AB 1629 (Extension)
May 24, 2010
Senator Denise Ducheny, Chair
Senate Budget and Fiscal Review Committee
State Capitol, Room 5019
Sacramento, CA 95814
Dear Senator Ducheny:
Disability Rights California supports conditioning the extension of AB 1629 on the adoption of accountability measures to advance better care for California’s nursing home residents and we offer some enhancements to the administration's proposal. We take no position on the expansion of the Quality Assurance Fee (QAF), but if it does expand, we offer an alternative use for the increased revenue, rather than using it for a rate increase to nursing homes.
We also request that you look at this proposal in the context of what is happening to long term care services which support people to stay at home – services which save the state money, are preferred by everyone, comply with federal law requiring services in the least restrictive environment – and which have been threatened with cuts and elimination. We suggest there is a lack of equity in how the legislature regards IHSS and ADHC as opposed to institutional providers of long term care for the same population.
We opposed AB 1629 because it did not tie payment to quality, giving full payment and bonuses to facilities regardless of the quality of their care. As Department of Health Care Services (DHCS) now states, AB 1629 “has no tangible or direct mechanism for financially incentivizing, rewarding, or penalizing SNFs for the overall quality of care rendered to their residents.”
Taxpayers now spend close to one billion dollars more per year on nursing home care than before AB 1629, but California nursing home residents continue to suffer from neglect and abuse in many facilities. The rate system has not delivered on its promise to improve quality or staffing. We have seen horrific examples of bad care, some resulting in death, in facilities which continued to receive enhanced funding and bonuses at the same time the budget crisis has lead to threatened cuts to and elimination of home and community based services.
California Watch reported in April that its months-long investigation found that although 230 nursing homes saw funding increases, these same facilities cut wages, reduced staff or fell below California’s minimum staffing levels. A January 2009 report by the Department of Public Health found that most skilled nursing facilities did not fully comply with California’s outdated minimum staffing requirements and that wages for certified nursing assistants have not even kept pace with inflation since AB 1629 was enacted. An April 2008 report by researchers at the University of California San Francisco (UCSF) concluded that the quality of nursing home care had declined despite the enormous infusion of funds into the system, which did produce increased profits for operators
Disability Rights California recently released a report focused on the failure to investigate and prosecute that occurs in nursing homes. While the focus of the report was on this issue, the underlying abuse was chilling. A copy of the report may be found at our home page: http://disabilityrightsca.org/.
We have consistently opposed extending AB 1629 absent any reforms, and would oppose extension this year had the administration not acknowledged AB 1629's shortcomings and proposed some corrections. We recommend the following enhancements to the administration proposals:
Reform the Labor-Driven Operating Allocation: The Administration’s proposal calls for cutting the labor-driven operating allocation (LDOA) in half beginning in FY 2011-12. The LDOA is a bonus that pays operators 8 percent on top of their actual labor costs, costing Medi-Cal about $160 million per year. We have always decried the LDOA as it is the only example in Medicaid in which providers are given payments with absolutely no accountability as to how this taxpayer money is spent. If the LDOA is retained, even at a reduced level, we recommend that the operators be required to use the payments to improve direct care staffing.
Strengthen Staffing Penalties: The Administration’s proposal would impose a penalty of 25% of the LDOA in 2010-11 on SNFs which fail to meet California’s minimum staffing requirements on 5% of the days surveyed. The penalty would rise to 50% of the LDOA in 2011-12.
Disability Rights California recommends that understaffed nursing homes be penalized the full amount of the LDOA rather than a fraction of it. California’s minimum staffing standard was set in 1999 and is widely recognized as being outdated and inadequate to serve the needs of today’s nursing home residents. Nursing homes that staff below the minimum standard are endangering residents.
Reward Operators that Exceed Standards: The Administration’s proposal would establish a special fund containing penalties and diverted payments to reward SNFs that meet identified quality measures. We support the general concept of rewarding SNFs that excel by redirecting payments from substandard facilities.
