ODDC- Highlights of Federal Oversight of Growing Medicaid Home and Community-Based Waivers Should Be Strengthened

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TITLE:Highlights of Federal Oversight of Growing Medicaid Home and Community-Based Waivers Should Be Strengthened, http://www.gao.gov/new.items/d03576.pdf June 2003

Author: General Accounting Office, (Katherine Cargill-Willis 1/21/04)

Background: In 2001approximately one-third of the Medicaid budget ($228 billion) was spent on long-term care in both institutional and community-based settings. States administer the program within broad federal rules and according to a CMS-approved a state plan. States are mandated to provide some services, such as nursing home care and home health care. Other services, such as personal care, are optional, which a state may choose to offer, but if they are offered, they must be offered statewide. States may also apply to CMS for a section 1915(c) waiver to provide home and community-based services (HCBS) as an alternative to institutional care in a hospital, nursing home, or intermediate care facility for the mentally retarded (ICF/MR). To receive federal funds for waiver services, a state must submit an application to Health and Human Services (HHS) identifying the target population, specifying the number of persons that will be served, and listing the services to be included. Federal regulations specify that the state’s safeguards for the health and welfare of beneficiaries must include (1) adequate standards for all providers of waiver services and (2) assurance that any state licensure or certification requirements for providers of waiver services are met.

If approved, HCBS waivers allow states to limit the availability of services geographically, to target services to specific populations or conditions, or to limit the number of persons served, actions not generally allowed for state plan services. States often operate multiple waivers serving different population groups. Services available under waivers may include home modification, transportation, chore services, respite care, nursing services, personal care services, and caregiver training for family members.

To be eligible for waiver services, an individual must meet the state’s criteria for needing the level of care provided in an institution. States determine the specific financial and functional eligibility criteria used, conduct the necessary screening and assessment, and arrange for services to be provided. CMS requires that a state’s waiver application include documentation regarding the standards applicable for each service provider. If the only requirement for a particular provider is licensure or certification, the state must provide a citation to the applicable state statute or regulation. If other requirements apply, the state must specify the applicable standards that providers must meet and explain how the provider standards will ensure beneficiaries’ welfare. Finally, states must annually report on how they implement, monitor, and enforce their health and welfare standards and the waiver’s impact on the health and welfare of beneficiaries. If CMS determines that a waiver application meets program requirements, including sufficient documentation to indicate that necessary safeguards to protect the health and welfare of waiver beneficiaries, it will approve an initial waiver for a 3-year period.

Waivers may be extended for additional 5-year periods. An extension of a waiver will be granted unless (1) CMS’s review shows that the assurances the state made were not met and (2) the state fails to provide adequate documentation and assurances to justify an extension. Reviews of waiver programs for which a renewal has been requested are expected during the initial 3-year period, and at least once during each renewal cycle. The reviews require on-site visits including an examination of beneficiary and provider records. If a state’s efforts to protect the health and welfare of waiver beneficiaries are inadequate, CMS can either bar the state from enrolling any new waiver beneficiaries until corrective actions are taken or terminate the waiver.

Oversight of waivers is often decentralized and fragmented among a variety of agencies and rarely does a single entity have accountability for the overall quality of care provided to waiver beneficiaries. Some waiver service providers are regulated by state licensing agencies, some are certified by private accreditation organizations, and others operate under terms of a contract or other agreement with a state agency.

Waivers Are Vehicle for Dramatic Growth in Medicaid HCBS: Medicaid-covered HCBS services have become a growing component of state long-term care systems and in a few states, these waivers are beginning to replace nursing homes as the dominant means for providing long-term care. Over the past ten years, total Medicaid long-term care spending has more than doubled - from $33.8 billion in fiscal year 1991 to $75.3 billion in fiscal year 2001. However, the share of spending for institutional care declined from 86 to 71 percent, while the share spent for HCBS care grew from 14 to 29 percent. Waiver spending grew from five percent of all Medicaid long-term care spending in fiscal year 1991 to 19 percent in fiscal year 2001. In all but two states - California and New York—and the District of Columbia, over one-half of Medicaid HCBS spending in fiscal year 2001 was through waivers.

Every state except Arizona operates at least one waiver for the elderly. In 1982, the first year of the waiver program, 6 states operated HCBS waivers. By 1992, 48 states operated a total of 155 HCBS waivers. As of June 2002, 49 states and the District of Columbia operated a total of 263 HCBS waivers, with 77 serving the elderly. In 1999, 15 states served more than 10,000 persons in their waivers for the elderly, an increase from only four states in1992. Nationally, the number of HCBS waiver beneficiaries nearly tripled from 235,580 in 1992 to 688,152 in 1999. The number of people served in waivers for the elderly more than doubled from 155,349 in 1992 to 377,083 in 1999. At the same time, Medicaid beneficiaries who used some nursing home care grew by only 2.5 percent. By 1999, waivers for the elderly were serving 19% of all beneficiaries served either in a nursing home or through an HCBS waiver for the elderly, an increase from nine percent in 1992. In 1999, the average expenditure per person in HCBS waivers serving the elderly was $5,567, an increase from $3,622 in 1992.

