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Jo Ann Halberstadter, Esq. Joins Firm

By: Jo Ann Halberstadter, Esq. 

On October 10, 2014, the U.S. Department of Justice announced that Extendicare Health Service, Inc. agreed to pay $38 Million to settle False Claims Act allegations relating to the provision of substandard nursing care and medically unnecessary rehabilitation therapy constituting the largest failure of care settlement  with a chain-wide skilled nursing facility in the department's history. [1]

Extendicare, a Delaware Corporation, that operates 146 skilled nursing facilities in 11 states, is alleged to have billed Medicare and Medicaid for materially substandard skilled nursing services and inadequate care in 33 of its facilities from 2007 through 2013.  Examples of the alleged substandard care included insufficient staffing, failure to provide adequate catheter care to residents, and failure to follow appropriate protocols to prevent pressure ulcers or falls.  Nonetheless,  in a post-settlement press release, Tim Lukenda, President and CEO of Extendicare stated that "the number of EHSI centers with an overall Four or Five-Star quality rating, as measured by the Centers for Medicare and Medicaid Services, has improved by almost 300% since the program's inception in 2008."[2]

On August 24, 2014, the New York Times published an article entitled "Medicare Star Ratings Allow Nursing Homes to Game the System".  The article exposed the flaws of the Medicare Five Star rating system using as an example, Rosewood Post-Acute Rehab ("Rosewood"), a Sacramento, CA nursing home owned by North American Health Care Inc.  The NY Times article examined the discrepancy between actual resident care, safety and satisfaction and Rosewood's public portrayal of itself as a deluxe facility with a Five Star ranking under Medicare's Five-Star rating system.   According to the article, Rosewood had achieved a Medicare five-star rating despite having received a maximum State fine as a result of a resident death and more than twice the average of consumer complaints filed with the State of California. 

The New York Times made public what we in the long term care industry already knew:  the Medicare Five-Star rating system gives the appearance of an independent Medicare evaluation of long term care facilities when in fact, two out of the three criteria used in the evaluation (staff levels and quality statistics) are self-reported by long term care facilities without authentication or audit by Medicare.  Unfortunately, this Five-Star rating system not only affects consumer choices but is relied upon by hospitals for discharge planning and Medicare intends to expand the Five-Star rating system to hospitals and home healthcare centers. [3]

As part of the Five-Star rating system, facilities submit a staff ratio (rating) form once per year at the time of their annual Medicare inspection.  Many facilities often know when this inspection will occur and increase staff hours for that period only.  Similarly, for the Medicare "quality measures" criteria, the score is based on each nursing home's collected data regarding issues such as bedsores and falls. 

President Obama signed into law on October 6, 2014, the Improving Medicare Post-Acute Care Transformation Act ("IMPACT") amending title XVIII of the Social Security Act ("Medicare") to provide for standardized post-acute care assessment data for quality, payment, and discharge planning, and for other purposes.  In conjunction with the signing of the IMPACT Act, the White House announced changes to the Medicare Five Star rating system for nursing homes including nationwide audits to check the quality rating for accuracy. [4]

IMPACT will implement a long-delayed provision of the Affordable Care Act (ACA) requiring nursing homes to more accurately report staffing data.  The bi-partisan Act provides $11 million funding to set up an electronic data collection system.  As a result of the IMPACT Act, nursing homes will have to electronically report staffing data every quarter which will "increase accuracy, improve the timeliness of the data, and allow for the calculation of quality measures for staff turnover, retention, types of staffing, and levels of different types of staffing," according to a White House press release. [5] The Centers for Medicare & Medicaid Services (CMS) will oversee the staffing-data collection and will audit the data using nursing home payrolls.  The data-collection system is scheduled to be in place by the end of fiscal year 2016. 

Using this electronic data, the government plans to expand and strengthen Medicare's five-star Quality Rating System for Nursing Homes, in particular the reliance on self-reported data for staffing levels and quality measures.  Thus, beginning in January 2015, in addition to auditing staff levels against electronically reported payroll information, CMS will implement the following:

a)                          Numerous on-site audits of long term care facilities nationwide or "focused survey inspections" intended to verify the staffing and quality measure information provided by long term care facilities using a sampling method.

b)                          A revised scoring for the Five Star rating system placing more emphasis on verified data;

c)                           An increase in both the number and type of quality measures used in the Nursing Home Compare Five-Star rating system including use of anti-psychotic medication (effective January 2015),  rates of re-hospitalization, discharges to the community and other measures to be introduced in the future.

d)                          Stronger requirements on States to complete timely and accurate on-site inspections and to maintain informational websites for public viewing, assumedly to report the results of the on-site inspections.

It is important to note that in addition to providing the standardized Assessment data and new quality measures used to improve the Five-Star rating system,  the IMPACT Act is also intended to create the necessary assessment instruments to promote Medicare payment reform to Post Acute Care providers  ("PACs") and a more accountable, quality-driven PAC benefit. [6] The IMPACT Act requires the Medicare Payment Advisory Committee, ("MedPAC") and the Department of Health and Human Services to build actual payment prototypes and report them to Congress by 2022.  The IMPACT Act also requires: 1) Post-Acute Care Providers to use quality date to inform discharge planning by 2016; 2) Standardized Quality and Resource Use Measure reporting for PAC providers by 2017; and 3) Standardized Assessment Data required for PAC providers beginning in 2019.

[2] Extendicare News Release, October 6, 2014, www.extendicare.com.  

[3]  http://blog.cms.gov/2014/06/18/star-quality-ratings-coming-soon-to-compare-sites-on-medicare-gov/ 

[4] The White House, Office of the Press Secretary Statements & Releases at http://www.whitehouse.gov/the-press-office/2014/10/06/fact-sheet-administration-announces-new-executive-actions-improve-qualit  

[5] See above Footnote 3. 

[6] The United States Committee on Finance at http://www.finance.senate.gov/imo/media/doc/IMPACT%20Summary.pdf