Posts Tagged ‘Department of Health and Human Services’

Court Says HHS Secretary Thompson Acted in Bad Faith

MARCH 8, 2004 VOLUME 11, NUMBER 36

In June 2001, four national advocacy organizations and an individual plaintiff sued Secretary of the U.S. Department of Health and Human Services (HHS), Tommy Thompson. The lawsuit sought the court’s help to force Secretary Thompson to follow the law’s requirement that comparative written information about what participating Medicare+Choice Organizations (MCOs) offer be mailed to individual Medicare beneficiaries.

In August 2001, a preliminary injunction issued to compel the Secretary to comply with the law regarding the information mailed to Medicare beneficiaries. In 2002, the Secretary was enjoined permanently from failing to mail the information as required at Section 1395w-24(a)(1) of Title 42 of the United States Code by the U. S. District Court for the District of Columbia.Gray Panthers Project Fund,, v. Tommy G. Thompson, 273. F.Supp.2nd 32(D.D.C.2002).

The plaintiffs to the action filed a motion to secure an award of attorney’s fees against Secretary Thompson on the basis that the Secretary had acted in bad faith in refusing to follow the dictates of the law. On February 23, 2004, the District of Columbia Circuit Court again ruled against Secretary Thompson and awarded the plaintiffs attorneys fees that amount to approximately $173,000.

The Center for Medicare Advocacy represented the plaintiffs against the Secretary to compel him to follow the statutory directive that Medicare beneficiaries, many of whom are infirm, receive the annual description of MCO plan comparisons. Secretary Thompson had argued that the plan comparisons were being left out due to the prohibitive cost of mailing this information. In issuing the preliminary injunction against Secretary Thompson, Judge Henry Kennedy, for the court, wrote that “it was astounded that the Secretary has the audacity to argue that compliance with the statutory mailing requirement is too expensive while simultaneously electing to spend $35 million on advertisements.”

Judge Kennedy summed up his opinion on the permanent injunction by saying “On the whole, the defendant [Secretary Thompson] has simply failed to provide the court with adequate assurances that he intends to cooperate with the applicable provisions in the long run…Agencies may not chose to follow some laws while ignoring others…”

It was undoubtedly this perception that Secretary Thompson wantonly failed to follow what the legislature directed that earned the plaintiff’s their attorneys fees. Attorney’s fees are not awarded routinely.

Long Term Care Industry Must Be Accountable, Says Advocate


By Patricia Nelson*

I disagree with a recent Elder Law Issues assertion that higher reimbursement rates are automatically required to meet nursing home staffing needs (see More On DHHS/HCFA Report Of Nursing Home Staff Shortages). Before such conclusions can be made, I await Sen. Charles Grassley’s US Committee on Aging report that will analyze some bankrupt nursing chains’ finances. The report will evaluate how nursing homes’ profits and obscene salaries/perks could instead have been used to pay for promised long-term care (LTC) services.

A recent NY Daily News article published profit margins and owner salaries from several NY nursing homes. Both totals were outstanding—mostly in the million dollar range—clearly showing why NY has one of the highest Medicare/Medicaid reimbursement rates in the nation. Since the majority of these facilities annually file Medicaid Cost Reports, the government is well aware how its monies have been spent. Since HCFA is solely responsible for monitoring reimbursements and has data at its disposal to alert itself to wrongdoing, how is it possible that so much public money entered the profiteers’ pockets?

There can be no other answer why 25% of America’s nursing homes remain dangerous places to live. Why laws and regulations are routinely ignored or circumvented to accommodate the nursing home industry—rather than protecting its residents. Industry campaign contributions are key to keeping government’s regulatory agencies clueless on how to solve the nursing home crisis. Placing industry insiders in high HCFA regulatory positions successfully stops any meaningful industry reforms from reaching the streets. The recent decision to return higher reimbursement rates to the industry is typical of how government monies are routinely awarded without necessary accountability.

The industry in its arrogance has become omnipotent. It routinely bypasses its legal obligations to provide a service for which it is paid. It rewards itself with obscene profit margins and compensation by purposefully withholding resident services for which consumers have paid and are legally entitled to have. These fraudulent activities continue unabated because government is well compensated by industry to ignore the real problems the industry creates.

And what recourse do consumers have to stop these bad practices? Clearly, each state’s oversight systems are seriously compromised. Numerous studies by the US Government Accounting Office conclude that the states do not adequately protect LTC consumers. In addition, consumers are prevented by state legislation from seeking help from local law enforcement as they must submit all complaints to their ombudsman office, which has no training in criminal investigations. In short, on the merry-go-round of LTC reimbursements, the industry always gets the brass ring.

Higher reimbursement rates without industry accountability is not the answer. Complicity between the nursing home industry and government must be exposed and legislation requiring a major overhaul in favor of industry accountability must be passed. The insanity of today’s LTC practices will be eliminated when the nursing home industry is subjected to the same civil and criminal laws—and procedures—as the rest of us.

