The Dept. of Health and Human Services (HHS) Office of Inspector General (OIG) issued a new report on Oct. 29 declaring the Special Focus Facility (SFF) program under control of the Centers for Medicare and Medicaid Services (CMS) does not work, detailing how nursing homes placed on the list for poor quality fail to sustain necessary improvements.

The SFF program is CMS’s flagship effort to address quality problems at the nation’s poorest-performing nursing homes with track records of serious noncompliance. HHS OIG said assessing the effectiveness of the SFF program is critical to ensure that CMS provides support and accountability for poorly performing nursing homes.

“The SFF program is not working because most nursing homes that graduate from the program do not keep the improvements they made over the long term. Between 2013 and 2022, nearly two-thirds of the nursing homes that were in the SFF program improved enough to graduate but soon afterward showed the type of quality problems that put them in the SFF program in the first place,” the report said.

Further, the report said for nursing homes in the SFF program that violate federal requirements, the program relies too heavily on financial penalties that do not require changes in nursing home operations.

The SFF program seeks to move facilities off the poor-performing list within two years. If there are no improvements in quality measures, CMS can remove the SFF from participating in the Medicare and or Medicaid programs.

OIG said only 71 of the 645 SNFs on the SFF list between 2013 and 2022 were terminated or shut. A large majority of 495 SNFs moved off the list. Seventeen SNFs were returned to the SFF designation more than the one time.

What OIG Wants

In analyzing the SFF program, OIG pointed to the following issues as being problems:

Staffing: CMS minimally includes staffing in the SFF program, but nursing homes that graduate from the program and sustain improvements maintain higher staffing levels than those that do not sustain improvements.

Ownership: CMS does not consider ownership at all in the SFF program. However, a handful of owners stand out as owning many low-quality nursing homes, which points to poor management practices. “Also, state agencies told us that owners play an important role in whether nursing homes improve quality,” the report said.

States’ quality improvement efforts: Some states work off SFF program requirements with their own initiatives to support improvements in nursing homes. “CMS can learn from these efforts to increase the effectiveness of the SFF program,” OIG said.

Recommendations from OIG to improve the SGG program are:

1. Impose more non-financial enforcement that encourage sustained compliance.

2. Assess the extent to which it took enhanced enforcement actions for SFF graduates and the effectiveness of those actions, particularly for graduates that received a deficiency for staffing.

3. Incorporate nursing home ownership information into the SFF program, such as in selecting SFFs and identifying patterns of poor performance.

OIG said CMS agreed with its second recommendation but did not concur with the first and third recommendations.

Provider Notes Report’s Misses

In reaction, Steven Littlehale, chief innovation officer, Zimmet Healthcare Services Group, said the OIG report narrowly defines “quality” by limiting it to survey performance, thus making the process objective given the state variability in survey scores.

“OIG did acknowledge that survey data — the backbone of the SFF program — are variable and imperfect, both across and within states. However, they did not statistically control for that variability in their analysis,” he said. “Instead, they treated survey-derived deficiencies as the system’s operational reality, while noting that uneven state survey performance undermines consistency and comparability.”

This means, OIG recognized the problem, but didn’t correct for it — and by implication, the SFF designation remains state-relative, survey-dependent, and not a fully standardized indicator of quality, Littlehale said.

On the OIG recommendations, he said broadening role of staffing in the SFF program “makes sense to me. If there was a trigger if staff falls below a certain level.”

Concerning non-financial remedies, Littlehale said this also would be a good step since the taking away of money from distressed facilities doesn’t encourage quality improvement, increased staff, and other compliance activities.

Ownership Issue Requires Work

One area where the report lacked clarity was on ownership. Littlehale noted that some nursing home owners seek out distressed properties for their “turnaround” potential.

“The OIG’s ownership analysis was cross-sectional rather than longitudinal. They merged ownership data from CMS’s Care Compare public files with SFF program participation lists between 2015 and 2022, linking owners to facilities that were SFFs at the time of SFF entry,” he said.

Thus, OIG measured the owner associated with each facility when it entered the SFF program, not necessarily the owner before or after it became troubled. “The dataset did not distinguish whether an owner had purchased the facility already in poor condition or had operated it long enough for quality to deteriorate under their management,” Littlehale said.

Some ownership groups — especially private equity firms or turnaround operators — specialize in acquiring chronically underperforming homes, he added. These “distressed asset” acquisitions can temporarily inflate their portfolio’s SFF proportion, even if their goal is to improve quality over time.

“Because OIG’s metric was based on the share of each owner’s homes ever in the SFF program, not how those homes performed after acquisition, owners with a ‘rehab’ or ‘rescue’ strategy would indeed appear worse in this analysis,” Littlehale said.

Read the complete report at https://tinyurl.com/mwvve4cu.

Comments or questions, email Patrick Connole at pconnole@parkplacelive.com.