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B. NURSING HOME SURVEYSUnder the current statutory system, the Health Care Financing Administration (HCFA) contracts with state agencies to inspect nursing homes for compliance.(27) Federal officials then randomly reinspect at least five percent of the homes to verify the state surveys.(28) NHRA produced dramatic effects.(29) By 1996, the regulations had cut the use of physical restraints on nursing home residents in half; incidences of dehydration also decreased by fifty percent.(30) Despite these promising results, subsequent reports found many disturbing conditions.(31) Approximately forty percent of all HCFA-certified facilities repeatedly violated federal standards over the past four surveys, including critical aspects of patient care.(32) "[A] quarter of the nation''s nursing homes failed even to assess each patient''s needs or develop individual care plans"(33) and, at the time, "government data show[ed] more than 2/3 of [the nation''s] nursing homes d[id] not fully comply with federal standards."(34) Explanations for the survey results ranged from the "federal inspection guidelines were less than rigorous and enforcement had little teeth ... [because] ... the only fines were minimal("35) claims that the inspection process was too subjective. The primary federal remedy, to deny payment for new admissions after three months of noncompliance,(36) apparently did not suffice to reform the quality of nursing home care.(37)

II. THE NATIONAL NURSING HOME ENVIRONMENTThe percentage of elderly Americans is growing.(12) In 1997, 34.1 million elderly accounted for 12.7% of the U.S. population.(13) Roughly 4% of that elderly population elderly received care in 17,176 nursing homes providing approximately 1.8 million beds.(14) Expenditures to care for this population totaled $78.5 billion in 1997,(15) with Medicaid (48%) and private pay sources (31.4%) shouldering most of the burden.(16) The entrance of the Baby Boomers into the 65 and older age categories will double the number of elderly persons to approximately 70 million, or 20% of the population by 2030.(17) This growing elderly population will need adequate long-term care resources to meet its needs,(18) Although nursing homes are not always the preferred method of long-term care,(19) their importance and necessity in our society will only increase as America ages.

The current administrative appeals process may explain HCFA''s poor collection rate. The Departmental Appeals Board (DAB), a division of the Department of Health and Human Services, is a three judge panel designated to hear all of the nation''s nursing home appeals.(56) Although this panel is capable of about two dozen decisions a year, as of January 1999, 670 appeals involving millions of dollars were pending.(57) The backlog began with the imposition of heavier fines in 1995. Even though it costs a facility approximately $10,000 to bring an appeal, and they receive a 35% discount if they do not challenge the fines, many providers feel that by accepting such fines, they are making it easier for "big-verdict lawsuits brought by patients for abuse and neglect."(58)

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