted for removal of the
immediate jeopardy when the temporary manager is imposed in an
immediate jeopardy situation.
Comment: One commenter asked that providers be allowed a time
period to demonstrate an ability to correct deficiencies if, because of
a temporary manager's incompetence, deficiencies have not been
corrected timely.
Response: A temporary manager's failure to correct facility
deficiencies does not absolve a facility of its responsibility for
generating corrections to those deficiencies, and if deficiencies are
not corrected or the immediate jeopardy is not removed timely, the
facility will be terminated. HCFA and the State are not required to
provide facilities with additional time to come back into substantial
compliance, but we are obligated to ensure that Medicare beneficiaries
and Medicaid recipients receive the quality care to which they are
entitled.
Comment: Many commenters requested that we clarify the fiduciary
responsibility of the temporary manager. One commenter asked that we
designate the temporary manager as a fiduciary of the facility, and
stated that by doing so we would empower the facility to protect its
interests through established legal principles governing the
relationship of fiduciaries to their charges. Other commenters believed
we should stipulate that the temporary manager has a responsibility to
maintain confidentiality of facility information, and obligations to
act in the facility's best interests and ensure that the facility's
financial resources are properly managed while he or she works to bring
the facility into compliance. Additional commenters asked that we
require the temporary manager to conduct himself or herself in a
professional manner and to act in a manner reasonably calculated to
correct deficiencies and protect the facility's residents.
Response: The temporary manager has a responsibility to further the
enforcement efforts of HCFA or the State in an effort to protect the
facility's residents, and not a duty to serve the facility. HCFA or the
State commissions the temporary manager to correct deficiencies
identified in the facility's operation, and we expect the temporary
manager to exercise sound financial judgment and discretion while
executing his or her duty. Likewise, we assume that the temporary
manager will conduct himself or herself in a professional manner and
act in the facility's best interests. However, we will not explicitly
require these standards in the regulation. These terms could not be
meaningfully defined because appropriate definitions for them would
vary with the circumstances of each temporary management assignment.
Comment: A great number of commenters asked that the temporary
manager be held liable to the owner or governing body of a facility for
gross negligence, intentional acts and omissions, unexplained
shortfalls in facility funds, and breaches of fiduciary duty. Certain
commenters proposed that HCFA, the State, or the temporary manager be
required to secure a bond before overseeing operation of a facility,
and others requested that HCFA or the State indemnify the facility for
harmful consequences arising from the temporary manager's actions or
omissions. Another felt that HCFA or the State should be identified as
the temporary manager's employer for liability purposes.
Response: We expect facilities to monitor the performance of the
temporary manager, and if they have any apprehensions about his or her
performance, they may have the remedy discontinued. Neither HCFA nor
the State can force a facility to relinquish control to the temporary
manager. Because it is the facility that decides to continue to yield
to the temporary manager, neither HCFA nor the State will assume
liability for the facility's decision. However, the facility does have
the right to seek from the temporary manager any redress available
under State laws relating to liability and fiduciary responsibilities.
Comment: A few commenters asked whether the temporary manager will
have a contract.
Response: All of the actions needed to remove immediate jeopardy
and correct deficiencies at a facility may not be readily apparent at
the outset of the temporary management; therefore, it would be
imprudent to delineate the specific duties and authorities of the
temporary manager in contract form. The temporary manager must have the
autonomy to take whatever steps are necessary to bring the facility
into substantial compliance and ensure resident health and safety.
Shortsighted contract provisions could prove restrictive and thus
impede the temporary manager's progress.
Comment: One commenter was concerned about the effect that the
appointment of a temporary manager would have on a facility's liability
insurance rates.
Response: It would be more appropriate for a facility's insurer to
address this issue. Should a facility find that the imposition of a
temporary manager will cause the cost of its liability insurance to
rise, this increase would be one of the factors that the facility would
have to consider when evaluating the benefits and costs of
relinquishing control to a temporary manager.
Comment: One commenter asked that the temporary manager be
authorized to not honor pre-existing leases, mortgages or contracts if
their costs are excessive or if the contracts are otherwise
unconscionable.
Response: The temporary manager does not have the authority to
selectively meet the financial obligations of the nursing home. That
is, the temporary manager can not choose to pay some bills and not
others, because he or she disagrees with the wisdom of the permanent
facility management having assumed those financial obligations
previously. It is the temporary manager's role to manage all aspects of
the facility's operation, including its finances.
Comment: One commenter believed that it would be problematic to
bring temporary managers into county facilities because those
facilities are subject to many restraints on hiring and the expenditure
of funds set by county commissioners. Other commenters were concerned
about whether the temporary manager would respect a facility's union
agreements and contracts.
Response: We recognize that a temporary manager in a public
facility may be constrained in ways that he or she would not be in
other facilities. We expect the temporary manager to work within any
limitations under which the facility operates and to abide by union
agreements and contracts. (See above response.)
Comment: One commenter asked whether HCFA or the State would
sanction a temporary manager who fails to rectify an immediate jeopardy
situation within 23 days.
Response: A failure to rectify an immediate jeopardy situation may
be more indicative of the magnitude of a facility's deficiencies than
the competency of the temporary manager, and neither HCFA nor the State
will penalize automatically a temporary manager when his or her efforts
failed to remove the immediate jeopardy. However, if HCFA or the State
believes that the temporary manager was deficient in his or her duty,
then that individual may be penalized to the extent that he or she is
excluded from consideration for future temporary management
assignments.
Comment: Several commenters asked that we limit the duration of the
temporary management. Many recommended that the temporary manager be
discontinued when the immediate jeopardy is removed or when compliance
with the requirements that triggered the temporary management is
achieved.
Response: Temporary management will be removed when the facility is
terminated, or when HCFA or the State has determined that the facility
is in substantial compliance and has the management capability to
sustain substantial compliance. The temporary management might end when
the immediate jeopardy has been removed and deficiencies have been
corrected, but it would not have to. It would be premature to
discontinue the temporary management before HCFA or the State is
confident that the facility will not relapse into noncompliance.
Effective enforcement involves promoting sustained substantial
compliance, and we are revising Sec. 488.454, ``Duration of remedies''
to reflect this.
Comment: One commenter recommended that HCFA or the State be able
to continue special actions taken by the temporary manager which are
necessary to protect resident health, welfare or safety. Facility
management would request termination of the special conditions once it
could show that they are no longer necessary. The commenter believed
that this policy would ensure that the facility doesn't deteriorate
when the temporary management ends.
Response: Neither HCFA nor the State will discontinue temporary
management and restore control of a facility to its own management
unless it is convinced that the facility is capable of and committed to
sustaining substantial compliance. We do not believe an additional
regulatory provision is necessary to ensure this result.
Comment: Several commenters were opposed to the use of temporary
management, and proposed alternatives to it. One commenter suggested
that, instead of using temporary management in immediate jeopardy
cases, HCFA require the non-compliant homes to hire consultants
approved by HCFA to correct deficiencies. Another commenter proposed
that HCFA itself create and train teams to act in an advisory capacity.
A few commenters asked that temporary management be eliminated and
replaced by State monitoring. Another commenter requested that we allow
facilities to devise their own plans of correction to remove immediate
jeopardy and have the State agency monitor implementation instead of
imposing temporary management.
Response: Temporary management is authorized by sections
1819(h)(2)(B)(iii), 1919(h)(2)(A)(iii), and 1919(h)(3)(C)(iii) of the
Act, and HCFA and the States are required to establish and implement
it: we may not exclude it as an enforcement option. Sections
1819(h)(2)(A)(i), 1919(h)(1)(A), and 1919(h)(5) of the Act specifically
require that temporary management be used in immediate jeopardy
situations when provider agreement termination is not sought.
The Act provides that the temporary manager is to oversee the
operation of a facility and assure the health and safety of the
facility's residents while improvements are made to bring the facility
into compliance. Therefore, we conclude that the Act intends the
temporary manager's role to be more than that of just a monitor of the
progress made by the facility or a consultant to management, and we
believe that inherent in the Act's rationale for establishing temporary
management is the assumption that the facility's management staff lacks
the capability to bring the facility into compliance. It would be
insufficient to substitute the use of a consultant or monitor for the
appointment of a temporary manager, because a consultant or monitor
would not have the authority to completely manage the entire facility
as a temporary manager does. Only a temporary manager has a role active
enough to substitute for the facility management, whose deficient
skills or practices would impede correction of deficiencies and
protection of the residents' health or safety.
Comment: One commenter wondered how availability of temporary
managers would affect the use of this remedy.
Response: In cases of immediate jeopardy, if a temporary manager
cannot be located within 10 days of the last day of the survey, HCFA or
the State is required to proceed with action to terminate the
facility's program participation in order to protect the health or
safety of the residents. To safeguard residents when this takes place,
we will allow a State monitor to be imposed who will notify HCFA or the
State if residents are being subjected to substantial risks and need to
be transferred from the facility. If a temporary manager cannot be
located for a situation which does not immediately jeopardize the
health or safety of the residents, HCFA or the State has the
flexibility to impose another type of remedy which it believes will
best motivate the facility to achieve substantial compliance. However,
if temporary management is the most logical alternative remedy, and a
temporary manager cannot be located, HCFA or the State has the
authority to terminate the provider agreement. We do not believe that
the imposition of temporary management in lieu of termination is a
provider right. Rather, it is an accommodation to the provider if, in
the judgment of HCFA or the State, it will lead to substantial
compliance and there are competent temporary managers available in the
given geographic area.
Comment: A few commenters requested that States be able to appoint
a trustee or a receiver in lieu of a temporary manager if they have
State laws that provide for these enforcement actions.
Response: Many States have developed laws in accordance with State
licensure authority that provide for sanctions similar to temporary
management. The States use these sanctions, such as receivership and
trusteeship, to enforce compliance with State licensure requirements.
Section 1919(h)(2)(B)(ii) of the Act also gives the State the authority
to use these measures when enforcing compliance with Federal Medicaid
participation requirements, if the State can demonstrate to HCFA's
satisfaction through a State plan amendment that trusteeship or
receivership is as effective in deterring noncompliance and correcting
deficiencies as the remedy of temporary management. Therefore, if HCFA
approves the State plan amendment establishing trusteeship or
receivership as a remedy, a trustee or receiver may be used by a State
as an acceptable alternative to a temporary manager when the State
takes the enforcement action. The State may use the alternative remedy
both when a temporary manager is required in cases of immediate
jeopardy, and when one is selected as the most appropriate enforcement
response in non-jeopardy cases.
Comment: One commenter asked that we state the conditions under
which temporary management will be imposed.
