“A NATIONAL TRAGEDY: COVID-19 IN THE NATION’S NURSING HOMES”
HEARING OF THE
SENATE FINANCE COMMITTEE
MARCH 17, 2021
STATEMENT OF THE CENTER FOR MEDICARE ADVOCACY
Toby S. Edelman
SENIOR POLICY ATTORNEY
1025 CONNECTICUT AVENUE, NW, SUITE 709
WASHINGTON, DC 20036
202 293-5760
The Center for Medicare Advocacy is a national non-profit law organization founded in 1986. The Center provides legal assistance, education, analysis, and advocacy to advance access to comprehensive Medicare coverage and high quality care for older people and people with disabilities. The Center focuses on the concerns of people with chronic conditions and those in need of long-term care. The organization’s positions and actions are based on the experiences of the people we hear from every day.
Thank you for holding this important hearing on COVID-19 in the nation’s nursing homes. The experience of COVID-19 is indeed a national tragedy. Although the early days of the coronavirus pandemic were especially chaotic, when little was known about asymptomatic spread of the virus, there is no question that better staffing and infection control practices could have prevented, and, in some facilities, did prevent, many cases and deaths among residents and staff.[1]
The coronavirus pandemic has exacerbated long-standing problems in the nation’s nursing homes and brought them all too vividly to national attention. These problems must be corrected to ensure that the next public health crisis does not result, again, in such devastation, overwhelming loss of life, and serious harm to residents’ health and quality of life.[2]
Longstanding Problems
- Inadequate nurse staffing levels, both professional and paraprofessional
The lack of sufficient numbers of nursing staff has been known for decades. In 2000, a federal study mandated by the 1987 Nursing Home Reform Law documented that more than 90 percent of nursing facilities did not have sufficient staff to prevent avoidable harm or to meet standards of care set out in the Reform Law.[3] Staffing levels have not changed in the two decades since the report was issued, despite the increased frailty and acuity of the resident population.
The coronavirus pandemic has continued to highlight the dire consequences of inadequately staffing nursing facilities. Study after study documents that facilities without sufficient nursing staff have both more cases of COVID-19 and more deaths from the virus.[4] A study of nursing facilities in Connecticut found that 20 minutes of additional registered nurse care per resident per day was correlated with 22% fewer COVID-19 cases among residents and 26% fewer deaths.[5]
In January 2021, the New York State Attorney General found “Staffing was more determinative of death rates than ‘COVID-19 geography’ during the initial wave of the pandemic.”[6] Attorney General James found that although the harshest impact of COVID-19 was in New York City and neighboring counties at the beginning of the pandemic, the death rate was half in facilities in this geographic area that had the highest (5-star) ratings in staffing.
The direct care workforce also needs to be strengthened. The paraprofessional workers who provide most of the hands-on care for residents need a living wage[7] and comprehensive benefits, including paid sick leave.[8] Over the past year, the virus has been spread to residents and staff by infected but asymptomatic workers who work in multiple facilities, often because they earn such low wages, minimum wage or just above minimum wage, that they need multiple jobs to try to make ends meet and pay their bills. Direct care workers frequently lack health insurance and paid sick leave, leading them to work when sick.[9]
- Poor infection control practices
In May 2020, the Government Accountability Office (GAO) reported that infection control was the most frequently-cited deficiency in nursing homes in the pre-pandemic period 2013-2017, with 40 percent of facilities cited each year and 82 percent cited at least once in the five-year period.[10] The guidance for COVID-19 is no different from the guidance for all infections: staff must wash their hands, properly disinfect medical equipment between residents, properly and consistently use personal protective equipment, and identify, track, and isolate residents who appear to have, or who are confirmed to have, infectious diseases.
- Limited enforcement of standards of care
The GAO reports that only one percent of facilities cited with an infection control deficiency between 2013 and 2017 received any kind of financial penalty.[11] Facilities ignore deficiencies when they know deficiencies are unlikely to be cited and, if cited, unlikely to lead to any consequence.