State Quality Assurance Concerns: There is no nationwide data available on quality assurance systems for the care provided through HCBS waivers. States’ waiver applications and annual reports often contained little or no information on the mechanisms used to ensure quality. Over one-third of waivers were unavailable because they lacked a review from the regional office. Of those with a CMS waiver oversight report, an annual state waiver report, or a state audit report more than half identified oversight weaknesses and quality-of-care problems. Frequently cited quality-of-care problems included:

Failure to provide authorized or necessary services,
Inadequate assessment or documentation of beneficiaries’ care needs in the plan of care, and
Inadequate case management

Eleven applications for the 15 largest waivers serving the elderly identified three or fewer quality assurance mechanisms. Eighteen of 52 state annual waiver reports contained no information on the mechanisms used to help ensure quality. Since the applications or reports were not complete, CMS could not see how states ensured quality. Information in state waiver applications and annual reports identified a variety of tools used to protect the health and welfare of recipients. Some of these approaches focus on the waiver beneficiary, such as case management or beneficiary satisfaction surveys. Other focused on providers, including licensure and inspections, corrective action plans, sanctions, and program manuals. States may require that certain providers be licensed or certified. A third set of quality assurance approaches focuses on waiver program operation.

Waiver applications: Most of the applications for the 15 largest waivers provided CMS limited information on how they plan to protect the health and welfare of beneficiaries. The two mechanisms most frequently cited by states were (1) licensure for some HCBS waiver providers, such as home health agencies and residential care providers, and (2) case management.

Annual waiver reports: The quality assurance mechanisms states’ annual reports cited most frequently included (1) audits of case management agencies, (2) reviews of provider or direct-care staff, (3) licensure and certification of providers, (4) beneficiary satisfaction surveys or interviews, (5) case management, and (6) training and technical assistance. Only 13 of the 40 states identified complaint systems as a monitoring tool in their annual waiver reports. Eighteen of the elderly waiver reports (26%) from 12 states did not include a description of the process for monitoring the standards and safeguards under the waiver, as required on the reporting form. CMS regional office reviews or state audits identified weaknesses in state oversight for waivers in 15 of 23 waivers. In some cases, the waiver programs did not have essential oversight systems or processes in place. CMS regional office reviews and states’ annual waiver reports identified quality-of-care related problems in 36 of 51 HCBS waiver programs. They found weaknesses in the delivery of key elements of HCBS that could affect waiver beneficiaries’ health and welfare, but the reports did not say enough to demonstrate the impact of these weaknesses on waiver beneficiaries. The most frequently identified quality-of-care problems involved failure to provide authorized or necessary services, inadequate assessment or documentation of beneficiaries’ care needs in the plan of care, and inadequate case management.

Provision of authorized or necessary services: Identified problems included (1) services identified in plans of care not rendered, (2) inadequate nutrition provided to waiver beneficiaries, and (3) discontinuation of services without adequate notice to beneficiaries.
Plan of care: Issues included plans of care that (1) insufficiently addressed the needs of waiver beneficiaries, (2) were not completed or updated appropriately, and (3) were missing from beneficiaries’ files.
Case management: Examples of case management problems included case managers who (1) were unaware of beneficiaries having lapses in delivery of care, (2) were not always aware of procedures or protocols for reporting abuse, neglect, or exploitation, (3) failure to complete resident assessments-service plans were either incomplete or inappropriate, and updates to plans of care were late, or (4) did not always appear to have a clear understanding of service definitions or requirements of the waiver or Medicaid program.

CMS Guidance to States and Oversight of HCBS Waivers are Inadequate: As of June 2002, about one-fifth of the 228 waivers in place for 3 years or more had either never been reviewed or were renewed without a review. CMS is not holding its own regional offices or states accountable for oversight of the quality of care provided to individuals served under HCBS waivers. CMS regional offices are expected to conduct periodic waiver reviews to determine whether states are protecting the health and welfare and annual state reports are required by law. These reviews and reports are to be used in determining whether a waiver should be renewed. Most CMS regional offices have not conducted timely reviews of the state agencies administering waivers serving the elderly and other target populations or have not completed reports to document the results of their reviews. The allocation of staff resources and travel funding levels have at times impeded the scope and timing of their reviews and some on-site visits have been substituted with more limited desk reviews. CMS has several initiatives to generate information and dialogue on quality assurance approaches, but they still have not:

Required states to submit detailed information on their quality assurance approaches, or
Stipulated the necessary components for an acceptable quality assurance system.

CMS recognizes that insufficient attention has been given to the various mechanisms that states could and should use to monitor quality in their waiver programs. The initiatives did include:

Identifying strategies that states are currently using to monitor and improve quality in HCBS
Distributing a guide on quality improvement and assessment mechanisms for states and regional offices, ·Giving technical assistance and resources to states.