Response: Other than the provisions in the law requiring temporary
management in situations that immediately jeopardize the health or
safety of residents, specific criteria for imposing temporary
management in other types of situations would be impossible to develop.
The decision of HCFA or the State to impose a temporary manager will be
based on the deficiencies found at the time of survey coupled with
other factors that exist at the facility at that particular point in
time. For example, a facility might identify a deficiency before the
State survey agency does and attempt to correct it. Although we could
not dismiss the facility's failure to prevent the deficiency, neither
would we ignore the administrative competence that the facility
demonstrated by identifying and attempting to address the deficiency on
its own initiative. We would consider both factors when selecting the
appropriate remedy.
Section 488.417 Denial of Payment for All New Admissions
Upon our review of comments and evaluation of the underlying
statute, we noted that we did not make it clear in the proposed rule
that the authority of the Secretary to deny payment to a facility is
limited to Medicare facilities. In the case of Medicaid facilities, the
State may deny payment to the facility and HCFA may deny payment to the
State for all Medicaid residents in the facility. A related issue is
the question of who must be satisfied that a facility has achieved and
will remain in substantial compliance after the facility has been cited
for repeated instances of substandard quality of care so that payments
may resume. Section 1819(h)(2)(E) says that it is the Secretary for
Medicare, and section 1919(h)(2)(D) says that it is the State for
Medicaid.
Comment: One commenter said that this remedy should be imposed only
in cases posing a hazard to the residents or in cases when their rights
are compromised.
Response: We consider this remedy to be appropriate for both the
cases in which we have designated it may be used and the cases in which
we designate it must be used. We believe that it will be one of our
most effective remedies because it will strongly motivate facilities to
come into and remain in compliance.
Comment: Some commenters said that the denial of payment for
certain diagnostic categories set forth at Sec. 488.217(b) of the
proposed rule would be ineffective, and lead to discrimination against
individuals whose care may be more costly. This, they said, would be in
violation of the Rehabilitation Act of 1974 and of the Americans with
Disabilities Act of 1991.
Response: We believe that these arguments are convincing, and to
prevent facilities from using the provision as a means to discriminate,
we have deleted it in this final rule.
Comment: Many commenters said that this remedy as written is too
broad and subject to too much interpretation, particularly with respect
to the meaning of the terms ``adequate care,'' ``diagnostic
categories,'' ``certain specified diagnoses,'' ``substandard quality of
care,'' and ``new admission.'' Some said that residents who go to the
hospital, then directly back to the facility, should not be considered
to be ``new admissions.''
Response: ``Substandard quality of care'' has been defined in
Sec. 488.301. ``New admission'' has been defined at Sec. 488.401 and
the definition already contained the statement that residents admitted
before the effective date of the denial of payment and taking temporary
leave are not considered new admissions, nor subject to the denial of
payment. Since we have deleted the proposed Sec. 488.417(b), no
definitions for those terms need be provided. Finally, the term
``adequate care'' does not appear in the regulations text at
Sec. 488.417. When it appears elsewhere in this regulation, it has the
ordinary dictionary meaning.
Comment: One facility offered criteria for imposing denial of
payment for all new admissions based on a scope and severity scale of
its own design, and suggested we say, at Sec. 488.417, that denial of
payment for all new admissions will be in effect only until the date
the facility is certified to be in substantial compliance.
Response: We received several suggestions for revising our scope
and severity scales, and the enforcement scheme that we have
established at Sec. 488.408 (``Selection of remedies.'') reflects some
of these suggestions. Neither a denial of payment nor any other remedy
will be imposed at a facility in substantial compliance, as defined at
Sec. 488.401. Once a denial of payment is imposed, it will be lifted
when the facility achieves substantial compliance (and is capable of
maintaining it, if necessary). This policy is set forth at paragraphs
(c) and (d) of this section, as well as at Sec. 488.454 Duration of
remedies.
Comment: One commenter, in setting forth regulation text for
proposed Sec. 488.217, said that--
Denial of payment should be imposed, not only for any
deficiency which remains uncorrected within 90 calendar days after the
last day of survey identifying the deficiency, but for any deficiency
which remains substantially uncorrected within that time period as
well;
If the facility can supply documentation that substantial
compliance was attained on a date preceding that of the revisit of the
survey team, the denial of payment only remains in effect until the
date that substantial compliance was actually reached;
Denial of payment for all new admissions should last only
until the facility has ``substantially corrected'' the deficiencies;
Denial of payment should not take effect until either HCFA
or the State has provided notice to the facility and the public of the
impending action. Public notice shall be provided by publication in a
newspaper of general circulation in the county where the facility is
located; (Another commenter agreed that denial of payment should not
take effect until notice has been provided, and also said that HCFA
should set forth regulations requiring States to give notice to
facilities before denying payment for all new admissions.); and
When payments resume, this too should be announced to the
public in the same way as the denial notice.
Response: We agree that denial of payment for all new admissions
should last only until the facility is in substantial compliance.
Because the final rule reflects the adoption of a substantial
compliance standard, a denial of payment for new admissions, like other
sanctions, will only be applied should a facility fail to meet that
standard. Thus, under sections 1819(h)(2)(d) or 1919(h)(2)(C) of the
Act, that facility must face a denial of payments for new admissions.
Similarly, if, within 3 months of the survey that first identified
deficiencies, the facility is successful in achieving substantial
compliance, the denial of payments will be lifted as required by
sections 1819(h)(3) and 1919(h)(4) of the Act. If the facility does not
come into substantial compliance by 3 months after the last day of the
survey, denial of payment will be imposed until substantial compliance
is achieved or until the facility is terminated.
We also agree that, except in the case of the mandatory denial of
payment for substandard quality of care identified in three consecutive
standard surveys, if the facility can supply documentation acceptable
to HCFA or the State survey agency that it was in substantial
compliance, and was capable of remaining in substantial compliance, if
necessary, on a date preceding that of the revisit, the remedies
terminate on the date that HCFA or the State can verify as the date
that substantial compliance was achieved. (This is further discussed in
connection with a comment on Sec. 488.454.) In the case of repeated
substandard quality of care, the Act requires that the denial of
payment (and State monitor) remain in place until the facility is in
compliance and can demonstrate that it will remain in compliance.
We agree that facilities should receive notice of remedies before
they are imposed. Notification requirements are found at
Sec. 488.402(f), and need not appear again at Sec. 488.417. The
commenter cited section 1919(h)(2)(A)(i) of the Act as rationale for
HCFA promulgating regulations setting forth procedures for States to
use in informing the general public about remedies. We do not agree
that the Act requires HCFA to promulgate regulations regarding how
States must go about notifying the general public.
Comment: Some commenters said that the remedy denial of payment for
specific categories of residents to be used if the surveyor finds that
the facility is not currently able to provide adequate care for these
individuals, or determines that caring for such individuals would
adversely affect care provided to other residents, was not one of the
remedies provided in OBRA '87.
Response: We are deleting the provisions for denial of payment for
specific categories of residents from this final rule because, as we
stated at the beginning of this section, we believe that this remedy
could lead to inequities.
Comment: A number of commenters expressed concern over whether
survey agency revisits would be timely enough to ensure the prompt
resumption of payments as soon as the facility corrects its
deficiencies.
Response: We are revising this final rule to state that
deficiencies are considered to be corrected when a survey team revisit
confirms that they have been corrected, or when a facility provides
evidence satisfactory to HCFA or the State survey agency, which can be
verified without an on-site visit, that the deficiencies have been
corrected before the revisit or before the credible evidence was
submitted. In addition, sections 1819(h)(3) and 1919(h)(4) of the Act
allow for lifting the denial of payment for new admissions when the
facility achieves substantial compliance. (Please see the discussion
regarding substantial compliance under the comments pertaining to
Sec. 488.454 in this final rule, Duration of remedies.)
Comment: Two commenters suggested that, instead of denying payment
for all new Medicare and/or Medicaid admissions when warranted, we
impose a ban on all new admissions to a facility, regardless of the
source of payment. They said that if we use this remedy, we should pair
it with a directed plan of correction requiring the facility to take
steps to restore capacity to provide a full range of NF/SNF services.
Response: We cannot accept this suggestion since the Act does not
give us the authority to regulate payments that may be made to
facilities by private paying residents.
Comment: Three commenters suggested that we add to proposed
Sec. 488.217 (a)(2) and (b)(2) a sentence stating, ``No retroactive
payments will be made when a ban on all new admissions is lifted.'' The
rationale is that, if facilities know they will receive payments later,
they may admit those residents they choose and thus cover the short
term cash flow problem. They say that this would lessen the
effectiveness of the sanction.
Response: We agree in principle, and, for purposes of
clarification, we are revising the suggested sentence to state, at
Sec. 488.417(e), that no retroactive payments will be made for any new
admissions to the facility for the period between the date the remedy
was imposed and the date that HCFA or the State determines that the
facility achieved substantial compliance.
Comment: One commenter suggested that Sec. 488.417(a)(1)(i) be
revised to state that HCFA or the State may impose a denial of payment
for new admissions if a deficiency remains uncorrected after 90
calendar days (as opposed to within) of the last day of survey
identifying the deficiency. As worded in the proposed rule, the
mandatory sanction would have been imposed if a deficiency had existed
at any time during the 90 days.
Response: We agree with the intent of the comment, and although we
are no longer referring to 90 days but to 3 months as the Act does, we
are making this revision. (Please note that the proposed
Sec. 488.217(a)(1)(i) is now redesignated as Sec. 488.417(b)(1).)
Comment: One commenter suggested that HCFA deny payment for all new
admissions after the second consecutive survey which documents that
substandard care is being provided. The rationale is that this would be
more in keeping with the purpose of remedies, that is, encouraging
rapid compliance with the program requirements. Another commenter
suggested that denial of payment for new admissions be a mandatory
remedy when there are widespread substandard quality of care violations
or when there is a pattern of substandard quality of care violations.
Response: While the Act, at section 1819(h)(2)(E) requires denial
of payment for new admissions or for all Medicare residents, and, at
1919(h)(2)(D) requires that denial of payment for new admissions be
imposed after the third consecutive standard survey that shows
substandard quality of care, it permits the imposition of this sanction
anytime that noncompliance is found.
Comment: One commenter said that provisions should be made for the
protection of Medicare beneficiaries or Medicaid recipients, or both,
admitted to a facility while the payment ban on new admissions is in
effect. To protect such individuals, the commenter said, providers
should be prohibited from seeking payment from residents or third
parties for any care furnished during a period in which the providers
were denied payment for new admissions.
