Some Connecticut lawmakers want the state to have better access to nursing home financial records, specifically how they spend Medicaid money. But how long will it take for the legislation to catch up?
WSHU’s Ebong Udoma spoke with CT Mirror’s Dave Altimari to discuss his article written with Jenna Carlesso, “Lawmakers push for more transparency in nursing home spending,” as part of the collaborative podcast Long Story Short.
WSHU: Hello, Dave. You and fellow Connecticut Mirror reporter Jenna Carlesso have been looking into how Connecticut lawmakers try to deal with a nursing home crisis in the state following the COVID pandemic. And it seems finances is a major issue. Senate President Martin Looney has co-sponsored a bill on this. What's that about?
DA: It’s particularly about the finances of nursing homes, and particularly how they spend the state’s Medicaid money that we give them. In many of these places, 70% of the people in the facilities are covered by Medicaid. So every year, every nursing home has to submit what is called a cost report, which is supposed to be an audit of their finances. What Senator Looney proposed was that 80% of the revenues that they take in, whether it be Medicaid or Medicare, which is federally funding, private pay, or private insurance, go towards what is known as direct care, which is feeding and bathing, literally taking care of the residents of the nursing homes. Right now in Connecticut, that number is only 51%.
WSHU: So the concern is that the money is being used for other things besides care.
DA: Exactly. What is it being used for? I think there are several legislators, and the buzzword is transparency. They want more transparency on what the nursing home providers are doing with their money. There's what's called related party transactions, which include things like rent and a category called administrative fees, which is a pretty open ended thing. There's no real definition of administrative fees, other than that it includes things like salaries of top personnel, like CEOs and others. I think overall, they want more transparency on where the money is going. Because what's happening in the nursing home business is that there is more and more private equity money. Hedge funds and private equity companies are taking over or investing or are quietly investing in nursing homes.
WSHU: Basically leveraging to take over these nursing homes and taking on a lot of debt that needs to be serviced.
DA: Exactly.
WSHU: So the big concern overall is private equity and hedge funds, and they're getting into this business because they see that there's a way to make money.
DA: Correct. And I think there's concern that money is coming out of these nursing homes that should be going towards taking care of grandma, that is instead going to other things that aren't involved with direct care, and that the cost reports that they submit now don't really get at that.
WSHU: Okay. But there's been some pushback on Looney’s bill. The feeling that there should be a study of this first. Could you explain that 80%? There's some pushback, they don't want the mandate.
DA: Looney’s bill was tabled, they are going to set up a task force to study the issue and report back next session. Aging is a pretty big issue in the legislature this year, the governor proposed his own bill. And one of the things in the governor's bill that I'm fairly confident will probably make it through is to give the DSS, the agency that oversees the money to nursing homes, the ability to conduct forensic audits.
WSHU: Right now, they don't have that ability.
DA: Right.
WSHU: They don't have the authority to demand these audits.
DA: They do not. They do audits, DSS does audits. They hire a company that does them, but they are not forensic audits. So that would be a detailed look atwho your vendors are, whether you owe them money, and who you are paying rent to. What's this LLC that shows up here on your cost report? So they don't have the depth or the ability at the moment to do that. That part of the governance bill would allow them to hire, do a forensic audit, make the nursing home provider pay for it, and do a deep dive into if there's a concern.
We do have, you know, they're one of the largest nursing home chains in the state. Athena is struggling mightily, financially. They've closed two facilities, and there have been rumors of bankruptcy or that they're going to have to sell off many homes. And the state really doesn't have a lot of ability to take a hard look at what's going on there. Right. forensic audit of Athena, they can't do that right now. The governor's bill will be one of the things that will be available.
WSHU: Even though the nursing home association is saying that they already provide a lot of information to the state.
DA: Yes, they're saying that the cost reports, you know, are pretty thorough. I think Connecticut, to be fair, does more than a lot of states in trying to get into what the finances are and where the money's going. I just think there's some concern that more needs to be done, especially as we see some homes closing and you know, possible bankruptcies. And, you know, like the situation with Athena, I think has really brought some state people by surprise. A company that had 21 nursing homes at one point has already sold five to a private equity company. So more of that is coming down the road here.
WSHU: So bottom line, it's gonna take a while to deal with this ongoing crisis. And there are many aspects to it even beyond the funding for the nursing homes.
DA: Yes, eventually Connecticut will raise that rate. I mean, 51% is significantly lower than other New England states. Several states, like New York, Massachusetts and Rhode Island, have recently raised their Medicaid floor of Medicaid that has to go directly to care. And so Connecticut is behind on that, as Looney said in his testimony, and we need to catch up on that part of it.
WSHU: But that may not happen this year.
DA: It will not happen this year. Sometimes things take a little while at the legislature. Aging has not been a big issue, frankly, at the legislature until now. It's a hot topic. The governor submitted a bill. The speaker of the House has supported a massive aging bill that's going to make changes and several other kinds of things when it comes to how we care for our elderly. The money part of it. I think it's just taken a little bit longer to catch up.