The Trump Administration dramatically rolled back the already-weak federal enforcement system, largely through sub-regulatory guidance documents (survey and certification letters addressed to state survey agencies).[12] The result of the changes has been few and comparatively small per instance financial penalties (rather than per day penalties that the Obama Administration mandated as the default type of civil money penalty). The few reported decisions by Administrative Law Judges that have been issued since the Trump Administration decimated the enforcement system suggest that no financial penalties were imposed for facilities’ noncompliance or that penalties were so low that facilities chose not to appeal or both.
Solutions
- Require meaningful nurse staffing levels and reverse the dismantling of the enforcement system
The Senate Finance Committee must require meaningful nurse staffing ratios at all levels and require improved salaries, benefits, and working conditions for the paraprofessional workforce. The Committee further needs to call on the Centers for Medicare & Medicaid Services to reverse the dismantling of the enforcement system so that meaningful and appropriate sanctions are promptly imposed for noncompliance with federal standards of care.
In addition, the Committee needs to address changes in the nursing home industry since the 1987 Nursing Home Reform Law was enacted that have reduced accountability for the quality of care that facilities provide and for public spending.
- Enact laws to prohibit or at least restrict/reduce provider self-dealing
Jordan Rau of Kaiser Health News reported in The New York Times three years ago that nearly three-quarters of all nursing facilities in the country buy goods and services, such as therapy services, management services, medications, and rent, often at inflated prices, from companies that they own and control.[13] The result of these related-party transactions is that facilities are able to hide profits as the cost of doing business. In 2015, facilities’ contracts with related parties accounted for $11 billion, a tenth of facilities’ Medicare reimbursement. Rau described two New York owners whose family trusts took $40 million of the $145 million that their facilities received as reimbursement over an eight-year period – a 28 percent profit margin. Rau reported Kaiser Health News’s analysis that found facilities engaging in these practices have fewer nurses and aides to provide care to residents, “higher rates of patient injuries and unsafe practices,” and twice as many complaints as other facilities.
In December 2020, Debbie Cenziper and colleagues at The Washington Post documented the self-dealing of California’s largest nursing home operator, Brius Healthcare Services, whose nursing facilities paid $103 million to related companies in 2018 for supplies, administrative services and financial consulting, and rent, among other services.[14] Care at many Brius facilities was so poor that, in 2014, then-California Attorney General Kamala Harris took an unprecedented step of filing an emergency motion in bankruptcy court in an effort to prevent the court from giving Brius additional facilities. Harris’s motion called the company a “‘serial violator of rules within the skilled nursing industry.’”
The Naples Daily News reported in 2018 that Consulate Health Care, the largest nursing home operator in Florida and sixth largest operator in the country (with 210 facilities and 22,059 beds in 21 states), founded in 2006 and owned by the Atlanta-based private equity firm Formation Capital, designed its facilities “to appear cash-strapped.”[15] The article described the chain’s individual facilities as “essentially empty shells, they pay rent, management and rehabilitation service fees to Consulate or Formation Capital-affiliated companies.” One Consulate facility paid $467,022 in management fees and $294,564 in rent to two companies owned by Consulate and Formation Capital. Forty-eight of Consulate’s 77 Florida nursing facilities had one or two stars, the lowest ratings, on the federal website, then called Nursing Home Compare. In “an unprecedented action” in January 2018, the state threatened to close 53 of the corporation’s 77 Florida facilities under a state law that authorizes revocation of state licenses for serious violations at facilities under common ownership.[16]
- Enact laws (with enforceable consequences for violations) limiting the amount of public reimbursement that can be spent on profits, administration, and overhead
A financial issue related to self-dealing is the need for new federal and state rules to require facilities to spend designated portions of their reimbursement on care of residents and to set, and enforce, strict limits on how much can be spent on administrative costs, management fees, and profits. Congress enacted such rules, called medical loss ratios, in the Affordable Care Act for Medicare managed care plans. The state of New Jersey recently enacted legislation for nursing facilities to mandate direct care ratios, which limit the percentage of reimbursement that can be spent on administrative costs and profits.[17]
Congress should enact direct care ratio requirements for the Medicare and Medicaid reimbursement that facilities receive.
