Nursing homes tending to veterans can breathe easy

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The paperwork headache for 2,000 community nursing homes that contract locally with the Department of Veterans Affairs will be eased by a surprising clause passed in the millenium veterans' bill. Providers, the government and veterans' families have been fighting to eradicate the hand-wringing contracts required under the Service Contract Act since the late 1980s. The Act required complicated, archaic reporting and left homes open to intense scrutiny by the Department of Labor, sometimes leading to fines.

"We did not lobby for this, though we've worked on it in the past," said Jeff Smokler, spokesman for the American Health Care Association. "Surprisingly, it very quietly passed."
On Dec. 6, President Bush signed the "Veterans Health Care, Capital Asset, and Business Improvement Act of 2003." Section 105, which allows nursing homes who are already participating in Medicare or Medicaid to enter into "agreements" with the VA, passed under the radar.
"I asked Dan [Schoeps] one day, how did that happen?" said Jade Gong, principle of Health Strategy Association in Arlington, VA, astounded. "He said the sun and moon and stars were aligned and it got through." Gong, who consults long-term care providers, is on the Geriatrics and Gerontology committee of the VA.
Schoeps, the director of long-term care purchasing for the VA, witnessed enrollment in his community nursing home program decline over the last few years. The program has phased out the regional contracts for large companies, leaving only local contracts. Local contracts are held accountable by the state labor departments. The program turnover over is relatively static, at less than 100 homes per year.
"Providers were so put off at the notion of being a federal contractor, they would not do business with us," said Schoeps. "This [bill] allows us to set up our own conditions of participation."
Under the former law, nursing facilities that cared for veterans were considered federal employers. That meant they had to award a separate salary and benefits package to the nurses who provide direct care to veterans. So when providers signed the federal contracts, they suddenly had to hire consultants to compile a compliance report to submit to the DOL, which took a toll on the bottom line.
"What really got bizarre was that we had to keep track of everybody who applied for a job, whether it be by phone, or walk-in," said John Elliot, president of American Medical Facilities Management in Charleston, WV. "It included all sorts of statistical profiling. We were being subjected to the same criteria as the aerospace industry."
Elliot, who has 11 nursing homes, reluctantly withdrew his contracts with the VA in November, merely 30 days before this bill passed and after two years of book crunching. He signed a contract in 1985 with the VA and didn't realize he might not be complying with the reporting standards until he heard about a colleague getting fined $50,000 two and a half years ago. He decided he needed to protect himself.
"I looked at how much it was going to cost for the consultant to put the reporting in process for the DOL," said Elliot. "By the time we tallied up all of the costs and how much time we were diverting from the human resources department, it got to be diminishing returns."
Under the new law, the Department of Veterans Affairs will create its own conditions for providers to participate. Schoeps is currently setting up the group that will write the regulations for the program. He forecasts that providers will be affected by Oct. 1. Out of the nearly $400 million in federal money allocated for the program, nursing homes are reimbursed for Medicaid plus an 18% add-on factor, with variables for case mix adjustment, Schoeps said.
The community nursing home program was created in 1965 to give veterans more options, so they could be housed closer to their families. In 1989, the Bush administration was considering eliminating the program or reallocating funds. Robert Bernhardt, then director of reimbursement for Manor Care in Washington, which had 60 contracts with the VA, testified in front of the Congressional subcommittee to keep the program.
"At the time, we were probably making between $2 and $5 per patient per day from the contracts," said Bernhardt, who now is a managed care consultant. "It wasn't worth it. But it was important to veterans."
Schoeps is now looking to strengthen participating homes' overall quality of service.
"In some markets we'll be able to replace some providers with others," says Schoeps. "I think that's t
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