Response: This provision is already in the Act at section
1866(a)(1)(A) for Medicare and at section 1919(c)(5)(A) for Medicaid.
Additionally, 42 CFR 447.15 obligates providers to accept Medicaid
payments as payment in full.
Comment: One commenter said that, in order for this remedy to be
effective, the duration must be such that there is some assurance that
compliance will be sustained.
Response: In the strictest sense, regardless of the nature of the
deficiency, and regardless of the remedy imposed, there can be no
guarantee that substantial compliance will continue once the survey
team leaves. We can only impose reasonable sanctions and make periodic
on-site inspections to ensure compliance. However, when HCFA or the
State denies payment for instances of repeated substandard quality of
care, we do, at paragraph (c) of this section, state that the sanction
is not lifted until--
The facility is in substantial compliance; and
HCFA or the State survey agency believes that it will
remain in substantial compliance.
Comment: One commenter suggested we amend this section to state
that a denial of payment for all new admissions will take effect on the
date the facility receives the notice of the remedy.
Response: Notification requirements are at Sec. 488.402(f). Section
488.402(f)(1) states that, except when the State is taking the action
for a non-State operated NF, HCFA gives the provider notice of the
reasons for, and the effective date of, the remedy. Paragraph (f)(2)
states that, for all remedies specified in Sec. 488.406, the notice
must be given at least 2 calendar days before the effective date of the
remedy in immediate jeopardy situations, and at least 15 calendar days
before the effective date in non-immediate jeopardy situations. We
believe that this is equitable. Nursing homes are businesses, some of
them very large businesses. They have payrolls to meet, suppliers to
pay, buildings and equipment to maintain, and similar overhead. An
``effective immediately'' notice would not be reasonable.
Comment: One commenter said that Sec. 488.417(a)(1)(i) is
inconsistent with Sec. 488.412(b)(3). Section 488.417 says, at
paragraph (a)(1), that HCFA or the State may deny payment for new
admissions, and, at (a)(1)(i), that HCFA will and the State must deny
payment for new admissions if any deficiency remains uncorrected within
90 calendar days after the last day of survey identifying the
deficiencies. (Since Sec. 488.412(b)(3) bears no direct relationship to
Sec. 488.417(a)(1)(i) and Sec. 488.412(a)(3) does, we believe that the
commenter meant to cite the latter, which says that if any deficiency
remains uncorrected within 90 calendar days after the last day of
survey, HCFA will and the State must deny payment for new admissions.)
Response: While Secs. 488.417(a)(1)(i) and 488.412(a)(3) overlap,
they are not inconsistent because a certain amount of overlapping has
been purposely written into this final rule for ease of reference on
the part of those who will use it. As previously, noted, we have
amended the regulations text to reflect a 3 month timeframe to comport
with the Act.
Comment: One commenter asked if there was any difference between
``all new admissions'' in Sec. 488.417(a) and ``new admissions'' in
Sec. 488.417(a)(1).
Response: There is no difference. We are revising the regulations
text to conform to the section's title.
Comment: Some general comments we received on the provisions in
this section of the proposed rule were as follows:
They are unjustifiably severe;
Providers can not comply with them in all cases because
some deficiencies take more than 90 days to correct; and
They are unnecessary.
Response: At HCFA's request, the Institute of Medicine (IoM), which
is part of the National Academy of Sciences, conducted a study of the
policies and regulations governing the certification of nursing homes
participating in Medicare and Medicaid. Its report, issued in March
1986, cited the urgent need for enacting statutory provisions extending
the remedies available to HCFA and the States in enforcing compliance
with nursing home regulations. A General Accounting Office (GAO) study
(``Medicare and Medicaid: Stronger Enforcement of Nursing Home
Requirements Needed'' (July 1987)) also concluded that penalties short
of decertification of nursing homes are needed to deter noncompliance.
HCFA's operating experience also bears this out. Traditionally, if
facilities were unable to correct deficiencies within 90 days of the
survey date, their provider agreements would have been terminated by
the 90th day. We, along with the IoM, GAO, and the Congress believe
that these regulations are necessary, are not unduly harsh or severe,
and that it is possible for providers to comply with them. Furthermore,
the denial of payment for new admissions is not only authorized by the
Act, but required by the Act in certain circumstances, such as when
noncompliance remains after 3 months or when substandard quality of
care has been cited in three consecutive standard surveys.
Section 488.418 Secretarial Authority to Deny All Payment
Upon our review of comments and evaluation of the underlying Act,
we noted that we did not include a section in the proposed rule
explicitly stating the Secretary's authority to deny all payment to a
facility. Under section 1819(h)(2)(B) of the Act, if a facility has not
met a requirement, the Secretary may deny payment for all Medicare
residents. Under section 1819(h)(2)(E), the Secretary is required to
deny payment for all current Medicare residents or for all Medicare new
admissions if a SNF, on three consecutive standard surveys has been
found to have provided substandard quality of care.
Under section 1919(h)(3)(C)(i) of the Act, the Secretary may deny
payments for all current Medicaid residents but this denial authority
is exercised against the State, not the facility. Only with respect to
State-operated facilities may the Secretary take action directly
against a facility because section 1919(h)(3)(A) expressly provides
such authority.
We are adding new Sec. 488.418 to make explicit this authority. We
provide that, if a facility has not met a requirement, in addition to
the authority to deny payment for all new admissions as set forth at
Sec. 488.417(a), HCFA has the authority to deny any further payment to
the facility for all Medicare residents and to deny further payment to
the State for all Medicaid residents.
Under paragraph (b) of new Sec. 488.418, if the facility achieves
substantial compliance, HCFA resumes payment to the facility or the
State prospectively from the date that it verifies as the date that
substantial compliance has been achieved, except as provided in
paragraphs (c), (d), and (e) of this section.
If payments to the facility or the State resume, no payments will
be made for the period between the date the remedy was imposed and the
date that HCFA verifies as the date that substantial compliance was
achieved. This is the case with both denial of payment for all new
admissions as well as with denial of payment for those already residing
in the facility.
Should HCFA or the State find that the facility was in substantial
compliance before the date of the revisit, or before HCFA or the survey
agency receives the credible evidence of such compliance, the remedy
must be lifted as of the date that substantial compliance was achieved,
as determined by HCFA. The exceptions to this rule occur when the
denial of payment remedy is imposed for repeat instances of substandard
quality of care. The remedy is not lifted until substantial compliance
is achieved and HCFA believes that the facility will remain in
substantial compliance.
Section 488.422 State Monitoring
Comment: Some commenters expressed concern that the Act did not
provide for State monitoring.
Response: We disagree. The statutory authority for State monitoring
is implicit for cases of repeated noncompliance (see sections
1819(h)(2)(E)(ii) and 1919(h)(2)(D)(ii) of the Act with cross
references to sections 1819(g)(4)(B) and 1919(g)(4)(B) of the Act for
Medicare and Medicaid respectively).
Comment: Some commenters asked in what instances the remedy of
State monitoring is to be applied.
Response: The Act requires State monitoring in cases of repeated
noncompliance. That is, if a facility, on three consecutive standard
surveys conducted under sections 1819(g)(2) and 1919(g)(2) of the Act
has been found to have provided substandard quality of care, State
monitoring is to be imposed. Otherwise, State monitoring may be
considered as an optional remedy.
Comment: Several commenters raised questions as to how funding for
State monitors would be met. Some suggested that costs for monitoring
be borne by the facility and not be an allowable cost for
reimbursement.
Response: We believe the costs of State monitoring should be part
of the survey and certification process and, therefore, should be
considered by the State survey agency in planning its annual Medicare
and Medicaid workload. The budgeted amounts for these activities are
approved by HCFA as part of the annual survey and certification budget
process.
Comment: A few commenters suggested that we prescribe the role of
the State monitor in the final rule.
Response: We do not wish to prescribe the role of the State
monitor; however, we have clarified language in the final rule
describing in general terms the purpose of the State monitor. The State
monitor oversees the correction of cited deficiencies and ensures that
residents are protected from harm. Any more specific description of
State monitor roles and responsibilities will be addressed in manual
instructions to the State survey agency.
Comment: Some commenters expressed concerns regarding the length of
time State monitoring would continue. Several commenters suggested that
the State survey agency retain the ability to monitor ongoing
conditions in the facility until the State survey agency or HCFA
determines the serious condition(s) have been corrected.
Response: We agree with the commenters. State monitoring remains in
place at least until HCFA or the State survey agency determines that
the provider is in substantial compliance with the requirements of
participation. In the case of State monitoring imposed for repeated
substandard quality of care, the sanction will stay in place until the
facility has demonstrated to the Secretary or the State survey agency
that it will stay in substantial compliance. At this time, any serious
deficiencies must have been corrected to the point where the facility
is in substantial compliance.
Comment: We received several comments suggesting we write
qualifications for a State monitor in the final rule.
Response: Because of the broad spectrum of situations in which
State monitoring might be used, we choose not to expand the current
language in Sec. 488.422(a).
Comment: Some commenters suggested we mandate State monitoring be
used whenever a facility is undergoing termination or closure.
Response: While we agree with commenters that installing a State
monitor would be appropriate in a termination or closure situation, we
will not require the States to use this remedy in all such cases.
Section 488.421 Directed Plans of Correction
Comment: Some commenters wanted us to define a directed PoC as a
facility-initiated PoC which the State or HCFA orders the facility to
implement. Commenters reasoned that making this change would allow
States to use directed PoC more efficiently and effectively since
facilities' governing bodies will generally be more capable of drafting
viable plans of correction based upon knowledge of facility resources.
One commenter wanted to amend proposed Sec. 488.224 to read as follows:
``HCFA, or the State (or the temporary manager with HCFA or State
approval) has the responsibility to develop a plan of correction * *
*''. Another commenter believed that when the State or HCFA orders (or
directs) a facility to comply with the directed PoC, the State or HCFA
have more authority to require the facility to revise any aspect of the
PoC which is not acceptable. The commenter further suggested that the
imposition of a governmentally created PoC on a facility raises
questions of the government's and the facility's respective liabilities
if the plan does not correct the deficiencies.
Response: Defining a directed PoC as a facility-initiated plan
which HCFA or the State orders or directs a facility to implement would
be virtually identical to the way we have always defined a traditional
PoC. The traditional PoC is a requirement when any deficiency is cited,
except for isolated deficiencies where no actual harm has occurred and
there may be potential for minimal harm. The exception to this is if a
directed PoC is used as a remedy. The directed PoC can be used by
itself for deficiencies which cause no actual harm. We also disagree
that a PoC developed by the facility would give the State survey agency
or HCFA any more authority than one developed by the State survey
agency, HCFA, or a temporary manager. We do not believe that to say
``HCFA * * * has the responsibility'' adds anything to the meaning of
this section. Although it may be true that the facility's governing
body may be more familiar with a facility's resources, developing a
directed PoC does not rest solely on this knowledge. For the reasons
stated above, we are not accepting these suggestions.