In May 2002, CMS introduced a voluntary application template for its new consumer-directed HCBS waiver to describe states’ quality assurance and improvement programs, including

The frequency of quality assurance activities,
The dimensions monitored,
The qualifications of quality assurance staff,
The process for identifying problems,
Provisions for addressing problems in a timely manner, and
The system for handling critical incidents or events

Periodic on-site reviews are used to determine, among other things, whether a state is ensuring the health and welfare of waiver beneficiaries. Over a ten-year period, a regional office should have conducted two reviews for each waiver.

Eighteen percent of all HCBS waivers that have been in place for three years or more either have never been reviewed by the regional offices or have not been reviewed prior to their last waiver renewal.
Fourteen of the 42 waivers- serving approximately 37,000 people in 1999- have had ten or more years elapse without a regional office review.

As of June 2002, 23% of the review reports in over half of the regional offices had not been finalized. Without such a final report, there is no formal documentation to indicate whether a state has fulfilled the required assurances, including those related to the health and welfare of waiver beneficiaries. States routinely fail to submit these annual reports within the required time frame. A review of the most recent annual state reports for 70 of 79 HCBS waivers serving the elderly cited the following problems:

Reports for more than a third of waivers were at least 1 year late;
Reports for approximately one-fourth of the waivers provided no information on whether deficiencies had been identified through the monitoring processes,
Five reports indicated that deficiencies had been identified but provided no additional information about the nature of or response to the problems.
Four of the 15 HCBS waivers were not reviewed in a timely manner by the CMS regional office- none of the 4 had reviews for 8 or more years and yet were renewed.
Four of the 15 waivers had no waiver review final report completed by the regional office.
Four of the 15 waivers lacked a timely annual state report to the regional office.
Seven of the 15 waivers had annual state reports that were incomplete, lacking information on their quality assurance mechanisms or deficiencies had been identified.

CMS guidance instructs regional office staff to review beneficiary records; interview waiver beneficiaries, primary direct-care staff of waiver providers, and case managers; and observe waiver beneficiaries and the interaction between the beneficiary and direct-care staff. This guidance was updated in January 2001 when use of the new HCBS waiver quality review protocol became mandatory. The new protocol does not address important operational issues such as simple size, methodology and should the sample be divided into different groups served under the waiver.

Three of the 10 regional offices had specialists assigned to waiver oversight, such as registered nurses or qualified mental retardation professionals and three of the ten regional offices identified the direct assignment of specialist staff. CMS’s waiver review protocol specifies that the participation of clinical and other specialist staff is important to assessing issues related to beneficiaries’ health and welfare. Many regional offices indicated that they had to “borrow” specialist staff from other departments within the region. Four of the ten CMS regional offices identified insufficient travel funding. Regional office staff indicated that there was no correlation between the amount of travel dollars made available by the regional offices for the reviews and the review schedule set forth by CMS headquarters. Regional office responses to inadequate travel funds have included (1) conducting a “desk review” without visiting state agency officials, providers, and waiver beneficiaries, (2) limiting the number of days allotted for the review, (3) reducing the number of staff assigned to conduct the review, or (4) not reviewing a particular waiver at all.

Recommendations for Executive Actions: To ensure that state quality assurance efforts are adequate to protect the health and welfare of HCBS waiver beneficiaries, the CMS administrator should:

Develop and provide states with detailed criteria regarding the necessary components of an HCBS waiver quality assurance system,
Require states to submit more specific information about their quality assurance approaches prior to waiver approval, and
Ensure that states provide sufficient and timely information in their annual waiver reports.

To strengthen federal oversight of the growing HCBS waiver programs and to ensure the health and welfare, the Administrator should:

Ensure allocation of sufficient resources and hold regional offices accountable for conducting thorough and timely reviews of the status of quality in HCBS waiver programs, and
Develop guidance on the scope and methodology for federal reviews of state waiver programs, including a sampling methodology that provides confidence in the generalizability of the review results.

Agency Comments To The Evaluation: CMS generally concurred with GAO’s recommendations to improve state and federal accountability for quality assurance in HCBS waivers but raised concerns about the definition of quality, how best to ensure quality in state waiver programs, the appropriate state and federal oversight roles, and the resources and guidance required to carry out federal quality oversight. CMS cited growth in the number of persons served by HCBS waivers was evidence of beneficiary satisfaction. Even assuming that beneficiary satisfaction alone is a reliable indicator of quality, CMS offered no empirical evidence to support its position. Only about half of the state annual waiver reports indicated that states measured satisfaction with services.

CMS asserted that design of a waiver, not monitoring its implementation, is the most important contributor to quality, and the agency’s recent efforts have focused on working with states to improve design. GAO disagrees with CMS, stating that they do recognize the importance of maintaining states’ considerable flexibility in ensuring quality in HCBS waivers but concludes that insufficient emphasis has been placed on balancing this flexibility with measures to ensure the accountability called for by both statute and regulations.

GAO did not recommend an additional or increased federal oversight role or the adoption of oversight systems such as those used for institutional providers. CMS currently receives too little information from states about their quality assurance approaches to hold them accountable, raising a question as to whether the agency has adequate information to approve or renew some waivers.

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