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| Nursing home companies sued for Medicare fraud in recent years received more than $300 million in coronavirus relief payments. The allegations include putting elderly residents into unnecessary therapy services and delaying patients' release to reap higher Medicare payments. (N/A/Getty Images) |
More
than a dozen companies that received federal funding have settled civil
lawsuits in recent years with the Justice Department, which alleged
improper Medicare billing, forged documents, substandard care and other
abuses.
The
companies repaid the government a total of more than $260 million and
nearly all are under active corporate integrity agreements with the
inspector general of the U.S. Department of Health and Human Services —
the same department that distributed the payments under the Coronavirus
Aid, Relief, and Economic Security Act, or Cares Act. The five-year
agreements require independent audits, employee training and other
enhanced reporting protocols.
One
nursing home provider is still embroiled in active litigation with the
government, which has accused the company in federal court in Tennessee
of putting elderly residents into unnecessary therapy services and
delaying the release of patients to reap higher Medicare payments.
SavaSeniorCare, whose homes received more than $65 million in pandemic
relief aid, has denied wrongdoing.
All told, nursing home companies sued for Medicare fraud in recent years received more than $300 million in relief payments.
Millions more went to nursing homes with widely publicized breakdowns during the pandemic. Among them: a facility in Pennsylvania cited by the state for giving more than 200 residents the experimental anti-malarial drug touted by President Trump and a home in New Jersey
under investigation by the state attorney general for lapses in
infection control and patient care during a lethal coronavirus outbreak
earlier this spring. After an anonymous tip, police found the bodies of
17 residents in a makeshift morgue; another had been stored in a shed.
The money was distributed through the $175 billion Provider Relief Fund,
which since April has directed federal stimulus payments to hospitals,
nursing homes and other health-care providers. In May, HHS announced a
targeted nursing home distribution of $4.9 billion.
The
payments, for expenses or lost revenue related to covid-19 — the
disease caused by the novel coronavirus — came with few spending
restrictions. Agreements
between the providers and HHS include language prohibiting nursing
homes from using the federal money for abortions, gun-control lobbying
and the purchase of chimpanzees, but do not require homes to spend on
such things as personal protective equipment or hazard pay for nurses
and aides caring for covid-19 patients.
“The
president wants us to accelerate getting those dollars out,” Seema
Verma, administrator for the Centers for Medicare and Medicaid Services
(CMS), announced in April during a news briefing with the White House
coronavirus task force. “There are no strings attached, so the
health-care providers that are receiving these dollars can essentially
spend that in any way they see fit.”
Watchdog
groups and some independent experts say the government should have
assessed the financial needs of the nursing home industry, scrutinized
the track records of providers and attached some spending restrictions
before distributing the payments. They say they are most concerned about
for-profit companies, some owned by private equity and other investment
firms, that in the past have slashed costs and cut staff to boost
profit.
Two
publicly traded nursing home companies that regularly pay dividends to
shareholders announced they continued to do so in the first two quarters
of this year, The Post found.
Rep. James E. Clyburn (D-S.C.), who chairs the House select subcommittee on the coronavirus crisis, launched a congressional investigation in June focused in part on grant spending by five nursing home chains.
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| Rep. James E. Clyburn (D-S.C.), chairman of the House select subcommittee on the coronavirus crisis, said that the panel will conduct oversight to make sure nursing home companies are spending funds as Congress intended. (Salwan Georges/The Washington Post) |
“Our committee intends to conduct rigorous oversight to ensure that
nursing home companies that received funds in order to deal with the
crisis spend those funds as Congress intended,” he said in a statement
to The Post. “Nursing home companies that received funds after
committing fraud warrant particularly close scrutiny.”
HHS said
that providers will be required to undergo audits and submit spending
documents, and those unable to show that money went to expenses or lost
revenue attributed to the coronavirus could be forced to return some or
all of the funds.
