Nursing home ‘bonuses’ amendment demands scrutiny

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Sen. Tom Coburn (R-OK), who introduced a Senate budget amendment that would block bonuses for non-performing government contractors and executives, might be misinformed about bonuses—at least as they pertain to nursing homes.

Amendment 892, which is now part of the Senate budget resolution, would end bonuses awarded for over-budget projects and programs that fail to meet basic performance requirements.

In a statement, Coburn offers five examples of “improper bonuses” that would be blocked by the amendment. Here is one: The Centers for Medicare & Medicaid Services pays more than $312 million per year in quality-of-care bonuses to nursing homes that have substandard care and have past health and safety violations.

But Coburn might have gotten his facts wrong.

The reason is because of some misleading reporting in a Des Moines Register newspaper article, on which the amendment is likely based. The November 2008 story notes that nursing homes around the country are receiving hundreds of millions of dollars in taxpayer-funded bonuses despite health and safety violations. Eight so-called “bonus-payment” programs cost taxpayers $312 million a year, the paper said. (Note the same figure in the amendment.)

There are a few problems with the story, according to Barbara Manard, vice president of the American Association of Homes and Services for the Aging. For one, it oversimplifies the concept of “bonuses.” Citing pay-for-performance-type programs in Iowa and Oklahoma, the story says that several poor performing homes in these states received bonuses.

But these so-called bonuses don’t tell the whole story about the program and the survey and certification system at the heart of it. That could lead to a misunderstanding.

“If you don’t know a lot about the situation, that sounds terrible,” Manard said. “It sounds like bad quality homes are given big bonuses just like AIG. In those two states, the challenge is how do you really define quality and we know there are lots of problems with the survey system, so it’s not surprising that one measure of quality would not match another measure of quality … What it speaks to is our need to continually refine these measures and be cautious about them.”

But perhaps an even bigger flaw in the story is its statement that there are 81 bonus-payment programs in 36 states. Manard said there are only a handful of such programs.

The article also incorrectly lumps in provider-tax reimbursement programs around the country with incentive bonus programs. This makes the “bonus” issue seem even more egregious.

Stepping back a bit, many states give facilities extra reimbursement in connection with provider taxes. As the long-term community knows, provider taxes are a complicated process that involves taxing facilities to receive more federal Medicaid funding.

The story draws no distinction between money related to provider tax-related programs and money related to pay-for-performance programs. So it makes sense that senators were outraged by the amount of funds being thrown around.

“No surprisingly, in the climate we are in today, everyone stood up and saluted that one,” Manard said.

As it stands, Congress has not yet passed a budget resolution, so this amendment is still a proposal.  If, however, lawmakers proceed to enact this amendment, they should have the facts and understand the complexity surrounding the term “bonuses."

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Daily Editors' Notes

McKnight's Daily Editors' Notes features commentary on the latest in long-term care news and issues. Entries are written by Editorial Director John O'Connor, Editor James M. Berklan, Senior Editor Elizabeth Newman and Staff Writer Marty Stempniak.