Editorial: Legislature doubles down on state-sanctioned Medicaid scam – DesMoinesRegister.com
Late in the 2016 legislative session, Iowa lawmakers quietly approved a massive, taxpayer-funded giveaway designed to provide 400 of the state’s privately operated nursing homes with hundreds of millions of dollars.
It was one of the biggest corporate hand-outs in Iowa history. But when asked about the bill after the Legislature adjourned for the year, the governor and state lawmakers professed ignorance, claiming they had no idea that over five years the bill would result in a billion-dollar windfall for Iowa’s nursing homes owners, courtesy of the Medicaid program. Then, as expected, the governor signed the bill into law.
This law requires the state to construct a new method of funneling Medicaid dollars to Iowa nursing homes through a so-called “supplemental payment program.” The problem with this program isn’t just that it’s costly, but that it’s also based on two layers of deceit:
- The law enables county hospitals to hold the licenses of independent nursing homes to create the appearance that the homes are managed by hospitals. This fictional hospital “affiliation” qualifies the homes for higher Medicaid payments than they’re currently entitled to collect as independent operators.
- Medicaid is run by the states, but is funded by both the state and federal governments. In theory, the federal government should give Iowa roughly two dollars for every dollar the state chooses to spend on Medicaid. But under this proposed supplemental payment program, the hospitals and homes kick back to the state its share of the new Medicaid money, while hanging onto the federal dollars they’ve collected.
The upshot of all this is that the federal government winds up spending roughly $200 million per year to supplement a non-existent state investment in nursing homes that aren’t really affiliated with county hospitals and don’t really qualify for the additional money.
Fortunately, the federal Centers for Medicare and Medicaid Services, which has to approve the supplemental payment program due to the staggering cost to the federal treasury, raised a series of pointed questions with Iowa officials in December, demanding to know the how this enormous infusion of public money would improve care in Iowa’s nursing homes.
Nursing home lobbyists, sensing the scheme was on the verge of being rejected by the feds, leaned on lawmakers this year to pass a law requiring the state to submit a new, but nearly identical, proposal to CMS by Sept. 29. That bill is now sitting on Gov. Terry Branstad’s desk.
Rep. Dave Heaton, a Mount Pleasant Republican who sponsored both the 2016 and 2017 legislation, says this year’s bill was written entirely by industry lobbyists who felt the new payment program would have a better shot at federal approval if the state submitted a new proposal to CMS emphasizing the anticipated improvements in resident care that would result.
But will those improvements materialize?
The legislation requires only that the facilities limit their use of the new money to four objectives: endowments; remodeling and renovation projects; computer technology; and quality of care. A nursing home could choose to spend nothing at all on quality of care and still be in compliance with the law, as long as the new money was used to meet one of the other three objectives.
Still, the House and Senate approved the bill at the urging of the lobbyists who wrote it.
“They wanted this bill very, very badly,” Heaton says.
No doubt. What industry wouldn’t want $1 billion in public subsidies to pay for computers, infrastructure and other obligations that are part of the normal cost of doing business?
Other states have used this same subterfuge to draw down hundreds of millions of dollars in additional Medicaid funding for nursing home operators. Indiana’s nursing home industry, for example, has collected an additional $836 million per year from Medicaid by gaming the system in precisely this fashion.
The supplemental payment program is a scam that, if approved, will cost federal taxpayers, including those right here in Iowa, more than $200 million per year. The blame for this can be laid directly at the door of our “fiscally responsible” state legislators who have twice approved this scheme on the laughable premise that because it has no effect on the state budget, it won’t cost Iowa’s taxpayers a nickel.
The Centers for Medicare and Medicaid Services should reject the state’s proposal and put a stop to this scheme in Iowa and in other states.