Skilled-nursing facilities and other long-term care providers will likely face greater scrutiny from state and federal investigators as they struggle to manage COVID-19 cases, legal experts said.
Prior to the pandemic, regulators have systematically bolstered enforcement activity targeting long-term care facilities, which have struggled to contain the virus that's infecting many of their chronically ill patients who live in close quarters. This has resulted in thousands of deaths, which experts warn are likely significantly underreported, and a lack of transparency has hindered containment efforts.
As authorities are primed to clamp down on nursing homes and rehabilitation facilities that didn't do enough to protect their patients and staff, providers argue that years of underinvestment has made otherwise "good actors" particularly vulnerable to the pandemic.
While some of the investigations will be justified, other law-abiding providers will have to incur significant costs to defend themselves against federal, state and local probes, said Brian French, a partner at Nixon Peabody and member of the law firm's government investigations and white collar defense team.
"People will need to look for someone to blame, and long-term care providers can be an easy target," he said. "They are in a difficult bind—they are forced to do without many resources, but something like this happens and they are expected to respond incredibly well, forgetting the circumstances before the crisis began."
The Department of Justice and the U.S. attorney's office in Boston announced April 10 that they are investigating Soldiers' Home, a state-funded nursing facility for military veterans in Holyoke, Mass., where dozens of residents succumbed to the virus. The Massachusetts attorney general's office is independently investigating Soldiers' Home.
The Alameda County (Calif.) district attorney's office said Wednesday that it is investigating a Hayward nursing home where at least 13 residents have died from COVID-19.
"It appears that the current crisis is overwhelming long-term care providers that have previously tried to manage the shortcomings of inadequate staffing and supplies," said Matthew Curley, a member of the law firm Bass, Berry & Sims who focuses on compliance, government investigations and healthcare fraud. "The magnitude of this crisis is bringing to light many significant shortcomings in a very significant way."
Last month, the DOJ launched a national initiative to coordinate and enhance civil and criminal enforcement action against LTCFs. Although the initiative didn't directly stem from COVID-19, regulators noted that they started investigating 30 nursing homes' adherence to basic infection-control protocols—a key guidance from the CMS and Centers for Disease Control and Prevention. They will also be looking for nursing homes that haven't fed their patients well, withheld medication or used physical or chemical restraints to restrain or sedate their residents.
"Nursing home and elder care enforcement initiatives are nothing new," Curley said. "I expect the current crisis will increase the focus and resources of civil and criminal enforcement by regulators."
COVID-19 has beset long-term care facilities like nursing homes, many of which have become hot spots as they take on an influx of severely ill patients.
Around 70% of 183 senior nursing and assisted-living facilities surveyed said they are not fully prepared to treat an increasing number of patients diagnosed with COVID-19, according to a new poll from Premier, a group purchasing and consulting organization. Nearly a quarter said they do not have N95 respirators on hand, and most respondents have less than two weeks' supply of surgical masks, isolation gowns and face shields.
Regulators have tried to limit the spread of the highly contagious virus by banning visitors. They have also relaxed certain documentation requirements as well as changed payment policy to bolster providers' fight.
Under the national emergency declaration, the CMS temporarily waived what's known as the "three-day rule," which requires that Medicare beneficiaries stay in an inpatient hospital for three consecutive days to be eligible for Medicare-reimbursed skilled nursing and rehabilitative care.
It's a move that could help stabilize the sector and ease the pandemic's burden on older patients and the workers that care fo them, according to Beth Mace, chief economist for the National Investment Center for Seniors Housing & Care.
The CDC has also issued a checklist intended to guide LTCFs through properly notifying public health authorities when their patients or staff contract the coronavirus, using personal protective equipment and documenting the efforts to protect their patients and control the spread of the virus.
And the CMS and CDC developed a COVID-19 survey that identifies priority areas for LTCFs' self-assessments, such as resident care and placement; infection prevention and control standards; infection surveillance; visitor entry; and staff education, monitoring and screening.
Long-term care facilities should document what is expected of them in terms of preparation, mitigation strategies and notification of local authorities as well as their shortcomings, French said.
"Those strategies can be fluid, but the more that a provider can do to show real-time planning and response will be very important," he said.
Skilled-nursing facilities have been adapting to a new payment model that the CMS hoped would limit unnecessary care. While policy experts are hopeful the Patient Driven Payment Model will provide a boost for SNFs, long-term financial challenges remain.
The PDPM, which is based on the medical complexity of patients rather than on the volume of therapy services, took effect Oct. 1. Skilled-nursing facilities have responded by restructuring their workforce and laying off or reducing the hours of thousands of therapists in the process, as well as retooling their documentation and coding processes.
Medicare revenue per patient day increased 4.6% in the fourth quarter, in part due to PDPM, according to the National Investment Center for Seniors Housing & Care.
While SNFs generally financially benefited from shorter rehabilitative stays after a patient is discharged from the hospital, most of their patients are longer-term Medicaid beneficiaries whose cost of care is higher than provider reimbursements. Also, short-stay patients are few and far between as SNFs brace for COVID-19 cases and elective surgeries are canceled.
Average net income across SNFs declined from about $4 per patient day in 2014 to less than 50 cents in 2018, according to recent report from Marcum, an accounting and consulting firm. They have less than a month of cash on hand, with the national average sitting at 21 days, which exacerbates any staffing shortages.
The COVID-19 stimulus bills may help in the short term, but LTCFs can run into compliance issues if they don't abide by the terms of the funding, said Bill Jordan, partner and co-leader of Alston & Bird's healthcare litigation group.
"This situation has the potential to be rife with FCA issues, so healthcare provider organizations will need to be scrupulous when accepting the funding," he said. "With these sums of money going out to institutions across the country, conditions are like a Christmas 'wish list' for FCA whistleblowers. Grant recipients need to be vigilant with both requirements and documentation."
Policy experts have called for long-term policy fixes that bridge some of the reimbursement disparities. Going forward, a natural tension between enforcement efforts and LTCFs' resources will persist long after the pandemic subsides, Curley said.
"It's quite possible that there is going to have to be a serious look at the reimbursement model if we are going to expect these facilities to be staffed adequately and have adequate supplies to weather this sort of crisis in the future," he said.