However, the proposal as written may not achieve the desired result. It states that supplemental payments will be directed to SNFs “that improve the quality and accountability of care rendered to residents.” Additionally, it identifies specific measures that will be used to qualify, including “reduction in the use of physical restraints” and compliance with the minimum staffing standard. Medi-Cal should not reward SNFs that illegally restrain residents, even if they show some improvement in this area. Nor should it reward a facility whose residents have suffered avoidable bedsores, even if the rate of bedsores is reduced.
Disability Rights California recommends that supplemental payments be made only to SNFs that exceed standards and deliver excellent care. Those that fall below standards or barely meet outdated staffing requirements should not qualify. Additionally, we recommend that SNFs that misuse antipsychotic drugs be disqualified from supplemental payments. The widespread misuse of these drugs is a leading type of elder abuse in California nursing homes and causes great misery and premature death. California should use payment incentives to help ensure nursing homes are not using antipsychotics or other type of psychoactive drugs as a substitute for needed care.
Fund Long Term Care Ombudsman Services: In addition to funding incentive payments to SNFs, the Administration proposal would use the SNF Quality and Accountability Special Fund to cover DPH administrative costs related to staffing enforcement.
Beginning in FY 2011-12, we recommend that the Special Fund also be used to replace the general funds historically appropriated to the long-term care ombudsman program. In September 2008, the Governor cut $3.8 million (100 percent of their general funds) from these programs, which represented about half of their funding. The cut has had a devastating impact on ombudsman programs and has left nursing home residents more susceptible to abuse and neglect. Allocating $3.8 million annually to preserve and restore ombudsman services would greatly benefit California nursing home residents and would not significantly impact the Special Fund’s ability to meet its other purposes.
Ban Payment of Legal Fees to Fight Citations for Abuse and Neglect: The Administration’s proposal would disallow reimbursement for legal costs related to cases that have not been found in favor of facilities. This is a positive first step in cutting subsidies to operators that are used to defend abuse and neglect. However, stronger action is needed because the Medi-Cal subsidies encourage litigious behavior that has gridlocked California’s nursing home enforcement system.
Legal fees should be disallowed anytime a facility challenges citations, inspection findings or enforcement actions, regardless of the outcome. Taxpayers should not pay for legal challenges to defend abuse and neglect. Providers should be required to fund the cost of their appeals, just as consumers are required to do when they disagree with DPH determinations. The state does not pay for IHSS consumers to appeal denials of services or IHSS workers to challenge a denial of their right to work.
Cap Liability Insurance Payments: We support the Administration’s proposal to cap reimbursement for professional liability insurance at the 75th percentile. Under the current system, substandard nursing homes are able to purchase insurance at high rates and then charge Medi-Cal the full cost of this expensive insurance.
Fiscal Alternative
The Administration proposal calls for a 3.93 percent rate increase for freestanding skilled nursing facilities in FY 2010-11 to be funded by an increase in the quality assurance fee. Disability Rights California opposes this increase because California should not be increasing nursing home payments while the Administration is seeking to gut or eliminate IHSS and Adult Day Health Care services.
Instead, we suggest that the increased revenue from the QAF and its federal match be used to back out the equivalent amount of money from the General Fund, which should then be earmarked to support home and community based services – IHSS and Adult Day Health Care. There is no requirement for QAF revenue to be used to give nursing homes a rate increase, and, in this budget situation, there is every reason not to. The nursing homes would still be uniquely advantaged by not facing a cut and by retaining a portion of the LDOA, which no other provider of long term care services receives.
The majority of California nursing home residents are people with disabilities, including seniors. We urge you to take this opportunity to improve their lives, both by improving the care in nursing homes and sustaining the community services which give them alternatives to institutions.
Thank you for considering our concerns and recommendations. Please contact me if you have any questions about our position.
Sincerely,
Deborah Doctor
Legislative Advocate
CC: Honorable Members of the Senate Budget and Fiscal Review Committee
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