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Medicane/Noveins: Medicane Homes
UNITED STATES
GENERNY ACCOUNTING OFFICE
REPORT TO THE CONGRESS
Continuing Problems In
Providing Nursing Home Care
And Prescribed Drugs
Under The Medicaid Program
In California
B-164031(3)
Social and Rehabilitation Service
Department of Health, Education,
and Welfare
BY THE COMPTROLLER GENERAL
OF THE UNITED STATES
FORD is LIBRARY GERALD
AUG.26,1970
UNITED
STATE
COMPTROLLER GENERAL OF THE UNITED STATES
GENERAL OFFICE ITNG
WASHINGTON, D.C. 20548
B-164031(3)
To the President of the Senate and the
Speaker of the House of Representatives
This is our report on continuing problems in providing
nursing home care and prescribed drugs under the Medicaid
program in California. Medicaid is a grant-in-aid program
administered at the Federal level by the Social and Rehabili-
tation Service, Department of Health, Education, and Welfare.
Our review was made pursuant to the Budget and Accounting
Act, 1921 (31 U.S.C. 53), and the Accounting and Auditing Act
of 1950 (31 U.S.C. 67).
Copies of this report are being sent to the Director, Of-
fice of Management and Budget, and to the Secretary of Health,
Education, and Welfare.
Acting Comptroller General
of the United States
FORD i LIBRARY GERALD
COMPTROLLER GENERAL'S
CONTINUING PROBLEMS IN PROVIDING
REPORT TO THE CONGRESS
NURSING HOME CARE AND PRESCRIBED
DRUGS UNDER THE MEDICAID PROGRAM
IN CALIFORNIA
Social and Rehabilitation Service,
Department of Health, Education,
and Welfare (B-164031(3)
DIGEST
WHY THE REVIEW WAS MADE
Problems in providing nursing home care and controlling payments for pre-
scription drugs under the medical assistance program for welfare recipi-
ents in California were pointed out by the General Accounting Office (GAO)
in an August 1966 report to the Subcommittee on Health of the Elderly,
Special Committee on Aging, U.S. Senate.
California, in March 1966, replaced its medical assistance program with
Medicaid, a grant-in-aid program administered at the Federal level by the
Department of Health, Education, and Welfare (HEW). Expenditures for its
nursing home care program increased from about $67 million in 1965 to
about $160 million in 1968. HEW paid about half of the amount each year.
Because of that substantial increase and the concern of the Congress over
the rising costs of medical care, GAO examined into the actions taken by
HEW and the State of California to correct the problems discussed in its
August 1966 report.
FINDINGS AND CONCLUSIONS
Actions taken by HEW and the State to correct the previously reported
problems were generally ineffective. Coordination between State agencies
still is insufficient to successfully implement the Medicaid program.
(See p. 36.)
Some problems continue because California's Medicaid plan, as approved by
HEW, does not provide adequate guidelines. GAO's review shows that
--payments are not stopped for Medicaid patients in nursing homes where
significant substandard conditions persist (see pp. 10 to 18),
--narcotics and other drugs in nursing homes are not controlled prop-
erly (see pp. 20 to 23), and
--patients are transferred from one nursing home to another for the
benefit of the attending physician or nursing home operator (see
pp. 34 and 35).
Tear Sheet
1
FORD i LIBRARY GERALD
AUG. 26,
AGENCY ACTIONS AND UNRESOLVED ISSUES
Improper practices continue also because the State does not have adequate
procedures to help ensure compliance with guidelines. GAO's review
HEW informed GAO that it would review Federal regulations relating to the
showed that
quality of nursing home care and their application with California offi-
cials. Similar reviews would be made in some other States and possibly
--controls over authorizations for medication and treatment were inade-
in all States eventually, HEW said.
quate (see pp. 19 and 20),
HEW agreed that the State agencies responsible for administering Califor-
--drugs for patients who had died or had been discharged were not de-
nia's Medicaid program should make sure that other agencies assisting them
stroyed or proper records of their destruction were not kept (see
are aware of their responsibilities. HEW promised to discuss that issue,
pp. 24 and 25),
as well as other GAO findings, with State officials, and to assist the
State in determining corrective actions.
-supplemental payments, prohibited under Medicaid, were made to nursing
homes for services covered by the rates paid to the homes (see pp. 26
HEW stated that it would review with the State the implementation of HEW
to 28),
regulations designed to ensure delivery of proper quantities of drugs and
the new pharmacy billing form designed by the State to improve drug claim
--patients' personal funds were not always properly safeguarded (see pp.
processing and determine whether further action would be necessary. (See
28 to 30), and
pp. 38 and 44.)
--some nursing home advertising was misleading and advertising was not
being policed (see pp. 31 to 33).
MATTERS FOR CONSIDERATION BY THE CONGRESS
The continuing nursing home problems are attributable, at least in part,
GAO is sending this report to the Congress because of the congressional
to the inadequacy of administrative reviews by HEW regional representa-
interest in the Medicaid program and in the provision of quality nursing
tives. (See pp. 36 and 37.)
home care to program recipients. The report should be useful to the
Congress in its consideration of planned legislative changes to the
GAO has found also that the procedures for payment of prescribed drugs
Medicaid program.
do not ensure that payments are made only for prescribed drugs actually
delivered for use by program recipients in nursing homes or other insti-
tutions, or private homes, or that drugs are dispensed by pharmacies in
quantities and in frequencies consistent with physicians' dosage instruc-
tions. (See pp. 39 to 45.)
RECOMMENDATIONS OR SUGGESTIONS
The Secretary, HEW, should
--direct HEW regional representatives to review State agencies' imple-
mentation of HEW regulations on the care of Medicaid patients in
nursing homes,
-impress upon State officials the need to clarify the roles of State
and county agencies involved in the Medicaid program,
--help the State find solutions to the problems discussed in this re-
port, and
--urge the State to see that payments for prescribed drugs are made
only for drugs actually delivered for the use of program recipients
and that drugs are dispensed in quantities and in frequencies con-
sistent with physicians' instructions. (See pp. 37 and 44.)
Tear Sheet
DERALD FORD LIBRARY
3
2
Contents
Page
DIGEST
1
CHAPTER
1
INTRODUCTION
4
Medicaid program coverage
5
Administration of the Medicaid program
6
Medicaid program in California
6
Changes in procedures relating to nurs-
ing home care under Medi-Cal
7
2
PRACTICES IN PROVIDING NURSING HOME CARE
9
Standards of care
10
Violations of nursing home standards
12
Agency comments and actions
18
Controls over medication and treatment
for Medicaid patients in nursing homes
19
Authorizations for medication and
treatment
19
Accounting for drugs and quantities
of drugs on hand in nursing homes
20
Accounting for narcotics
20
Accounting for drugs other than
narcotics
22
Drugs on hand
24
Agency comments and actions
25
Supplemental payments to nursing homes
for Medicaid patients
26
Safeguarding patients' personal
funds
28
Agency comments and actions
30
Advertising by nursing homes of physical
therapy facilities
31
Agency comments and actions
33
Transferring patients between nursing
homes
34
Agency comments and actions
35
Conclusions, recommendations, and agency
comments and actions
36
Recommendations to the Secretary of
Health, Education, and Welfare
37
Agency comments and actions
38
FORD i LIBRAR 976879
COMPTROLLER GENERAL'S
CONTINUING PROBLEMS IN PROVIDING
CHAPTER
Page
REPORT TO THE CONGRESS
NURSING HOME CARE AND PRESCRIBED
DRUGS UNDER THE MEDICAID PROGRAM
3
CONTROLS OVER PAYMENTS FOR PRESCRIBED DRUGS
39
IN CALIFORNIA
Conclusions, recommendations, and agency
Social and Rehabilitation Service,
comments and actions
44
Department of Health, Education,
and Welfare (B-164031(3)
Recommendation to the Secretary of
Health, Education, and Welfare
44
Agency comments and actions
44
DIGEST
4
SCOPE OF REVIEW
46
WHY THE REVIEW WAS MADE
APPENDIX
Problems in providing nursing home care and controlling payments for pre-
scription drugs under the medical assistance program for welfare recipi-
I
Letter dated June 15, 1970, from the Assistant
ents in California were pointed out by the General Accounting Office (GAO)
Secretary, Comptroller, Department of Health,
in an August 1966 report to the Subcommittee on Health of the Elderly,
Education, and Welfare, to the General Ac-
Special Committee on Aging, U.S. Senate.
counting Office
49
California, in March 1966, replaced its medical assistance program with
II
Comments of California Department of Health
Medicaid, a grant-in-aid program administered at the Federal level by the
Department of Health, Education, and Welfare (HEW). Expenditures for its
Care Services, dated March 4, 1970
56
nursing home care program increased from about $67 million in 1965 to
about $160 million in 1968. HEW paid about half of the amount each year.
III
Principal officials of the Department of
Health, Education, and Welfare having re-
Because of that substantial increase and the concern of the Congress over
sponsibility for the activities discussed
the rising costs of medical care, GAO examined into the actions taken by
in this report
HEW and the State of California to correct the problems discussed in its
59
August 1966 report.
ABBREVIATIONS
FINDINGS AND CONCLUSIONS
DHCS
Department of Health Care Services (State)
Actions taken by HEW and the State to correct the previously reported
problems were generally ineffective. Coordination between State agencies
GAO
General Accounting Office
still is insufficient to successfully implement the Medicaid program.
(See p. 36.)
HEW
Department of Health, Education, and Welfare
Some problems continue because California's Medicaid plan, as approved by
HEW, does not provide adequate guidelines. GAO's review shows that
--payments are not stopped for Medicaid patients in nursing homes where
significant substandard conditions persist (see pp. 10 to 18),
--narcotics and other drugs in nursing homes are not controlled prop-
erly (see pp. 20 to 23), and
-patients are transferred from one nursing home to another for the
benefit of the attending physician or nursing home operator (see
pp. 34 and 35).
BERALD R.FORD VIBRARY
Improper practices continue also because the State does not have adequate
AGENCY ACTIONS AND UNRESOLVED ISSUES
showed that
procedures to help ensure compliance with guidelines. GAO's review
HEW informed GAO that it would review Federal regulations relating to the
quality of nursing home care and their application with California offi-
--controls over authorizations for medication and treatment were inade-
cials. Similar reviews would be made in some other States and possibly
quate (see pp. 19 and 20),
in all States eventually, HEW said.
--drugs for patients who had died or had been discharged were not de-
HEW agreed that the State agencies responsible for administering Califor-
stroyed or proper records of their destruction were not kept (see
nia's Medicaid program should make sure that other agencies assisting them
pp. 24 and 25),
are aware of their responsibilities. HEW promised to discuss that issue,
as well as other GAO findings, with State officials, and to assist the
--supplemental homes for payments, prohibited under Medicaid, were made to nursing
State in determining corrective actions.
to 28),
services covered by the rates paid to the homes (see pp. 26
HEW stated that it would review with the State the implementation of HEW
regulations designed to ensure delivery of proper quantities of drugs and
--patients' personal funds were not always properly safeguarded (see pp.
28 to 30), and
the new pharmacy billing form designed by the State to improve drug claim
processing and determine whether further action would be necessary. (See
pp. 38 and 44.)
--some nursing home advertising was misleading and advertising was not
being policed (see pp. 31 to 33).
MATTERS FOR CONSIDERATION BY THE CONGRESS
The to the continuing nursing home problems are attributable, at least in part,
tives. (See pp. 36 and 37.)
inadequacy of administrative reviews by HEW regional representa-
GAO is sending this report to the Congress because of the congressional
interest in the Medicaid program and in the provision of quality nursing
do GAO has found also that the procedures for payment of prescribed
home care to program recipients. The report should be useful to the
delivered not ensure that payments are made only for prescribed drugs drugs
Congress in its consideration of planned legislative changes to the
tutions, or private homes, or that drugs are dispensed by pharmacies in
for use by program recipients in nursing homes or other actually insti-
Medicaid program.
tions. quantities and in frequencies consistent with physicians' dosage instruc-
(See pp. 39 to 45.)
RECOMMENDATIONS OR SUGGESTIONS
The Secretary, HEW, should
--direct HEW regional representatives to review State agencies' imple-
mentation of HEW regulations on the care of Medicaid patients in
nursing homes,
-impress upon State officials the need to clarify the roles of State
and county agencies involved in the Medicaid program,
--help the State find solutions to the problems discussed in this re-
port, and
--urge the State to see that payments for prescribed drugs are made
and only for drugs actually delivered for the use of program recipients
sistent with physicians' instructions. (See pp. 37 and 44.)
that drugs are dispensed in quantities and in frequencies con-
2
3
GERALD LIBRARY FORD
CHAPTER 1
The Medicaid program is a grant-in-aid program under
which the Federal Government pays from 50 to 83 percent
(depending upon the per capita income in each State) of the
INTRODUCTION
costs incurred by the States in providing medical services
to individuals who are unable to pay for such services.
GAO has reviewed the procedures and practices of HEW
For calendar year 1968, the 42 States and jurisdictions
and appropriate agencies of the State of California in pro-
that had Medicaid programs reported expenditures of about
viding nursing home care to, and in controlling payments
$3.9 billion of which about $2 billion represented the Fed-
for drugs prescribed for use by, recipients under the
eral share. About 30 percent of these expenditures was for
Federal-State program of medical assistance for the needy
nursing home care. By August 1970, 52 States and jurisdic-
(Medicaid).
tions had adopted a Medicaid program.
In a prior report¹ to the Chairman, Subcommittee on
The major differences between the Medicaid program and
Health of the Elderly, Special Committee on Aging, U.S.
the prior medical assistance program are (1) increased num-
Senate, we pointed out certain weaknesses and deficiencies
ber of recipients under the Medicaid program and (2) addi-
in the administration of the former medical assistance pro-
tional health services provided to these recipients.
gram in providing nursing home care and prescribed drugs to
welfare recipients in California. In California expendi-
MEDICAID PROGRAM COVERAGE
tures for nursing home care increased from about $67 mil-
lion in 1965 to about $160 million in 1968. The purpose of
Persons receiving public assistance payments under
our most recent review was to appraise the effectiveness of
other titles of the Social Security Act (title I, old-age
the actions taken by Federal and State agencies in response
assistance; title IV, aid to families with dependent chil-
to our prior report.
dren; title X, aid to the blind; title XIV, aid to the per-
manently and totally disabled; and title XVI, optional com-
Since our review was limited to those specific matters
bined plan for other titles) are entitled to benefits of
covered in our prior review, the findings in this report
the Medicaid program. Also, persons whose income or other
should not be considered typical of the entire Medicaid
financial resources exceed standards set by the States to
program in California. The scope of our review is de-
qualify for public assistance programs but whose resources
scribed on page 46.
are not sufficient to meet the costs of necessary medical
care may also be entitled to benefits of the Medicaid pro-
The medical assistance program under which welfare re-
gram at the option of the State. This latter category of
cipients obtained nursing home care in California at the
persons was not covered under the predecessor medical as-
time of our prior review no longer exists. In its place,
sistance program.
California adopted a new plan for medical care to conform
to the requirements of title XIX (Medicaid) of the Social
State Medicaid programs are required to provide inpa-
Security Act, as amended (42 U.S.C. 1396). This plan be-
tient hospital services, outpatient hospital services, lab-
came effective in California on March 1, 1966.
oratory and X-ray services, skilled nursing home services,
and physicians' services. Additional services, such as
dental care and prescribed drugs, may be included in a
1
State's Medicaid program if it so chooses.
Examination into Alleged Improper Practices in Providing
Nursing Home Care and Controlling Payments for Prescribed
Drugs for Welfare Recipients in the State of California"
(B-114836, August 8, 1966).
5
4
GERALD LISRARY FORD
ADMINISTRATION OF THE MEDICAID PROGRAM
$808 million; the Federal share of these expenditures was
about $405 million.
At the Federal level, the Secretary of HEW has dele-
gated the responsibility for the administration of the Med-
DHCS is responsible for making State policy determina-
icaid program to the Administrator of the Social and Reha-
tions, establishing fiscal and management controls, and
bilitation Service. Authority to approve grants for State
performing reviews of Medi-Cal program activities. In ad-
Medicaid programs has been further delegated to the Re-
dition, DHCS is responsible for approving, disapproving, or
gional Commissioners of the Service who administer the
canceling the certification of medical facilities (such as
field activities of the program through HEW's 10 regional
hospitals and nursing homes) for participation in the Medi-
offices.
Cal program. In carrying out its responsibilities, DHCS is
assisted by the State Department of Social Welfare and the
Under the act the States have the primary responsibil-
State Department of Public Health. The Department of So-
ity for initiating and administering their Medicaid pro-
cial Welfare, in conjunction with each county welfare de-
grams. The nature and scope of a State's Medicaid program
partment, is responsible for determining the eligibility of
are contained in a State plan which, after approval by a
recipients for aid under the program and also for providing
Regional Commissioner of the Service, provides the basis
social services to such recipients. The Department of Pub-
for Federal grants to the State. The Regional Commissioners
lic Health is responsible for making periodic inspections
are also responsible for determining whether the State pro-
and evaluations of medical facilities and making recommen-
grams are being administered in accordance with Federal re-
dations to DHCS concerning the certification of such facil-
quirements and the provisions of the State's approved plan.
ities for participation in the program.
HEW's Handbook of Public Assistance Administration provides
the States with Federal policy and instructions on the ad-
CHANGES IN PROCEDURES RELATING TO
ministration of the several public assistance programs.
NURSING HOME CARE UNDER MEDI-CAL
Supplement D of the handbook and the Service's program reg-
ulations prescribe the policies, requirements, and instruc-
Under the former medical assistance program for wel-
tions relating to the Medicaid program.
fare recipients in California, the responsibility for eval-
uating the quality of nursing home care rested primarily
At the time of our review, the HEW regional office in
with the county welfare agencies. To evaluate the adequacy
San Francisco, California, provided general administrative
of care, county medical-social review teams--which included
direction for medical assistance programs in Alaska, Ari-
a medical consultant and a medical-social worker--were re-
zona, California, Guam, Hawaii, Nevada, Oregon, and Washing-
quired to visit annually 10 percent of the welfare recipi-
ton. The HEW Audit Agency is responsible for audits of the
ents in nursing homes. These visits supplemented the li-
manner in which Federal responsibilities relative to State
censure compliance inspection by the Department of Public
Medicaid programs are being discharged. A listing of prin-
Health and represented an added measure of surveillance
cipal HEW officials having responsibility for the activities
over the quality of care being received by these recipients.
discussed in this report is included as appendix III.
The State plan for the Medi-Cal program does not pro-
MEDICAID PROGRAM IN CALIFORNIA
vide for the use of county medical-social review teams to
monitor the quality of care provided to Medicaid recipients
The Medicaid program in California is referred to as
in nursing homes. However, the Medi-Cal program has re-
Medi-Cal. In California the Department of Health Care Ser-
tained the county medical consultant feature of the former
vices (DHCS) was established as part of the Human Relations
program. These Medi-Cal Consultants--medical doctors em-
Agency to administer the program. For fiscal year 1969
ployed on behalf of the State or county--are responsible
California reported Medi-Cal expenditures of about
for reviewing requests for nursing home care and for
GERALD, FORD LIBRARY
6
7
determining whether the individual, for whom such care has
been requested, is actually in need of such care.
CHAPTER 2
A nursing home cannot be paid for services provided to
PRACTICES IN PROVIDING NURSING HOME CARE
a Medi-Cal recipient unless the services have been autho-
rized by a Consultant. However, Medi-Cal Consultants or
In our report dated August 8, 1966, we concluded that
their duly authorized representatives (such as public health
the provisions of the California State plan were deficient
nurses or caseworkers) are not required by State regula-
in that they did not set forth criteria for evaluating the
tions to visit recipients in nursing homes in order to
adequacy of care furnished welfare patients in nursing homes
evaluate the quality of care being provided by the homes.
or provide adequate guidelines or requirements relating to
Therefore, under the Medi-Cal program the only State or
the transfer of welfare patients to other nursing homes.
county organization required to periodically visit nursing
Further, although the State plan did contain provisions re-
homes and report to DHCS on the quality of care being pro-
garding supplemental payments to nursing homes, protection
vided to Medi-Cal recipients is the Department of Public
of patients' personal funds, control and administration of
Health.
medications and treatments, and misleading advertising, ade-
quate procedures had not been established in these areas for
Another area in which Medi-Cal differs substantially
control purposes or to fix the responsibility and authority
from the former program is the method used by the State to
for taking corrective action.
reimburse the providers of medical services. Formerly, this
was primarily a county function. Since the inception of
We expressed the view that the California State plan
the Medi-Cal program, DHCS has contracted with certain pri-
then in effect needed improvement to clarify the respective
vate organizations, such as the California Physicians Ser-
responsibilities of the State and county welfare agencies
vice, the Hospital Service of California, and the Hospital
and of the Department of Public Health to provide the sur-
Service of Southern California, for assistance in adminis-
veillance necessary to disclose deficiencies in the care,
tering the program. These private organizations--acting in
services, or treatment provided welfare recipients in nurs-
the capacity of fiscal agents of the State--coordinate pro-
ing homes and to effect corrective action, and to provide
gram operations between the State and the institutions and
adequate guidelines as to the policies and procedures to be
persons who provide medical services under the program. In
followed by the respective agencies in carrying out these
addition, the fiscal agents review, process, and pay claims
responsibilities.
submitted by the providers for services rendered to program
recipients.
In commenting on our earlier report, HEW and the State
and the local agencies expressed their general agreement with
our findings and conclusions and outlined certain corrective
actions which had been taken or were being contemplated.
Further, HEW and the State agencies expressed the view that,
with the initiation of the Medi-Cal program, there would be
changes in procedures and practices which would help to cor-
rect the problems discussed in our report.
In general, our most recent review has shown that, as
a result of the State's implementation of Medi-Cal, the
State plan now sets forth provisions designed to correct
certain problems identified in our prior report. The plan
includes criteria for evaluating the adequacy of care
8
9
GERALD FORD LIBRARY
furnished Medi-Cal patients and describes the responsibil-
program, the home must (1) with a few exceptions be li-
ity and authority of the various State agencies involved in
censed by the State and (2) meet all additional require-
administering the Medi-Cal program--the Human Relations
ments imposed by HEW. State licensing requirements are set
Agency and its constituent agencies, DHCS, the Department
forth in the California Administrative Code.
of Public Health, and the Department of Social Welfare. Al-
though these provisions have been incorporated in the State
The State's standards that govern the care to be pro-
plan, we found that problems with regard to nursing home
vided to Medi-Cal patients in nursing homes have been sub-
care continued to exist because the State plan has not been
stantially upgraded as illustrated by the following require-
effectively implemented to ensure that adequate care is be-
ments which were not in effect at the time of our prior re-
ing provided to Medi-Cal recipients.
view.
In the following sections of this chapter, we are pre-
1. A registered or licensed nurse must be on duty at
senting the results of our most recent examination into the
all times.
practices of providing nursing home care as they relate to
2. Patients must be visited by their physicians at
--standards of care (pp. 10 to 18),
least once a month.
--controls over medication and treatment for Medicaid
3. Written policies and procedures for patient care
patients (pp. 19 to 25),
must be maintained.
--supplemental payments for Medicaid patients (pp. 26
4. Menus must be planned and supervised by a qualified
to 30),
dietary consultant.
--advertising of physical therapy facilities (pp. 31
Although other requirements have been established, those
to 33), and
listed above are, in the opinion of State Department of
Public Health officials, some of the more significant re-
-transferring patients between nursing homes (pp. 34
quirements which a nursing home must meet in order to par-
and 35).
ticipate in the program.
In a letter dated June 15, 1970, commenting on a draft
Title 17 of the California Administrative Code contains
of this report, the Assistant Secretary, Comptroller, HEW,
provisions for revoking a nursing home license for failure
agreed that problems warranting the careful attention of the
to meet State licensing requirements. In addition to a
State agency and HEW continued to exist in many of the areas
nursing home's removal from the program through a license
examined. (See apps. I and II.)
revocation, HEW regulations require the suspension of pay-
ments to a nursing home for failing to meet standards de-
STANDARDS OF CARE
signed to ensure that medical care is of acceptable quality.
The State plan for the Medi-Cal program specifies the
The State has Medi-Cal Consultants throughout the
standards which must be met by nursing homes in order to
State who are responsible for approving program recipients'
participate in the program and the standards by which the
requests for nursing home care. Title 22 of the California
care to Medi-Cal patients in such nursing homes is to be
Administrative Code provides that the Consultant may cancel
evaluated. HEW has imposed still other standards relating
any authorization for nursing home care in effect if ser-
to the adequacy of medical care to be given to nursing home
vices or placement are not appropriate to the needs of the
patients. For a nursing home to participate in the Medicaid
patient.
10
11
GERALD R.FORD LIBRARY
Violations of nursing home standards
1,250 nursing homes in the State. However, these officials
have informed us also that, because action to revoke a
The Department of Public Health is responsible for
nursing home license--or to otherwise suspend the nursing
periodically inspecting nursing homes. As part of our ex-
home from the program--must be based on a well-documented
amination, we reviewed the Department's inspection reports--
record and must stand the test of formal administrative
covering the period January 1, 1966, through November 15,
proceedings, it is the State's policy to give nursing home
1969--for 70 nursing homes located in 16 counties. These
proprietors every opportunity, through both routine notifi-
inspection reports showed numerous nursing home violations
cations of inspection findings and informal disciplinary
of State licensing and HEW requirements for participation
conferences, to correct deficiencies noted during inspec-
in the Medi-Cal program. For example, there were
tions before formal disciplinary action is initiated.
--219 violations at 57 nursing homes involving medi-
In March 1967, HEW notified all States that, effective
cations given to patients without signed physicians'
January 1, 1969, nursing homes participating in the Medicaid
orders, or medications not administered as prescribed
program must provide nursing service on a 24-hour basis and
or not recorded in the patients' records,
the service must be directed by a registered professional
nurse employed full time by the homes. Also, at all times,
--138 violations at 69 nursing homes involving inade-
the nursing service must be in the charge of a professional
quate general maintenance or inadequate cleaning and
registered nurse or a licensed practical nurse. In this
disinfection of dishes,
connection, the HEW Audit Agency in a report dated June 25,
1969, on its review of the Medi-Cal program stated that
--118 violations at 49 nursing homes involving inade-
about 200 nursing homes which had not met professional staff-
quate nursing care supervision or inadequate or un-
ing requirements were allowed to continue to participate in
qualified nursing staff,
the program beyond the January 1, 1969, deadline. The re-
port concluded that, as a result, Medi-Cal patients had not
--119 violations at 44 nursing homes involving incom-
received the quality of care that had been anticipated under
plete patient records,
the Medicaid program. The State advised each of the approx-
imately 200 nursing home operators of the noted violations
--80 violations at 41 nursing homes involving improper
and stated that the participation of these homes in the
labeling, handling, storage, or disposal of drugs,
Medi-Cal program would be terminated unless the homes met
the staffing requirements. Our review showed that, by
--68 violations at 34 nursing homes involving the ab-
July 31, 1969, 12 of these homes had voluntarily withdrawn
sence of employee health examinations,
from the program; 65 homes had their certificates to par-
ticipate in the program withdrawn by the State; and, about
--38 violations at 23 nursing homes involving inopera-
123 homes had apparently made required staffing changes and
tive patient call systems, and
thus were able to continue in the program.
--38 violations at 17 nursing homes involving inade-
The State plan does not specify which State agency, if
quate diets and menus.
any, has the authority and responsibility to withhold pay-
ment for Medi-Cal patients in nursing homes in which sub-
We have been informed by DHCS and Department of Public
standard conditions exist. We noted that, in a letter dated
Health officials that, at any given time, violations of
April 4, 1967, the Administrator of the Human Relations
varying intensity of certain of the State requirements for
Agency advised the HEW regional representative that the
nursing homes can be found in most of the approximately
Medi-Cal Consultant may deny requests for nursing home care
GERALD
LIBRARY
12
13
for Medi-Cal recipients in nursing homes which fail to meet
by the Department of Public Health to revoke the license of
program standards.
the operator which illustrates, in our opinion, the need
for establishing procedures authorizing Medi-Cal Consultants
As noted on page 11 of this report, title 22 of the
to cancel authorizations for nursing home care for patients
California Administrative Code provides that the Medi-Cal
who are in nursing homes where substandard conditions exist.
Consultant may also cancel any previously approved authori-
zation for nursing home care when services or placement are
In March 1967 the State placed a nursing home operator
not appropriate to the needs of the patient. Notwithstand-
on 3 years' probation, in lieu of revoking his license, for
ing this provision, DHCS officials have advised us that, in
numerous violations of licensing requirements. The condi-
their opinion, a Consultant may not cancel a previously ap-
tions of probation were that the operator meet all such re-
proved authorization for nursing home care simply because
quirements in the future.
the standards of care specified by the State or HEW are not
being met. They have advised us also that a patient's phy-
During the following 13 months, five inspections of
sician is primarily responsible for evaluating the quality
the nursing home disclosed 18 violations of State licensing
of care being provided by a nursing home and for removing
requirements. Department of Public Health officials con-
the patient from the nursing home if he is dissatisfied
sulted with the nursing home operator on three separate OC-
with the quality of care being provided to his patient.
casions during this period. In April 1968 the Department
DHCS officials have advised us further that a Consultant
recommended that the State Attorney General take action to
may not cancel any previously approved authorization--on
revoke the nursing home operator's licesne. During the
the basis of noncompliance with nursing home standards--un-
next 4 months, five more inspections disclosed 28 violations
til all legal and administrative due process has been af-
of State licensing requirements. In September 1968 formal
forded to the nursing home.
license revocation hearings were held for 5 days. In Feb-
ruary 1969 the operator was placed on probation (this time
Accordingly, it appears that under current State prac-
for 5 years) again contingent upon his compliance with all
tices, the removal of a patient from a nursing home which
State licensing requirements.
is not providing the quality of care required is possible
only through (1) time-consuming formal administrative and/or
Almost 2 years elapsed from the start of formal action
legal proceedings or (2) action of the patient's physician.
against the nursing home operator until the case was de-
cided. In the meantime, the State was paying the nursing
In our report dated August 8, 1966, we pointed out that
home for services provided to Medi-Cal patients. We cannot
serious substandard conditions had existed at many of the
say whether this situation resulted in any harm to the pa-
nursing homes for long periods of time without action being
tients, since this could only be determined through a full
taken to revoke the license of the operators. Further,
evaluation of all facts and circumstances involving individ-
where formal revocation action had been taken, many months
ual patients by persons having requisite skills in the medi-
elapsed before final decisions were rendered. During our
cal and/or social welfare fields.
most recent review, we noted that this situation continued
to exist.
We believe that, if the Consultant had threatened to
cancel--or had canceled--authorizations for treatment of
Officials of the Department of Public Health have ad-
Medi-Cal patients in this home, it would have induced the
vised us that license revocation proceedings generally take
from 3 weeks to 22 months and that, since a license revoca-
operator to promptly comply with State licensing require-
ments. In our opinion, so long as the State does not take
tion affects the proprietor rather than the nursing home, a
such action, patients may be provided care of a lesser qual-
revocation proceeding can be stopped through a change in
ownership of the home. Following is an example of an action
ity than called for by the Medicaid regulations.
14
15
GERALD FORD
We agree with DHCS that a patient's physician has the
Although HEW and the State have taken certain actions
responsibility of removing his patient from a nursing home
to substantially upgrade the quality of care provided to
if he is not satisfied with the quality of care being pro-
nursing home patients under the program, we believe that
vided to a patient. We believe, however, that a physician's
further actions are necessary to ensure that Medi-Cal pa-
decision to place or retain a patient in a nursing home
tients do not remain in nursing homes that violate State
which is not complying with Medicaid standards should not be
and HEW requirements for long periods of time. In this re-
gard, there still remains a need to precisely define the
interpreted as requiring the Consultant to approve requests
for care in such homes. Also, the role of the physician
specific authority and responsibility of agencies and in-
dividuals involved in the evaluation of the adequacy of
does not relieve DHCS of its responsibility for ensuring
care provided to patients in a nursing home and the enforce-
compliance with HEW standards for skilled nursing homes.
Moreover, there are situations where we believe the Medi-
ment of nursing home standards.
Cal Consultant should be relied upon to safeguard a patient's
welfare. For example, in homes wholly or partially owned
by physicians or in homes in which they otherwise have a
pecuniary interest, we believe that an objective decision
On April 29, 1970, final HEW regulations to implement
by the physician to remove a patient under these circum-
section 1902(a) (28) of the Social Security Act--relating to
stances would be more difficult. Also, our review of medi-
standards for skilled nursing homes to participate in the
cal records in 14 nursing homes indicated that Medi-Cal pa-
Medicaid program--were published in the Federal Register
tients were not always being visited by a physician at
(45 CFR 249.33). These regulations provide that, if a home
least once each month as required by HEW and the State.
is not in substantial compliance with the standards for pay-
Therefore, in our opinion, such physicians were not in a
ment for skilled nursing home care, the home may not par-
position to monitor the quality of care being received by
ticipate in the Medicaid program. If the home is found to
their patients. On the basis of our review of nursing home
be in substantial compliance (that is, is in compliance ex-
records and State and HEW requirements, we estimate that
cept for deficiencies), the State agency may permit the
1,234 physicians' visits were required for 106 Medi-Cal pa-
home to participate in the program for a period of 6 months,
tients from February 1966 through May 1969. Our review
provided there is a reasonable prospect that the deficien-
cies can be corrected within that time and that the defi-
showed that 215 physicians' visits were not made.
ciencies do not jeopardize the health and safety of the pa-
tients. No more than two agreements for successive 6-month
Neither DHCS nor the Department of Public Health advises
periods may be executed with any one home and a second
the patients' physicians of nursing homes' violations of
agreement may not be executed if a deficiency previously
State and HEW requirements; therefore, the physicians--un-
noted continues unless the home has made substantial effort
less they inspect the home or make inquiries at the appro-
and progress toward its correction.
priate State or county offices--may not know whether a nurs-
ing home (1) has adequate professional staff, (2) has proper
The HEW regulations, if properly implemented by the
food preparation and service, (3) has adequate general
States, should help to resolve problems such as those noted
maintenance, (4) is providing services to the proper number
during our review. We believe that forceful monitoring by
of patients consistent with the licensed capacity, (5) has
HEW of the States' implementation of the regulations relat-
adequate fire protection, (6) has required its employees to
ing to discontinuing payments to homes and granting exten-
take periodic health examinations, or (7) meets accepted
sions of certifications when homes are in substantial com-
professional practices in the labeling, handling, storage,
pliance with standards for payment, will be necessary to en-
and disposal of drugs. We doubt that many physicians are
sure that patients receive the quality of care called for
making such inspections or inquiries nor do we believe that
by the Medicaid regulations.
it is practical for them to do so.
17
16
GERALD FORD LIBRARY
CONTROLS OVER MEDICATION AND TREATMENT
Agency comments and actions
FOR MEDICAID PATIENTS IN NURSING HOMES
In commenting on a draft of this report, HEW stated
that its regulations governing the certification of skilled
Authorizations for medication and treatment
nursing homes to participate in the program are sufficient,
if properly implemented by the State, to eliminate the
The State licensing requirement that there be signed
weaknesses reported relating to the standards of care in
physicians' orders for medication and treatment administered
California. HEW stated also that there may be some misun-
to nursing home patients which was in effect at the time of
derstanding by the State agency as to the provisions of cer-
our prior review, was still in effect at the time of our
tain Federal requirements and that the HEW regional office
recent review. In addition, after our prior report, the
staff will attempt to clarify the requirements for the
California State Board of Pharmacy issued guidelines for
State agency.
providing pharmaceutical services in nursing homes. These
guidelines emphasize the importance of signed physicians'
In a letter dated March 4, 1970 (see app. II), the
orders and accurate recordings on the patients' charts of
State advised HEW that, in an effort to strengthen the ef-
medications administered.
fectiveness of the Medi-Cal Consultants, new standards for
operation of the Medi-Cal Consultant units throughout the
DHCS officials advised us that they relied on inspec-
State are being developed with a view toward obtaining a
tions by the Department of Public Health to disclose defi-
more uniform and more effective application of program pol-
cient nursing home practices in administering medication and
icies, rules, and regulations. We noted that these stan-
treatment to patients. Officials of the Department of Pub-
dards, which were incorporated in State regulations in April
lic Health told us that their inspections of nursing homes
1970, provide for periodic on-site visits to nursing homes
did not include tests of compliance with the State Board of
by staff members of the Medi-Cal Consultant units to evalu-
Pharmacy guidelines because compliance with these guidelines
ate the quality of care.
was not mandatory and because their inspections covered only
compliance with State licensing requirements and Medi-Cal
regulations.
We reviewed 1 month's medical records of 106 Medi-Cal
patients at 14 nursing homes. These records showed that
734 doses of medication were administered without any signed
physicians' orders; 311 doses were administered in quanti-
ties in excess of those prescribed; and 1,210 prescribed
doses were not administered.
As previously noted on page 12, State inspection re-
ports for 70 nursing homes showed that State requirements
regarding authorizations for medication and treatment were
violated more frequently than other requirements. A total
of 219 violations of this type were recorded at 57 nursing
homes.
Where records showed that medications had been admin-
istered without physicians' orders, we were told by nursing
18
19
GERALD FORD LIBRARY
home personnel that the physicians had neglected to write
patients by keeping custody of their medications and admin-
or sign the order. In those instances where records showed
istering them when necessary.
that medications had been administered in greater quanti-
ties than prescribed or had not been administered at all,
Our review at 13 nursing homes showed that narcotics
nursing home personnel told us that (1) there were errors
were being kept in locked cabinets and that, usually, a phy-
on the patients' medical charts and the medications had
sical count was made once on each nursing shift, or at least
been correctly administered and (2) the medications were
once a day, to ensure that the quantity of narcotics on
given on an as-needed basis and, in some cases, the patients
hand agreed with the quantity shown on the control sheet
did not need the medications at the time it was supposed to
maintained for each narcotic.
have been administered.
At five of these 13 nursing homes, we compared for 29
We believe the results of our review clearly show that
selected patients the narcotics dispensed during a 1-month
improper nursing home practices regarding authorizations for
period, as shown by the narcotic drug control sheets main-
medication and treatment continue to exist and that there
tained by the dispensary, with patients' medical charts.
is still a need for the State to adequately control medica-
Our comparison showed that 86 doses of the narcotics dis-
tion and treatment administered to patients.
pensed had not been administered, according to the patients'
medical charts. On the other hand, the patients' medical
Accounting for drugs and quantities
charts showed that 24 doses of narcotics were administered
of drugs on hand in nursing homes
to these patients, but the drug control sheets did not show
that the narcotics had been dispensed. Nursing home offi-
Accounting for narcotics
cials advised us that the discrepancies were attributable
to poor recordkeeping.
HEW requires that a record be maintained on separate
sheets for each type and strength of narcotic, showing the
We were advised by Department of Public Health offi-
quantity on hand, the date and time a dose is administered
cials that their inspectors would not make the types of com-
to a patient, the name of the patient, the name of the phy-
parisons that we had made and that, therefore, these types
sician, the signature of the person administering the dose,
of discrepancies in accounting for narcotics would not be
and the quantity remaining on hand.
disclosed. They also stated that nursing homes were not re-
quired by the State plan or licensing requirements to main-
The State plan for Medi-Cal does not require nursing
tain drug control sheets. DHCS officials stated that in-
homes to maintain special records to account for narcotics.
spections were the only means they had of systematically
However, guidelines issued by the State Board of Pharmacy
evaluating nursing home controls over narcotics.
for providing pharmaceutical services in nursing homes call
for various physical and accounting controls over narcotics.
We believe that the results of our review indicate a
As noted previously, DHCS and the Department of Public
need for the State to examine into the accounting for nar-
Health have no means to ensure that the guidelines are being
cotics in nursing homes and, on the basis of such an exami-
followed because compliance with these guidelines is not
nation, to institute controls over the administration of
mandatory. The California Narcotic Act requires the person
narcotics in nursing homes, including periodic compliance
who prescribes, administers, or dispenses a narcotic to re-
inspections by the Department of Public Health. We believe
cord the transaction; however, State officials told us that
that such measures are particularly needed in view of (1)
they interpret this requirement as applying to physicians
the State's interpretation that the California Narcotic Act
and pharmacies but not to nursing homes because the homes
does not apply to nursing homes because the homes act only
do not have a narcotic license but act only in behalf of
in behalf of patients by keeping custody of their medica-
tions and administering them when necessary and (2) HEW
20
21
GERALD FORD LIBRARY
requirements that a record of narcotics dispensed and admin-
We were advised at 11 of these homes that test counts
istered be maintained in detail.
of incoming drugs from pharmacies were not made and at the
remaining home that test counts were made infrequently.
Accounting for drugs other
Also, at five of the 12 homes, we were advised that pharma-
than narcotics
cies never showed quantities of drugs on the labels; whereas,
at five other homes, we were advised that the pharmacies
In our August 8, 1966, report, we expressed the view
always showed quantities on the labels. At the two remain-
that (1) nursing homes should maintain records of the quan-
ing nursing homes, we were advised that some pharmacies
tity of incoming drugs, (2) pharmacists should be required
showed quantities on the container labels whereas others did
not.
to indicate the quantity of drugs on the labels of the con-
tainers of drugs for welfare patients, and (3) nursing homes
should be required to check these quantities, at least on a
The need for control and accountability over the quan-
test basis. It was our belief that maintaining records of
tity of prescribed drugs received by nursing homes still ex-
incoming drugs, the added labeling requirement, and periodic
ists, because current guidelines relating to drug control
test counts could serve as bases for further inquiry or in-
are not mandatory and do not require verification of quanti-
vestigation in those instances where there were indications
ties of incoming drugs. As illustrated in the following
that significant units of drugs were unaccounted for or that
table, at one nursing home visited, significant proportions
quantities of drugs purchased substantially exceeded antici-
of drugs prescribed for three Medi-Cal patients during the
pated needs.
period October 1, 1969, through January 6, 1970, were not on
hand and could not be accounted for by nursing home offi-
cials.
Subsequent to the issuance of that report, the State
of California advised HEW that guidelines issued by the State
Board of Pharmacy would meet and surpass the standards sug-
Quantity
Unac-
gested by GAO. We note that the Board's guidelines concern-
administered
counted
ing pharmaceutical services provided in nursing homes state
Quantity
per orders
for dif-
Medication
that "Accurate records shall be kept of all medication re-
Patient
purchased
and charts
ference
ceived by the facility and administered to the patient" and
Mellaril tablets
that "All prescription medication for the individual patient
A
310
265
45
shall bear on the label the name, dose size, expiration date
Darvon compound
if indicated, and amount of the drug contained." (Under-
capsules
B
60
29
31
scoring supplied.) It should be noted that adherence to
Benadryl capsules
C
281
267
14
these guidelines by nursing homes and pharmacies participat-
ing in the Medi-Cal program is not obligatory. We noted
In view of the continuing lack of control and account-
also that neither the State licensing requirements for nurs-
ability over the quantity of drugs received, we believe that
ing homes nor Medi-Cal regulations require that test counts
DHCS should require pharmacies and nursing homes participat-
of incoming drugs be made.
ing in the Medi-Cal program to adhere to recordkeeping and
labeling guidelines set forth by the State Board of Pharmacy.
