Nursing Homes Enjoying Catastrophic Care Windfall

The nursing home industry and state governments are enjoying a financial windfall that could reach nearly $2 billion because more patients are qualifying for federal payments under Medicare’s controversial new catastrophic care program.

But patients are not necessarily enjoying a higher level of care in the special Medicare wings that nursing homes are establishing, according to their advocates. They angrily contend the new law encourages nursing homes to play musical beds, moving frail and confused patients simply to qualify for higher rates of government payments.

“I have seen patients cry out and want to go home (to their original rooms) after being moved,” wrote a woman from Montague, Mich., whose brain-damaged husband is in a nursing home. He can locate his old room and go to the day room and back without assistance, she said. “Move him,” she said, “and you have taken everything away from him.”

The nursing home industry says that it is simply obeying the law, under which Congress requires a patient to be in a Medicare-certified bed before the federal government will pay the tab.

Nursing home administrators “are only moving people because they have to,” said Paul Willging, executive vice president of the American Health Care Assn., which represents 10,000 nursing homes. Willging insisted that nursing homes, as required by Medicare, are spending more money to provide skilled nursing services.

He said that the states and nursing home patients are enjoying most of the financial benefits of Medicare’s new catastrophic care program.

States come out ahead, he said, because the bills for many nursing home patients were transferred from Medicaid, which is partly state-financed, to Medicare, which is strictly federal. He said that Medicaid typically pays nursing homes about $55 a day for each patient, compared with $65 to $70 for Medicare.

The patients are profiting who previously had been paying their own way in nursing homes, Willging said.

Spending Escalates

This much is undisputed: The federal government’s spending for care at skilled nursing facilities is zooming in the first year of Medicare’s catastrophic care program. Costs were $2.4 billion in the last fiscal year and will probably reach $4.1 billion or even more in the current year, which ends on Sept. 30, according to preliminary figures from the Health Care Financing Administration.

The number of persons receiving treatment at skilled nursing homes apparently is rising far more slowly, HCFA says. The figure increased from fewer than 300,000 in 1987 to 360,000 last year, but this year’s population is running at a rate of 350,000, a slight decrease, for the first six months of 1989.

Unless the tally of patients increases sharply, the figures indicate that federal taxpayers are spending much more money on skilled nursing care without helping a significant number of additional people.

Fresh Controversy

The unexpected surge in spending for skilled nursing care is adding fresh controversy to the catastrophic care law, which is already in deep trouble. Elderly persons are angry with the surtax of up to $800 a year that they are paying for the first time this tax year to finance the program, and the Administration has added a whopping $18 billion to its estimate of the cost of the program for its first five years.

The catastrophic care law, which took effect Jan. 1, eliminated the old requirement that a person spend three days in a hospital before Medicare would pay for care in a skilled nursing facility. Moreover, Medicare now covers 150 days of residence in skilled nursing facilities, up from 100 days under previous law.

Skilled nursing facilities provide 24-hour nursing care and treat persons who are recovering from illnesses or surgery. Medicare does not pay for custodial nursing care.

Calls for Analysis

Eliminating the required three-day hospital stay meant that some persons already in skilled nursing facilities could be shifted to the Medicare rolls. Senate Aging Committee Chairman David Pryor (D-Ark.) asked the General Accounting Office, Congress’ investigative arm, to analyze how many persons were being transferred to Medicare.

“According to a number of organizations around the country, hundreds of residents have been transferred since January 1, 1989, and transfers are expected to continue as each resident’s benefit period is exhausted,” Pryor said in a letter to the GAO. “In some cases, these transfers may have jeopardized the health status of the residents.”

Under a federal rule that allows skilled nursing facilities to charge higher rates in some wards than others, the transferred patients are typically clustered in Medicare wings known as “distinct parts.”

‘Care Is Not Improved’

A Medicare wing should provide better care, with additional staff, according to federal rules. “But we often hear (that) the care is not improved or is even worse,” said Frank Lalle, a staff attorney for the Legal Aid Society in San Mateo County. “There is a new set of nurses and care-givers unfamiliar with the patient.”

Patricia Christensen, whose mother, Adelaide Fallon, was in an institution in Burlingame, Calif., said the administrator told her in January that her bed was being reclassified as a Medicare bed and that her daily rate would go from $87 to $133. Christensen asked that her mother, who did not qualify for Medicare, be transferred.

“I moved her out because of the very high daily rate I was paying,” Christensen said in an affidavit accompanying a petition to the government to allow occupants of all beds to be eligible for Medicare. “It appeared to me the care she was receiving for $133 a day was not very good and was worse than the care she had received for $87 a day.”

Says Calls Unheeded

Christensen said that the nursing facility’s Medicare wing “had a heavy odor of urine on at least one occasion. Patient call lights were unheeded and in some cases patients had bowel and bladder accidents (while) waiting for someone to help them.”

In Contra Costa County, more than 100 patients were shifted as nine facilities made mass transfers in January.

“One patient who had been in the same room for many years was heard by other patients and their families begging not to be moved,” said Lois J. McKnight, the Contra Costa ombudsman, in an affidavit. “She told them she thought she would die if she was moved. She was moved anyway, and died that night.”

Federal Spending For Skilled Nursing Care 1989: $2.4 billion 1990: $4.1 billion 1991: $4.6 billion Patients 1988: 360,000 1989: 175,000 (through June) Patient-Days 1987: 7.3 million 1988: 10.3 million 1989: 8.3 million (through June) SOURCE: Health Care Financing Administration