Gov. Nathan Deal is giving select nursing homes another shot at a $27 million rate increase only a few months after the same boost was stalled by the agency that regulates the industry.
Deal included the extra money in his budget recommendations for the upcoming year and the House approved it, despite the fact that the nursing homes’ top lobbyist told lawmakers they didn’t need the full amount. The Senate has yet to formally weigh in but will do so this week.
The industry has long been a major campaign backer of Deal's, as it has been for past governors from both parties. Contributions flowed in after the Department of Community Health stalled the rate increase in September, including more than $60,000 in one day to Deal's re-election campaign about two weeks after the proposal was pulled.
Now the higher rate has been proposed again, an example of the political muscle of a powerful industry that relies heavily on government payments and uses campaign contributions to pave the way for even more funding.
When asked why Deal included the increase in next year’s budget, Merry Hunter Hipp, his deputy communications director, said: “The governor’s budget speaks for itself. The Department of Community Health and the Governor’s Office of Planning and Budget submitted their recommendations to the governor, and the budget reflects that input.”
The increase — originally designed to go to the owners of about 40 nursing homes bought after Jan. 1, 2012 — was stalled in September after The Atlanta Journal-Constitution and members of the Community Health Board raised questions about it. Industry officials pitched it as a way to provide extra money to new owners who upgraded their facilities.
The Georgia Senate inserted wording calling for the increase — but not the money to pay for it — into the budget during the 2014 session. Several senators who worked on the budget said they couldn’t remember how it got there when contacted by the AJC.
When it came before the DCH board for its approval, one board member said it “didn’t make sense” and others opposed it. DCH Commissioner Clyde Reese pulled the increase from consideration in part because of concerns raised by board members. Reese said his agency would study changes to speed up compensating nursing home owners when they make improvements to their facilities.
Two board members critical of the increase were not reappointed by Deal, although their terms had expired before the decision on the higher rate was made. The governor's staff said Deal had long planned to replace them, but the timing didn't look good: They were told shortly after the increase stalled.
Four months later, the governor included funding to boost the rate in his budget proposal for fiscal 2016, which begins July 1.
Several of the nursing homes that would receive higher reimbursements under the change are owned by top political donors to Deal, Lt. Gov. Casey Cagle and leading lawmakers.
The Pruitt family, among Deal’s top donors, have at least eight nursing homes that could benefit, according to DCH records. All eight were listed as changing ownership in 2014, including five during the General Assembly session when the wording was inserted into the budget. The reimbursement change could increase annual payments by about $4 million.
Nursing home owners have been among the biggest political donors to state leaders and the two major parties, heavily backing Democrats when they were in charge, then switching to Republicans when the GOP became the majority party at the Capitol.
The group’s lobbying arm and top companies have given more than $1 million to legislative candidates, political parties and partisan 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.
On Sept. 24, about two weeks after the DCH pulled the rate increase, Deal’s campaign raised just over $100,000. At least $63,000 of that came from the nursing home industry.
“They have been big players for a long time,” said Rep. Ben Harbin, R-Evans, a former House budget chairman. “They house a significant population of the state and a population that is vulnerable.”
Government funding is the lifeblood of nursing homes, as it is for some other health care industries. Jon Howell, the president of the Georgia Health Care Association, the industry’s lobbying arm, said 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.
Howell 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.
“Some of these changes in ownership will result in lower costs,” Howell said.
Others, he said, saw increased costs when they bought homes.
“Where there is a change of ownership, you might have systems that are very expensive that have to be put in place, you may have electronic health records that have to be purchased, you might have additional labor costs,” Howell said.
Advocates, however, question whether there are any guarantees about how the extra funding will be spent.
“We would hope the Legislature would tie this to actual quality measures to ensure that this is a transparent transaction and really will go toward improvements,” said Kathy Floyd, the executive director of the Georgia Council on Aging.
While Howell said the governor’s proposal to fund increases for the new owners could be cut, he also asked House budget writers for a more general rate increase of about $12 million in state money — about $36 million when federal money is included. Howell said the reimbursement rate Georgia pays nursing homes is the lowest in the Southeast.
The House didn’t go along with the larger increase but agreed to the original $27 million proposed for new owners by Deal.
Rep. Butch Parrish, R-Swainsboro, is the chairman of the Appropriations subcommittee that recommended the full funding for new owners and has been working on state budgets for decades. When asked why his subcommittee agreed to it, despite the industry saying it didn’t need all the money, Parrish said: “We just agreed with the governor on that. My understanding was that this was to make sure they were brought up to the necessary level of funding.”
Alan Essig, a former state budget analyst and head of the left-leaning Georgia Budget and Policy Institute, said, “We can’t afford to give money and favors away to friends and special interests without a real policy-interest reason for doing it.”
Essig said on policy grounds, nursing home owners can make a case for needing more money to improve facilities and services. But he said there should be some proof of where the money is going.
“This seems like another kind of special-interest benefit without any accountability,” he said. “It should be based on need and a plan for expenditures. If that’s not the case, they are being given a blank check for questionable reasons.”
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