During our recent review we found that none of the 12
Also, we continue to believe that nursing homes should be
nursing homes which we visited maintained records of the
required to verify, on a test count basis, the quantities of
quantity of incoming drugs other than narcotics. At these
incoming drugs and to record the dates and results of such
tests.
12 nursing homes we inquired as to whether test counts were
made of incoming drugs--other than narcotics--and whether
pharmacists recorded the quantity of drugs on the label of
the drug container.
22
23
GERALD FORD LIBRARY
Drugs on hand
opinion that a nursing home operator could conceal from the
inspectors drugs belonging to deceased or discharged pa-
State licensing requirements regarding the disposition
tients by maintaining the required records of destruction
of drugs for deceased patients or for patients who have left
(while not actually destroying the drugs) and routinely ob-
nursing homes have been revised since the issuance of our
taining the signatures of his employees as witnesses.
prior report. These requirements now state that individu-
These officials did not cite any specific instances where
ally prescribed drugs shall be destroyed when a patient dies
such concealment had been detected. We believe that the
or is discharged from a nursing home unless the attending
Department should direct its inspectors to examine into the
physician orders otherwise. The State requires nursing
authenticity of the signatures of witnesses and the manner
homes to record the destruction of individually prescribed
in which such signatures were obtained on a periodic test
drugs. The home's records are required to show the patient's
basis and in every instance in which it is suspected that
name, the name of the medication, the quantity destroyed,
drugs are being improperly retained by a nursing home in
the date of destruction, and the signatures of two witnesses.
violation of State licensing requirements.
Our review at 11 of 12 nursing homes indicated that in-
We believe that improvements have been made in the
dividually prescribed drugs for deceased or discharged pa-
State's procedures governing the disposal of individually
tients were being destroyed in accordance with State li-
prescribed drugs for patients who have left nursing homes.
censing requirements. At the remaining nursing home, how-
Nevertheless, continued efforts by State licensing inspec-
ever, we found that individually prescribed drugs had not
tors are warranted in view of the concern expressed by State
been destroyed for patients who were deceased or discharged.
officials relating to the possible concealment of drugs pur-
An official at this nursing home advised us that it was their
ported to be disposed of.
policy to collect these drugs and return them for destruc-
tion to the pharmacy from which they were purchased. At the
Agency comments and actions
time of our visit, we noted that drugs for such patients had
been packaged for delivery to the pharmacy but records of
In commenting on a draft of this report, HEW and DHCS
the disposition of these drugs--or drugs previously disposed
agreed that continued effort to improve controls over the
of in this manner--were not maintained. Department of Pub-
prescribing and dispensing of drugs for nursing home pa-
lic Health officials agreed with us that returning drugs to
tients appeared warranted. HEW stated that it planned to
the pharmacy from which they were purchased was not in ac-
discuss the matter with State officials and DHCS stated that
cord with State licensing requirements.
it was in the process of developing detailed Medi-Cal pro-
gram requirements for the prescribing and dispensing of
We examined State inspection reports for 70 nursing
drugs in nursing homes.
homes for the period January 1, 1966, through November 15,
1969 (see P. 12). These reports cited 80 violations at
41 homes of State licensing requirements relating to the
handling, storage, and disposal of drugs; 23 of the viola-
tions related to the improper disposal of drugs at nursing
homes.
Department of Public Health officials advised us that,
despite the revised licensing requirements, the disposal of
prescription drugs by nursing homes was a very difficult
area for their inspectors to police. They were of the
BERALD FORD VIBRARY
24
25
SUPPLEMENTAL PAYMENTS TO NURSING
transactions were attributable to the home's former
HOMES FOR MEDICAID PATIENTS
administrator and former bookkeeper. Since these vi-
olations were by the employees of the home, DHCS did
Supplemental payments by patients or others to nursing
not bring formal action to remove the proprietors
homes under the Medicaid program are prohibited by HEW reg-
from the program. We were advised by DHCS officials
ulations. Supplement D of HEW's Handbook of Public Assis-
that arrangements to recover the overpayments were
tance Administration states that participation in the pro-
being made and that amounts collected would be re-
gram is limited to providers of service, including nursing
turned to those who made the payments.
homes, that accept, as payment in full, the amounts paid in
accordance with the fee structures established by the State.
2. Another investigation resulted in a nursing home
The California State plan for Medi-Cal contains the same
being placed on probation for 3 years in lieu of
being suspended from the program. This home had
prohibition.
collected about $2,000 in supplemental payments--
We noted that State and county agencies had issued a
$100 a month during the period April 1967 to Decem-
number of informational brochures advising recipients of
ber 1968--made in behalf of a Medi-Cal patient.
the medical services covered under the Medi-Cal program.
These brochures, however, do not (1) describe the nature of
3. Another nursing home was charging Medi-Cal patients
supplemental payments, (2) specify the items of service or
$10 a month for personal laundry even though, in
care included in the rate paid to nursing homes, or (3) spe-
some instances, no such expenses were incurred and,
cifically state that supplemental payments by patients or
in other instances, these expenses may have been
others for items included in the rate should not be made.
less than the $10. This charge was made only to
We noted also that the State had, on several occasions, ad-
Medi-Cal patients in the home. As a result of their
vised fiscal agents, nursing homes, Medi-Cal Consultants,
investigation, DHCS recovered about $1, 300.
and county welfare offices, that supplemental payments were
prohibited. We found, however, that the State did not sys-
DHCS officials stated that they did not have statistics
tematically review nursing home practices to ascertain
on the number of complaints received regarding supplemental
whether supplemental payments were being received and that
payments under the former medical assistance program but
investigations were made on a complaint basis only.
that the number of complaints received concerning supple-
mental payments had probably increased because of the ex-
Since initiation of the Medi-Cal program, DHCS has in-
panded coverage of the Medi-Cal program and the increased
vestigated complaints that supplemental payments were being
number of participants.
made to 42 nursing homes. At the time of our recent re-
view, many of these investigations had not been completed.
We noted that a report issued in November 1968 by the
In nine cases, DHCS determined that supplemental payments
Attorney General of the State of California stated that an
had, in fact, been collected by the nursing homes. Three
investigation of the Medi-Cal program had disclosed that
examples follow.
many nursing homes required patients or their relatives to
pay money "under the table" to secure admission of the pa-
1. Between March 1966 and September 1969, a nursing
tient and that often supplemental payments were required
home collected over $1,400 from 34 patients for ser-
each month that the patient remained in the home. The At-
vices which were covered in the daily rate paid by
torney General's report further stated that many Medi-Cal
Medi-Cal. This home also collected $250 at the
patients in nursing homes were not aware of the benefits to
rate of $25 per month in "under the table" payments
which they were entitled and could be billed by the nursing
from the family of one Medi-Cal patient. The in-
home for services which, unknown to the patient, had already
vestigation disclosed that all of the improper
been paid for under the program.
27
GERALD LIDRARY
26
California uniform procedures for use by nursing funds, in
State officials advised us that the State homes had
A Department of Public Health official advised us that
a review to determine whether supplemental payments had
not issued for, and handling of, patients' personal We were
been made was not included in their inspections of nursing
accounting suggested in our August 1966 report. matter told be-
homes. DHCS officials advised us that, despite a substan-
although that corrective action had not been taken on this
tial increase in their investigative staff since the start
cause of higher priority projects.
of the Medi-Cal program, there was. still not sufficient
recent review at 12 nursing homes, records we again
staff to systematically review nursing home records to de-
termine whether supplemental payments had been received and,
During considerable our variance in the procedures funds. and For ex-
therefore, such reviews were made only when a complaint was
used found by the homes to account for patients'
received.
ample:
In considering the (1) substantial increase in the cov-
--four homes maintained patients' personal funds homes in
sistance program, (2) increased number of complaints being
checking retained patients' funds in individual envelopes in
accounts at local banks while three
erage of the Medi-Cal program over the prior medical as-
received by DHCS concerning supplemental payments, (3) de-
the nursing homes,
terminations by DHCS in cases examined that supplemental
payments were, in fact, being received by nursing home op-
--six homes maintained individual ledger accounts made for
erators, and (4) findings of the State's Attorney General,
we believe that an effective State program to discover, in-
notations each of deposits and withdrawals on
patient's funds while three homes merely envelopes
vestigate, and eliminate supplemental payments to nursing
containing the funds,
homes is needed. Such a program could include (1) letters
did not issue receipts to patients for
of inquiry to relatives of the patients, (2) discussions
with patients during routine visits by State employees, and
two homes and four homes did not obtain patients' accounts, signa-
(3) notices to recipients when periodically mailing their
tures funds for withdrawals from their personal
Medi-Cal identification cards.
and
homes were members of separate nursing home main-
We believe that, so long as reviews at nursing homes
do not include a determination for compliance with the HEW
--three chains and the patients' personal funds were
regulations prohibiting supplemental payments, such pay-
tained at the chains' central offices.
ments will continue to be made principally because most per-
We noted also that the State Attorney General's Novem-
sons making such payments are either unaware that the pay-
1968 report on the Medi-Cal program disclosed instances for such
ments are not required or are concerned that a complaint
could result in the patients' not receiving adequate care.
ber which the $15 per month personal expense money, Medi-Cal
Further, we remain of the opinion that dissemination of in-
in as cigarettes, candy, and haircuts, which had
formation to Medi-Cal recipients and other interested par-
ties, as to the nature of supplemental payments and what
misappropriated patients by some nursing homes. The report of
items received from the county welfare offices cited, been
services or care are covered in the rate paid under the pro-
example, one nursing home that was in possession who had
gram, would tend to deter supplemental payments to nursing
as about an $2,000 which belonged to Medi-Cal patients
homes for Medi-Cal patients.
died had been discharged from the home. Department in- of
Public or Health officials advised us that, during their the
of nursing homes, they ascertained whether
Safeguarding patients' personal funds
home spections had adequate facilities to safeguard patients' personal such
The California Administrative Code requires nursing
funds and whether the home had records to account for
home operators to maintain adequate safeguards and accurate
funds. The Department does not, however, routinely
records of Medi-Cal patients' money and valuables.
29
GERALD
28
examine into the propriety of the types of charges made
against the accounts or the adequacy of documents support-
ADVERTISING BY NURSING HOMES
ing deposits and withdrawals.
OF PHYSICAL THERAPY FACILITIES
Regulations of the California Department of Social Wel-
The California Administrative Code specifies that pro-
fare require that patients in nursing homes be visited at
viders of services may be suspended from the Medi-Cal pro-
least once a year by a county social worker to verify that
gram for unlawful or unethical advertising or advertising
the patient's continued residence in the nursing home is
which holds forth the advertiser as one specifically author-
consistent with his social needs. A Department of Social
ized or certified to render services available under the
Welfare official has advised us that, during these visits,
program.
the social workers inquire into the status of the personal
funds of patients only if requested to do so by the patient
We inquired into the advertising practices at 12 nurs-
or someone acting in the patient's behalf or if the patient
ing homes. Three homes did not advertise; seven homes
has previously been judged incompetent.
used various types of advertising which appeared to be con-
sistent with the Medi-Cal regulations; but the advertising
We believe that the results of our review, together
of the two remaining nursing homes appeared not to be in
with the report of the State Attorney General, demonstrate
accord with the regulations.
the need for action by the State to strengthen controls
over the handling of patients' personal funds.
One nursing home's advertising brochure stated that a
fully equipped physical therapy room was available on the
Also, we continue to believe that there is a need for
premises; however, our visit to the physical therapy room
the State to establish standard procedures to be used by
revealed that the only equipment available was a set of
nursing homes in handling and accounting for Medi-Cal pa-
parallel bars. The nurse in charge at this home informed
tients' personal funds. Such action, supplemented by ap-
us that the parallel bars represented the only physical
propriate surveillance during visits by State representa-
therapy equipment in the home. She stated that, in prepar-
tives would, in our opinion, substantially assist the State
ing the advertising brochure, she referred to other nursing
in guarding against misuse of these funds.
home advertisements in the yellow pages of the telephone
directory and took excerpts from the various advertisements.
Agency comments and actions
A second home--part of a chain of nursing homes--was
In commenting on a draft of this report, HEW agreed
using the same advertising brochure cited in our August 1966
with our suggestion that information on services and care
report as containing misleading information regarding phys-
covered under the Medi-Cal daily rate paid to nursing homes
ical therapy facilities. We noted that, except for the
and restrictions concerning supplemental payments should be
front and back covers which contained the names and exterior
provided to patients' relatives and other interested per-
pictures of the individual nursing homes, this advertising
sons. The State advised HEW that it had adopted this sug-
brochure was being used by at least eight other homes in the
gestion and was preparing an information leaflet for cir-
chain. The home advertised that it possessed
cularization.
1. a physical therapy department under the direction
HEW agreed also that better controls over the handling
of a well-qualified registered therapist,
of patients' personal funds by nursing homes were needed
and stated that it would discuss with State officials the
2. 12-foot parallel bars,
feasibility of establishing standard procedures to be fol-
lowed by the homes and surveillance by the State.
3.
exercise
steps,
30
31
responsibility is specifically assigned to, and carried out
4. a tilt-top table,
by, some other State agency.
5. exergenie wall pulleys,
Agency comments and actions
6. a Burdick ultrasound and electric stimulator,
In commenting on a draft of this report, HEW agreed
that DHCS should either assume the responsibility for polic-
7. diathermy,
ing advertising practices relating to Medi-Cal or ensure
that such responsibility is specifically assigned to, and
8. a traction table, and
carried out by, some other State agency. In this connection,
the State advised HEW that consideration would be given to
9. a hydrocollator for moist heat.
increasing efforts to detect cases of misleading advertis-
Our inspection of the physical therapy room at this nursing
ing.
home revealed that the only items of equipment available
HEW stated that, while advertising practices described
were the parallel bars and the exercise steps. The admin-
in our report might mislead a Medi-Cal recipient or his
istrator of this nursing home acknowledged that these two
family, it is expected that the patient's caseworker will in
items of equipment were the only pieces of physical therapy
be familiar with nursing home conditions and services an
equipment at this home; however, she said that the remainder
area and will advise the patient and/or his family in in-
of the advertised equipment was located in other nursing
stances of misleading advertising.
homes in the chain but was portable and could be made avail-
able to patients in this home.
We discussed the results of our review with DHCS and
Department of Public Health officials who advised us that
they had no program to review nursing home advertisements.
We were told that their investigative staffs reviewed nurs-
ing home advertisements only on a complaint basis or when
one of these staff members happened to notice a questionable
advertisement. Furthermore, DHCS officials stated that, in
their capacity as the single State agency responsible for
administration of the Medi-Cal program, they were concerned
only with those who advertise services, supplies, or equip-
ment as being reimbursable under the Medi-Cal program.
DHCS and Department of Public Health officials stated that
the policing of advertising was not their responsibility.
In our opinion, no action has been taken by the State
to improve controls over advertising by nursing homes. We
believe that Medi-Cal patients or their families could be
misled by the types of advertisement which we have noted.
We believe that, to help avoid misleading advertising by
nursing homes, DHCS--as the single State agency--should
either assume the responsibility for policing advertising
practices relating to the program or ensure that such
FORD LIBRARY
33
32
TRANSFERRING PATIENTS
--Five transfers were made because the attending physi-
BETWEEN NURSING HOMES
cian wanted the patient in a nursing home of which
he had become part owner.
State Medi-Cal regulations require that transfers of
patients between nursing homes be approved by the Medi-Cal
In each of these 13 transfers, the Medi-Cal Consultant
Consultant prior to such transfers. The regulations do not,
determined that nursing home care was needed by the patient.
however, specify the manner in which prior approval is to be
The approval document for such care, however, is not de-
obtained. Guidelines issued by DHCS to the Consultants for
signed to disclose any information relevant to the reasons
their use in authorizing nursing home care are not addressed
for the transfer of a Medi-Cal patient from one home to
to the circumstances under which interhome transfers of pa-
another. In our opinion, the Medi-Cal Consultant did not
tients are to be permitted. We were advised by Medi-Cal
receive all the information necessary to reach a decision
Consultants that prior approval for transferring a Medi-Cal
concerning the need for, or reasonableness of, interhome
patient was usually obtained from the Consultant by tele-
transfers.
phone and that no permanent record of such approval had
been maintained.
We believe that criteria under which Medi-Cal patients
may be transferred at the initiative of the nursing home
We inquired into the reasons for the interhome trans-
should be established; that policies and procedures under
fers of 60 Medi-Cal patients at eight of the 14 nursing
which nursing homes would have to obtain the written approval
homes we visited. Since the nursing homes are not required
of the Medi-Cal Consultant before effecting such transfers
to maintain records of the reasons for interhome transfers
should be developed; and that these criteria, policies, and
of patients, it was necessary for us, in most instances, to
procedures should be made a part of the State plan.
rely on the recollections of the nursing homes' staffs
about the reasons for the transfers.
Agency comments and actions
On the basis of the recollections of the nursing homes'
In commenting on a draft of this report, HEW agreed
staffs and our review of available records, it appears that,
with our suggestion that authorizations for transfer be in
of the 60 transfers, 34 were made primarily for the benefit
writing and include the reasons for transfer. HEW stated
of the patient. For 13 transfers, there was not sufficient
that it planned to recommend to the State that, in each in-
evidence to enable us to reach an opinion as to who bene-
stance of a proposed transfer, an interview with the patient
fited primarily from the transfer. We believe, however,
by his caseworker be required and that the caseworker make
that the remaining 13 transfers were made for the benefit
a written record of the reasons for the transfer.
of someone other than the Medi-Cal patient. We found that:
--Six transfers were made primarily for the benefit of
the nursing homes making the transfers because op-
erators of the homes wanted the beds occupied by
these patients for use by prospective Medicare or
private patients for whom a higher daily rate could
be collected. In one of these six transfers, the
family of the patient was not aware of the transfer
until after it had taken place.
Two transfers were made at the instigation of the
former owner of a nursing home who had opened a new
home.
35
34
CONCLUSIONS, RECOMMENDATIONS, AND
administration of narcotics and other drugs, and (3) protec-
AGENCY COMMENTS AND ACTIONS
tion of the patients from interhome transfers for the bene-
fit of others. Although the State plan contains guidelines
Our recent review of practices in providing nursing
relating to supplemental payments, protection of patients'
home care showed that, for the most part, weaknesses in the
personal funds, authorizations for medications and treat-
administration of California's Medi-Cal program continue to
ment, destruction of drugs for deceased or discharged pa-
exist. Although HEW and the State instituted measures de-
tients, and nursing home advertisements, we believe that
signed to correct some of the weaknesses pointed out in our
adequate procedures to help ensure compliance with these
August 1966 report, such measures were generally ineffective
guidelines by nursing homes have not been implemented by
in resolving the problems noted. Also, we found weaknesses
the State nor have appropriate reviews been made by the
in the administration of one aspect of the program--account-
State or HEW to highlight the need for additional correc-
ing for narcotics--which we had examined into during our
tive measures.
prior review and found not to be a problem.
Primary responsibility for the quality of medical care
Extensive coordination of the various State agencies is
under the Medicaid program rests with the States. HEW is
vital to the success of any program--such as Medicaid--
responsible for assuring itself, through appropriate admin-
wherein there are divergent interests and/or multiple levels
istrative reviews and audits of States' program activities,
of responsibility. We believe, however, that the degree of
of the adequacy of States' program administration. We be-
coordination necessary to enable California to successfully
lieve that administrative reviews by HEW regional represen-
implement its Medicaid program has not been achieved. For
tatives generally have been inadequate to ascertain whether
example:
nursing homes providing care to Medi-Cal patients have met
the HEW requirements governing the quality of care or
1. Results of Department of Public Health inspections
whether the patients' interests have been safeguarded. We
of nursing homes which revealed significant defici-
noted that, on November 25, 1969, the HEW Audit Agency fur-
encies relating to State licensing and HEW require-
nished to its regional offices audit guidelines for a multi-
ments had not been made known to attending physi-
State audit of nursing homes participating in the Medicaid
cians either through Medi-Cal Consultants or through
program. One of the stated objectives of the Audit Agency's
local medical societies or had not been used by DHCS
review was to determine whether Medicaid patients were being
to carry out its responsibilities under HEW regula-
provided with adequate care and facilities.
tions to require compliance with, or to terminate a
nursing home's participation in, the program.
Recommendations to the Secretary
of Health, Education, and Welfare
2. DHCS had not required that guidelines promulgated
by the California State Board of Pharmacy be fol-
In the interest of providing the surveillance necessary
lowed by nursing homes.
to help minimize deficiencies in the care, services, or
3. DHCS had not fixed the responsibility for the polic-
treatment given to Medicaid patients in nursing homes and to
ing of nursing homes' advertising practices.
effect corrective action where such deficiencies are found,
we recommend that the Secretary of HEW, through the Admin-
istrator of the Social and Rehabilitation Service:
We believe that the State plan for Medi-Cal, which has
been approved by HEW, remains deficient in that it does not
provide adequate guidelines for (1) discontinuance of pay-
--Direct HEW regional representatives to review the
ment for the care of Medi-Cal patients in nursing homes in
manner in which State agencies are implementing HEW
which substandard conditions exist, (2) controls over the
regulations relating to the quality of care being
provided to Medicaid patients in nursing homes.
36
37
CHAPTER 3
-Impress upon State officials the importance of clari-
fying the respective responsibilities and authority
of the State and county agencies involved in the ad-
CONTROLS OVER PAYMENTS
ministration of the Medicaid program.
FOR PRESCRIBED DRUGS
We recommend also that HEW regional representatives assist
DHCS in determining action needed to help resolve the prob-
In our report of August 1966, we concluded that the
lems discussed in this report.
prepayment and postpayment audit procedures recommended in
the State plan to provide assurance that payments were made
Agency comments and actions
only for correctly priced drugs prescribed under proper au-
thority and actually delivered for the use of eligible re-
In commenting on a draft of this report by a letter
cipients had not been fully and adequately implemented at
dated June 15, 1970 (see app. I), the Assistant Secretary,
the county level. We stated that (1) the State had not ad-
Comptroller, HEW, stated that the HEW regional office staff
equately carried out its responsibilities for evaluating
would be instructed to review with the California State
county activities to determine that the objectives of the
agency the several Federal regulations relating to the qual-
State plan relating to payment for prescribed drugs had
ity of nursing home care and to discuss with them the appli-
been achieved and (2) HEW had not utilized the review pro-
cability of these regulations to the observations made in
cesses necessary to ascertain the quality of the administra-
our report. He stated also that, since there appears to be
tion of this aspect of the program.
a lack of full understanding of these regulations in Cali-
fornia and other States, HEW was planning visits by teams
We suggested that HEW provide its field representatives
of central office and regional office staffs to review ac-
with specific guidelines relating to the prescription drug
tivities and procedures of State agencies and to provide
program for their use in making continuing reviews of State
consultation on full implementation of the regulations.
and local administration as required in HEW regulations.
We suggested also that consideration be given to including
The Assistant Secretary, Comptroller, informed us that
in the State plan certain additional requirements and proce-
HEW planned to visit a few selected States within the next
dures to better ensure that drugs for which payments were
3 months and would, on the basis of this experience, con-
made were actually delivered for the use of eligible welfare
sider visiting all Medicaid States. He informed us also
recipients.
that HEW agreed that the single State agency administering
the Medicaid program should assure itself that employees of
During calendar year 1964, payments of about $21.3 mil-
assisting agencies were fully aware of the responsibilities
lion were made in the State of California for more than
which had been established.
5.8 million drug prescriptions for welfare recipients; dur-
ing 1968, payments of $47.3 million were made for 11.8 mil-
Further, in accordance with our recommendations, HEW
lion drug prescriptions under Medi-Cal. The Federal share
officials will discuss these matters with DHCS officials
of these expenditures was about 50 percent.
and will assist them in determining the actions needed to
ensure correction of the problems noted. He also stated
On the basis of our most recent review, we believe that
that, if these discussions revealed a need for assistance
the procedures for payment of prescription drugs under the
by the Division of Management Information and Payment Sys-
Medi-Cal program generally are inadequate to preclude a con-
tems or the Division of Technical Assistance and Training
tinuation of problems cited in our prior report. Social and
of the Medical Services Administration, Social and Rehabil-
Rehabilitation Service regulations, issued in March 1969,
itation Service, in Washington, such assistance would be
require that States institute procedures for reviewing the
made available.
39
38
use of medical services, including prescription drugs, and
made by someone employed by the dispensing pharmacy or (2)
for safeguarding against misuse of such services. We found
that of the Medi-Cal recipient or someone duly authorized
that DHCS had not specified procedures to be followed by the
by him to receive the drugs.
fiscal agent to effectively control Medi-Cal drug payments.
Further, HEW and the State were not making systematic and
Our examination of 300 Medi-Cal prescription forms for
independent verifications to ascertain whether payments to
evidence of receipt of drugs by the recipient or persons
private pharmacies for prescription drugs were limited to
authorized to act in their behalf showed that:
prescriptions for recipients for whom the drugs were pre-
scribed and whether the drugs were dispensed by the pharma-
--10 prescription forms contained a certification of
cies in quantities and in frequencies consistent with the
receipt executed by an employee of the dispensing
physicians' dosage instructions.
pharmacy.
Prior to Medi-Cal, each county in the State was respon-
--139 prescription forms were receipted by persons
sible for processing, paying, and auditing claims for pre-
whose relationships to the Medi-Cal recipients were
scription drugs for welfare program recipients. For Medi-
not identified on the prescription forms.
Cal, the State contracted with California Physicians Ser-
vice to act as fiscal agent for all 58 counties in the
DHCS plans to adopt a new Medi-Cal drug billing form
State. The contract requires the fiscal agent to process,
which, it believes, will provide faster and more accurate
pay, and audit drug claims under the program and to install
processing of the drug claims. The new form will eliminate
controls to prevent fraud and misuse of the drug program by
the practice of obtaining the signature of the recipient or
providers and recipients.
his authorized representative as evidence of receipt. In
our opinion, obtaining the signature of the person receiving
The HEW Audit Agency reviewed the claims processing
the drug serves a useful purpose--as a means of control--in
procedures of California Physicians Service. This review,
the administration of the prescribed drug aspect of the pro-
which covered the period March 1966 through June 1968, in-
gram and should be retained.
cluded evaluations of the effectiveness of controls over the
processing of claims and resulted in a number of recommenda-
We believe that the administration of this aspect of
tions for improving operations. The HEW Audit Agency's re-
the Medi-Cal program could be strengthened by requiring
port, issued in October 1968, did not deal with the problems
persons who receive prescribed drugs on behalf of recipients
discussed in our August 1966 report. The HEW Audit Agency
to record on the new billing forms their identities and ca-
also reviewed selected areas of the Medi-Cal program for
pacities or authorizations for acting on behalf of the re-
the period March 1966 through December 1968, and, in a
cipients. This practice could assist in ensuring that the
June 1969 report, the Audit Agency made recommendations to
recipients actually receive the drugs.
DHCS for improving administration of the program. This re-
view also did not include an examination into claims for
We recognize that, because of the large volume of pre-
prescribed drugs under the Medi-Cal program.
scriptions, it would be impracticable to verify the author-
ity of every person certifying receipt of drugs on behalf
The prepayment and postpayment audit procedures used
of Medi-Cal recipients. However, verification on a test
by the fiscal agent did not provide for routine verifica-
basis would provide reasonable assurance that prescription
tions that prescribed drugs had been received by recipients
invoices submitted by pharmacies represent drugs actually
for whom the prescriptions were written. For example, pre-
dispensed by the pharmacies and received by eligible recip-
payment audit procedures did not require the claims re-
ients. Verification procedures might include comparing the
viewer to examine the prescription drug form to ensure that
names and/or signatures of persons certifying receipt on
the signature acknowledging receipt of the drug was (1) not
behalf of eligible recipients with the names of persons
40
41
We noted that, during the period October 1967 through Novem-
residing in the household--as shown in Department of Social
ber 1968, DHCS reviewed the drug payment procedures fol-
Welfare case files--who would normally be expected to re-
lowed by its fiscal agent and found that overpayments to
ceive drugs for the recipients. The names or signatures of
pharmacies were not being detected primarily because the
persons authorized to receive prescribed drugs for Medi-Cal
auditors were not consistently following their audit proce-
recipients residing in institutions, such as nursing homes,
dures and because, in some instances, these audit procedures
could be submitted for inclusion in Department of Social
were not adequate to disclose instances of fraud or misuse.
Welfare records. Where test results raise questions as to
Efforts of the fiscal agent to correct the problems noted
the proper use of the drug program--by an individual recip-
in the DHCS review were not effective. We therefore be-
ient, an institution, or an individual pharmacy--a field in-
lieve that additional efforts are required.
vestigation would be indicated to determine whether a misuse
of the drug program occurred.
In our prior report we noted an overlapping of pre-
scriptions as indicated by the pharmacies dispensing pre-
scribed drugs over periods of time in quantities and in
frequencies greater than required by dosage instructions.
In one of the cases which we cited, five separate prescrip-
tions were issued to a welfare recipient for a total of 120
tablets of the same drug during an 18-day period. Accord-
ing to dosage instructions, only 18 tablets should have
been used during that period. During our recent review, we
noted that the State Attorney General's November 1968 report
disclosed instances of pharmacies' dispensing prescribed
drugs in greater quantities than specified by physicians.
We found that patient profiles (history of medical ser-
vices received by individual recipients) were not routinely
produced to assist California Physicians Service in carrying
out its responsibility as fiscal agent for preventing fraud
and misuse of the drug program. Therefore, it was not
practicable for us to attempt to identify instances of over-
lapping prescriptions which, when compared with the pre-
scribed dosage, would indicate the dispensing of drugs over
periods of time in quantities greater than specified. In
the absence of such profiles, and since drug claims are
processed individually as received, the fiscal agent's au-
dit procedures cannot detect an irregular pattern of drug
purchases over a period of time.
In our opinion, DHCS should require the fiscal agent
to institute postpayment audit procedures to help identify
instances in which it appears that excessive quantities of
drugs are being dispensed to Medi-Cal recipients. Instances
so identified could provide a basis for inquiry or investi-
gation to determine whether misuse of the program exists.
FORD
43
GERALD
LIBRARY
42
CONCLUSIONS, RECOMMENDATIONS, AND
(1) ensure that excessive quantities of drugs were not pre-
AGENCY COMMENTS AND ACTIONS
scribed and (2) contribute to a system of control over
claims and payments to ensure that purchased services were
DHCS has not instituted procedures to ensure that
actually delivered. He stated also that the HEW regional
(1) payments are made only for prescription drugs actually
representatives had been advised to review with the State
delivered to Medi-Cal recipients and (2) drugs are being
the status of the implementation of this regulation and its
dispensed in quantities and in frequencies consistent with
applicability to the problems identified in our report.
physicians' dosage instructions. In view of the large vol-
ume of prescriptions written for Medi-Cal recipients and in
With respect to our suggestion that the State require
view of the cost of such prescriptions, we believe that
persons receiving drugs to sign for them and to indicate
their identities and authorizations to act on behalf of the
strengthened controls over these aspects of the Medi-Cal
program are warranted. In our opinion, a requirement that
recipients, DHCS advised HEW (see app. II) that the require-
persons who receive prescribed drugs on behalf of program
ment for signature on receipt of drugs had been irritative
recipients identify their authority to receive such drugs
and nonproductive but that the newly designed pharmacy bill-
would help to prevent the receipt of drugs by unauthorized
ing form did call for certification by the pharmacy that the
persons. Also, the use of patient profiles--which would
services were provided. DHCS also stated that the new form
indicate irregular patterns of drug purchase--will highlight
would allow improved claims processing by computerized
instances where a field investigation is warranted to de-
techniques and a review of pharmacy claims that were not
termine whether a misuse occurred.
within prescribed limits. HEW advised us that it planned
to review the new billing form and to determine whether
Recommendation to the Secretary
further action, possibly as we suggested, would be necessary.
of Health, Education, and Welfare
We recommend that the Secretary of HEW, through the
Administrator of the Social and Rehabilitation Service, en-
courage DHCS to institute additional procedures designed to
ensure that payments are made only for prescribed drugs
which are actually delivered for use of program recipients
and that drugs are dispensed in quantities and in frequen-
cies consistent with physicians' instructions. We believe
that the State should require persons receiving and signing
for prescribed drugs on behalf of program recipients to re-
cord on the prescription forms their identities and capaci-
ties or authorizations for acting on behalf of the recip-
ients.
Agency comments and actions
In a letter to us dated June 15, 1970 (see app. I),
the Assistant Secretary, Comptroller, HEW, agreed that con-
trols must be instituted by the fiscal agent to detect ir-
regular patterns of drug purchases. He stated that the
program regulation issued by the Social and Rehabilitation
Service in March 1969, if adequately implemented, would
45
44
CHAPTER 4
SCOPE OF REVIEW
Our review of HEW and State procedures and practices
in providing nursing home care to, and in controlling pay-
ments for drugs prescribed for use by, Medicaid recipients
in the State of California was directed toward determining
and evaluating the effectiveness of actions taken to cor-
rect the weaknesses and deficiencies discussed in our Au-
gust 1966 report on the former medical assistance program.
Our work was performed at HEW headquarters in Washing-
ton, D.C., at HEW's regional office in San Francisco, Cali-
fornia, and at the Sacramento headquarters of DHCS, the De-
partment of Public Health, and the Department of Social
Welfare. We also visited the offices of California Physi-
cians Service in San Francisco.
APPENDIXES
We reviewed the enabling legislation and examined per-
tinent procedures, records, and documents relating to the
Medicaid and Medi-Cal programs. We held discussions with
HEW, State, and California Physicians Service officials re-
sponsible for the administration of the program. In addi-
tion, we visited 14 nursing homes located in Alameda,
Fresno, Los Angeles, and Santa Clara counties. These coun-
ties were selected because they accounted for a significant
amount of Medi-Cal expenditures. We did not review all
matters discussed in this report at every home we visited.
Factors which we considered in selecting nursing homes were
their bed capacity and the number of Medi-Cal recipients
served. We reviewed case files for 106 patients at the
14 nursing homes which we visited. For the most part,
these case files, which covered transactions during calen-
dar years 1966-70, were selected for Medi-Cal recipients
residing in the home at the time of our visit.
In addition, we selected 70 nursing homes located in
16 counties in northern California and reviewed all inspec-
tion reports of the Department of Public Health for these
homes during the 1966-69 period. Again, the factors we
used in selecting these homes were their bed capacity and
the number of Medi-Cal recipients served.
47
46
APPENDIX I
Page 1
INSURANCE EDUCATION:
HEALTH.
OF
DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
WASHINGTON, D.C. 20201
U.S.A.
JUN 15 1970
OFFICE OF THE SECRETARY
Mr. John D. Heller
Assistant Director
Civil Division
U.S. General Accounting Office
Washington, D. C. 20548
Dear Mr. Heller:
The Secretary has asked that I reply to the draft report of the
General Accounting Office on its review of actions taken to improve
practices in providing nursing home care and controlling payments
for prescribed drugs for Medicaid recipients in California.
Enclosed are the Department comments on the findings and
recommendations in your report and the comments on certain
points in the response of the Department of Health Care Services
of the State of California.
We appreciate the opportunity to review and comment on your
draft report and welcomed your suggestion that the appropriate
State officials be afforded the same opportunity.
Sincerely yours,
James F. Kelly
Assistant Secretary, Comptroller
Enclosure
49
APPENDIX I
APPENDIX I
Page 2
Page 3
COMMENTS ON DRAFT REPORT
OF THE GENERAL ACCOUNTING OFFICE
the appropriate avenue for the single State agency administering
the Medi-Cal program to follow (in this case, the Department of
PROBLEM AREAS RELATING TO NURSING HOME CARE AND PRESCRIBED
Health Care Services) is outlined in the Medicaid regulations.
DRUGS UNDER THE MEDICAID PROGRAM IN THE STATE OF CALIFORNIA
Specifically, if a home is found not to be in substantial compliance
with the standards for payment for skilled nursing homes that
home may not receive Medicaid payments. If the home is found to
The draft report by the General Accounting Office is an evalu-
be in substantial compliance (i.e., is in compliance except for
ation of the extent to which problems identified in 1966, in
deficiencies), the State agency may permit the home to participate
the provision of care to nursing home patients in California
for a period of 6 months provided there is reasonable prospect
under the medical assistance to the aged program, have been
that the deficiencies can be corrected within that time and that
corrected or persist under Medicaid. On the basis of the find-
the deficiencies noted do not jeopardize the health and safety of
ings reported by GAO, we agree that problems warranting the
the patients. No more than two successive six month agreements
careful attention of the State agency and the Department of
may be executed with any one home and no second agreement may be
Health, Education, and Welfare continue to exist in many of the
executed if a previous deficiency continues unless the facility
areas examined.
has made substantial effort and progress in correcting the
deficiency.
Following are our comments on each of the matters discussed in
the draft report.
If properly implemented, the HEW regulations governing the certi-
fication of skilled nursing homes to participate in the program
STANDARDS OF CARE IN NURSING HOMES
are sufficient to correct the weaknesses relating to standards
of nursing home care pointed out in this report. The draft report
The GAO reports, on its review of the maintenance of standards
brings to our attention matters which suggest that there may be
in skilled nursing homes, findings which clearly indicate prob-
some misunderstanding on the part of the State agency of the
lems in this area. The report correctly points out that HEW has
provisions of certain Federal requirements relating to eligibility
imposed upon States, standards for facilities and services which
of nursing homes to provide service and receive payments under the
must be met by nursing homes to participate in the Medicaid
program. SRS Regional Office staff will discuss these findings
program. Final regulations to implement Section 1902(a (28) of
with officials of the State agency in an effort to clarify the
the Social Security Act - relating to standards for skilled
regulations.
nursing homes - were published in the Federal Register on
April 29, 1970 (45 CFR 249.33); the interim regulations were
CONTROLS OVER MEDICATIONS AND TREATMENT FOR MEDICAID PATIENTS
published on June 24, 1969.
IN NURSING HOMES
The draft report seems to emphasize licensing violations noted
We agree that California Department of Public Health inspections
by the California Department of Public Health inspections. While
of nursing homes - which are made on behalf of the Department of
meeting licensing standards is one of the prerequisites for partic-
Health Care Services for Medicaid certification purposes - should
ipation in the program, a skilled nursing home may meet State
ascertain that all State and HEW requirements relating to drugs
licensure requirements but nevertheless not be qualified to
are met. We plan to discuss this point with State officials in
participate in the program because of a failure to meet HEW stand-
connection with Medicaid skilled nursing home standards and
ards for certification of eligibility to provide services to
certification.
Medicaid patients.
On the basis of the facts reported, continued effort to improve
A revocation of a facility's license would make the facility
controls over prescribing and dispensing of drugs for nursing
ineligible to participate in the Medicaid program. While
revocation may be the appropriate action for the State's purpose,
50
51
APPENDIX I
APPEND IX I
Page 4
Page 5
home patients appear warranted. We note that in its comments
[sic]
on the GAO draft report, the Department of Health Care Services
agrees with this point and is in the process of developing
HEW regulations require that long-term care be authroized only
requirements to be adopted in regulations.
after joint consideration by the physician and the social worker
of the pertinent medical and social factors, including considera-
SUPPLEMENTAL PAYMENTS TO NURSING HOMES FOR MEDICAID PATIENTS
tion of alternative arrangements for the patient's care. Also,
we note in the State's comments on the GAO draft reports that a
The GAO draft report establishes that problems still exist with
plan is being considered to make a social evaluation of Medi-Cal
respect to (1) improper supplemental payments being demanded or
nursing home placements within 30 days after admission. Full
accepted from relatives of Medi-Cal recipients and (2) the handling
implementation by the State of the HEW requirement for prior
of patients' personal funds.
medical-social evaluation should, if properly carried out, minimize
instances where facilities are not appropriate to the needs of the
We concur in the suggestion that information on services covered
patients.
by program payments and restrictions on additional payments be
provided to relatives and other interested parties. We note that
TRANSFERRING PATIENTS BETWEEN NURSING HOMES
the State agency has adopted this suggestion and is preparing an
informational leaflet for this purpose.
The GAO review found that in a least 13 of 60 cases examined,
transfers of Medicaid patients from one home to another appeared
We concur also that better controls over the handling of patients'
to have been made for the benefit of persons other than the patient.
personal funds by nursing homes is warranted. We plan to discuss
In the discussion of this problem in the draft report we found
with State officials the feasibility of establishing standard
no mention of the involvement of the patients' caseworkers, and
procedures to be followed by the homes as well as appropriate
assume, therefore, that no caseworker contact was found. Although
surveillance by the State.
the Handbook of Public Assistance Administration does not expressly
require that the caseworkers be consulted before transfers of patients
MISLEADING ADVERTISING BY NURSING HOMES OF PHYSICAL THERAPY FACILITIES
are made - as it does in the case of initial admissions - we believe
that the intent of Federal policies relating to social services
Misleading advertising on the part of nursing homes is to be deplored
available to patients strongly suggest that this should be done.
and should receive the attention of appropriate State authorities.
Accordingly, we agree that the Department of Health Care Services
We agree with the GAO suggestion that authorizations of transfer
should either assume the responsibility for policing advertising
be in writing and should state the reasons for transfer. We plan
practices relating to Medi-Cal or see to it that such responsibility
to recommend to the State that an interview with the patients by
is specifically assigned to, and carried out by, some other State
their caseworkers be required in each instance of proposed transfer
agency on a systematic basis. In this connection, the State has
and that the caseworkers make a written record of the reasons for
advised us that consideration will be given to greater case-detection
transfers.
efforts; however, cost considerations must be weighed against the
benefits to be derived.
CONCLUSIONS AND RECOMMENDATIONS
While advertising practices such as shown in the GAO draft report
GAO has recommended that SRS Regional representatives be given
might mislead a Medi-Cal recipient or his family, it is expected
direction and assistance for reviewing the manner in which State
that the patient's caseworker will be familiar with the conditions
agencies are implementing Federal regulations relating to the
and services in nursing homes in the area and will advise the
quality of care being received by Medicaid patients in nursing
patient and/or his family in any instance where such a situation
homes.
is known to exist.
Regional Office staff will be instructed to review with the
California State agency, the several Federal regulations which
FORD
52
53
GERALD R.
LIBRARY
APPENDIX I
APPENDIX I
Page 7
Page 6
agent to detect irregular patterns of drug purchases over a
relate to the quality of care and discuss with them the applica-
period of time. Such controls are implicit in SRS regulations
bility of these regulations to the observations recounted in the
relating to utilization reviews by the States.
report. Since there appears to be a lack of full understanding
of these regulations in California - as well as other States -
CONCLUSIONS AND RECOMMENDATIONS
we are currently developing plans for visits by teams of both
Central Office and Regional staff to review current activities
GAO recommends that SRS encourage the Department of Health Care
and procedures of the State agencies and to provide consultation
Services to institute additional procedures designed to ensure
on full implementation of the regulations. We plan such visits
that prescribed drugs are actually delivered for use of program
in a few selected States within the next three months and will
recipients and that excessive quantities of drugs are not prescribed
evaluate the desirability of extending them to all Medicaid States
for them.
on the basis of this experience.
