Report 2006-106 Summary - April 2007
Department of Health Services:
Its Licensing and Certification Division Is Struggling to Meet State and Federal Oversight Requirements for Skilled Nursing Facilities
Our review of the Department of Health Services' (Health Services) oversight of skilled nursing facilities revealed the following:
- Health Services has struggled to initiate and close complaint investigations and communicate with complainants in a timely manner.
- Health Services did not correctly prioritize certain complaints and understated the severity of certain deficient practices it identified at skilled nursing facilities.
- Health Services has yet to implement an Internet-based inquiry system as required by state law to provide consumers with accessible public information regarding skilled nursing facilities.
- The system Health Services uses to track complaint investigations regarding skilled nursing facilities has weak controls over data integrity that could allow erroneous data to be entered into the system without being detected.
- The timing of some federal recertification surveys is more predictable than others, which diminishes the effectiveness of these reviews.
- Health Services has weak controls over its disbursements of funds from the Health Facilities Citation Penalties Account, which limit its ability to ensure that funds are used for necessary purposes.
- Despite efforts to increase staffing, Health Services has struggled to fill its vacant facility evaluator positions with registered nurses. This reliance on registered nurses is also problematic because of the current nursing shortage and higher salaries offered elsewhere in state service.
RESULTS IN BRIEF
The Department of Health Services (Health Services) is responsible for protecting and enhancing the health of the State's citizens. With an annual budget of roughly $38 billion and a staff of more than 6,000 in fiscal year 2006-07, Health Services works toward achieving its mission by administering a broad range of health programs, such as the California Medical Assistance Program, and overseeing various health care professionals and facilities, such as administrators and health care providers employed at skilled nursing facilities. Citizens whose primary needs are for ongoing nursing support rely on more than 1,200 skilled nursing facilities for care each year.
To operate a skilled nursing facility in California, or to receive federal funding under Medicaid or Medicare, a skilled nursing facility administrator must obtain Health Services' continued approval. As part of its approval process, Health Services must ensure that residents of skilled nursing facilities are receiving quality care. Health Services' key oversight functions include investigating complaints from facility stakeholders, such as physicians and concerned relatives of residents, and conducting recurring inspections of skilled nursing facilities to determine whether they continue to comply with state and federal program requirements.
Our review of Health Services' oversight of skilled nursing facilities revealed that it has not consistently followed state and federal laws and regulations and its own policies governing the oversight process. In particular, we found that Health Services has struggled to investigate and close complaints promptly and make timely communications with complainants. The Health and Safety Code requires Health Services to initiate investigations of all but the most serious complaints within 10 working days. Additionally, according to its policy, Health Services' goal is to complete a complaint investigation within 45 working days of receiving the complaint. To measure how promptly Health Services initiated and closed complaint investigations, we used data from its complaint-tracking system. We found that data related to the dates Health Services received complaints, initiated investigations, and closed complaints were of undetermined reliability. The data were of undetermined reliability primarily because of weaknesses in application controls over data integrity. According to these data, Health Services received roughly 17,000 complaints and reports of incidents that facilities self-reported between July 1, 2004, and April 14, 2006. Although not every complaint Health Services receives and reviews warrants an investigation, we found that Health Services promptly initiated investigations for only 51 percent of the 15,275 complaints for which it began investigations and promptly completed investigations only 39 percent of the time.
Our audit also noted that Health Services' staff could not demonstrate that they have consistently communicated with complainants promptly. Program statutes require Health Services to acknowledge its receipt of complaints within two working days and inform complainants in writing of the results of their investigations within 10 working days of completing their work. For 21 of the 35 complaints we reviewed, the files contained copies of the initial letters to the complainants. In seven of these 21 cases, we found that Health Services notified the complainant beyond the two working-day time frame. For the most delayed case, it took Health Services 104 days to notify the complainant. Similarly, for all 22 cases that contained copies of the second letter, we found that Health Services notified the complainant of the results of the investigation beyond the 10-working-day time frame. In the most delayed case, it took Health Services 273 days to provide this notification to the complainant. The main cause for delays in providing the second notice appears to be Health Services' practice of waiting for the facility to first submit its plan of correction, which can take another 10 to 15 days beyond the date the facility was notified, before informing the complainant of the investigation results. By failing to consistently meet deadlines for communicating with complainants, Health Services unnecessarily exposes complainants to continued uncertainty about the well-being of residents at skilled nursing facilities.
