Tag Archives: Medicaid

RELIANT HEALTH CARE MANAGEMENT LLC: THE WORST NURSING HOME CHAIN IN AMERICA

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Dave Kingsley

The data analytics system we have developed at the Center for Health Information & Policy (CHIP) – our nonprofit research organization – gives us the capability to drill into our extensive data on the nearly 15,000 skilled nursing and long term care facilities in the U.S. We feel confident that we have identified the bottom of the bottom dwellers and need to bring them to the attention of other professionals and the public. We are curious about why a chain like the one described in this post is allowed to operate with impunity.

RELIANT HEALTH CARE, LLC: AN EXTREMELY LOW PERFORMING MISSOURI NURSING HOME CHAIN

    Reliant Care Management, LLC owns 21 Medicare & Medicaid funded skilled nursing  facilities in the State of Missouri – four are in the Kansas City Metropolitan Area.  In our work across the United States in cities, counties, states, and regions, we have not encountered a chain with  lower federal ratings on quality of care. In this alert, we will lay out the case for a high level of concern among families, ministers, social workers and others who might have an occasion to find a skilled nursing facility for a loved one or a client.

LOOK FOR THE RED HAND

    The Center for Medicare & Medicaid Services as the federal regulatory agency for Medicare and Medicaid funded skilled nursing has a complicated rating system for each facility that ranges from l for low performing facilities to 5 for high performing facilities.  Facilities with a rating plus a red hand have incidents that present a danger to patients.  It is rare for a chain of even a few facilities to have more than one red hand.  Nevertheless, of the 21 Reliant facilities 9 have a red hand (see table below).

    Red hands are signs of poor quality of care.  In addition to incidents that place patients in immediate jeopardy, ongoing neglect often occurs due to a lack of adequate staffing.  Nursing staffing is measured by the number of nursing hours per resident day (HPRD).  The current average of the 14,516 skilled nursing facilities in our data file is 3.8 (3 hours & 48 minutes) HPRD for RN, LPN, and CNA staffing – which most experts agree is far too low.  Nevertheless, nursing homes with an HPRD of 2 or less are quite rare – only 7 tenths of 1 percent or 103 out of 14,516 facilities.

    As the table below illustrates, the hours per resident day column indicates that Reliant facilities are extremely understaffed (“HOURS” was somehow deleted from the column – it should be “HOURS PER RESIDENT DAY”).  Indeed, HPRDs in the low 2s and 1s for an entire chain is appalling.

*According to CMS, a Special Focus Facility has, “More problems than other nursing homes (about twice the average number of deficiencies),” More serious problems than other nursing homes,” and “A pattern of serious problems that have persisted over a long period of time.”

**Special Focus Candidates:” Not quite bad enough to be a Special Focus Facility yet but moving in that direction. It is truly phenomenal to see a chain of this size with one SFF and two SFF candidates.

THE NURSING HOME CLASS DIVIDE AND THE RELIANT BUSINESS MODEL

    If you’ve seen one nursing home, you’ve seen one nursing home.  If you’ve seen one nursing home chain, you’ve seen one nursing home chain.  If you’ve seen one state nursing home system, you’ve seen one state nursing home system.  Nevertheless, similarities in patterns and practices can be seen in the SKN/LTC system.  For instance, some chains accept Medicare but not Medicaid, some accept Medicaid and Medicare, some have very little Medicaid while others have mostly Medicaid as a payor.  The amount of contract labor used, and the price paid for it varies from chain to chain and so forth.

    With 90 percent of its bed days reimbursed by Medicaid, Reliant has an extremely high number of patients who are in long-term care and too poor to pay out of pocket.  The company runs mostly large facilities (120-250 beds) and a small proportion of small facilities (approximately 60 beds). Bed size varies between and within chains.  However, the pattern we see is this:  the larger facilities in number of beds tend to be in poorer neighborhoods and serve a disproportionate number of Medicaid patients.  We have also noticed that these “big” facilities with mostly Medicaid bed days tend to be rated lower in CMS Nursing Home Care Compare quality measurement system.