SRS Program Regulation 40-9 issued in March 1969 requires State
GAO recommends also that SRS impress upon responsible State
agencies to institute procedures for review of utilization of
officials the importance of clarifying the respective responsi-
services, including drugs, and to safeguard against over-
bilities and authority of the various State and county agencies
utilization. This regulation, if adequately implemented, should
involved in the administration of the Medicaid program.
meet the problem of assuring that excessive quantities of drugs
are not prescribed and should contribute substantially to a system
The report indicates that the Department of Health Care Services
of controls over claims and payments designed to assure that
is the single State agency responsible for administering the Medi-
services purchased are actually delivered. We have asked SRS
Cal program and is assisted by the Department of Public Health
Regional staff to review with the State the status of implementation
and the Department of Social Welfare. We agree that the single
of this regulation and its applicability to the problems raised in
State agency should assure itself that the employees of the
the GAO draft report.
assisting agencies (such as inspectors, Medi-Cal Consultants, and
caseworkers) are fully aware of the responsibilities which have
In connection with the above recommendation, GAO has suggested
been established. In this regard, we will discuss the issues
that the State should require persons - receiving and signing
raised by GAO with the State agency.
for prescribed drugs on behalf of program recipients - to clearly
indicate on the prescription forms their identity and capacity or
GAO has recommended further that the matters in their report be
authorization for acting on behalf of the recipients.
discussed with officials of the Department of Health Care Services
and the SRS Regional representatives assist them in action needed
With respect to this suggestion, we note in the State agency's
to ensure correction of these practices. The action suggested
response to the GAO report that they do not consider this
by this recommendation will be taken; if discussions reveal a need
procedure to be appropriate and that they have designed a new
for assistance by the Division of Management Information and Pay-
pharmacy billing form as a part of an improved system of computer
ment Systems or the Division of Technical Assistance and Training
controls over claims processing. We plan to review the new bill-
of the Medical Services Administration, SRS, such assistance will
ing form and determine whether further action, possibly as suggested,
be made available.
is necessary.
CONTROLS OVER PAYMENTS FOR PRESCRIBED DRUGS
The GAO draft report identifies problems relating to excessive
quantities of drugs being prescribed and prescribed drugs being
purchased which may not have been delivered for the recipient's
use. We agree that controls must be instituted by the fiscal
FORD
54
55
GERALD
LIS8487
APPENDIX II
APPENDIX II
Page 1
Page 2
STATE OF CALIFORNIA-HUMAN RELATIONS AGENCY
RONALD REAGAN, Governor
DEPARTMENT OF HEALTH CARE SERVICES
Miss Gene Beach
-2-
714 STREET
March 4, 1970
SACRAMENTO, CALIFORNIA 95814
March 4, 1970
Denial of care to the program's beneficiaries because of nursing homes'
deficiencies in meeting standards for participation cannot be accomplished
by evading due process of law. In today's legal climate, a Medi-Cal
consultant cannot act in an arbitrary or capricious manner to remove or
Miss Gene Beach
restrict a provider's livelihood. To expect a Medi-Cal consultant to
Associate Regional Commissioner
act in an injudicious manner in this regard, is to oversimplify a number
Medical Services Administration
of very complex problems, and would serve only to abridge the legal
Social and Rehabilitation Services
rights of providers. Actions contemplating revocation of licenses or
Department of Health, Education and Welfare
culminating in program suspensions must similarly consider the legal
50 Fulton Street
rights of providers of services.
San Francisco, California 94102
The removal of patients from a nursing home is not a function of the
Medi-Cal program. Rather, the disapproval of an authorization request
Dear Miss Beach:
by the Medi-Cal consultant for nursing home placement or continued care
is a denial of payment for services which are judged to be not medically
This is in response to your letter of February 10, 1970, concerning the
necessary or not covered by the program.
General Accounting Office draft report to Congress of the Review of
Actions Taken to Improve Practices in Providing Nursing Home Care and
Concerning control of medications being administered to program benefi-
Controlling Payments for Prescribed Drugs for Medicaid Recipients in
ciaries in nursing homes, despite our efforts and those of the State
the State of California.
Board of Pharmacy, we are still dissatisfied with the handling of drugs
in many of these facilities. The present method is a mixed-breed system
This Department has expended considerable effort, with varying degrees
which ineptly combines the method of dispensing drugs for patients at
of success, to solve the problems set forth in this review. We under-
home with methods used for patients in hospitals, and as it has developed,
stand however that many of these same problems exist in other Medicaid
highlights the worst features of each. The Department is in the process
programs throughout the country, and have proved difficult or impossible
of developing its own detailed program requirements for prescribing and
to solve.
dispensing drugs in nursing homes and plans to adopt these requirements
by regulations.
The review indicates that the State has failed to set forth in its state
plan criteria for evaluating the adequacy of care provided in nursing
The draft suggests strengthening of the requirement for persons receiving
homes. Aside from staffing standards and requirements relating to
prescribed drugs to sign for them and indicate their identity and autho-
equipment and structure, standards relating to the adequacy of care are
rization to act on behalf of the recipient. Our experience has been that
at best intangible and difficult to define for a spectrum of patients.
the requirement for signature on receipt of drugs has been irritative and
The Department will conduct on site review of patient care programs as
non-productive. This is why this requirement was not designed into a
it implements the Medical-Social Review Team requirements set forth in
new pharmacy billing form recently developed by the Department. The new
the 1967 amendments to the Social Security Act. It must be recognized,
form, however, does call for certification by the pharmacy that the services
however, that time must be allowed, along with a considerable amount
were provided. In addition, this new form has been designed to permit
of effort, to bring about the effective operation of this process. The
improved claims processing by computerized techniques, and review of
scope of this undertaking in California is formidable since there are
pharmacy claims that are not within designated parameters.
more than 1,200 nursing homes providing services to almost 48,000 program
beneficiaries.
With regard to supplemental payments for nursing home care, the draft
report sets forth a valid suggestion to circularize information to
In an effort to strengthen the effective functioning of the Medi-Cal
interested persons concerning the program's role in payment. Immediate
consultants throughout the State, the Department is in the process of
action is being taken to develop a leaflet concerning Medi-Cal's nursing
of formulating standards for the operation of the many consultant units
home benefits. A draft copy of the proposed leaflet is attached for
at county levels. On adoption and promulgation of these standards, it
your convenience. (See GAO note.) As to control by direct surveillance,
is anticipated that a more uniform and more effective application of
the feasibility of doing this on a large scale is obviously limited by
the program's policies, rules and regulations will result.
the number of program beneficiaries currently in nursing homes.
GAO note: Draft copy of proposed leaflet is not reproduced
here.
56
57
APPENDIX III
APPENDIX II
Page 3
PRINCIPAL OFFICIALS
Miss Gene Beach
-3-
March 4, 1970
OF THE
DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
Preliminary discussions have been initiated about a plan to institute
a social evaluation of all Medi-Cal nursing home placements within 30
HAVING RESPONSIBILITY FOR THE ACTIVITIES
days of admission. This would encompass an explanation to the patient,
his family and relatives, and the facility, as to the program's
financial responsibilities, and alert all concerned about the prohibition
DISCUSSED IN THIS REPORT
against supplemental payments for program covered services.
Current regulations incorporate provisions against unlawful and unethical
advertising and have significantly reduced this problem. Here again,
Tenure of office
however, the Department is faced with the practicality of direct surveil-
From
To
lance of advertising material in all media. Consideration will be given
by the Department to greater case-detection efforts, but the cost factor
of doing this must be weighed against the return and the low incidence
SECRETARY OF HEALTH, EDUCATION,
of this problem.
AND WELFARE:
As indicated in the draft report, a regulatory requirement for authorization
Elliot L. Richardson
June
1970
Present
of nursing home transfer of patients is in effect. The major problem of
Robert H. Finch
Jan.
1969
June
1970
mass transfers and bartering of patients between nursing home facilities
Wilbur J. Cohen
May
1968
Jan.
1969
has been eliminated, and there have been almost no instances brought to
our attention of patients being moved against their wishes. When these
John W. Gardner
Aug.
1965
May
1968
have been brought to our notice, investigative actions have been undertaken.
Here too, clear definitions of circumstances under which transfers may be
permitted are difficult in the face of the federal requirement for free-
ADMINISTRATOR, SOCIAL AND REHA-
choice of provider of service.
BILITATION SERVICE:
John D. Twiname
Mar.
1970
Present
The Department recognizes the potential benefits of establishing beneficiary
Mary E. Switzer
Aug.
1967
Mar.
1970
profiles, and as the availability of more sophisticated computer equipment
and programming techniques permits, this will be pursued. Such an under-
taking will be costly however, and consideration must be given to establishing
priorities in accordance with program needs. The feasibility of such profiles
will be the subject of intensive study in the course of operating the proto-
type system of claims handling recommended by the Lockheed Missiles and Space
Corporation.
We appreciate the opportunity to review and comment on this draft report,
and we concur in the identification of the problem areas. Nevertheless, the
nearly four years of operation of this program have incontrovertibly established
a Title XIX axiom; that the many problems inherent in this and other Medicaid
programs are more readily identified than solved. We will continue to
welcome workable suggestions for program improvements, and we will be keenly
interested in learning of successful solutions in other states to the kinds
of problems reviewed in this draft report.
Sincerely, Director Designate
for
CAREL E. H. MULDER
Director
Attachment
U.S. GAO, Wash., D.C.
59
58
From
BARBER B. CONABLE, JR.
U. S. HOUSE OF REPRESENTATIVES
FOR RELEASE
35th District, New York
Tuesday, March 26, 1974
Washington, March 26 -- Representative Barber B. Conable (35th Dist., N.Y.)
today proposed establishment of a new program of long-term care for the elderly
that would provide alternatives to institutionalizing persons by expanding the types
of care available to the elderly. In a measure introduced in the House today the
Congressman called for a system of community long-term care centers in every area
to coordinate and direct long-term care services for the elderly, including home-
maker, health, nutrition, and day care, as well as institutional care.
"There is a tremendous need to provide broader and more flexible. care than is
presently available to elderly citizens who need it," the Congressman declared in
explaining his proposal. "There is too great a reliance on placing people in insti-
tutions today when many of them could be cared for better in other surroundings,
including their own homes. In too many cases what we are doing amounts to incar-
ceration rather than considerate care. This is a major concern among senior citi-
zens.
"A broader, coordinated system could better serve older people without comparable
increases in cost," the Congressman insisted. "Since government programs pay for -
long-term medical care but not non-medical care, a great many of the elderly who
need only a modest degree of assistance are being placed in medical facilities which
are the most costly to maintain. We need other realistic alternatives."
The system proposed by Mr. Conable would be administered by state long-term
care agencies through community long-term care centers. The centers would be gov-
erned by a board comprised at least in half of people eligible for benefits. The
centers would determine the kind of care required in consultation with each indi-
vidual and family.
Financing of the program would be by a $3 monthly premium paid by those who
enroll and the remainder contributed by state and federal governments. These
would not be completely new costs, according to the Congressman, because many of
the services provided would replace those presently furnished through the more
costly medicare and medicaid. State and federal governments presently spend more
than $4 Billion annually under these two programs for long-term care.
*****
GERALD:
EXCEPTIVE CHANDER
HUGH L. CAREY, GOVERNOR
Robert Laird, Press Secretary
518-474-8418
212-977-2716
FOR RELEASE:
IMMEDIATE, FRIDAY
JANUARY 10, 1975
Executive Chamber
EXECUTIVE ORDER NO. 2
EXECUTIVE ORDER
When public funds are channeled through private hands to
finance health and residential services, government must insure
that those funds are used honestly and efficiently in the promotion
of the public welfare. The compassionate purpose of programs of
residential and health care must not be subverted by the improper
diversion of public funds for private benefit, nor through the
inability of government to control the use of such funds under
present regulatory structures.
A serious public concern has been expressed as to the quality
of care provided by nursing homes and residential facilities sheltering
the aged, the disabled, the mentally ill and retarded, receiving public
financial assistance and subject to supervision by State agencies, but
owned by private interests.
State government is deeply involved in the supervision of such
facilities, but the public has lost confidence in the methods through
which government finances these facilities, and in the government's
ability to assure the efficient delivery of health and related services.
It is necessary, therefore, that there be an official inquiry
into the mechanisms of State and Federal funding, particularly
reimbursement under the Medicaid system. Current methods of funding
must be evaluated to determine if they contribute to exploitation of
the poor, aged, and infirm and to profitecring in public funds.
In addition, the State regulatory structure must be evaluated
to insure that nursing homes and homes which shelter the aged and
disabled provide the highest quality of care with the greatest degree
of economy.
This inquiry must also look into the ownership, finn sing and
control of nursing homes and residential facilities and must thoroughly
examine any allegations of improper conduct by publicly elected of ficials
or members of their staffs with respect to the operation of State
agencies charged with the responsibility of regulating these institutions
Now, therefore, I, Hugh L. Carey, pursuant to Section Six of
the Executive Law, have appointed and by these present du appoint
Morris B. Abram as Commissioner to study, examine, investigate, review
FORD LIBRARY ''d GERALD
and make recommendations with respect to the management and affairs of
any department, board, bureau, or commission of the State exercising any
direction, supervision, visitation, inspection, funding or control of
any non-governmental nursing home, residential facility or home which
provides health, residential or allied services, and which receives
any Federal, State or local financial assistance or payment, directly
or indirectly, or which provides care or services to any individual
-2-
The Commissioner is hereby empowered to subpoena and enforce
the attendance of witnesses, to administer oaths and examine witnesses
under oath and to require the production of any books, records or
papers deemed relevant or material and I hereby give and grant to the
Commissioner the powers and authorities which may be given or granted
to persons appointed by me for such purpose under authority of
Section Six of the Executive Law.
Every State department, division, board, bureau, commission,
council and agency shall provide to the Commissioner every assistance,
facility and cooperation which may be proper or desirable for the
accomplishment of the purposes for which the Commissioner is hereby
appointed.
GIVEN under my hand and the
Privy Seal of the State at the
Capitol in the City of Albany
this tenth
day of
January, in the year of our
Lord one thousand nine hundred
seventy-five.
BY THE GOVERNOR
/s/ Hugh L. Carey
Secretary to the Governor
/s/ David W. Burke
FORD is LIBRARY GERALD
PROPOSED QUESTIONS TO BE PRESENTED TO THE MORELAND COMMISSION
FOR INCLUSION IN THEIR STUDY OF THE NURSING HOME INDUSTRY IN NEW YORK STATE
1. Based upon the current cost of inpatient care in proprietary nursing
homes in upstate New York which is approximately $30 per patient per day,
would the commission conclude that this cost is excessive taking into
account the fact that the cost for voluntary nursing homes in upstate
New York is approximately $35 per patient day and the cost of a moderate
hotel room in New York City is $40 per day, where nursing homes provide
24 hour nursing care, meals, etc.
2. It has been suggested in the media that some or all professional employee
in nursing homes such as physicians, nurses, aides, dieticians, physical
therapists, etc. are improperly caring for patients. Would the commission
conclude that if this were the case, that the same professional employees
who work in hospitals and state medical facilities are not doing the same job
3. It has been suggested by governmental officials that the cost of caresin
nursing homes is excessive, clearly leading one to the conclusion that
only this one segment of the health care industry is. responsible for high
costs. Taking into account the high costs of inpatient hospital care and
the cost of care in state facilities, would the commission conclude that
only one segment of the health care industry would be responsible for
excessive cost when all inpatient providers are reimbursed basically under
the same formula?
4. Does the commission believe that the regulatory authorities in New York
state regarding reimbursement (New York Health Department) should have a
uniform reporting system (i.e. chart of accounts and specific guidelines
for allowable cost) which would clearly deliniate what types of expenses
it considers allowable; or should the authorities continue under the current
system whereby each facility is left on its own to make its determinations
and then upon audit is told in many instances that certain expenses may
retroactively be declared not allowable?
5. Does the commission believe that field auditors who are paid solely
to find fault and make on-the-spot decisions should have these decisions
final or should the facility have the right to appeal?
6. Can the commission determine the basis for governmental authorities who
have approved programs for construction under the New York State Article 28A
and 2SB construction program that have allowed facilities to be built and
equipped at costs from 25% to 125% above the cost allowed to proprietary
facilities, where it is clear under state and federal statutes that the level
of care, staffing and space requirements are identical? The state then uses
federal funds to pay back these higher costs as well as tax free interest
on bonds to investors who bought the bonds in the first place.
GERALD FORD VIBRARY
7. Can the commission determine why the New York State Health Department
has consistently allowed many non-profit facilities, staff and equ pment
far greater than that allowed for proprietary facilities thereby clearly
discriminating against patients in proprietary facilities, apparently in
violation of the law?
8. Can the commission determine why the New York hate Health Department
groups non-profit facilities separately from proprictary facilities for
reimbursement purposes? Could it be that the higher cost of these
facilities due to exorbitant construction costs and higher operating costs
can more easily be hidden and then reimbursed without comparing the non-
profit operation to proprietary operation in terms of cost of operation?
9. Can the commission explain or justify the higher and fully reimbursable
construction and operational cost in non-profit facilities particularly
those funded under the 28A program? Does not this higher cost directly
affect the total Medicaid dollar thereby requiring the state to stringently
control the cost on other facilities because the higher dollar value paid
for construction takes away from direct patient care?
10. Can the commission explain why the New York Health Department changes
Part 86 without notice and without hearing? Specifically, last year a
major change occurred in computing reimbursement for movable equipment
with a ceiling being established with no notice given which would appear
to be a violation of Part 86.21 (I) of the Health Department's own
regulation.
11. Can the commission justify the Health Department's right to penalize
a nursing home under Part 86. (C) to keep the nursing home's reimburse-
ment at the group average where facilities have "significant operational
deficiencies"? What is a significant operational deficiency? Who
determines what it is, and what is the criteria? There is no guideline and
apparently this regulation is enforced indiscriminately.
12. Can the commission explain why the public health council who legally
has the right to establish new operations on the basis of character, compe-
tence and financial ability, does not apply and does not publish what
criteria this council uses in making a determination? The record clearly
shows that non-profit and voluntary sponsors obtain approval in 2 to 4 months
and proprietary sponsors take a year or more to obtain approvals, and one
wonders how the same criteria can be applied to both sponsors when
proprietary sponsors must have all financial resources in hand when many
voluntary sponsors are regularly approved without having any financial re-
sources other that what it can borrow from the state. Should not the criteri.
for all applicants be the same?' Should not there be a specific time period
allowed for all applicants?
GERALD FORD LIBRARY
13. Can the commission explain why the Health Department takes 6 months
to a year to schedule a hearing on applications thereby causing 2 nn ?
year delays in projects?
14. Why does the Health Department add to all of its letters requesting
information that the applicant has 30 days to answer "or else" when the
Health Department itself many times does not act for 2 years?
15. Can the commission explain why the media believes that facilities
who are reimbursed for their legal expenses in bringing actions against
arbitrary state decisions should not continue to be reimbursed as legitimate
expenses, or would the commission believe that the Health Department itself
in many instances is the cause of these legal expenses because of delays,
arbitrary decisions and little or no guidelines in the decision making
process? It would appear that if the commission determines that these legal
expenses were not to be reimbursed, then the commission should also
recommend that in instances where governmental officials take actions which
are overturned in the courts, that the commissioner of the department or
the governor should become individually liable for these legal bills in
defending arbitrary state action without the tax payers. having to pay
taxes to pay for these legal bills on behalf of the state.
16. Can the commission explain why the State Health Department Bureau of
Health Economics does not publish a guideline determining exactly what are
considered allowable costs (somewhat like IRS). Under the current
situation field audits are conducted subsequent to expenses being incurred
and requests for facilities to reimburse the government for non-allowable
costs are made 2 or 3 years later. In many instances these costs were
considered allowable by the auditor for the facility and then thrown out
by the state. It has also been suggested that interest and penalties be
incurred on the amounts considered due to the state and that would be
justifiable only if the state would agree to pay interest and penalties
on moneys owed to facilities from both Medicare and Medicaid which are
overdue.
17. Can the commission explain the anomaly which exists between the Bureau
of Health Economics and the regional survey teams where one agency is
charged with controlling the cost and the other agency is charged with
improving and increasing care? There appears to be no correlation between
these agencies as to what costs are involved in doing the job.
18. Can the commission explain why the Health Department does not publish
standard definitions of what it considers to be direct care nursing hours?
Each regional office appears to work with a different definition.
GERALD FORD LIBRARY
19. Can the commission explain why current regulations promulgated by the
New York Health Department are replete with phrases such as "as the
department shall require"? Should not the department stipulate wt
requirements are rather than leave it open to ununiform. interpretation?
20. Can the commission explain why federal and state agencies have not
been able to put a dollar value on new regulations which have been
effective since December 1973? These regulations have had a tremendous
impact on cost, yet the agencies who promulgate these regulations do not
chose to believe that there is any cost involved and facilities were
required to comply with these regulations during the federal government's
economic stabilization program, and in many instances were not reimbursed.
21. Is the commission aware that many nursing homes must pay lower wages
to many employees than hospitals or voluntary nursing homes who have
allowed their facilities to become organized by labor unions. If a
facility wishes to increase employee benefits, it must incur the cost,
then request an appeal from the Health Department, where as if a facility
becomes organized by a labor union, an immediate increase is given to
that facility. Of course, it becomes apparent that there is no collective
bargaining because the labor unions are aware that whatever demands they
make will be paid for by the state and that there is no true collective
bargaining.
22. Can the commission explain why the Department of Mental Hygiene in
1971 restricted admissions to state mental facilities to people who were
65 and under thereby forcing the group 65 and over who had psychiatric
problems to be admitted to nursing homes who in many instances were not
prepared to accept these types of patients?
23. Is the commission aware that nursing homes can be considered
deficient by federal and state regulation if the attending physician does
not see the patient every 30 days, but that the facilities have no control
to force physicians to comply with this regulation? The same situation
exists regarding the prescribing of drugs.
24. Can the commission explain why commissioners of social services
regularly admit patients who need intermediate or skilled care to
proprietary homes for adults where the patients do not receive adequate
care.
25. Can the commission explain why members of boards of governors of many
voluntary facilities conduct business with their own facilities?
26. Does not the commission believe it is illegal for an employee or owner
of a nursing home to contact his congressman, senator or other elected
official in order to discuss a problem which may be effecting his liveli-
hood, or should personnel who work or own nursing homes be exempt from this
constitutional privilege?
GERALD FORD LIBRARY
27. Does the commission believe that because many legal suits have been
brought by institutions involved in health care against governme
agencies and won these legal suits, that these facilities have hired better
lawyers, or could it possibly be that these facilities were correct in
fighting arbitrary governmental decisions?
28. It would appear that the charge of this commission is to look into the
nursing home component of the health care industry. As we are all aware,
the health care industry includes physicians, dentists, hospitals, nursing
homes, laboratories, etc. Can this commission explain why the nursing
home component is being isolated when the same personnel are involved in al
segments of the health care industry? Could it also be concluded that
problems which exist in nursing homes also exist to the same extent in
hospitals, state facilities, etc. ?
FORD & LIBRARY 938870
WHER EAS, the nursing home profession in the State of New York
is involved in numerous investigations; Federal, state and
local, both criminal and civil, and
WHEREAS, the Governor of the State of New York has appointed a
special commission known as the Moreland Commission to
investigate alleged abuses and practices in the nursing home
field including but not limited to; financing of construction,
ownership and sponsorship of facilities, provision of medical,
nursing, rehabilitative and other services, and the methods
of financing the same, and said Commission has been charged
with the task of recommending corrective legislation and,
WHEREAS, as set forth in the Moss Reports it is recognized that the
problems described in the State of New York are characteristic
of those which may prevail in the nation as a whole and,
WHEREAS, resulting legislation will have a strong impact upon,
and possibly serve as a model for, similar legislation nationally,
both Federal and State and,
WHEREAS, the American Nursing Home Association is the
appropriate body to assume a leadership role in the formulation
and presentation of constructive approaches in shaping
legislative proposals which are the lifeblood and future of long-
term care as it is known today,
Now therefore, it is hereby unanimously resolved by the Board of
Directors of the New York State Health Facilities Association, Inc.
that the American Nursing Home Association be requested to
assist the New York State Health Facilities Association, Inc.,
both financially and administratively, in the preparation and
presentation of those points of view, and legislative and financial
proposals which will advance and enhance the delivery of high
quality patient care while assuring reasonable and efficient
expenditure of public funds.
FORD is LIBRARY GERALD
IIC
Stein 0 Panal's Rive
For the Homes
By ROBI RTA B. GRATZ
leagth and non-arms length ment in-defined in the Health
The Stein Commission to.
real property transactions Coleara 10 persont or 103
day recommended five
and instead using a historic ownership intere :. said com-
cost for reimbursement. This mission executive director
changes in the state's nurs-
proposal would imore all Terrence Mom. who wrote
FORD & LIBRARY GERALD
IIE2
New YoRK Post 2/18/75
HEALTH of ENGINEERS
From
THE LEGISLATIVE INDEX COMPANY
February 11, 1975
100 So. Swan St., Albany, N.Y.
Assembly 3253
By Mr. Stein
AN ACT to amend the public health law, in relation to the bidding and letting of
contracts with respect to health facilities
Section 1. Article one of the public health law is hereby amended by adding thereto
a new title, to be title three to read as follows:
TITLE III
BIDDING AND LETTING OF CONTRACTS FOR HEALTH FACILITIES
Section 100. Declaration of policy.
101. Definitions:
102. Public bidding.
102-a. Exceptions to public bidding.
103. Qualifications of bidders.
104. Advertising for bids.
105. Statement of non-collusion.
106. Conspiracies to prevent competitive bidding.
$100. Declaration of policy. It is hereby found, declared and determined that
hospitals and other health facilities of the state are of foremost concern and essent-
ial in providing comprehensive care and treatment for the ill and infirm, both physical
and mental, and are thus vital to the protection and the promotion of the health, wel-
fare and safety of the people of the state of New York.
It is further declared to be the policy of this state that this article shall be
construed in the negotiation of contracts for works and purchases to which any health
facility is a party so as to assure the prudent and economical use of public moneys
for the genefit of all the inhabitants of the state and to facilitate the acquisition
of facilities and commodities of maximum quality at the lowest possible cost.
$101. Definitions. 1. "Board" shall mean the board of trustees or board of directors
in control of a health facility.
2. "Commissioner" shall mean the commissioner of health of the state of New York,
3. "Construction" shall mean site axquisition, planning design, erection, building,
alteration, reconstruction, renovation, improvement, extension, enlargement, replace-
ment or modification and the inspection or modification thereof.
4. "Health facility" shall include, but not be limited to, general hospitals,
psychiatric hospitals, tuberculosis hospitals, ambulatory hospitals and centers,
chronic disease hospitals, nursing homes, extended care facilities, dispensaries and
laboratories and any other related facilities, and any combination of the foregoing,
both public and private, participating in the state medicaid program
5. "State" shall mean the state of New York.
$102. Public bidding. Any contract let by a health facility for works or purchases
shall be publicly let to the lowest responsible bidder furnishing the required secur-
ity after advertisement for sealed bids in the manner provided by section one hundred
four.
$102-a. Exceptions to public bidding. 1. Section one hundred two does not apply to
situations otherwise experssly provided for by an act of the state legislature or by
a local law adopted prior to September first, nineteen hundred seventy-four.
2. Section one hundred two does not apply to situations where the cost of a contract
does not exceed five thousand dollars for works or one thousand five hundred dollars
for purchases.
3. Section one hundred two may be waived by the board in situations where competit-
ion is so limited that it would be impracticable or detrimental for the health facility
to comply with the public bidding requirements of that section. However, at no time
shall the toard act in an arbitrary or capricious manner.
4. Section one hundred two may be waived upon the adoption of a resolution by a un-
animous vote of the board. Such a resolution should contain a full explanation of the
reasons for its adoption. All purchases made pursuant to such a resolution shall be
subject to audit and inspection by the commissioner.
5. Section one hundred two may be waived in the case of a public emergency erising
out of an accident or other unforeseen occurence or condition whereby circumstances
effecting a health facility or the life, health, safety or property of patients or
employees therein require immediate action and cannot await competitive bidding. In
these situations contracts for works or the purchase of supplies, material or equip-
ment may be let by the appropriate officer, board or agency of the health facility.
Notice of such action should be filed with the commissioner not later than two weeks
after validation of the contract.
GERALO, FORD ARABARY
IIFIa
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Page 2 - Assembly 3253 - HEALTH - ENGINEERS
6. Surplus and second hand supplies, anterial or equipment may be purchased from
the federal or state government, or from any other political subdivision or district,
without competitive bidding.
7. The exceptions of section one hundred two-a are not applicable to situations
where they are employed to result in a contract that enables an interested member of
the board to reap financial gains.
$103. Qualifications of bidders. 1. A health facility may make rules and regulations
governing the qualifications of bidders entering into such a contract where the cost
of such a contract exceeds twenty-five thousand dollars. The bidding may be restricted
to those who shall have qualified prior to the receipt of bids according to standards
fixed by the health facility, provided however, that notice or notices for the sub-
mission of qualifications shall be published in an appropriate trade journal publish-
ed in the city, county or state, or, if no such journal exists, in a newspaper with
a general circulation in the city or county concerned, at least once. This publica-
tion should be not less than ten days prior to the date fixed for filing of qualifi-
cations.
2. Each contract for the construction of a health facility may include a provision
that the architect who designed the facility, or the architect or engineer retained or
employed specifically for the purpose of supervision, shall supervise the work to be
performed through to completion and shall see to it that the materials furnished and
the work performed are in accordance with the drawings, plans, specifications and
contracts thereof.
$104. Advertising for bids. 1. Advertisements for bids shall be published in a
newspaper or trade journal designed for such purpose. Copies of all such advertise-
ments shall be filed with the Commissioner. Such advertisements shall contain a state-
ment of the time when and place where all bids received pursuant to such notice will
be publicly opened and read. The board seeking such bids may by resolution designate
any officer or employee to open the bids at the time and the place specified in the
notice. Such designee shall make a record of such bids in such form and detail as
the board shall prescribe and present the same at the next regular or special meeting
of such board. All bids received shall be publicly opened and read at the time and
place so specified. At least five days shall elapse between the first publication of
such advertisement and the date so specified for the opening and reading of bids.
2. In any case where a responsible bidder's gross price is reducible by an allow-
ance for the value of used machiner, equipment, apparatus or tools to be traded in by
the health facility, the gross price shall be reduced by the amount of such allowance,
for the purpose of determining the low bid.
3. In cases where two or nore responsible bidders submit identifical bids as to
price, such officers or board may award the contract to any of such bidders. Such
officer or board should not reap personal financial gain from the ensuing contract.
Such officer or board may, in his or its discretion, reject all bids and readvertise
for new bids in the manner provided in this section.
$105. Statement of non-collusion. Every contract hereafter made or awarded by a
health facility, pursuant to bid, for work or services performed or to be performed
or for purchases, shall contain the following statement subscribed by the bidder
and affirmed by such bidder as true under the penalties of perjury:
(a) By submission of this bid, each bidder and each person signing on bohalf of
my bidder certifies, and in the case of a joint bid each party thereto certifies as
to its own organization, under penalty of perjury, that to the best of knowledge and
belief:
(1) The prices in this bid have been arrived at independently without collusion,
consultation, communication, or agreement, for the purpose of restricting competition,
as to any matter relating to such prices with any other bidder or with any competitor;
(2) Unless otherwise required by law, the prices which have been quoted in this
bid have not been knowingly disclosed by the bidder and will not knowingly be disclosed
by the bidder prior to opening, directly or indirectly, to any other bidder or any
o ther competitor; and
(b) A bid shall not be considered for award nor shall any award be made where
paragraphs one, two and three of subdivision (a) of this section have not been
complied with; provided however that if in any case the bidder cannot make the fore-
going certification, the bidder shall so state and shill furnish with the bid a signed
statement which sets forth in Cetail the reasons therefor. Where paragraphs one, two
and three of subdivision (a) of this section have not been complied with, the bid
shall not be considered for award nor shall any award be made unless the commissioner,
or his designee, determines that such disclosure was not Dade for the purpose of
restricting competition.
AR
GERALD FORD LIBRARY
IIFIf
Page 3- Assembly 3253 - HEALTH - ENGINEERS
The fact that a builder (a) has published price lists, rates, thriffs covering
items being procured, (b) has informed prospective customers of proposed or pending
publication of new or revised lists for such items, or (c) has sold the same items
to other customers at the same prices being bid, does not constitute, without more,
a disclosure within the meaning of paragraph one of subdivision (a) of this section.
6 106. Conspiracies to prevent competitive bidding. A person or corporation who
shall wilfully, knowingly and with intent to defraud, make or enter into, or attempt
to make or enter into, with any other person or corporation, a contract, agreement,
arrangement or combination to submit a fraudulent cr collusive bid, to refrain from
submitting a bona fide competitive bid to any health facility on a contract for work
or purchase which has been advertised for bidding, shall be guilty of a misdemeanor,
and on conviction thereof shall, if a natural person, be punished by a fine not
exceeding five thousand dollars or by imprisonment for not longer than one year, cr
by both such fine and imprisonment, and if a corporation, by a flue not exceeding
twenty thousand dollars. An indictment or information based upon a violation of any
provision of this section must be found within three years after its commission.
$ 2. This act shall take effect on the first day of September next succeeding the
date on which it shall have become a law.
Referred to Health Com.
GERALD LISSANY
3r
IIFIC
HEALTH - INSURANCE
From
THE LEGISLATIVE INDEX COMPANY
February 11, 1975
100 So. Swan St., Albany, N.Y.
Assembly 3254
By Mr. Stein
AN ACT to amend the public health law and the insurance law, in relation to the
promotion of efficiency in the delivery of health services
Section 1. Legislative findings. The legislature hereby finds that a factor
contributing to the problems of some of the hospitals and health care institutions
facing severe financial crises in New York state is a lack of adequate and effective
management and administrative practices; that no comprehensive management or per-
formance audit of individual hospitals and health facilities is currently required or
conducted in connection with the allocation of publicly provided or regulated reimburse
ments; that the conduct of annual financial audits of private hospitals has been dele-
gated to non-profit insurance corporations without any regular or effective public
supervision or evaluation of the corporations' performance of this task; that major
decisions affecting the existence of some hospitals are being made with little attention
to the economic impact on the financial future of the institution and its ability to
continue to deliver health services to the community; that the maintenance of the
public health is dependent on the continued effectiveness of both public and private
hospitals and health facilities and that all of these institutions must be viewed as
a public resource; and that the powers and responsibilities of the commissioner of healt
and superintendent of insurance are limited and not clearly defined with regard to the
initiation of actions which encourage, promote and insure the efficient and financially
sound operation of the hospitals in New York state.
§2. Section twenty-eight hundred of the public health law, as amended by chapter
eight hundred sixty-two of the laws of nineteen hundred sixty-eight, is hereby amended
to read as follows:
$2800. Declaration of policy and statement of purpose. pursuant to section
three of article seventeen of the constitution, the department of health, acting through
the health commissioner, shall have the central, comprehensive responsibility for the
development and administration of the state's policy*****
§3. Section twenty-eight hundred one of such law is hereby amended by adding
thereto a new subdivision, to be subdivision eight, to read as follows:
8. "Impact statement" means a statement demonstrating economic impact of all major
decisions, including but not limited to the following: construction, renovation, or
replacement of facilities; new equipment costs exceeding fifty thousand dollars; merger,
acquisition or creation of subsidiary by a hospital or health-related service; initia-
tion of a new program of highly specialized or technologically sophisticated health
services, research or education by a hospital or health-related service not presently
under taken; and any alteration in service provided by the hospital or health-related
service which would decrease hospital service or health-related service presently
provided by the hospital or health-related service.
$4. Subdivision one of section twenty-eight hundred three of such law, as amended
by chapter nine hundred eighteen of the laws of nineteen hundred seventy-two, is here-
by amended to read as follows:
1. (a) The commissioner shall have the power to inquire into the operation of hos-
pitals and home health agencies and to conduct periodic inspections of facilities
with respect to the fitness and adequacy of the premises, equipment, personnel, rules
and by-laws, standards of medical care, hospital service, including health-related
service, home health service, system of accounts, records, and the adequacy of
financial resources and sources of future revenues. (NEW MATTER BEGINS HERE)
(b) (i) The commissioner shall have the power to establish by rule and regulation,
within six months of the date on which this subparagraph shall have become law, specific
criteria for the determination of hospital efficiency and to provide for the deter-
mination of hospital efficiency and to provide for the dissemination of such criteria
to the public and hospitals. Only after public hearing, which must be held every two
years if not sooner, may such hospital efficiency criteria be revised.
(ii) Notice of such hearing shall be published on three successive days in at least
two newspapers having general circulation within the territory or district where the
hearing will be held. The notice of hearing shall state the purpose thereof, the time
when and the place where the public meeting shall be held. The public hearing shall
be held at a time and location deemed by the commissioner to be most convenient to the
public. At such hearing, any person may be heard in favor of or against the revision
of hospital efficiency criteria.
(c) (1) The commissioner shall have the power to initiate consolidation of programs
and/or services offered by two or more hospitals and/or health-related services;
(11) No action hereunder shall be taken without a hearing. The commissioner shall
fix a time and place for the hearing. A copy of the proposed action, together with the
notice of the time and place of the hearing, shall be served in person on or mailed by
registered mail to the hospital or health-related service at least thirty days before
date fixed for the hearing. The hospital or health-related service shall file with the
commissioner, not less than eight days prior to the hearing, a written statement
concerning such proposed action. (NEW MATTER ENDS HERE)
GERALD
§5. Subdivision one of section twenty-eight hundred six of such law, as amended
by chapter nine hundred twenty-three of the laws of nineteen hundred seventy-three, is
hereby amended, and a new subdivision, to be subdivision five, is hereby added thereto
to read, respectively, as follows:
IIF2
mdr
HEALTH
From
THE LEGISLATIVE INDEX COMPANY
January 14, 1975
100 So. Swan St., Albany, N.Y.
51074
Bustin
Assembly 993
By Mr. H. Posnor
AN ACT to amend the public health law, in relation to the rights of patients in
certain medical facilities
Section 1. The public health law is hereby amended by adding thoreto a new section,
to be section twenty-eight hundred three-e, to read as follows:
$2803-c. Rights of patients in certain medical facilities.
1. The commissioner shall require that every nursing home and health related facility,
as defined in subdivisions two and three (b) of section twenty-eight hundred one of
this article, shall adopt and make public a statement of the rights and responsibili-
ties of the patients who are receiving care in such facilities, and shall treat such
patients in accordance with the provisions of such statement.
2. Said statement shall include, but not be limited to the following:
a. A guarantee that the patient's civil and religious liberties, including the
right to independent personal decisions and knowledge of available choices, will not
be infringed and that the facility will encourage and assist in the fullest possible
exorcise of these rights.
b. A guarantee of the patient's right to have private and unrestricted communica-
tions with his physician, attorney, and any other person.
c. A guarantee of the patient's rights to present grievances on behalf of him-
self or others, to the facility's staff or administrator, to governmental officials,
or to any other person without fear of reprisal, and to join with other patients or
individuals within or outside of the facility to work for improvements in patient
care.
d. A guarantee of the patient's right to manage his own financial affairs, or to
have a monthly accounting of any financial transactions in his behalf, should the
patient delegate such responsibility to the facility for any period of time!
e. A guarantee of the patient's right to receivo at least adequate and appropri-
ate medical care, to be fully informed of his medical condition and proposed Creat-
ment, and to participate in the planning of all medical treatment, including the
right to refuse medication and treatment and know the consequences of such actions.
f. A guarantee of the patient's right to have privacy in treatment and in caring
for personal needs, confidentiality in the treatment of personal and medical records,
and security in storing and using personal possessions.
8. A guarantee of the patient's right to receive courteous, fair, and equal treat-
ment and services and a written statement of the services provided by the facility,
including those required to be offered on an as-needed basis.
h. A guarantee of the patient's right to be free from mental and physical abuse
and from physical and chemical restraints, except these retrainte authorized in
writing by a doctor for a specified and limited period of time.
1. A statement of the facility's regulations and an explanation of the patient's
responsibility to obey all reasonable regulations of the facility and to respect the
personal rights and private property of the other patients.
j. A guarantee that, should the patient bo adjudicated incompetent and not be
restored to legal capacity, the above rights and responsibilities shall devolve up-
on a sponsor or guardian who shall SCC that the patient is provided with adequate,
appropriate, and respectful medical treatment and care and all rights which he is
capable of exercising.
3. Each facilicy shall make available a copy of the statement to each patient and
to each patient's guardian at or prior to the time of admission to the facility, and
to each member of the facility's staff.
4. Each facility shall prepare a written plan and provide appropriate staff train-
ing to implement each patient's right included in the statement.
§2. This act shall take effect on the cixtieth day after it shall have become a
law.
Referred to Health Com.
111111
FORD
GERALD
1129817
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Page 2 - Assembly 3254 - HEALTH - INSURANCE
1. A hsopital operating certificate may be revoked, suspended, limited or
annulled by the commissioner on proof that:*****to provide for necessary emergency
care and treatment for an unidentified person brought to it in an unconscious,
seriously 111 or wounded condition (NEW MATTER BEGINS HERE); or (c) the hospital
has failed to furnish the commissioner of health with An impact statement prior
to acting, or, having been furnished with an impact statement prior to acting, the
commissioner neither certifies the proposed action as improving the efficient delivery
of health care services nor certifies such action as critical to the public health,
and the hospital acts on its proposed action.
S. In addition to the power to revoke, suspend, limit or annul the hospital
operating certificate, the commissioner may, in the event of a violation by a hos-
pital or health-related service of any provision of the certificate of incorpora-
tion or any order of the commissioner or of any rules and regulations duly promul-
gated pursuant to the provisions of this chapter, remove any or all of the existing
directions of the hospital or health-related service and appoitn such person or
persons whom the commissioner deems advisable, including officers and employees of
the department, as new directors to serve in the places of those removed. Directors
so appointed by the commissioner who are officers or employees of the department
shall serve in such capacity without compensation, and any directors so appointed
by the commissioner shall serve only for a period coexistent with the duration of
such violation or until the commissioner is assured in a manner satisfactory to him
against violations of a similar nature. (NEW MATTER ENDS HERE)
§6. Subdivision three of section twenty-eight hundred seven of such law, as
amended by chapter nine hundred eighteen of the laws of nineteen hundred seventy-
two, is hereby amended to read as follows:
3. Prior to the approval of such rates, the commissioner shall determine and
certify to the superintendent of insurance and the state director of the budget
that the proposed rate schedules for payments for hospital and health-related ser-
vice, including home health service, are [reasonably related to the costs of ef-
ficient production of such service] rates of payment which are directly related to
the efficient delivery of health care services as determined according to the
specific criteria set forth by the commissioner. In making such certification, the
commissioner shall take into consideration the elements of cost,
$7. Such law is hereby amended by adding thereto a new section, to be section
twenty-eight hundred seven-a, to read as follows:
$2807-a. Impact statements. The contents of all impact statements submitted
pursuant to this article shall be public information and such statements shall be
evailable for public inspection under such conditions as the commissioner shall
prescribe. The department shall prepare an analysis of each impact statement for
the commissioner. The commissioner shall certify for all donect statements either
that the proposed action improves the efficient delivery of health care services,
that the proposed action is critical to the public health, or that the proposed
action shall not be undertaken and the rationale therefor.
