The story so far
2014
March — Language is slipped into the budget calling for a rate increase for nursing home owners who bought facilities in a two-year period. Several lawmakers later say they don’t know about the provision, and several nursing homes change hands during the General Assembly session
August — Department of Community Health board members question the reasons for the $27 million rate increase, but the panel tentatively approves it.
September — DCH Commissioner Clyde Reese pulls the rate increase on the day it was supposed to win final approval after The Atlanta Journal-Constitution also raises questions about the increase. On the same day, two DCH board members who had questioned the increase but whose terms had expired are told by Gov. Nathan Deal’s office that they will be replaced.
September — Deal’s re-election campaign raises $60,000 in one day from nursing home interests two weeks after the rate increase stalls.
2015
January — Deal includes the $27 million in his budget proposal for fiscal 2016, which begins July 1.
February — A nursing home lobbyist tells a House subcommittee that the owners don’t need the full amount.
March — The House and Senate pass the fiscal 2016 budget, including the $27 million increase.
May — Deal signs the budget into law.
Thursday — The Department of Community Health board approves the “rate adjustment.”
Last summer members of the Department of Community Health board raised questions about a proposed $27 million rate bump for select nursing home owners, and it stalled.
A few months later, the nursing home industry’s lobbyist told legislators that the owners didn’t need the full increase.
But Gov. Nathan Deal and lawmakers budgeted the money anyway, and Thursday, the “rate adjustment” was approved by the DCH board with no debate.
It wasn’t the same board because Deal replaced two of the members who raised questions about the increase last year. Their terms had expired, but they were called and told they were being replaced hours after the nursing home rate increase stalled.
Boost tied to improvements without guarantee
The money will go to owners who bought nursing homes between Jan. 1, 2012, and June 30, 2014, and it was meant, according to supporters, to compensate them for upgrades to the facilities they bought.
“This rate adjustment is intended to recognize changes in costs related to operational changes implemented under new ownership,” said John Upchurch, the director of reimbursement for DCH.
Advocates for the elderly, however, said there is no guarantee the facilities were or will be upgraded.
Senate Minority Leader Steve Henson, D-Tucker, said Georgia is a low-reimbursement state and rates should probably be increased for all homes. Henson said he hopes DCH puts regulations into place to ensure the extra money goes to improve facilities.
“My hope is any rate increase will go to help nursing homes that are improving care above what the previous owner provided,” Henson said. “I would expect that there would not be a windfall for nursing homes that are not improving care.”
Industry packs political clout
About $10 million of the $27 million a year will go to two companies — PruittHealth and Cypress Skilled Nursing. Members of the Pruitt family are among Deal’s biggest campaign donors, and the family has long been one of the powers behind the politically connected industry.
The special rate increase was stalled in September by DCH after The Atlanta Journal-Constitution and DCH board members raised questions about it. Deal replaced two board members, but the issue didn't come back up before the panel last year.
The governor included the $27 million in his budget proposal for the upcoming fiscal year, which starts July 1. The industry's chief lobbyist told a legislative panel that not all the money was needed because some of the new owners had cut costs. He said the allocation could be sliced nearly in half.
But the General Assembly approved spending the full amount, and Deal signed the budget last month. The only comments made by the DCH board Thursday came from the panel’s chairman, Norman Boyd, who made it clear the General Assembly had included the money in the budget.
The nursing home industry’s lobbying arm and top companies have given more than $1 million to legislative candidates, political parties and political action committees in recent years.
The industry contributed about $1 million to Deal’s campaigns and Real PAC, the political action committee created to support Deal. Real PAC received about 40 percent of its contributions from the industry. The nursing home lobby also hired Deal’s son-in-law just after the governor was elected in 2010.
Government funding is the lifeblood of nursing homes, as it is for some other health care industries. Jon Howell, then president of the Georgia Health Care Association, the industry’s lobbying arm, told lawmakers in February that 72 percent of people in nursing homes have their stays paid through the Medicaid program. Others are covered through other government programs. Medicaid spends more than $1 billion a year on nursing home care in Georgia.
Nursing homes draw federal scrutiny
The special payments haven’t been the only recent controversy for the Department of Community Health involving nursing homes.
The federal government wants the state to return about $250 million in payments to nursing homes that it said were not permitted by Medicaid regulations.
DCH says it has stopped making the higher payments — as part of the Upper Payment Limit program — to the 34 nursing homes under scrutiny by the federal government.
Using UPLs, the state can get higher, Medicare-level rates for providing services, such as 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 the 34 Georgia nursing homes in question were owned by local development authorities, which provided the matching money. In fact, the federal government said the homes were privately owned by a Middle Georgia company, 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.
The state is fighting the request to return the money, and DCH officials have said its handling of the payments has been approved by federal officials in the past.
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