Feds Scrutinizing Health & Hospital Corporation's Nursing Home Scam

Throughout the debate over the referendum to allow the Marion County Health & Hospital Corporation to issue bonds to construct a new, $750 million hospital without raising a dime in new tax revenues, I repeatedly called attention to the scam the HHC had become involved with its entry into the nursing home business. It's essentially a scheme under which HHC pretends to own and operate nursing homes that are actually owned and operated by a privately-owned nursing home chain, American Senior Communities. Nursing homes "owned" by HHC receive close to 50% higher reimbursement rates from Medicare and Medicaid because the county-owned hospital it operates serves a disproportionate share of indigent and uninsured patients. Its revenues from that nursing home business that HHC is relying upon to pay debt service on the new hospital bonds. What exactly a nursing home in Allen, Tippecanoe or Vanderburgh County has to do with providing health care to the poor in Marion County where the HHC statutory authorization to provide government-funded health care services is limited has been a bit of a mystery to me.

HHC officials scoffed at my criticism of their funding mechanism when I repeatedly raised alarm bells during the debate over the referendum to approve the issuance of the bonds. The IBJ's J.K. Wall is reporting in the latest edition that the feds, no surprise, are starting to scrutinize the HHC's nursing home racket.

In March, the federal agency that oversees the Medicare and Medicaid programs sent out a letter saying it would give additional scrutiny to the programs county-owned hospitals have used to pull in extra nursing home revenue from the federal government.

That scrutiny now affects more hospital around Indiana. Since 2011, Indiana's county-owned hospitals have acquired licenses of 205 nursing homes around the state-many of them from the campuses of their new owners.

In Indianapolis, any changes to nursing home reimbursement would hit Wishard Health Services particularly hard. The county-owned hospital system's 59 nursing homes generated cash flow of $104 million last year--money that is particularly helpful to Wishard as it pays for the $754 million replacement hospital its' building downtown.

Wishard officials say they are not concerned about changes to the program, But they and other hospital executives are monitoring the situation . . .

Not concerned? Hah. They better be. It makes absolutely no sense under the Affordable Care Act, whose purpose is to eliminate the current problem of the uninsured and the disproportionate impact that has on health care providers, like Wishard, which serve this population. If the ACA works as intended, there will be far fewer uninsured patients. Why then would the federal government continue providing disproportionate payments to county-owned hospitals as it has in the past, let alone allow them to pretend to operate nursing homes in order to further scam the system? The ACA calls for $155 billion in cuts to county-owned hospitals like Wishard over the first decade. The IBJ notes that the fiscal cliff deal enacted in January took away another $15 billion and the federal budget sequester will take away another $10 billion. At the same time, Indiana cut Medicaid payments 5% last year. Don't be surprised if you learn some day in the near future that HHC is going to be hiking your property taxes significantly to make up for cuts in federal funding.