$8. Subsection two of section two hundred fifty-five of the insurance law, as
amended by chapter six hundred ten ef the laws of nineteen hundred sixty-two, is
hereby amended to read as follows:
2. No corporation subject to the provisions of this article shall enter into
any contract with a subscriber unless and until it shall have filed with the super-
intendent of insurance a full schedule of the rates to be paid by the subscribers
to such contracts and shall have obtained the superintendent's approval therof. The
superintendent's approval shall not be granted until after the approval of the com-
missioner of health. The superintendent may refuse such approval*****
§9. Paragraphs (a) and (b) of subsection two-a of section two hundred fifty-
five of such law, as added by chapter five hundred seventy-two of the laws of nine-
teen hundred seventy, are hereby amended, to read, respectively, as follows:
(a) Notwithstanding any other provision of law, no rate filing with respect to
contracts, *****except in compliance with the provisions of this subsection as well as
other applicable provisions of law. The superintendent shall annually evaluate the
management practices, operating policies and financial and administrative procedures
of all corporations organized and operating in accepannce with article nine-c of the
insurance law.
(b) Prior to any such filing or application by or on behalf of a corporation,
such corporation, when directed by the superintendent, shall conduct a public hearing
with respect to the terms of such filing or application. Notice of such hearing
together with the annual evaluation shall be published on three successive days in
at least two newspapersmnk
$10. This act shall take effect on the thirtieth day after it shall have become
a law.
Referred to Health Com.
***** means same as old law
]
means old matter omitted
FORD
means new matter
pa
GERALD
LIBRARY
IIF3b
S 269
1975
MEMORANDUM IN SUPPORT OF
Senate Bill No. 269
by Sanator John E. Flynn
AN ACT to amend the Public Health Law in relation
to the appointment of an advisory council
on complaints arising with respect to
nursing homes
SUMMARY OF PROVISIONS:
Adds a new subdivision to be subdivision 9 of $2896a of the Public
Health Law to allow the Commissioner power to appoint at least one senior
citizen in each county and upon the recommendation of the Chief of the
appropriate Social Services district therefor, one senior citizen shall be
appointed to investigate specific complaints arising with respect to nursing
homes, and report his findings to the Commissioner.
JUSTIFICATION:
It is a well known fact that the citizens of our State are very
concerned with the conditions existing in nursing homes. The Department of
Públic Health makes diligent efforts to investigate complaints concerning
nursing homes as they arise. It is felt, however, that the present system
could be greatly improved by the addition of Senior Citizen Investigators,
deputized to investigate specific complaints arising in the counties in
which they reside. This proposed system would add a large investigatory arm
to the Department of Public Health and would result in a more prompt and
efficient handling of nursing home complaints, enabling the Department of
Health to take speedier action to remedy abuses. At the same time, it is
felt that the Senior Citizens who have a "special interest" involved in this
area will do a very thorough and conscientious job in this appointive capacity.
EFFECTIVE DATE:
Thirty days after it shall have become law.
IIF4
GEERAL FORD LIBRARY
A.83
MEMORANDUM IN SUPPORT
WERTZ
AN ACT to amend the mental hygiene law, in relation
to defining certain terms
PURPOSE OF BILL:
This bill is designed to clarify the intent of the Legislature
by statutorily defining various terms.
SUMMARY OF PROVISIONS:
Section 1.05 of the Mental Hygiene Law is amended to: (a)
include family care homes, hostels and halfway houses within the
definition of "facility;" (b) excludes a home, in which domestic
care and comfort are provided to a person by a relative, from the
definition of "facility;" and (c) separately defines "domestic care
and comfort," "family care home, = "hostel," "halfway house,"
"aftercare services, and "conditional release."
The bill would take effect immediately.
LEGISLATIVE HISTORY:
None.
JUSTIFICATION:
Family care homes have been providing services to the mentally
disabled for nearly forty years. Currently, there are close to
2,000 such homes servicing nearly 7,000 residents. The development
of hostels and halfway houses as alternatives to large institutions
is expected to increase. The bill acknowledges both the important
role family care homes have played in providing services and the
expanded role hostels and halfways are expected to play. "Domestic
care and comfort, "family care home," "hostel," "halfway house,
"aftercare services," and "conditional release" have been separately
defined in an effort to clarify the meaning of such terms.
FISCAL IMPLICATIONS:
None.
IIF5
FORD & LIBRARY 976870
+16.55
184
MEMORANDUM IN SUPPORT
Ass WERTZ
A.84
AN ACT to amend the executive law, in relation to giving
the board of social welfare the responsibility
for setting standards and approving the opera-
tion of certain residential facilities for
adults, to repeal section seven hundred fifty-
eight thereof and to make an appropriation
therefor
PURPOSE OF BILL:
This bill is designed to assure that all residential
facilities for adults meet and maintain minimum standards and to
assign the responsibility for approving, inspecting and investigat-
ing such facilities to one governmental agency.
SUMMARY OF PROVISIONS:
This bill amends section 755 of the Executive Law by no
longer permitting the board of social welfare to delegate its responsi-
bility for visiting, inspecting and supervising private proprietary
homes for adults with a capacity of four or less to local commissioners
of social services districts.
The bill also repeals section 758 of the Executive Law and
replaces it with a new expanded section which, while retaining
certain parts of the original section, makes these substantial
changes:
1. defines "boarding house," "foster home for adults, " and
"hostels;"
2. gives the board responsibility for approving, inspecting
and supervising the operation of these additional facilities;
3. provides that no person shall operate any facility as a
private proprietary home for adults or as a foster home for adults
after August 31, 1974 without the written approval of the board;
4. provides that no person or corporation shall operate
any facility as a residence for adults, boarding house or hotel
after August 31, 1974 without the written approval of the board;
5. provides that the board shall not grant its approval
for the operation of any private proprietary home for adults,
residence for adults, foster home for adults, boarding house or
hotel after August 31, 1974 unless a member or member' of the board's
staff have personally visited and inspected the facility
requesting its approval and are satisfied that the person or corporation
requesting its approval is: financially responsible; prepared to
make social, recreational and other supportive services available
to all its residents; that the buildings, equipment, staff, standard
of care and records to be employed in the operation of such facility
comply with applicable provisions of law and rules of the board;
and that any license or permit required by law for the operation of
such facility has been issued to the applicant;
6. provides that any person or corporation which operates
any of these facilities in violation of the provisions of this act
shall be guilty of a misdemeanor;
7. provides the board with the power to revoke, suspend
or limit its approval of any of these facilities under certain
circumstances;
IIFba
GERALD FORD, LIBRARY
- 2 -
8. provides that any order of revocation, suspension or
limitation of the board's approval shall be subject to judicial
review; and
9. provides the board with a $550,000 appropriation to.
effectuate the provisions of this act.
The bill would take effect next September first.
JUSTIFICATION:
No one state agency exercises any control over boarding
houses and hotels. It is these types of unregulated facilities which
are generally providing substandard accommodations to large numbers
of adult public assistance recipients. While the board already has
responsibility for private proprietary convalescent homes, private
proprietary home for adults, and residences for adults, it has
delegated its responsibility for visiting, inspecting and supervising
proprietary homes for adults which have a capacity of four or less
residents to local social services commissioners. As a result of
the absence of any control over boarding houses and hotels, and the
lack of accountability that has resulted from the board's delegation
of certain of its responsibilities, a large number of the state's
socially incapacitated citizens are living in substandard residential
facilities. This bill is designed to assure that all residential
facilities for adults meet and maintain certain minimum standards.
It accomplishes this by giving the board of social welfare full
responsibility for approving, inspecting, investigating and supèrvis-
ing all these facilities and by permitting the Board to withdraw its
approval whenever facilities are not complying with applicable provi-
sions of law or its own rules.
The bill provides that, in addition to meeting the standards
prescribed by the board, all such residential facilities requesting
approval after August 31, 1974, must make social, recreational and
other supportive services available to all its residents. These
services are mandated because the individuals who reside in group
residential facilities of these types, are those who have various
social problems which limit their ability to function independently,
effectively and competitively in society.
FISCAL IMPLICATIONS:
The board has estimated that it would require an additional
$300,000 for staff if it were to assume full responsibility for
approving; visiting, inspecting and supervising the approximately
1,000 proprietary home for adults with a capacity of four or less
residents which local social services commissioners are presently
responsible for. There are no accurate estimates of the number of
boarding houses and hotels presently being operated in the state,
although we know from recent experiences in Long Beach and New York
City that the use of single room occupancy accommodations is rapidly
increasing. An additional $250,000 is being
appropriated to the board to assist it in identifying and regulating
these expanding facilities.
FORD
IIF66
GERALD
658
HEALTH
MEMORANDUM
S.
By Mr. Lombardi
AN ACT to amend the public health law,
in relation to determining
A.
By
eligibility standards for the
granting of state aid to certified
public and non-profit home health
agencies
PURPOSE: To provide funding for grants in aid to public and non-profit certified home
health agencies to allow these agencies to expand and enhance their services.
SUMMARY OF PROVISIONS: Amends section 2801 of the public health law to provide for a
program of State grants to public and non-profit certified home health agencies. Such
grants would be available for a maximum of five years. An agency may not apply for a
grant of more than $50,000. For the first two years grants would be made without
requiring the agency to match funds. For an agency to continue to receive funds for the
third, fourth and fifth year, the agency will have to provide its own funds on a sliding
scale as follows:
State Funds
Agency Funds
First Year
100%
00%
Second Year
100%
00%
Third Year
75%
25%
Fourth Year
50%
50%
Fifth Year
25%
75%
In order to receive State grants, public and non-profit certified home
health agencies must submit plans to expand the types of services provided, increase the
number of personnel they utilize, make home health care available on a seven-day-a-week
basis, develop training programs for agency personnel, and develop programs to coordinate
the work of the agency with other community resources.
JUSTIFICATION: The type of home health services available varies substantially from
one area of the State to another. In some communities, persons can return home early
from the hospital and receive comprehensive high quality care at home. Such care is
advantageous to both the patient and the family and can be provided at greatly reduced
costs. In other comunities the same patient would have to stay in the hospital and
possibly be forced to enter a nursing home.
This uneven development across the State is inequitable to some and acts
as 2 barrier to sound proposals to provide greater home care inclusion in insurance,
governmental programs and new health delivery developments. In addition, the lack
FORD
IIF 7a
GERALD
all
yvy
-2-
of home health agencies providing an adequate range of services stands as a block to
prevent overuse of, facilities through stepped-up utilization reveiw and PSRO developments.
A program of State aid to public and non-profit certified home health
agencies as authorized by this legislation will provide these agencies with the financial
resources to expand and enhance the services they provide. The expansion of home health
agencies will allow patients to truly realize the types of savings home health care can
provide.
The real potential for savings of health dollars can be effective only if
strong home health agencies exist. A most important aspect of this, of course, is the
key role of the physician in the use of home care. A physician will not send a seriously
ill patient home, no matter how much dollar coverage is available, unless there is an
agency capable of providing the range and quality of care his patient needs. This
legislation addresses itself directly to this problem.
With the additions to home health agency responsibilities (incrèasing the
number of. types of therapeutic and related services and adding the services of homemakers)
and certification requirements which have come from the 1972 and 1973 legislation, the
gradual increase in the over 65 age group in New York State, the federal curtailment of
reimbursable services under Medicare and the greater availability of insurance coverage
for home health care, it is important to develop a statewide home health agency financial
assistance program.
The success of the State aid program proposed by this legislation can follow
the most favorable experience found under the 1965-67 Medicare "start-up" grant funds
which the Health Department administered and from which this proposal is patterned.
FISCAL IMPLICATIONS: There will be no cost to the State until April 1, 1976.
LEGISLATIVE HISTORY: A similar bill (S. 9188) passed the Senate only in 1974.
EFFECTIVE DATE: This act will take effect immediately, however, grants of State aid
will not be made available until April 1, 1976.
FORD LIBRARY &
IIF76
S SH
In support of Senate Bill No. 574
1975
Introduced by Senator John J. Santucci
"An Act to amend the executive
law and the mental hygiene law,
in relation to approval of
certain private proprietary
homes for adults.
This bill would require that any private proprietary
home for adults where ten percent or more of the persons
admitted to such home had been patients at a Department
of Mental Hygiene facility within the previous two years,
must be approved by the Commissioner of Mental Hygiene,
in addition to the State Board of Social Welfare.
In addition, Section 7.05 of the Mental Hygiene Law
is amended by a new subdivision, (e), which mandates that
the department shall set up standards for those proprietary
homes which fall within its jurisdiction.
Within the past two years, the State Department of
Mental Hygiene has been releasing patients from its state
mental hospitals at a much greater rate than ever before.
Many of these ex-mental patients are finding their way into
proprietary homes for adults because they have no other
place to go. These facilities are presently under the
exclusive jurisdiction of the State Board of Social Welfare
without any specific standards, programs, etc. geared toward
these ex-mental patients. As a result, chaos is rapidly
developing in many of these proprietary institutions.
It is important that the Department of Mental Hygiene's
responsibility for the aftercare of these people be mandated
in two respects. One, the department should be responsible
for the licensing of these facilities to make sure that
they do provide the necessary facilities, programs and
personnel for effective aftercare and also that the depart-
ment have responsibility for follow-up via visits and
inspections to make sure that the facilities they approved
are living up to their standards.
Additional fiscal costs to the Department of Mental
Hygiene will be necessitated by the additional personnel
required for the administration of this program.
Respectfully Submitted
John J. Santucci
FORD is LIBRARY GERALD
IIF8
Die
By FRANK VAN RIPER and WILLIAM SHERMAN Stuff Correspe. dents of The News Lost of a series
Washin; ton, F.b. 19-The
He did not explain how much addi-
the nive in
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rest nor did in say new it would elimi-
informed choices 011 White have
rate the frandment intiation of costs
then Homes
contine to quality of ming
worke
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tion's indigent clderly. passed nine
is Many OWNERS in states like Now
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NEW YORK STATE HEALTH FACILITIES ASSOCIATION
MORELAND COMMITTEE
New York State Health Facilities Association is desirous
of preparing a study of certain aspects of the nursing home
component of the health delivery system in New York State.
The members of this association are the true experts in
the field, and will provide direct input through a task
force approach in order to develop specific proposals in
specified areas of concern. We recognize, however, that
there are people outside of our association who have extreme
competence in our field, and from time to time these
individuals will be called upon to work with the task forces
in order to develop proposals.
Purpose of Study
In order to help focus attention on the positive aspects
of nursing home care, our study will have to recount the
history of the nursing home system as well as develop statistical
and other pertinent data. The existing components such as
government regulation, reimbursement and patient care will
have to be analyzed and where deficient, specific proposals
will have to be made in order to support our theses. The
actual proposal must take into account legitimate public
concern over patient care and reimbursement; however, it
should be understood we are not going to attempt to rewrite
all existing laws and regulations, as this would be an
impossible task. It is our specific purpose to focus on
specified areas and to point out the necessary role which
the proprietary sector has played and will continue to play
FORD is LIBRARY GERALD
-2-
in the delivery of quality nursing home care, for truly there
are no alternatives.
Areas Of Concern
Real estate
Reimbursement
Patient care
Definition of a public policy regarding nursing home care
Abuses, public accountability and quality assurance
The firm selected to assist in this project will be
responsible for providing directed research, coordination of
task forces, guidance as to approach to presentation,
assistance in presentation, research staff, resource personnel
both in and out of house. The firm will work under the
direction of the New York State Health Facilities Association
Committee and its legal counsel, and it is expected the
final report will be completed in six months with interim
reports within thirty days. It must be pointed out that
it is the committee's feeling that no one single consulting
firm has the capability to produce a complete study, and
from time to time individuals in specified areas will also be
called in to participate in our work. Therefore, it should
be understood that the roll which the major consulting firm
will play would be somewhat akin to that of a general contractor
in a construction project with prime additional subcontractors
participating.
FORD & LIBRARY GERALD
-3-
The firm selected will be required to provide a representation
to the Association that it has no affiliation either direct
or indirect with any individual, corporation or company who
has any interest whatsoever in a nursing home either directly
or indirectly. Further the representation must also include
a statement that the firm has not employed any officers,
directors, staff members or members of the New York State
Health Facilities Association within the last three years
and that no remuneration of any nature has been or will be
made to any of the above.
FORD LIBRARY is GERALD
u.y Times 3/19/76
That effort, begun by Presi-
BOARDING HOMES
t
dent Kennedy, sought to end
f-
E
warehousing in state institu-
tions through the development
C
'Hungry People Begging'
of about 4,500 community-
more
S
"I have seen broken windows
FOR AGED SCORED
based mental health centers,
most of them clinics. Only 443
letting the cold air into rooms
homes
n
are in operation, and Federal
without radiators," he said. "I
t
support has been reduced.
have seen leaking roofs and
V
In the interim, the Federal
holes in ceilings. I have seen
S
Senate Panel Tells of Profit
Government enacted and began
hungry people with their faces
in 1974 the Supplementary Se-
up against vending machines
From Mentally III Through
curity Income program for the
begging for a quarter.
elderly poor and disabled-as
"It became evident to me,"
Federal Welfare Funds
b
former inmates of mental hos-
he continued," that operators
to
pitals are classified-and set a
were cutting corners every way
basic level of out-of-institution
they could in order to maxi-
tl
support for them.
mize profits. Apparently, men-
By NANCY HICKS
0
tal patients are a good invest.
GERALD FORD LIBRARY
Big HEW Survey Cites
Nursing Home Faults
Washington
tion of nursing home asso-
home, as is also required by
ciations in the 50 states, had
The Department of
federal regulations.
Health. Education and Wel-
no comment on the report.
The report found that 44.8
fare, in what it said was the
The report found that 48
per cent of nursing home pa-
first national study of nurs-
per cent of nursing home pa-
tients were being given tran-
ing homes ever undertaken
tients had not been exam-
quilizers
f-nms homes
SATURDAY, MARCH 20, 1976
c
17
Residents of City Adult-Care Homes Tell of Abuses
By NATHANIEL SHEPPARD Jr.
been a resident of the Palace
switchboard operator at the
strung, however, by a lack of
Residents of city adult-care
Hotel, an adult-care facility in
facility.
jurisdiction because of opposi-
facilities testified at a United
Long Beach, L.I., since 1973,
A spokesman for the facility
tion by the State Board of So-
States Senate subcommittee
told the subcommittee she had
referred all questions to the
cial Welfare.
hearing here yesterday that
been forced to pay a $2 bribe
proprietor, Rabbi Menachem
Under questioning by Repre-
they frequently lived in terror
to employees before she was
Blum, but added that the rabbi
sentative Edward I. Koch, Ber-
FORD i LIBRARY 938470
Wash. Star- News 3/19/76
f - Nursing Homes
Nursing Home Horrors Detailed
By Edmund Pinto
Sen. Frank E. Moss, D-
When it approved Social
Patients in many of these
Associated Press
Utah, chairman of the
Security in 1935, Moss said,
private institutions are con-
A new government report
panel, said the conditions
Congress barred giving So-
fronted with poor care and
says some mentally ill pa-
were being fostered by gov-
cial Security funds to resi-
abuse, deliberate physical
tients in private nursing
ernment policy that pro-
dents of public institutions,
abuse and unsanitary
vides a financial incentive
but if boarded in a private
conditions, he said.
homes are living with hun-
ger, cockroaches, leaking
to move patients from pub-
home they could receive the
He claimed also they face
roofs, exposed electrical
lic institutions into private-
money.
poor food, high incidence of
care facilities.
wires and doors made of
"In short, Congress
theft, inadequate control on
created the scandal-ridden,
cardboard and burlap.
drugs, fire hazards, reprisal
"I have seen hungry peo-
for-profit nursing home
if they complain about
The report, released
ple with their faces up
industry." he said.
conditions, use of restraints
FORD is LIBR 076
Congressional Record
United States
of America
PROCEEDINGS
AND
DEBATES
OF
THE
93d
CONGRESS, SECOND SESSION
Vol. 120
WASHINGTON, TUESDAY, MARCH 26, 1974
No. 41
House of Representatives
Second, a great majority of our com-
by the program. Specifically, a new State
H.R. 13720: MEDICARE LONG-TERM
munities do not have available the types
agency would be established which would
CARE ACT OF 1974
of services which are better alternatives
divide up the State geographically, as-
to institutionalization.
The SPEAKER per tempore. Under a
sure the establishment of a community
And third, in most communities, no
previous order of the House, the gentle-
long-term care center in each area, ap-
single person or agency, public or private,
man from New York (Mr. CONABLE) is
prove such centers for participation in
takes full responsibility for helping older
recognized for 5 minutes.
the program, and pay the centers for
people and their families meet their
services furnished:
Mr. CONABLE Mr. Speaker, today I
needs as health and family status
have introduced H.R. 13720, the Medi-
The community long-term care center
changes.
care Long-Term Care Act of 1974. This
would be required to have a governing
I have deliberately constructed H.R.
proposal will establish a new program
board with at least half of its members
13279 to deal directly with these prob-
of long-term care of the elderly that will
from among persons who are eligible for
lems. My bill is modeled on the medicare
provide alternatives to expensive and
benefits. In addition, one-quarter of the
program and would meet the first prob-
confining medical care by expanding the
board would be elected by eligible people
Iem by establishing a new program under
options available. By including services
in the area and one-quarter appointed
as well as institutional medical care in
medicare which would provide protec-
by officials of local government.
the program, we can offer our elderly
tion against the costs of long-term care,
The program would be financed by a
citizens who need it a more secure and
both institutional and noninstitutional,
$3 premium paid by those aged who
less worrisome future, less family strain,
without concern about drawing an arbi-
choose to enroll in the program, by a
and less demands on their savings.
trary and unnecessary line between
contribution from States of 10 percent
The resources of older people can be
health care services and nonhealth care
of program costs with the balance from
wiped out by a long stay in a nursing
services.
Federal general revenues. My bill would
home since neither medicare nor private
The bill would meet the second prob-
increase by $3 the amount of SSI bene-
insurance covers long-term care. The
lem, the lack of adequate community
fits to everyone receiving them so the
only program that does provide some
services, in several ways. First, the bene-
program will represent no additional cost
funds is medicaid-the program of health
fits covered by the bill would include
to these individuals.
care for the poor.
services which can be alternatives to in-
No estimates of the cost of the bill
In too many cases what we are doing
stitutionalization. Provision of these serv-
have been made, largely because making
today amounts to incarceration, rather
ices can help people in their own homes
estimates in this area is very difficult.
than considerate care, because too great
or other family settings. Second, the bill
However, the States and the Federal
a reliance is put on placing people in in-
would require that placement in an in-
Government now pay more than $4 bil-
stitutions when many of them could be
stitution could occur only after all other
lion a year for nursing home care under
cared for better in other surroundings,
avenues have been explored. And third,
the medicaid program. Medicare pays an
including their own homes. That is why
even when placement in a nursing home
additional several hundred million dol-
the emphasis of the bill I have intro-
has been designated as the only possible
Iars for extended care services. Numer-
duced today is on care in the home or on
alternative the patient will have a con-
ous studies have shown that large num-
an outpatient basis. This proposal calls
tinuing opportunity to move out of the
bers of older people now in nursing homes
for 2 system of community long-term
home or improve his situation in the
care centers in every area of the country
home.
do not need to be there, particularly if
to coordinate and direct long-term care
And finally, my bill would meet the
realistic alternatives are available. Thus,
services for the elderly, including home-
third problem by creating for every
I think it is fair to conclude that under
maker, health, nutrition, and day care,
community a long-term care center
my bill the costs of institutional care
as well as institutional care.
which would act as the coordinator and
would be held in check.
In the past efforts to secure assistance
paying agency for long-term care serv-
But regardless of how the costs might
for older Americans have not been suc-
ices. Whenever a question arose in a fam-
turn out, the important point is that we
cessful mainly for three reasons. First,
ily about what to do about a change in
need to rationalize the system of provid-
we do not have an effective and rational
health or family situation, the center
ing long-term care and I believe my bill
method of meeting the costs of long-
would be responsible for helping find the
has the potential to do that with possibly
term care services, including institu-
best answer and for providing the needed
no increase in overall costs.
tional care when it is required. Older peo-
services, after careful consultation with
An outline of H.R. 13720 is attached.
ple with chronic conditions have been
the individual and his or her family.
I urge Members, people with special in-
left to their own devices because the
The bill contains certain other fea-
terest in the aging, and the general pub-
costs to any public program of institu-
tures I would like to highlight.
lic to study the bill carefully. I have
tionalized care are prohibitive. So we
While the program would be national
introduced this bill so that this subject
have resisted program involvement and
in application, just like medicare now,
will get the attention it deserves in a
we have developed a defeatist attitude
the administration of the program would
rapidly aging society. I am hopeful that
toward one of society's most vexing
be decentralized and involve, on a local
hearings can be held on the bill so that
problems.
basis, the people who are to be served
it can be fully explored.
The information follows:
H.R. 13720, MEDICARE LONG-TERM CARE ACT
6. Conditions of Participation for Com-
OF 1974, INTRODUCED BY THE HONORABLE
munity Long-Term Care Centers: Com-
BARBER B. CONABLE, JR.
munity Long-Term Care Centers must:
1. Brief Description: Amends the Medi-
Have policies, established by a group of
care program by adding a new voluntary
professional personnel and approved by the
Part D to Title 18 of the Social Security Act
governing board:
which would:
Maintain medical and other records on all
Establish & comprehensive program of
beneficiaries;
long-term care services available to those who
Have an overal plan and budget;
enroll under the program;
Meet other conditions the Secretary may
Provide for the creation of community
prescribe; and
long-term care centers in all areas of the
Be either a public or non-profit organiza-
nation and State long-term care agencies as
tion.
part of & new administrative structure for
The governing board of a community long-
the organization and delivery of long-term
term care center must be composed as fol-
care services; and
lows: one-half of people covered under the
Provide a significant role for people eli-
program who reside in its service area; at
gible for long-term care benefits in the ad-
least one-quarter have been elected by the
ministration of the program.
people covered under the program: and at
2. Eligibility: Anyone who is (1) eligible
least one-quarter appointed b7 locally elect-
for hospital insurance under Part A of Medi-
ed government officials.
care (aged or disabled), or (2) is age 65 and
Members can serve only two terms and full
a resident, or (3) is eligible for supplemental
membership must change at least every six
security income (SSI) benefits is eligible to
years.
enroll under the new program if he has also
7. Detailed Definitions of Covered Serv-
enrolled under the Part B medical insurance
ices:
part of Medicare. Enrollment procedures are
3. Nutrition Services.
similar to those which now apply to the
Limited to meals on wheels and similar
Part B program.
programs and services provided in the place
Premiums of $3 a month would be col-
of residence of such individual by a nutri-
lected just as Part B premiums are now
tionist.
collected.
b. Homemaker Services.
3. Financing: A Federal Long-Term Care
Services provided in the home designed to
Trust Fund would be established to handle
maintain the individual in his home.
the financial operations of the program.
Preparing and serving meals in the home of
The Trust Fund would receive its monies
an individual.
from the $3 premiums of those who enroll,
c. Institutional Services
10% from the States and the balance from
Extended care benefits in a skilled nurs-
Federal general revenues.
ing facility (same as social security defini-
4. Functions of Community Long-Term
tion)
Centers: Provide directly or through arrange-
Intermediate care services
ments covered items and services to each
Institutional day care services
individual residing in the area who is
d. Home Health Services (Same as under
eligible;
present Medicare program.)
Provide evaluation and certify the long-
e. Day Care and Foster Home Care
term needs of individuals through a team
Services
approach involving the individual and his
Care provided on a regular daily basis in
family;
a place other than the individual's home;
Maintain a continuous relationship with
and
individuals receiving any items or services;
Placement of individual on a full-time
and
basis in a family setting.
Provide an organized system for making its
1. Community Mental Health Center Out-
existence and location (which must be acces-
patient Services
sible in the community) known to the indi-
8. Payment Method for Community Long-
viduals-in the service area.
Term Care Centers:
In carrying out the above, a community
Secretary will develop prospective payment
long-term care center shall not certify the
methods after consultation with states and
need for inpatient institutional services for
other interested parties. and States will fol-
an individual unless a determination has
low them in paying the community long-
been made that the needs of such individual
term care centers.
cannot be met through covered types of care
9. Miscellaneous Provisions:
or other community resources.
5. State Long-Term Care Agency: Each
If an individual stays in a nursing home
State must establish an agency-either a
for more than 6 months, beginning with the
separate agency, or major division of the
7th month his social security cash benefits
are reduced by ½ (in recognition of such a
health department-which will:
person's reduced living costs) and the ½ is
Designate service areas in the State;
deposited in the long term care trust fund.
Certify the conditions of participation for
As soon as the recipient leaves the nursing
a community long-term care center;
home, full benefits are restored immediately.
Promote and assist in the organization of
The bill would increase SSI benefits by 33
new community long-term care centers in
a month so that the premium payment could
areas where they do not exist; and make
be met without a reduction in cash income.
payments to and monitor the activities of all
10. Effective date:
long-term care centers in the State; and
Provide local government offices where a
Benefits would first become payable on
nonprofit agency does not exist.
July 1, 1976, thus allowing sufficient time
for the organization of the new system.
FOR IMMEDIATE RELEASE
APRIL 29, 1976
OFFICE OF THE WHITE HOUSE PRESS SECRETARY
(Houston, Texas)
THE WHITE HOUSE
REMARKS OF THE PRESIDENT
TO THE
ANNUAL MEETING
OF THE
TEXAS NURSING HOME ASSOCIATION
HYATT REGENCY HOTEL
10:18 A.M. CDT
It is nice to see some more friendly faces here.
Mr. Pendergast, Senator John Tower, members of
the Texas Nursing Home Association:
It is a privilege and a pleasure for me to have
the opportunity to stop by and make some observations and
comments and thank you for the good job that you have done,
not only here in Texas with your organization but with
comparable organizations throughout the United States.
I know from personal experience in my State of
Michigan that the organization of the Association there
has done a good job, and I am sure that is likewise true
here, and I congratulate you and compliment you.
But let me talk for just a few minutes about
some of the things that I am trying to do to make certain,
to make positive that the 32 million or 33 million Americans
who are the beneficiaries of Social Security and other
Federal programs are properly taken care of.
You, I am sure, know that in the State of the
Union message that I submitted to the Congress in January
of 1976, I recommended the full cost of living increase
for Social Security recipients, and it is my understanding
that based on the calculations that have been made by
the proper authorities that will be 6.4 percent, as I
recall, as of July 1 of this year.
I believe that we, as a Nation, hold an obligation
to that part of our society. They bought and paid for
the benefits that are coming and ought to be given to
them under the law.
Another program that I feel Congress ought to act
on is what is commonly known as catastrophic insurance.
It has been my experience as I traveled around the country
to see in many, many instances individuals who were good
citizens and saved their money and planned for their
retirement all of a sudden be hit with a catastrophic
illness where the costs were great, where the time that they
had to spend in a hospital or a nursing home was very, very
extended.
MORE
GERALD FORD LIBRARY
Page 2
I am told under Medicaid that there are roughly
3 to 4 million of our fellow citizens who are adversely
affected by the catastrophic illness. I think we owe
an obligation to them because they, under no circumstances,
could pay the cost to maintain adequate care during this
tragedy.
So I recommended to the Congress that something
be done about it. Unfortunately, no action has transpired
at the present time. Unfortunately, the prospects do not
look good. Believe me, I feel an obligation, and I think
those of us who are healthy, whether you are young or old,
owe an obligation to that segment of our society that are
tragically hit by these unfortunate illnesses.
I likewise know that your organization has raised
a good many questions about HEW's 1972 regulations. I am
sure you are not the only organization, because I am informed
that other State organizations comparable to you have done
likewise.
It does appear to me -- and I have talked to the
Secretary of HEW about it -- that there is an overzealous
interference attempted by those regulations, and I hope
we can do something affirmatively to change them.
I have repeatedly said that we want to get the
Federal Government off the backs of people and out of their
pockets. We have recommended tax decreases, additional
tax reductions. We are making some headway in reducing
Federal paperwork.
About six months ago I directed the Office of OMB
to make a 10 percent reduction in the total paperwork as
far as all Federal agencies and departments are concerned.
That 10 percent reduction is to be achieved by July 1 of
this year.
Let me put it as simply, but I think it is as
safely as I can, as it affects what all of you are trying
to do: Your emphasis should be on taking care of patients,
not making out forms.
It has been a great privilege and pleasure to
be here and to say hello to you and to give you the benefit
of some of my views and programs, policies that we are
seeking to implement for the benefit of all of the 215
million Americans.
I thank you for the opportunity to be here.
END (AT 10:25 A.M. CDT)
BERALD FORD LIBRARY
HEALTH.
DEPART ARTMENT DEPARTMENT ICATION
OF
THE UNDER SECRETARY OF HEALTH, EDUCATION, AND WELFARE
WASHINGTON, D.C. 20201
U.S.A.
OCT 8 1976
MEMORANDUM TO SPENCER JOHNSON
Attached is the brief talking points you requested
on the status of long term care policy.
hajone Under Marjorie Lynch hynch
Secretary
Attachment
FORD LIBRARY & GERALD
STATUS OF LONG-TERM CARE POLICY
The Federal Government now provides about $4 billion financial
support for care in skilled nursing homes and intermediate care
facilities through primarily the Medicaid and also the Medicare
program. For the past several years, HEW has put particular
emphasis on programs to insure the safety of the facilities and
enforcement of other standards.
In our effort to provide needed nursing home care for those who
need it, we may have unnecessarily placed persons in institutional
care who could be better cared for in their homes. HEW is just
now completing hearings held throughout the country to explore
improvements in home health care as an alternative to institutional
care.
In addition, the Federal efforts to insure that facilities for the
elderly, the sick, the disabled and the retarded are safe and
appropriate for their care have led in some cases not to better
care, but rather endless regulations and bureaucratic red tape.
As part of my regulatory reform initiative, HEW is conducting a
thorough review in cooperation with state and local governments
to separate the needed from the useless regulatory provisions.
Finally, we need to rethink the proper Federal-State and local
roles in providing long-term care. While the Federal government's
financial support for such care is appropriate, it is probably
more appropriate that state and local agencies have the primary
responsibility for tailoring the care provided to each individual's
needs.
