Citing the crisis in nursing home care, “with residents facing systemic neglect and unnecessary suffering,” the correlation of poor quality and for-profit ownership, the nursing home industry’s objections to meaningful reform, and “the challenging politics of nursing home reform,” Law Professor Nina A. Kohn (Yale and Syracuse) and colleagues identify four approaches that are currently available to improve quality of care for residents in “Using What We Have: How Existing Legal Authorities Can Help Fix American’s Nursing Home Crisis.” These approaches are federal certification for Medicare and Medicaid, federal and state financial penalties, state licensure, and federal mortgage insurance under section 232 of the National Housing Act.
- Certification for Medicare and Medicaid determines nursing facilities’ eligibility for public reimbursement
The Centers for Medicare & Medicaid Services (CMS) has largely delegated responsibility to states to determine facilities’ eligibility for Medicare and Medicaid reimbursement, imposing only two federal requirements: disclosing ownership interests and having a quality assessment and assurance committee. Article 144. Kohn argues that “HHS could use the certification process to steer public funds away from nursing homes owned or operated by entities with a history of abuse and neglect.” Id. 143. Citing the plain language of the Nursing Home Reform Act (1987), she describes CMS’s “unrealized opportunity to use its existing certification authority to improve nursing home quality of care by considering the performance record of facilities’ owners and operators.” Id. 145.
Citing 42 U.S.C. §1395i-3(f)(5), Kohn argues that “the Secretary has existing statutory authority to deny certification to facilities that are governed or managed by entities that have shown they are unlikely to administer them in a way that will provide residents with the required quality of care.” Id.
The Secretary has an “affirmative responsibility [42 U.S.C. §§1395i-3(f)(1), 1396r(f)(1), Medicare and Medicaid, respectively] to ensure that the requirements governing skilled nursing facilities are “‘adequate to protect the health, safety, welfare, and rights of residents and to promote the effective and efficient use of public moneys.’” Id. 146. Kohn concludes:
Denying certification to facilities owned or operated by entities with a history of endangering residents is therefore consistent with the Secretary’s statutory mandate to refrain from certifying facilities that are not administered in a way that enables them to provide residents with high-quality care.
Id.
“[A] pattern of serious survey deficiencies” could result in a denial of certification (either outright or by creating or a rebuttable presumption of denial).” Id.
- Financial Penalties
Kohn argues that “CMS could use the inspection process to greater effect by employing the full range of penalties already available to it,” as President Biden called for in his nursing home reform agenda. Id. 147. She notes that fines are typically quite small, usually at “the lower end of the permissible range.” “The mean fine in July 2019 was just over $16,000 and decreased slightly to $15,000 by April 2021.” Id. 150.
Financial penalties are small because (1) facilities are often first given an opportunity to correct deficiencies, (2) facilities successfully appeal through a largely secret appeals process (citing Robert Gebeloff, Katie Thomas & Jessica Silver-Greenberg, “How Nursing Homes’ Worst Offenses Are Hidden from the Public,” The New York Times (Dec. 9, 2021, https://www.nytimes.com/2021/12/09/business/nursing-home-abuse-inspection.html?searchResultPosition=1), Jocelyn Wiener, “The Case of the Vanishing Fine: How a Massive Nursing Home Penalty Eluded Consumer Detection,” Cal.Matters (Dec. 15, 2021), https://calmatters.org/health/2021/12/rechnitz-nursing-home-fines/), and (3) surveyors have incentives not to cite deficiencies (citing same 2021 New York Times article). Id. 151-152.
Kohn proposes that CMS issue new guidance “to give teeth to existing quality-of-care requirements by employing a broader range of statutorily permissible penalties when facilities are determined to have violated regulations designed to protect residents.” Id. 152-153.
States could also impose their own meaningful fines for survey violations. Id. 153.
- State Licensure
States could also consider performance of operators or other facilities owned or operated by an applicant for a state license, which not all states currently do, id. 159, as well as a facility’s performance when considering a license renewal, id. 162-163. License revocation or suspension is another opportunity for states to consider facility performance. Id. 165-173. Many states either do not have or do not exercise state authority to consider performance in licensure decisions.
- Federal Mortgage Insurance
Under section 232 of the National Housing Act, the federal government through the Department of Housing and Urban Development (HUD) “provides mortgage insurance to new or rehabilitated nursing homes.” Id. 180-181. In 2019, The New York Times reported that the section 232 program “‘guaranteed[d] $20 billion in mortgages to more than 2,300 nursing homes – about 15 percent of the country’s total.” Matthew Goldstein, “$146 Million Default by Nursing Home Chain Leaves U.S. on the Hook,” The New York Times (May 31, 2019), https://www.nytimes.com/2019/05/31/business/nursing-homes-mortgage-hud.html?searchResultPosition=1.
Kohn describes “perverse incentives” in section 232 regulations that “reward the wrong behavior.” Id. 182, 186. The regulations “encourage[s] larger facilities rather than the smaller ones associated with better care, treat[s] for-profit facilities more favorably than non-profit facilities, even though the latter are also associated with better care, and create[s] barriers to entry for non-chain owners.” Id. 186
Analyzing 452 facilities currently receiving section 232 support in fiscal years 2021 and 2020, Kohn finds that
- 94.9% were for-profit (3.3% were non-profit; 1.8% were government entities)
- facilities averaged 3 hours and 28 minutes of direct care staff per resident per day, lower than the national average of 3 hours and 46 minutes
- facilities averaged 8.7 health citations, more than the national average of 8.1 health citations
- facilities’ overall star ratings averaged 3.1 stars
Id. 184-186.
The article proposes that HUD rescind current regulations that make small facilities ineligible for section 232 and revise the Section 232 Handbook. It also suggests the Secretary use the law’s broad authority to promulgate regulations that encourage better quality care. Id. 186. Regulations could bar “facilities with problematic owners and operators from participation.” Id. 187.
Current regulations bar only Special Focus Facilities. Current regulatory language restricting participation to “‘responsible individuals and organizations who will honor their legal, financial[,] and contractual obligations’” focuses solely on owners’ “prior participation in housing finance programs,” not on the quality of care they provide to residents. Id.
HUD could also prioritize smaller facilities, facilities with private rooms, and facilities with higher staffing ratios. Id. 187-188. HUD collects data about facilities, but appears to use the data “exclusively to assess financial risk to HUD – and not to ensure that borrowers actually provide quality residential care.” Id. 188.
December 21, 2023 – T. Edelman