1 State Inspections & Survey Process Regina Casabal & Mary Walsh The Office of Residential Care Facilities U.S. Department of Housing and Urban Development Eastern Lenders Conference Philadelphia, PA March 13 & 14, 2013

2 OFFICE OF HEALTHCARE PROGRAMS INSURES REGULATED SKILLED NURSING FACILITIES

3 LICENSURE COMPLIANCE IS CRITICAL IN ENSURING SUCCESS OF THE PROPERTY OVER THE LIFE OF THE MORTGAGE.

4 Office of Residential Care Facilities Takes licensure compliance very serious Without Provider Status/License there are no funds available to make rent/mortgage payments ORCF currently utilizes tools to monitor survey compliance which reduce risk to our portfolio ORCF will continue to analyze deficiencies, compliance issues, and remedies that could place the facility at risk to lose their license or not support operations.

5 Topics Covered During this Session: Overview of Survey Inspections & Process Lenders Requirements for submittal of 223f and a7 as it pertains to surveys Tools to assist in oversight of Nursing Home Surveys A Lender’s Perspective on Oversight of Nursing Home Surveys TEAM TSI Dashboard Training Questions will be taken after the session due to limited time for the topic

6 CMS The Center for Medicare & Medicaid Services (CMS), a part of the federal government, certifies facilities to receive payments from Medicare and Medicaid. CMS contracts with each state to provide nursing home surveys to ensure Medicare and Medicaid quality and performance standards are being met.

7 CMS (continued) The survey covers various aspects such as resident life, quality of care, safe and sanitary food preparation processes, staff/resident interactions, environment, policy and procedures and, among numerous others, abuse and neglect. If the regulatory standards are not being met, as shown through the survey process, then CMS can impose penalties, remedies or sanctions and possibly revoke all Medicare & Medicaid funding.

8 Overview of Inspections & Process Different Terms used interchangeably for Surveys:  Health Inspection  Health Inspection Survey  State Survey  State Inspection, etc. Several Different Types of Surveys/Inspections:  Annual Health Inspections (every 9-15 months)  Complaint Surveys  Special Focus Surveys (every 6 months)  Life Safety Inspections

9 Survey Overview Continued: Annual Surveys/Health Inspections  Comprised of an inspection team (trained inspectors which typically include a registered nurse, a license or certified social worker and a certified life safety code inspector).  Are unannounced and performed 24 hours a day/ 365 days a year.  Generally lasts a 3-5 days which can include non business hours and/or weekends.

10 Survey Overview Continued The survey team follows the survey process and evaluates whether the facility is meeting individual resident needs and providing quality of care as defined by CMS. The survey team routinely cites facilities for noncompliance of a Regulation. Typically cited and referenced as an F tag. If severe deficiencies are found that have risen to the level of harm (G, H or I) or immediate jeopardy (J,K, L,) then the survey may be extended.

11 Survey Overview (continued) If the regulatory standards are not being met, as shown through the survey process, then CMS can impose penalties, remedies or sanctions and possibly revoke all Medicare & Medicaid funding.

12 CMS Scope and Severity Grid Helps assist in understanding scope and severity of citations. Level 3 “Harm Level” Level 4 “Immediate Jeopardy” Levels coordinate with Star Rating Levels

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14 Examples of Surveys 2567 with F 309 cited at a SS=H

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16 Examples of Surveys 2567 survey with F 520 tag cited at SS=K

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18 Survey Correspondence Letters received regarding:  Not in Substantial Compliance  Civil Money Penalties (due to Harm or Immediate Jeopardy)  Denial of Payment/Ban on Admissions  Date of Termination if unable to come into Compliance

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22 Complaint Surveys Unannounced Following up on complaints made by residents, family members, friends, etc. Typically one or two surveyors Follow the same standards for the annual survey

23 Special Focus Designation: Program offered by CMS for facilities with a history of serious quality issues. Meant to stimulate the project to improve their quality of care to residents. Surveyed every 6 months. Special Focus Categories:  New  Improving  Not Improving  Graduated  Terminated

24 Special Focus Designation (continued): New: recently added to the Special Focus Program Improving: Advances to this status once meeting acceptable surveys (less than E or higher) as outlined by CMS Not Improving: Not meeting acceptable survey outcomes (receiving E or higher on surveys)  Enforcement becomes more stringent  Termination from Medicare & Medicaid Program possible if surveys do not Improve

25 Special Focus Designation (continued): Graduated status: Received 2 consecutive Improving surveys. Termination: Did not improve during Special Focus surveys.  No longer eligible to participate as a Medicare and Medicaid Provider

26 Life Safety Inspections Typically done at the time of the Annual Inspection. All Skilled Nursing Homes, to be a Medicare & Medicaid Provider, must be in compliance with the 2000 edition of the Life Safety Code (LSC). Replaces the REAC Inspection for Skilled Nursing Homes.

27 Life Safety Inspections The survey team routinely cites facilities for noncompliance of a Regulation. Typically cited and referenced as an K tag. Severe deficiencies are found under the citations at a level of harm (G, H or I) or immediate jeopardy (J,K, L,).