FORD LIBRARY y GERALD s
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"ocrText": "The original documents are located in Box 9, folder \"Nursing Homes\" of the Spencer C.\nJohnson Files at the Gerald R. Ford Presidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the\nUnited States of America her copyrights in all of her husband's unpublished writings in National\nArchives collections. Works prepared by U.S. Government employees as part of their official\nduties are in the public domain. The copyrights to materials written by other individuals or\norganizations are presumed to remain with them. If you think any of the information displayed\nin the PDF is subject to a valid copyright claim, please contact the Gerald R. Ford Presidential\nLibrary.\nSome items in this folder were not digitized because it contains copyrighted\nmaterials. Please contact the Gerald R. Ford Presidential Library for access to\nthese materials.\nMedicane/Noveins: Medicane Homes\nUNITED STATES\nGENERNY ACCOUNTING OFFICE\nREPORT TO THE CONGRESS\nContinuing Problems In\nProviding Nursing Home Care\nAnd Prescribed Drugs\nUnder The Medicaid Program\nIn California\nB-164031(3)\nSocial and Rehabilitation Service\nDepartment of Health, Education,\nand Welfare\nBY THE COMPTROLLER GENERAL\nOF THE UNITED STATES\nFORD is LIBRARY GERALD\nAUG.26,1970\nUNITED\nSTATE\nCOMPTROLLER GENERAL OF THE UNITED STATES\nGENERAL OFFICE ITNG\nWASHINGTON, D.C. 20548\nB-164031(3)\nTo the President of the Senate and the\nSpeaker of the House of Representatives\nThis is our report on continuing problems in providing\nnursing home care and prescribed drugs under the Medicaid\nprogram in California. Medicaid is a grant-in-aid program\nadministered at the Federal level by the Social and Rehabili-\ntation Service, Department of Health, Education, and Welfare.\nOur review was made pursuant to the Budget and Accounting\nAct, 1921 (31 U.S.C. 53), and the Accounting and Auditing Act\nof 1950 (31 U.S.C. 67).\nCopies of this report are being sent to the Director, Of-\nfice of Management and Budget, and to the Secretary of Health,\nEducation, and Welfare.\nActing Comptroller General\nof the United States\nFORD i LIBRARY GERALD\nCOMPTROLLER GENERAL'S\nCONTINUING PROBLEMS IN PROVIDING\nREPORT TO THE CONGRESS\nNURSING HOME CARE AND PRESCRIBED\nDRUGS UNDER THE MEDICAID PROGRAM\nIN CALIFORNIA\nSocial and Rehabilitation Service,\nDepartment of Health, Education,\nand Welfare (B-164031(3)\nDIGEST\nWHY THE REVIEW WAS MADE\nProblems in providing nursing home care and controlling payments for pre-\nscription drugs under the medical assistance program for welfare recipi-\nents in California were pointed out by the General Accounting Office (GAO)\nin an August 1966 report to the Subcommittee on Health of the Elderly,\nSpecial Committee on Aging, U.S. Senate.\nCalifornia, in March 1966, replaced its medical assistance program with\nMedicaid, a grant-in-aid program administered at the Federal level by the\nDepartment of Health, Education, and Welfare (HEW). Expenditures for its\nnursing home care program increased from about $67 million in 1965 to\nabout $160 million in 1968. HEW paid about half of the amount each year.\nBecause of that substantial increase and the concern of the Congress over\nthe rising costs of medical care, GAO examined into the actions taken by\nHEW and the State of California to correct the problems discussed in its\nAugust 1966 report.\nFINDINGS AND CONCLUSIONS\nActions taken by HEW and the State to correct the previously reported\nproblems were generally ineffective. Coordination between State agencies\nstill is insufficient to successfully implement the Medicaid program.\n(See p. 36.)\nSome problems continue because California's Medicaid plan, as approved by\nHEW, does not provide adequate guidelines. GAO's review shows that\n--payments are not stopped for Medicaid patients in nursing homes where\nsignificant substandard conditions persist (see pp. 10 to 18),\n--narcotics and other drugs in nursing homes are not controlled prop-\nerly (see pp. 20 to 23), and\n--patients are transferred from one nursing home to another for the\nbenefit of the attending physician or nursing home operator (see\npp. 34 and 35).\nTear Sheet\n1\nFORD i LIBRARY GERALD\nAUG. 26,\nAGENCY ACTIONS AND UNRESOLVED ISSUES\nImproper practices continue also because the State does not have adequate\nprocedures to help ensure compliance with guidelines. GAO's review\nHEW informed GAO that it would review Federal regulations relating to the\nshowed that\nquality of nursing home care and their application with California offi-\ncials. Similar reviews would be made in some other States and possibly\n--controls over authorizations for medication and treatment were inade-\nin all States eventually, HEW said.\nquate (see pp. 19 and 20),\nHEW agreed that the State agencies responsible for administering Califor-\n--drugs for patients who had died or had been discharged were not de-\nnia's Medicaid program should make sure that other agencies assisting them\nstroyed or proper records of their destruction were not kept (see\nare aware of their responsibilities. HEW promised to discuss that issue,\npp. 24 and 25),\nas well as other GAO findings, with State officials, and to assist the\nState in determining corrective actions.\n-supplemental payments, prohibited under Medicaid, were made to nursing\nhomes for services covered by the rates paid to the homes (see pp. 26\nHEW stated that it would review with the State the implementation of HEW\nto 28),\nregulations designed to ensure delivery of proper quantities of drugs and\nthe new pharmacy billing form designed by the State to improve drug claim\n--patients' personal funds were not always properly safeguarded (see pp.\nprocessing and determine whether further action would be necessary. (See\n28 to 30), and\npp. 38 and 44.)\n--some nursing home advertising was misleading and advertising was not\nbeing policed (see pp. 31 to 33).\nMATTERS FOR CONSIDERATION BY THE CONGRESS\nThe continuing nursing home problems are attributable, at least in part,\nGAO is sending this report to the Congress because of the congressional\nto the inadequacy of administrative reviews by HEW regional representa-\ninterest in the Medicaid program and in the provision of quality nursing\ntives. (See pp. 36 and 37.)\nhome care to program recipients. The report should be useful to the\nCongress in its consideration of planned legislative changes to the\nGAO has found also that the procedures for payment of prescribed drugs\nMedicaid program.\ndo not ensure that payments are made only for prescribed drugs actually\ndelivered for use by program recipients in nursing homes or other insti-\ntutions, or private homes, or that drugs are dispensed by pharmacies in\nquantities and in frequencies consistent with physicians' dosage instruc-\ntions. (See pp. 39 to 45.)\nRECOMMENDATIONS OR SUGGESTIONS\nThe Secretary, HEW, should\n--direct HEW regional representatives to review State agencies' imple-\nmentation of HEW regulations on the care of Medicaid patients in\nnursing homes,\n-impress upon State officials the need to clarify the roles of State\nand county agencies involved in the Medicaid program,\n--help the State find solutions to the problems discussed in this re-\nport, and\n--urge the State to see that payments for prescribed drugs are made\nonly for drugs actually delivered for the use of program recipients\nand that drugs are dispensed in quantities and in frequencies con-\nsistent with physicians' instructions. (See pp. 37 and 44.)\nTear Sheet\nDERALD FORD LIBRARY\n3\n2\nContents\nPage\nDIGEST\n1\nCHAPTER\n1\nINTRODUCTION\n4\nMedicaid program coverage\n5\nAdministration of the Medicaid program\n6\nMedicaid program in California\n6\nChanges in procedures relating to nurs-\ning home care under Medi-Cal\n7\n2\nPRACTICES IN PROVIDING NURSING HOME CARE\n9\nStandards of care\n10\nViolations of nursing home standards\n12\nAgency comments and actions\n18\nControls over medication and treatment\nfor Medicaid patients in nursing homes\n19\nAuthorizations for medication and\ntreatment\n19\nAccounting for drugs and quantities\nof drugs on hand in nursing homes\n20\nAccounting for narcotics\n20\nAccounting for drugs other than\nnarcotics\n22\nDrugs on hand\n24\nAgency comments and actions\n25\nSupplemental payments to nursing homes\nfor Medicaid patients\n26\nSafeguarding patients' personal\nfunds\n28\nAgency comments and actions\n30\nAdvertising by nursing homes of physical\ntherapy facilities\n31\nAgency comments and actions\n33\nTransferring patients between nursing\nhomes\n34\nAgency comments and actions\n35\nConclusions, recommendations, and agency\ncomments and actions\n36\nRecommendations to the Secretary of\nHealth, Education, and Welfare\n37\nAgency comments and actions\n38\nFORD i LIBRAR 976879\nCOMPTROLLER GENERAL'S\nCONTINUING PROBLEMS IN PROVIDING\nCHAPTER\nPage\nREPORT TO THE CONGRESS\nNURSING HOME CARE AND PRESCRIBED\nDRUGS UNDER THE MEDICAID PROGRAM\n3\nCONTROLS OVER PAYMENTS FOR PRESCRIBED DRUGS\n39\nIN CALIFORNIA\nConclusions, recommendations, and agency\nSocial and Rehabilitation Service,\ncomments and actions\n44\nDepartment of Health, Education,\nand Welfare (B-164031(3)\nRecommendation to the Secretary of\nHealth, Education, and Welfare\n44\nAgency comments and actions\n44\nDIGEST\n4\nSCOPE OF REVIEW\n46\nWHY THE REVIEW WAS MADE\nAPPENDIX\nProblems in providing nursing home care and controlling payments for pre-\nscription drugs under the medical assistance program for welfare recipi-\nI\nLetter dated June 15, 1970, from the Assistant\nents in California were pointed out by the General Accounting Office (GAO)\nSecretary, Comptroller, Department of Health,\nin an August 1966 report to the Subcommittee on Health of the Elderly,\nEducation, and Welfare, to the General Ac-\nSpecial Committee on Aging, U.S. Senate.\ncounting Office\n49\nCalifornia, in March 1966, replaced its medical assistance program with\nII\nComments of California Department of Health\nMedicaid, a grant-in-aid program administered at the Federal level by the\nDepartment of Health, Education, and Welfare (HEW). Expenditures for its\nCare Services, dated March 4, 1970\n56\nnursing home care program increased from about $67 million in 1965 to\nabout $160 million in 1968. HEW paid about half of the amount each year.\nIII\nPrincipal officials of the Department of\nHealth, Education, and Welfare having re-\nBecause of that substantial increase and the concern of the Congress over\nsponsibility for the activities discussed\nthe rising costs of medical care, GAO examined into the actions taken by\nin this report\nHEW and the State of California to correct the problems discussed in its\n59\nAugust 1966 report.\nABBREVIATIONS\nFINDINGS AND CONCLUSIONS\nDHCS\nDepartment of Health Care Services (State)\nActions taken by HEW and the State to correct the previously reported\nproblems were generally ineffective. Coordination between State agencies\nGAO\nGeneral Accounting Office\nstill is insufficient to successfully implement the Medicaid program.\n(See p. 36.)\nHEW\nDepartment of Health, Education, and Welfare\nSome problems continue because California's Medicaid plan, as approved by\nHEW, does not provide adequate guidelines. GAO's review shows that\n--payments are not stopped for Medicaid patients in nursing homes where\nsignificant substandard conditions persist (see pp. 10 to 18),\n--narcotics and other drugs in nursing homes are not controlled prop-\nerly (see pp. 20 to 23), and\n-patients are transferred from one nursing home to another for the\nbenefit of the attending physician or nursing home operator (see\npp. 34 and 35).\nBERALD R.FORD VIBRARY\nImproper practices continue also because the State does not have adequate\nAGENCY ACTIONS AND UNRESOLVED ISSUES\nshowed that\nprocedures to help ensure compliance with guidelines. GAO's review\nHEW informed GAO that it would review Federal regulations relating to the\nquality of nursing home care and their application with California offi-\n--controls over authorizations for medication and treatment were inade-\ncials. Similar reviews would be made in some other States and possibly\nquate (see pp. 19 and 20),\nin all States eventually, HEW said.\n--drugs for patients who had died or had been discharged were not de-\nHEW agreed that the State agencies responsible for administering Califor-\nstroyed or proper records of their destruction were not kept (see\nnia's Medicaid program should make sure that other agencies assisting them\npp. 24 and 25),\nare aware of their responsibilities. HEW promised to discuss that issue,\nas well as other GAO findings, with State officials, and to assist the\n--supplemental homes for payments, prohibited under Medicaid, were made to nursing\nState in determining corrective actions.\nto 28),\nservices covered by the rates paid to the homes (see pp. 26\nHEW stated that it would review with the State the implementation of HEW\nregulations designed to ensure delivery of proper quantities of drugs and\n--patients' personal funds were not always properly safeguarded (see pp.\n28 to 30), and\nthe new pharmacy billing form designed by the State to improve drug claim\nprocessing and determine whether further action would be necessary. (See\npp. 38 and 44.)\n--some nursing home advertising was misleading and advertising was not\nbeing policed (see pp. 31 to 33).\nMATTERS FOR CONSIDERATION BY THE CONGRESS\nThe to the continuing nursing home problems are attributable, at least in part,\ntives. (See pp. 36 and 37.)\ninadequacy of administrative reviews by HEW regional representa-\nGAO is sending this report to the Congress because of the congressional\ninterest in the Medicaid program and in the provision of quality nursing\ndo GAO has found also that the procedures for payment of prescribed\nhome care to program recipients. The report should be useful to the\ndelivered not ensure that payments are made only for prescribed drugs drugs\nCongress in its consideration of planned legislative changes to the\ntutions, or private homes, or that drugs are dispensed by pharmacies in\nfor use by program recipients in nursing homes or other actually insti-\nMedicaid program.\ntions. quantities and in frequencies consistent with physicians' dosage instruc-\n(See pp. 39 to 45.)\nRECOMMENDATIONS OR SUGGESTIONS\nThe Secretary, HEW, should\n--direct HEW regional representatives to review State agencies' imple-\nmentation of HEW regulations on the care of Medicaid patients in\nnursing homes,\n-impress upon State officials the need to clarify the roles of State\nand county agencies involved in the Medicaid program,\n--help the State find solutions to the problems discussed in this re-\nport, and\n--urge the State to see that payments for prescribed drugs are made\nand only for drugs actually delivered for the use of program recipients\nsistent with physicians' instructions. (See pp. 37 and 44.)\nthat drugs are dispensed in quantities and in frequencies con-\n2\n3\nGERALD LIBRARY FORD\nCHAPTER 1\nThe Medicaid program is a grant-in-aid program under\nwhich the Federal Government pays from 50 to 83 percent\n(depending upon the per capita income in each State) of the\nINTRODUCTION\ncosts incurred by the States in providing medical services\nto individuals who are unable to pay for such services.\nGAO has reviewed the procedures and practices of HEW\nFor calendar year 1968, the 42 States and jurisdictions\nand appropriate agencies of the State of California in pro-\nthat had Medicaid programs reported expenditures of about\nviding nursing home care to, and in controlling payments\n$3.9 billion of which about $2 billion represented the Fed-\nfor drugs prescribed for use by, recipients under the\neral share. About 30 percent of these expenditures was for\nFederal-State program of medical assistance for the needy\nnursing home care. By August 1970, 52 States and jurisdic-\n(Medicaid).\ntions had adopted a Medicaid program.\nIn a prior report¹ to the Chairman, Subcommittee on\nThe major differences between the Medicaid program and\nHealth of the Elderly, Special Committee on Aging, U.S.\nthe prior medical assistance program are (1) increased num-\nSenate, we pointed out certain weaknesses and deficiencies\nber of recipients under the Medicaid program and (2) addi-\nin the administration of the former medical assistance pro-\ntional health services provided to these recipients.\ngram in providing nursing home care and prescribed drugs to\nwelfare recipients in California. In California expendi-\nMEDICAID PROGRAM COVERAGE\ntures for nursing home care increased from about $67 mil-\nlion in 1965 to about $160 million in 1968. The purpose of\nPersons receiving public assistance payments under\nour most recent review was to appraise the effectiveness of\nother titles of the Social Security Act (title I, old-age\nthe actions taken by Federal and State agencies in response\nassistance; title IV, aid to families with dependent chil-\nto our prior report.\ndren; title X, aid to the blind; title XIV, aid to the per-\nmanently and totally disabled; and title XVI, optional com-\nSince our review was limited to those specific matters\nbined plan for other titles) are entitled to benefits of\ncovered in our prior review, the findings in this report\nthe Medicaid program. Also, persons whose income or other\nshould not be considered typical of the entire Medicaid\nfinancial resources exceed standards set by the States to\nprogram in California. The scope of our review is de-\nqualify for public assistance programs but whose resources\nscribed on page 46.\nare not sufficient to meet the costs of necessary medical\ncare may also be entitled to benefits of the Medicaid pro-\nThe medical assistance program under which welfare re-\ngram at the option of the State. This latter category of\ncipients obtained nursing home care in California at the\npersons was not covered under the predecessor medical as-\ntime of our prior review no longer exists. In its place,\nsistance program.\nCalifornia adopted a new plan for medical care to conform\nto the requirements of title XIX (Medicaid) of the Social\nState Medicaid programs are required to provide inpa-\nSecurity Act, as amended (42 U.S.C. 1396). This plan be-\ntient hospital services, outpatient hospital services, lab-\ncame effective in California on March 1, 1966.\noratory and X-ray services, skilled nursing home services,\nand physicians' services. Additional services, such as\ndental care and prescribed drugs, may be included in a\n1\nState's Medicaid program if it so chooses.\nExamination into Alleged Improper Practices in Providing\nNursing Home Care and Controlling Payments for Prescribed\nDrugs for Welfare Recipients in the State of California\"\n(B-114836, August 8, 1966).\n5\n4\nGERALD LISRARY FORD\nADMINISTRATION OF THE MEDICAID PROGRAM\n$808 million; the Federal share of these expenditures was\nabout $405 million.\nAt the Federal level, the Secretary of HEW has dele-\ngated the responsibility for the administration of the Med-\nDHCS is responsible for making State policy determina-\nicaid program to the Administrator of the Social and Reha-\ntions, establishing fiscal and management controls, and\nbilitation Service. Authority to approve grants for State\nperforming reviews of Medi-Cal program activities. In ad-\nMedicaid programs has been further delegated to the Re-\ndition, DHCS is responsible for approving, disapproving, or\ngional Commissioners of the Service who administer the\ncanceling the certification of medical facilities (such as\nfield activities of the program through HEW's 10 regional\nhospitals and nursing homes) for participation in the Medi-\noffices.\nCal program. In carrying out its responsibilities, DHCS is\nassisted by the State Department of Social Welfare and the\nUnder the act the States have the primary responsibil-\nState Department of Public Health. The Department of So-\nity for initiating and administering their Medicaid pro-\ncial Welfare, in conjunction with each county welfare de-\ngrams. The nature and scope of a State's Medicaid program\npartment, is responsible for determining the eligibility of\nare contained in a State plan which, after approval by a\nrecipients for aid under the program and also for providing\nRegional Commissioner of the Service, provides the basis\nsocial services to such recipients. The Department of Pub-\nfor Federal grants to the State. The Regional Commissioners\nlic Health is responsible for making periodic inspections\nare also responsible for determining whether the State pro-\nand evaluations of medical facilities and making recommen-\ngrams are being administered in accordance with Federal re-\ndations to DHCS concerning the certification of such facil-\nquirements and the provisions of the State's approved plan.\nities for participation in the program.\nHEW's Handbook of Public Assistance Administration provides\nthe States with Federal policy and instructions on the ad-\nCHANGES IN PROCEDURES RELATING TO\nministration of the several public assistance programs.\nNURSING HOME CARE UNDER MEDI-CAL\nSupplement D of the handbook and the Service's program reg-\nulations prescribe the policies, requirements, and instruc-\nUnder the former medical assistance program for wel-\ntions relating to the Medicaid program.\nfare recipients in California, the responsibility for eval-\nuating the quality of nursing home care rested primarily\nAt the time of our review, the HEW regional office in\nwith the county welfare agencies. To evaluate the adequacy\nSan Francisco, California, provided general administrative\nof care, county medical-social review teams--which included\ndirection for medical assistance programs in Alaska, Ari-\na medical consultant and a medical-social worker--were re-\nzona, California, Guam, Hawaii, Nevada, Oregon, and Washing-\nquired to visit annually 10 percent of the welfare recipi-\nton. The HEW Audit Agency is responsible for audits of the\nents in nursing homes. These visits supplemented the li-\nmanner in which Federal responsibilities relative to State\ncensure compliance inspection by the Department of Public\nMedicaid programs are being discharged. A listing of prin-\nHealth and represented an added measure of surveillance\ncipal HEW officials having responsibility for the activities\nover the quality of care being received by these recipients.\ndiscussed in this report is included as appendix III.\nThe State plan for the Medi-Cal program does not pro-\nMEDICAID PROGRAM IN CALIFORNIA\nvide for the use of county medical-social review teams to\nmonitor the quality of care provided to Medicaid recipients\nThe Medicaid program in California is referred to as\nin nursing homes. However, the Medi-Cal program has re-\nMedi-Cal. In California the Department of Health Care Ser-\ntained the county medical consultant feature of the former\nvices (DHCS) was established as part of the Human Relations\nprogram. These Medi-Cal Consultants--medical doctors em-\nAgency to administer the program. For fiscal year 1969\nployed on behalf of the State or county--are responsible\nCalifornia reported Medi-Cal expenditures of about\nfor reviewing requests for nursing home care and for\nGERALD, FORD LIBRARY\n6\n7\ndetermining whether the individual, for whom such care has\nbeen requested, is actually in need of such care.\nCHAPTER 2\nA nursing home cannot be paid for services provided to\nPRACTICES IN PROVIDING NURSING HOME CARE\na Medi-Cal recipient unless the services have been autho-\nrized by a Consultant. However, Medi-Cal Consultants or\nIn our report dated August 8, 1966, we concluded that\ntheir duly authorized representatives (such as public health\nthe provisions of the California State plan were deficient\nnurses or caseworkers) are not required by State regula-\nin that they did not set forth criteria for evaluating the\ntions to visit recipients in nursing homes in order to\nadequacy of care furnished welfare patients in nursing homes\nevaluate the quality of care being provided by the homes.\nor provide adequate guidelines or requirements relating to\nTherefore, under the Medi-Cal program the only State or\nthe transfer of welfare patients to other nursing homes.\ncounty organization required to periodically visit nursing\nFurther, although the State plan did contain provisions re-\nhomes and report to DHCS on the quality of care being pro-\ngarding supplemental payments to nursing homes, protection\nvided to Medi-Cal recipients is the Department of Public\nof patients' personal funds, control and administration of\nHealth.\nmedications and treatments, and misleading advertising, ade-\nquate procedures had not been established in these areas for\nAnother area in which Medi-Cal differs substantially\ncontrol purposes or to fix the responsibility and authority\nfrom the former program is the method used by the State to\nfor taking corrective action.\nreimburse the providers of medical services. Formerly, this\nwas primarily a county function. Since the inception of\nWe expressed the view that the California State plan\nthe Medi-Cal program, DHCS has contracted with certain pri-\nthen in effect needed improvement to clarify the respective\nvate organizations, such as the California Physicians Ser-\nresponsibilities of the State and county welfare agencies\nvice, the Hospital Service of California, and the Hospital\nand of the Department of Public Health to provide the sur-\nService of Southern California, for assistance in adminis-\nveillance necessary to disclose deficiencies in the care,\ntering the program. These private organizations--acting in\nservices, or treatment provided welfare recipients in nurs-\nthe capacity of fiscal agents of the State--coordinate pro-\ning homes and to effect corrective action, and to provide\ngram operations between the State and the institutions and\nadequate guidelines as to the policies and procedures to be\npersons who provide medical services under the program. In\nfollowed by the respective agencies in carrying out these\naddition, the fiscal agents review, process, and pay claims\nresponsibilities.\nsubmitted by the providers for services rendered to program\nrecipients.\nIn commenting on our earlier report, HEW and the State\nand the local agencies expressed their general agreement with\nour findings and conclusions and outlined certain corrective\nactions which had been taken or were being contemplated.\nFurther, HEW and the State agencies expressed the view that,\nwith the initiation of the Medi-Cal program, there would be\nchanges in procedures and practices which would help to cor-\nrect the problems discussed in our report.\nIn general, our most recent review has shown that, as\na result of the State's implementation of Medi-Cal, the\nState plan now sets forth provisions designed to correct\ncertain problems identified in our prior report. The plan\nincludes criteria for evaluating the adequacy of care\n8\n9\nGERALD FORD LIBRARY\nfurnished Medi-Cal patients and describes the responsibil-\nprogram, the home must (1) with a few exceptions be li-\nity and authority of the various State agencies involved in\ncensed by the State and (2) meet all additional require-\nadministering the Medi-Cal program--the Human Relations\nments imposed by HEW. State licensing requirements are set\nAgency and its constituent agencies, DHCS, the Department\nforth in the California Administrative Code.\nof Public Health, and the Department of Social Welfare. Al-\nthough these provisions have been incorporated in the State\nThe State's standards that govern the care to be pro-\nplan, we found that problems with regard to nursing home\nvided to Medi-Cal patients in nursing homes have been sub-\ncare continued to exist because the State plan has not been\nstantially upgraded as illustrated by the following require-\neffectively implemented to ensure that adequate care is be-\nments which were not in effect at the time of our prior re-\ning provided to Medi-Cal recipients.\nview.\nIn the following sections of this chapter, we are pre-\n1. A registered or licensed nurse must be on duty at\nsenting the results of our most recent examination into the\nall times.\npractices of providing nursing home care as they relate to\n2. Patients must be visited by their physicians at\n--standards of care (pp. 10 to 18),\nleast once a month.\n--controls over medication and treatment for Medicaid\n3. Written policies and procedures for patient care\npatients (pp. 19 to 25),\nmust be maintained.\n--supplemental payments for Medicaid patients (pp. 26\n4. Menus must be planned and supervised by a qualified\nto 30),\ndietary consultant.\n--advertising of physical therapy facilities (pp. 31\nAlthough other requirements have been established, those\nto 33), and\nlisted above are, in the opinion of State Department of\nPublic Health officials, some of the more significant re-\n-transferring patients between nursing homes (pp. 34\nquirements which a nursing home must meet in order to par-\nand 35).\nticipate in the program.\nIn a letter dated June 15, 1970, commenting on a draft\nTitle 17 of the California Administrative Code contains\nof this report, the Assistant Secretary, Comptroller, HEW,\nprovisions for revoking a nursing home license for failure\nagreed that problems warranting the careful attention of the\nto meet State licensing requirements. In addition to a\nState agency and HEW continued to exist in many of the areas\nnursing home's removal from the program through a license\nexamined. (See apps. I and II.)\nrevocation, HEW regulations require the suspension of pay-\nments to a nursing home for failing to meet standards de-\nSTANDARDS OF CARE\nsigned to ensure that medical care is of acceptable quality.\nThe State plan for the Medi-Cal program specifies the\nThe State has Medi-Cal Consultants throughout the\nstandards which must be met by nursing homes in order to\nState who are responsible for approving program recipients'\nparticipate in the program and the standards by which the\nrequests for nursing home care. Title 22 of the California\ncare to Medi-Cal patients in such nursing homes is to be\nAdministrative Code provides that the Consultant may cancel\nevaluated. HEW has imposed still other standards relating\nany authorization for nursing home care in effect if ser-\nto the adequacy of medical care to be given to nursing home\nvices or placement are not appropriate to the needs of the\npatients. For a nursing home to participate in the Medicaid\npatient.\n10\n11\nGERALD R.FORD LIBRARY\nViolations of nursing home standards\n1,250 nursing homes in the State. However, these officials\nhave informed us also that, because action to revoke a\nThe Department of Public Health is responsible for\nnursing home license--or to otherwise suspend the nursing\nperiodically inspecting nursing homes. As part of our ex-\nhome from the program--must be based on a well-documented\namination, we reviewed the Department's inspection reports--\nrecord and must stand the test of formal administrative\ncovering the period January 1, 1966, through November 15,\nproceedings, it is the State's policy to give nursing home\n1969--for 70 nursing homes located in 16 counties. These\nproprietors every opportunity, through both routine notifi-\ninspection reports showed numerous nursing home violations\ncations of inspection findings and informal disciplinary\nof State licensing and HEW requirements for participation\nconferences, to correct deficiencies noted during inspec-\nin the Medi-Cal program. For example, there were\ntions before formal disciplinary action is initiated.\n--219 violations at 57 nursing homes involving medi-\nIn March 1967, HEW notified all States that, effective\ncations given to patients without signed physicians'\nJanuary 1, 1969, nursing homes participating in the Medicaid\norders, or medications not administered as prescribed\nprogram must provide nursing service on a 24-hour basis and\nor not recorded in the patients' records,\nthe service must be directed by a registered professional\nnurse employed full time by the homes. Also, at all times,\n--138 violations at 69 nursing homes involving inade-\nthe nursing service must be in the charge of a professional\nquate general maintenance or inadequate cleaning and\nregistered nurse or a licensed practical nurse. In this\ndisinfection of dishes,\nconnection, the HEW Audit Agency in a report dated June 25,\n1969, on its review of the Medi-Cal program stated that\n--118 violations at 49 nursing homes involving inade-\nabout 200 nursing homes which had not met professional staff-\nquate nursing care supervision or inadequate or un-\ning requirements were allowed to continue to participate in\nqualified nursing staff,\nthe program beyond the January 1, 1969, deadline. The re-\nport concluded that, as a result, Medi-Cal patients had not\n--119 violations at 44 nursing homes involving incom-\nreceived the quality of care that had been anticipated under\nplete patient records,\nthe Medicaid program. The State advised each of the approx-\nimately 200 nursing home operators of the noted violations\n--80 violations at 41 nursing homes involving improper\nand stated that the participation of these homes in the\nlabeling, handling, storage, or disposal of drugs,\nMedi-Cal program would be terminated unless the homes met\nthe staffing requirements. Our review showed that, by\n--68 violations at 34 nursing homes involving the ab-\nJuly 31, 1969, 12 of these homes had voluntarily withdrawn\nsence of employee health examinations,\nfrom the program; 65 homes had their certificates to par-\nticipate in the program withdrawn by the State; and, about\n--38 violations at 23 nursing homes involving inopera-\n123 homes had apparently made required staffing changes and\ntive patient call systems, and\nthus were able to continue in the program.\n--38 violations at 17 nursing homes involving inade-\nThe State plan does not specify which State agency, if\nquate diets and menus.\nany, has the authority and responsibility to withhold pay-\nment for Medi-Cal patients in nursing homes in which sub-\nWe have been informed by DHCS and Department of Public\nstandard conditions exist. We noted that, in a letter dated\nHealth officials that, at any given time, violations of\nApril 4, 1967, the Administrator of the Human Relations\nvarying intensity of certain of the State requirements for\nAgency advised the HEW regional representative that the\nnursing homes can be found in most of the approximately\nMedi-Cal Consultant may deny requests for nursing home care\nGERALD\nLIBRARY\n12\n13\nfor Medi-Cal recipients in nursing homes which fail to meet\nby the Department of Public Health to revoke the license of\nprogram standards.\nthe operator which illustrates, in our opinion, the need\nfor establishing procedures authorizing Medi-Cal Consultants\nAs noted on page 11 of this report, title 22 of the\nto cancel authorizations for nursing home care for patients\nCalifornia Administrative Code provides that the Medi-Cal\nwho are in nursing homes where substandard conditions exist.\nConsultant may also cancel any previously approved authori-\nzation for nursing home care when services or placement are\nIn March 1967 the State placed a nursing home operator\nnot appropriate to the needs of the patient. Notwithstand-\non 3 years' probation, in lieu of revoking his license, for\ning this provision, DHCS officials have advised us that, in\nnumerous violations of licensing requirements. The condi-\ntheir opinion, a Consultant may not cancel a previously ap-\ntions of probation were that the operator meet all such re-\nproved authorization for nursing home care simply because\nquirements in the future.\nthe standards of care specified by the State or HEW are not\nbeing met. They have advised us also that a patient's phy-\nDuring the following 13 months, five inspections of\nsician is primarily responsible for evaluating the quality\nthe nursing home disclosed 18 violations of State licensing\nof care being provided by a nursing home and for removing\nrequirements. Department of Public Health officials con-\nthe patient from the nursing home if he is dissatisfied\nsulted with the nursing home operator on three separate OC-\nwith the quality of care being provided to his patient.\ncasions during this period. In April 1968 the Department\nDHCS officials have advised us further that a Consultant\nrecommended that the State Attorney General take action to\nmay not cancel any previously approved authorization--on\nrevoke the nursing home operator's licesne. During the\nthe basis of noncompliance with nursing home standards--un-\nnext 4 months, five more inspections disclosed 28 violations\ntil all legal and administrative due process has been af-\nof State licensing requirements. In September 1968 formal\nforded to the nursing home.\nlicense revocation hearings were held for 5 days. In Feb-\nruary 1969 the operator was placed on probation (this time\nAccordingly, it appears that under current State prac-\nfor 5 years) again contingent upon his compliance with all\ntices, the removal of a patient from a nursing home which\nState licensing requirements.\nis not providing the quality of care required is possible\nonly through (1) time-consuming formal administrative and/or\nAlmost 2 years elapsed from the start of formal action\nlegal proceedings or (2) action of the patient's physician.\nagainst the nursing home operator until the case was de-\ncided. In the meantime, the State was paying the nursing\nIn our report dated August 8, 1966, we pointed out that\nhome for services provided to Medi-Cal patients. We cannot\nserious substandard conditions had existed at many of the\nsay whether this situation resulted in any harm to the pa-\nnursing homes for long periods of time without action being\ntients, since this could only be determined through a full\ntaken to revoke the license of the operators. Further,\nevaluation of all facts and circumstances involving individ-\nwhere formal revocation action had been taken, many months\nual patients by persons having requisite skills in the medi-\nelapsed before final decisions were rendered. During our\ncal and/or social welfare fields.\nmost recent review, we noted that this situation continued\nto exist.\nWe believe that, if the Consultant had threatened to\ncancel--or had canceled--authorizations for treatment of\nOfficials of the Department of Public Health have ad-\nMedi-Cal patients in this home, it would have induced the\nvised us that license revocation proceedings generally take\nfrom 3 weeks to 22 months and that, since a license revoca-\noperator to promptly comply with State licensing require-\nments. In our opinion, so long as the State does not take\ntion affects the proprietor rather than the nursing home, a\nsuch action, patients may be provided care of a lesser qual-\nrevocation proceeding can be stopped through a change in\nownership of the home. Following is an example of an action\nity than called for by the Medicaid regulations.\n14\n15\nGERALD FORD\nWe agree with DHCS that a patient's physician has the\nAlthough HEW and the State have taken certain actions\nresponsibility of removing his patient from a nursing home\nto substantially upgrade the quality of care provided to\nif he is not satisfied with the quality of care being pro-\nnursing home patients under the program, we believe that\nvided to a patient. We believe, however, that a physician's\nfurther actions are necessary to ensure that Medi-Cal pa-\ndecision to place or retain a patient in a nursing home\ntients do not remain in nursing homes that violate State\nwhich is not complying with Medicaid standards should not be\nand HEW requirements for long periods of time. In this re-\ngard, there still remains a need to precisely define the\ninterpreted as requiring the Consultant to approve requests\nfor care in such homes. Also, the role of the physician\nspecific authority and responsibility of agencies and in-\ndividuals involved in the evaluation of the adequacy of\ndoes not relieve DHCS of its responsibility for ensuring\ncare provided to patients in a nursing home and the enforce-\ncompliance with HEW standards for skilled nursing homes.\nMoreover, there are situations where we believe the Medi-\nment of nursing home standards.\nCal Consultant should be relied upon to safeguard a patient's\nwelfare. For example, in homes wholly or partially owned\nby physicians or in homes in which they otherwise have a\npecuniary interest, we believe that an objective decision\nOn April 29, 1970, final HEW regulations to implement\nby the physician to remove a patient under these circum-\nsection 1902(a) (28) of the Social Security Act--relating to\nstances would be more difficult. Also, our review of medi-\nstandards for skilled nursing homes to participate in the\ncal records in 14 nursing homes indicated that Medi-Cal pa-\nMedicaid program--were published in the Federal Register\ntients were not always being visited by a physician at\n(45 CFR 249.33). These regulations provide that, if a home\nleast once each month as required by HEW and the State.\nis not in substantial compliance with the standards for pay-\nTherefore, in our opinion, such physicians were not in a\nment for skilled nursing home care, the home may not par-\nposition to monitor the quality of care being received by\nticipate in the Medicaid program. If the home is found to\ntheir patients. On the basis of our review of nursing home\nbe in substantial compliance (that is, is in compliance ex-\nrecords and State and HEW requirements, we estimate that\ncept for deficiencies), the State agency may permit the\n1,234 physicians' visits were required for 106 Medi-Cal pa-\nhome to participate in the program for a period of 6 months,\ntients from February 1966 through May 1969. Our review\nprovided there is a reasonable prospect that the deficien-\ncies can be corrected within that time and that the defi-\nshowed that 215 physicians' visits were not made.\nciencies do not jeopardize the health and safety of the pa-\ntients. No more than two agreements for successive 6-month\nNeither DHCS nor the Department of Public Health advises\nperiods may be executed with any one home and a second\nthe patients' physicians of nursing homes' violations of\nagreement may not be executed if a deficiency previously\nState and HEW requirements; therefore, the physicians--un-\nnoted continues unless the home has made substantial effort\nless they inspect the home or make inquiries at the appro-\nand progress toward its correction.\npriate State or county offices--may not know whether a nurs-\ning home (1) has adequate professional staff, (2) has proper\nThe HEW regulations, if properly implemented by the\nfood preparation and service, (3) has adequate general\nStates, should help to resolve problems such as those noted\nmaintenance, (4) is providing services to the proper number\nduring our review. We believe that forceful monitoring by\nof patients consistent with the licensed capacity, (5) has\nHEW of the States' implementation of the regulations relat-\nadequate fire protection, (6) has required its employees to\ning to discontinuing payments to homes and granting exten-\ntake periodic health examinations, or (7) meets accepted\nsions of certifications when homes are in substantial com-\nprofessional practices in the labeling, handling, storage,\npliance with standards for payment, will be necessary to en-\nand disposal of drugs. We doubt that many physicians are\nsure that patients receive the quality of care called for\nmaking such inspections or inquiries nor do we believe that\nby the Medicaid regulations.\nit is practical for them to do so.\n17\n16\nGERALD FORD LIBRARY\nCONTROLS OVER MEDICATION AND TREATMENT\nAgency comments and actions\nFOR MEDICAID PATIENTS IN NURSING HOMES\nIn commenting on a draft of this report, HEW stated\nthat its regulations governing the certification of skilled\nAuthorizations for medication and treatment\nnursing homes to participate in the program are sufficient,\nif properly implemented by the State, to eliminate the\nThe State licensing requirement that there be signed\nweaknesses reported relating to the standards of care in\nphysicians' orders for medication and treatment administered\nCalifornia. HEW stated also that there may be some misun-\nto nursing home patients which was in effect at the time of\nderstanding by the State agency as to the provisions of cer-\nour prior review, was still in effect at the time of our\ntain Federal requirements and that the HEW regional office\nrecent review. In addition, after our prior report, the\nstaff will attempt to clarify the requirements for the\nCalifornia State Board of Pharmacy issued guidelines for\nState agency.\nproviding pharmaceutical services in nursing homes. These\nguidelines emphasize the importance of signed physicians'\nIn a letter dated March 4, 1970 (see app. II), the\norders and accurate recordings on the patients' charts of\nState advised HEW that, in an effort to strengthen the ef-\nmedications administered.\nfectiveness of the Medi-Cal Consultants, new standards for\noperation of the Medi-Cal Consultant units throughout the\nDHCS officials advised us that they relied on inspec-\nState are being developed with a view toward obtaining a\ntions by the Department of Public Health to disclose defi-\nmore uniform and more effective application of program pol-\ncient nursing home practices in administering medication and\nicies, rules, and regulations. We noted that these stan-\ntreatment to patients. Officials of the Department of Pub-\ndards, which were incorporated in State regulations in April\nlic Health told us that their inspections of nursing homes\n1970, provide for periodic on-site visits to nursing homes\ndid not include tests of compliance with the State Board of\nby staff members of the Medi-Cal Consultant units to evalu-\nPharmacy guidelines because compliance with these guidelines\nate the quality of care.\nwas not mandatory and because their inspections covered only\ncompliance with State licensing requirements and Medi-Cal\nregulations.\nWe reviewed 1 month's medical records of 106 Medi-Cal\npatients at 14 nursing homes. These records showed that\n734 doses of medication were administered without any signed\nphysicians' orders; 311 doses were administered in quanti-\nties in excess of those prescribed; and 1,210 prescribed\ndoses were not administered.\nAs previously noted on page 12, State inspection re-\nports for 70 nursing homes showed that State requirements\nregarding authorizations for medication and treatment were\nviolated more frequently than other requirements. A total\nof 219 violations of this type were recorded at 57 nursing\nhomes.\nWhere records showed that medications had been admin-\nistered without physicians' orders, we were told by nursing\n18\n19\nGERALD FORD LIBRARY\nhome personnel that the physicians had neglected to write\npatients by keeping custody of their medications and admin-\nor sign the order. In those instances where records showed\nistering them when necessary.\nthat medications had been administered in greater quanti-\nties than prescribed or had not been administered at all,\nOur review at 13 nursing homes showed that narcotics\nnursing home personnel told us that (1) there were errors\nwere being kept in locked cabinets and that, usually, a phy-\non the patients' medical charts and the medications had\nsical count was made once on each nursing shift, or at least\nbeen correctly administered and (2) the medications were\nonce a day, to ensure that the quantity of narcotics on\ngiven on an as-needed basis and, in some cases, the patients\nhand agreed with the quantity shown on the control sheet\ndid not need the medications at the time it was supposed to\nmaintained for each narcotic.\nhave been administered.\nAt five of these 13 nursing homes, we compared for 29\nWe believe the results of our review clearly show that\nselected patients the narcotics dispensed during a 1-month\nimproper nursing home practices regarding authorizations for\nperiod, as shown by the narcotic drug control sheets main-\nmedication and treatment continue to exist and that there\ntained by the dispensary, with patients' medical charts.\nis still a need for the State to adequately control medica-\nOur comparison showed that 86 doses of the narcotics dis-\ntion and treatment administered to patients.\npensed had not been administered, according to the patients'\nmedical charts. On the other hand, the patients' medical\nAccounting for drugs and quantities\ncharts showed that 24 doses of narcotics were administered\nof drugs on hand in nursing homes\nto these patients, but the drug control sheets did not show\nthat the narcotics had been dispensed. Nursing home offi-\nAccounting for narcotics\ncials advised us that the discrepancies were attributable\nto poor recordkeeping.\nHEW requires that a record be maintained on separate\nsheets for each type and strength of narcotic, showing the\nWe were advised by Department of Public Health offi-\nquantity on hand, the date and time a dose is administered\ncials that their inspectors would not make the types of com-\nto a patient, the name of the patient, the name of the phy-\nparisons that we had made and that, therefore, these types\nsician, the signature of the person administering the dose,\nof discrepancies in accounting for narcotics would not be\nand the quantity remaining on hand.\ndisclosed. They also stated that nursing homes were not re-\nquired by the State plan or licensing requirements to main-\nThe State plan for Medi-Cal does not require nursing\ntain drug control sheets. DHCS officials stated that in-\nhomes to maintain special records to account for narcotics.\nspections were the only means they had of systematically\nHowever, guidelines issued by the State Board of Pharmacy\nevaluating nursing home controls over narcotics.\nfor providing pharmaceutical services in nursing homes call\nfor various physical and accounting controls over narcotics.\nWe believe that the results of our review indicate a\nAs noted previously, DHCS and the Department of Public\nneed for the State to examine into the accounting for nar-\nHealth have no means to ensure that the guidelines are being\ncotics in nursing homes and, on the basis of such an exami-\nfollowed because compliance with these guidelines is not\nnation, to institute controls over the administration of\nmandatory. The California Narcotic Act requires the person\nnarcotics in nursing homes, including periodic compliance\nwho prescribes, administers, or dispenses a narcotic to re-\ninspections by the Department of Public Health. We believe\ncord the transaction; however, State officials told us that\nthat such measures are particularly needed in view of (1)\nthey interpret this requirement as applying to physicians\nthe State's interpretation that the California Narcotic Act\nand pharmacies but not to nursing homes because the homes\ndoes not apply to nursing homes because the homes act only\ndo not have a narcotic license but act only in behalf of\nin behalf of patients by keeping custody of their medica-\ntions and administering them when necessary and (2) HEW\n20\n21\nGERALD FORD LIBRARY\nrequirements that a record of narcotics dispensed and admin-\nWe were advised at 11 of these homes that test counts\nistered be maintained in detail.\nof incoming drugs from pharmacies were not made and at the\nremaining home that test counts were made infrequently.\nAccounting for drugs other\nAlso, at five of the 12 homes, we were advised that pharma-\nthan narcotics\ncies never showed quantities of drugs on the labels; whereas,\nat five other homes, we were advised that the pharmacies\nIn our August 8, 1966, report, we expressed the view\nalways showed quantities on the labels. At the two remain-\nthat (1) nursing homes should maintain records of the quan-\ning nursing homes, we were advised that some pharmacies\ntity of incoming drugs, (2) pharmacists should be required\nshowed quantities on the container labels whereas others did\nnot.\nto indicate the quantity of drugs on the labels of the con-\ntainers of drugs for welfare patients, and (3) nursing homes\nshould be required to check these quantities, at least on a\nThe need for control and accountability over the quan-\ntest basis. It was our belief that maintaining records of\ntity of prescribed drugs received by nursing homes still ex-\nincoming drugs, the added labeling requirement, and periodic\nists, because current guidelines relating to drug control\ntest counts could serve as bases for further inquiry or in-\nare not mandatory and do not require verification of quanti-\nvestigation in those instances where there were indications\nties of incoming drugs. As illustrated in the following\nthat significant units of drugs were unaccounted for or that\ntable, at one nursing home visited, significant proportions\nquantities of drugs purchased substantially exceeded antici-\nof drugs prescribed for three Medi-Cal patients during the\npated needs.