Report recommends withholding Medicaid from lowest-rated nursing homes

By: - February 2, 2022 2:08 pm

The Office of the State Comptroller found the 15 worst-rated long-term care centers in the state continued to receive hundreds of millions of dollars from the New Jersey Medicaid program. (Getty Images)

A state watchdog is recommending the state pull Medicaid awards from New Jersey’s least safe nursing homes in a bid to force the long-troubled facilities to improve their services.

In a report released Wednesday, the Office of the State Comptroller found the 15 worst-rated long-term care centers in the state continued to receive hundreds of millions of dollars from the New Jersey Medicaid program despite abysmal ratings on inspections measuring resident health, care quality, and staffing levels.

Each of the 15 centers received a one-star rating for at least six of the eight most recent quarters.

In some cases, the deficiencies stretched back years. South Jersey Extended Care received a one-star rating for all but two quarters since the start of 2013.

State officials from the Department of Health inspect long-term care facilities for the Centers for Medicare and Medicaid Services, which issues nursing homes a quarterly rating of between one and five stars.

Despite the deficiencies, the 15 homes cited in the report — which house about 7% of the 28,500 New Jerseyans in long-term care facilities — still receive an average of $103 million in state Medicaid funds annually, the comptroller found.

“Inspectors are repeatedly citing these facilities for serious health and safety issues year after year. We found that $100 million in Medicaid funds — state and federal funds — go to these long-term care facilities that are repeatedly rated one star,” acting State Comptroller Kevin Walsh said. “That’s $100 million annually. None of the 15 facilities in New Jersey has made sustained improvements, yet the Medicaid program continues to pay.”

Low-rated facilities were far likelier than higher-rated homes to have received a citation for actual harm on their most recent inspection. Just over 45% of one-star long-term care centers had such a citation in their most recent inspection, compared to 0.1% of five-star homes, and residents at the low-rated facilities were also likelier to be at greater risk of serious injury, impairment, or death.

The comptroller recommends the Division of Medical Assistance and Health Services, in coordination with the Departments of Health and Human Services, impose stepped restrictions on Medicaid awards to the troubled facilities. A spokesperson for the Department of Health said the agency was reviewing and actively considering the comptroller’s recommendations.

The office recommends the division warn facilities with one-star ratings that they face sanctions unless they improve their care quality.

Suggested sanctions

Under the report’s recommendations, nursing homes that receive a one-star rating for two consecutive quarters could be barred from making additional Medicaid admissions or have their number of Medicaid beneficiaries capped.

They could also lose additional per-resident funding awarded under the state’s Quality Incentive Payment Program (QIPP), which gives up to $3 per resident to nursing homes based on patient injury, physical restraint use, and customer feedback, among other things.

The 15 lowest-rated long-term care centers received an average $1.97 per-patient payment from QIPP, compared to the $2.55 paid on average to all nursing homes in the state. Eight of the 15 worst-rated facilities saw a boost in QIPP payments in 2022 despite their persistent one-star ratings.

Laurie Facciarossa Brewer, the state’s long-term care ombudsman, on Wednesday told reporters the Division of Aging Services, which administers QIPP, appears to be considering a re-evaluation of the program to lower awards to deficient facilities.

A third consecutive one-star rating could see nursing homes entirely barred from making further admissions and receiving QIPP payments, and all Medicaid beneficiaries could be removed from the facility under the Comptroller’s recommendations.

Operators of troubled nursing homes could also be banned from gaining ownership or stakes in additional long-term care facilities.

Over $300 million in Medicaid money has flowed to LTCs that are repeatedly rated one star between fiscal years 2017-2019. (Courtesy of the Office of the State Comptroller)

The comptroller’s office found owners, administrators, and managers of the lowest-rated nursing homes were often involved in other low-rated facilities in the state.

“When you look at a report like this, you see so many facilities that have common ownership that would perform poorly year over year, and you really can’t help but conclude that running a facility that continually is issued deficiencies and pays fines for poor care, that this is just baked in and this is just the cost of doing business,” Facciarossa Brewer said.

Staffing deficiencies often played a key role in a long-term care center’s low rating, she said.

Cutting the number of registered nurses at a facility can reduce costs, but nursing homes with fewer registered nurses are far likelier to receive a lower rating, Facciarossa Brewer said.

“You have to curtail admissions when you can’t handle the people you have, because when you’re chronically short-staffed, mistakes are going to be made. Call bells aren’t going to be answered,” she said, adding, “Many of the facilities that are on this list probably won’t curtail admissions on their own, so the survey agency may need to go in and do that for them.”


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Nikita Biryukov
Nikita Biryukov

Nikita Biryukov most recently covered state government and politics for the New Jersey Globe. His tenure there included revelatory stories on marijuana legalization, voting reform and Rep. Jeff Van Drew's decamp to the Republican Party. Earlier, he worked as a freelancer for The Home News Tribune and The Press of Atlantic City.