Feds' reimbursement change need not harm nursing home care

The federal government is fixing a mistake it made last year. The Centers for Medicare and Medicaid Services is reducing payments to nursing homes by 11.1 percent to correct for “an unintended spike in payments.”
The news was met with complaints from the industry that quality of care will suffer. It was also met with complaints from Wall Street. Stock prices of large nursing home operators plummeted. “It is difficult to quantify a level at which we would be buyers” of nursing home stock after “the worst possible scenario” in cuts, a Citigroup analyst told the Wall Street Journal.
In other words, nursing homes may not make stockholders as much money now.
The places caring for the elderly and disabled — and relying heavily on government payments to do so — should not be viewed as profit-centers in the first place. Unfortunately, they have been.
A report from the Government Accountability Office last year found private investment firms have been buying nursing homes the past several years — resulting in a lack of transparency that make it impossible to know who is ultimately responsible for a home. Just as troubling was why they were buying homes: They are a “reliable investment streams,” according to government investigators.
That defies the image most Americans have of nursing homes. How can these places be such reliable money-makers when they pay the staff providing care so little? When there are too few employees, which contributes to complaints of neglect? When lobbyists repeatedly say they need higher payments from Medicare and Medicaid?
While elderly Iowans deplete their life savings to spend their final days in these homes, the financial sector looks on them as gold mines. And we know what that means. Just like any for-profit, public company, it means immense pressure on homes to cut expenses (think fewer workers) and increase profits (think higher dividends).
Cuts in government reimbursements do not have to automatically harm the care residents receive. Homes can reprioritize how they spend money. They can choose to hire more direct-care workers, buy medical equipment for residents’ use and plant flowers for residents and their families to enjoy. Though this thinking should apply to the two-thirds of nursing homes in this country that are for-profits, it should also apply to nonprofit owners.
Instead of directing money to stockholders, some nonprofits simply spread large amounts around within their organizations. A few years ago the Register reported on Care Initiatives, a nonprofit that owns about 50 nursing homes in Iowa. The chief executive was being paid $2.1 million. Board members were collecting more than $400 an hour. The “nonprofit charity” owned a for-profit insurance company in the Turks and Caicos Islands, which provided the coverage solely for Care Initiatives and had more than $1 million in cash on hand.
Stories such as these abound. The New York Times reported on Philip and Joel Levy, brothers who were paid close to $1 million apiece to run a Medicaid-financed nonprofit with homes serving developmentally disabled people. They drove expensive cars and had the college bills of their children paid by the tax-exempt organization.
Government, the largest and most reliable payer for care, has obviously been paying some of these places too much. The Centers for Medicare and Medicaid Services says the recently-announced reduction in rates will “better align Medicare payments with costs.”
That refers to the cost of caring for vulnerable people, not pleasing Wall Street investors, which should have been the priority of nursing homes all along.
Source http://www.desmoinesregister.com/