\nperiod October 1, 1969, through January 6, 1970, were not on\nhand and could not be accounted for by nursing home offi-\ncials.\nSubsequent to the issuance of that report, the State\nof California advised HEW that guidelines issued by the State\nBoard of Pharmacy would meet and surpass the standards sug-\nQuantity\nUnac-\ngested by GAO. We note that the Board's guidelines concern-\nadministered\ncounted\ning pharmaceutical services provided in nursing homes state\nQuantity\nper orders\nfor dif-\nMedication\nthat \"Accurate records shall be kept of all medication re-\nPatient\npurchased\nand charts\nference\nceived by the facility and administered to the patient\" and\nMellaril tablets\nthat \"All prescription medication for the individual patient\nA\n310\n265\n45\nshall bear on the label the name, dose size, expiration date\nDarvon compound\nif indicated, and amount of the drug contained.\" (Under-\ncapsules\nB\n60\n29\n31\nscoring supplied.) It should be noted that adherence to\nBenadryl capsules\nC\n281\n267\n14\nthese guidelines by nursing homes and pharmacies participat-\ning in the Medi-Cal program is not obligatory. We noted\nIn view of the continuing lack of control and account-\nalso that neither the State licensing requirements for nurs-\nability over the quantity of drugs received, we believe that\ning homes nor Medi-Cal regulations require that test counts\nDHCS should require pharmacies and nursing homes participat-\nof incoming drugs be made.\ning in the Medi-Cal program to adhere to recordkeeping and\nlabeling guidelines set forth by the State Board of Pharmacy.\nDuring our recent review we found that none of the 12\nAlso, we continue to believe that nursing homes should be\nnursing homes which we visited maintained records of the\nrequired to verify, on a test count basis, the quantities of\nquantity of incoming drugs other than narcotics. At these\nincoming drugs and to record the dates and results of such\ntests.\n12 nursing homes we inquired as to whether test counts were\nmade of incoming drugs--other than narcotics--and whether\npharmacists recorded the quantity of drugs on the label of\nthe drug container.\n22\n23\nGERALD FORD LIBRARY\nDrugs on hand\nopinion that a nursing home operator could conceal from the\ninspectors drugs belonging to deceased or discharged pa-\nState licensing requirements regarding the disposition\ntients by maintaining the required records of destruction\nof drugs for deceased patients or for patients who have left\n(while not actually destroying the drugs) and routinely ob-\nnursing homes have been revised since the issuance of our\ntaining the signatures of his employees as witnesses.\nprior report. These requirements now state that individu-\nThese officials did not cite any specific instances where\nally prescribed drugs shall be destroyed when a patient dies\nsuch concealment had been detected. We believe that the\nor is discharged from a nursing home unless the attending\nDepartment should direct its inspectors to examine into the\nphysician orders otherwise. The State requires nursing\nauthenticity of the signatures of witnesses and the manner\nhomes to record the destruction of individually prescribed\nin which such signatures were obtained on a periodic test\ndrugs. The home's records are required to show the patient's\nbasis and in every instance in which it is suspected that\nname, the name of the medication, the quantity destroyed,\ndrugs are being improperly retained by a nursing home in\nthe date of destruction, and the signatures of two witnesses.\nviolation of State licensing requirements.\nOur review at 11 of 12 nursing homes indicated that in-\nWe believe that improvements have been made in the\ndividually prescribed drugs for deceased or discharged pa-\nState's procedures governing the disposal of individually\ntients were being destroyed in accordance with State li-\nprescribed drugs for patients who have left nursing homes.\ncensing requirements. At the remaining nursing home, how-\nNevertheless, continued efforts by State licensing inspec-\never, we found that individually prescribed drugs had not\ntors are warranted in view of the concern expressed by State\nbeen destroyed for patients who were deceased or discharged.\nofficials relating to the possible concealment of drugs pur-\nAn official at this nursing home advised us that it was their\nported to be disposed of.\npolicy to collect these drugs and return them for destruc-\ntion to the pharmacy from which they were purchased. At the\nAgency comments and actions\ntime of our visit, we noted that drugs for such patients had\nbeen packaged for delivery to the pharmacy but records of\nIn commenting on a draft of this report, HEW and DHCS\nthe disposition of these drugs--or drugs previously disposed\nagreed that continued effort to improve controls over the\nof in this manner--were not maintained. Department of Pub-\nprescribing and dispensing of drugs for nursing home pa-\nlic Health officials agreed with us that returning drugs to\ntients appeared warranted. HEW stated that it planned to\nthe pharmacy from which they were purchased was not in ac-\ndiscuss the matter with State officials and DHCS stated that\ncord with State licensing requirements.\nit was in the process of developing detailed Medi-Cal pro-\ngram requirements for the prescribing and dispensing of\nWe examined State inspection reports for 70 nursing\ndrugs in nursing homes.\nhomes for the period January 1, 1966, through November 15,\n1969 (see P. 12). These reports cited 80 violations at\n41 homes of State licensing requirements relating to the\nhandling, storage, and disposal of drugs; 23 of the viola-\ntions related to the improper disposal of drugs at nursing\nhomes.\nDepartment of Public Health officials advised us that,\ndespite the revised licensing requirements, the disposal of\nprescription drugs by nursing homes was a very difficult\narea for their inspectors to police. They were of the\nBERALD FORD VIBRARY\n24\n25\nSUPPLEMENTAL PAYMENTS TO NURSING\ntransactions were attributable to the home's former\nHOMES FOR MEDICAID PATIENTS\nadministrator and former bookkeeper. Since these vi-\nolations were by the employees of the home, DHCS did\nSupplemental payments by patients or others to nursing\nnot bring formal action to remove the proprietors\nhomes under the Medicaid program are prohibited by HEW reg-\nfrom the program. We were advised by DHCS officials\nulations. Supplement D of HEW's Handbook of Public Assis-\nthat arrangements to recover the overpayments were\ntance Administration states that participation in the pro-\nbeing made and that amounts collected would be re-\ngram is limited to providers of service, including nursing\nturned to those who made the payments.\nhomes, that accept, as payment in full, the amounts paid in\naccordance with the fee structures established by the State.\n2. Another investigation resulted in a nursing home\nThe California State plan for Medi-Cal contains the same\nbeing placed on probation for 3 years in lieu of\nbeing suspended from the program. This home had\nprohibition.\ncollected about $2,000 in supplemental payments--\nWe noted that State and county agencies had issued a\n$100 a month during the period April 1967 to Decem-\nnumber of informational brochures advising recipients of\nber 1968--made in behalf of a Medi-Cal patient.\nthe medical services covered under the Medi-Cal program.\nThese brochures, however, do not (1) describe the nature of\n3. Another nursing home was charging Medi-Cal patients\nsupplemental payments, (2) specify the items of service or\n$10 a month for personal laundry even though, in\ncare included in the rate paid to nursing homes, or (3) spe-\nsome instances, no such expenses were incurred and,\ncifically state that supplemental payments by patients or\nin other instances, these expenses may have been\nothers for items included in the rate should not be made.\nless than the $10. This charge was made only to\nWe noted also that the State had, on several occasions, ad-\nMedi-Cal patients in the home. As a result of their\nvised fiscal agents, nursing homes, Medi-Cal Consultants,\ninvestigation, DHCS recovered about $1, 300.\nand county welfare offices, that supplemental payments were\nprohibited. We found, however, that the State did not sys-\nDHCS officials stated that they did not have statistics\ntematically review nursing home practices to ascertain\non the number of complaints received regarding supplemental\nwhether supplemental payments were being received and that\npayments under the former medical assistance program but\ninvestigations were made on a complaint basis only.\nthat the number of complaints received concerning supple-\nmental payments had probably increased because of the ex-\nSince initiation of the Medi-Cal program, DHCS has in-\npanded coverage of the Medi-Cal program and the increased\nvestigated complaints that supplemental payments were being\nnumber of participants.\nmade to 42 nursing homes. At the time of our recent re-\nview, many of these investigations had not been completed.\nWe noted that a report issued in November 1968 by the\nIn nine cases, DHCS determined that supplemental payments\nAttorney General of the State of California stated that an\nhad, in fact, been collected by the nursing homes. Three\ninvestigation of the Medi-Cal program had disclosed that\nexamples follow.\nmany nursing homes required patients or their relatives to\npay money \"under the table\" to secure admission of the pa-\n1. Between March 1966 and September 1969, a nursing\ntient and that often supplemental payments were required\nhome collected over $1,400 from 34 patients for ser-\neach month that the patient remained in the home. The At-\nvices which were covered in the daily rate paid by\ntorney General's report further stated that many Medi-Cal\nMedi-Cal. This home also collected $250 at the\npatients in nursing homes were not aware of the benefits to\nrate of $25 per month in \"under the table\" payments\nwhich they were entitled and could be billed by the nursing\nfrom the family of one Medi-Cal patient. The in-\nhome for services which, unknown to the patient, had already\nvestigation disclosed that all of the improper\nbeen paid for under the program.\n27\nGERALD LIDRARY\n26\nCalifornia uniform procedures for use by nursing funds, in\nState officials advised us that the State homes had\nA Department of Public Health official advised us that\na review to determine whether supplemental payments had\nnot issued for, and handling of, patients' personal We were\nbeen made was not included in their inspections of nursing\naccounting suggested in our August 1966 report. matter told be-\nhomes. DHCS officials advised us that, despite a substan-\nalthough that corrective action had not been taken on this\ntial increase in their investigative staff since the start\ncause of higher priority projects.\nof the Medi-Cal program, there was. still not sufficient\nrecent review at 12 nursing homes, records we again\nstaff to systematically review nursing home records to de-\ntermine whether supplemental payments had been received and,\nDuring considerable our variance in the procedures funds. and For ex-\ntherefore, such reviews were made only when a complaint was\nused found by the homes to account for patients'\nreceived.\nample:\nIn considering the (1) substantial increase in the cov-\n--four homes maintained patients' personal funds homes in\nsistance program, (2) increased number of complaints being\nchecking retained patients' funds in individual envelopes in\naccounts at local banks while three\nerage of the Medi-Cal program over the prior medical as-\nreceived by DHCS concerning supplemental payments, (3) de-\nthe nursing homes,\nterminations by DHCS in cases examined that supplemental\npayments were, in fact, being received by nursing home op-\n--six homes maintained individual ledger accounts made for\nerators, and (4) findings of the State's Attorney General,\nwe believe that an effective State program to discover, in-\nnotations each of deposits and withdrawals on\npatient's funds while three homes merely envelopes\nvestigate, and eliminate supplemental payments to nursing\ncontaining the funds,\nhomes is needed. Such a program could include (1) letters\ndid not issue receipts to patients for\nof inquiry to relatives of the patients, (2) discussions\nwith patients during routine visits by State employees, and\ntwo homes and four homes did not obtain patients' accounts, signa-\n(3) notices to recipients when periodically mailing their\ntures funds for withdrawals from their personal\nMedi-Cal identification cards.\nand\nhomes were members of separate nursing home main-\nWe believe that, so long as reviews at nursing homes\ndo not include a determination for compliance with the HEW\n--three chains and the patients' personal funds were\nregulations prohibiting supplemental payments, such pay-\ntained at the chains' central offices.\nments will continue to be made principally because most per-\nWe noted also that the State Attorney General's Novem-\nsons making such payments are either unaware that the pay-\n1968 report on the Medi-Cal program disclosed instances for such\nments are not required or are concerned that a complaint\ncould result in the patients' not receiving adequate care.\nber which the $15 per month personal expense money, Medi-Cal\nFurther, we remain of the opinion that dissemination of in-\nin as cigarettes, candy, and haircuts, which had\nformation to Medi-Cal recipients and other interested par-\nties, as to the nature of supplemental payments and what\nmisappropriated patients by some nursing homes. The report of\nitems received from the county welfare offices cited, been\nservices or care are covered in the rate paid under the pro-\nexample, one nursing home that was in possession who had\ngram, would tend to deter supplemental payments to nursing\nas about an $2,000 which belonged to Medi-Cal patients\nhomes for Medi-Cal patients.\ndied had been discharged from the home. Department in- of\nPublic or Health officials advised us that, during their the\nof nursing homes, they ascertained whether\nSafeguarding patients' personal funds\nhome spections had adequate facilities to safeguard patients' personal such\nThe California Administrative Code requires nursing\nfunds and whether the home had records to account for\nhome operators to maintain adequate safeguards and accurate\nfunds. The Department does not, however, routinely\nrecords of Medi-Cal patients' money and valuables.\n29\nGERALD\n28\nexamine into the propriety of the types of charges made\nagainst the accounts or the adequacy of documents support-\nADVERTISING BY NURSING HOMES\ning deposits and withdrawals.\nOF PHYSICAL THERAPY FACILITIES\nRegulations of the California Department of Social Wel-\nThe California Administrative Code specifies that pro-\nfare require that patients in nursing homes be visited at\nviders of services may be suspended from the Medi-Cal pro-\nleast once a year by a county social worker to verify that\ngram for unlawful or unethical advertising or advertising\nthe patient's continued residence in the nursing home is\nwhich holds forth the advertiser as one specifically author-\nconsistent with his social needs. A Department of Social\nized or certified to render services available under the\nWelfare official has advised us that, during these visits,\nprogram.\nthe social workers inquire into the status of the personal\nfunds of patients only if requested to do so by the patient\nWe inquired into the advertising practices at 12 nurs-\nor someone acting in the patient's behalf or if the patient\ning homes. Three homes did not advertise; seven homes\nhas previously been judged incompetent.\nused various types of advertising which appeared to be con-\nsistent with the Medi-Cal regulations; but the advertising\nWe believe that the results of our review, together\nof the two remaining nursing homes appeared not to be in\nwith the report of the State Attorney General, demonstrate\naccord with the regulations.\nthe need for action by the State to strengthen controls\nover the handling of patients' personal funds.\nOne nursing home's advertising brochure stated that a\nfully equipped physical therapy room was available on the\nAlso, we continue to believe that there is a need for\npremises; however, our visit to the physical therapy room\nthe State to establish standard procedures to be used by\nrevealed that the only equipment available was a set of\nnursing homes in handling and accounting for Medi-Cal pa-\nparallel bars. The nurse in charge at this home informed\ntients' personal funds. Such action, supplemented by ap-\nus that the parallel bars represented the only physical\npropriate surveillance during visits by State representa-\ntherapy equipment in the home. She stated that, in prepar-\ntives would, in our opinion, substantially assist the State\ning the advertising brochure, she referred to other nursing\nin guarding against misuse of these funds.\nhome advertisements in the yellow pages of the telephone\ndirectory and took excerpts from the various advertisements.\nAgency comments and actions\nA second home--part of a chain of nursing homes--was\nIn commenting on a draft of this report, HEW agreed\nusing the same advertising brochure cited in our August 1966\nwith our suggestion that information on services and care\nreport as containing misleading information regarding phys-\ncovered under the Medi-Cal daily rate paid to nursing homes\nical therapy facilities. We noted that, except for the\nand restrictions concerning supplemental payments should be\nfront and back covers which contained the names and exterior\nprovided to patients' relatives and other interested per-\npictures of the individual nursing homes, this advertising\nsons. The State advised HEW that it had adopted this sug-\nbrochure was being used by at least eight other homes in the\ngestion and was preparing an information leaflet for cir-\nchain. The home advertised that it possessed\ncularization.\n1. a physical therapy department under the direction\nHEW agreed also that better controls over the handling\nof a well-qualified registered therapist,\nof patients' personal funds by nursing homes were needed\nand stated that it would discuss with State officials the\n2. 12-foot parallel bars,\nfeasibility of establishing standard procedures to be fol-\nlowed by the homes and surveillance by the State.\n3.\nexercise\nsteps,\n30\n31\nresponsibility is specifically assigned to, and carried out\n4. a tilt-top table,\nby, some other State agency.\n5. exergenie wall pulleys,\nAgency comments and actions\n6. a Burdick ultrasound and electric stimulator,\nIn commenting on a draft of this report, HEW agreed\nthat DHCS should either assume the responsibility for polic-\n7. diathermy,\ning advertising practices relating to Medi-Cal or ensure\nthat such responsibility is specifically assigned to, and\n8. a traction table, and\ncarried out by, some other State agency. In this connection,\nthe State advised HEW that consideration would be given to\n9. a hydrocollator for moist heat.\nincreasing efforts to detect cases of misleading advertis-\nOur inspection of the physical therapy room at this nursing\ning.\nhome revealed that the only items of equipment available\nHEW stated that, while advertising practices described\nwere the parallel bars and the exercise steps. The admin-\nin our report might mislead a Medi-Cal recipient or his\nistrator of this nursing home acknowledged that these two\nfamily, it is expected that the patient's caseworker will in\nitems of equipment were the only pieces of physical therapy\nbe familiar with nursing home conditions and services an\nequipment at this home; however, she said that the remainder\narea and will advise the patient and/or his family in in-\nof the advertised equipment was located in other nursing\nstances of misleading advertising.\nhomes in the chain but was portable and could be made avail-\nable to patients in this home.\nWe discussed the results of our review with DHCS and\nDepartment of Public Health officials who advised us that\nthey had no program to review nursing home advertisements.\nWe were told that their investigative staffs reviewed nurs-\ning home advertisements only on a complaint basis or when\none of these staff members happened to notice a questionable\nadvertisement. Furthermore, DHCS officials stated that, in\ntheir capacity as the single State agency responsible for\nadministration of the Medi-Cal program, they were concerned\nonly with those who advertise services, supplies, or equip-\nment as being reimbursable under the Medi-Cal program.\nDHCS and Department of Public Health officials stated that\nthe policing of advertising was not their responsibility.\nIn our opinion, no action has been taken by the State\nto improve controls over advertising by nursing homes. We\nbelieve that Medi-Cal patients or their families could be\nmisled by the types of advertisement which we have noted.\nWe believe that, to help avoid misleading advertising by\nnursing homes, DHCS--as the single State agency--should\neither assume the responsibility for policing advertising\npractices relating to the program or ensure that such\nFORD LIBRARY\n33\n32\nTRANSFERRING PATIENTS\n--Five transfers were made because the attending physi-\nBETWEEN NURSING HOMES\ncian wanted the patient in a nursing home of which\nhe had become part owner.\nState Medi-Cal regulations require that transfers of\npatients between nursing homes be approved by the Medi-Cal\nIn each of these 13 transfers, the Medi-Cal Consultant\nConsultant prior to such transfers. The regulations do not,\ndetermined that nursing home care was needed by the patient.\nhowever, specify the manner in which prior approval is to be\nThe approval document for such care, however, is not de-\nobtained. Guidelines issued by DHCS to the Consultants for\nsigned to disclose any information relevant to the reasons\ntheir use in authorizing nursing home care are not addressed\nfor the transfer of a Medi-Cal patient from one home to\nto the circumstances under which interhome transfers of pa-\nanother. In our opinion, the Medi-Cal Consultant did not\ntients are to be permitted. We were advised by Medi-Cal\nreceive all the information necessary to reach a decision\nConsultants that prior approval for transferring a Medi-Cal\nconcerning the need for, or reasonableness of, interhome\npatient was usually obtained from the Consultant by tele-\ntransfers.\nphone and that no permanent record of such approval had\nbeen maintained.\nWe believe that criteria under which Medi-Cal patients\nmay be transferred at the initiative of the nursing home\nWe inquired into the reasons for the interhome trans-\nshould be established; that policies and procedures under\nfers of 60 Medi-Cal patients at eight of the 14 nursing\nwhich nursing homes would have to obtain the written approval\nhomes we visited. Since the nursing homes are not required\nof the Medi-Cal Consultant before effecting such transfers\nto maintain records of the reasons for interhome transfers\nshould be developed; and that these criteria, policies, and\nof patients, it was necessary for us, in most instances, to\nprocedures should be made a part of the State plan.\nrely on the recollections of the nursing homes' staffs\nabout the reasons for the transfers.\nAgency comments and actions\nOn the basis of the recollections of the nursing homes'\nIn commenting on a draft of this report, HEW agreed\nstaffs and our review of available records, it appears that,\nwith our suggestion that authorizations for transfer be in\nof the 60 transfers, 34 were made primarily for the benefit\nwriting and include the reasons for transfer. HEW stated\nof the patient. For 13 transfers, there was not sufficient\nthat it planned to recommend to the State that, in each in-\nevidence to enable us to reach an opinion as to who bene-\nstance of a proposed transfer, an interview with the patient\nfited primarily from the transfer. We believe, however,\nby his caseworker be required and that the caseworker make\nthat the remaining 13 transfers were made for the benefit\na written record of the reasons for the transfer.\nof someone other than the Medi-Cal patient. We found that:\n--Six transfers were made primarily for the benefit of\nthe nursing homes making the transfers because op-\nerators of the homes wanted the beds occupied by\nthese patients for use by prospective Medicare or\nprivate patients for whom a higher daily rate could\nbe collected. In one of these six transfers, the\nfamily of the patient was not aware of the transfer\nuntil after it had taken place.\nTwo transfers were made at the instigation of the\nformer owner of a nursing home who had opened a new\nhome.\n35\n34\nCONCLUSIONS, RECOMMENDATIONS, AND\nadministration of narcotics and other drugs, and (3) protec-\nAGENCY COMMENTS AND ACTIONS\ntion of the patients from interhome transfers for the bene-\nfit of others. Although the State plan contains guidelines\nOur recent review of practices in providing nursing\nrelating to supplemental payments, protection of patients'\nhome care showed that, for the most part, weaknesses in the\npersonal funds, authorizations for medications and treat-\nadministration of California's Medi-Cal program continue to\nment, destruction of drugs for deceased or discharged pa-\nexist. Although HEW and the State instituted measures de-\ntients, and nursing home advertisements, we believe that\nsigned to correct some of the weaknesses pointed out in our\nadequate procedures to help ensure compliance with these\nAugust 1966 report, such measures were generally ineffective\nguidelines by nursing homes have not been implemented by\nin resolving the problems noted. Also, we found weaknesses\nthe State nor have appropriate reviews been made by the\nin the administration of one aspect of the program--account-\nState or HEW to highlight the need for additional correc-\ning for narcotics--which we had examined into during our\ntive measures.\nprior review and found not to be a problem.\nPrimary responsibility for the quality of medical care\nExtensive coordination of the various State agencies is\nunder the Medicaid program rests with the States. HEW is\nvital to the success of any program--such as Medicaid--\nresponsible for assuring itself, through appropriate admin-\nwherein there are divergent interests and/or multiple levels\nistrative reviews and audits of States' program activities,\nof responsibility. We believe, however, that the degree of\nof the adequacy of States' program administration. We be-\ncoordination necessary to enable California to successfully\nlieve that administrative reviews by HEW regional represen-\nimplement its Medicaid program has not been achieved. For\ntatives generally have been inadequate to ascertain whether\nexample:\nnursing homes providing care to Medi-Cal patients have met\nthe HEW requirements governing the quality of care or\n1. Results of Department of Public Health inspections\nwhether the patients' interests have been safeguarded. We\nof nursing homes which revealed significant defici-\nnoted that, on November 25, 1969, the HEW Audit Agency fur-\nencies relating to State licensing and HEW require-\nnished to its regional offices audit guidelines for a multi-\nments had not been made known to attending physi-\nState audit of nursing homes participating in the Medicaid\ncians either through Medi-Cal Consultants or through\nprogram. One of the stated objectives of the Audit Agency's\nlocal medical societies or had not been used by DHCS\nreview was to determine whether Medicaid patients were being\nto carry out its responsibilities under HEW regula-\nprovided with adequate care and facilities.\ntions to require compliance with, or to terminate a\nnursing home's participation in, the program.\nRecommendations to the Secretary\nof Health, Education, and Welfare\n2. DHCS had not required that guidelines promulgated\nby the California State Board of Pharmacy be fol-\nIn the interest of providing the surveillance necessary\nlowed by nursing homes.\nto help minimize deficiencies in the care, services, or\n3. DHCS had not fixed the responsibility for the polic-\ntreatment given to Medicaid patients in nursing homes and to\ning of nursing homes' advertising practices.\neffect corrective action where such deficiencies are found,\nwe recommend that the Secretary of HEW, through the Admin-\nistrator of the Social and Rehabilitation Service:\nWe believe that the State plan for Medi-Cal, which has\nbeen approved by HEW, remains deficient in that it does not\nprovide adequate guidelines for (1) discontinuance of pay-\n--Direct HEW regional representatives to review the\nment for the care of Medi-Cal patients in nursing homes in\nmanner in which State agencies are implementing HEW\nwhich substandard conditions exist, (2) controls over the\nregulations relating to the quality of care being\nprovided to Medicaid patients in nursing homes.\n36\n37\nCHAPTER 3\n-Impress upon State officials the importance of clari-\nfying the respective responsibilities and authority\nof the State and county agencies involved in the ad-\nCONTROLS OVER PAYMENTS\nministration of the Medicaid program.\nFOR PRESCRIBED DRUGS\nWe recommend also that HEW regional representatives assist\nDHCS in determining action needed to help resolve the prob-\nIn our report of August 1966, we concluded that the\nlems discussed in this report.\nprepayment and postpayment audit procedures recommended in\nthe State plan to provide assurance that payments were made\nAgency comments and actions\nonly for correctly priced drugs prescribed under proper au-\nthority and actually delivered for the use of eligible re-\nIn commenting on a draft of this report by a letter\ncipients had not been fully and adequately implemented at\ndated June 15, 1970 (see app. I), the Assistant Secretary,\nthe county level. We stated that (1) the State had not ad-\nComptroller, HEW, stated that the HEW regional office staff\nequately carried out its responsibilities for evaluating\nwould be instructed to review with the California State\ncounty activities to determine that the objectives of the\nagency the several Federal regulations relating to the qual-\nState plan relating to payment for prescribed drugs had\nity of nursing home care and to discuss with them the appli-\nbeen achieved and (2) HEW had not utilized the review pro-\ncability of these regulations to the observations made in\ncesses necessary to ascertain the quality of the administra-\nour report. He stated also that, since there appears to be\ntion of this aspect of the program.\na lack of full understanding of these regulations in Cali-\nfornia and other States, HEW was planning visits by teams\nWe suggested that HEW provide its field representatives\nof central office and regional office staffs to review ac-\nwith specific guidelines relating to the prescription drug\ntivities and procedures of State agencies and to provide\nprogram for their use in making continuing reviews of State\nconsultation on full implementation of the regulations.\nand local administration as required in HEW regulations.\nWe suggested also that consideration be given to including\nThe Assistant Secretary, Comptroller, informed us that\nin the State plan certain additional requirements and proce-\nHEW planned to visit a few selected States within the next\ndures to better ensure that drugs for which payments were\n3 months and would, on the basis of this experience, con-\nmade were actually delivered for the use of eligible welfare\nsider visiting all Medicaid States. He informed us also\nrecipients.\nthat HEW agreed that the single State agency administering\nthe Medicaid program should assure itself that employees of\nDuring calendar year 1964, payments of about $21.3 mil-\nassisting agencies were fully aware of the responsibilities\nlion were made in the State of California for more than\nwhich had been established.\n5.8 million drug prescriptions for welfare recipients; dur-\ning 1968, payments of $47.3 million were made for 11.8 mil-\nFurther, in accordance with our recommendations, HEW\nlion drug prescriptions under Medi-Cal. The Federal share\nofficials will discuss these matters with DHCS officials\nof these expenditures was about 50 percent.\nand will assist them in determining the actions needed to\nensure correction of the problems noted. He also stated\nOn the basis of our most recent review, we believe that\nthat, if these discussions revealed a need for assistance\nthe procedures for payment of prescription drugs under the\nby the Division of Management Information and Payment Sys-\nMedi-Cal program generally are inadequate to preclude a con-\ntems or the Division of Technical Assistance and Training\ntinuation of problems cited in our prior report. Social and\nof the Medical Services Administration, Social and Rehabil-\nRehabilitation Service regulations, issued in March 1969,\nitation Service, in Washington, such assistance would be\nrequire that States institute procedures for reviewing the\nmade available.\n39\n38\nuse of medical services, including prescription drugs, and\nmade by someone employed by the dispensing pharmacy or (2)\nfor safeguarding against misuse of such services. We found\nthat of the Medi-Cal recipient or someone duly authorized\nthat DHCS had not specified procedures to be followed by the\nby him to receive the drugs.\nfiscal agent to effectively control Medi-Cal drug payments.\nFurther, HEW and the State were not making systematic and\nOur examination of 300 Medi-Cal prescription forms for\nindependent verifications to ascertain whether payments to\nevidence of receipt of drugs by the recipient or persons\nprivate pharmacies for prescription drugs were limited to\nauthorized to act in their behalf showed that:\nprescriptions for recipients for whom the drugs were pre-\nscribed and whether the drugs were dispensed by the pharma-\n--10 prescription forms contained a certification of\ncies in quantities and in frequencies consistent with the\nreceipt executed by an employee of the dispensing\nphysicians' dosage instructions.\npharmacy.\nPrior to Medi-Cal, each county in the State was respon-\n--139 prescription forms were receipted by persons\nsible for processing, paying, and auditing claims for pre-\nwhose relationships to the Medi-Cal recipients were\nscription drugs for welfare program recipients. For Medi-\nnot identified on the prescription forms.\nCal, the State contracted with California Physicians Ser-\nvice to act as fiscal agent for all 58 counties in the\nDHCS plans to adopt a new Medi-Cal drug billing form\nState. The contract requires the fiscal agent to process,\nwhich, it believes, will provide faster and more accurate\npay, and audit drug claims under the program and to install\nprocessing of the drug claims. The new form will eliminate\ncontrols to prevent fraud and misuse of the drug program by\nthe practice of obtaining the signature of the recipient or\nproviders and recipients.\nhis authorized representative as evidence of receipt. In\nour opinion, obtaining the signature of the person receiving\nThe HEW Audit Agency reviewed the claims processing\nthe drug serves a useful purpose--as a means of control--in\nprocedures of California Physicians Service. This review,\nthe administration of the prescribed drug aspect of the pro-\nwhich covered the period March 1966 through June 1968, in-\ngram and should be retained.\ncluded evaluations of the effectiveness of controls over the\nprocessing of claims and resulted in a number of recommenda-\nWe believe that the administration of this aspect of\ntions for improving operations. The HEW Audit Agency's re-\nthe Medi-Cal program could be strengthened by requiring\nport, issued in October 1968, did not deal with the problems\npersons who receive prescribed drugs on behalf of recipients\ndiscussed in our August 1966 report. The HEW Audit Agency\nto record on the new billing forms their identities and ca-\nalso reviewed selected areas of the Medi-Cal program for\npacities or authorizations for acting on behalf of the re-\nthe period March 1966 through December 1968, and, in a\ncipients. This practice could assist in ensuring that the\nJune 1969 report, the Audit Agency made recommendations to\nrecipients actually receive the drugs.\nDHCS for improving administration of the program. This re-\nview also did not include an examination into claims for\nWe recognize that, because of the large volume of pre-\nprescribed drugs under the Medi-Cal program.\nscriptions, it would be impracticable to verify the author-\nity of every person certifying receipt of drugs on behalf\nThe prepayment and postpayment audit procedures used\nof Medi-Cal recipients. However, verification on a test\nby the fiscal agent did not provide for routine verifica-\nbasis would provide reasonable assurance that prescription\ntions that prescribed drugs had been received by recipients\ninvoices submitted by pharmacies represent drugs actually\nfor whom the prescriptions were written. For example, pre-\ndispensed by the pharmacies and received by eligible recip-\npayment audit procedures did not require the claims re-\nients. Verification procedures might include comparing the\nviewer to examine the prescription drug form to ensure that\nnames and/or signatures of persons certifying receipt on\nthe signature acknowledging receipt of the drug was (1) not\nbehalf of eligible recipients with the names of persons\n40\n41\nWe noted that, during the period October 1967 through Novem-\nresiding in the household--as shown in Department of Social\nber 1968, DHCS reviewed the drug payment procedures fol-\nWelfare case files--who would normally be expected to re-\nlowed by its fiscal agent and found that overpayments to\nceive drugs for the recipients. The names or signatures of\npharmacies were not being detected primarily because the\npersons authorized to receive prescribed drugs for Medi-Cal\nauditors were not consistently following their audit proce-\nrecipients residing in institutions, such as nursing homes,\ndures and because, in some instances, these audit procedures\ncould be submitted for inclusion in Department of Social\nwere not adequate to disclose instances of fraud or misuse.\nWelfare records. Where test results raise questions as to\nEfforts of the fiscal agent to correct the problems noted\nthe proper use of the drug program--by an individual recip-\nin the DHCS review were not effective. We therefore be-\nient, an institution, or an individual pharmacy--a field in-\nlieve that additional efforts are required.\nvestigation would be indicated to determine whether a misuse\nof the drug program occurred.\nIn our prior report we noted an overlapping of pre-\nscriptions as indicated by the pharmacies dispensing pre-\nscribed drugs over periods of time in quantities and in\nfrequencies greater than required by dosage instructions.\nIn one of the cases which we cited, five separate prescrip-\ntions were issued to a welfare recipient for a total of 120\ntablets of the same drug during an 18-day period. Accord-\ning to dosage instructions, only 18 tablets should have\nbeen used during that period. During our recent review, we\nnoted that the State Attorney General's November 1968 report\ndisclosed instances of pharmacies' dispensing prescribed\ndrugs in greater quantities than specified by physicians.\nWe found that patient profiles (history of medical ser-\nvices received by individual recipients) were not routinely\nproduced to assist California Physicians Service in carrying\nout its responsibility as fiscal agent for preventing fraud\nand misuse of the drug program. Therefore, it was not\npracticable for us to attempt to identify instances of over-\nlapping prescriptions which, when compared with the pre-\nscribed dosage, would indicate the dispensing of drugs over\nperiods of time in quantities greater than specified. In\nthe absence of such profiles, and since drug claims are\nprocessed individually as received, the fiscal agent's au-\ndit procedures cannot detect an irregular pattern of drug\npurchases over a period of time.\nIn our opinion, DHCS should require the fiscal agent\nto institute postpayment audit procedures to help identify\ninstances in which it appears that excessive quantities of\ndrugs are being dispensed to Medi-Cal recipients. Instances\nso identified could provide a basis for inquiry or investi-\ngation to determine whether misuse of the program exists.\nFORD\n43\nGERALD\nLIBRARY\n42\nCONCLUSIONS, RECOMMENDATIONS, AND\n(1) ensure that excessive quantities of drugs were not pre-\nAGENCY COMMENTS AND ACTIONS\nscribed and (2) contribute to a system of control over\nclaims and payments to ensure that purchased services were\nDHCS has not instituted procedures to ensure that\nactually delivered. He stated also that the HEW regional\n(1) payments are made only for prescription drugs actually\nrepresentatives had been advised to review with the State\ndelivered to Medi-Cal recipients and (2) drugs are being\nthe status of the implementation of this regulation and its\ndispensed in quantities and in frequencies consistent with\napplicability to the problems identified in our report.\nphysicians' dosage instructions. In view of the large vol-\nume of prescriptions written for Medi-Cal recipients and in\nWith respect to our suggestion that the State require\nview of the cost of such prescriptions, we believe that\npersons receiving drugs to sign for them and to indicate\ntheir identities and authorizations to act on behalf of the\nstrengthened controls over these aspects of the Medi-Cal\nprogram are warranted. In our opinion, a requirement that\nrecipients, DHCS advised HEW (see app. II) that the require-\npersons who receive prescribed drugs on behalf of program\nment for signature on receipt of drugs had been irritative\nrecipients identify their authority to receive such drugs\nand nonproductive but that the newly designed pharmacy bill-\nwould help to prevent the receipt of drugs by unauthorized\ning form did call for certification by the pharmacy that the\npersons. Also, the use of patient profiles--which would\nservices were provided. DHCS also stated that the new form\nindicate irregular patterns of drug purchase--will highlight\nwould allow improved claims processing by computerized\ninstances where a field investigation is warranted to de-\ntechniques and a review of pharmacy claims that were not\ntermine whether a misuse occurred.\nwithin prescribed limits. HEW advised us that it planned\nto review the new billing form and to determine whether\nRecommendation to the Secretary\nfurther action, possibly as we suggested, would be necessary.\nof Health, Education, and Welfare\nWe recommend that the Secretary of HEW, through the\nAdministrator of the Social and Rehabilitation Service, en-\ncourage DHCS to institute additional procedures designed to\nensure that payments are made only for prescribed drugs\nwhich are actually delivered for use of program recipients\nand that drugs are dispensed in quantities and in frequen-\ncies consistent with physicians' instructions. We believe\nthat the State should require persons receiving and signing\nfor prescribed drugs on behalf of program recipients to re-\ncord on the prescription forms their identities and capaci-\nties or authorizations for acting on behalf of the recip-\nients.\nAgency comments and actions\nIn a letter to us dated June 15, 1970 (see app. I),\nthe Assistant Secretary, Comptroller, HEW, agreed that con-\ntrols must be instituted by the fiscal agent to detect ir-\nregular patterns of drug purchases. He stated that the\nprogram regulation issued by the Social and Rehabilitation\nService in March 1969, if adequately implemented, would\n45\n44\nCHAPTER 4\nSCOPE OF REVIEW\nOur review of HEW and State procedures and practices\nin providing nursing home care to, and in controlling pay-\nments for drugs prescribed for use by, Medicaid recipients\nin the State of California was directed toward determining\nand evaluating the effectiveness of actions taken to cor-\nrect the weaknesses and deficiencies discussed in our Au-\ngust 1966 report on the former medical assistance program.\nOur work was performed at HEW headquarters in Washing-\nton, D.C., at HEW's regional office in San Francisco, Cali-\nfornia, and at the Sacramento headquarters of DHCS, the De-\npartment of Public Health, and the Department of Social\nWelfare. We also visited the offices of California Physi-\ncians Service in San Francisco.\nAPPENDIXES\nWe reviewed the enabling legislation and examined per-\ntinent procedures, records, and documents relating to the\nMedicaid and Medi-Cal programs. We held discussions with\nHEW, State, and California Physicians Service officials re-\nsponsible for the administration of the program. In addi-\ntion, we visited 14 nursing homes located in Alameda,\nFresno, Los Angeles, and Santa Clara counties. These coun-\nties were selected because they accounted for a significant\namount of Medi-Cal expenditures. We did not review all\nmatters discussed in this report at every home we visited.\nFactors which we considered in selecting nursing homes were\ntheir bed capacity and the number of Medi-Cal recipients\nserved. We reviewed case files for 106 patients at the\n14 nursing homes which we visited. For the most part,\nthese case files, which covered transactions during calen-\ndar years 1966-70, were selected for Medi-Cal recipients\nresiding in the home at the time of our visit.\nIn addition, we selected 70 nursing homes located in\n16 counties in northern California and reviewed all inspec-\ntion reports of the Department of Public Health for these\nhomes during the 1966-69 period. Again, the factors we\nused in selecting these homes were their bed capacity and\nthe number of Medi-Cal recipients served.\n47\n46\nAPPENDIX I\nPage 1\nINSURANCE EDUCATION:\nHEALTH.\nOF\nDEPARTMENT OF HEALTH, EDUCATION, AND WELFARE\nWASHINGTON, D.C. 20201\nU.S.A.\nJUN 15 1970\nOFFICE OF THE SECRETARY\nMr. John D. Heller\nAssistant Director\nCivil Division\nU.S. General Accounting Office\nWashington, D. C. 20548\nDear Mr. Heller:\nThe Secretary has asked that I reply to the draft report of the\nGeneral Accounting Office on its review of actions taken to improve\npractices in providing nursing home care and controlling payments\nfor prescribed drugs for Medicaid recipients in California.\nEnclosed are the Department comments on the findings and\nrecommendations in your report and the comments on certain\npoints in the response of the Department of Health Care Services\nof the State of California.\nWe appreciate the opportunity to review and comment on your\ndraft report and welcomed your suggestion that the appropriate\nState officials be afforded the same opportunity.\nSincerely yours,\nJames F. Kelly\nAssistant Secretary, Comptroller\nEnclosure\n49\nAPPENDIX I\nAPPENDIX I\nPage 2\nPage 3\nCOMMENTS ON DRAFT REPORT\nOF THE GENERAL ACCOUNTING OFFICE\nthe appropriate avenue for the single State agency administering\nthe Medi-Cal program to follow (in this case, the Department of\nPROBLEM AREAS RELATING TO NURSING HOME CARE AND PRESCRIBED\nHealth Care Services) is outlined in the Medicaid regulations.\nDRUGS UNDER THE MEDICAID PROGRAM IN THE STATE OF CALIFORNIA\nSpecifically, if a home is found not to be in substantial compliance\nwith the standards for payment for skilled nursing homes that\nhome may not receive Medicaid payments. If the home is found to\nThe draft report by the General Accounting Office is an evalu-\nbe in substantial compliance (i.e., is in compliance except for\nation of the extent to which problems identified in 1966, in\ndeficiencies), the State agency may permit the home to participate\nthe provision of care to nursing home patients in California\nfor a period of 6 months provided there is reasonable prospect\nunder the medical assistance to the aged program, have been\nthat the deficiencies can be corrected within that time and that\ncorrected or persist under Medicaid. On the basis of the find-\nthe deficiencies noted do not jeopardize the health and safety of\nings reported by GAO, we agree that problems warranting the\nthe patients. No more than two successive six month agreements\ncareful attention of the State agency and the Department of\nmay be executed with any one home and no second agreement may be\nHealth, Education, and Welfare continue to exist in many of the\nexecuted if a previous deficiency continues unless the facility\nareas examined.\nhas made substantial effort and progress in correcting the\ndeficiency.\nFollowing are our comments on each of the matters discussed in\nthe draft report.\nIf properly implemented, the HEW regulations governing the certi-\nfication of skilled nursing homes to participate in the program\nSTANDARDS OF CARE IN NURSING HOMES\nare sufficient to correct the weaknesses relating to standards\nof nursing home care pointed out in this report. The draft report\nThe GAO reports, on its review of the maintenance of standards\nbrings to our attention matters which suggest that there may be\nin skilled nursing homes, findings which clearly indicate prob-\nsome misunderstanding on the part of the State agency of the\nlems in this area. The report correctly points out that HEW has\nprovisions of certain Federal requirements relating to eligibility\nimposed upon States, standards for facilities and services which\nof nursing homes to provide service and receive payments under the\nmust be met by nursing homes to participate in the Medicaid\nprogram. SRS Regional Office staff will discuss these findings\nprogram. Final regulations to implement Section 1902(a (28) of\nwith officials of the State agency in an effort to clarify the\nthe Social Security Act - relating to standards for skilled\nregulations.\nnursing homes - were published in the Federal Register on\nApril 29, 1970 (45 CFR 249.33); the interim regulations were\nCONTROLS OVER MEDICATIONS AND TREATMENT FOR MEDICAID PATIENTS\npublished on June 24, 1969.\nIN NURSING HOMES\nThe draft report seems to emphasize licensing violations noted\nWe agree that California Department of Public Health inspections\nby the California Department of Public Health inspections. While\nof nursing homes - which are made on behalf of the Department of\nmeeting licensing standards is one of the prerequisites for partic-\nHealth Care Services for Medicaid certification purposes - should\nipation in the program, a skilled nursing home may meet State\nascertain that all State and HEW requirements relating to drugs\nlicensure requirements but nevertheless not be qualified to\nare met. We plan to discuss this point with State officials in\nparticipate in the program because of a failure to meet HEW stand-\nconnection with Medicaid skilled nursing home standards and\nards for certification of eligibility to provide services to\ncertification.\nMedicaid patients.\nOn the basis of the facts reported, continued effort to improve\nA revocation of a facility's license would make the facility\ncontrols over prescribing and dispensing of drugs for nursing\nineligible to participate in the Medicaid program. While\nrevocation may be the appropriate action for the State's purpose,\n50\n51\nAPPENDIX I\nAPPEND IX I\nPage 4\nPage 5\nhome patients appear warranted. We note that in its comments\n[sic]\non the GAO draft report, the Department of Health Care Services\nagrees with this point and is in the process of developing\nHEW regulations require that long-term care be authroized only\nrequirements to be adopted in regulations.\nafter joint consideration by the physician and the social worker\nof the pertinent medical and social factors, including considera-\nSUPPLEMENTAL PAYMENTS TO NURSING HOMES FOR MEDICAID PATIENTS\ntion of alternative arrangements for the patient's care. Also,\nwe note in the State's comments on the GAO draft reports that a\nThe GAO draft report establishes that problems still exist with\nplan is being considered to make a social evaluation of Medi-Cal\nrespect to (1) improper supplemental payments being demanded or\nnursing home placements within 30 days after admission. Full\naccepted from relatives of Medi-Cal recipients and (2) the handling\nimplementation by the State of the HEW requirement for prior\nof patients' personal funds.\nmedical-social evaluation should, if properly carried out, minimize\ninstances where facilities are not appropriate to the needs of the\nWe concur in the suggestion that information on services covered\npatients.