- Enact laws (with enforceable consequences for violations) identifying who is eligible to own and manage nursing facilities
Nursing facilities are bought and sold and management contracts are signed with virtually no oversight and few limits set by states. Increasingly, multiple limited liability companies take pieces of a nursing home business. With multiple companies, it is difficult, and intentionally so,[18] for government and private parties to hold facilities accountable for poor care.
Secrecy surrounds changes of ownership and management. The example of Skyline Healthcare is illustrative. Beginning in late 2015, the New Jersey-based Skyline Healthcare took over management of more than 100 facilities across the country in little more than year. Almost as quickly as it acquired facilities, Skyline began to default, failing to pay vendors and staff. States across the country went to court to get receiverships in order to be able to pay vendors and staff and provide residents with food and medications.[19] Information about new owners was often kept secret. On April 27, 2018, for example, Pennsylvania installed a temporary manager at nine facilities operated by Skyline, but the state declined to identify the manager.[20] As reported on May 5, Pennsylvania identified as the new operator of the Skyline facility in Lancaster a new for-profit company that had been created just three days earlier, on May 2. The so-called new operator was not actually new. It had at least two of the same owners and shared the address of a company, Priority Healthcare Group, that had actually bought 14 facilities in the state in 2016.[21] Priority’s record managing 11 former Golden Living facilities in Pennsylvania was poor. Priority cut staffing levels and reduced other spending at the facilities.[22] Yet this is the so-called new company that Pennsylvania entrusted with a former Skyline facility.
State licensure rules governing ownership and management are openly flouted. For example, New York purchasers of five nursing facilities in Vermont began operating the facilities in October 2020,[23] before going through a new state review process for nursing home sales that requires consideration of past records at other facilities.[24] The New Yorkers’ record includes Priority Healthcare Group, whose Pennsylvania facilities were cited with low staffing levels and poor quality care.[25]
The federal government appears to believe that any facility with a state license is eligible for Medicare and Medicaid certification, no questions asked. The abandonment of state or federal responsibility and actions to ensure that only qualified owners and managers own and operate nursing facilities has led to the growing concentration of nursing facilities in private equity firms, real estate investment trusts, and other private owners that have little apparent knowledge about or interest in providing high quality care, to the detriment of residents and staff. This issue is not new but has only gotten worse over time.
More than 25 years ago, in 1994, Jon Robertson formed Phoenix Health Group and acquired nursing facilities in California. The Los Angeles Times reported in 1997, “As the money began to roll in from Medicare and Medi-Cal payments to the more than 300 residents at the facilities, Robertson, who had long displayed a fondness for life’s pricier pleasures – from Harley-Davidson motorcycles to diamond rings – began to spend conspicuously.”[26] In 1996, Robertson checked into a rehabilitation center in Phoenix to deal with a cocaine addiction. Robertson also “served prison time and owed $150,000 in restitution to the IRS for filing a false tax return as president of another nursing home management company.”[27] Robertson’s California facilities provided poor care for residents and were cited with numerous deficiencies. The company filed for bankruptcy and abruptly closed its facilities.
Despite this record and sometime after his drug rehabilitation and prison sentence, Robertson formed a new company, Utah-based Deseret Health Group. Multiple states gave licenses to facilities owned by Robertson’s new company and the federal government certified the facilities for Medicare and Medicaid reimbursement. In early May 2015, Robertson repeated his pattern from California. Deseret abruptly stopped paying for food, medical supplies, and workers’ wages and benefits in nursing facilities owned by the company in Kansas, Minnesota, Nebraska, and Wyoming. States pursued court receiverships or otherwise took control of the facilities to protect residents and ensure they received food and medications.[28]
Private equity ownership of nursing homes has created special problems. In 2007, The New York Times reported “more profit and less nursing” in facilities owned by private equity firms.[29]
A research study looking at nursing home ownership between 2000 and 2017 found that private equity (PE) ownership increased the probability of death during a resident’s stay by 1.7 percentage points (meaning that “about 20,150 Medicare lives [were] lost due to PE ownership”) while Medicare costs for residents’ care increased by 11 percent.[30] Facilities owned by private equity firms reduced staffing and increased, by 50 percent, the use of antipsychotic drugs.