28 Life Safety Inspections (continued): If the regulatory standards are not being met, as shown through the survey process, then CMS can impose penalties, remedies or sanctions and possibly revoke all Medicare & Medicaid funding. ORHP is monitoring Life Safety Inspections at Harm Level (G or higher) citations closely as this was substituted for the REAC Inspections for Skilled Nursing Homes.

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30 Substantial Compliance Notification Facility has cleared all citations Facility is in Substantial Compliance Possibly includes Civil Money Penalties— Lender needs to follow up and ensure property can support penalties and impact to financials.

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33 CMS Star Rating ORCF reviews all elements of the Star Rating. When submitting applications please include in the Lender’s Narrative all star rating under each category. 4 Star Ratings:  Overall  Health Inspection  Staffing  Quality

34 Lender’s Narrative Page 1  Medicare.Gov Star Rating (# of stars)  Place ALL 4 star ratings in the Lender’s Narrative under the above category 4 Star Ratings Includes:  Overall  Health Inspection  Staffing  Quality

35 Lender’s Requirements for 223f and a7’s submittal pertaining to the surveys: If either Overall and/or Health Inspection Star Rating has a 2 star rating and/or Special Focus and/or Medium or Higher TSI report then submit the below:  Submit a review of a minimum of past 3 years survey/CMS remedy history  Submit Improvement Plans for a “Goal of Improving each category to a minimum of 3 stars”. This is NOT the Plan of Correction from the  Submit Improvement Plans for a “Goal of not achieving a G or higher going forward”  If Special Focus submit Improvement Plans on timeline to Graduate from Special Focus.  Lender to give recommendations based on review of past history and submitted improvement plans  Lender to Monitor Star Rating until Star Rating Improves

36 Lender’s Requirements for 223f and a7’s submittal pertaining to the surveys: If either Overall and/or Health Inspection Star Rating has a 1 star rating and/or Special Focus and/or High/Critical TSI report then submit the below:  Submit a review of a minimum of past 3 years survey/CMS remedy history  Submit Improvement Plans for a “Goal of Improving each category to a minimum of 3 stars”. This is NOT the Plan of Correction from the  Submit Improvement Plans for a “Goal of not achieving a G or higher going forward”  If Special Focus submit Improvement Plans on timeline to Graduate from Special Focus.  Lender to give recommendations based on review of past history and submitted improvement plans  Lender to Monitor Star Rating until Star Rating Improves

37 Lender’s Requirements for 223f and a7’s submittal pertaining to the surveys (con’t): Lender to review and submit a summary of all Civil Money Penalties, Denial of Payment, Termination, etc. Lender to submit recommendations on financial/operational review, if property can support CMS remedies and if plans are in place to improve survey performance.

38 Lender’s Requirements for 223f and a7’s submittal pertaining to the surveys (con’t): Lender to request if there has been a G or higher citation in the last 6 months or notification of Special Focus Status that is not shown in the CMS Star Rating/TSI report.  If G or higher obtain summary, compliance letter, remedies and submit recommendations on current surveys and remedies, past surveys and remedies, if operations can support remedies and improve survey performance going forward.  Include State/CMS current and past history of Remedies  Impact to Operating Financials  Include Compliance Letter  Include Special Focus, State Monitored, etc.

39 Underwriting (223f and a7’s) and Incorporating into Lender’s Narrative Utilize the Lender’s Narrative to provide detail for all survey/star rating issues. Page 1 list all Star Ratings in Each Category (Should be 4 Star Rating Listed) Page 6 list Risk Factors associated with Star Ratings/Survey Issues and Financial Issues that are created due to low star rating/survey issues/Civil Money Penalties Page 47 requests General Review and Findings of survey issues. List all Star Rating issues/survey issues, Improvement Plans Requested, Summary and Recommendations.

40 Lender’s Narrative Page 60 Other Issues: Discuss any issues regarding long term viability of project due to current Star Rating/Survey Issues and discuss possible impact to financials. Page 61: Special Conditions—include when necessary that may include:  Improvement Plans  Risk Management Program  Change in Operator/Management Company/Utilization of Consultants  Oversight of Surveys until 3 star minimum is seen in each category  Request of future Improvement Plans if below 3 stars is seen/Harm Level or higher continues. Lender to notify AE/HUD.

41 Lender’s Narrative Page 61 Conclusion Include Conclusion and Lender’s Recommendations regarding Star Rating for each category/Survey Issues, Licensure Issues, Financial Impact, the Improvement Plans received and recommendations for long term viability of this license and long term viability of operations/financials going forward.

42 Tools for Oversight Surveys CMS Star Rating CMS Special Focus TEAM TSI Dashboard Contact Facility Directly Lender’s Corner

43 Lender’s Corner New Lender’s Corner available on HUD.gov portal  Tool for lenders to use for the latest training opportunities  Portal access offered by the ORCF for current HUD insured properties using_administration/healthcare_facilities/section_232 /lean_processing_page/Lender_Corner

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46 A Lender’s Perspective—Nadine Sheppard TEAM TSI Dashboard Training Questions—We will be available after the presentation for questions