\nby program payments and restrictions on additional payments be\nprovided to relatives and other interested parties. We note that\nTRANSFERRING PATIENTS BETWEEN NURSING HOMES\nthe State agency has adopted this suggestion and is preparing an\ninformational leaflet for this purpose.\nThe GAO review found that in a least 13 of 60 cases examined,\ntransfers of Medicaid patients from one home to another appeared\nWe concur also that better controls over the handling of patients'\nto have been made for the benefit of persons other than the patient.\npersonal funds by nursing homes is warranted. We plan to discuss\nIn the discussion of this problem in the draft report we found\nwith State officials the feasibility of establishing standard\nno mention of the involvement of the patients' caseworkers, and\nprocedures to be followed by the homes as well as appropriate\nassume, therefore, that no caseworker contact was found. Although\nsurveillance by the State.\nthe Handbook of Public Assistance Administration does not expressly\nrequire that the caseworkers be consulted before transfers of patients\nMISLEADING ADVERTISING BY NURSING HOMES OF PHYSICAL THERAPY FACILITIES\nare made - as it does in the case of initial admissions - we believe\nthat the intent of Federal policies relating to social services\nMisleading advertising on the part of nursing homes is to be deplored\navailable to patients strongly suggest that this should be done.\nand should receive the attention of appropriate State authorities.\nAccordingly, we agree that the Department of Health Care Services\nWe agree with the GAO suggestion that authorizations of transfer\nshould either assume the responsibility for policing advertising\nbe in writing and should state the reasons for transfer. We plan\npractices relating to Medi-Cal or see to it that such responsibility\nto recommend to the State that an interview with the patients by\nis specifically assigned to, and carried out by, some other State\ntheir caseworkers be required in each instance of proposed transfer\nagency on a systematic basis. In this connection, the State has\nand that the caseworkers make a written record of the reasons for\nadvised us that consideration will be given to greater case-detection\ntransfers.\nefforts; however, cost considerations must be weighed against the\nbenefits to be derived.\nCONCLUSIONS AND RECOMMENDATIONS\nWhile advertising practices such as shown in the GAO draft report\nGAO has recommended that SRS Regional representatives be given\nmight mislead a Medi-Cal recipient or his family, it is expected\ndirection and assistance for reviewing the manner in which State\nthat the patient's caseworker will be familiar with the conditions\nagencies are implementing Federal regulations relating to the\nand services in nursing homes in the area and will advise the\nquality of care being received by Medicaid patients in nursing\npatient and/or his family in any instance where such a situation\nhomes.\nis known to exist.\nRegional Office staff will be instructed to review with the\nCalifornia State agency, the several Federal regulations which\nFORD\n52\n53\nGERALD R.\nLIBRARY\nAPPENDIX I\nAPPENDIX I\nPage 7\nPage 6\nagent to detect irregular patterns of drug purchases over a\nrelate to the quality of care and discuss with them the applica-\nperiod of time. Such controls are implicit in SRS regulations\nbility of these regulations to the observations recounted in the\nrelating to utilization reviews by the States.\nreport. Since there appears to be a lack of full understanding\nof these regulations in California - as well as other States -\nCONCLUSIONS AND RECOMMENDATIONS\nwe are currently developing plans for visits by teams of both\nCentral Office and Regional staff to review current activities\nGAO recommends that SRS encourage the Department of Health Care\nand procedures of the State agencies and to provide consultation\nServices to institute additional procedures designed to ensure\non full implementation of the regulations. We plan such visits\nthat prescribed drugs are actually delivered for use of program\nin a few selected States within the next three months and will\nrecipients and that excessive quantities of drugs are not prescribed\nevaluate the desirability of extending them to all Medicaid States\nfor them.\non the basis of this experience.\nSRS Program Regulation 40-9 issued in March 1969 requires State\nGAO recommends also that SRS impress upon responsible State\nagencies to institute procedures for review of utilization of\nofficials the importance of clarifying the respective responsi-\nservices, including drugs, and to safeguard against over-\nbilities and authority of the various State and county agencies\nutilization. This regulation, if adequately implemented, should\ninvolved in the administration of the Medicaid program.\nmeet the problem of assuring that excessive quantities of drugs\nare not prescribed and should contribute substantially to a system\nThe report indicates that the Department of Health Care Services\nof controls over claims and payments designed to assure that\nis the single State agency responsible for administering the Medi-\nservices purchased are actually delivered. We have asked SRS\nCal program and is assisted by the Department of Public Health\nRegional staff to review with the State the status of implementation\nand the Department of Social Welfare. We agree that the single\nof this regulation and its applicability to the problems raised in\nState agency should assure itself that the employees of the\nthe GAO draft report.\nassisting agencies (such as inspectors, Medi-Cal Consultants, and\ncaseworkers) are fully aware of the responsibilities which have\nIn connection with the above recommendation, GAO has suggested\nbeen established. In this regard, we will discuss the issues\nthat the State should require persons - receiving and signing\nraised by GAO with the State agency.\nfor prescribed drugs on behalf of program recipients - to clearly\nindicate on the prescription forms their identity and capacity or\nGAO has recommended further that the matters in their report be\nauthorization for acting on behalf of the recipients.\ndiscussed with officials of the Department of Health Care Services\nand the SRS Regional representatives assist them in action needed\nWith respect to this suggestion, we note in the State agency's\nto ensure correction of these practices. The action suggested\nresponse to the GAO report that they do not consider this\nby this recommendation will be taken; if discussions reveal a need\nprocedure to be appropriate and that they have designed a new\nfor assistance by the Division of Management Information and Pay-\npharmacy billing form as a part of an improved system of computer\nment Systems or the Division of Technical Assistance and Training\ncontrols over claims processing. We plan to review the new bill-\nof the Medical Services Administration, SRS, such assistance will\ning form and determine whether further action, possibly as suggested,\nbe made available.\nis necessary.\nCONTROLS OVER PAYMENTS FOR PRESCRIBED DRUGS\nThe GAO draft report identifies problems relating to excessive\nquantities of drugs being prescribed and prescribed drugs being\npurchased which may not have been delivered for the recipient's\nuse. We agree that controls must be instituted by the fiscal\nFORD\n54\n55\nGERALD\nLIS8487\nAPPENDIX II\nAPPENDIX II\nPage 1\nPage 2\nSTATE OF CALIFORNIA-HUMAN RELATIONS AGENCY\nRONALD REAGAN, Governor\nDEPARTMENT OF HEALTH CARE SERVICES\nMiss Gene Beach\n-2-\n714 STREET\nMarch 4, 1970\nSACRAMENTO, CALIFORNIA 95814\nMarch 4, 1970\nDenial of care to the program's beneficiaries because of nursing homes'\ndeficiencies in meeting standards for participation cannot be accomplished\nby evading due process of law. In today's legal climate, a Medi-Cal\nconsultant cannot act in an arbitrary or capricious manner to remove or\nMiss Gene Beach\nrestrict a provider's livelihood. To expect a Medi-Cal consultant to\nAssociate Regional Commissioner\nact in an injudicious manner in this regard, is to oversimplify a number\nMedical Services Administration\nof very complex problems, and would serve only to abridge the legal\nSocial and Rehabilitation Services\nrights of providers. Actions contemplating revocation of licenses or\nDepartment of Health, Education and Welfare\nculminating in program suspensions must similarly consider the legal\n50 Fulton Street\nrights of providers of services.\nSan Francisco, California 94102\nThe removal of patients from a nursing home is not a function of the\nMedi-Cal program. Rather, the disapproval of an authorization request\nDear Miss Beach:\nby the Medi-Cal consultant for nursing home placement or continued care\nis a denial of payment for services which are judged to be not medically\nThis is in response to your letter of February 10, 1970, concerning the\nnecessary or not covered by the program.\nGeneral Accounting Office draft report to Congress of the Review of\nActions Taken to Improve Practices in Providing Nursing Home Care and\nConcerning control of medications being administered to program benefi-\nControlling Payments for Prescribed Drugs for Medicaid Recipients in\nciaries in nursing homes, despite our efforts and those of the State\nthe State of California.\nBoard of Pharmacy, we are still dissatisfied with the handling of drugs\nin many of these facilities. The present method is a mixed-breed system\nThis Department has expended considerable effort, with varying degrees\nwhich ineptly combines the method of dispensing drugs for patients at\nof success, to solve the problems set forth in this review. We under-\nhome with methods used for patients in hospitals, and as it has developed,\nstand however that many of these same problems exist in other Medicaid\nhighlights the worst features of each. The Department is in the process\nprograms throughout the country, and have proved difficult or impossible\nof developing its own detailed program requirements for prescribing and\nto solve.\ndispensing drugs in nursing homes and plans to adopt these requirements\nby regulations.\nThe review indicates that the State has failed to set forth in its state\nplan criteria for evaluating the adequacy of care provided in nursing\nThe draft suggests strengthening of the requirement for persons receiving\nhomes. Aside from staffing standards and requirements relating to\nprescribed drugs to sign for them and indicate their identity and autho-\nequipment and structure, standards relating to the adequacy of care are\nrization to act on behalf of the recipient. Our experience has been that\nat best intangible and difficult to define for a spectrum of patients.\nthe requirement for signature on receipt of drugs has been irritative and\nThe Department will conduct on site review of patient care programs as\nnon-productive. This is why this requirement was not designed into a\nit implements the Medical-Social Review Team requirements set forth in\nnew pharmacy billing form recently developed by the Department. The new\nthe 1967 amendments to the Social Security Act. It must be recognized,\nform, however, does call for certification by the pharmacy that the services\nhowever, that time must be allowed, along with a considerable amount\nwere provided. In addition, this new form has been designed to permit\nof effort, to bring about the effective operation of this process. The\nimproved claims processing by computerized techniques, and review of\nscope of this undertaking in California is formidable since there are\npharmacy claims that are not within designated parameters.\nmore than 1,200 nursing homes providing services to almost 48,000 program\nbeneficiaries.\nWith regard to supplemental payments for nursing home care, the draft\nreport sets forth a valid suggestion to circularize information to\nIn an effort to strengthen the effective functioning of the Medi-Cal\ninterested persons concerning the program's role in payment. Immediate\nconsultants throughout the State, the Department is in the process of\naction is being taken to develop a leaflet concerning Medi-Cal's nursing\nof formulating standards for the operation of the many consultant units\nhome benefits. A draft copy of the proposed leaflet is attached for\nat county levels. On adoption and promulgation of these standards, it\nyour convenience. (See GAO note.) As to control by direct surveillance,\nis anticipated that a more uniform and more effective application of\nthe feasibility of doing this on a large scale is obviously limited by\nthe program's policies, rules and regulations will result.\nthe number of program beneficiaries currently in nursing homes.\nGAO note: Draft copy of proposed leaflet is not reproduced\nhere.\n56\n57\nAPPENDIX III\nAPPENDIX II\nPage 3\nPRINCIPAL OFFICIALS\nMiss Gene Beach\n-3-\nMarch 4, 1970\nOF THE\nDEPARTMENT OF HEALTH, EDUCATION, AND WELFARE\nPreliminary discussions have been initiated about a plan to institute\na social evaluation of all Medi-Cal nursing home placements within 30\nHAVING RESPONSIBILITY FOR THE ACTIVITIES\ndays of admission. This would encompass an explanation to the patient,\nhis family and relatives, and the facility, as to the program's\nfinancial responsibilities, and alert all concerned about the prohibition\nDISCUSSED IN THIS REPORT\nagainst supplemental payments for program covered services.\nCurrent regulations incorporate provisions against unlawful and unethical\nadvertising and have significantly reduced this problem. Here again,\nTenure of office\nhowever, the Department is faced with the practicality of direct surveil-\nFrom\nTo\nlance of advertising material in all media. Consideration will be given\nby the Department to greater case-detection efforts, but the cost factor\nof doing this must be weighed against the return and the low incidence\nSECRETARY OF HEALTH, EDUCATION,\nof this problem.\nAND WELFARE:\nAs indicated in the draft report, a regulatory requirement for authorization\nElliot L. Richardson\nJune\n1970\nPresent\nof nursing home transfer of patients is in effect. The major problem of\nRobert H. Finch\nJan.\n1969\nJune\n1970\nmass transfers and bartering of patients between nursing home facilities\nWilbur J. Cohen\nMay\n1968\nJan.\n1969\nhas been eliminated, and there have been almost no instances brought to\nour attention of patients being moved against their wishes. When these\nJohn W. Gardner\nAug.\n1965\nMay\n1968\nhave been brought to our notice, investigative actions have been undertaken.\nHere too, clear definitions of circumstances under which transfers may be\npermitted are difficult in the face of the federal requirement for free-\nADMINISTRATOR, SOCIAL AND REHA-\nchoice of provider of service.\nBILITATION SERVICE:\nJohn D. Twiname\nMar.\n1970\nPresent\nThe Department recognizes the potential benefits of establishing beneficiary\nMary E. Switzer\nAug.\n1967\nMar.\n1970\nprofiles, and as the availability of more sophisticated computer equipment\nand programming techniques permits, this will be pursued. Such an under-\ntaking will be costly however, and consideration must be given to establishing\npriorities in accordance with program needs. The feasibility of such profiles\nwill be the subject of intensive study in the course of operating the proto-\ntype system of claims handling recommended by the Lockheed Missiles and Space\nCorporation.\nWe appreciate the opportunity to review and comment on this draft report,\nand we concur in the identification of the problem areas. Nevertheless, the\nnearly four years of operation of this program have incontrovertibly established\na Title XIX axiom; that the many problems inherent in this and other Medicaid\nprograms are more readily identified than solved. We will continue to\nwelcome workable suggestions for program improvements, and we will be keenly\ninterested in learning of successful solutions in other states to the kinds\nof problems reviewed in this draft report.\nSincerely, Director Designate\nfor\nCAREL E. H. MULDER\nDirector\nAttachment\nU.S. GAO, Wash., D.C.\n59\n58\nFrom\nBARBER B. CONABLE, JR.\nU. S. HOUSE OF REPRESENTATIVES\nFOR RELEASE\n35th District, New York\nTuesday, March 26, 1974\nWashington, March 26 -- Representative Barber B. Conable (35th Dist., N.Y.)\ntoday proposed establishment of a new program of long-term care for the elderly\nthat would provide alternatives to institutionalizing persons by expanding the types\nof care available to the elderly. In a measure introduced in the House today the\nCongressman called for a system of community long-term care centers in every area\nto coordinate and direct long-term care services for the elderly, including home-\nmaker, health, nutrition, and day care, as well as institutional care.\n\"There is a tremendous need to provide broader and more flexible. care than is\npresently available to elderly citizens who need it,\" the Congressman declared in\nexplaining his proposal. \"There is too great a reliance on placing people in insti-\ntutions today when many of them could be cared for better in other surroundings,\nincluding their own homes. In too many cases what we are doing amounts to incar-\nceration rather than considerate care. This is a major concern among senior citi-\nzens.\n\"A broader, coordinated system could better serve older people without comparable\nincreases in cost,\" the Congressman insisted. \"Since government programs pay for -\nlong-term medical care but not non-medical care, a great many of the elderly who\nneed only a modest degree of assistance are being placed in medical facilities which\nare the most costly to maintain. We need other realistic alternatives.\"\nThe system proposed by Mr. Conable would be administered by state long-term\ncare agencies through community long-term care centers. The centers would be gov-\nerned by a board comprised at least in half of people eligible for benefits. The\ncenters would determine the kind of care required in consultation with each indi-\nvidual and family.\nFinancing of the program would be by a $3 monthly premium paid by those who\nenroll and the remainder contributed by state and federal governments. These\nwould not be completely new costs, according to the Congressman, because many of\nthe services provided would replace those presently furnished through the more\ncostly medicare and medicaid. State and federal governments presently spend more\nthan $4 Billion annually under these two programs for long-term care.\n*****\nGERALD:\nEXCEPTIVE CHANDER\nHUGH L. CAREY, GOVERNOR\nRobert Laird, Press Secretary\n518-474-8418\n212-977-2716\nFOR RELEASE:\nIMMEDIATE, FRIDAY\nJANUARY 10, 1975\nExecutive Chamber\nEXECUTIVE ORDER NO. 2\nEXECUTIVE ORDER\nWhen public funds are channeled through private hands to\nfinance health and residential services, government must insure\nthat those funds are used honestly and efficiently in the promotion\nof the public welfare. The compassionate purpose of programs of\nresidential and health care must not be subverted by the improper\ndiversion of public funds for private benefit, nor through the\ninability of government to control the use of such funds under\npresent regulatory structures.\nA serious public concern has been expressed as to the quality\nof care provided by nursing homes and residential facilities sheltering\nthe aged, the disabled, the mentally ill and retarded, receiving public\nfinancial assistance and subject to supervision by State agencies, but\nowned by private interests.\nState government is deeply involved in the supervision of such\nfacilities, but the public has lost confidence in the methods through\nwhich government finances these facilities, and in the government's\nability to assure the efficient delivery of health and related services.\nIt is necessary, therefore, that there be an official inquiry\ninto the mechanisms of State and Federal funding, particularly\nreimbursement under the Medicaid system. Current methods of funding\nmust be evaluated to determine if they contribute to exploitation of\nthe poor, aged, and infirm and to profitecring in public funds.\nIn addition, the State regulatory structure must be evaluated\nto insure that nursing homes and homes which shelter the aged and\ndisabled provide the highest quality of care with the greatest degree\nof economy.\nThis inquiry must also look into the ownership, finn sing and\ncontrol of nursing homes and residential facilities and must thoroughly\nexamine any allegations of improper conduct by publicly elected of ficials\nor members of their staffs with respect to the operation of State\nagencies charged with the responsibility of regulating these institutions\nNow, therefore, I, Hugh L. Carey, pursuant to Section Six of\nthe Executive Law, have appointed and by these present du appoint\nMorris B. Abram as Commissioner to study, examine, investigate, review\nFORD LIBRARY ''d GERALD\nand make recommendations with respect to the management and affairs of\nany department, board, bureau, or commission of the State exercising any\ndirection, supervision, visitation, inspection, funding or control of\nany non-governmental nursing home, residential facility or home which\nprovides health, residential or allied services, and which receives\nany Federal, State or local financial assistance or payment, directly\nor indirectly, or which provides care or services to any individual\n-2-\nThe Commissioner is hereby empowered to subpoena and enforce\nthe attendance of witnesses, to administer oaths and examine witnesses\nunder oath and to require the production of any books, records or\npapers deemed relevant or material and I hereby give and grant to the\nCommissioner the powers and authorities which may be given or granted\nto persons appointed by me for such purpose under authority of\nSection Six of the Executive Law.\nEvery State department, division, board, bureau, commission,\ncouncil and agency shall provide to the Commissioner every assistance,\nfacility and cooperation which may be proper or desirable for the\naccomplishment of the purposes for which the Commissioner is hereby\nappointed.\nGIVEN under my hand and the\nPrivy Seal of the State at the\nCapitol in the City of Albany\nthis tenth\nday of\nJanuary, in the year of our\nLord one thousand nine hundred\nseventy-five.\nBY THE GOVERNOR\n/s/ Hugh L. Carey\nSecretary to the Governor\n/s/ David W. Burke\nFORD is LIBRARY GERALD\nPROPOSED QUESTIONS TO BE PRESENTED TO THE MORELAND COMMISSION\nFOR INCLUSION IN THEIR STUDY OF THE NURSING HOME INDUSTRY IN NEW YORK STATE\n1. Based upon the current cost of inpatient care in proprietary nursing\nhomes in upstate New York which is approximately $30 per patient per day,\nwould the commission conclude that this cost is excessive taking into\naccount the fact that the cost for voluntary nursing homes in upstate\nNew York is approximately $35 per patient day and the cost of a moderate\nhotel room in New York City is $40 per day, where nursing homes provide\n24 hour nursing care, meals, etc.\n2. It has been suggested in the media that some or all professional employee\nin nursing homes such as physicians, nurses, aides, dieticians, physical\ntherapists, etc. are improperly caring for patients. Would the commission\nconclude that if this were the case, that the same professional employees\nwho work in hospitals and state medical facilities are not doing the same job\n3. It has been suggested by governmental officials that the cost of caresin\nnursing homes is excessive, clearly leading one to the conclusion that\nonly this one segment of the health care industry is. responsible for high\ncosts. Taking into account the high costs of inpatient hospital care and\nthe cost of care in state facilities, would the commission conclude that\nonly one segment of the health care industry would be responsible for\nexcessive cost when all inpatient providers are reimbursed basically under\nthe same formula?\n4. Does the commission believe that the regulatory authorities in New York\nstate regarding reimbursement (New York Health Department) should have a\nuniform reporting system (i.e. chart of accounts and specific guidelines\nfor allowable cost) which would clearly deliniate what types of expenses\nit considers allowable; or should the authorities continue under the current\nsystem whereby each facility is left on its own to make its determinations\nand then upon audit is told in many instances that certain expenses may\nretroactively be declared not allowable?\n5. Does the commission believe that field auditors who are paid solely\nto find fault and make on-the-spot decisions should have these decisions\nfinal or should the facility have the right to appeal?\n6. Can the commission determine the basis for governmental authorities who\nhave approved programs for construction under the New York State Article 28A\nand 2SB construction program that have allowed facilities to be built and\nequipped at costs from 25% to 125% above the cost allowed to proprietary\nfacilities, where it is clear under state and federal statutes that the level\nof care, staffing and space requirements are identical? The state then uses\nfederal funds to pay back these higher costs as well as tax free interest\non bonds to investors who bought the bonds in the first place.\nGERALD FORD VIBRARY\n7. Can the commission determine why the New York State Health Department\nhas consistently allowed many non-profit facilities, staff and equ pment\nfar greater than that allowed for proprietary facilities thereby clearly\ndiscriminating against patients in proprietary facilities, apparently in\nviolation of the law?\n8. Can the commission determine why the New York hate Health Department\ngroups non-profit facilities separately from proprictary facilities for\nreimbursement purposes? Could it be that the higher cost of these\nfacilities due to exorbitant construction costs and higher operating costs\ncan more easily be hidden and then reimbursed without comparing the non-\nprofit operation to proprietary operation in terms of cost of operation?\n9. Can the commission explain or justify the higher and fully reimbursable\nconstruction and operational cost in non-profit facilities particularly\nthose funded under the 28A program? Does not this higher cost directly\naffect the total Medicaid dollar thereby requiring the state to stringently\ncontrol the cost on other facilities because the higher dollar value paid\nfor construction takes away from direct patient care?\n10. Can the commission explain why the New York Health Department changes\nPart 86 without notice and without hearing? Specifically, last year a\nmajor change occurred in computing reimbursement for movable equipment\nwith a ceiling being established with no notice given which would appear\nto be a violation of Part 86.21 (I) of the Health Department's own\nregulation.\n11. Can the commission justify the Health Department's right to penalize\na nursing home under Part 86. (C) to keep the nursing home's reimburse-\nment at the group average where facilities have \"significant operational\ndeficiencies\"? What is a significant operational deficiency? Who\ndetermines what it is, and what is the criteria? There is no guideline and\napparently this regulation is enforced indiscriminately.\n12. Can the commission explain why the public health council who legally\nhas the right to establish new operations on the basis of character, compe-\ntence and financial ability, does not apply and does not publish what\ncriteria this council uses in making a determination? The record clearly\nshows that non-profit and voluntary sponsors obtain approval in 2 to 4 months\nand proprietary sponsors take a year or more to obtain approvals, and one\nwonders how the same criteria can be applied to both sponsors when\nproprietary sponsors must have all financial resources in hand when many\nvoluntary sponsors are regularly approved without having any financial re-\nsources other that what it can borrow from the state. Should not the criteri.\nfor all applicants be the same?' Should not there be a specific time period\nallowed for all applicants?\nGERALD FORD LIBRARY\n13. Can the commission explain why the Health Department takes 6 months\nto a year to schedule a hearing on applications thereby causing 2 nn ?\nyear delays in projects?\n14. Why does the Health Department add to all of its letters requesting\ninformation that the applicant has 30 days to answer \"or else\" when the\nHealth Department itself many times does not act for 2 years?\n15. Can the commission explain why the media believes that facilities\nwho are reimbursed for their legal expenses in bringing actions against\narbitrary state decisions should not continue to be reimbursed as legitimate\nexpenses, or would the commission believe that the Health Department itself\nin many instances is the cause of these legal expenses because of delays,\narbitrary decisions and little or no guidelines in the decision making\nprocess? It would appear that if the commission determines that these legal\nexpenses were not to be reimbursed, then the commission should also\nrecommend that in instances where governmental officials take actions which\nare overturned in the courts, that the commissioner of the department or\nthe governor should become individually liable for these legal bills in\ndefending arbitrary state action without the tax payers. having to pay\ntaxes to pay for these legal bills on behalf of the state.\n16. Can the commission explain why the State Health Department Bureau of\nHealth Economics does not publish a guideline determining exactly what are\nconsidered allowable costs (somewhat like IRS). Under the current\nsituation field audits are conducted subsequent to expenses being incurred\nand requests for facilities to reimburse the government for non-allowable\ncosts are made 2 or 3 years later. In many instances these costs were\nconsidered allowable by the auditor for the facility and then thrown out\nby the state. It has also been suggested that interest and penalties be\nincurred on the amounts considered due to the state and that would be\njustifiable only if the state would agree to pay interest and penalties\non moneys owed to facilities from both Medicare and Medicaid which are\noverdue.\n17. Can the commission explain the anomaly which exists between the Bureau\nof Health Economics and the regional survey teams where one agency is\ncharged with controlling the cost and the other agency is charged with\nimproving and increasing care? There appears to be no correlation between\nthese agencies as to what costs are involved in doing the job.\n18. Can the commission explain why the Health Department does not publish\nstandard definitions of what it considers to be direct care nursing hours?\nEach regional office appears to work with a different definition.\nGERALD FORD LIBRARY\n19. Can the commission explain why current regulations promulgated by the\nNew York Health Department are replete with phrases such as \"as the\ndepartment shall require\"? Should not the department stipulate wt\nrequirements are rather than leave it open to ununiform. interpretation?\n20. Can the commission explain why federal and state agencies have not\nbeen able to put a dollar value on new regulations which have been\neffective since December 1973? These regulations have had a tremendous\nimpact on cost, yet the agencies who promulgate these regulations do not\nchose to believe that there is any cost involved and facilities were\nrequired to comply with these regulations during the federal government's\neconomic stabilization program, and in many instances were not reimbursed.\n21. Is the commission aware that many nursing homes must pay lower wages\nto many employees than hospitals or voluntary nursing homes who have\nallowed their facilities to become organized by labor unions. If a\nfacility wishes to increase employee benefits, it must incur the cost,\nthen request an appeal from the Health Department, where as if a facility\nbecomes organized by a labor union, an immediate increase is given to\nthat facility. Of course, it becomes apparent that there is no collective\nbargaining because the labor unions are aware that whatever demands they\nmake will be paid for by the state and that there is no true collective\nbargaining.\n22. Can the commission explain why the Department of Mental Hygiene in\n1971 restricted admissions to state mental facilities to people who were\n65 and under thereby forcing the group 65 and over who had psychiatric\nproblems to be admitted to nursing homes who in many instances were not\nprepared to accept these types of patients?\n23. Is the commission aware that nursing homes can be considered\ndeficient by federal and state regulation if the attending physician does\nnot see the patient every 30 days, but that the facilities have no control\nto force physicians to comply with this regulation? The same situation\nexists regarding the prescribing of drugs.\n24. Can the commission explain why commissioners of social services\nregularly admit patients who need intermediate or skilled care to\nproprietary homes for adults where the patients do not receive adequate\ncare.\n25. Can the commission explain why members of boards of governors of many\nvoluntary facilities conduct business with their own facilities?\n26. Does not the commission believe it is illegal for an employee or owner\nof a nursing home to contact his congressman, senator or other elected\nofficial in order to discuss a problem which may be effecting his liveli-\nhood, or should personnel who work or own nursing homes be exempt from this\nconstitutional privilege?\nGERALD FORD LIBRARY\n27. Does the commission believe that because many legal suits have been\nbrought by institutions involved in health care against governme\nagencies and won these legal suits, that these facilities have hired better\nlawyers, or could it possibly be that these facilities were correct in\nfighting arbitrary governmental decisions?\n28. It would appear that the charge of this commission is to look into the\nnursing home component of the health care industry. As we are all aware,\nthe health care industry includes physicians, dentists, hospitals, nursing\nhomes, laboratories, etc. Can this commission explain why the nursing\nhome component is being isolated when the same personnel are involved in al\nsegments of the health care industry? Could it also be concluded that\nproblems which exist in nursing homes also exist to the same extent in\nhospitals, state facilities, etc. ?\nFORD & LIBRARY 938870\nWHER EAS, the nursing home profession in the State of New York\nis involved in numerous investigations; Federal, state and\nlocal, both criminal and civil, and\nWHEREAS, the Governor of the State of New York has appointed a\nspecial commission known as the Moreland Commission to\ninvestigate alleged abuses and practices in the nursing home\nfield including but not limited to; financing of construction,\nownership and sponsorship of facilities, provision of medical,\nnursing, rehabilitative and other services, and the methods\nof financing the same, and said Commission has been charged\nwith the task of recommending corrective legislation and,\nWHEREAS, as set forth in the Moss Reports it is recognized that the\nproblems described in the State of New York are characteristic\nof those which may prevail in the nation as a whole and,\nWHEREAS, resulting legislation will have a strong impact upon,\nand possibly serve as a model for, similar legislation nationally,\nboth Federal and State and,\nWHEREAS, the American Nursing Home Association is the\nappropriate body to assume a leadership role in the formulation\nand presentation of constructive approaches in shaping\nlegislative proposals which are the lifeblood and future of long-\nterm care as it is known today,\nNow therefore, it is hereby unanimously resolved by the Board of\nDirectors of the New York State Health Facilities Association, Inc.\nthat the American Nursing Home Association be requested to\nassist the New York State Health Facilities Association, Inc.,\nboth financially and administratively, in the preparation and\npresentation of those points of view, and legislative and financial\nproposals which will advance and enhance the delivery of high\nquality patient care while assuring reasonable and efficient\nexpenditure of public funds.\nFORD is LIBRARY GERALD\nIIC\nStein 0 Panal's Rive\nFor the Homes\nBy ROBI RTA B. GRATZ\nleagth and non-arms length ment in-defined in the Health\nThe Stein Commission to.\nreal property transactions Coleara 10 persont or 103\nday recommended five\nand instead using a historic ownership intere :. said com-\ncost for reimbursement. This mission executive director\nchanges in the state's nurs-\nproposal would imore all Terrence Mom. who wrote\nFORD & LIBRARY GERALD\nIIE2\nNew YoRK Post 2/18/75\nHEALTH of ENGINEERS\nFrom\nTHE LEGISLATIVE INDEX COMPANY\nFebruary 11, 1975\n100 So. Swan St., Albany, N.Y.\nAssembly 3253\nBy Mr. Stein\nAN ACT to amend the public health law, in relation to the bidding and letting of\ncontracts with respect to health facilities\nSection 1. Article one of the public health law is hereby amended by adding thereto\na new title, to be title three to read as follows:\nTITLE III\nBIDDING AND LETTING OF CONTRACTS FOR HEALTH FACILITIES\nSection 100. Declaration of policy.\n101. Definitions:\n102. Public bidding.\n102-a. Exceptions to public bidding.\n103. Qualifications of bidders.\n104. Advertising for bids.\n105. Statement of non-collusion.\n106. Conspiracies to prevent competitive bidding.\n$100. Declaration of policy. It is hereby found, declared and determined that\nhospitals and other health facilities of the state are of foremost concern and essent-\nial in providing comprehensive care and treatment for the ill and infirm, both physical\nand mental, and are thus vital to the protection and the promotion of the health, wel-\nfare and safety of the people of the state of New York.\nIt is further declared to be the policy of this state that this article shall be\nconstrued in the negotiation of contracts for works and purchases to which any health\nfacility is a party so as to assure the prudent and economical use of public moneys\nfor the genefit of all the inhabitants of the state and to facilitate the acquisition\nof facilities and commodities of maximum quality at the lowest possible cost.\n$101. Definitions. 1. \"Board\" shall mean the board of trustees or board of directors\nin control of a health facility.\n2. \"Commissioner\" shall mean the commissioner of health of the state of New York,\n3. \"Construction\" shall mean site axquisition, planning design, erection, building,\nalteration, reconstruction, renovation, improvement, extension, enlargement, replace-\nment or modification and the inspection or modification thereof.\n4. \"Health facility\" shall include, but not be limited to, general hospitals,\npsychiatric hospitals, tuberculosis hospitals, ambulatory hospitals and centers,\nchronic disease hospitals, nursing homes, extended care facilities, dispensaries and\nlaboratories and any other related facilities, and any combination of the foregoing,\nboth public and private, participating in the state medicaid program\n5. \"State\" shall mean the state of New York.\n$102. Public bidding. Any contract let by a health facility for works or purchases\nshall be publicly let to the lowest responsible bidder furnishing the required secur-\nity after advertisement for sealed bids in the manner provided by section one hundred\nfour.\n$102-a. Exceptions to public bidding. 1. Section one hundred two does not apply to\nsituations otherwise experssly provided for by an act of the state legislature or by\na local law adopted prior to September first, nineteen hundred seventy-four.\n2. Section one hundred two does not apply to situations where the cost of a contract\ndoes not exceed five thousand dollars for works or one thousand five hundred dollars\nfor purchases.\n3. Section one hundred two may be waived by the board in situations where competit-\nion is so limited that it would be impracticable or detrimental for the health facility\nto comply with the public bidding requirements of that section. However, at no time\nshall the toard act in an arbitrary or capricious manner.\n4. Section one hundred two may be waived upon the adoption of a resolution by a un-\nanimous vote of the board. Such a resolution should contain a full explanation of the\nreasons for its adoption. All purchases made pursuant to such a resolution shall be\nsubject to audit and inspection by the commissioner.\n5. Section one hundred two may be waived in the case of a public emergency erising\nout of an accident or other unforeseen occurence or condition whereby circumstances\neffecting a health facility or the life, health, safety or property of patients or\nemployees therein require immediate action and cannot await competitive bidding. In\nthese situations contracts for works or the purchase of supplies, material or equip-\nment may be let by the appropriate officer, board or agency of the health facility.\nNotice of such action should be filed with the commissioner not later than two weeks\nafter validation of the contract.\nGERALO, FORD ARABARY\nIIFIa\nsp\nPage 2 - Assembly 3253 - HEALTH - ENGINEERS\n6. Surplus and second hand supplies, anterial or equipment may be purchased from\nthe federal or state government, or from any other political subdivision or district,\nwithout competitive bidding.\n7. The exceptions of section one hundred two-a are not applicable to situations\nwhere they are employed to result in a contract that enables an interested member of\nthe board to reap financial gains.\n$103. Qualifications of bidders. 1. A health facility may make rules and regulations\ngoverning the qualifications of bidders entering into such a contract where the cost\nof such a contract exceeds twenty-five thousand dollars. The bidding may be restricted\nto those who shall have qualified prior to the receipt of bids according to standards\nfixed by the health facility, provided however, that notice or notices for the sub-\nmission of qualifications shall be published in an appropriate trade journal publish-\ned in the city, county or state, or, if no such journal exists, in a newspaper with\na general circulation in the city or county concerned, at least once. This publica-\ntion should be not less than ten days prior to the date fixed for filing of qualifi-\ncations.\n2. Each contract for the construction of a health facility may include a provision\nthat the architect who designed the facility, or the architect or engineer retained or\nemployed specifically for the purpose of supervision, shall supervise the work to be\nperformed through to completion and shall see to it that the materials furnished and\nthe work performed are in accordance with the drawings, plans, specifications and\ncontracts thereof.\n$104. Advertising for bids. 1. Advertisements for bids shall be published in a\nnewspaper or trade journal designed for such purpose. Copies of all such advertise-\nments shall be filed with the Commissioner. Such advertisements shall contain a state-\nment of the time when and place where all bids received pursuant to such notice will\nbe publicly opened and read. The board seeking such bids may by resolution designate\nany officer or employee to open the bids at the time and the place specified in the\nnotice. Such designee shall make a record of such bids in such form and detail as\nthe board shall prescribe and present the same at the next regular or special meeting\nof such board. All bids received shall be publicly opened and read at the time and\nplace so specified. At least five days shall elapse between the first publication of\nsuch advertisement and the date so specified for the opening and reading of bids.\n2. In any case where a responsible bidder's gross price is reducible by an allow-\nance for the value of used machiner, equipment, apparatus or tools to be traded in by\nthe health facility, the gross price shall be reduced by the amount of such allowance,\nfor the purpose of determining the low bid.\n3. In cases where two or nore responsible bidders submit identifical bids as to\nprice, such officers or board may award the contract to any of such bidders. Such\nofficer or board should not reap personal financial gain from the ensuing contract.\nSuch officer or board may, in his or its discretion, reject all bids and readvertise\nfor new bids in the manner provided in this section.\n$105. Statement of non-collusion. Every contract hereafter made or awarded by a\nhealth facility, pursuant to bid, for work or services performed or to be performed\nor for purchases, shall contain the following statement subscribed by the bidder\nand affirmed by such bidder as true under the penalties of perjury:\n(a) By submission of this bid, each bidder and each person signing on bohalf of\nmy bidder certifies, and in the case of a joint bid each party thereto certifies as\nto its own organization, under penalty of perjury, that to the best of knowledge and\nbelief:\n(1) The prices in this bid have been arrived at independently without collusion,\nconsultation, communication, or agreement, for the purpose of restricting competition,\nas to any matter relating to such prices with any other bidder or with any competitor;\n(2) Unless otherwise required by law, the prices which have been quoted in this\nbid have not been knowingly disclosed by the bidder and will not knowingly be disclosed\nby the bidder prior to opening, directly or indirectly, to any other bidder or any\no ther competitor; and\n(b) A bid shall not be considered for award nor shall any award be made where\nparagraphs one, two and three of subdivision (a) of this section have not been\ncomplied with; provided however that if in any case the bidder cannot make the fore-\ngoing certification, the bidder shall so state and shill furnish with the bid a signed\nstatement which sets forth in Cetail the reasons therefor. Where paragraphs one, two\nand three of subdivision (a) of this section have not been complied with, the bid\nshall not be considered for award nor shall any award be made unless the commissioner,\nor his designee, determines that such disclosure was not Dade for the purpose of\nrestricting competition.\nAR\nGERALD FORD LIBRARY\nIIFIf\nPage 3- Assembly 3253 - HEALTH - ENGINEERS\nThe fact that a builder (a) has published price lists, rates, thriffs covering\nitems being procured, (b) has informed prospective customers of proposed or pending\npublication of new or revised lists for such items, or (c) has sold the same items\nto other customers at the same prices being bid, does not constitute, without more,\na disclosure within the meaning of paragraph one of subdivision (a) of this section.\n6 106. Conspiracies to prevent competitive bidding. A person or corporation who\nshall wilfully, knowingly and with intent to defraud, make or enter into, or attempt\nto make or enter into, with any other person or corporation, a contract, agreement,\narrangement or combination to submit a fraudulent cr collusive bid, to refrain from\nsubmitting a bona fide competitive bid to any health facility on a contract for work\nor purchase which has been advertised for bidding, shall be guilty of a misdemeanor,\nand on conviction thereof shall, if a natural person, be punished by a fine not\nexceeding five thousand dollars or by imprisonment for not longer than one year, cr\nby both such fine and imprisonment, and if a corporation, by a flue not exceeding\ntwenty thousand dollars. An indictment or information based upon a violation of any\nprovision of this section must be found within three years after its commission.\n$ 2. This act shall take effect on the first day of September next succeeding the\ndate on which it shall have become a law.\nReferred to Health Com.\nGERALD LISSANY\n3r\nIIFIC\nHEALTH - INSURANCE\nFrom\nTHE LEGISLATIVE INDEX COMPANY\nFebruary 11, 1975\n100 So. Swan St., Albany, N.Y.\nAssembly 3254\nBy Mr. Stein\nAN ACT to amend the public health law and the insurance law, in relation to the\npromotion of efficiency in the delivery of health services\nSection 1. Legislative findings. The legislature hereby finds that a factor\ncontributing to the problems of some of the hospitals and health care institutions\nfacing severe financial crises in New York state is a lack of adequate and effective\nmanagement and administrative practices; that no comprehensive management or per-\nformance audit of individual hospitals and health facilities is currently required or\nconducted in connection with the allocation of publicly provided or regulated reimburse\nments; that the conduct of annual financial audits of private hospitals has been dele-\ngated to non-profit insurance corporations without any regular or effective public\nsupervision or evaluation of the corporations' performance of this task; that major\ndecisions affecting the existence of some hospitals are being made with little attention\nto the economic impact on the financial future of the institution and its ability to\ncontinue to deliver health services to the community; that the maintenance of the\npublic health is dependent on the continued effectiveness of both public and private\nhospitals and health facilities and that all of these institutions must be viewed as\na public resource; and that the powers and responsibilities of the commissioner of healt\nand superintendent of insurance are limited and not clearly defined with regard to the\ninitiation of actions which encourage, promote and insure the efficient and financially\nsound operation of the hospitals in New York state.\n§2. Section twenty-eight hundred of the public health law, as amended by chapter\neight hundred sixty-two of the laws of nineteen hundred sixty-eight, is hereby amended\nto read as follows:\n$2800. Declaration of policy and statement of purpose. pursuant to section\nthree of article seventeen of the constitution, the department of health, acting through\nthe health commissioner, shall have the central, comprehensive responsibility for the\ndevelopment and administration of the state's policy*****\n§3. Section twenty-eight hundred one of such law is hereby amended by adding\nthereto a new subdivision, to be subdivision eight, to read as follows:\n8. \"Impact statement\" means a statement demonstrating economic impact of all major\ndecisions, including but not limited to the following: construction, renovation, or\nreplacement of facilities; new equipment costs exceeding fifty thousand dollars; merger,\nacquisition or creation of subsidiary by a hospital or health-related service; initia-\ntion of a new program of highly specialized or technologically sophisticated health\nservices, research or education by a hospital or health-related service not presently\nunder taken; and any alteration in service provided by the hospital or health-related\nservice which would decrease hospital service or health-related service presently\nprovided by the hospital or health-related service.\n$4. Subdivision one of section twenty-eight hundred three of such law, as amended\nby chapter nine hundred eighteen of the laws of nineteen hundred seventy-two, is here-\nby amended to read as follows:\n1. (a) The commissioner shall have the power to inquire into the operation of hos-\npitals and home health agencies and to conduct periodic inspections of facilities\nwith respect to the fitness and adequacy of the premises, equipment, personnel, rules\nand by-laws, standards of medical care, hospital service, including health-related\nservice, home health service, system of accounts, records, and the adequacy of\nfinancial resources and sources of future revenues. (NEW MATTER BEGINS HERE)\n(b) (i) The commissioner shall have the power to establish by rule and regulation,\nwithin six months of the date on which this subparagraph shall have become law, specific\ncriteria for the determination of hospital efficiency and to provide for the deter-\nmination of hospital efficiency and to provide for the dissemination of such criteria\nto the public and hospitals. Only after public hearing, which must be held every two\nyears if not sooner, may such hospital efficiency criteria be revised.\n(ii) Notice of such hearing shall be published on three successive days in at least\ntwo newspapers having general circulation within the territory or district where the\nhearing will be held. The notice of hearing shall state the purpose thereof, the time\nwhen and the place where the public meeting shall be held. The public hearing shall\nbe held at a time and location deemed by the commissioner to be most convenient to the\npublic. At such hearing, any person may be heard in favor of or against the revision\nof hospital efficiency criteria.