During the coronavirus pandemic, The Washington Post reported that Portopiccolo Group, a private equity firm with a record of poor care (nearly 70 percent of Portopiccolo facilities have ratings of one or two (of five) on the federal website), short staffing, and coronavirus outbreaks, bought at least 22 nursing facilities, with “scant scrutiny” from state regulators in Maryland and Virginia.[31] As in the facilities it already owned, Portopiccolo reduced operating expenses (reducing cleaning supplies and personal protective equipment) and reduced workers’ benefits. The results were poorer care for residents.
A February 2021 posting in Health Affairs made these points in a scathing indictment of the nursing home industry:
Prior to the pandemic, persistent problems with nursing home care had been documented for years, often because of too few and inadequately trained frontline staff. The harm to frail older adults can be quite severe—abuse and sexual assault, infections, overuse of psychotropic medications, pressure ulcers, falls with injuries, weight loss, dehydration, pain, and medication errors. Infection control violations have also been found repeatedly in a majority of nursing homes.
Quality issues persist as policy makers are unable to oversee how nursing homes spend Medicare and Medicaid payments. The growth in complex nursing-home ownership structures has limited financial transparency by allowing nursing homes to hide public payments and stint on direct resident care. We recommend specific policy changes to make ownership, management, and financing more transparent and accountable to improve US nursing home care.[32]
The Committee should address the issue of nursing home ownership and management and enact, with appropriate enforcement mechanisms, meaningful statutory standards for state licensure and federal certification.
Conclusion
Staffing is the critical factor that makes good care possible. Unless facilities have sufficient professional and paraprofessional staff and treat all staff well, care will not improve. Improving staffing is absolutely necessary, but it is not sufficient.
In addition, states and the federal government need to limit licensure and certification, respectively, to owners and managers that are knowledgeable about and demonstrate commitment and the financial capacity to provide high quality care to residents. Finally, public reimbursement must be spent on care for residents and not diverted to management fees, overhead, and excessive profits.
Many of these issues have been raised before.[33] The Committee now has the opportunity to dramatically improve care for residents and working conditions for workers by addressing these issues.
March 25, 2021
[1] Cinnamon St. John, “Geography Is Not Destiny: Protecting Nursing Home Residents from the Next Pandemic” (Feb. 2021), https://medicareadvocacy.org/wp-content/uploads/2021/02/CMA-NH-Report-Geography-is-Not-Destiny.pdf
[2] Michael Levere, Patricia Rowan, Andrea Wysocki, “The adverse events of the COVID-19 pandemic on nursing home resident well-being,” Journal of the American Medical Directors Association (Journal Pre-proof published Mar. 2021), https://www.jamda.com/article/S1525-8610(21)00306-6/pdf (documenting negative consequences of pandemic on Connecticut nursing home residents, including increases in depression, unplanned weight loss, and incontinence and deterioration in cognitive function, resulting from residents’ loneliness and isolation).
[3] CMS, Report to Congress: Appropriateness of Minimum Nurse Staffing Ratios (2001)
[4] CMA Alert, “Studies Find Higher Nurse Staffing Levels in Nursing Facilities Are Correlated With Better Containment of COVID-19” (Aug. 13, 2020), https://medicareadvocacy.org/studies-find-higher-nurse-staffing-levels-in-nursing-facilities-are-correlated-with-better-containment-of-covid-19/ (citing multiple studies). See also Jose F. Figueroa, Rishi K. Wadhera, Irene Papanicolas, et al, “Association of Nursing Home Ratings on Health Inspections, Quality of Care, and Nurse Staffing With COVID-19 Cases,” JAMA Network (Aug. 10, 2020), https://jamanetwork.com/journals/jama/fullarticle/2769437?guestAccessKey=258f9d19-b7c2-43e2-9218-55c23d3914bc&utm_source=silverchair&utm_medium=email&utm_campaign=article_alert-jama&utm_content=olf&utm_term=081020
[5] Yue Li, H Temkin-Greener, S Gao, X. Cai, “COVID-19 infections and deaths among Connecticut nursing home residents: facility correlates,” Journal of American Geriatrics Society (2020), https://onlinelibrary.wiley.com/doi/epdf/10.1111/jgs.16689
[6] New York State Office of the Attorney General Letitia James, Nursing Home Response to COVID-19 Pandemic, p. 30 (revised Jan. 30, 2021), https://ag.ny.gov/sites/default/files/2021-nursinghomesreport.pdf
[7] LeadingAge recently released a report finding that paying a living wage to the direct care workforce could pay for itself, just by improving care for residents. Making Care Work Pay: How Paying at Least a Living Wage to Direct Care Workers Could Benefit Care Recipients, Workers, and Communities, https://leadingage.org/sites/default/files/Making%20Care%20Work%20Pay%20Report.pdf?_ga=2.118488393.1154178586.1601481977-1021098696.1598989890
[8] PHI, Caring for the Future: The Power and Potential of America’s Direct Care Workforce (Jan. 12, 2021), reached through a link at Caring for the Future: The Power and Potential of America’s Direct Care Workforce – PHI (phinational.org).