With respect to the commenter's point that a governmentally-
initiated PoC could raise a question about the State's or HCFA's
liability if the directed PoC does not correct deficiencies, we do not
guarantee that any remedy will necessarily result in facility
compliance. The directed PoC, as well as other remedies prescribed, are
developed and recommended based on the professional judgment of State
or HCFA staff and their consideration of which remedy(ies) would
promote prompt achievement of compliance. If a remedy does not result
in a facility achieving compliance, another remedy may be imposed to
safeguard the health or safety of nursing home residents. This other
remedy could be an additional remedy from the same category, or, if the
deficiencies have been exacerbated, a remedy or remedies from a higher
category, including termination. However, HCFA and the State will
usually impose alternative remedies prior to terminating a facility.
Comment: Other commenters wanted us to amend Sec. 488.424 to
specify situations where a directed PoC would be mandatory. These
commenters asked that a directed PoC be used when the following
deficiencies are identified.
Violations of admission requirements;
Violations of Sarrassat requirements concerning notice of
Medicare coverage and rights to demand billing;
Violations of transfer prohibitions and bed hold
requirements;
All cases of violations of individual rights; and
Care problems of specific, identifiable individuals.
Commenters further suggested that the directed plans of correction
must be developed by qualified health care professionals in
consultation with the State survey agency.
Response: We are rejecting this suggestion for several reasons.
Mandating a directed PoC for certain deficiencies would limit HCFA or
the State's choice of remedies and would run counter to the thrust of
the Act which encourages the flexible application of enforcement
options. Also, requiring a remedy for specific deficiencies would be
inconsistent with the requirements associated with other remedies. We
also do not want to prescribe in regulations which staff people must
develop the directed PoC, but opt to give HCFA or State the flexibility
to decide who will carry out this function. We expect that the State
survey agency would develop the directed PoC, but the State would be
responsible for officially notifying the facility of the remedy.
However, in manual instructions, we will provide guidance in this
regard by including examples of deficiency situations and corresponding
directed PoCs which are appropriate in terms of content and the staff
person responsible for development.
Comment: One commenter urged HCFA to require that directed PoCs
include specific corrective action to protect individual residents who
suffered harm when those residents are clearly identifiable. Another
commenter wanted the rule amended to provide that all PoCs are to make
an injured resident or residents ``whole,'' whenever possible, and that
the facility be required to take specific steps to ensure future
compliance. The commenters offered, as an example, a facility which
improperly denies a resident his or her bed hold rights. The commenters
believed that in this example the directed PoC must require that the
facility honor the resident's statutory right to return to the next
available bed. Commenters feared that without such a requirement, the
directed PoC will be nothing more than a facility's promise not to do
it again.
Response: Requiring in regulation that a facility make a resident
whole whenever a resident has been injured or has been deprived of his
or her rights would be virtually impossible. In many instances where
irreparable harm has occurred this would be an unattainable goal.
Although HCFA and the State survey agency consider the unique
circumstances of a facility and the results on residents when
developing a directed PoC, any PoC is based on prospective compliance.
The principle behind a PoC is to ensure that the underlying cause of
cited deficiencies does not recur. The purpose of the PoC is not,
however, a checklist of past violations which must retroactively be
corrected. In the example cited, if a facility denied a resident a bed
through improper application of a bed hold policy, the resident would
probably have to be admitted to another facility. Prescribing in the
directed PoC that the resident would be eligible to be readmitted to
the facility when the next bed became available would be pointless
since he or she, being unable to wait, would probably already be placed
in another home. We have not accepted this comment to mandate that the
directed PoC include resident specific reparations.
Comment: One commenter recommended the use of a directed PoC for
substandard quality of care findings with a scope of 3 or 4 and for
repeat substandard quality of care findings at a scope of 1 or 2 and
for all other repeated violations.
Response: We are not accepting this suggestion. Based on numerous
public comments, we have reconfigured the scope and severity grid
without numerical values, and are offering it in this preamble as one
example of how a State could determine what remedies to impose in
noncompliant facilities. Additionally, we have developed recommended
categories of remedies for ranges of deficiencies. The directed PoC is
a remedy which can be used for any deficiency and may be the only
remedy used for lower level deficiencies. We do not intend to require a
directed PoC for substandard quality of care findings but rather leave
that option to the enforcing entity. Nor do we mandate the use of
directed PoCs for repeat deficiencies. The law provides for denial of
payment, State monitoring, and increased civil money penalties in
certain cases of repeated noncompliance and those are the only
enforcement actions related to repeat deficiencies that we have
required in these regulations.
Section 488.425 Directed In-Service Training
On the basis of our review of issues raised by commenters and our
reevaluation of our statutory authority, we are including in the final
rule a provision for the imposition of a directed inservice training
program. After several years of experience with implementing the OBRA
'87 provisions, we have come to a greater realization that some
compliance problems are a result of imperfect knowledge on the part of
the health services staff relative to state-of-art practices and
resident outcome expectations. For example, we know that incontinence
and decubitus ulcers are not an inevitable result of old age and
immobility. The incidence and/or prevalence of these conditions in a
particular long-term care facility may be the result of general lack of
knowledge about the prevention and treatment of these conditions, and a
lasting change may be produced in that facility by a directed inservice
training program.
We also believe that a directed inservice training program may be
particularly effective in reducing reliance on chemical restraints. Two
studies have been instructional on this point. The first, entitled ``A
Randomized Trial of a Program to Reduce the Use of Psychoactive Drugs
in Nursing Homes'' by Dr. Jerry Avorn and colleagues (New England
Journal of Medicine; Vol. 327 No. 3; July 16, 1992, pages 168-173),
demonstrates that a fairly intensive training program for the medical,
as well as, all three shifts of the nursing staff (including aides) can
bring a dramatic reduction in the use of psychoactive drugs without
adversely affecting the overall behavior and level of functioning of
the residents.
Another study was entitled, ``Reducing Antipsychotic Drug Use in
Nursing Homes: A Controlled Trial of Provider Education,'' by Dr. Wayne
Ray and colleagues at Vanderbilt University School of Medicine
published in the Archives of Internal Medicine; Vol. 153; March 22,
1993, pages 713-721. This study applied a formalized training program
to teach nursing personnel how to manage the most prevalent behavioral
symptoms experienced by aged individuals in nursing homes. Common
behavioral symptoms such as catastrophic reaction, yelling and
screaming, fighting, wandering, etc. are addressed in this study, and
non-drug interventions are described. The training program led to a 59
percent reduction in the use of antipsychotic drugs over the control
facility, and a 31 percent reduction in physical restraints over the
control facility.
We would invite facilities to use inservice programs conducted by
sources with an in-depth knowledge of the area(s) which require
specific training so the positive change is achieved and maintained. We
would also encourage facilities to use programs developed by well
established centers of geriatric health services education and
training. These centers include, but are not limited to, schools of
medicine or nursing, Area Health Education Centers, and centers for
aging. These centers should have established programs in geriatrics and
geriatric psychiatry. We only recommend to the facility where it can
obtain its inservice training program. The ultimate test of the
training program will be in the outcome of care achieved by the
facility after completion of the training program. If the resident's
care circumstance has not improved after training, the facility, upon
resurvey by the State agency, will be subject to stronger sanctions. We
also require that the payment for the directed inservice training is
the responsibility of the facility.
Section 488.426 Closure or Transfer of Residents, or Both
Comment: Several commenters said that HCFA should give more
guidance on when closure of a facility and/or transfer of residents are
appropriate. Others were concerned because the regulations did not set
out procedures for State transfer of residents. A few commenters said
that closures should be conducted in accordance with the provisions of
the proposed Sec. 488.240. Some commenters insisted that closing a
facility should only be a last resort when alternative methods have
failed or the physical plant is unsafe. Other commenters said HCFA
should include a definition of the term ``emergency'' in the
regulations.
Response: The closure of a facility and/or transfer of the
residents are measures of last resort that are taken only in an
emergency situation. These actions are rare, but most States have had
experience with such actions. Most States have a relocation plan that
outlines the circumstances under which the plan will be put into effect
and the procedures to be followed. Because of this, we believe it would
be unnecessary to mandate procedures for States to follow in cases of
closure or transfer of residents. The Act places the responsibility for
closure and/or transfer upon the States and proposed Sec. 488.240, the
content of which is now incorporated into Sec. 488.426, requires any
transfers to be orderly. We do not believe that any greater procedural
specificity is required in Federal regulations. We also do not believe
that it is necessary to define ``emergency.'' We define words only if
their definitions will have a narrower application than definitions
commonly found in dictionaries. That is not the case for the use of the
word ``emergency'' in this regulation.
Comment: Some commenters insisted that a temporary manager be
appointed to oversee the transfers whenever large numbers of residents
are involved. Other commenters believed that States should be required
to get a court order before closing a facility or transferring
residents.
Response: We do not agree with these comments. We believe the
States should retain the flexibility to implement emergency relocation
plans according to the circumstances of each case. The States have the
knowledge and experience to choose the optimum combination of
procedures to handle each unique situation. Obtaining a court order
could delay the implementation of the relocation plan in an emergency
situation and would add nothing to the process. The same can be said
about the imposition of a temporary manager, because it is the State
that is experienced in closure and/or transfer of residents'
situations, not necessarily a temporary manager.
Comment: One commenter noted that the Act at section 1919(h)(5)
cross references the transfer of residents to sections pertaining to
facility-initiated transfers and discharges. Consequently, the final
rule must require States to set up procedures which include written
notice, involvement of ombudsmen and orientation procedures.
Response: Sections 1819(h)(4) and 1919(h)(5) of the Act, which make
reference to a resident's rights upon transfer, speak to them as they
relate to the ``safe and orderly transfer of the residents * * *'' We
believe that whatever appeal rights individual residents have when the
facility in which they reside faces termination bear only on the
appropriateness of the transfer plans for those individuals and not the
correctness of the government's decision to terminate the facility's
provider agreement. For example, an individual may disagree with the
nature or location of the facility to which he is slated for transfer
and could challenge such a decision under the appeals process provided
by sections 1819(e)(3) and 1919(e)(3) of the Act.
