Statement of Mary K. Ousley, Senior Vice President,
Health Services, Marriott Senior Living Services, Bethesda, Maryland,
on behalf of American Health Care Association

Testimony Before the Subcommittee on Health
of the House Committee on Ways and Means

Hearing on Medicare Reform: Bringing Regulatory Relief to Beneficiaries and Providers

March 15, 2001

Good morning Madame Chairman, and Members of the subcommittee. Thank you for inviting me here today to provide perspective on reform of the Health Care Financing Administration. I am honored to be here.

My name is Mary Ousley, and I am here today on behalf of the American Health Care Association. The American Health Care Association is a non-profit association representing more than 12,000 non-profit and for-profit skilled nursing, assisted living, subacute facilities, and facilities treating the developmentally disabled nationwide.

Let me briefly tell you about myself. I have been in the caregiving profession for nearly three decades. I am a registered nurse, a licensed administrator, and someone with first-hand experience on the front lines of caregiving. I am not here to beat up on HCFA. I have worked with them both informally and formally, in many capacities, and on many issues. However, it is critical that we enlist them as partners in serving the beneficiaries through a more active role in quality improvement.

I would like to commend you, Madame Chairman, on your vision for long term care, and for taking the time in the last few years to roll up your sleeves and get to know the intricacies of the care needs -- and care environment -- of our nation's frail, elderly and disabled population.

There is a storm approaching in long term care. We have a demographic crisis brewing that, if not addressed today, will severely threaten the quality and availability of care for the baby boomers who are now entering retirement. While this generational bubble begins to strain the long term care system, the supply of caregivers dwindles to crisis levels, and the oversight system serves to promote distrust of providers, demoralizes caregivers, and scares families.

Financially, nursing homes are treading water. We appreciate the Medicare PPS adjustments you made in BIPA last year because these adjustments are providing some stability to our Medicare patients. But it is imperative to note that nearly 70% of our residents are Medicaid beneficiaries, and that is where our real financial trouble lies.

You spoke eloquently a few short month's ago about the state of caregiving in this country, and your words have been appreciated by those hard working women who perform a very difficult and demanding job. You said, ""We’re going to drive people out of the caregiving environment – because they came there to give care, not to do paperwork."

All I can say is, how right you were. We are facing a staffing crisis of epidemic proportions in every part of the United States. Turnover rates in our profession are more than 80%. Recruitment is nearly impossible. This crisis is compounded exponentially by a regulatory system that forces caregivers to focus an extraordinary amount of time on cumbersome paperwork and complex, confusing regulatory requirements.

This burdensome system is having a negative impact on patient care by driving good providers out of the business. Caregivers who enter this profession today quickly find themselves spending more time on paperwork describing their care, and justifying their actions on behalf of patients -- than on actually delivering care.

I am not here today to ask for less government -- I am here today to ask for smarter, more accountable government – government that works in the best interest of promoting and maintaining quality care for beneficiaries.

Since the Institute of Medicine (IOM) study in 1986 and the Nursing Home Reform Act of 1987 (OBRA ’87), nursing facilities’ daily operations have been inextricably linked to the Health Care Financing Administration (HCFA). The system of oversight that exists today -- though well-intended -- grew like a vine, and evolved into an ineffective bureaucracy.

The result of this evolution is that what was originally envisioned by the IOM to be a resident-centered, outcome-oriented, consistent system of oversight, was implemented in a manner that meets none of those criteria, and in many cases, does just the opposite.

Today, providers face a system of oversight that is an entirely subjective, process-oriented snapshot inspection system that focuses on punishment -- not quality improvement. This system bears very little resemblance to what OBRA ’87 envisioned.

The current system is susceptible to political forces, and providers are caught in the crossfire. The result of the current political climate is a type of "catch-22" scenario, in which a low number of citations is interpreted as poor oversight, while a high number of citations are seen as poor care. Clearly the incentive for inspectors is to cite more deficiencies.

The subjectivity of the survey system makes it unpredictable. This means that no provider, even if they have done everything correctly, can predict whether they will receive citations on any given inspection. This helps explain the wide variation in the charts attached to my testimony.

The Institute of Medicine (IOM) in their December 2000 report "Improving the Quality of Long Term Care," discovered that "forty concurrent surveys in ten states found that state surveyors were inconsistent in detecting problems related to outcomes of care…" , and that "At the same time, states surveyors also cited some facilities for deficiencies that appeared to be a function of their high prevalence of seriously impaired residents rather than poor quality care." In our view, a system that consistently fails to measure quality has little hope of improving it.

Let me again be very clear about one point: We are not talking about less regulation, we are talking about better, more intelligent regulation.