Some Significant Reliant Financial Information:

  • Average bed size of 113.5 (versus 90 nationwide but Reliant has a mix of a few small and very large facilities).
  • Patient revenue: $161.6 million
  • Net operating income: $3.3 million
  • Payments to Home Office & Wholly Owned Subsidiaries:  $28.8 million
  • Reliant owned businesses supplying goods and services: management, therapy, pharmaceuticals, medical supplies, laundry subsidiaries (real estate side of the business is unknown at this time due to a lack of information)
  • All therapy services are contracted out to Reliant owned therapy subsidiary
  • Reduced labor costs through extreme low staffing and below average wages

WHO OWNS RELIANT CARE MANAGEMENT, LLC AND WHAT ARE OFFICIALS AND AUTHORITIES DOING ABOUT THIS CHAIN?

    According to CMS ownership records, Reliant is owned by one individual – Mr. Rick DeStefane (see, e.g.: Find Healthcare Providers: Compare Care Near You | Medicare).  Information (perhaps PR and propaganda) about Mr. DeStefane can be found on the Reliant website (Rick DeStefane | Reliant Care Management, LLC | St. Louis).  We cannot be a judge of Mr. DeStefane’s character.  We can only ask why his SKN/LTC facilities are rated lower than even some of the most scurrilous chains we have analyzed.

    We would also ask Mr. DeStefane to show the taxpaying public Reliant’s consolidated financial reports, e.g. income statement, balance sheet, and cash flow statement.  We have no idea the extent of personal wealth accruing to Mr. DeStefane and his family’s assets but we believe that the public has the right to know.  Our federal and state governments have failed the public by allowing nursing home providers to hide their finances. 

    What are Missouri and federal legislators and regulators planning to do about Reliant? Are they even tuned into the ratings discussed in this bulletin? What are local politicians, health departments, ministerial alliances, and other individuals and organizations with an obligation to protect the vulnerable aging and disabled populations with a need for institutional nursing care doing about Reliant?  Certainly, it is not OK to allow nursing homes this bad to operate below the radar.

Managed Care & Privatization was Supposed to Save Taxpayers Money & Work Better than Government Administered Medical Care, but That’s Not What is Happening.

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By:  Dave Kingsley

Managed Care for Poor Peoples’ Medicine is a Chimera

    According to a report released by the HHS OIG’s Office last week[1], the massive Medicaid program intended for poor Americans is beset with denial of authorization for care and weak state oversight.  What that means is this:  poor people who are hard scrabble poor enough to qualify for Medicaid and have the moxie and luck in navigating the bureaucracy to the point of approval for the program, are far too often denied the treatment physicians think they need.  The gigantic insurance companies contracting with states to run their Medicaid programs are denying care at double the rate of Medicare denials under managed care (i.e., Medicare Advantage).

    It is not difficult to understand why an undue administrative burden is placed on poor people for both qualifying for government health care in the first instance and then for receiving needed care once they are admitted to the program.  Powerful insurance companies have a financial incentive to deny a large proportion of care medical professionals think Medicaid recipients need. Furthermore, a lobby for poor people is nonexistent; they are powerless; and they can be pushed around and/or ignored by state bureaucrats.  Nevertheless, a puzzling and mistaken conventional wisdom proclaims that a corporatized and privatized system is a far more efficient and effective way to deliver taxpayer funded medical services.  It is past time that the conventional wisdom undergoes strong pushback from medical professionals, academics, and the media.

Background

    During the 2000 aughts (starting about 2010), states relying on the concept of “managed care” in which insurance companies (known as MCOs) are paid a “capitation rate,” i.e., a specific amount per enrollee, turned over their Medicaid programs to insurance corporations.  If the insurers keep their costs below the total dollars committed for enrollees, they make money.  Patients are, however, required to utilize medical services within “network.”  They must use a medical practice or hospital that is part of the contracting MCOs network of physicians and other medical providers.  Furthermore, care must be authorized by the MCO.

