Federal officials have handed the state a bill that could ultimately top $200 million for payments to nursing homes that the government said were not permitted by Medicaid regulations.
The government requested the state return $104.5 million it says was paid to a group of private nursing homes in fiscal 2010 and 2011. But it also requested any similar payments be returned from fiscal 2012 and 2013.
State Department of Community Health officials told The Atlanta Journal-Constitution that about $144 million more went to those nursing homes under a special payment program in 2012 and 2013.
DCH says it has stopped making the higher payments — as part of the Upper Payment Limit program — to the 34 nursing facilities under scrutiny by the federal government.
But it argued that the government’s ruling is incorrect, and that the federal Centers for Medicare & Medicaid Services — called the CMS — has approved of its payment methods for years prior to coming out with a report in December asking for the money back. The state has sent a response to the federal government and hasn’t yet returned any money.
“We disagree with the CMS ruling on this matter,” said Clyde Reese, commissioner of the Georgia Department of Community Health. “CMS has reviewed and approved the state share of the UPL funding every year since the inception of the program. In addition, UPL funding for these nursing homes was audited in fiscal 2006 and approved at that time.
“We look forward to working toward an outcome in the best interest of the state of Georgia and the citizens served by the Department.”
CMS officials declined to comment.
Formula at issue
Having to return the money would be a big hit for Georgia’s Medicaid’s program, which spends about $1 billion a year on nursing home services.
The nursing home payments in question are part of a complex formula. Essentially, using UPLs, the state can get higher, Medicare-level rates for providing services, like nursing home stays, paid for by Medicaid.
Medicare provides health coverage for the elderly. Medicaid is the state-federal health care plan for the poor and disabled, but it also pays for most nursing home stays in Georgia.
Under UPL, health care providers can put up matching funds and get the higher payments in return.
According to the federal report, the state said that the 34 Georgia nursing homes in question were owned by local development authorities, which provided the matching money. In fact, CMS said the homes were privately owned, not owned by a public agency, as required, and the matching money came from a privately owned cash management company operating on behalf of the nursing homes.
Incorporation records for the homes list the same business address as Ethica Retirement Communities in Gray, one of the larger nursing home companies in the state. Attempts to reach Ethica for comment were unsuccessful. Federal officials said the matching payments were made by another organization, which the AJC found also listed the same address as Ethica.
The state argues that local development authorities own the buildings or the lease on each of the facilities. And it says the payments were in compliance with Georgia’s State Medicaid Plan, which the federal agency approved.
“Refunding payments previously approved by CMS would be inequitable and would result in unjust enrichment to the federal government,” state officials said in their response to CMS.
Ethica’s leaders have been big campaign contributors to top politicians, like Gov. Nathan Deal. It has at least two members on the board of the Georgia Health Care Association, the politically powerful nursing home lobby.
Legislature OKs rate hike
While it’s unclear how the Medicaid flap will ultimately be resolved, the nursing home industry has a long track record of getting what it wants in Georgia.
In the just-concluded session of the General Assembly, nursing home providers won a special, $27 million rate increase for about 40 nursing homes bought after Jan. 1, 2012.
Backed by Gov. Deal, the increase was initially stalled last year after the AJC and members of the DCH board raised questions about it.
Industry officials pitched it as a way to provide extra money to new owners who upgraded their facilities, but advocates for the elderly said there was no guarantee how the money would be spent.
The Pruitt family, among Deal’s top donors, have at least eight nursing homes that could benefit, according to DCH records. The family’s company, United Health Services, contributed $21,000 to 21 lawmakers days before the session started this year.
Political contributions flowed in after the DCH board stalled the rate increase in September, including more than $60,000 in one day from the industry to Deal’s re-election campaign about two weeks after the proposal was pulled.
Jon Howell, the nursing home industry’s top lobbyist, told a House Budget subcommittee in February that the rate increase for new owners could be reduced to about $15 million in state and federal funding. Howell asked the subcommittee for a more general rate increase for all nursing homes, arguing that Georgia’s reimbursement rates were the lowest in the Southeast.
But in the end, the General Assembly didn’t go along with the rate increase for all nursing homes. And they included the $27 million Deal recommended.
Howell resigned last week amid internal differences in the organization.
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