HCR -- Cutting Payments to Nursing Homes

By John Ballard

This is gonna sound wrong at first glance but the reader is urged to look more closely. Scanning headlines is a poor way to get information. The latest Health Beat headline is Why Medicare Should Cut Payments to Nursing Homes.  Sounds like a GOP plot to squeeze another drop of blood from Grandma, doesn't it? It isn't for reasons that will be explained.

Rather than relying on my parsing of the post, go read what Maggie Mahar says. This comment left in the comments thread (also worth a look) will set the stage: There is no reason I should beat the drum louder when writers at the links have laid out the case so clearly. Do go read.

The Carlyle Group restructured its take-over of Manor Care, which comprised about 300 corporate entities that could obscure ownership and make it more difficult to regulate care. It split the company's real estate holdings from the rest of the business so the properties could be used as collateral to raise funds in credit markets.

Ownership structures with multiple stakeholders have been used by other private-equity firms to minimize liabilities and shield them from regulator inquiries like when cutting staff is made to improve profit margins. They use these kinds of structures to avoid taking responsibility when taking control of nursing homes.

Private equity is buying up this industry and then hiding the assets, and when residents are dying from lack of proper care, there is little the courts or regulators can do, while they skim off the profits to line the pockets of investors or plow the money into separate ventures that have nothing to do with nursing home care.

The for-profits are taking over hospices the same way they have taken over nursing homes. The Kaiser Network noted that hospice care was designed to be delivered mainly by not-for-profit groups with affiliations to religious and community groups, but the June 2008 MedPAC report found that since 2000 mostly for-profit companies and hospices have been providing such care.

Manor Care operates hospice under their for-profit nursing homes as Heartland Hospice Care. On top of receiving an additional $130 a day for hospice service, above the daily payment they receive providing nursing home care, they take donations to their Heartland Hospice Fund.

For-profit hospices, like for-profit nursing homes are run by corporations the are coldly efficient, according to a leading palliative care specialist. If there is a way to play the system to make a higher profit, they will. Nursing home residents are already receiving 24/7 care. The hospice service is an additional $130 a day the home receives.

Another way these for-profits increase revenue is when a Medicaid resident goes to the hospital for (let's say) a urinary tract infection for four days, and is readmitted to the nursing home, they are placed on Medicare-only status for up to 80 days, at a much higher rate of reimbursement.

The only Plan of Care that is recognized is a decreased functional mobility secondary to a recent urinary tract infecton and hospital stay. The goal is for the resident to ambulate, transfer and perform bed mobility. The only intervention is for skilled physical therapy five times a week.

But there are no other interventions to prevent urinary tract infections. So, near the end of the 80 day period or when the resident has reached their plateau of physical stamina, the resident is taken off of Medicare-only and place back on Medicaid.

If another urinary tract infection occurs, and the resident uses up the allotted time period to meet physical therapy plateu standards, the resident cannot stay on Medicare-only even though the urinary tract indications are not resolved.

Any ancillary services provided due to the hospitalization would also be more remunerative to the company if those services are owned by, or are shell companies belonging to the company (even when they do not pertain to the medical indication).

Whether those ancillary services are independent of the company or not, they are an additional cost burden on residents and/or government programs.

The previous administration shut off a source of information about abuse and neglect in long-term care facilities that people suing nursing homes consider crucial to their cases. The change, which affects the $144 billion nursing-home industry, was enacted with no public notice or attention.

The rule designates state inspectors and Medicare and Medicaid contractors as federal employees, a group usually shielded from providing evidence for either side in private litigation.

The restrictions affect about 16,000 nursing facilities and 3 million residents in the United States. The practical effect is to force litigants to go to greater lengths, including seeking court orders, to get inspection reports or depositions for cases they are pursuing or defending.