“HHS
will have significant anti-fraud monitoring of the funds distributed,
and the Office of Inspector General will provide oversight as required
in the CARES Act to ensure that federal dollars are used appropriately,”
according to HHS.
The
American Health Care Association (AHCA) and National Center for
Assisted Living, which represents 14,000 long-term-care providers, said
the federal money was badly needed. The group has reported
that both nonprofit and for-profit nursing homes had been “on the verge
of collapse” during a deepening health crisis, faced with the
increasing costs of supplies and personnel expenses and the loss of
existing and potential residents.
The industry group said it expects reporting and tracking protocols.
“For
several months, all health care providers have been waiting for
guidance on reporting and HHS’ approach to auditing and are anticipating
significant oversight in the coming months,” Mike Cheek, AHCA senior
vice president of reimbursement policy, said in a statement to The Post.
“We support reasonable efforts to ensure this federal aid has been
properly directed to providers to cover costs associated with addressing
COVID-19 and potential losses."
Whether
that oversight prompts the government to flag irregular spending — or
demand the return of stimulus money — is not yet known.
As the money became available, LeadingAge, an industry group
that represents nonprofit providers, put out a primer for providers
with detailed instructions about how to access and use the payments.
“HHS or
Congress could clawback some portion of the relief funds from non-COVID
areas,” the document says. “But in an election year, there is low
probability of this occurring.”
Those
familiar with the industry say they fear some companies will simply
absorb the money without investing in patient care or compensation for
front-line workers.
“This
has been one of my concerns from the moment the government passed the
Cares Act — the money is not ending up where it needs to be,” said
Michael Wasserman, medical director of a Los Angeles nursing home and
president of the California Association of Long Term Care Medicine. “The help has to go specifically to the front line.”
To
better understand where stimulus money was distributed, The Post used
public records and provider websites to untangle the ownership structure
of individual homes and then determine the total funding for homes
within the same parent company. The calculations may be low. In some
cases, The Post was unable to link the names of individual nursing homes
with ownership records maintained by HHS or CMS.
The
analysis captured more than 2,000 homes within some of the largest
chains in the United States. The Post also looked at several publicly
traded nursing home companies as well as smaller companies and
individual facilities scrutinized for improper business practices or
patient care before or during the pandemic. The Post could not
independently verify how the relief payments, only recently distributed,
were spent.
More
than $35 million went to homes operated by the for-profit Brius, with
dozens of nursing homes in California, federal data shows.
In
2016, officials at four Brius homes acknowledged in federal court that
employees used corporate credit cards to buy massages, tickets to
sporting events and excursions on the 222-foot mega yacht Inspiration
Hornblower for hospital planners who provided patient referrals. The
officials, who struck deferred prosecution agreements with the
government, said at the time that Brius management was unaware of the
scheme to maximize Medicare revenue.
The four homes repaid $6.9 million through a settlement.
Last
year, the state threatened to fine one Brius home $156,000 after
inspectors noted that a resident who had trouble swallowing choked on a
honey bun and died, and another resident needed two surgeries after she
fell out of her wheelchair while unattended. The home’s administration
withheld records and instructed staff not to cooperate, according to the
state inspection report.
In
2014, then-California Attorney General Kamala D. Harris called the
company’s owner, Shlomo Rechnitz, a “serial violator of rules within the
skilled nursing industry” in an emergency court motion to stop Brius
from buying homes through a bankruptcy sale.
Speaking
for Rechnitz, company attorney Mark Johnson said Rechnitz does not have
any role in the day-to-day operations of Brius homes. Johnson said the
Justice Department settlement stemmed from allegations from 2006 to 2012
and “clearly has nothing to do with the CARES Act or the current
pandemic.” The company, he said, cooperated with investigators and
terminated the individuals involved.
Johnson
denied allegations that facility employees failed to cooperate last year
with state inspectors and said the company appealed the state’s
findings. He added that Brius has faced rising expenses from increased
wages, the cost of supplies and other needs during the coronavirus
crisis.