There is no evidence in the Act or the legislative history that the
Congress intended to vest nursing home residents with the right to
challenge the correctness of the decision to take enforcement measures
against the facility. That decision lies with either the Secretary or
the State and is subject to challenge by the facility, not the
residents. There is no reason to believe that the Congress, in drafting
these provisions, had as its objective the overturning of the Supreme
Court's decision in O'Bannon v. Town Court Nursing Center, 447 U.S. 773
(1980), and we cannot presume that O'Bannon has been overturned by
indirection.
Moreover, the plain implication of the transfer and discharge
provisions in sections 1819(c) and 1919(c) of the Act is that their
focus is on actions that may face an individual resident of a facility
rather than all of a facility's residents. Thus, subsection (c)(2)(A)
speaks to a transfer or discharge for the resident's welfare or for the
health of individuals in the facility. These imply individualized
determinations, not the kind of facility determination that
automatically subjects the entire Medicare or Medicaid patient
population to forced removal from the facility.
Additionally, when describing the documentation requirements for
discharge or transfer, the Act (in the paragraph immediately following
the listing of permissible grounds for such actions) speaks to the
necessity for documentation to appear in the resident's clinical record
and often times to be entered by the resident's physician. We know,
however, that decisions to terminate a facility's provider agreement
are made by either the Secretary or the State, not by residents'
physicians. Thus, it would seem that the kind of transfer appeals
referred to in sections 1819(c)(2) and 1919(c)(2) of the Act do not
encompass issues that are central to the provider agreement
termination, but rather decisions affecting the fate of an individual
resident that may be made by his or her physician.
We believe that sections 1819(h)(4) and 1919(h)(5) of the Act give
the Secretary and the States discretion in how to apply the transfer
notice and appeal provisions of sections 1819(c)(2) and 1919(c)(2). The
Act's enforcement provisions require that the transfer of residents
whose facility faces termination be done in a manner ``consistent
with'' the provisions of subsection (c)(2). Had the Congress intended
that there be strict adherence to the Act's transfer provisions, it
could easily have specified that they be followed precisely. Use of the
phrase ``consistent with,'' however, implies a less rigorous standard
that permits the Secretary and the States to make judgments as to how
to best accommodate the notice provisions, for example, while not
compromising the effectiveness of the termination action. Thus we
believe residents should receive as much notice as possible of their
impending transfer as long as the notice period does not further
compromise their quality of care.
Comment: A few commenters mentioned that the proposed regulation
improperly references proposed Sec. 488.206(c).
Response: The reference to proposed Sec. 488.206(c) has not been
included in the final rule as Sec. 488.426 has been revised to include
closure and transfer of residents in NFs and SNF/NFs.
Comment: One commenter suggested that the term ``Medicaid
facility'' be changed to read ``Medicaid certified facility `` so as
not to give the false impression that a facility must be 100 percent
Medicaid in order for these provisions to apply.
Response: The term ``Medicaid facility'' is commonly used to
designate Medicaid certification, regardless of whether or not the
entire facility is occupied by Medicaid eligible patients.
Proposed Sec. 488.228 Alternative or Additional State
Remedies (now incorporated in Sec. 488.406)
Proposed Sec. 488.230 Civil Money Penalties
In the final rule, we are redesignating proposed Sec. 488.230 as
the following sections:
------------------------------------------------------------------------
Proposed Sec.
Redesignated Section 488.230
------------------------------------------------------------------------
Sec. 488.430CMP: Basis for imposing penalty.............. (a)
Sec. 488.432CMP: When penalty is collected............... (b)
Sec. 488.434CMP: Notice of penalty....................... (c), (d)
Sec. 488.436CMP: Waiver of hearing, reduction of penalty (e)
amount.
Sec. 488.438CMP: Amount of penalty....................... (f), (g)
Sec. 488.440CMP: Effective date and duration of penalty.. (h), (i)
Sec. 488.442CMP: Due date for payment of penalty......... (j)
Sec. 488.444CMP: Settlement of penalty................... (k)
------------------------------------------------------------------------
Comment: We received many general comments regarding civil money
penalties. A few commenters who supported this provision of the
regulation stated they believed in a swift and certain fine structure
which is mandatory in nature and imposed directly on ownership.
Response: We appreciate the support of these commenters who realize
that civil money penalties can be an effective remedy to encourage
prompt compliance with participation requirements as well as to promote
the continued rendering of quality health care in a safe environment.
Comment: One commenter suggested that we prohibit the recoupment of
fines through rate increases.
Response: We do not accept this suggestion. Incorporating
provisions to address the facility's recoupment of penalties through
rate increases is beyond the scope of this rule which addresses the
survey, certification and enforcement for skilled nursing facilities
and nursing facilities.
Comment: Several other commenters believed civil money penalties do
not work, are not the answer, serve no purpose or are an insult to
professionals.
Response: We do not agree with these comments. We have the
statutory responsibility to do what is necessary to promote the
continued health and safety of residents in long term care facilities.
We cannot say at this point that civil money penalties do not work. We
can say the Congress perceived the effectiveness of this remedy and
included it among the other remedies established to encourage prompt
compliance with participation requirements.
Comment: A few commenters stated that civil money penalties are not
necessary, as there is an extensive list of available remedies.
Response: We agree that there are many available remedies that can
be used. We are including at Sec. 488.404 the factors to be considered
when selecting the most effective enforcement remedy. OBRA '87 included
revised and expanded authority for the enforcement of the Federal
participation requirements for long-term care facilities which allow
State and Federal governments to choose the most effective remedy to
encourage rapid compliance with participation requirements. We do not
agree with the statement that civil money penalties are not necessary,
because using civil money penalties as a remedy provides another
enforcement option for addressing the unique characteristics of each
case of facility noncompliance.
Comment: A few commenters said that civil money penalties are not
fair and must be reasonable and realistic.
Response: The ranges in the amounts of the civil money penalties
are commensurate with the level of SNF or NF noncompliance and, we
believe, permit penalties to be imposed in a fair, reasonable and
realistic manner. In fact, the higher and wider range of fines ($3,050
to $10,000 per day) is reserved for immediate jeopardy deficiencies,
even though these deficiencies account for a very small minority of the
cases of noncompliance.
Comment: Several commenters expressed concern that civil money
penalties will drive up the cost to the taxpayer and increase the
government's debt.
Response: Increased cost to taxpayers as a result of civil money
penalties is possible if civil money penalties are imposed on publicly
funded facilities. To the extent that such a provider's operation is
characterized by deficiencies, and costs are excessive, financial
burdens are imposed on the taxpayers. However, the money collected from
penalties does not increase the Federal debt as it is returned to the
Medicare Trust Fund or is earmarked for the protection of the health or
property of Medicaid residents. Therefore, money is indirectly returned
to the taxpayers' benefit.
Comment: Several commenters expressed the concern that civil money
penalties could cause small, independent, primarily Medicaid supported,
rural facilities to be closed down, possibly displacing residents from
their community home.
Response: We reject this argument. Sections 1819(h)(2)(B)(ii) and
1919(h)(3)(C)(ii) of the Act state that the Secretary or the State may
(emphasis added) impose a civil money penalty. A civil money penalty
need not be imposed in every situation. The Act provides the Secretary
and the State the authority to choose a remedy which corresponds to the
unique characteristics of each case. In addition, Sec. 488.438 states
that a facility's financial condition is a factor considered in
determining the amount of the civil money penalty.
Comment: Several commenters are concerned that the imposition of
civil money penalties could detract from resident care or redirect
funds that could be used to continue to improve care.
Response: We do not accept this comment. First, the money that is
collected from civil money penalties is either transferred into the
Medicare Trust Fund or is earmarked for the protection of Medicaid
residents' health or property. Second, as soon as substantial
compliance is achieved, civil money penalties are discontinued.
Therefore, the facility is in control of how much money it ultimately
is responsible for paying; that is, the sooner it corrects
deficiencies, the less penalties it will pay.
Comment: A professional organization commented that the proposed
section on civil money penalties does not reflect all of the points
discussed by the Institute of Medicine in its study, Improving the
Quality of Care in Nursing Homes (1986). The Institute of Medicine
envisioned civil money penalties as a valuable enforcement tool which
could be applied in amounts appropriate to the seriousness, duration
and repeat occurrence of the violation. It recommended prompt, short
hearings on the imposition of the remedy, that fines be large enough to
be more costly than the violation, and that fines be versatile enough
to be used to correct minor violations, as well as to immediately
punish life threatening violations.
Response: We believe the regulatory provisions for civil money
penalties encompass the above referenced points from the Institute of
Medicine. The only point of departure is the suggestion with regard to
promptness. Section 1128A of the Act requires that a hearing be
provided to a provider that properly requests one before HCFA collects
a civil money penalty. Section 1919(h)(8) of the Act requires the State
to offer a hearing before collecting a civil money penalty.
Comment: One commenter suggested that the civil money penalty
system be changed to a monetary award program. Facilities in compliance
with the regulations would be rewarded. This would lead to improved
resident care and provide an incentive for the employees.
Response: We do not accept this comment. Provisions for civil money
penalties are located in sections 1819(h)(2)(B)(ii), 1919(h)(2)(A)(ii)
and 1919(h)(3)(C)(ii) of the Act as part of an enforcement process.
They are options that the Secretary and the State may exercise when
SNFs and NFs are not in substantial compliance with participation
requirements. Removing civil money penalties as an enforcement option
and substituting a monetary reward system would not reflect the law as
written. For participants in the Medicaid program, the State may
separately establish a program to reward, through public recognition or
incentive payments, or both, providers that provide the highest quality
care. This reward provision is specified at Sec. 488.303 of this rule.
Comment: Several State civil monetary penalty systems were
submitted with the comments on the proposed rule for review. Different
commenters recommended that HCFA adopt and/or evaluate these civil
money penalty systems.
Response: Before developing regulations for civil money penalties,
we met with the nursing home industry, consumer groups and government
entities to obtain input in the development of the proposed rule. In
addition, we reviewed a variety of State civil money penalty systems.
We do not believe we have sufficient data at this time to justify
abandoning the system we developed in the proposed rule in favor of
another or to cause us to consider any State's program to be more
effective than the civil money penalty system in the regulation at this
time.
Comment: One commenter suggested changing ``HCFA or the State may
impose * * *'' to ``HCFA or the State shall impose * * *'' at proposed
Sec. 488.230(a)(1). The commenter's rationale is that if facilities are
required to pay for every instance of noncompliance, compliance would
be maintained and additional funds could be used to support critical
areas, such as, Long Term Care Ombudsman Programs.