*Patricia Nelson is executive director of Glenda’s House, Princeton, NJ, an affiliate of the Association for Protection of the Elderly. Glenda’s House conducts investigative research and advocates on behalf of New Jersey’s elder and disabled consumers by exposing corrupt practices that violate their rights. Ms. Nelson has written numerous articles on nursing home reform issues and is a noted public speaker for elder and disabled rights.

More On DHHS/HCFA Report Of Nursing Home Staff Shortages


Last week Elder Law Issues reported on a government study of nursing home staffing and safety. This week we continue that report. The full DHHS/HCFA report is now online.]

As described last week, the Department of Health and Human Services report recommends minimum staffing levels for nursing aides, Registered Nurses and Licensed Practical Nurses in nursing homes. It also suggests optimum levels. Almost two-thirds of U.S. nursing homes fall below those optimum staffing levels, and about half are below even the minimum levels for RNs and LPNs.

Why are staffing levels so low? Part of the problem, according to the government report, is the government itself. In recent years the federal Medicare and Medicaid programs have moved aggressively to cut medical costs, with particular emphasis on long-term care costs. Particularly notable was the Balanced Budget Act of 1997, which reduced government spending largely through reductions in Medicare and Medicaid financing, and with particular emphasis on long-term care, hospital care and drug costs. One result: many nursing homes can not afford adequate staffing.

A related problem in recent years has been the growing number of individual nursing homes, regional and national nursing home chains facing financial difficulties. A number of national chains have filed bankruptcy proceedings in the past eighteen months. Vencor, Sun Healthcare, Integrated Health Services and Mariner Post-Acute Network, four of the largest chains in the country, all filed for bankruptcy protection during that time period. Combined, these troubled organizations operated well over a thousand nursing homes.

The DHHS study looked at staffing ratios in those financially troubled nursing homes as compared to other chains and individual homes. Not surprisingly, staffing in the bankrupt chains decreased in the last four years—but so did staffing levels in the non-bankrupt chain facilities. Staffing levels in non-chain nursing homes, meanwhile, increased slightly during the same time period.

What will Congress and the Administration do about the decline in nursing home staffing? Republican Senator Chuck Grassley of Iowa, Chairman of the Senate’s Special Committee on Aging, provided one preview. In a press release issued days after the report was received, the Senator intoned that “the suffering of nursing home residents is intolerable. Bedsores and malnutrition turn the stomach and hurt the conscience. They beg for a solution, the sooner, the better.”

Senator Grassley “plans to look into options to encourage states to increase Medicaid rates for nursing homes if they agree to hire more staff with the increased rates.” In addition, the Senator promises to consider giving the nursing home industry back some of the money cut from Medicare budgets by the Republicans’ “Balanced Budget Act of 1997″—provided that the nursing home industry uses the money to hire more staff.

Will this solve the nursing home staffing problem? Perhaps. Direct government regulation may work better. In those states with minimum staffing requirements, the report indicates that staffing approaches the levels deemed acceptable by its analysis. But if staffing levels are increased by government order, but no new money is added to the system, those nursing homes already experiencing financial difficulties can hardly be expected to thrive.

Government Reports Nursing Home Staffing Is Inadequate

JULY 31, 2000 VOLUME 8, NUMBER 5

In 1990 Congress became concerned about the quality of care in American nursing homes. The Department of Health and Human Services was directed to prepare a report on nursing homes by the beginning of 1992. Last week DHHS finally sent the first part of that report to Congress a little over eight years late. Maybe it took so long because the figures on nursing home care are so bad.

Nursing home operators and patient advocates tend to disagree on many things, but central to their differences is the appropriate level of staffing required to operate safe and healthy nursing homes. The DHHS report to Congress attempts to determine minimum and optimal staffing levels in nursing homes.

DHHS reviewers tried three different methods to determine the appropriate staff-patient ratios for nursing homes. They considered the numbers proposed in professional journal articles. They also considered “outcome” measures like injury and death rates, and compared them to staff ratios.

Finally, the reviewers conducted “time-motion” studies in an attempt to determine how many staff hours are required to adequately care for each nursing home resident. While the literature review was not very helpful, the other two measures provided strong arguments for a minimum staffing level.

The report proposes a minimum staffing level of 2.0 hours of aides for each resident day. In other words, one full-time aide position should be filled for every four patients in the facility.

According to the report, there should also be one full-time RN on staff for every 40 residents, and a combination of RNs and LPNs at the level of about one for every ten patients. Of course, those staff members need to be spread across shifts to provide 24-hour coverage as necessary.

How do nursing homes stack up against those minimum requirements? Poorly, as it turns out. More than half (54%) of nursing homes studied now fall below the minimum staffing level for aides, and about a third fall below the minimum standards for professional staff. That is for minimum standards: the figures are much bleaker when compared to optimum levels.

According to DHHS it would be much better if RN and LPN rates were considerably higher. The agency recommends that RNs should be hired at the rate of one for every 18 residents, and the combination of RNs and LPNs should total one for every 8 patients. Between half and two-thirds of all nursing homes fall below those preferred staffing levels.

Why are staffing levels so low? One culprit is the federal government itself. Vigorous budget-cutting by Congress has resulted in a record rate of bankruptcies in the industry. More on that problem, and the early Republican response to the report, in next week’s Issues.