[9] Harold Van Houtven, Nicole DePasquale, Norma B. Coe, “Essential Long-Term Care Workers Commonly Hold Second Jobs and Double- or Triple-Duty Caregiving Roles,” Journal of the American Geriatrics Society, Vol. 68, Issue 8, pp. 1657-1660 (published Apr. 27, 2020), https://agsjournals.onlinelibrary.wiley.com/doi/10.1111/jgs.16509
[10] “Infection Control Deficiencies Were Widespread and Persistent in Nursing Homes Prior to COVID-19 Pandemic,” GAO-20-576R, p. 4 (May 20, 2020), https://www.gao.gov/products/GAO-20-576R
[11] Id.
[12] See Jordan Rau, “Trump Administration Eases Nursing Home Fines in Victory for Industry,” The New York Times (Dec. 24, 2017), https://www.nytimes.com/2017/12/24/business/trump-administration-nursing-home-penalties.html?searchResultPosition=2; Toby S. Edelman, “Deregulating Nursing Homes,” Bifocal, Vol. 39, No. 3, p. 31 (Jan.-Feb. 2018), final-bifocal_39_3.pdf (americanbar.org); testimony of Toby S. Edelman at Hearing before House Ways and Means Committee, Subcommittee on Health, “Examining the COVID-19 Nursing Home Crisis, (Jun. 25, 2020), https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/Toby%20Edelman_Testimony.pdf
[13] Jordan Rau, “Care Suffers as More Nursing Homes Feed Money Into Corporate Webs,” The New York Times (Jan. 2, 2018), https://www.nytimes.com/2018/01/02/business/nursing-homes-care-corporate.html?searchResultPosition=9
[14] Debbie Cenziper, “Profit and Pain: How California’s largest nursing home chain amassed millions as scrutiny mounted,” Washington Post (Dec. 31, 2020), https://www.washingtonpost.com/business/2020/12/31/brius-nursing-home
[15] Ryan Mills and Melanie Payne, “Neglected: Florida’s largest nursing home owner represents trend toward corporate control,” Naples Daily News (May 31, 2018), https://www.naplesnews.com/story/news/special-reports/2018/05/31/floridas-largest-nursing-home-owner-part-growing-national-trend/581511002/
[16] Ryan Mills and Melanie Payne, “Neglected: Florida’s largest nursing home chain survives despite legacy of poor patient care,” Naples Daily News (May 31, 2018), https://www.naplesnews.com/story/news/special-reports/2018/05/31/neglected-fraud-and-abuse-nursing-homes-florida/542609002/
[17] A4482/S2758, https://www.njleg.state.nj.us/2020/Bills/A4500/4482_R2.PDF; “Governor Murphy Signs Legislative Package to Strengthen the Resiliency and Preparedness of New Jersey’s Long-Term Care Industry” (News Release, Sep. 16, 2020), https://www.nj.gov/governor/news/news/562020/approved/20200916b.shtml
[18] Joseph E. Casson and Julia McMillen, “Protecting Nursing Home Companies: Limiting Liability Through Corporate Restructuring,” Journal of Health Law, Fall 2003, Vol. 36, No. 4
[19] Laura Strickler, Stephanie Gosk and Shelby Hanssen, “A nursing home chain grows too fast and collapses, and elderly and disabled residents pay the price,” NBC News (Jul. 19, 2019), https://www.nbcnews.com/health/aging/nursing-home-chain-grows-too-fast-collapses-elderly-disabled-residents-n1025381
[20] Harold Brubaker, “Pa. ousts Skyline Healthcare from nine Pa. nursing homes,” Philadelphia Inquirer (May 2, 2018), Pa. ousts Skyline Healthcare from nine Pa. nursing homes (inquirer.com)