Response: The regulation reflects the corresponding provisions of
the Act. The Act permits HCFA's and the States' discretion in the
imposition of this enforcement remedy. The Federal government cannot
require the States to use this remedy in every instance of
noncompliance, nor must it choose this remedy itself in every instance
of noncompliance.
Comment: Another commenter suggested that HCFA interpret its
authority to include the delegation of the imposition of civil money
penalties to the States for Medicare purposes when HCFA determines that
it is appropriate. The commenter also suggested the State could
recommend a civil money penalty, HCFA could monitor the State's
performance in this area and funds collected could offset State costs
in performing this task.
Response: The Act does not permit the Secretary to delegate the
authority to impose a civil money penalty on a Medicare participating
facility to the State. Section 1819(h)(2) of the Act charges the
Secretary, upon the recommendation of the State, with the authority to
impose remedies. HCFA's decision to monitor a State's performance does
not hinge on the imposition of civil money penalties. Further, any
civil money penalties collected under Medicare will be returned to the
Medicare Trust Fund.
Comment: A few commenters are concerned that the proposed
definition of deficiency will make any failure to comply, no matter how
small, subject to a fine.
Response: We agree with the commenters' concern that, as described
in the proposed rule, very minimal deficiencies could be subject to
civil money penalties. As a result, we revised the rule and developed
enforcement action categories which correspond to the seriousness of
the deficiencies. These enforcement action categories are described at
Sec. 488.408, Selection of remedies.
Also, as discussed previously in this preamble, we are accepting
the commenters' implicit suggestion to incorporate the concept of
substantial compliance as a standard SNFs and NFs must meet to
participate in the Medicare and Medicaid programs. Using the standard
of performance of substantial compliance for these providers ensures
virtual compliance with sections 1819(b), (c), and (d) and 1919(b),
(c), and (d) of the Act because the type of deficiency tolerated under
a substantial compliance standard is very limited. We are defining
substantial compliance at Sec. 488.301. We consider substantial
compliance to satisfy a facility's obligation to meet requirements.
Therefore, facilities in substantial compliance adequately protect the
health and safety of nursing home residents and will not be subject to
a civil money penalty.
Section 488.430 Basis for Imposing Penalty
Comment: Several commenters were confused and requested that we
clarify the number of days of noncompliance between two certifications
of compliance at proposed Sec. 488.230(a)(2).
Response: We revised this paragraph of the rule and redesignated it
as Sec. 488.430(b). It now provides that HCFA or the State may impose a
civil money penalty for the number of days of past noncompliance since
the last standard survey, including the days of immediate jeopardy. We
believe that this revision implements sections 1819(h) and 1919(h) of
the Act, which state that if a facility meets the requirements of
subsections (b), (c), and (d), but as of a previous period did not meet
such requirements, a civil money penalty could be imposed for the days
in which the facility was not in compliance with the requirements. We
believe this statutory provision permits a civil money penalty to be
imposed whenever there is past noncompliance with the participation
requirements between standard surveys. The following example
illustrates one application of this provision: A facility had a survey
on July 1, 1993, and it was in substantial compliance with all of the
participation requirements. During the orientation tour at the next
survey, June 15, 1994, surveyors observed questionable infection
control procedures. This observation prompted the surveyors to further
examine records and the facility's infection control program. This
examination indicated that the facility was out of compliance with
infection control requirements (Sec. 483.65) from October 15 to October
30, 1993. However, at the time of the June 15, 1994, survey, the
facility was again in substantial compliance with participation
requirements. The number of days of noncompliance would be 16, which is
the number of days between (and including) October 15 and October 30.
This noncompliance existed for 16 days, but it did not exist at the
time of either survey.
Although we may have discretion with respect to the selection of
remedies to address noncompliance that is corrected by the time of a
survey, it is likely that we would give serious consideration to civil
money penalties in such cases. The Act, at sections 1819(h)(1) and
1919(h) (1) and (3), expressly authorizes the impositions of these
sanctions even if, at the time of the survey, the facility is in
substantial compliance.
Comment: Another commenter suggested incorporating language which
says, ``HCFA or the State may impose a civil money penalty for the
number of days of noncompliance between two certifications of
compliance if the deficiency was at a severity level of 4 and the
facility could have prevented it.''
Response: We do not accept this suggestion. Adding this language
narrows the authority of the Secretary and the State. Limiting this
enforcement authority could allow noncompliance to go unsanctioned. We
see no justification for narrowing this authority.
Comment: A consumer organization specifically recommended we
clarify proposed Sec. 488.230(a)(2) to say, ``the penalty accrues as of
the first day that noncompliance existed in a previous period.''
Resident records or resident witnesses with corroboration would be
sufficient evidence to determine noncompliance.
Response: In this final rule, we are revising this paragraph to
provide that HCFA or the State may impose a civil money penalty for the
number of days of past noncompliance since the last standard survey,
including the number of days of immediate jeopardy. It is evident in
this situation the civil money penalty could be imposed for all of the
days of noncompliance. We do not accept the suggestion to incorporate
into the regulation what specific evidence must be used to determine
noncompliance, as each situation of noncompliance is unique.
Comment: Several commenters recommended that the word ``impose'' be
changed to ``collect'' at proposed Sec. 488.230(a)(2), since the Act
authorizes the use of civil money penalties for past noncompliance that
has been corrected.
Response: While it is true that the Act specifies that a civil
money penalty may be imposed for past noncompliance that has been
corrected, it is not necessarily true that a civil money penalty will
be collected in every case. For instance, if a facility prevails at a
hearing, a civil money penalty will not be collected. Accordingly, we
are not adopting this recommendation.
Comment: A provider organization suggested that we expand proposed
Sec. 488.230(b) by adding, ``(2) HCFA will not and the State may not
impose a civil money penalty on a facility that is being terminated or
is under temporary management or a denial of payment for all new
admissions, except for a denial of payment under paragraph (a)(1) of
[proposed] Sec. 488.217.''
Response: The purpose of all remedies is to protect residents
against inadequate care and to motivate providers to promptly comply
with the participation requirements so they may continue to provide
quality services. Sections 1819(h) and 1919(h) of the Act specify that
the State or HCFA may impose multiple sanctions to achieve these
purposes. Limiting the authority of the Secretary and the State, as
suggested by this comment, would reduce the ability of the Secretary
and the State to tailor remedies to fit each unique situation of
noncompliance, particularly those situations in which multiple remedies
are warranted. If HCFA or the State chooses to impose a remedy, the
procedures set forth in Secs. 488.404 and 488.408 of this rule are
followed to determine the most appropriate remedy or remedies.
Section 488.432 When Penalty Is Collected
Comment: Many commenters questioned the proposed provisions of
Sec. 488.230(b) which stated that HCFA will not and the State may not
impose a civil money penalty while the facility has a hearing pending
on the imposition of a remedy. A few commenters recommended that the
word ``impose'' be changed to ``collect'' at Sec. 488.230(b).
Commenters wanted more information about:
When a fine begins;
Whether a fine is assessed for the days between the survey
date and the hearing date, or only for days after the hearing date;
Whether there is a conflict between Sec. 488.230(b) and
Sec. 488.230(i) of the proposed rule.
The commenters' recommendations included:
Stop the assessment of civil money penalties on the date
that a formal hearing is requested. If the appeal outcome upholds the
remedy then the civil money penalty is imposed retroactive to the date
that the appeal was requested.
Permit the States and HCFA to impose but not collect a
civil money penalty during the pendency of any hearing. The penalty
would accumulate during the appeal until the deficiency is corrected or
the appeal is decided; and
Do not stop the clock from running on a civil money
penalty while the appeal is pending, as this can insulate noncompliant
facilities against the imposition of these penalties.
Response: We are revising redesignated Sec. 488.432 to be more
specific and discuss when penalties are collected. We say that, when a
facility requests a hearing on the noncompliance which led to the
imposition of the civil money penalty, HCFA or the State will not
initiate collection of the penalty until a final administrative
decision is rendered which upholds the determination of noncompliance.
If a facility does not request a hearing within the time period for
requesting a hearing, collection of the penalty will begin when the
facility achieves substantial compliance or is terminated. If a
facility waives its right to a hearing in writing within 60 days of the
date of the notice of intent to impose the penalty, collection is
initiated when the facility achieves substantial compliance with the
participation requirements or is terminated. This section now
references Sec. 488.440, which discusses the accrual of the civil money
penalty and computation and notice of the amount due, and Sec. 488.442,
which discusses when payments for civil money penalties are due.
Comment: A commenter stated the proposed regulation does not permit
the survey agency to impose a remedy for a second deficiency found as a
result of a complaint survey until a pending hearing on a deficiency
cited from a previous survey is concluded.
Response: This regulatory provision does not compromise the ability
of the Secretary or the State to impose another remedy if one is
warranted for a second situation of noncompliance before a final
administrative decision is concluded on the first situation of
noncompliance which has led to the pending imposition of a civil money
penalty. However, if a civil money penalty is the preferred remedy for
the second instance of noncompliance, as it was for the first, it will
not be collected until the final administrative decision supporting its
imposition is concluded. In this case, the State or HCFA could increase
the civil money penalty amount if the noncompliance found later creates
a situation of immediate jeopardy. If the second situation of
noncompliance results from repeated deficiencies, HCFA or the State
would increase the civil money penalty. However, the noncompliance
found at a later time may warrant a remedy other than a civil money
penalty which could be imposed before there is a final administrative
decision on the first situation of noncompliance.
Comment: We received many comments stating that the proposed
process will precipitate prolonged appeals without civil money
penalties ever being assessed.
Response: The Act requires that an administrative appeal be
provided before civil money penalties are collected. Even a prolonged
appeals process does not eliminate the civil money penalty unless the
facility prevails at the hearing. For example, if a provider achieves
substantial compliance by the time of the appeal, the correction is
only relevant from the standpoint of the number of days the penalty
applies. The fact that a facility achieves substantial compliance
before the hearing does not eliminate the need for the hearing. If the
facility does not prevail in the hearing, the civil money penalty is
collectible for each day of noncompliance.
Comment: Commenters endorsed incorporating a variety of ideas into
the final rule to discourage frivolous appeals, including the
following: provide for the accrual of interest pending appeal at a rate
fixed by the State, stipulate that attorney fees will not be paid and
are not an allowable cost if the appeal is unsuccessful, and, as stated
in the Institute of Medicine Report, deny payment of provider fees for
unsuccessful appeals of survey related costs. Another commenter
requested the rule be revised to include that facilities not be allowed
to claim on State or Federal income taxes civil money penalties and
legal expenses upheld on appeal.