“While
we certainly cannot project the end of this pandemic, at present it
seems unlikely that the relief funding will be sufficient to meet the
increased expenses related to this pandemic,” Johnson said in an email.
In
New York, two homes that are part of the for-profit SentosaCare
received more than $2 million in pandemic relief payments, federal
records show. In October, a federal judge
ruled that the owners of the company were liable for violations of
human-trafficking laws after Filipino nurses brought to the United
States to work in the two homes said they were overworked, improperly
paid and threatened with $25,000 fines if they quit before their
contracts ended.
Elliot
Hahn, a lawyer for SentosaCare, said nurses were not threatened and
were paid an hourly rate of $29 or more. The company has appealed the
ruling.
“This is not a case where employees were mistreated or ‘trafficked’ in any sense of the word,” Hahn said in an email.
Nursing homes that have drawn significant scrutiny during the pandemic also received relief payments, The Post found.
The Life
Care Center of Kirkland in Washington state, the site of the country’s
first known coronavirus outbreak, received nearly $320,000 in pandemic
relief. After the outbreak, CMS inspectors found
the home did not properly care for sick residents or alert authorities
to the spread of illness. The state banned the home, linked to more than
40 deaths, from accepting new residents until changes were made.
The
Life Care Center of Nashoba Valley outside of Boston drew $300,000 in
federal funds. After 17 people died of covid-19, including a nurse at
the home, Sens. Elizabeth Warren (D-Mass) and Edward J. Markey (D-Mass.)
and Rep. Lori Trahan (D-Mass.) appealed to CMS
to provide more oversight of Life Care and other for-profit chains. The
Massachusetts Attorney General is investigating the home.
Tim
Killian, public information liaison for the Tennessee-based chain, said
the company continues to work with government regulators to “provide the
best care and to safeguard both residents and staff.”
“We
have lost both residents and staff members to this horrible contagion,”
he said in an email. “Our staff members engaged in heroic efforts to
provide the best care possible at great risk to their own health and
well-being."
Life
Care, with more than 200 nursing homes, is being monitored by federal
authorities for financial compliance with Medicare rules. In 2016, Life
Care, without admitting liability and arguing the government did not
prove its case, agreed to the oversight and to a $145 million settlement
to resolve allegations by the government that the chain and its
billionaire owner had engaged in “a systematic scheme” to maximize
Medicare billing.
Homes within the Life Care network received more than $48 million in pandemic relief payments, federal data shows.
“I
asked Seema Verma to increase oversight of these for-profit chains, not
hand out hundreds of millions of dollars with no strings attached,”
Warren said in a statement to The Post. “CMS needs to make sure this
money goes to responding to the virus and protecting vulnerable
residents and staff, not padding profits and bottom lines.”
Billions distributed with few restrictions
The
nursing home industry has pressed for financial relief since the start
of the pandemic, when hundreds and then thousands of elderly residents
fell ill during coronavirus outbreaks that swept homes from New York to
California. More than 45,000 residents have died since March, along with
several hundred nurses and other caregivers.
For
months, the industry has asked Congress and the Trump administration to
provide testing supplies, protective gear and money to cover expenses
as well as lost revenue from beds left empty by patients who died of
covid-19 or potential residents who decided to live elsewhere. Congress
complied, allowing nursing homes to use stimulus money to cover
shortfalls in revenue or expenses attributed to covid-19.
Nursing
homes received about $2.7 million in initial, general distribution
payments for hospitals and health-care providers. In May, HHS Secretary
Alex Azar announced a targeted $4.9 billion distribution to nursing
homes.
“This
funding secured by President Trump will help nursing homes keep the
seniors they care for safe during the COVID-19 pandemic,” Azar said at
the time.
HHS opted for a simple distribution formula:
Nursing homes would receive a $50,000 lump-sum payment, along with an
additional allocation of $2,500 per bed. The average distribution was
$315,000, with some larger facilities receiving $3 million or more,
according to HHS.
The
money, HHS said in guidance to the industry, did “not need to be
specific to providing care for possible or actual coronavirus patients.”
