The Medicare payment system for SNFs has become increasingly broken, a report states.

Editor’s Note: This article has been updated to include more information about a state program to boost pay for low-paid nursing home workers. The Massachusetts Senior Care Association contends no executives would have been eligible for pay hikes or bonuses.

A group of state legislators is asking Massachusetts’ attorney general to investigate Kindred Healthcare’s plans to close four nursing homes and an assisted living facility in and around Boston, accusing it of misappropriating state money at those facilities.

 “The question that needs to be answered is, ‘Did Kindred lobby for and receive state funding while they were planning for the closure of nursing homes?’” Rep. Nick Collins (D-South Boston), told the Boston Globe. “The public has a right to know. It’s their money.”

In a letter to Attorney General Maura Healey cited by the Globe, Collins and seven other legislators allege Kindred executives may have mismanaged state funds intended to boost wages for some of the lowest-paid nursing home workers. The company denies the allegations.

Kindred announced in late November that it would close the five facilities, then lay off more than 600 people who work at the facilities in Boston, Canton, Dedham and Needham.

The sale of the four nursing homes and one assisted living facility were described as fallout from Kindred’s sell-off to BM Eagle Holdings LLC. The Boston-area facilities were not part of the larger $700 million sale and will be closed by the second quarter of this year.

Massachusetts allocated $35.5 million in 2016 to boost worker compensation at all nursing homes statewide. The Globe wrote that a December report from the Executive Office of Health and Human Services found cash sometimes went to highly compensated staff instead, but the Massachusetts Senior Care Association took issue Wednesday with that description.

According to the December report, all but five of 393 participating facilities had filed required compliance paperwork. Of those, 9% were found not in compliance and 14% had to provide more information to demonstrate compliance. Officials reported that most “noncompliant” facilities had yet to dole out their total allocations. 

“The Massachusetts Senior Care Association is very pleased with the state’s report which shows as of December, 90% of nursing facilities were in full compliance with the rules set forth by the state,” association president Tara Gregorio said in a statement emailed to McKnight’s. “The money went where it was supposed to, namely to those on the front lines who work around the clock taking care of our residents. Executives and management were not eligible for these funds.”  

The program was designed to boost pay among eight categories of employees, ranging from social workers and activities staff to registered nurses. While the majority of facilities — 351 and 353 respectively —increased hourly wages for RNs and LPNS, fewer than half did the same for lower-paid staff in housekeeping and dietary departments.

Collins suggested to the Globe that money given to Kindred might have been used “to increase salaries and bonuses for executives.”

Gregorio said disparaging the program could undercut efforts to get all nursing home employees a living wage.

“The results of this direct-care wage pass-through program again show a direct link between Medicaid rate increases and nursing facilities’ ability to increase wages,” added Gregorio, who wants to see the program funded again in in FY ’19.

Healey’s spokeswoman, Jillian Fennimore, said the Attorney General’s office is reviewing the legislators’ inquiry.

A Kindred spokeswoman said the company had complied with state regulations and would “cooperate fully” in the case of an investigation.

Any nursing facility in the state program that fails to come into compliance by January 30 will face a take-back of funds and a 25% penalty.