Response: We do not support these revisions. It would not be fair
practice to assess interest on a civil money penalty before the
provider knows the outcome of the hearing on the imposition of that
penalty. To charge interest for the time period during which a hearing
is pending would be tantamount to punishing the provider for exercising
its right to have an administrative hearing, as provided for in
sections 1128A(c)(2) and 1919(h)(8) of the Act. Regarding the comments
about attorney fees, other provider costs and income taxes, these
payment issues are not addressed in the Act and are beyond the scope of
this regulation.
Section 488.434 Notice of Penalty
Comment: One commenter asked for further clarification of HCFA
notice of penalty and State notice of penalty provisions of the
regulation.
Response: We revised the content of Sec. 488.434 to be more
specific regarding the notice of intent to impose the penalty. The rule
now states that, when HCFA proposes to impose a civil money penalty, it
would deliver or send to the provider written notice of its intent to
impose the penalty. The notice would include reference to the statutory
basis for the penalty; the nature of the noncompliance; the amount of
the penalty per day of noncompliance; any factors specified in
Sec. 488.438(f) that were considered when determining the amount per
day of the proposed penalty; the date the penalty starts accruing; when
the penalty will stop accruing; when collection of the penalty will be
made; and instructions for responding to the notice. These instructions
would include a specific statement of the facility's right to a hearing
and the implications of waiving a hearing.
The rule now states that, when the State imposes a civil money
penalty in the case of any non-State operated nursing facility, the
State must notify the facility in accordance with State procedures;
however, the State's notice must be written and it must include, at a
minimum, the information specified in the HCFA notice of penalty as
stated above.
Comment: A few commenters were concerned about implementation of
civil money penalties if HCFA could not issue the notice in a timely
manner.
Response: Although HCFA and the State will proceed quickly to issue
notice of the imposition of the civil money penalty, its imposition
does not hinge on specified notification timeframes. The notice of the
imposition of the penalty is not required before a civil money penalty
can start to accrue, since the Act permits the imposition of civil
money penalties for past violations that have been corrected, and the
penalty may start accruing as early as the date the facility was first
out of compliance. For these reasons, in Sec. 488.402, we exclude the
civil money penalty remedy in the discussion of the notification
requirements when remedies are imposed.
Comment: One provider organization recommended revising the notice
of penalty section to specify that the State sends the notice via
certified mail in all cases except State operated facilities and other
facilities when HCFA is imposing the penalty based on a validation
survey. This comment also listed specifics to be included in the
notice.
Another commenter recommended that the notification requirements
HCFA uses when it imposes the civil money penalty must also be the
minimal standards applied to the State, instead of allowing the State's
notice to be prepared in accordance with State's procedures.
Response: We are not accepting the suggestion that the notice be
sent via certified mail because this would preclude sending a valid
notice via other means, such as telefax, telegram, commercial overnight
delivery services, or other means that may be faster. In fact, for
these reasons we are revising this section of the rule to eliminate the
requirement that the notice be sent by mail with a return receipt
requested. Also, to have the State send the penalty notice to Medicare
participating facilities and to dually participating facilities, as the
commenter suggests, would be inappropriate as HCFA provides notices for
Medicare facilities.
We accept the comment to require that the contents included in the
HCFA notice of penalty be contained in the State notice of penalty.
Accordingly, as stated in a previous response, we are revising
redesignated Sec. 488.434 to provide that the State must notify the
facility in accordance with State procedures for all non-State operated
NFs when the State takes the action; however, the State's notice must
be written and must include, at a minimum, the information specified in
redesignated Sec. 488.434(a). This revision is consistent with existing
policy in prescribing the content of State notices in Medicaid provider
termination cases and other Medicaid and AFDC matters.
Section 488.436 Waiver of Hearing; Reduction of Penalty Amount
Comment: We received many comments opposing the facility's
opportunity to have a 35 percent reduction in the civil money penalty
if the facility waived its right to a hearing. Commenters said that
this provision is inappropriate in the regulatory process, not
reflective of Congressional intent, insulting, tantamount to blackmail
and plea bargaining and without statutory basis for offering a bonus to
providers who waive their appeal rights. Some commenters objected to
the 35 percent reduction if a facility waives its right to a hearing
because they felt a justified penalty should be imposed without any
compromise or reduction. Another commenter stated that, if the
penalties reflect the deficiencies, then reducing the penalty amount
makes the penalty lose some of its deterrent value. One commenter was
concerned that the waiver of hearing provision, as written, may induce
HCFA or the State to inflate the penalty. Then, if the penalty is
reduced 35 percent because of the waiver, the fine amount is the amount
it would have been before the reduction.
A commenter agreed with this regulatory provision on waiver of a
hearing and stated that this is appropriate since informal conflict
resolution can be used to eliminate misunderstandings or deficiencies
that are not supported by the evidence.
Response: The 35 percent reduction in the civil money penalty
afforded providers for waiver of right to appeal is based on a State
model (Sec. 488.436). Providers are free to reject the option to waive
the right to a hearing. The intent behind this regulatory provision is
to encourage facilities to carefully consider their position in terms
of substantial compliance, as well as the costs they will incur in
litigating the matter, before tying up already overburdened hearing
resources.
Also, if we are not confronted with the administrative costs of
litigation, we believe we should consider offsetting civil money
penalty amounts accordingly. On its face, these waiver provisions could
seem to lessen the deterrent value of the civil money penalty. However,
a 35 percent reduction of a $10,000 per day civil money penalty leaves
a penalty amount of $6,500 per each day of noncompliance, and this is a
significant deterrent to continued noncompliance.
We disagree with the comment that the waiver provision may induce
HCFA or the State to inflate the penalty because the per day amount of
the civil money penalty will be determined before the facility would
have the opportunity to exercise its option to waive a hearing. This is
because the notice of the intent to impose the penalty includes the
amount of the penalty per day of noncompliance, as well as the option
to waive the hearing.
Regarding dispute resolution, we appreciate the support of this
commenter and agree that dispute resolution is an appropriate vehicle
afforded the provider to address survey finding issues.
Comment: One commenter stated that the waiver should not permit the
facility to deny the existence of the deficiency for the purpose of
determining whether repeat violations exist.
Response: The opportunity to waive the right to a hearing and
consequently receive a 35 percent reduction in the amount of the civil
money penalty does not permit the facility to deny the existence of
deficiencies for any purpose, nor will waiver of the right to a hearing
remove the deficiencies from the facility's record. When a facility
waives its right to a hearing, it is in effect not contesting the
deficiency.
Comment: One commenter suggested replacing may with must as
alternative language indicating that, ``HCFA or the State must reduce
the civil money penalty.'' A few commenters stated that the language
used in the preamble regarding proposed Sec. 488.230(e) renders the
reduction in the penalty mandatory, and the language used in the
regulation text is permissive.
Response: We erred in the proposed text. We accept the suggestion
and intended to require that, when a facility requests a waiver of a
hearing in writing, within the 60 day timeframe, HCFA or the State
reduces the civil money penalty amount by 35 percent, and we are
revising the final rule accordingly. We are also adding a paragraph to
specify that, if the facility does not waive its right to a hearing, in
writing, within 60 days from the date of the notice of intent to impose
the penalty, the civil money penalty is not reduced. We believe the
specified timeframe gives the provider ample opportunity to decide
whether or not to exercise its option to waive a hearing.
Comment: One commenter stated that allowing a reduction in the
amount of the civil money penalty will necessitate that States develop
and implement complicated and costly accounting systems for
recordkeeping and reporting purposes. Another commenter suggested that
the collection of civil money penalties will be very confusing and they
would rather have lower penalty amounts than the opportunity for a 35
percent reduction.
Response: Less litigation as a result of the waiver of hearing
provision more than compensates for the recordkeeping and reporting
necessary to implement the 35 percent reductions in civil money
penalties. We are striving not only to reduce litigation costs but also
to reduce the considerable investment of time necessary to prepare for
and participate in a hearing. Imposing lower fine amounts instead of
allowing the 35 percent reduction for a waiver is not in keeping with
the reasons, as stated above, for having this provision.
Comment: A few commenters requested that the reduction of the civil
money penalty amount when a facility waives its right to a hearing be
50 percent. Another suggestion was permitting a reduction of up to 35
percent. One commenter recommended the percent reduction be 10 percent
and only available upon prompt payment.
Response: We believe that 35 percent is reasonable and appropriate,
based on our review of an existing State model, and it approximates the
savings we believe are possible by not litigating these cases.
Comment: One commenter suggested that the waiver of appeal rights
submitted be written and that 50 percent of the civil money penalty be
paid within 15 days from the date of notification.
Response: We accept the suggestion that the waiver be in writing
and have made this revision in the final rule. We do not accept the
suggestion that 50 percent of the penalty be paid within 15 days from
the date of the receipt of a request to waive appeal rights. If a
facility waives its right to request a hearing in accordance with the
provisions specified in Sec. 488.436, and subsequently receives a 35
percent reduction in the amount of the penalty owed, we do not believe
it is necessary to also offer the facility the opportunity to pay only
50 percent of the civil money penalty at that time. To accept partial
payments of a civil money penalty creates an unnecessary recordkeeping
system and detracts from the financial incentive to motivate compliance
which civil money penalties were intended to create. Also, we specified
in the regulation that the entire penalty is payable on the due date,
and that date would be 15 days after receipt of the waiver request if
the facility has achieved substantial compliance with the requirements
or the facility has been terminated. However, if the facility has not
achieved substantial compliance or been terminated when the waiver
request is received, the civil money penalty would continue to accrue
until the facility achieves substantial compliance or is terminated.
The due dates for civil money penalties are specified in Sec. 488.442.
Comment: A few commenters proposed that the number of days in which
a facility may request, or waive the right to, a hearing be changed.
The alternatives were 10, 20 or 30 days.
Response: We do not accept the commenters' recommendations to
change the number of days in which a facility may request or waive its
right to a hearing. The existing 60 day timeframe to request a hearing
has been effective in accommodating the needs of the government to move
quickly in situations of noncompliance without unduly compromising the
due process considerations of the provider. It often provides
sufficient time to the facility to resolve disagreements prior to the
initiation of costly litigation or, failing resolution of
disagreements, adequate time to prepare for a hearing. To adopt a
shorter timeframe, as suggested by the commenters, could compromise
these opportunities.
Comment: A couple of the commenters offered the following
alternative text for proposed Sec. 488.230(e): ``The facility must pay
the civil money penalty that was imposed, less 35 percent, and correct
the deficiencies for which the civil money was imposed, within 10 days
of receipt of the notice. This waiver of hearing is called
settlement.''
