OIG Looks at Contract Surveyors in States - Questions Remain

In a new report, HHS OIG audited CMS oversight of states’ use of contract surveyors for nursing home surveys, which analysts said left open many questions related to how the use of contractors impacts survey results across the country, and even within states.

The report (A-04-24-08105) said because of staffing shortages and survey backlogs—exacerbated by the COVID-19 pandemic—many states and CMS increasingly have come to rely on contract surveyors to conduct nursing home surveys.

“This audit assessed whether CMS adequately oversees state survey agencies’ use of contract surveyors to conduct these surveys in accordance with federal requirements,” OIG said.

What OIG Found

Investigators said they discovered the following key points:

• CMS did not provide adequate oversight of states’ use of contract surveyors to conduct nursing home surveys.

• During the OIG audit period, CMS issued a memo to state survey agencies outlining contracting practices they could use to ensure that contract surveyors meet federal requirements, but CMS did not monitor whether the agencies implemented practices that achieved the memo’s underlying objectives.

• The OIG survey of 14 states that used contract surveyors found that all 14 could have improved their policies and procedures to ensure that the CMS guidelines were met. In the absence of CMS monitoring and oversight, there is an increased risk that state survey agencies have not implemented sufficient controls to ensure that contract surveyors meet federal requirements when performing nursing home surveys.

Following on the OIG findings, Steven Littlehale, chief innovation officer, Zimmet Healthcare Services Group, and an expert in the field of CMS surveys and their impact on providers and the larger sector, said there are gaping holes in transparency and survey contracting in the states.

“We are in an era of unprecedented transparency around nursing home performance, but we know surprisingly little about the survey teams producing the regulatory outcomes we publish, and it matters,” he said.

Research has already demonstrated substantial variation in survey team composition, experience and workload across states.

“The OIG report identifies another important characteristic we should know: whether the surveyor is a state employee or a contractor. CMS should make that information readily identifiable and available for analysis. If survey outcomes are going to carry this much weight for providers and consumers, we should also understand who is conducting the surveys,” Littlehale added.

What’s the Bottom Line?

In further analysis of the OIG report, Jay Gormley, chief investment officer, COO, Advisory, Zimmet Healthcare Services Group, said the main finding is that CMS had not built much of an oversight structure around this increased reliance on contractors.

“Federal requirements are supposed to be the same regardless of whether the person conducting the survey is a state employee or a contractor, and state survey agencies remain responsible for ensuring that contractors meet federal qualification, training and conflict of-interest requirements,” he said.

CMS issued guidance in April 2024 reminding states to address training, quality assurance, conflicts of interest, data-use agreements, and other controls. But OIG found that CMS did not monitor whether states actually implemented those practices or incorporate contractor oversight into its routine annual reviews of state survey agencies.

State Controls Not Consistent

Gormley said state-level controls also varied. According to OIG, all 14 sampled state agencies could improve their policies and procedures. States generally included basic qualification standards in their contracts, including survey experience, professional licensure, and background checks, but OIG found that states frequently relied on contractors themselves to verify that those requirements had been met rather than independently confirming them.

“For providers, the most interesting part of the report is what it does not tell us. OIG did not find that contract surveyors are harsher, more lenient or more variable than state-employed surveyors. It did not compare deficiency counts, scope and severity, IJ rates, or Five-Star outcomes between the two groups. So, this report is not proof that contractors produce different survey results,” he said.

Littlehale says his own experience says there is a difference, and a striking one at that at times.

“In my work with state associations and their members around the country, I’ve had the opportunity to look closely at survey outcomes within individual states. In some cases, I’ve seen striking differences between state offices using contracted surveyors and other offices in the very same state using state-employed surveyors,” he said.

“These weren’t simply differences providers perceived; they were visible in the survey data. That doesn’t establish that contracting caused those differences, but the differences were significant enough that we should be studying them. CMS collecting and identifying contractor status would finally give us the ability to do that on a much broader scale.”

Who Is a Contractor?

Then there is the question of contractors and their status in the system. Gormley said: “Perhaps the most striking finding is that CMS has not even had a clean way to identify who is a contractor. During the audit period, CMS did not systematically track which states used contract surveyors or require states to report contractor participation on individual surveys.”

ASPEN, Gormley said, could contain that information in user profiles, but CMS lacked a standardized way to pull it, and OIG says iQIES had similar limitations.

“That means CMS has had a huge amount of data on deficiencies, scope and severity, enforcement, and Five-Star outcomes, but not the basic variable needed to answer a fairly obvious question: do contractor-involved surveys actually produce different results than surveys performed solely by state employees?” he said.

OIG recommended that CMS require employee-versus-contractor status to be recorded in iQIES for every surveyor and verify that states have appropriate policies and procedures in place for contractor oversight. CMS agreed with both recommendations.

See a summary of the OIG report here.

Questions or comments? Contact Patrick Connole at pconnole@parkplacelive.com.