\n(c) (1) The commissioner shall have the power to initiate consolidation of programs\nand/or services offered by two or more hospitals and/or health-related services;\n(11) No action hereunder shall be taken without a hearing. The commissioner shall\nfix a time and place for the hearing. A copy of the proposed action, together with the\nnotice of the time and place of the hearing, shall be served in person on or mailed by\nregistered mail to the hospital or health-related service at least thirty days before\ndate fixed for the hearing. The hospital or health-related service shall file with the\ncommissioner, not less than eight days prior to the hearing, a written statement\nconcerning such proposed action. (NEW MATTER ENDS HERE)\nGERALD\n§5. Subdivision one of section twenty-eight hundred six of such law, as amended\nby chapter nine hundred twenty-three of the laws of nineteen hundred seventy-three, is\nhereby amended, and a new subdivision, to be subdivision five, is hereby added thereto\nto read, respectively, as follows:\nIIF2\nmdr\nHEALTH\nFrom\nTHE LEGISLATIVE INDEX COMPANY\nJanuary 14, 1975\n100 So. Swan St., Albany, N.Y.\n51074\nBustin\nAssembly 993\nBy Mr. H. Posnor\nAN ACT to amend the public health law, in relation to the rights of patients in\ncertain medical facilities\nSection 1. The public health law is hereby amended by adding thoreto a new section,\nto be section twenty-eight hundred three-e, to read as follows:\n$2803-c. Rights of patients in certain medical facilities.\n1. The commissioner shall require that every nursing home and health related facility,\nas defined in subdivisions two and three (b) of section twenty-eight hundred one of\nthis article, shall adopt and make public a statement of the rights and responsibili-\nties of the patients who are receiving care in such facilities, and shall treat such\npatients in accordance with the provisions of such statement.\n2. Said statement shall include, but not be limited to the following:\na. A guarantee that the patient's civil and religious liberties, including the\nright to independent personal decisions and knowledge of available choices, will not\nbe infringed and that the facility will encourage and assist in the fullest possible\nexorcise of these rights.\nb. A guarantee of the patient's right to have private and unrestricted communica-\ntions with his physician, attorney, and any other person.\nc. A guarantee of the patient's rights to present grievances on behalf of him-\nself or others, to the facility's staff or administrator, to governmental officials,\nor to any other person without fear of reprisal, and to join with other patients or\nindividuals within or outside of the facility to work for improvements in patient\ncare.\nd. A guarantee of the patient's right to manage his own financial affairs, or to\nhave a monthly accounting of any financial transactions in his behalf, should the\npatient delegate such responsibility to the facility for any period of time!\ne. A guarantee of the patient's right to receivo at least adequate and appropri-\nate medical care, to be fully informed of his medical condition and proposed Creat-\nment, and to participate in the planning of all medical treatment, including the\nright to refuse medication and treatment and know the consequences of such actions.\nf. A guarantee of the patient's right to have privacy in treatment and in caring\nfor personal needs, confidentiality in the treatment of personal and medical records,\nand security in storing and using personal possessions.\n8. A guarantee of the patient's right to receive courteous, fair, and equal treat-\nment and services and a written statement of the services provided by the facility,\nincluding those required to be offered on an as-needed basis.\nh. A guarantee of the patient's right to be free from mental and physical abuse\nand from physical and chemical restraints, except these retrainte authorized in\nwriting by a doctor for a specified and limited period of time.\n1. A statement of the facility's regulations and an explanation of the patient's\nresponsibility to obey all reasonable regulations of the facility and to respect the\npersonal rights and private property of the other patients.\nj. A guarantee that, should the patient bo adjudicated incompetent and not be\nrestored to legal capacity, the above rights and responsibilities shall devolve up-\non a sponsor or guardian who shall SCC that the patient is provided with adequate,\nappropriate, and respectful medical treatment and care and all rights which he is\ncapable of exercising.\n3. Each facilicy shall make available a copy of the statement to each patient and\nto each patient's guardian at or prior to the time of admission to the facility, and\nto each member of the facility's staff.\n4. Each facility shall prepare a written plan and provide appropriate staff train-\ning to implement each patient's right included in the statement.\n§2. This act shall take effect on the cixtieth day after it shall have become a\nlaw.\nReferred to Health Com.\n111111\nFORD\nGERALD\n1129817\nIIF3a\nPage 2 - Assembly 3254 - HEALTH - INSURANCE\n1. A hsopital operating certificate may be revoked, suspended, limited or\nannulled by the commissioner on proof that:*****to provide for necessary emergency\ncare and treatment for an unidentified person brought to it in an unconscious,\nseriously 111 or wounded condition (NEW MATTER BEGINS HERE); or (c) the hospital\nhas failed to furnish the commissioner of health with An impact statement prior\nto acting, or, having been furnished with an impact statement prior to acting, the\ncommissioner neither certifies the proposed action as improving the efficient delivery\nof health care services nor certifies such action as critical to the public health,\nand the hospital acts on its proposed action.\nS. In addition to the power to revoke, suspend, limit or annul the hospital\noperating certificate, the commissioner may, in the event of a violation by a hos-\npital or health-related service of any provision of the certificate of incorpora-\ntion or any order of the commissioner or of any rules and regulations duly promul-\ngated pursuant to the provisions of this chapter, remove any or all of the existing\ndirections of the hospital or health-related service and appoitn such person or\npersons whom the commissioner deems advisable, including officers and employees of\nthe department, as new directors to serve in the places of those removed. Directors\nso appointed by the commissioner who are officers or employees of the department\nshall serve in such capacity without compensation, and any directors so appointed\nby the commissioner shall serve only for a period coexistent with the duration of\nsuch violation or until the commissioner is assured in a manner satisfactory to him\nagainst violations of a similar nature. (NEW MATTER ENDS HERE)\n§6. Subdivision three of section twenty-eight hundred seven of such law, as\namended by chapter nine hundred eighteen of the laws of nineteen hundred seventy-\ntwo, is hereby amended to read as follows:\n3. Prior to the approval of such rates, the commissioner shall determine and\ncertify to the superintendent of insurance and the state director of the budget\nthat the proposed rate schedules for payments for hospital and health-related ser-\nvice, including home health service, are [reasonably related to the costs of ef-\nficient production of such service] rates of payment which are directly related to\nthe efficient delivery of health care services as determined according to the\nspecific criteria set forth by the commissioner. In making such certification, the\ncommissioner shall take into consideration the elements of cost,\n$7. Such law is hereby amended by adding thereto a new section, to be section\ntwenty-eight hundred seven-a, to read as follows:\n$2807-a. Impact statements. The contents of all impact statements submitted\npursuant to this article shall be public information and such statements shall be\nevailable for public inspection under such conditions as the commissioner shall\nprescribe. The department shall prepare an analysis of each impact statement for\nthe commissioner. The commissioner shall certify for all donect statements either\nthat the proposed action improves the efficient delivery of health care services,\nthat the proposed action is critical to the public health, or that the proposed\naction shall not be undertaken and the rationale therefor.\n$8. Subsection two of section two hundred fifty-five of the insurance law, as\namended by chapter six hundred ten ef the laws of nineteen hundred sixty-two, is\nhereby amended to read as follows:\n2. No corporation subject to the provisions of this article shall enter into\nany contract with a subscriber unless and until it shall have filed with the super-\nintendent of insurance a full schedule of the rates to be paid by the subscribers\nto such contracts and shall have obtained the superintendent's approval therof. The\nsuperintendent's approval shall not be granted until after the approval of the com-\nmissioner of health. The superintendent may refuse such approval*****\n§9. Paragraphs (a) and (b) of subsection two-a of section two hundred fifty-\nfive of such law, as added by chapter five hundred seventy-two of the laws of nine-\nteen hundred seventy, are hereby amended, to read, respectively, as follows:\n(a) Notwithstanding any other provision of law, no rate filing with respect to\ncontracts, *****except in compliance with the provisions of this subsection as well as\nother applicable provisions of law. The superintendent shall annually evaluate the\nmanagement practices, operating policies and financial and administrative procedures\nof all corporations organized and operating in accepannce with article nine-c of the\ninsurance law.\n(b) Prior to any such filing or application by or on behalf of a corporation,\nsuch corporation, when directed by the superintendent, shall conduct a public hearing\nwith respect to the terms of such filing or application. Notice of such hearing\ntogether with the annual evaluation shall be published on three successive days in\nat least two newspapersmnk\n$10. This act shall take effect on the thirtieth day after it shall have become\na law.\nReferred to Health Com.\n***** means same as old law\n]\nmeans old matter omitted\nFORD\nmeans new matter\npa\nGERALD\nLIBRARY\nIIF3b\nS 269\n1975\nMEMORANDUM IN SUPPORT OF\nSenate Bill No. 269\nby Sanator John E. Flynn\nAN ACT to amend the Public Health Law in relation\nto the appointment of an advisory council\non complaints arising with respect to\nnursing homes\nSUMMARY OF PROVISIONS:\nAdds a new subdivision to be subdivision 9 of $2896a of the Public\nHealth Law to allow the Commissioner power to appoint at least one senior\ncitizen in each county and upon the recommendation of the Chief of the\nappropriate Social Services district therefor, one senior citizen shall be\nappointed to investigate specific complaints arising with respect to nursing\nhomes, and report his findings to the Commissioner.\nJUSTIFICATION:\nIt is a well known fact that the citizens of our State are very\nconcerned with the conditions existing in nursing homes. The Department of\nPúblic Health makes diligent efforts to investigate complaints concerning\nnursing homes as they arise. It is felt, however, that the present system\ncould be greatly improved by the addition of Senior Citizen Investigators,\ndeputized to investigate specific complaints arising in the counties in\nwhich they reside. This proposed system would add a large investigatory arm\nto the Department of Public Health and would result in a more prompt and\nefficient handling of nursing home complaints, enabling the Department of\nHealth to take speedier action to remedy abuses. At the same time, it is\nfelt that the Senior Citizens who have a \"special interest\" involved in this\narea will do a very thorough and conscientious job in this appointive capacity.\nEFFECTIVE DATE:\nThirty days after it shall have become law.\nIIF4\nGEERAL FORD LIBRARY\nA.83\nMEMORANDUM IN SUPPORT\nWERTZ\nAN ACT to amend the mental hygiene law, in relation\nto defining certain terms\nPURPOSE OF BILL:\nThis bill is designed to clarify the intent of the Legislature\nby statutorily defining various terms.\nSUMMARY OF PROVISIONS:\nSection 1.05 of the Mental Hygiene Law is amended to: (a)\ninclude family care homes, hostels and halfway houses within the\ndefinition of \"facility;\" (b) excludes a home, in which domestic\ncare and comfort are provided to a person by a relative, from the\ndefinition of \"facility;\" and (c) separately defines \"domestic care\nand comfort,\" \"family care home, = \"hostel,\" \"halfway house,\"\n\"aftercare services, and \"conditional release.\"\nThe bill would take effect immediately.\nLEGISLATIVE HISTORY:\nNone.\nJUSTIFICATION:\nFamily care homes have been providing services to the mentally\ndisabled for nearly forty years. Currently, there are close to\n2,000 such homes servicing nearly 7,000 residents. The development\nof hostels and halfway houses as alternatives to large institutions\nis expected to increase. The bill acknowledges both the important\nrole family care homes have played in providing services and the\nexpanded role hostels and halfways are expected to play. \"Domestic\ncare and comfort, \"family care home,\" \"hostel,\" \"halfway house,\n\"aftercare services,\" and \"conditional release\" have been separately\ndefined in an effort to clarify the meaning of such terms.\nFISCAL IMPLICATIONS:\nNone.\nIIF5\nFORD & LIBRARY 976870\n+16.55\n184\nMEMORANDUM IN SUPPORT\nAss WERTZ\nA.84\nAN ACT to amend the executive law, in relation to giving\nthe board of social welfare the responsibility\nfor setting standards and approving the opera-\ntion of certain residential facilities for\nadults, to repeal section seven hundred fifty-\neight thereof and to make an appropriation\ntherefor\nPURPOSE OF BILL:\nThis bill is designed to assure that all residential\nfacilities for adults meet and maintain minimum standards and to\nassign the responsibility for approving, inspecting and investigat-\ning such facilities to one governmental agency.\nSUMMARY OF PROVISIONS:\nThis bill amends section 755 of the Executive Law by no\nlonger permitting the board of social welfare to delegate its responsi-\nbility for visiting, inspecting and supervising private proprietary\nhomes for adults with a capacity of four or less to local commissioners\nof social services districts.\nThe bill also repeals section 758 of the Executive Law and\nreplaces it with a new expanded section which, while retaining\ncertain parts of the original section, makes these substantial\nchanges:\n1. defines \"boarding house,\" \"foster home for adults, \" and\n\"hostels;\"\n2. gives the board responsibility for approving, inspecting\nand supervising the operation of these additional facilities;\n3. provides that no person shall operate any facility as a\nprivate proprietary home for adults or as a foster home for adults\nafter August 31, 1974 without the written approval of the board;\n4. provides that no person or corporation shall operate\nany facility as a residence for adults, boarding house or hotel\nafter August 31, 1974 without the written approval of the board;\n5. provides that the board shall not grant its approval\nfor the operation of any private proprietary home for adults,\nresidence for adults, foster home for adults, boarding house or\nhotel after August 31, 1974 unless a member or member' of the board's\nstaff have personally visited and inspected the facility\nrequesting its approval and are satisfied that the person or corporation\nrequesting its approval is: financially responsible; prepared to\nmake social, recreational and other supportive services available\nto all its residents; that the buildings, equipment, staff, standard\nof care and records to be employed in the operation of such facility\ncomply with applicable provisions of law and rules of the board;\nand that any license or permit required by law for the operation of\nsuch facility has been issued to the applicant;\n6. provides that any person or corporation which operates\nany of these facilities in violation of the provisions of this act\nshall be guilty of a misdemeanor;\n7. provides the board with the power to revoke, suspend\nor limit its approval of any of these facilities under certain\ncircumstances;\nIIFba\nGERALD FORD, LIBRARY\n- 2 -\n8. provides that any order of revocation, suspension or\nlimitation of the board's approval shall be subject to judicial\nreview; and\n9. provides the board with a $550,000 appropriation to.\neffectuate the provisions of this act.\nThe bill would take effect next September first.\nJUSTIFICATION:\nNo one state agency exercises any control over boarding\nhouses and hotels. It is these types of unregulated facilities which\nare generally providing substandard accommodations to large numbers\nof adult public assistance recipients. While the board already has\nresponsibility for private proprietary convalescent homes, private\nproprietary home for adults, and residences for adults, it has\ndelegated its responsibility for visiting, inspecting and supervising\nproprietary homes for adults which have a capacity of four or less\nresidents to local social services commissioners. As a result of\nthe absence of any control over boarding houses and hotels, and the\nlack of accountability that has resulted from the board's delegation\nof certain of its responsibilities, a large number of the state's\nsocially incapacitated citizens are living in substandard residential\nfacilities. This bill is designed to assure that all residential\nfacilities for adults meet and maintain certain minimum standards.\nIt accomplishes this by giving the board of social welfare full\nresponsibility for approving, inspecting, investigating and supèrvis-\ning all these facilities and by permitting the Board to withdraw its\napproval whenever facilities are not complying with applicable provi-\nsions of law or its own rules.\nThe bill provides that, in addition to meeting the standards\nprescribed by the board, all such residential facilities requesting\napproval after August 31, 1974, must make social, recreational and\nother supportive services available to all its residents. These\nservices are mandated because the individuals who reside in group\nresidential facilities of these types, are those who have various\nsocial problems which limit their ability to function independently,\neffectively and competitively in society.\nFISCAL IMPLICATIONS:\nThe board has estimated that it would require an additional\n$300,000 for staff if it were to assume full responsibility for\napproving; visiting, inspecting and supervising the approximately\n1,000 proprietary home for adults with a capacity of four or less\nresidents which local social services commissioners are presently\nresponsible for. There are no accurate estimates of the number of\nboarding houses and hotels presently being operated in the state,\nalthough we know from recent experiences in Long Beach and New York\nCity that the use of single room occupancy accommodations is rapidly\nincreasing. An additional $250,000 is being\nappropriated to the board to assist it in identifying and regulating\nthese expanding facilities.\nFORD\nIIF66\nGERALD\n658\nHEALTH\nMEMORANDUM\nS.\nBy Mr. Lombardi\nAN ACT to amend the public health law,\nin relation to determining\nA.\nBy\neligibility standards for the\ngranting of state aid to certified\npublic and non-profit home health\nagencies\nPURPOSE: To provide funding for grants in aid to public and non-profit certified home\nhealth agencies to allow these agencies to expand and enhance their services.\nSUMMARY OF PROVISIONS: Amends section 2801 of the public health law to provide for a\nprogram of State grants to public and non-profit certified home health agencies. Such\ngrants would be available for a maximum of five years. An agency may not apply for a\ngrant of more than $50,000. For the first two years grants would be made without\nrequiring the agency to match funds. For an agency to continue to receive funds for the\nthird, fourth and fifth year, the agency will have to provide its own funds on a sliding\nscale as follows:\nState Funds\nAgency Funds\nFirst Year\n100%\n00%\nSecond Year\n100%\n00%\nThird Year\n75%\n25%\nFourth Year\n50%\n50%\nFifth Year\n25%\n75%\nIn order to receive State grants, public and non-profit certified home\nhealth agencies must submit plans to expand the types of services provided, increase the\nnumber of personnel they utilize, make home health care available on a seven-day-a-week\nbasis, develop training programs for agency personnel, and develop programs to coordinate\nthe work of the agency with other community resources.\nJUSTIFICATION: The type of home health services available varies substantially from\none area of the State to another. In some communities, persons can return home early\nfrom the hospital and receive comprehensive high quality care at home. Such care is\nadvantageous to both the patient and the family and can be provided at greatly reduced\ncosts. In other comunities the same patient would have to stay in the hospital and\npossibly be forced to enter a nursing home.\nThis uneven development across the State is inequitable to some and acts\nas 2 barrier to sound proposals to provide greater home care inclusion in insurance,\ngovernmental programs and new health delivery developments. In addition, the lack\nFORD\nIIF 7a\nGERALD\nall\nyvy\n-2-\nof home health agencies providing an adequate range of services stands as a block to\nprevent overuse of, facilities through stepped-up utilization reveiw and PSRO developments.\nA program of State aid to public and non-profit certified home health\nagencies as authorized by this legislation will provide these agencies with the financial\nresources to expand and enhance the services they provide. The expansion of home health\nagencies will allow patients to truly realize the types of savings home health care can\nprovide.\nThe real potential for savings of health dollars can be effective only if\nstrong home health agencies exist. A most important aspect of this, of course, is the\nkey role of the physician in the use of home care. A physician will not send a seriously\nill patient home, no matter how much dollar coverage is available, unless there is an\nagency capable of providing the range and quality of care his patient needs. This\nlegislation addresses itself directly to this problem.\nWith the additions to home health agency responsibilities (incrèasing the\nnumber of. types of therapeutic and related services and adding the services of homemakers)\nand certification requirements which have come from the 1972 and 1973 legislation, the\ngradual increase in the over 65 age group in New York State, the federal curtailment of\nreimbursable services under Medicare and the greater availability of insurance coverage\nfor home health care, it is important to develop a statewide home health agency financial\nassistance program.\nThe success of the State aid program proposed by this legislation can follow\nthe most favorable experience found under the 1965-67 Medicare \"start-up\" grant funds\nwhich the Health Department administered and from which this proposal is patterned.\nFISCAL IMPLICATIONS: There will be no cost to the State until April 1, 1976.\nLEGISLATIVE HISTORY: A similar bill (S. 9188) passed the Senate only in 1974.\nEFFECTIVE DATE: This act will take effect immediately, however, grants of State aid\nwill not be made available until April 1, 1976.\nFORD LIBRARY &\nIIF76\nS SH\nIn support of Senate Bill No. 574\n1975\nIntroduced by Senator John J. Santucci\n\"An Act to amend the executive\nlaw and the mental hygiene law,\nin relation to approval of\ncertain private proprietary\nhomes for adults.\nThis bill would require that any private proprietary\nhome for adults where ten percent or more of the persons\nadmitted to such home had been patients at a Department\nof Mental Hygiene facility within the previous two years,\nmust be approved by the Commissioner of Mental Hygiene,\nin addition to the State Board of Social Welfare.\nIn addition, Section 7.05 of the Mental Hygiene Law\nis amended by a new subdivision, (e), which mandates that\nthe department shall set up standards for those proprietary\nhomes which fall within its jurisdiction.\nWithin the past two years, the State Department of\nMental Hygiene has been releasing patients from its state\nmental hospitals at a much greater rate than ever before.\nMany of these ex-mental patients are finding their way into\nproprietary homes for adults because they have no other\nplace to go. These facilities are presently under the\nexclusive jurisdiction of the State Board of Social Welfare\nwithout any specific standards, programs, etc. geared toward\nthese ex-mental patients. As a result, chaos is rapidly\ndeveloping in many of these proprietary institutions.\nIt is important that the Department of Mental Hygiene's\nresponsibility for the aftercare of these people be mandated\nin two respects. One, the department should be responsible\nfor the licensing of these facilities to make sure that\nthey do provide the necessary facilities, programs and\npersonnel for effective aftercare and also that the depart-\nment have responsibility for follow-up via visits and\ninspections to make sure that the facilities they approved\nare living up to their standards.\nAdditional fiscal costs to the Department of Mental\nHygiene will be necessitated by the additional personnel\nrequired for the administration of this program.\nRespectfully Submitted\nJohn J. Santucci\nFORD is LIBRARY GERALD\nIIF8\nDie\nBy FRANK VAN RIPER and WILLIAM SHERMAN Stuff Correspe. dents of The News Lost of a series\nWashin; ton, F.b. 19-The\nHe did not explain how much addi-\nthe nive in\nlanded premise of free. high qual-\nConal money the inventive bian would\nworld allow private\nrest nor did in say new it would elimi-\ninformed choices 011 White have\nrate the frandment intiation of costs\nthen Homes\ncontine to quality of ming\nworke\nNATI\nity nursing home care :-: the na-\ntion's indigent clderly. passed nine\nis Many OWNERS in states like Now\nYork where reimbur ement is calculat-\nsubervision. activities for the courly,\nyears ago by the \"Great : clety\"\n!! according to expenses - such as\nphy wa plant ard tood.\n11\nIV\nn-\ne\n1e\n1\nby\nr\nin\n!i-\ned\nm\nes\nnd\nal\n21 w\nte\nIn\nii-\n10\nin\nId\nr-\nhe\nn-\nre\nin\na-\nis\nes\nis\nto\nof\n15\nul\nly\nn-\n19\nS-\nn-\nIII\nre\nat\nne\nrk\n4\not\nV,\nin\nas\nig\nit\nat\nli-\nin\nE\nW\nes\nof\n111\nte\ne-\nFORD\nn-\n?\n11,\nat\nLIBRARY\nis\nI\nin\n5\nsystem. that would also be available to\n****** remaining when\n1...\nat\nprop.# 75-5588\nNEW YORK STATE HEALTH FACILITIES ASSOCIATION\nMORELAND COMMITTEE\nNew York State Health Facilities Association is desirous\nof preparing a study of certain aspects of the nursing home\ncomponent of the health delivery system in New York State.\nThe members of this association are the true experts in\nthe field, and will provide direct input through a task\nforce approach in order to develop specific proposals in\nspecified areas of concern. We recognize, however, that\nthere are people outside of our association who have extreme\ncompetence in our field, and from time to time these\nindividuals will be called upon to work with the task forces\nin order to develop proposals.\nPurpose of Study\nIn order to help focus attention on the positive aspects\nof nursing home care, our study will have to recount the\nhistory of the nursing home system as well as develop statistical\nand other pertinent data. The existing components such as\ngovernment regulation, reimbursement and patient care will\nhave to be analyzed and where deficient, specific proposals\nwill have to be made in order to support our theses. The\nactual proposal must take into account legitimate public\nconcern over patient care and reimbursement; however, it\nshould be understood we are not going to attempt to rewrite\nall existing laws and regulations, as this would be an\nimpossible task. It is our specific purpose to focus on\nspecified areas and to point out the necessary role which\nthe proprietary sector has played and will continue to play\nFORD is LIBRARY GERALD\n-2-\nin the delivery of quality nursing home care, for truly there\nare no alternatives.\nAreas Of Concern\nReal estate\nReimbursement\nPatient care\nDefinition of a public policy regarding nursing home care\nAbuses, public accountability and quality assurance\nThe firm selected to assist in this project will be\nresponsible for providing directed research, coordination of\ntask forces, guidance as to approach to presentation,\nassistance in presentation, research staff, resource personnel\nboth in and out of house. The firm will work under the\ndirection of the New York State Health Facilities Association\nCommittee and its legal counsel, and it is expected the\nfinal report will be completed in six months with interim\nreports within thirty days. It must be pointed out that\nit is the committee's feeling that no one single consulting\nfirm has the capability to produce a complete study, and\nfrom time to time individuals in specified areas will also be\ncalled in to participate in our work. Therefore, it should\nbe understood that the roll which the major consulting firm\nwill play would be somewhat akin to that of a general contractor\nin a construction project with prime additional subcontractors\nparticipating.\nFORD & LIBRARY GERALD\n-3-\nThe firm selected will be required to provide a representation\nto the Association that it has no affiliation either direct\nor indirect with any individual, corporation or company who\nhas any interest whatsoever in a nursing home either directly\nor indirectly. Further the representation must also include\na statement that the firm has not employed any officers,\ndirectors, staff members or members of the New York State\nHealth Facilities Association within the last three years\nand that no remuneration of any nature has been or will be\nmade to any of the above.\nFORD LIBRARY is GERALD\nu.y Times 3/19/76\nThat effort, begun by Presi-\nBOARDING HOMES\nt\ndent Kennedy, sought to end\nf-\nE\nwarehousing in state institu-\ntions through the development\nC\n'Hungry People Begging'\nof about 4,500 community-\nmore\nS\n\"I have seen broken windows\nFOR AGED SCORED\nbased mental health centers,\nmost of them clinics. Only 443\nletting the cold air into rooms\nhomes\nn\nare in operation, and Federal\nwithout radiators,\" he said. \"I\nt\nsupport has been reduced.\nhave seen leaking roofs and\nV\nIn the interim, the Federal\nholes in ceilings. I have seen\nS\nSenate Panel Tells of Profit\nGovernment enacted and began\nhungry people with their faces\nin 1974 the Supplementary Se-\nup against vending machines\nFrom Mentally III Through\ncurity Income program for the\nbegging for a quarter.\nelderly poor and disabled-as\n\"It became evident to me,\"\nFederal Welfare Funds\nb\nformer inmates of mental hos-\nhe continued,\" that operators\nto\npitals are classified-and set a\nwere cutting corners every way\nbasic level of out-of-institution\nthey could in order to maxi-\ntl\nsupport for them.\nmize profits. Apparently, men-\nBy NANCY HICKS\n0\ntal patients are a good invest.\nGERALD FORD LIBRARY\nBig HEW Survey Cites\nNursing Home Faults\nWashington\ntion of nursing home asso-\nhome, as is also required by\nciations in the 50 states, had\nThe Department of\nfederal regulations.\nHealth. Education and Wel-\nno comment on the report.\nThe report found that 44.8\nfare, in what it said was the\nThe report found that 48\nper cent of nursing home pa-\nfirst national study of nurs-\nper cent of nursing home pa-\ntients were being given tran-\ning homes ever undertaken\ntients had not been exam-\nquilizers\nf-nms homes\nSATURDAY, MARCH 20, 1976\nc\n17\nResidents of City Adult-Care Homes Tell of Abuses\nBy NATHANIEL SHEPPARD Jr.\nbeen a resident of the Palace\nswitchboard operator at the\nstrung, however, by a lack of\nResidents of city adult-care\nHotel, an adult-care facility in\nfacility.\njurisdiction because of opposi-\nfacilities testified at a United\nLong Beach, L.I., since 1973,\nA spokesman for the facility\ntion by the State Board of So-\nStates Senate subcommittee\ntold the subcommittee she had\nreferred all questions to the\ncial Welfare.\nhearing here yesterday that\nbeen forced to pay a $2 bribe\nproprietor, Rabbi Menachem\nUnder questioning by Repre-\nthey frequently lived in terror\nto employees before she was\nBlum, but added that the rabbi\nsentative Edward I. Koch, Ber-\nFORD i LIBRARY 938470\nWash. Star- News 3/19/76\nf - Nursing Homes\nNursing Home Horrors Detailed\nBy Edmund Pinto\nSen. Frank E. Moss, D-\nWhen it approved Social\nPatients in many of these\nAssociated Press\nUtah, chairman of the\nSecurity in 1935, Moss said,\nprivate institutions are con-\nA new government report\npanel, said the conditions\nCongress barred giving So-\nfronted with poor care and\nsays some mentally ill pa-\nwere being fostered by gov-\ncial Security funds to resi-\nabuse, deliberate physical\ntients in private nursing\nernment policy that pro-\ndents of public institutions,\nabuse and unsanitary\nvides a financial incentive\nbut if boarded in a private\nconditions, he said.\nhomes are living with hun-\nger, cockroaches, leaking\nto move patients from pub-\nhome they could receive the\nHe claimed also they face\nroofs, exposed electrical\nlic institutions into private-\nmoney.\npoor food, high incidence of\ncare facilities.\nwires and doors made of\n\"In short, Congress\ntheft, inadequate control on\ncreated the scandal-ridden,\ncardboard and burlap.\ndrugs, fire hazards, reprisal\n\"I have seen hungry peo-\nfor-profit nursing home\nif they complain about\nThe report, released\nple with their faces up\nindustry.\" he said.\nconditions, use of restraints\nFORD is LIBR 076\nCongressional Record\nUnited States\nof America\nPROCEEDINGS\nAND\nDEBATES\nOF\nTHE\n93d\nCONGRESS, SECOND SESSION\nVol. 120\nWASHINGTON, TUESDAY, MARCH 26, 1974\nNo. 41\nHouse of Representatives\nSecond, a great majority of our com-\nby the program. Specifically, a new State\nH.R. 13720: MEDICARE LONG-TERM\nmunities do not have available the types\nagency would be established which would\nCARE ACT OF 1974\nof services which are better alternatives\ndivide up the State geographically, as-\nto institutionalization.\nThe SPEAKER per tempore. Under a\nsure the establishment of a community\nAnd third, in most communities, no\nprevious order of the House, the gentle-\nlong-term care center in each area, ap-\nsingle person or agency, public or private,\nman from New York (Mr. CONABLE) is\nprove such centers for participation in\ntakes full responsibility for helping older\nrecognized for 5 minutes.\nthe program, and pay the centers for\npeople and their families meet their\nservices furnished:\nMr. CONABLE Mr. Speaker, today I\nneeds as health and family status\nhave introduced H.R. 13720, the Medi-\nThe community long-term care center\nchanges.\ncare Long-Term Care Act of 1974. This\nwould be required to have a governing\nI have deliberately constructed H.R.\nproposal will establish a new program\nboard with at least half of its members\n13279 to deal directly with these prob-\nof long-term care of the elderly that will\nfrom among persons who are eligible for\nlems. My bill is modeled on the medicare\nprovide alternatives to expensive and\nbenefits. In addition, one-quarter of the\nprogram and would meet the first prob-\nconfining medical care by expanding the\nboard would be elected by eligible people\nIem by establishing a new program under\noptions available. By including services\nin the area and one-quarter appointed\nas well as institutional medical care in\nmedicare which would provide protec-\nby officials of local government.\nthe program, we can offer our elderly\ntion against the costs of long-term care,\nThe program would be financed by a\ncitizens who need it a more secure and\nboth institutional and noninstitutional,\n$3 premium paid by those aged who\nless worrisome future, less family strain,\nwithout concern about drawing an arbi-\nchoose to enroll in the program, by a\nand less demands on their savings.\ntrary and unnecessary line between\ncontribution from States of 10 percent\nThe resources of older people can be\nhealth care services and nonhealth care\nof program costs with the balance from\nwiped out by a long stay in a nursing\nservices.\nFederal general revenues. My bill would\nhome since neither medicare nor private\nThe bill would meet the second prob-\nincrease by $3 the amount of SSI bene-\ninsurance covers long-term care. The\nlem, the lack of adequate community\nfits to everyone receiving them so the\nonly program that does provide some\nservices, in several ways. First, the bene-\nprogram will represent no additional cost\nfunds is medicaid-the program of health\nfits covered by the bill would include\nto these individuals.\ncare for the poor.\nservices which can be alternatives to in-\nNo estimates of the cost of the bill\nIn too many cases what we are doing\nstitutionalization. Provision of these serv-\nhave been made, largely because making\ntoday amounts to incarceration, rather\nices can help people in their own homes\nestimates in this area is very difficult.\nthan considerate care, because too great\nor other family settings. Second, the bill\nHowever, the States and the Federal\na reliance is put on placing people in in-\nwould require that placement in an in-\nGovernment now pay more than $4 bil-\nstitutions when many of them could be\nstitution could occur only after all other\nlion a year for nursing home care under\ncared for better in other surroundings,\navenues have been explored. And third,\nthe medicaid program. Medicare pays an\nincluding their own homes. That is why\neven when placement in a nursing home\nadditional several hundred million dol-\nthe emphasis of the bill I have intro-\nhas been designated as the only possible\nIars for extended care services. Numer-\nduced today is on care in the home or on\nalternative the patient will have a con-\nous studies have shown that large num-\nan outpatient basis. This proposal calls\ntinuing opportunity to move out of the\nbers of older people now in nursing homes\nfor 2 system of community long-term\nhome or improve his situation in the\ncare centers in every area of the country\nhome.\ndo not need to be there, particularly if\nto coordinate and direct long-term care\nAnd finally, my bill would meet the\nrealistic alternatives are available. Thus,\nservices for the elderly, including home-\nthird problem by creating for every\nI think it is fair to conclude that under\nmaker, health, nutrition, and day care,\ncommunity a long-term care center\nmy bill the costs of institutional care\nas well as institutional care.\nwhich would act as the coordinator and\nwould be held in check.\nIn the past efforts to secure assistance\npaying agency for long-term care serv-\nBut regardless of how the costs might\nfor older Americans have not been suc-\nices. Whenever a question arose in a fam-\nturn out, the important point is that we\ncessful mainly for three reasons. First,\nily about what to do about a change in\nneed to rationalize the system of provid-\nwe do not have an effective and rational\nhealth or family situation, the center\ning long-term care and I believe my bill\nmethod of meeting the costs of long-\nwould be responsible for helping find the\nhas the potential to do that with possibly\nterm care services, including institu-\nbest answer and for providing the needed\nno increase in overall costs.\ntional care when it is required. Older peo-\nservices, after careful consultation with\nAn outline of H.R. 13720 is attached.\nple with chronic conditions have been\nthe individual and his or her family.\nI urge Members, people with special in-\nleft to their own devices because the\nThe bill contains certain other fea-\nterest in the aging, and the general pub-\ncosts to any public program of institu-\ntures I would like to highlight.\nlic to study the bill carefully. I have\ntionalized care are prohibitive. So we\nWhile the program would be national\nintroduced this bill so that this subject\nhave resisted program involvement and\nin application, just like medicare now,\nwill get the attention it deserves in a\nwe have developed a defeatist attitude\nthe administration of the program would\nrapidly aging society. I am hopeful that\ntoward one of society's most vexing\nbe decentralized and involve, on a local\nhearings can be held on the bill so that\nproblems.\nbasis, the people who are to be served\nit can be fully explored.\nThe information follows:\nH.R. 13720, MEDICARE LONG-TERM CARE ACT\n6. Conditions of Participation for Com-\nOF 1974, INTRODUCED BY THE HONORABLE\nmunity Long-Term Care Centers: Com-\nBARBER B. CONABLE, JR.\nmunity Long-Term Care Centers must:\n1. Brief Description: Amends the Medi-\nHave policies, established by a group of\ncare program by adding a new voluntary\nprofessional personnel and approved by the\nPart D to Title 18 of the Social Security Act\ngoverning board:\nwhich would:\nMaintain medical and other records on all\nEstablish & comprehensive program of\nbeneficiaries;\nlong-term care services available to those who\nHave an overal plan and budget;\nenroll under the program;\nMeet other conditions the Secretary may\nProvide for the creation of community\nprescribe; and\nlong-term care centers in all areas of the\nBe either a public or non-profit organiza-\nnation and State long-term care agencies as\ntion.\npart of & new administrative structure for\nThe governing board of a community long-\nthe organization and delivery of long-term\nterm care center must be composed as fol-\ncare services; and\nlows: one-half of people covered under the\nProvide a significant role for people eli-\nprogram who reside in its service area; at\ngible for long-term care benefits in the ad-\nleast one-quarter have been elected by the\nministration of the program.\npeople covered under the program: and at\n2. Eligibility: Anyone who is (1) eligible\nleast one-quarter appointed b7 locally elect-\nfor hospital insurance under Part A of Medi-\ned government officials.\ncare (aged or disabled), or (2) is age 65 and\nMembers can serve only two terms and full\na resident, or (3) is eligible for supplemental\nmembership must change at least every six\nsecurity income (SSI) benefits is eligible to\nyears.\nenroll under the new program if he has also\n7. Detailed Definitions of Covered Serv-\nenrolled under the Part B medical insurance\nices:\npart of Medicare. Enrollment procedures are\n3. Nutrition Services.\nsimilar to those which now apply to the\nLimited to meals on wheels and similar\nPart B program.\nprograms and services provided in the place\nPremiums of $3 a month would be col-\nof residence of such individual by a nutri-\nlected just as Part B premiums are now\ntionist.\ncollected.\nb. Homemaker Services.\n3. Financing: A Federal Long-Term Care\nServices provided in the home designed to\nTrust Fund would be established to handle\nmaintain the individual in his home.\nthe financial operations of the program.\nPreparing and serving meals in the home of\nThe Trust Fund would receive its monies\nan individual.\nfrom the $3 premiums of those who enroll,\nc. Institutional Services\n10% from the States and the balance from\nExtended care benefits in a skilled nurs-\nFederal general revenues.\ning facility (same as social security defini-\n4. Functions of Community Long-Term\ntion)\nCenters: Provide directly or through arrange-\nIntermediate care services\nments covered items and services to each\nInstitutional day care services\nindividual residing in the area who is\nd. Home Health Services (Same as under\neligible;\npresent Medicare program.)\nProvide evaluation and certify the long-\ne. Day Care and Foster Home Care\nterm needs of individuals through a team\nServices\napproach involving the individual and his\nCare provided on a regular daily basis in\nfamily;\na place other than the individual's home;\nMaintain a continuous relationship with\nand\nindividuals receiving any items or services;\nPlacement of individual on a full-time\nand\nbasis in a family setting.\nProvide an organized system for making its\n1. Community Mental Health Center Out-\nexistence and location (which must be acces-\npatient Services\nsible in the community) known to the indi-\n8. Payment Method for Community Long-\nviduals-in the service area.\nTerm Care Centers:\nIn carrying out the above, a community\nSecretary will develop prospective payment\nlong-term care center shall not certify the\nmethods after consultation with states and\nneed for inpatient institutional services for\nother interested parties. and States will fol-\nan individual unless a determination has\nlow them in paying the community long-\nbeen made that the needs of such individual\nterm care centers.\ncannot be met through covered types of care\n9. Miscellaneous Provisions:\nor other community resources.\n5. State Long-Term Care Agency: Each\nIf an individual stays in a nursing home\nState must establish an agency-either a\nfor more than 6 months, beginning with the\nseparate agency, or major division of the\n7th month his social security cash benefits\nare reduced by ½ (in recognition of such a\nhealth department-which will:\nperson's reduced living costs) and the ½ is\nDesignate service areas in the State;\ndeposited in the long term care trust fund.\nCertify the conditions of participation for\nAs soon as the recipient leaves the nursing\na community long-term care center;\nhome, full benefits are restored immediately.\nPromote and assist in the organization of\nThe bill would increase SSI benefits by 33\nnew community long-term care centers in\na month so that the premium payment could\nareas where they do not exist; and make\nbe met without a reduction in cash income.\npayments to and monitor the activities of all\n10. Effective date:\nlong-term care centers in the State; and\nProvide local government offices where a\nBenefits would first become payable on\nnonprofit agency does not exist.\nJuly 1, 1976, thus allowing sufficient time\nfor the organization of the new system.\nFOR IMMEDIATE RELEASE\nAPRIL 29, 1976\nOFFICE OF THE WHITE HOUSE PRESS SECRETARY\n(Houston, Texas)\nTHE WHITE HOUSE\nREMARKS OF THE PRESIDENT\nTO THE\nANNUAL MEETING\nOF THE\nTEXAS NURSING HOME ASSOCIATION\nHYATT REGENCY HOTEL\n10:18 A.M. CDT\nIt is nice to see some more friendly faces here.\nMr. Pendergast, Senator John Tower, members of\nthe Texas Nursing Home Association:\nIt is a privilege and a pleasure for me to have\nthe opportunity to stop by and make some observations and\ncomments and thank you for the good job that you have done,\nnot only here in Texas with your organization but with\ncomparable organizations throughout the United States.\nI know from personal experience in my State of\nMichigan that the organization of the Association there\nhas done a good job, and I am sure that is likewise true\nhere, and I congratulate you and compliment you.\nBut let me talk for just a few minutes about\nsome of the things that I am trying to do to make certain,\nto make positive that the 32 million or 33 million Americans\nwho are the beneficiaries of Social Security and other\nFederal programs are properly taken care of.\nYou, I am sure, know that in the State of the\nUnion message that I submitted to the Congress in January\nof 1976, I recommended the full cost of living increase\nfor Social Security recipients, and it is my understanding\nthat based on the calculations that have been made by\nthe proper authorities that will be 6.4 percent, as I\nrecall, as of July 1 of this year.\nI believe that we, as a Nation, hold an obligation\nto that part of our society. They bought and paid for\nthe benefits that are coming and ought to be given to\nthem under the law.\nAnother program that I feel Congress ought to act\non is what is commonly known as catastrophic insurance.\nIt has been my experience as I traveled around the country\nto see in many, many instances individuals who were good\ncitizens and saved their money and planned for their\nretirement all of a sudden be hit with a catastrophic\nillness where the costs were great, where the time that they\nhad to spend in a hospital or a nursing home was very, very\nextended.\nMORE\nGERALD FORD LIBRARY\nPage 2\nI am told under Medicaid that there are roughly\n3 to 4 million of our fellow citizens who are adversely\naffected by the catastrophic illness. I think we owe\nan obligation to them because they, under no circumstances,\ncould pay the cost to maintain adequate care during this\ntragedy.\nSo I recommended to the Congress that something\nbe done about it. Unfortunately, no action has transpired\nat the present time. Unfortunately, the prospects do not\nlook good. Believe me, I feel an obligation, and I think\nthose of us who are healthy, whether you are young or old,\nowe an obligation to that segment of our society that are\ntragically hit by these unfortunate illnesses.\nI likewise know that your organization has raised\na good many questions about HEW's 1972 regulations. I am\nsure you are not the only organization, because I am informed\nthat other State organizations comparable to you have done\nlikewise.\nIt does appear to me -- and I have talked to the\nSecretary of HEW about it -- that there is an overzealous\ninterference attempted by those regulations, and I hope\nwe can do something affirmatively to change them.\nI have repeatedly said that we want to get the\nFederal Government off the backs of people and out of their\npockets. We have recommended tax decreases, additional\ntax reductions. We are making some headway in reducing\nFederal paperwork.\nAbout six months ago I directed the Office of OMB\nto make a 10 percent reduction in the total paperwork as\nfar as all Federal agencies and departments are concerned.\nThat 10 percent reduction is to be achieved by July 1 of\nthis year.\nLet me put it as simply, but I think it is as\nsafely as I can, as it affects what all of you are trying\nto do: Your emphasis should be on taking care of patients,\nnot making out forms.\nIt has been a great privilege and pleasure to\nbe here and to say hello to you and to give you the benefit\nof some of my views and programs, policies that we are\nseeking to implement for the benefit of all of the 215\nmillion Americans.\nI thank you for the opportunity to be here.\nEND (AT 10:25 A.M. CDT)\nBERALD FORD LIBRARY\nHEALTH.\nDEPART ARTMENT DEPARTMENT ICATION\nOF\nTHE UNDER SECRETARY OF HEALTH, EDUCATION, AND WELFARE\nWASHINGTON, D.C. 20201\nU.S.A.\nOCT 8 1976\nMEMORANDUM TO SPENCER JOHNSON\nAttached is the brief talking points you requested\non the status of long term care policy.\nhajone Under Marjorie Lynch hynch\nSecretary\nAttachment\nFORD LIBRARY & GERALD\nSTATUS OF LONG-TERM CARE POLICY\nThe Federal Government now provides about $4 billion financial\nsupport for care in skilled nursing homes and intermediate care\nfacilities through primarily the Medicaid and also the Medicare\nprogram. For the past several years, HEW has put particular\nemphasis on programs to insure the safety of the facilities and\nenforcement of other standards.\nIn our effort to provide needed nursing home care for those who\nneed it, we may have unnecessarily placed persons in institutional\ncare who could be better cared for in their homes. HEW is just\nnow completing hearings held throughout the country to explore\nimprovements in home health care as an alternative to institutional\ncare.\nIn addition, the Federal efforts to insure that facilities for the\nelderly, the sick, the disabled and the retarded are safe and\nappropriate for their care have led in some cases not to better\ncare, but rather endless regulations and bureaucratic red tape.\nAs part of my regulatory reform initiative, HEW is conducting a\nthorough review in cooperation with state and local governments\nto separate the needed from the useless regulatory provisions.\nFinally, we need to rethink the proper Federal-State and local\nroles in providing long-term care. While the Federal government's\nfinancial support for such care is appropriate, it is probably\nmore appropriate that state and local agencies have the primary\nresponsibility for tailoring the care provided to each individual's\nneeds.\nFORD LIBRARY y GERALD s"
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