    The size of federal expenditures for Medicaid has resulted in mushrooming revenue for major healthcare insurers such as UnitedHealth, Elevance, Cigna, Centene, and Aetna.  In the early 2000s, no health insurers were in the top 30 corporations listed on the Fortune 500.  By 2022, nearly one-third of the top 30 Fortune 500 companies were related to healthcare insurance and managed care contracting.

    The idea of managed care began with the concept of health maintenance organizations (HMO) such as Kaiser Permanente and Ross Loos.  Individuals can join an HMO, pay the premium and expect low deductibles and co-pays.  However, the HMO or MCO in the case of Medicaid managed care have a network of physicians and other providers.  Enrollees must “stay within network” and receive authorization from an insurer (MCO) for a host of medical services their primary physician thinks they need.  This opens the door to tremendous power of insurance behemoths over Americans’ healthcare needs.

Has Privatization & Corporatization Through the Managed Care Concept Been Beneficial to the Health of Americans?

    As I mentioned, it is conventional wisdom that private, for-profit corporations can do a better job of administering taxpayer funded healthcare than government agencies.  But managed care is not working out in accordance with the widespread belief the government will pay less for healthcare if the profit motive incentivizes better care at a lower price.  Medicare Advantage costs fifteen percent more per enrollee than traditional Medicare.  Medicaid MCOs are paying robust dividends, buying back billions of dollars worth of their stock, and rewarding executives with exorbitant compensation packages while well baby care, infant mortality, heart disease, diabetes, and access to addiction treatment are not significantly improving across the Medicaid eligible population.

    Aetna, UnitedHealth, Centene, and other major insurance companies are reaping huge financial rewards by keeping per capita costs low. That would not in itself be a bad thing if outcomes were improving.  Perhaps having some healthcare is better than nothing.  No doubt, people receiving Medicaid benefits have better health outcomes than people with nothing.  But that is not the point.  Comparing poor people with no health insurance to poor people with Medicaid is illogical.

    Medicaid is lower tier medicine.  So those individuals lucky enough to qualify for it and actually receive it are treated as second class citizens.  So, by virtue of carving out a form of medical care for poor people – which is seen as welfare or a “handout” – the system can exploit them for financial gain while denying them the quality of care every other citizen deserves even though every form of healthcare received by Americans is heavily subsidized in some way or other by government.

Follow Us at the Center for Health Care Information & Policy (a newly formed nonprofit at https://chipcenterus.org/) and on this Blog as We Expose the Illogic and Folly of Privatizing U.S. Healthcare

[1] HHS OIG Report: “High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concern About Access to Care in Medicaid Managed Care.” https://www.oig.hhs.gov/oei/reports/OEI-09-19-00350.asp#:~:text=Overall%2C%20the%20MCOs%20included%20in%20our%20review%20denied,rates%20greater%20than%2025%20percent-twice%20the%20overall%20rate.

Medicaid is a Disgrace

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Dave Kingsley

The Medicaid Program Has Roots in Segregation & Racial Hatred

Among economically wealthy and technologically advanced countries in the world, Medicaid is a medical system unique to the United States.  The program was conceived and forced on the American people by segregationists in the Democratic Party during the Johnson Administration.  Segregationist Congressman Wilbur Mills, powerful chairman of the House Ways & Means Committee in the 1950s and 60s, was able to hold President Johnson’s Medicare legislation hostage until he agreed to a poverty medical care system which gave states considerable power over administration of programming and qualifying criteria.

Segregationists from states such as Arkansas, Alabama, Georgia and other states of the deep South saw poverty medicine for which people would have to prove to a state agency that they were eligible, as a means for keeping poor people – especially poor African Americans – from receiving health care. In the 1960s, the segregationist South was still the agricultural South which relied on cheap labor.  Furthermore, intense Jim Crow hatred of Southern African American citizens was incompatible with anything that might raise their status above a level of serfdom and humanize them. (See Jill Quadagno One Nation: Why the U.S Has No National Health Insurance, 2005, pp. 13-14; Gerard Boychuk, National Health Insurance in the United States and Canada:  Race, Territory, and the Roots of Difference, 2008, pp. 59-79; my chapter “Implementation of Medicaid-Funded Long-Term Care:  The Impact of Prior History on the Development of the Nursing Home Industry,” in Max Skidmore & Biko Koenig, Anti-Poverty Measures in America, 2019).