Hospital Outpatient Costs Not Limited by “Reasonableness”


Medicare beneficiaries, as most people know, are required to pay 20% of the reasonable charges for outpatient physician and inpatient hospital services. The ability of Medicare to set “reasonable” charges and require health care providers to abide by its determination is frequently cited as one of the principal reasons Medicare costs rise more slowly than medical costs outside the Medicare system. There is no doubt that the limitation on medical costs is a boon to Medicare participants.

A little-known quirk in the law recently came under closer scrutiny in a Federal Court of Appeals case. Although Medicare rules limit physicians and hospitals from charging more than the “reasonable” rate, Medicare has refused to set or enforce such rates for hospital outpatientservices. The result of this failure is that Medicare recipients are now paying about half the costs of such services, and the Department of Health and Human Services (HHS) predicts that their share will increase to over two-thirds by the turn of the century.

Hospital outpatient services now typically include radiology and diagnostic procedures and outpatient surgery. Making the problem worse is the increasing shift by hospitals to more outpatient treatment. Since the effect of doing a given procedure on an outpatient basis is to remove the Medicare cap on prices while at the same time reducing costs to the hospital, most observers predict that there will be even more pressure to treat patients on an outpatient basis in the future.

Whether the shift to outpatient care is a desirable result or not (and most critics concede that outpatient care is often preferable), the result of this funding glitch is to increase the cost of care to elderly and disabled patients. For that reason, the Center for Health Care Rights in Los Angeles brought action in Federal Court to require HHS to treat hospital outpatient costs in the same way as inpatient costs and physician’s outpatient services.

The Ninth Circuit Court of Appeals has now ruled against the Center. Although the Center argued that several sections of federal law compelled HHS to restrict reimbursement rates for outpatient services, the Court agreed with HHS’ argument that nothing in Medicare law expressly covered the reasonableness of rates for hospital outpatient services. Since the Center brought the lawsuit as a nationwide class action, this result will affect all Medicare recipients.

The Court of Appeals ruled that “although reasonableness has long been a condition on Part B provider agreements, Congress has never specifically directed the Secretary [of HHS] to cap the charges for hospital outpatient services.” Since the issue is now before the Congress, the Court also declined “the beneficiaries’ invitation to preempt congressional action in this very delicate area of public policy.” Stephenson v. Shalala , June 25, 1996.

Fraud Found By Government In Medicare and Medicaid

MAY 20, 1996 VOLUME 3, NUMBER 47

Last May the big news in aging was the fourth White House Conference on Aging. While the Conference did not lead to major new initiatives or approaches in dealing with aging or the elderly, one crowd-pleasing promise came from President Bill Clinton and Health and Human Services Secretary Donna Shalala. While Congress considered massive cuts in Medicare and Medicaid, many focused on fraud alleged to be rampant in both programs, the Administration announced an initiative to crack down on such fraud.

Called “Operation Restore Trust,” the anti-fraud plan targeted the five biggest states in both population and Medicare and Medicaid expenditures. Government operatives particularly looked at the programs in New York, California, Illinois, Texas and Florida.

After one year, the program claims major success. Operation Restore Trust claims to have identified and corrected $42.3 million in overpayments in the five targeted states. Since the cost of the special program was about $4 million, the Department of Health and Human Services claims a return of $10 for every dollar expended on control of fraud and waste.

Among the examples of fraud cited by the Department was one instance in which a nursing home routinely invited new residents to a get-acquainted tea. Later, one resident’s son noticed that the nursing home had charged Medicare for a group therapy session; after investigation, it turned out that the tea was being billed as therapy for all attendees.

Most of the efforts expended by Operation Restore Trust have been in nursing home, home health agency and durable medical equipment suppliers’ bills. In appropriate cases, the task force has pursued and obtained criminal convictions, fines and civil penalties against offenders, all of which have been paid into the Medicare Trust Fund or the U.S. Treasury.

The five states targeted by Operation Restore Trust account for 38.5% of the nation’s Medicaid beneficiaries and 34% of Medicare beneficiaries, according to the Department of Health and Human Services. Although only a little more than a third of Medicare and Medicaid beneficiaries are directly affected by the initiative, Department officials point out that it has given officers practice in building cases for fraud and experience in assembling cases.

Based on the claimed savings of $10 for every $1 expended, President Clinton has indicated that he will include more funds for expansion of Operation Restore Trust in his 1997 budget proposal. According to HHS Secretary Shalala, “In its first year Operation Restore Trust has proved its value and the president wants to extend its reach to every state in the nation.”

Over the next six years, Congress has proposed cutting the growth of the Medicare and Medicaid programs by a total of approximately $240 billion (President Clinton has proposed smaller cuts, totaling “only” $170 billion). Based on the first year experience of Operation Restore Trust, this initiative might be capable of reducing the cost of Medicare and Medicaid by a total of about $600 million over that same period. In other words, and aggressive fraud and waste reduction program might account for as much as three-tenths of one percent of the President’s proposed reductions, or one-quarter of one percent of the proposed Congressional reductions. Clearly, while fraud detection and reduction should be given a high priority, it will be nothing more than the proverbial drop in the budget bucket.

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