[21] Heather Stauffer, “Lancaster nursing home formerly run by Skyline has a new operator,” Lancasteronline (May 26, 2018), https://lancasteronline.com/news/local/lancaster-nursing-home-formerly-run-by-skyline-has-a-new/article_7df1ad0a-6057-11e8-937b-3393e543dbb7.html
[22] Daniel Simmons-Ritchie, “Worst nursing homes continue to fail the frail despite lawsuit and promises; Golden Living’s homes changed hands, but the care never got better,” PennLive (Nov. 26, 2018), https://www.witf.org/2018/11/26/worst-nursing-homes-continue-to-fail-the-frail-despite-lawsuit-and-promises/
[23] Katie Jickling, “Three New York-based owners take over management of five Genesis nursing homes,” Vtdigger (Nov. 13, 2020), https://vtdigger.org/2020/11/13/three-new-york-based-owners-takes-over-management-of-five-genesis-nursing-homes/
[24] Bill No. 125, 2018, establishing Nursing Home Oversight Working Group and (section 3) an Interim Review Process for Transfer of Nursing Home Ownership (effective July 1, 2018), https://legislature.vermont.gov/Documents/2018/Docs/ACTS/ACT125/ACT125%20As%20Enacted.pdf; signed by Governor May 10, 2018, hj180510.pdf (vermont.gov)
[25] Daniel Simmons-Ritchie, “Worst nursing homes continue to fail the frail despite lawsuit and promises; Golden Living’s homes changed hands, but the care never got better,” PennLive (Nov. 26, 2018), https://www.witf.org/2018/11/26/worst-nursing-homes-continue-to-fail-the-frail-despite-lawsuit-and-promises/
[26] Eric Slater, “Entrepreneur Fades From View as Empire Collapses,” Los Angeles Times (Oct. 23, 1997), https://www.latimes.com/archives/la-xpm-1997-oct-23-mn-45876-story.html
[27] The Associated Press, “Utah company facing bankruptcy; nursing home residents in limbo,” The Salt Lake Tribune (May 13, 2015)
[28] See, e.g., H.B. Lawson, “Nursing home faces closure,” The Saratoga Sun (May 6, 2015), https://www.saratogasun.com/story/2015/05/06/news/nursing-home-faces-closure/3898.html
[29] Charles Duhigg, “At Many Nursing Homes, More Profit and Less Nursing,” The New York Times (Sep. 23, 2007), https://www.nytimes.com/2007/09/23/business/23nursing.html
[30] Atul Gupta, Sabrina T. Howell, Constantine Yannelis, and Abhinav Gupta, “Does Private Equity Investment in Healthcare Benefit Patients? Evidence from Nursing Homes,” Becker Friedman Institute, Working Paper No. 2021-20 (Feb. 2021), https://bfi.uchicago.edu/wp-content/uploads/2021/02/BFI_WP_2021-20.pdf
[31] Rebecca Tan and Rachel Chason, “An investment firm snapped up nursing homes during the pandemic. Employees say care suffered,” The Washington Post (Dec. 21, 2020), https://www.washingtonpost.com/local/portopiccolo-nursing-homes-maryland/2020/12/21/a1ffb2a6-292b-11eb-9b14-ad872157ebc9_story.html
[32] Charlene Harrington, Anne Montgomery, Terris King, David C. Grabowski, Michael Wasserman, “These Administrative Actions Would Improve Nursing Home Ownership And Financial Transparency In The Post COVID-19 Period,” Health Affairs (Feb. 11, 2021), https://www.healthaffairs.org/do/10.1377/hblog20210208.597573/full/. See also
[33] “Buying and Selling Nursing Homes: Who’s Looking Out for the Residents?” (CMA Alert, May 23, 2018), https://medicareadvocacy.org/buying-and-selling-nursing-homes-whos-looking-out-for-the-residents/