Providers could use the grants for a range of expenses, including
health insurance, rent or mortgage payments, and equipment lease
payments. Providers would have to comply with unspecified future audits
and reporting requirements.
“They
should have specified that the money couldn’t just be used for
administrative costs and profits,” said Charlene Harrington, a nursing
home researcher and professor at the University of California at San
Francisco. “There was no reason that CMS couldn’t have put more
restrictions on the money."
Some
say the government also should have assessed the finances of nursing
homes and their parent companies before distributing the payments.
In
2018, nursing homes in the United States received $28.5 billion from
Medicare, which covers short-term stays and pays a far higher rate for
services than Medicaid.
As
the coronavirus crisis spiraled, CMS waived a rule that required
patients to spend three consecutive days in a hospital before becoming
eligible for skilled nursing care funded by Medicare. The idea was to
free up hospital beds for covid-19 patients — and protect the elderly
from exposure. But the change also allowed nursing homes to convert
existing, long-term-care patients on Medicaid to higher-paying Medicare
as long as the homes determined the residents needed skilled care under
CMS guidelines.
David Grabowski, a professor of health-care policy at Harvard Medical School, called the change a “huge revenue bump.”
“That’s
where all of the high margins are associated with nursing home care,”
Grabowski said. “You can quadruple your revenue overnight for those
residents.”
CMS
also extended the time that patients were eligible for Medicare-funded
skilled nursing, doubling the pre-pandemic 100-day limit if patients
affected by covid-19 needed more care. At the same time, states
including Massachusetts and Connecticut have directed aid to nursing
home providers.
Then came the stimulus money.
Homes
within the publicly traded Genesis HealthCare, which reported $33
million in net income in the first quarter of this year, received about
$180 million in pandemic payments. States provided an additional $27
million.
“It
goes back to this issue of whether or not there were shortfalls,”
Grabowksi said. “You would want them to be able to make payroll, to buy
all the supplies. … But I think there are a lot of concerns, especially
with private equity and others, are you making the payments to a
private-equity group or are you paying your staff? Greater
accountability here on the financial side would be a good thing.”
The
American Health Care Association said the money came at a critical
time: Medicaid for years has covered only 70 or 80 percent of the cost
of care in nursing homes, leaving some companies even before the
pandemic with razor-thin margins. Struck by higher costs and lower
occupancy rates during the crisis, the industry faced the loss of
billions of dollars in revenue, the group has reported.
Money flows to troubled chains
On
the front lines of nursing homes, the needs are clear. Last month
nearly 3,000 reported shortages of nurses, aides or both, according to
CMS data. More than 1,700 reported that they lacked a week’s supply of
N95 masks; 1,500 said they lacked surgical gowns.
But
lawmakers and watchdog groups worry that with few safeguards, nursing
home companies will seek to grow profit rather than direct money to
patients and caregivers. Some providers have affiliated entities, such
as medical supply companies, that could charge related nursing homes
above-market rates for goods and services to justify expenses.
“There
are owners in the industry who have related parties,” said Wasserman,
the California doctor and industry representative. “Now the facility is
paying five to 10 times the amount for PPE. That is not how Cares Act
money should be spent.”
Watchdog groups say they are particularly concerned about companies that have faced allegations of Medicare abuse.
Nursing
homes within Ohio-based Saber Healthcare, with facilities in seven
states, received more than $45 million in pandemic funding only weeks
after the company and related entities settled a 2016 government
lawsuit, agreeing to five years of compliance monitoring and repaying $10 million to the government, court records show.
Government
lawyers alleged in federal court in Virginia that nine of Saber’s homes
submitted false claims to Medicare in recent years for rehabilitation
therapy services for residents that were not reasonable, necessary or
skilled.
“Our
office is committed to investigating and stopping health-care fraud,”
U.S. Attorney G. Zachary Terwilliger, of the Eastern District of
Virginia, said in April. “Billing Medicare for higher-than-necessary
levels of care exploits our senior citizens and undermines trust in the
health-care system.”
