Main Series Page: Troubled Times in Nursing Homes
By Thomas J. Cole
Journal Investigative Reporter
The Health Care Financing Administration has advised states they need to be prepared to deal with financial problems in nursing homes.
The agency, which oversees the Medicare and Medicaid government health-care programs, said in a letter in May to the states:
"As you probably know, several national nursing-home chains are reporting significant financial difficulties. While we hope that these organizations will see their way through these difficult periods, we are nevertheless concerned that the quality of care residents receive in chain facilities citing financial pressures be protected."
The letter said states should have plans to use their receivership laws to take over operation of homes if necessary. Also, the letter said, states need to be prepared to relocate residents.
Mike Hash, deputy administrator of the Health Care Financing Administration, said in an interview that the agency has no evidence company bankruptcies are going to occur.
"We do, in fact, have a responsibility to be prepared to protect and act on behalf of our beneficiaries, and that's a responsibility we take very seriously," Hash said.
Another official said in June the agency was examining information from the Securities and Exchange Commission and Wall Street analysts on leading publicly traded health-care corporations.
"This can help us understand trends and Medicare's role," the official told a Senate committee.
Hash said the Health Care Financing Administration has experience in dealing with financial troubles in nursing homes.
The Texas Department of Human Services in January took control of a chain of 13 homes after Medicare payments were suspended because of alleged over-billings.
The Health Care Financing Administration advanced money to the state to help keep the homes open. Three of the homes were later closed, but the state found operators for the other 10.
In another case last year, Texas, Florida and Missouri took over more than 20 homes owned by a Dallas-based chain because of financial troubles and alleged care problems.
Like other states, New Mexico has a law that permits it to take over a nursing home with court approval.
To help finance continuing operation of a home, the state can draw from a pool built up with civil fines paid by nursing homes for deficiencies found in inspections.
The pool is about $227,000, according to the Department of Health.
New Mexico requires that a nursing home with more than 59 beds has at least four beds designated for residents whose stays are covered by Medicare.
The New Mexico Health Care Association has asked that the requirement be revoked in some cases.
Executive director Linda Sechovec said in a letter to Health and Human Services chief Alex Valdez that homes could face financial problems if forced to admit patients whose cost of care is more than Medicare payments for service.
Under the association's proposal, only nursing homes with no current Medicare patients would be able to withdraw from the Medicare program.
Valdez said in an interview that he is against the proposal because it would result in Medicaid, which is funded in part by the state, paying for the stays of some nursing-home residents whose bills would have been picked up by Medicare.
The cost to Medicaid would be about $3 million to $5 million a year, he said.
Iowa Republican Charles Grassley, chairman of the Senate Special Committee on Aging, has introduced legislation designed to protect patients when health-care providers are involved in bankruptcy proceedings.
In addition, court-appointed trustees for bankrupt health-care businesses would have to make sure patients are transferred when facilities are closed.
"Right now, the bankruptcy code does a good job of helping debtors reorganize and creditors recover losses. My bill would make sure the bankruptcy courts also look out for patients' interests," Grassley said.
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