In addition to timeliness issues, we found that Health Services may not have correctly prioritized complaints it received against skilled nursing facilities. For 12 of the 35 complaints we reviewed, Health Services may have understated the priority of complaints that, according to requirements, would have warranted more urgent investigations. We also found that Health Services may have understated the severity of the deficiencies it identified for nine of the 35 recertification surveys we reviewed. When Health Services does not classify deficiencies at a sufficiently severe level, the enforcement actions Health Services imposes on skilled nursing facilities may not be adequate, and facility stakeholders may form misperceptions about the quality of care offered at those facilities. It has also yet to implement an Internet-based inquiry system as required by statute to provide consumers with accessible public information regarding skilled nursing facilities. This inquiry system must provide information to consumers regarding a skilled nursing facility of their choice, including its location and owner, number of units or beds, and information on state citations assessed.
Our audit also revealed that Health Services could improve some of its business practices. We found that the system Health Services uses to track complaint investigations for skilled nursing facilities has weak application controls. We also found that Health Services did not record complaint data consistently and some complaint records contained data that is potentially inaccurate. These data problems limit Health Services' ability to effectively manage and accurately report its activities. Further, our audit found that although Health Services completes its recertification workload within federally required time frames, the timing of some recertification surveys is more predictable than that of others, depending on the region in which the skilled nursing facility is located. The more predictable the timing of Health Services' recertification surveys, the greater the opportunity for skilled nursing facilities to mask deficient practices.
We also found that Health Services has weak controls over its disbursements of funds from the Health Facilities Citation Penalties Account (citation account). Between fiscal years 2001-02 and 2005-06, Health Services spent more than $14.7 million from the citation account. Although most of those funds paid for temporary management companies—firms appointed by Health Services to take control over a skilled nursing facility that fails to comply with federal and/or state requirements—we found that Health Services did little to ensure that the payments it made were necessary or reasonable. In particular, Health Services disbursed more than $10.5 million to one temporary management company based primarily on the company's e-mails requesting funds. Without firm controls over expenditures, Health Services cannot be sure that citation account funds are used for necessary purposes.
Health Services cited staffing shortages as the cause of many of its oversight problems. We believe that Health Services' explanation has some merit. Our review of the staffing levels within the Field Operations Branch (branch) of the Licensing and Certification Division indicated that securing adequate staffing has been a problem. In the fiscal year 2005-06 budget, the Legislature approved funding for 485 positions within the branch, of which 397 were facility evaluator positions. During the same year, the branch reported it was able to fill 426 of these approved positions, of which 347 were facility evaluators. Most of these facility evaluators are registered nurses, accounting for 78 percent of the 397 health facility evaluator positions authorized in fiscal year 2005-06. Annual vacancy rates for these positions averaged about 16 percent between fiscal years 2002-03 and 2005-06 but have declined slightly each year since fiscal year 2003-04. Health Services primarily focuses on hiring candidates that are registered nurses; however, a nursing shortage and higher salaries elsewhere make filling these positions problematic.
To proactively manage its complaint workload, Health Services should periodically evaluate the timeliness with which district offices initiate and complete complaint investigations. Based on this information, Health Services should identify strategies, such as temporarily lending its staff to address workload imbalances occurring among district offices.
To ensure that it fully complies with state law regarding communication with complainants, Health Services should reassess its current practice of delaying notification to complainants about investigation results until after it receives acceptable plans of correction from cited skilled nursing facilities. If Health Services continues to support this practice, it should seek authorization from the Legislature to adjust the timing of communications with complainants accordingly.
To ensure that it can provide the public access to complete and accurate information regarding skilled nursing facilities as the Legislature intended, Health Services should continue in its efforts to implement an Internet-based inquiry system and take steps to ensure that the data it plans to provide through the system are accurate.
To improve the accuracy of complaint data used to monitor its workload and staff performance, Health Services should develop strong application controls to ensure that its data are accurate, complete, and consistent. This process should include validating the data entered into key data fields, ensuring that key data fields are complete, and training staff to ensure consistent input into key data fields, such as the field designed to capture the date on which the investigation was completed.
To reduce the predictability of its federal recertification surveys, Health Services should institute a practice of conducting surveys throughout the survey cycle, ensuring that each facility has a greater probability of being selected at any given time.
To ensure that it can adequately justify the expenses it charges to the citation account, Health Services should take steps to gain assurance from temporary management companies that the funds they received were necessary. This should include reviewing the support behind temporary management companies' e-mails requesting payments.
To fill its authorized positions and manage its federal and state workloads, Health Services should consider working with the Department of Personnel Administration to adjust the salaries of its staff to make them more competitive with those of other state agencies seeking similarly qualified candidates. In addition, Health Services may want to consider hiring qualified candidates who are not registered nurses. Finally, if these options prove unsuccessful, Health Services should develop additional strategies, such as temporarily reallocating its staff from district offices that are less burdened by their workloads to those facing the highest workloads.
Health Services agreed with our recommendations and indicated it is taking action to address them.