Saber did not admit liability when settling the case.
“Saber
disputes the allegations and has the utmost confidence that its
facilities have acted in compliance with applicable laws and regulations
in providing the best possible care to each and every patient,” the
company said in a statement to The Post. “During this critical time for
healthcare providers, our resources are better spent in serving our
patients’ needs and supporting our employees rather than continuing to
litigate these issues.”
In
federal court in Tennessee, the Justice Department is currently
pursuing a case against SavaSeniorCare, arguing that the nursing home
company, among the largest in the U.S., pressured its homes to meet
“unrealistic” financial goals by submitting false claims to Medicare for
rehabilitation therapy.
Homes within the Sava network received more than $65 million in pandemic relief, federal spending data shows.
Patte
Packey, whose 83-year-old father died of covid-19 at a Sava nursing
home in Bethesda, Md., said she worries the money will not be spent on
patient care.
“Who’s responsible for the oversight?” she said.
A
spokesperson for Sava declined to comment on the government’s case,
saying the litigation is ongoing. In court records, the company disputed
the allegations, arguing the government failed to prove its case.
“The
government hinges its entire case on five patient examples that
demonstrate, at most, the government’s subjective clinical disagreement —
and even then, a disagreement that wholly ignores the high standard to
which [skilled nursing facilities] are held in the delivery of therapy
services,” the company said.
Nursing
homes flagged by government inspectors for lapses in care during the
pandemic also drew millions of dollars, including Andover Subacute and
Rehabilitation Center in New Jersey, where 17 bodies were found in a
makeshift morgue.
The
facility, which along with a sister property received about $3 million,
failed to follow infection-control standards or properly screen
visitors, according to a state inspection in April. Inspectors also
found staff members who did not use proper protective equipment, wash
their hands or separate sick patients from healthy ones.
The home, under investigation by the New Jersey attorney general, said every effort was made to keep residents safe.
“Despite
all our efforts, the virus made its way into our facility, as it did in
the majority of long-term care facilities across New Jersey,” owner
Chaim “Mutty” Scheinbaum said in a statement. “We took every possible
step to handle this crisis internally while simultaneously making dozens
of outreaches to local, state, and federal agencies for help. … The
facility has made a strong recovery since the height of the pandemic.”
Industry appeals for more
In
recent weeks, state and federal lawmakers have ramped up calls to track
the money. Clyburn is investigating Sava, Genesis and Life Care, among
other nursing home chains, to determine how the stimulus money was
spent.
In Pennsylvania, state Sen. Katie Muth (D) is pushing a measure that would require providers to track and report their spending.
“All these things that we hoped the feds would do, they haven’t,” Muth said.
The
nursing home industry, meanwhile, is lobbying for more money. Last
month, the Trump administration announced an additional $5 billion in
funding for nursing homes and state veterans homes.
The
American Health Care Association is asking for $100 billion, much of it
directed at nursing homes. In early June, the group announced a $15
million fundraising effort to launch a public awareness campaign.
“Our profession faces its greatest challenge in history,” Mark Parkinson,
the former governor of Kansas and AHCA’s president, wrote in a letter
to the industry. “This isn’t like the usual fight we have in D.C. over a
two percent increase or cut, or over some crazy regulation. Instead,
this is a battle for the lives of our residents, our staff, and the very
survival of our sector.”
Jacobs
and Mulcahy are graduate students in journalism at Northwestern
University’s Medill Investigative Lab. Post researcher Alice Crites and
staff writer Douglas MacMillan contributed to this report, along with
Michael Korsh, Ellie Eimer, Chloe Hilles, Cadence Quaranta, Catherine
Buchaniec, Daniel Rosenzweig-Ziff and Alexa Mikhail with the Medill
Investigative Lab.
Full Article & Source:
Nursing home companies accused of misusing federal money received hundreds of millions of dollars in pandemic relief
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