LTC Bullet: Sue or Be Sued
Friday, October 10, 2014
Seattle— test
LTC Comment: If lawyers can sue nursing homes for poor care, shouldn’t
nursing homes be able to sue Medicaid for adequate reimbursement so they
can provide good care? How should SCOTUS rule, after the ***news.***
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LTC BULLET: SUE OR BE SUED
LTC Comment: We highlighted two articles about nursing-home litigation
for our LTC Clippings subscribers last week. The first article was
about tort liability suits against nursing homes. Here’s the clipping:
10/3/2014, “Lawsuits
Rattle Nursing-Home Chains,”
by Jennifer Smith, Wall Street Journal
Quote:
“Major nursing-home operators and industry groups say many of the lawsuits
line attorneys’ pockets while doing little to improve the quality of care.
They cite aggressive tactics by some law firms, such as drumming up
clients by blanketing areas with ads citing health violations at
individual nursing homes, and say a handful of recent landmark verdicts
are driving up the cost of settling other suits that may have little
merit.”
LTC
Comment:
I’ve consulted on a number of lawsuits against nursing homes and can vouch
for the profession’s complaints against aggressive tort lawyers. Seeing
the same horrific accusations in boilerplate language across several
different suits sows doubt.
The second article was about the right of nursing homes to sue Medicaid
for adequate reimbursement. Here’s the clipping:
10/6/2014, “Supreme
Court to rule on whether providers can sue states over inadequate Medicaid
rates,”
by Tim Mullaney, McKnight's LTC News
Quote:
“At issue is the Supremacy Clause of the U.S. Constitution. Idaho
officials [representing Medicaid] argue that it prohibits private legal
actions like the one brought by the providers. The providers say they have
no other recourse to ensure they receive adequate reimbursements to keep
offering services under Medicaid. By law, Medicaid funding must attract
enough providers so that beneficiaries have roughly the same access to
services as the ‘general population.’”
LTC
Comment:
The “Boren Amendment,” part of the Omnibus Budget Reconciliation Act of
1981, ensured at least minimally adequate Medicaid reimbursement rates for
nursing homes. Congress repealed Boren in the Balanced Budget Act of 1997
leaving no floor under Medicaid rates. Experts believe this latest
challenge by Idaho LTC providers will fail in the Supreme Court.
Sue or Be Sued
What’s going on? Why are nursing homes being sued for providing poor
care? Why do nursing homes need to be able to sue Medicaid? The answer
is a sad story about unintended consequences of well-intentioned, but
poorly conceived public policy.
Medicaid came along in 1965 and made nursing home care virtually free.
Without asset transfer penalties or estate recoveries in the beginning,
costs quickly exploded. In response, government capped Medicaid nursing
home reimbursements which caused cost shifting to private payers. High
private-pay charges and easy Medicaid eligibility led to a rapid and
catastrophic decline of private payers and a corresponding increase in
Medicaid recipients.
A vicious downward spiral ensued. Clever lawyers found more and more
inventive ways to qualify affluent clients for “free” Medicaid-financed
long-term care. With fewer private patients paying market rates and most
of their residents depending on Medicaid at reimbursement rates lower than
the cost of providing the care, nursing homes cut financial corners
wherever they could. Care quality suffered.
Re-enter the lawyers. Having raked in big fees putting people on Medicaid
who should have and could have paid privately, they sued the nursing homes
for providing poor care to the same previously affluent Medicaid
patients. Back in 2011, we summed up the story in
LTC Bullet:
Working Both Ends:
If elder law attorneys diligently warned their affluent clients to avoid
Medicaid instead of charging large fees to trap them on welfare, far fewer
people would depend on publicly financed long-term care. With many fewer
recipients, Medicaid could afford quality care for the genuinely indigent
and lawsuits against nursing homes for deficient care would be far less
common. But this kind of ethical behavior would destroy both ends of the
lawyers' profit stream--the old-faithful Medicaid planning and the
promising new field of nursing home litigation. So, don't hold your
breath.
Turnabout is Fair Play
Prov.
It is fair for one to suffer whatever one has caused others to suffer.
If
nursing homes can be sued for providing poor care, then nursing homes
should be able to sue their principal funder—Medicaid—for reimbursement
levels adequate to provide quality care. But Medicaid will never have
enough resources to pay market rates for long-term care, whether the care
is provided in a nursing home, an assisted living facility or in
recipients’ homes. Both the problem and the solution are more basic than
money. They go to incentives.
No system that rewards failure to plan responsibly for long-term care
risks and costs can survive indefinitely. Easy access to Medicaid nursing
home benefits prevented the development of a privately financed home and
community-based care market resulting in the much-maligned institutional
bias in the current system. Making Medicaid LTC available after the
insurable event occurs crowded out a market for private financing
alternatives like home equity conversion and long-term care insurance.
The end result is the Rube Goldberg arrangement we have today: a
nursing-home based, welfare-financed long-term care system providing low
cost care of uncertain quality in the wealthiest country in the world
where no one wishes or intends to be institutionalized in old age, yet too
many are. Instead of lawyers and nursing homes suing each other and
Medicaid, a much better answer is to give Medicaid back to the poor,
incentivize early and responsible LTC planning, and let private payers
vote with their feet instead of litigating if they don’t like the care
they receive.
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