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Two state agencies plan revisions to 2004 law

Ventura County Star
By Christina Jewett, California Watch
July 3, 2010

Since 2004, the state has refunded nursing homes some of the legal fees they've shelled out to fight regulatory penalties. That means the state pays for lawyers and inspectors to crack down on errant facilities and also pays to help the facilities to fight back.

But now, California health officials want to end some of those legal payments among other financial changes in store for nursing homes.

The state Department of Public Health said last month it will seek legislation to force nursing homes to pay fines into escrow accounts as soon as they file appeals. The pledge came in response to a Bureau of State Audits finding that suggests nursing homes tend to appeal fines simply to put off paying, fully aware that the state can take years to deal with such claims. Making them pay up front, the logic goes, would make it less enticing for nursing homes to file appeals and perhaps encourage them to pay more promptly.

Another agency that oversees nursing homes, the Department of Health Care Services, announced a proposed revised plan to reimburse only legal fees spent on winning battles to knock down citations.

Under a 2004 nursing home funding law, nursing homes have been allowed to bill their legal fees to the state as a cost of doing business. The proposed plan would allow nursing homes to tap into taxpayer funds only if they're successful in their appeal, essentially meaning they were justified for fighting.

That was just part of the news that came out of a meeting among officials crafting a way to go forward with a nursing home funding law. That law governs how nearly $4 billion each year is spent on nursing home care for the state's neediest elderly and disabled patients.

Here are some more highlights of the proposed plan, as announced last month by Toby Douglas of the Department of Health Care Services and Kathleen Billingsley of Department of Public Health:

  • The state would no longer pay nursing homes an 8 percent bonus on top of their labor costs. Nursing home owners had characterized this as an incentive to hire more staff members; critics called it the only profit perk in the world of Medicaid.
  • The Department of Public Health would audit facility staffing to see if the minimum number of caregivers are working. If the facilities fall short on 5 percent of the days, they would be fined $15,000; if they fall short on half of the days they would be fined $30,000.
  • The state would cap fees for liability insurance and use the savings of about $8 million to fund the state elder care ombudsman program and other projects.
  • The state would skim 1 percent off raises to nursing homes and re-distribute it based on homes' ability to meet quality standards related to patient satisfaction.