New York Nursing Homes Suing the State Received Federal Provider Relief Funds

Last week, the Center for Medicare Advocacy (Center) issued a Report about New York State nursing facilities and their trade associations that sued their State to prevent implementation of a new State law requiring them to spend 70% of their revenues on care (including 40% on “resident-facing staff”) and limiting their profits to 5%.  Effective January 2022, the new law requires facilities to remit to the State any “excess revenue” not meeting these accountability measures.  The facilities argue in their lawsuit that if these two provisions in the 2021-22 State budget law had been implemented in 2019, they would have been required to remit $824 million to the State.[1]

The Center reported that the plaintiff nursing facilities include one of three Special Focus Facilities (SFF)[2] in New York State, five of New York’s 15 candidates for the SFF Program, and seven of 11 facilities sued by the U.S. Attorney for the Southern District of New York in June 2021 for allegedly fraudulently billing Medicare for unnecessary services, in violation of the federal False Claims Act.  This Alert discusses the $19,529,428 in Provider Relief Funds received by the 13 plaintiff facilities.

Provider Relief Funds

During the coronavirus pandemic, the Department of Health and Human Services (HHS) has provided billions of dollars to health care providers that providers are not required to repay.[3]  The Center reported in March 2021 that the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in March 2020, has been distributed to providers in multiple phases.[4]  Although the CARES Act requires facilities to spend money awarded under the Provider Relief Fund (PRF) on “health care related expenses or lost revenues that are attributable to coronavirus,”[5] then-CMS Administrator Seema Verma said, as she announced the initial payout of $1.5 billion to skilled nursing facilities in April 2020, that the federal money comes with “‘no strings attached.’”[6]  In phase one, all certified skilled nursing facilities (SNFs) with six or more certified beds were eligible to receive $50,000 per facility plus $2,500 per bed.[7]  More than 13,000 certified SNFs received a total of $4.9 billion.  The Washington Post estimated in August 2020 that “the average distribution was $315,000, with some larger facilities receiving $3 million or more.”[8]  Later payments to nursing facilities from PRF in Phase 3 were based on “performance-based incentive payments.”[9]  However, multiple newspapers documented that facilities that were cited with, and fined for, infection control deficiencies received “performance-based incentive payments” and that that these payments often exceeded their fines.[10]  Additional funding of $25.5 billion under Phase 4 was announced in September 2021.[11]

As described below, the 13 facilities discussed by the Center last week received PRF funding totaling $19,529,428.  The average PRF payment for each of the 13 facilities is $1,502,264, with a range of $545,135 to $2,511,679.  The Center identified these PRF payments from federal data.[12]

Provider Relief Funds Received by Plaintiff Nursing Facilities

Special Focus Facility and Candidates

The one SFF, Pontiac Care and Rehabilitation (reported in the CDC dataset as Pontiac Nursing Home) received $545,135 in PRF.

Plaintiff Facilities that Are SFF Candidates (as of Dec. 8, 2021) and Provider Relief Funds

Facilities Sued by the U.S. Attorney

Plaintiff Facilities, Sued by the U.S. Attorney, Southern District of New York,
in June 2021 for Allegedly Overbilling the Medicare Program, and Provider Relief Funds

Discussion and Conclusion

Although there has been little accountability to date for the COVID-19 relief money that SNFs and other providers have received, HHS is authorized to audit providers that received PRF “to ensure that program requirements are met.”[13]  HHS has hired multiple outside contractors, including KPMG and PricewaterhouseCoopers, to conduct audits.[14]  The HHS Office of Inspector General (OIG) announced that the Office of Audit Services would conduct audits of providers that applied for General Distribution under Phases 1-3.[15]     

In December 2021, OIG announced that, as part of six case studies organized by the Pandemic Response Accountability Committee, it will “identify how nursing homes used the [COVID-19 Provider Relief] funds to support their COVID-19 response, improve infection control practices, and assess selected outcomes from that use of funds.”[16]  OIG anticipates releasing the report, “COVID-19 Pandemic Relief Funding and Its Effect on Nursing Homes: Case Study,” OEI-066-22-00040, in 2023.

The 13 New York SNFs that are SFF candidates or were sued by the U.S. Attorney in June 2021 for allegedly overbilling Medicare received $19,529,428 in Provider Relief Funds.  How did they spend the federal funds?

January 3, 2022 – T. Edelman

[1] “How Do Nursing Homes Spend the Reimbursement They Receive for Care?” (CMA Report, Jan. 26, 2022), https://medicareadvocacy.org/how-nursing-homes-spend-public-money/

[2] The Centers for Medicare & Medicaid Services (CMS) updated the Special Focus Facility lists on January 26, 2022.  The facilities identified in the Center’s January 26 Report, based on CMS’s December 8, 2021 lists, remain on the lists. 