Response: We do not accept these comments. We believe these
suggestions do not allow a facility enough time to make a decision
regarding whether to waive or request a hearing.
Section 488.438 Amount of Penalty
Comment: Several commenters supported the ``two tier'' civil money
penalty system as enunciated in proposed Sec. 488.230(f)(1).
Response: We appreciate the support of these commenters for this
regulatory provision.
Comment: Many commenters believed that the civil money penalty
fines of up to $10,000 a day are excessive and exorbitant. A few
comments stated that the range is too broad and would create
inconsistency on a national level. Some commenters said that imposing
civil money penalties for non-immediate jeopardy deficiencies is
severely punitive and ``overreacting'' and they should only be imposed
in severe, life threatening or repeated situations.
Response: The Act allows a maximum civil money penalty of $10,000
per day of noncompliance. By designating the highest two thirds of the
civil money penalties as the immediate jeopardy range, we believe we
have developed a system for the States to use under which relatively
few facilities will be subject to a maximum penalty. We expect that the
higher penalties will seldom be imposed, because situations involving
immediate jeopardy occur far less frequently than those with no
immediate jeopardy. Furthermore, the range of civil money penalties for
immediate jeopardy cases is broad enough to allow us the flexibility to
impose the maximum civil money penalty in only the most egregious cases
and some lower amount within the range for other situations of
immediate jeopardy. We believe penalties imposed in the immediate
jeopardy range are justified because residents are in life threatening
situations, and we want to motivate the facility to immediately correct
deficiencies. We set the amounts of the penalties within the two ranges
to allow consideration of the unique characteristics of each situation
of noncompliance. It is inappropriate to refer to a ``consistent''
application of civil money penalties because each situation of
noncompliance and the factors that affect the amount of the civil money
penalty are unique for each facility.
Comment: Several commenters stated that the civil money penalty
system appears to duplicate existing State systems and doubled fines
could financially destroy facilities. A few commenters asked that the
proposed rule be amended to allow States to use their civil money
penalty system when they have demonstrated that their system is
effective.
Response: The Medicare and Medicaid programs are separate and
distinct from State licensure programs. It is possible that a civil
money penalty could be imposed under the State licensure program as
well as under the Medicare and Medicaid programs; however, there is no
reason to assume that the penalties would be doubled.
A State can use its licensure civil money penalty system for
Medicaid purposes when it has demonstrated its effectiveness in
accordance with Sec. 488.406. These provisions state that alternative
State remedies for facilities participating in Medicaid may be imposed
if the State demonstrates to HCFA's satisfaction that the alternative
remedies are as effective in deterring noncompliance and correcting
deficiencies as the HCFA remedies.
Comment: A few commenters recommended that civil money penalties be
significantly reduced, because if a facility receives a civil money
penalty of $5,000 or more, that facility loses its ability to train
nurse aides.
Response: As stated above, the $10,000 per day civil money penalty
limit is established in the Act. While the Act gives the State and the
Secretary the discretion to impose a penalty as high as the limit, we
will not, as a matter of policy, lower civil money penalty amounts in
specific cases to preclude facilities from losing their ability to
train nurse aides. If a civil money penalty of $5,000 or more is
imposed on a facility, it is indicative of the fact that an egregious
situation of immediate jeopardy exists. In this case, we believe the
facility's ability to continue to train nurse aides is compromised and
the facility should lose approval of its nurse aide training and
competency evaluation program. However, as we have already stated, we
anticipate that the higher penalties will seldom be imposed, as
situations involving immediate jeopardy occur far less frequently than
those with no immediate jeopardy.
Comment: One commenter recommended revising proposed
Sec. 488.230(f)(2) to specify that a civil money penalty may not be one
of the alternative remedies imposed when a facility does not meet the
eligibility criteria for continuation of payment and HCFA will or the
State must terminate a provider's agreement. Also, the commenter
recommended that neither HCFA nor the State may impose more than four
penalties against a facility on the basis of a single survey and the
maximum total penalty amount that may be imposed against a facility
during any twelve-month period is five hundred dollars per licensed or
certified bed.
Response: The Act does not preclude the imposition of a civil money
penalty remedy as an enforcement option when the facility does not meet
the eligibility criteria for continuation of payment or is terminated.
In fact, section 1919(h)(7) of the Act discusses the special rules
applicable when other remedies additional or alternative to termination
are imposed. Concerning the specified amount of the penalty that can be
imposed per licensed or certified bed during a specific time period,
the Act does not specify such a limitation, and utilizing these
limitations would unnecessarily restrict the authority of the Secretary
and the State to tailor a civil money penalty remedy to the specific
situation of noncompliance. However, the Act does set dollar
limitations for each day of noncompliance. Therefore, the Act
contemplates that all deficiencies will be aggregated for the purposes
of determining the number of days of noncompliance (as opposed to the
number of deficiencies).
Comment: A few commenters requested that we clarify if survey
agencies may exceed the specified penalty ranges when a facility
alleges compliance but a revisit by HCFA or the State finds
noncompliance. One commenter recommended that the penalty be doubled in
this situation even if it exceeds the penalty limit. Another commenter
suggested replacing may with shall at proposed Sec. 488.230(f)(3) so
that this section reads, ``HCFA or the State shall increase the daily
penalty if the facility alleges compliance * * *.''
One commenter disagreed with Sec. 488.230(f)(3) concerning HCFA's
or the State's ability to increase the daily penalty if the facility
alleges compliance but a revisit finds noncompliance. The commenter
recommended including an objective and quantifiable basis for
increasing such penalties or deleting this regulatory provision.
Another commenter suggested increasing the civil money penalty when a
facility alleges completion of its plan of correction, but a revisit
finds the facility has not completed its plan.
Response: As noted above, we are revising redesignated Sec. 488.438
to provide that a civil money penalty would be decreased to the lower
range of penalty amounts if a revisit determines that the immediate
jeopardy is removed but the noncompliance continues. However, if the
noncompliance, that continues constitutes repeated deficiencies in the
same regulatory grouping of requirements, the civil money penalty would
be increased, as specified in sections 1819(h)(2)(B) and 1919(h)(2)(A)
and (h)(3)(C) of the Act. A civil money penalty could be increased to
the upper range of penalty amounts if deficiencies for which a lower
level penalty amount was imposed have become sufficiently serious to
pose immediate jeopardy. We are also revising Sec. 488.438 to provide
that civil money penalties are increased, even if a new penalty amount
exceeds the range for nonimmediate jeopardy, when deficiencies in the
same regulatory grouping of requirements for which a civil money
penalty was imposed are repeated.
We cannot accept the suggestion to increase a civil money penalty
if a facility does not follow its plan of correction. When a remedy is
lifted for a facility, it is based on that facility's substantial
compliance with the requirements, not on the facility's adherence to
its plan of correction. The health or safety of a resident could be
jeopardized by a situation in which a plan of correction was followed
but the facility was still not in substantial compliance with the
participation requirements.
Comment: One commenter stated that there is no provision in the
regulation which would prohibit daily penalties from mounting. This
commenter added that this is not reflective of the Congressional intent
behind sections 1819(h)(3) and 1919(h)(4) of the Act, which says that a
finding to deny payment terminates when the State or Secretary finds
that the facility is in substantial compliance with the requirements of
subsections (b), (c), and (d).
Response: A facility can always stop the accrual of a civil money
penalty by correcting the situation that caused the noncompliance. With
regard to all remedies, we received many comments recommending that the
standard of substantial compliance with sections 1819(b), (c), and (d)
and 1919(b), (c), and (d) of the Act be incorporated into the rule as
an acceptable measure of compliance. As discussed previously in this
preamble, we accept this comment and we will lift remedies imposed for
noncompliance when a facility is in substantial compliance with
sections 1819(b), (c), and (d) and 1919(b), (c), and (d) of the Act.
Comment: A few commenters requested we add, at proposed
Sec. 488.230(f), that interest accrues on all penalties not settled, at
the credit card rate, from the date of citation.
Response: We do not accept this comment. Redesignated Sec. 488.438
discusses the base amount of the civil money penalties. We do not think
it is appropriate to incorporate the interest rate in this section. A
discussion of interest follows in redesignated Sec. 488.442.
Comment: One commenter suggested that when noncompliance could
financially benefit a facility, the amount of the penalty should never
be less than twice what the State or HCFA can reasonably assume to have
been the savings to the facility, as a facility should never believe it
is in its financial self-interest to violate the law. This commenter
also said that HCFA and the State should have access to any data
(employee salaries, fees, supply costs, etc.) that will provide
necessary information to determine the amount of the penalty.
Response: We do not agree. First, it would be beyond the scope of
this rule to require the State to determine or for HCFA to try to
determine when noncompliance would financially benefit a facility.
Moreover, to provide that civil money penalties be twice the presumed
savings incurred by the facility would be to establish an arbitrary
requirement that would unnecessarily complicate using civil money
penalties as an enforcement option.
A facility that perceives it is in its financial self interest to
violate the law commits a grave error as it could face termination of
its provider agreement for noncompliance.
Comment: A few commenters recommended that all minimum penalty
amounts specified at proposed Sec. 488.230(f) and the ``per day''
modifiers in the regulation be deleted to permit the Secretary or the
State more discretion when imposing civil money penalty amounts.
Response: We do not accept these comments. The minimum penalty
amount is set at $50 because we believe that any lesser amount would
not be a remedy for any provider. The $50 minimum penalty amount also
corresponds to the imposition of civil money penalties in increments of
$50; this process was designed for purposes of simplicity of
implementation.
The Act specifies that a civil money penalty may be imposed for
each day of noncompliance. We believe that removing references to ``per
day'' alters the clear instructions specified in the Act. Furthermore,
the Secretary and the State always have discretion to impose or not to
impose a civil money penalty, since the law states that a civil money
penalty may be imposed for each day of noncompliance.
Comment: Many commenters responded that the factors used to
determine the amount of the civil money penalty are too broad and will
promote inconsistency. A commenter posed that these factors are
subjective, not uniform, and therefore, are challengeable in a court of
law. A few commenters suggested removing the factors used to determine
the amount of the civil money penalty from the final regulation while a
few said that HCFA and the State should be required to give due
consideration to the information provided by the facility.
Many commenters were generally negative in response to using the
facility's financial condition as a factor affecting the amount of
penalty and offered the following arguments about this policy:
It is not equitable;
It would result in inconsistent civil money penalties for
the same deficiency;
Poorly managed and/or not-for-profit facilities should not
be excused or pay a lower civil money penalty;
It discriminates against facilities that are more solvent;