We need regulation that holds, as its ultimate goal, the improvement of care quality we provide to our frail, elderly and disabled patients. We absolutely believe that the underlying concepts in OBRA’87 are sound. Yet, we as providers know that it has been the implementation and evolution of that statute -- through HCFA regulation and related policy-- that has missed the mark.

Dr. William Scanlon of the GAO, when asked by Senator Grassley last September if the quality of the surveys and the data derived from them is reliable enough to make judgements about the level of quality provided in nursing homes, answered: "I am afraid it is not."

Over four years ago, HCFA itself, when writing about the same subjective inspection system used in hospitals wrote, "…there are no data supporting the link between structure and process requirements, and positive patient outcomes. The combination of process-oriented requirements with an enforcement approach that focuses on identifying providers that do not have the required structures and procedures in place, no longer represents the best available method for assessing and improving hospital quality of care."

I would ask then, how could it represent the best available method for assessing and improving nursing home quality of care?

So, the questions before us are: What is the role of government in quality? What reforms would garner the most meaningful improvements? And, how can we ensure these reforms will provide continuous improvement in quality of care while protecting residents?

First, let me state that chronic poor performers that are unwilling or unable to improve the level of quality they provide should be closed. But this is extremely hard to judge because as the GAO testified, our oversight system does not provide a reliable measure of quality, only compliance with process requirements. It also does not reward excellence in caregiving with incentives to providers that achieve great outcomes.

HCFA must adapt to new technologies that create an objective system that provides useful, accurate information to consumers and providers alike.

In many states, the oversight bodies that contract with HCFA to inspect nursing homes have applied for waivers from HCFA to use modern technology in quality measurement, to use outcome measures, or provide a collaborative approach to quality improvement. Unfortunately, all of these waivers have been denied.

The American Health Care Association (AHCA) has also worked toward meaningful improvement of the oversight system for years. We have developed software that gives providers information on their performance on key "quality indicators"(QIs) measured against national and local benchmarks. As opposed to the current snapshot, this system monitors actual resident conditions continuously over time. We have also developed customer satisfaction tools that measure residents’ and families satisfaction with the care received.

However, these efforts have been stymied by HCFA’s refusal to share the aggregate data (MDS) that each provider transmits to them electronically every month. Members of this subcommittee have called HCFA asking them to provide these data to facilities to improve quality internally. We have even filed a Freedom of Information Act (FOIA) suit to get this quality information, with no response. This makes little sense, and is emblematic of the overall problem where HCFA can not move, and retards quality improvement.

The bottom line is that as quality measurement technology has advanced, and HCFA’s inspection system has stagnated – As a result it has become out of date, a more subjective and more punitive system.

It is imperative that the focus of HCFA oversight be changed to one of quality improvement in which government becomes a true stakeholder in improved quality for beneficiaries.

We urge you to adopt three types of reform of nursing home oversight:

One is making the much-needed incremental changes in the current regulatory system.

The second is to allow the regulators in the states to make advances in oversight without facing certain denial by Washington – to approve state waivers.

The third is broader restructuring of the role and responsibilities – and resources – of the HCFA. Yes, we believe they do not have adequate resources or training to do what is expected of them adequately.

With regard to the incremental improvements to the current system, the following are key areas in which minor changes could be made that would improve the quality of regulation, and also the quality of care we can provide. Below are 10 recommended steps:

1. Allow Collaboration - Create a collaborative system so providers and regulators can work together to address problems. In such a system, providers would retain responsibility to fix problems, but surveyors would play a supportive role to help providers achieve improvements. Currently, when surveyors find a problem, they are not allowed to discuss possible causes, provide technical assistance, or to suggest solutions. This "no collaboration" policy is an obstacle to ongoing improvements in quality. This is directly opposite of the approach taken with other providers such as clinical laboratories. Solution: Guidance must be given to inspectors through the State Operations Manual (SOM) to encourage collaboration and compliance-assistance toward quality improvement.

2. Allow providers to follow physician orders. All too often, providers are cited for deficiencies for simply following the orders of the residents’ physician. Nursing home inspectors, who are rarely physicians and do not have medical training, often cite providers for giving medication as prescribed, but that the inspector might not understand is appropriate and, in the physician’s judgement, is in the best interest of the patient. This is the only instance in health care where less-skilled personnel are allowed to second guess the orders of physicians, and nursing home care providers get punished. This system has forced providers to choose between government fines and the well being of those for whom they care. Most of the time, they pay the fine and protect the resident, but this system must be changed. Providers need to be allowed to follow the patients’ doctor’s orders without fear of citation.

