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COVID-19 in text on top of a pile of money

I’ve never been one to frown on government aid to the elderly, but sometimes even the best of intentions can lead to unintended consequences. The funding mechanisms that fuel the nation’s nursing-home industry, for example, may have contributed to the surge in COVID-19 deaths among its residents. And Washington’s attempts to fix the problem may be making it worse.

For-profit nursing homes live and die at the whim of Medicare and Medicaid payments — especially the extra dough delivered for so-called ancillary services. When the government decides certain offerings are more vital than others, these companies move as quickly as possible to shift their priorities and collect the largesse.

Prior to the pandemic, as Will Englund and Joel Jacobs report in the Washington Post, the Centers for Medicare and Medicaid Services (CMS) paid a premium to facilities providing physical and occupational therapy. In many cases, this had the effect of devaluing the nursing assistants who actually care for the residents. “There were incredible abuses,” recalls Atlanta lawyer Michael Sullivan, who sued one national chain for fraud. “The company wouldn’t hire enough nurses to care for the patients, feed them, or turn them. But there were plenty of therapists running around, even giving therapy to patients in hospice. It was ghoulish.”

When COVID-19 began ravaging the U.S. population, however, the government shifted gears. Suddenly, the big money was in ventilators. Many states designated certain nursing homes as “COVID hubs” and rewarded them handsomely for setting aside rooms and resources for patients suffering from the virus. CMS tacked on an extra $1,500 per week per patient as an incentive.

Trouble is, few of these facilities were equipped to handle these cases while still providing quality care for their non-COVID residents. The Post reporters focus on the case of Mary Catlin, 79, who landed at Medilodge of Livingston, part of a large Michigan chain, after a fall four years earlier. Despite receiving less-than-attentive care, she loved the nursing staff and felt comfortable with her surroundings. When the pandemic struck, though, she was suddenly moved out of her room to make way for coronavirus patients. Medilodge was angling for one of the state’s COVID hub designations — and its generous subsidies — so long-term residents like Catlin became less valuable. As her granddaughter put it, “We felt like Grandma was just a paycheck to them.”

A week or so later, a nurse called one of Catlin’s daughters to report that her mom was running a fever. Days passed, with Medilodge officials refusing to respond to the family’s requests for information. The family eventually learned Catlin had been diagnosed with the virus. Transported to a nearby hospital, she died three days later.

Later that week, Medilodge of Livingston was awarded one of the state’s hub designation: $5,000 per bed; $200 per day per patient — double the typical Medicaid payment.

Six weeks later, the facility had installed 22 ventilators, preparing for a surge of COVID patients. Nineteen eventually landed there, according to a CMS report. Meanwhile, 24 long-term care residents were diagnosed with the virus and 18 died. There’s no way to prove conclusively that the admission of the coronavirus patients led to the transmission of the virus to the other residents, but a subsequent inspection reported lax infection control and sketchy use of personal protective equipment by staff.

Medilodge of Livingston has since lost its hub designation and the state has levied nearly $300,000 in fines against the 49-facility chain, where 248 residents have died from COVID-19.

It’s easy to look at Catlin’s situation and assume she simply fell victim to a poorly run facility, but industry experts suggest it’s a systemic problem. Because the government offers a different reimbursement rate for residents covered by Medicare than for those covered by Medicaid, nursing homes tend to combine the two revenue streams — allocating just enough resources to Medicaid patients to satisfy state health inspectors while shortchanging services for Medicare patients. As Mark Fritz, who runs a chain of rehab centers in Texas, puts it: “We’re robbing those additional dollars from Medicare and giving them to those Medicaid patients.”

And because CMS generally limits payment for Medicare patients to 100 days, facilities tend to list as many chronic conditions as possible for each resident in order to keep them in a bed for the entire payment period, then discharge them as soon as the money stops coming in. “It’s wrong from a human perspective, and it’s wrong according to the law,” says Eric Carlson, an attorney with the advocacy group Justice in Aging. “You should get the care you need.”

The pandemic has upped the ante, as a lack of elective surgeries at hospitals stanched the flow of Medicare-covered rehab admissions, forcing companies like Medilodge to pursue the dollars suddenly allocated for COVID beds.

“The model just doesn’t work,” says David Grabowski, a professor of health care policy at Harvard Medical School. He argues that CMS should adjust Medicare and Medicaid payments to better reflect actual costs, and states should do a better job of enforcing minimum staffing requirements while supporting higher wages for nursing-home workers.

And while experts seem to agree that facilities demonstrating a higher level of infection control should be rewarded for their efforts during — and beyond — the current pandemic, it seems inevitable that politics will intrude. Just last week, the Department of Health and Human Services announced it was distributing $523 million to 9,248 nursing homes that reported infection rates in September that were lower than expected, given the COVID positivity rates in the counties in which they are located.

The formula, as Englund reports, seemed to reward Republican-led states whose officials had generally ignored mask and social-distancing mandates. New Hampshire, which had enacted more rigid pandemic-control measures resulting in lower infection rates among its general population, received an average $21,500 per nursing home. South Dakota, which features one of the highest positivity rates in the country due to its governor’s dismissal of the contagion, reaped nearly $157,000 per facility.

“If you turn your state into a petri dish, you receive the most nursing-home funding? The Trump Administration needs to stop playing politics with lifesaving aid,” argues New Hampshire Health Care Association CEO Brendan Williams. “In New Hampshire, the nation’s best quality nursing homes are being left for dead by the federal response.”

You can debate the political influences that affect government largesse pretty much until the cows come home, but the larger point here is that the business model under which all these facilities operate is fundamentally flawed. And it’s not the nursing homes that are dying as a result. It’s their residents.

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