Star Whitewashes HHC's Nursing Home Scam

Well, the Indianapolis Star allowed business reporter Dan Lee to write about how the Health & Hospital Corporation is scamming the federal government on its so-called ownership of a chain of nursing homes across the State of Indiana, but it completely whitewashed what one of its former CEOs has called a scam. First of all, Dan Lee deliberately ignored the most important aspect of this scam. The HHC DOES NOT OWN THESE NURSING HOMES! IT'S JUST AN ILLUSION! The nursing homes are owned by Eagle Care, Inc. HHC merely leases them from Eagle Care and, in turn, enters into operating agreements with American Senior Communities (ASC) to operate all 36 nursing homes. By creating the illusion a county-owned hospital that serves the indigent owns the nursing homes, it is able to take advantage of upper payment limits (UPL) and receive more than double the reimbursement per patient from Medicaid than other nursing homes. That's what sets HHC apart from others taking advantage of UPL payments. Here's a little of the extremely misleading news story by Lee:

Independent experts say the revenue is not likely to go away anytime soon, and Health and Hospital Corp. Chief Executive Officer Matt Gutwein says the project can be completed without raising taxes, even if the nursing home money declines.

Wishard has increased its net patient revenue and cut costs, Gutwein said. Income from nursing homes has been part of Health and Hospital Corp.'s strategy to diversify its revenue and reduce the amount of tax funding it receives.

Still, two opponents raise doubts about the long-term security of key Medicaid payments Wishard receives . . .

Health and Hospital Corp. owns about 35 nursing homes across Indiana, mostly outside Marion County. The facilities are operated by an outside company, American Senior Communities.

The nursing homes help boost the bottom line.

Health and Hospital Corp.'s overall revenue for 2009 is expected to be $848 million, with nursing homes accounting for 42 percent of that, Chief Financial Officer Dan Sellers said. Wishard Health Services brings in 51 percent of the total . . .

Because Health and Hospital Corp. is a government-owned entity, it is eligible to receive "upper payment limit" reimbursement from Medicaid -- payments privately owned nursing homes don't receive.

As Health and Hospital Corp.'s nursing-home division has grown, so have UPL payments: from $10 million in 2003 to about $48 million in 2009, according to Sellers.

Medicaid may pay a private nursing home $125 a day for a nursing home resident. But because Health and Hospital Corp. is a municipal corporation, it receives an extra $55 per day for each Medicaid resident in its nursing homes, according to Sellers.

Health and Hospital Corp.'s foray into nursing homes has accompanied Wishard's own financial rebound, Gutwein said.

The corporation has turned around a loss of $77 million in 2002 to a surplus of almost $39 million in 2008, according to financial documents. It has $150 million in cash set aside for the building project . . .

The purpose of this news story is not to inform the Star readers, but to blatantly misrepresent what is happening in order to alleviate any concerns voters might have in buying into the proponents' claim that a new county hospital can be built without raising your property taxes. Lee actually tries to portray the revenues received from these nursing homes as a reliable source, even as he concedes the Bush administration tried to end such payment arrangements a couple of years ago. There's absolutley no mention of the GAO studies highly critical of UPL payments, which it contends violates the spirit of the Medicaid law of equal sharing of costs between federal and state governments. Lee completely misleads the Star's readers by suggesting there is no likelihood of the HHC's revenue structure being affected by any changes in the future, even with the Obama health care plan. That's simply untrue.

Under a deal the American Hospital Association reached with the Obama administration earlier this year in exchange for the group's support of his health care plan, the hospitals agreed to cuts of approximately $150 billion in Medicare/Medicaid reimbursements. Included in those planned cuts are between $55-60 billion in disproportionate share payments. These so-called DSH payments are Wishard's bread and butter. It receives more than $100 million annually in these payments, and it receives more than any other hospital in Indiana. Methodist Hospital in Indianapolis is the only other hospital locally that receives DSH payments. HHC officials dismiss the impact these changes will have on Wishard. It says more people with insurance will mean fewer people needing free health services. This ignores the fact that people with insurance can pick and choose among hospitals. Who's to say they won't choose to go to a St. Francis, Community or St. Vincent Hospital instead of Wishard once they are covered by a national health insurance plan?

Lee makes it appear that only a couple of people have a problem with how Wishard is funding the construction of this new county hospital and that all the experts disagree with the opponents' views. Here's a little on that:

"I do have some trepidation about the funding structure under which an expansion would be created or a new hospital would be created," said Mitch Roob, who previously was CEO of Health and Hospital Corp. and secretary of the Indiana Family and Social Services Administration, which oversees the state Medicaid program.

"The upper payment limit is (a) pretty unsecure way of funding that expansion," Roob said.

Roob now is Indiana's secretary of commerce, although he emphasized he was speaking about the Wishard project as a private citizen.

Jane Jankowski, spokeswoman for Gov. Mitch Daniels, said the governor has not taken a position on the Wishard ballot issue, saying it's up to the voters of Marion County.

Self-described taxpayer advocate Carl Moldthan, Indianapolis, said he's studied Health and Hospital Corp.'s finances and worries about the upper payment limit reimbursement being vulnerable to future federal budget changes.

"When this thing fails," he said, "it will be a monster for people to be able to afford."

Health and Hospital Corp., he said, is hardly alone in seeking UPL payments. Hospitals, doctors and other providers also benefit from upper payment limit reimbursement.

"This is not some little thing that we invented," Gutwein said of UPL. "This is an important and routine feature of Medicaid programs."
One expert seemed to agree.

"So many public systems use everything they possibly can to maximize their revenue," said Heather O'Donnell, policy director for health care and human services at the Center for Tax and Budget Accountability, a Chicago nonprofit group. "Maximizing the UPL in different ways is what they have to do."

If Lee was going to rely on an expert from Chicago, he should have at least reported on the Cook County Hospital debacle. Chicago built a new hospital a few years back for nearly $700 million using UPL payments. The proponents made the same arguments that the old hospital building cost too much money to operate with the ongoing need for maintenance and repairs on the aging structure. Soon after the new hospital opened, it found itself in severe financial troubles and has constantly found itself going back to the state and federal governments seeking bailouts. An entire wing of the new hospital had to be closed because utilization rates were much lower than had been anticipated when the new hospital was built.

This is what we're up against. The Indianapolis Star has chosen to throw all caution to the wind and completely misrepresent the facts to its readers in order to push this referendum through. This is why so many people in the Indianapolis area are dropping their subscriptions to the Star. It simply cannot be believed to present fair and balanced reporting. It does very little investigative reporting and most of its news coverage is extremely weak, particularly when you consider it's supposed to be the paper of record for our state. Let's face it folks. You can't necessarily believe it just because it's in the Star. I've seen better reporting in tabloid magazines.

One final note. This story could have run in the Sunday newspaper, the most read news edition of the week. Instead, the editors held it off until Monday. Why? Pick a slow news day hoping nobody reads it? How pathetic can Dennis Ryerson become?