On
September 9, 2021, the Department of Health and Human Services (HHS) announced
that it is releasing $25.5 billion in COVID-19 funding to health care providers
– $8.5 billion from the American Rescue Plan for providers serving rural
patients, and $17 billion from the Provider Relief Fund (PRF) “for a broad
range of providers who can document revenue loss and expenses associated with
the pandemic.”[1]
Consistent with the Coronavirus Response and Relief Supplemental Appropriation
Act of 2020, the $17 billion PRF Phase 4 payments will be based on providers’
lost revenues and expenditures between July 1, 2020 and March 31, 2021.
HHS
describes the Biden-Harris Administration’s commitment to equity and supporting
providers in most need. Accordingly, HHS intends that PRF Phase 4 funding
will go to smaller providers “at a higher rate compared to larger
providers.” It also intends to “price these bonus payments at the
generally higher Medicare rates to ensure equity for those serving low-income
children, pregnant women, people with disabilities, and seniors.” HHS’s
Press release explains, “To help ensure that these provider relief funds are
used for patient care, PRF recipients will be required to notify the HHS
Secretary of any merger with, or acquisition of, another health care provider
during the period in which they can use the payments.” Detailed
information explains the methodology for calculating PRF Phase 3 payments.[2]
Acting
Administrator Diana Espinosa of the Health Resources & Services
Administration (HRSA), which administers the COVID funds, provided additional
details at a September 15 briefing. The PRF Phase 4 distribution will be
similar to the Phase 3 distribution. Administrator Espinosa said that 75%
of the $17 billion will be distributed to providers to reflect lost revenues
and expenses, with higher supplemental payments going to smaller providers, and
that 25% of the $17 billion will be distributed to providers serving patients
receiving Medicare, Medicaid, or Child Health Insurance Payments. She
described a reconsideration process for providers.
The
Center for Medicare Advocacy fully supports the Administration’s commitment to
equity and supporting providers in need. However, we have questions and
concerns about the distribution of the PRF for nursing facilities.
First, how will HRSA define small, medium, and large
facilities? Will each facility be evaluated on its own, individually, or
will HRSA consider corporate ownership of multiple facilities to determine
facility size?
Second, how will HRSA’s methodology for identifying
lost revenues ensure that calculations of PRF payments are based on accurate
information?[3] As The New York Times reported
in January 2018, 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 and that as a result of these related party transactions,
facilities are able to hide profits as the cost of doing business.[4] Jordan 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% profit margin. Rau reported Kaiser Health News’s analysis
that 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.
Several
months later, The Naples Daily
News similarly reported that Consulate Health Care, the largest
nursing home operator in Florida and sixth largest operator in the country
(then, 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.”[5]
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.
While
self-dealing contracts are not illegal under current law,[6] HHS must take steps to ensure that losses
identified by nursing facilities are real and not paper losses claimed by
owners and corporations hiding their profit-taking.
Third, will facilities be ineligible for PRF if they
have serious deficiencies related to infection control and prevention or other
resident care areas? In September 2020, CMS announced that $2 billion of
PRF would be distributed as “performance-based incentives” to nursing
facilities meeting two criteria: (1) a COVID-19 infection rate below the rate
of infections in the county in which the facility is located and (2) a COVID-19
death rate below a nationally-established performance threshold for mortality
among nursing home residents infected with COVID-19.[7] In some instances, these
“performance-based” payments exceeded the civil money penalties that CMS had
imposed against the same facilities for infection control deficiencies. The Colorado Sun reported
that 132 Colorado nursing facilities were both fined for poor infection control
practices and received performance-based incentive payments. One hundred
seventeen of the 132 facilities, which also experienced a COVID outbreak,
received more than $10.3 million more than they were fined in federal COVID-19 relief
money.[8]
There should be no question that federal funds should be directed
to the care of residents, not to facility and corporate profits.
Providers
may begin submitting applications for the funding on September 29, 2021.
___________________
[1] HHS, “HHS
Announces the Availability of $25.5 Billion in COVID-19 Provider Funding”
(Press Release, Sep. 10, 2021), https://www.hhs.gov/about/news/2021/09/10/hhs-announces-the-availability-of-25-point-5-billion-in-covid-19-provider-funding.html
[2] Provider Relief Fund Phase 3: Payment Calculation Methodology, https://www.hrsa.gov/sites/default/files/hrsa/provider-relief/phase-3-methodology-overview.pdf
[3] The Center expressed concern before with the distribution of
“performance-based” Provider Relief Funds to facilities that were fined for
infection control deficiencies. “Nursing Homes Fined for Infection
Control Should Not Receive COVID-19 ‘Performance Based’ Relief Funds” (May 27,
2021), https://medicareadvocacy.org/no-extra-funds-for-poor-performers/
[4] 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
[5] 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/
[6] California State Auditor, Skilled Nursing Facilities: Absent
Effective Oversight, Substandard Quality of Care Has Continued, Report 2017-19
(May 2018), https://www.auditor.ca.gov/pdfs/reports/2017-109.pdf
[7] CMS, “Nursing Home Quality Incentive Program Methodology” (Dec.
7, 2020), https://www.hhs.gov/sites/default/files/nursing-home-qip-methodology.pdf
[8] Zack Newman and Kevin Vaughn, “117 Colorado nursing homes with
COVID outbreaks received both fines and financial assistance from the federal
government,” The Colorado Sun
(May 9, 2021), https://coloradosun.com/2021/05/09/colorado-nursing-home-fines-coronavirus/ See “Nursing Homes Fined for
Infection Control Should Not Receive COVID-19 ‘Performance Based’ Relief Funds”
(CMA Alert, May 27, 2021), https://medicareadvocacy.org/no-extra-funds-for-poor-performers/
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