[3] CDC. HHS Provider Relief Fund, https://data.cdc.gov/Administrative/HHS-Provider-Relief-Fund/kh8y-3es6

[4] Center for Medicare Advocacy, “Nursing Facilities Have Received Billions of Dollars in Direct Financial and Non-Financial Support During Coronavirus Pandemic” (Special Report, Mar. 17, 2021), https://medicareadvocacy.org/report-snf-financial-support-during-covid/

[5] CMS, Acceptance of Terms and Conditions, https://www.hhs.gov/sites/default/files/terms-and-conditions-skilled-nursing-facility-relief-fund.pdf

[6] Verma said, “There are no strings attached, so the health care providers that are receiving these dollars can essentially spend that in any way that they see fit.” Alex Spanko, “$1.5B Medicare Cash Influx to Skilled Nursing Facilities Has Strings Attached – and Some May Not Keep It,” Skilled Nursing News (Apr. 13, 2020), https://skillednursingnews.com/2020/04/1-5b-medicare-cash-influx-to-skilled-nursing-facilities-has-strings-attached-and-some-may-not-keep-it/

[7] HHS, “HHS Announces Nearly $4.9 billion Distribution to Nursing Facilities Impacted by COVID-19” (News Release, May 22, 2020), https://public3.pagefreezer.com/browse/HHS.gov/31-12-2020T08:51/https://www.hhs.gov/about/news/2020/05/22/hhs-announces-nearly-4.9-billion-distribution-to-nursing-facilities-impacted-by-covid19.html

[8] Debbie Cenziper, Joel Jacobs and Shawn Mulcahy, “Nursing home companies accused of misusing federal money received hundreds of millions of dollars in pandemic relief,” The Washington Post (Aug. 4, 2020), https://www.washingtonpost.com/business/2020/08/04/nursing-home-companies-accused-misusing-federal-money-received-hundreds-millions-dollars-pandemic-relief/

[9] CMS, “Nursing Home Quality Incentive Program Methodology” (Dec. 7, 2020), https://www.hhs.gov/sites/default/files/nursing-home-qip-methodology.pdf

[10] See Zack Newman and Kevin Vaughn, “117 Colorado nursing homes with COVID outbreaks received both fines and financial assistance from the federal government,” The Colorado Sun (May 9, 2021), https://coloradosun.com/2021/05/09/colorado-nursing-home-fines-coronavirus/ and “Michigan nursing homes rewarded thousands of dollars after not following COVID protocols; Hundreds of nursing homes cited,” (May 25, 2021), https://www.clickondetroit.com/news/local/2021/05/24/michigan-nursing-homes-rewarded-thousands-of-dollars-after-not-following-covid-protocols/, discussed in Center, “Nursing Homes Fined for Infection Control Should Not Receive COVID-19 ‘Performance Based’ Relief Funds” (CMA Alert, May 27, 2021), https://medicareadvocacy.org/no-extra-funds-for-poor-performers/

[11] HHS, “HHS Announces the Availability of $25.5 Billion in COVID-19 Provider Funding” (Press Release, Sep. 10, 2021), https://www.hhs.gov/about/news/2021/09/10/hhs-announces-the-availability-of-25-point-5-billion-in-covid-19-provider-funding.html

[12] On January 25, 2022, the Department of Health and Human Services (HHS) announced the distribution of an additional two billion dollars from the PRF.  HHS, “HHS Distributing $2 Billion More in Provider Relief Fund Payments to Health Care Providers Impacted by the COVID-19 Pandemic” (Press Release, Jan. 25, 2022), https://www.hhs.gov/about/news/2022/01/25/hhs-distributing-2-billion-more-provider-relief-fund-payments-health-care-providers-impacted-covid-19-pandemic.html.  The HHS Press Release includes a link to a dataset from the Centers for Disease Control and Prevention that identifies every provider in the country that has received PRF funds.  https://data.cdc.gov/Administrative/HHS-Provider-Relief-Fund/kh8y-3es6. 

[13] Health Resources & Services Administration, “Provider Relief Fund General Information,” https://www.hrsa.gov/provider-relief/faq/general

[14] Wachler & Associates Health Law Blog, “HHS Expands Its Capability to Audit the Provider Relief Fund” (Sep. 1, 2021), https://www.wachlerblog.com/hhs-expands-it-capability-to-audit-the-provider-relief-fund/.  See also REDW, “Your Guide to the Provider Relief Fund Single Audit Requirement” (Nov. 9, 2021), https://www.redw.com/blog/2021/11/09/your-guide-to-the-provider-relief-fund-single-audit-requirement/

[15] OIG, “Audit of CARES Act Provider Relief Funds – Payments to Health Care Providers That Applied for General Distribution Under Phases 1, 2, and 3,” https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000587.asp

[16] OIG, “COVID-19 Pandemic Relief Funding and Its Effects on Nursing Homes: Case Study,” https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000634.asp