3. Prevent HCFA from closing Nurse Aide Training Programs - We are currently operating in a severe shortage of nursing home workers. This shortage is predicted to rapidly escalate until there are far fewer caregivers than needed. In this environment, HCFA is terminating the in-house nurse aide training programs for facilities with certain deficiencies or enforcement actions (even if completely unrelated to the training programs themselves). Clearly this "punishment" only hampers the providers’ ability to fix the problem and hire and train adequate staff to improve quality. Termination of Nurse aide training must only be an option when there is a deficiency directly related to the training program itself.

4. Implement a fair and timely appeals process - Currently, providers who want to dispute citations they believe have been issued in error first appeal to the agency that issued the citation. This process is not objective, and more often than not, a decision is rendered against the facility. Next, they must go through an administrative process that takes, on average, 1 year and 2 months. If appealed further, the next level, the Departmental Appeals Board (DAB) takes, on average, 1 year and 6 months. We must establish a fast and impartial system of appeal that will dispose of grievances in an equitable way, quickly impose citations that are merited, and dismiss those that are not.

5. Enlist Resident Assistants - Allow additional caregivers to help meet resident’s daily needs. Currently, HCFA allows untrained volunteers to perform nursing-related tasks, but the paid staff of the facility can not help dress, feed, or even push a wheelchair (even under direct RN supervision) unless trained to become a full CNA. During this severe shortage of caregivers, and amid concern about nutrition and hydration, we need every caring hand we can find to help meet resident needs. Legislation is being drafted by Members of this Committee to address this problem through a demonstration program, and we look forward to working with you to pass this into law.

6. Remove disincentives to improving facilities - Allow new owners to improve facilities without threats of closure due to previous problems. Today, a new owner who purchases a troubled facility inherits the track record, fines, enforcement penalties, and the termination status of the previous owner. In some cases, facilities have been closed within months of the takeover due to compliance problems that were cited before the turnover. This policy discourages companies from taking over problem homes and improving care. The government should work towards improving care for residents -- not prevent it. A positive step forward would be to allow a new owner to start with a chance to improve care.

7. Spend fine money improving care for residents. Funds collected from nursing facilities through fines for care problems should be spent on fixing the problem, not sitting in state and federal coffers ready to be diverted to other purposes. In the last 2 1/2 years, funds collected from nursing facilities by states alone amounted to over $20 million – and this does not include a large amount of federal fines. The overwhelming majority sits in state coffers and is not spent on the improvement of care. This is a significant amount of money to take from the facilities that need it most, and unconscionable to allow it to go unused for care improvement. The federal government should mandate that fines collected from troubled facilities be spent improving care in those facilities. HCFA must review and find appropriate citation levels for fines. At what level is correction less desirable than punishment?

8. Prevent mandatory termination. - Current law dictates that if a facility has been cited for substantial deficiencies, the clock starts running, and they must be found in compliance within six months or face mandatory termination of their Medicare certification. This may sound reasonable, but the effect has been that homes fix all problems cited in the initial survey, but have very minor new deficiencies in follow-up surveys - - for which they are terminated. Most homes cannot remain open without being paid, and therefore residents are forced to give up their home. The statute must be changed to allow providers and regulators to consider other options for the residents’ benefit, and to give residents and their families more voice in those decisions.

9. Prevent the labeling of Chains. It is inappropriate to label all facilities that have common ownership as poor performers just because of the shortcomings of one facility. This is misleading to consumers and in no way fosters care improvement. "Guilt by association" should not be tolerated, nor allowed.

With regard to the second issue, I can be brief and keep it simple. The oversight system works best when people closest to the beneficiary have a stake in the decision making process. HCFA does have the authority to grant Medicaid waivers to states, and should approve good waivers. HCFA should also be granted similar authority for oversight of dually-certified providers who serve Medicare beneficiaries as well.

Lastly, in terms of broader HCFA restructuring, we feel it is imperative that any new structures put in place be targeted toward achieving two major goals. The first is that policy and oversight for providers of care be housed together, but with a distinct philosophy of partnership. That government be a real stakeholder, accountable with providers and dedicated to working collaboratively to improve quality for beneficiaries.

The second major goal must be that the continuum of long term care be made more seamless so that the mass of baby boomers needing benefits can access services in a clear, rational manner. As the needs of seniors shifts the benefits should follow the individual without excessive paperwork and hand-offs between regulators.

In the final analysis Madame Chairman, it is imperative that the HCFA of the future have the resources and the structure to meet the needs of the millions of retiring seniors as the system meets the challenge of this demographic boom.

I have confidence that government and health care providers seek the same goal of ensuring quality care. With a new Administration, new leadership at HHS, HCFA, and even right here on this Committee, we look forward to establishing a fresh start, and a new, positive dialogue in which caregiver and regulator alike always puts the interests of patients first.

Thank you.