Medicaid is means-tested.  Americans must prove that they are impoverished to qualify.  This characteristic of the program has made state agencies and their bureaucrats the gateway to medical care for poor people who are required to experience the humiliating process of proving that they are too poor to get health care without government welfare.  One’s poverty must be so deep that only the poorest of the poor can qualify. In most states, the program is stigmatizing as legislatures and bureaucracies pile on humiliating barriers such as “proof of looking for work,” drug testing, and other criteria that should have nothing to do with receiving needed medical care.

Funding for Long-term & Skilled Nursing (Nursing Homes)

It is often said that placing nursing home funding in Medicaid for individuals unable to self-pay the daily rate in most facilities – or have spent down their life savings until they are impoverished – was an afterthought – that there was no purpose or rationale to making it a Medicaid program.  That was the position taken by Bruce Vladeck in his excellent but now outdated history of the system. (Unloving Care: The Nursing Home Tragedy, 1980).  I don’t believe that. 

It is my opinion that legislators like Mills and Senator Kerr from Oklahoma could foresee the major real estate industry that nursing home care would spawn.  Privatization (corporatization) was well on it way when Congressman Mill and Senator Kerr conceived and were able to get the Kerr-Mills medical program for seniors through congress in 1960.  It was also means-tested and was the precursor to Medicaid.  Nursing homes care was an integral component of Kerr-Mills.  Kerr had ties to the nursing home industry and Mills was an ardent believer in utilizing government funds and tax codes for incentivizing private economic expansion (as opposed to expansion of government, non-profit growth).

Medicaid has Become a Perverse Toxic Program that Enriches Investors & Corporate Executives

In December 2021, the Center for Medicaid & Medicare Services announced that Medicaid expenditures had reached $671 billion.  A large proportion of these funds reimburse corporations for nursing home care, which is mostly substandard and despicable.  Revenue for the industry includes not only the ample reimbursement member companies receive for patient care but also all of the capital gains from real estate which derives value from a license to operate a nursing home.

Although states and the federal government tolerate and even facilitate a veil of secrecy regarding finance and the flow of capital through lending institutions and from reimbursement, enough evidence can be found to suggest that substandard care is enriching corporations and executives.  For instance, Welltower, a major Real Estate Investment Trust and operator of nursing homes paid its CEO $20 million in 2020.  Investors in publicly listed nursing home related corporations have received high earnings during COVID.  Stock of the publicly listed corporations in the business has continued to increase while the markets have been decreasing.

A huge amount of capital flowing through the Medicaid system isn’t reinvested in a better health care system.  It is pocketed.  Much of what is pocketed can’t be seen because the government allows investors in privately held companies hide their finances.

Another Commission to Study the Nursing Home System Isn’t the Answer

People who are appointed to prestigious commissions to study the nursing home system aren’t given to speaking truth to power.  Indeed, appointing a group of academics and other professionals to a commission sponsored by the National Academy of Sciences and important foundations will not solve the problem we all have, i.e., dread of ever being in a nursing home.

It is very risky for most people on a commission to tell the truth, which is that the medical system in the United States is driven by greed.  Money in politics is resulting in domination of government bureaucracies and legislators by the very people who need to be regulated.  Money is power and has become an increasing factor in U.S. politics. 

Recommendations to tweak this that or the other thing in a system so corrupt and inefficient that nothing less than total transformation will change much of anything will likely only reinforce that system. Recommendations to increase staffing will be resisted by the industry and frustrate advocates, unions, and the public because any change will be window dressing.

I don’t want to see a recommendation for “more transparency.”  I want the privately held companies to open their books and provide the same information that publicly listed companies provide to the Securities and Exchange Commission.  The truth of the matter is that the nursing home industry, indeed the entire health care industry, has become financialized.  Taxpayers are not receiving the increase in productivity and quality that matches the tax dollars they are forced to pay for their own care.