How Congress Could Upend Senior Care Financing

Amid recent reports of patient harm and a lack of oversight within nursing homes, a new law could start holding nursing homes more accountable for low quality ratings.

The Nursing Home Accountability Act, sponsored by U.S. Rep. Mark Walker (R-NC), aims to cut nursing homes with the lowest scorers from Department of Housing and Urban Development (HUD) Section 232 loans, which provide mortgage insurance.

“Our seniors deserve the upmost respect and care,” Walker said in a statement. “Nursing homes and senior care facilities that fail to provide quality care should be ineligible for taxpayer-insured loans. The Nursing Home Accountability Act links ratings with federal loan eligibility to ensure our parents and loved ones are protected.”

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The act would associate a nursing homes’ eligibility for federally insured loans to Five-Star Quality Ratings from the Centers for Medicare and Medicaid Services (CMS). Nursing homes that earn the lowest ratings and fail to bring up their quality measures within 30 months—or two inspection cycles—will be ineligible for future mortgages insured by HUD.

CMS originally created the quality rating system to better inform consumers about low- and high-performing nursing homes as well as point out areas of improvement for operators. As the health system shifts toward value-based purchasing payments, quality ratings may continue to play a larger role when it comes to federal programs and reimbursement sources.

Nursing homes would be able to redeem themselves and become eligible for the loans if they reach at least a three-star rating from CMS for 30 consecutive months.

The legislation was prompted by an investigation by the Center for Public Integrity that found poorly-rated nursing homes received billions in government assistance through Department of Housing and Urban Development programs. The agency reported that hundreds of U.S. nursing homes with the lowest possible quality scores—a one star out of five—still received at least one HUD-backed mortgage, reaching a value close to $2.5 billion in taxpayer dollars.

Some nursing homes were awarded multiple mortgages. In one such case, the nursing home had recently come under scrutiny for its part in the death of three residents and had been forced to pay $145,000 in fines by the state, the investigation found. The results of the study sparked outrage around the industry that led to regulatory action.

Walker also cited a local feature by a North Carolina Fox media affiliate that highlighted the “gross mismanagement of federal funds” while introducing the bill to Congress in October.

ProPublica, a non-profit investigative news source, recently reported how New York’s largest nursing home group has been able to expand its reach with new ownerships and clear regulatory obstacles with several violations and a history of patient harm. The group, SentosaCare, LLC, had paid at least 20 federal fines, yet an oversight committee failed to mention the fines in 15 separate ownership applications since 2013. The publication determined a lack of oversight and gaps in the state’s system are to blame.

However, some within the industry have said the Nursing Home Accountability Act goes too far and fails to help nursing homes that may need federally-insured loans the most.

The American Health Care Association (AHCA), an industry group that represents nursing facilities, assisted living and other types of care providers, expressed concern over the bill.

“Upon initial review, AHCA has concerns with this legislation that we would like to discuss with the Congressman,” said Clifton Porter, II, senior vice president of government relations for AHCA. “Because skilled nursing centers use these loans for improvements that enhance patient care, we would not want to see centers that need the loans the most prohibited from receiving care.”

The bill also does not provide any solution for seniors who may be patients of one-star rated nursing homes. Another top concern is for rural nursing homes that may be the only care provider for older adults for miles.

Written by Amy Baxter

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