Why do NJ’s worst nursing homes continue to receive state Medicaid funding?


NJ Spotlight News

New Jersey’s worst-rated nursing homes receive millions in taxpayer dollars each year despite showing little to no sign of improvement. A new report from a top state fiscal watchdog recommends taking a much harder line, which could mean cutting off public funding in some cases.

Fifteen long-term care facilities in New Jersey receive a combined more than $100 million in public Medicaid funding annually despite consistently receiving one-star rankings from the government, the Office of the State Comptroller said in a report issued Wednesday.

To improve conditions for the nearly 2,000 residents of those facilities — most of which are operated by for-profit entities — the report recommends the state adopt a tougher approach to ensure taxpayer dollars are being used effectively.

Among other recommendations, the report suggests facilities should face removal of Medicaid-funded residents and prohibitions on further admissions until the problems that result in the poor government ratings are resolved.

“New Jersey should simply refuse to pay for substandard care,” acting Comptroller Kevin Walsh said in a news release issued along with the report.

“It’s time that we use taxpayer funds to demand better,” he said. “Any nursing home that year after year gets the lowest rating should not get public funds.”

Helping public monitor nursing homes

The comptroller’s office has also created an online “data dashboard” to give the public a way to keep tabs on New Jersey nursing homes that receive taxpayer dollars through the Medicaid program, but repeatedly receive poor ratings by health inspectors.

“We’re seeking to shine the light on the kind of care that almost 2,000 New Jerseyans are receiving at these ‘one-star’ facilities,” Walsh told reporters.

In all, more than $1.7 billion in Medicaid funding is spent annually in New Jersey for services provided by long-term care facilities, commonly referred to as nursing homes. Medicaid is a joint federal and state-funded program designed to cover low-income residents, but it is administered at the state level. And in New Jersey, the Office of the State Comptroller operates a Medicaid fraud division and is legally charged with ensuring that the state spends its Medicaid resources in a “responsible and effective manner.”

With more than 300 nursing homes across the state, nearly 30,000 New Jersey residents live in long-term care facilities. During the onset of the COVID-19 pandemic in early 2020, the conditions in these facilities became a key issue as New Jersey struggled to contain the spread of COVID-19 infections.

COVID-19 crisis

Concerns about COVID-19 in long-term care facilities came to a head in April 2020, when 17 bodies were found stacked in a makeshift morgue at the Andover Subacute and Rehab in Sussex County, the state’s largest nursing home with more than 500 beds. That facility — since rebranded as the Woodland Behavioral and Nursing Center — was one of the 15 identified in the comptroller’s report as being among New Jersey’s consistently worst-rated nursing homes.

Gov. Phil Murphy’s administration eventually hired a consultant to identify weaknesses in the state’s nursing home system and to recommend solutions. A June 2020 report called for stronger state oversight, greater transparency in nursing home ownership, additional funding for frontline worker wages and other reforms, many of which lawmakers codified as bills that Murphy later signed into law.

State officials already have some power to impose fines on facilities where inspectors uncover serious problems. Still, the comptroller’s report suggested New Jersey is not yet doing enough to rectify the conditions in some of the state’s worst-rated long-term care facilities.

The fiscal watchdog reviewed inspection data going back to 2013 and found the 15 lowest-rated facilities were collectively provided an average of $103 million annually even as they continued to receive low ratings for things like health inspections and staffing rates. The same facilities also received per-patient incentive payments from the state for meeting certain quality standards.

Failing to tell good from bad

“The state’s recent effort to incentivize higher-quality care thus far has failed to distinguish in a meaningful way between the highest and lowest rated facilities,” the report said. “The state has paid the lowest-rated LTCs at virtually the same rate as it paid higher-rated LTCs.”

Meanwhile, the report also found that a vast majority of the 15 lowest-rated facilities are operated by for-profit organizations and cited a study that found for-profit nursing homes can increase the short-term mortality risk for patients even as costs for taxpayers can increase. Overall, three out of four New Jersey nursing homes are now under for-profit ownership.

To help foster better conditions, the report recommends changes be written into New Jersey’s Medicaid program to require the lowest-rated facilities to either make improvements or face the possibility of losing some part or all Medicaid payments, which can be a major source of funding for such facilities.

The report goes on to recommend a “phased approach” be followed after a facility falls into the government’s lowest, one-star category.

Initially, facilities would be issued warnings and asked to prepare corrective-action reports. But prolonged poor ratings would trigger more significant actions.

They could include limiting how many Medicaid residents can be housed in a facility and reducing or eliminating its per-patient state incentive payments. In the worst cases, the report recommends removing any Medicaid residents from a facility and also barring future admissions. However, the report does not spell out in detail what this would mean for the residents at these sites.

“Whatever metrics, incentives and consequences are used, the polestar of such a system should be an approach that rejects an outcome that allows Medicaid beneficiaries to be housed in and receive care from LTCs that are perpetually low rated, in favor of one that rewards LTCs that obtain higher ratings and provide high quality care,” the report said.

Speaking during Wednesday’s news conference, Laurie Brewer, who serves as New Jersey’s long-term care ombudsman, said the findings detailed in the report should not be viewed as criticism of the state’s nursing-home employees, who she called “unsung heroes.”

“They’re showing up in the face of significant adversity and in facilities like this, that are ‘one-star’ year after year, the conditions aren’t just bad for the residents, but it’s also bad for the staff,” Brewer said.

She also stressed that the goal of ongoing reform efforts is not to shut down or put out of business the nursing homes in New Jersey that are consistently receiving the lowest marks from health inspectors.

“What we need is for them to get better, right? Because there are people living there and there are people receiving services there,” Brewer said. “That is the whole goal.”

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published this page in News and Politics 2022-02-03 03:27:32 -0800