Congress Gives COVID Relief Money to Nursing Facilities, Regardless of Fraud Lawsuits, Poor Quality of Care

The federal government has given money to nursing facilities during the COVID-19 pandemic without regard to their violations of federal law and federal care standards. Although facilities are required to spend money awarded under the Coronavirus Aid Relief, and Economic Security (CARES) Act’s Provider Relief Fund for “health care related expenses or lost revenues that are attributable to coronavirus,”[1] Seema Verma, the Administrator of the Centers for Medicare & Medicaid Services (CMS), said, as she announced the initial payout of $1.5 billion to SNFs in April, that the federal money comes with “no strings attached.”[2] Recent news reports describe federal funding under the CARES Act’s Provider Relief Fund to nursing facilities and chains that overcharged the Medicare program, violated federal law, and otherwise have records of poor care.

As discussed below, on August 7, CMS announced a revised policy for the next distribution of Provider Relief funds. 
As described by the Washington Post, CMS used a distribution formula[3] for the Provider Relief Fund: a lump-sum payment of $50,000 per facility plus an additional $2,500 per bed, with an average distribution for each facility of $315,000.[4] The Post describes large payments to nursing facilities, despite litigation against them for Medicare fraud and other illegal activity.

• In October 2019, a federal judge ruled that SentosaCare[5] violated federal human trafficking laws, when it brought Filipino nurses to the United States, improperly paid them, and threatened them with $25,000 fines if they quit before the end of their contracts.[6] The Washington Post reports that two nursing facilities connected with SentosaCare received more than $2 million in COVID-19 payments.

• In April 2020, Saber Healthcare and related entities agreed to pay $10 million to resolve allegations under the False Claims Act that nine of Saber’s facilities in North Carolina, Ohio, Pennsylvania, and Virginia, submitted false and inflated claims to Medicare.[7] The Washington Post reports that Saber Healthcare received more than $45 million in pandemic funding.

• Brius Healthcare Services, California’s largest operator with 81 nursing facilities and a record of “police scrutiny, lawsuits, stiff regulatory fines and state and federal investigations that have uncovered numerous alleged violations,”[8] received more than $35 million in federal relief funds.

• Life Care Centers of America, a privately-held company with more than 200 nursing facilities, is currently under a five-year Corporate Integrity Agreement (signed 2016) with the HHS Inspector General for overbilling Medicare.[9]  The company’s nursing facility in Kirkland, Washington was the site of the first COVID-19 outbreak in February. Life Care Centers of America received $48 million in pandemic funding.

The Miami Herald reports that 24 Florida facilities under common ownership – more than one-third of which are on the state’s Watch List of troubled facilities – received funding totaling between $48 million and $78 million from CARES Act funds – a combination of “competitive federal coronavirus relief funds” and increased federal reimbursement.[10]
On August 7, CMS announced a revised policy for the distribution of funds. It reported that it will distribute the next set of payments of $5 billion in two ways: half in mid-August, distributed – as before – without strings, but with the expectation that the funding will “support increased testing, staffing, and PPE needs,” and the other half, in the Fall 2020, based on facility performance.[11]  CMS describes its evaluation of facility performance as “based on the nursing home’s ability within this context [of geography] to minimize COVID spread and COVID-related fatalities among its residents.” CMS encourages “a collaborative approach to quality improvement,” as described in the June 2019 Executive Order on Transparency.[12]
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[1] CMS, Acceptance of Terms and Conditions, https://www.hhs.gov/sites/default/files/terms-and-conditions-skilled-nursing-facility-relief-fund.pdf.
[2] She said, “There are no strings attached, so the health care providers that are receiving these dollars can essentially spend that in any way that they see fit.”), Alex Spanko, “Skilled Nursing Facilities Could Soon See $1.5B Under CMS’s Emergency Relief Plan, With More on  the Way,” Skilled Nursing News (Apr. 8, 2020), https://skillednursingnews.com/2020/04/skilled-nursing-facilities-could-soon-see-1-5b-under-cmss-emergency-relief-plan-with-more-on-the-way/.
[3] HHS, “HHS Announces Nearly $4.9 Billion Distribution to Nursing Facilities Impacted by COVID-19” (News Release, May 22, 2020), https://www.hhs.gov/about/news/2020/05/22/hhs-announces-nearly-4.9-billion-distribution-to-nursing-facilities-impacted-by-covid19.html.
[4] Debbie Cenziper, Joel Jacobs and Shawn Mulcahy, “Nursing home companies accused of misusing federal money received hundreds of millions of dollars in pandemic relief,” Washington Post (Aug. 4, 2020), https://www.washingtonpost.com/business/2020/08/04/nursing-home-companies-accused-misusing-federal-money-received-hundreds-millions-dollars-pandemic-relief/.
[5] As of 2015, SentosaCare is New York’s largest nursing home network, with at least 25 facilities and 5,400 beds.  Allegra Abramo and Jennifer Lehman, “How N.Y.’s Biggest For-Profit Nursing Home Group Flourishes Despite a Record of Patient Harm,” ProPublica (Oct. 27, 2015), https://www.propublica.org/article/new-york-for-profit-nursing-home-group-flourishes-despite-patient-harm.
[6] Paguirigan v. Prompt Nursing Employment Agency, No. 17-cv-1302 (NG) (JO), E.D.N.Y. Sep. 24, 2019), https://cases.justia.com/federal/district-courts/new-york/nyedce/1:2017cv01302/398344/95/0.pdf?ts=1569413700.
[7] U.S. Department of Justice, “Nursing Home Chain Saber Healthcare Agrees to Pay $10 Million to Settle False Claims Act Allegations” (News Release, Apr. 14, 2020), https://www.justice.gov/opa/pr/nursing-home-chain-saber-healthcare-agrees-pay-10-million-settle-false-claims-act-allegations.
[8] Marjie Lundstrom and Phillip Reese, “California’s largest nursing home owner under fire from government regulators,” Sacramento Bee (Jun. 15, 2015), https://www.sacbee.com/news/investigations/nursing-homes/article24015475.html.
[9] Corporate Integrity Agreement (Oct. 2016), https://oig.hhs.gov/fraud/cia/agreements/Forrest_Preston_and_Life_Care_Centers_of_America_Inc_10212016.pdf. U.S. Department of Justice, “Life Care Centers of America Inc. Agrees to Pay $145 Million to Resolve False Claims Act Allegations Relating to the Provision of Medically Unnecessary Rehabilitation Therapy Services” (News Release, Oct. 24, 2016), https://www.justice.gov/opa/pr/life-care-centers-america-inc-agrees-pay-145-million-resolve-false-claims-act-allegations.
[10] Ben Wieder, “As Florida nursing home residents died, operators raked in federal handouts,” Miami Herald (Aug. 6, 2020), https://www.miamiherald.com/news/coronavirus/article244516407.html.
[11] CMS, “HHS Announces Allocations of CARES Act Provider Relief Fund for Nursing Homes” (News Release, Aug. 7, 2020), https://www.hhs.gov/about/news/2020/08/07/hhs-announces-allocations-of-cares-act-provider-relief-fund-for-nursing-homes.html.
[12] “Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First” (Jun. 24, 2019), https://www.whitehouse.gov/presidential-actions/executive-order-improving-price-quality-transparency-american-healthcare-put-patients-first/ (section 4 calls for Establishing a Health Quality Roadmap “that aims to align and improve reporting on data and quality measures “ and includes “a strategy for establishing, adopting, and publishing common quality measurements; aligning inpatient and outpatient measures; and eliminating low-value or counterproductive measures”).