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Nursing Home Industry: Pennsylvania Illegally Withheld Funds

Gene J. Puskar
The Brighton Rehabilitation and Wellness Center stands in Beaver County, Pa., Tuesday, May 12, 2020.

The nursing home industry is suing Pennsylvania, claiming in a filing announced Tuesday that the state illegally withheld more than $150 million that was intended to help long-term care facilities shoulder the financial burden of the coronavirus pandemic.

The lawsuit, filed in state court, contended the Department of Human Services is refusing to provide supplemental payments to nursing homes as required by law, depriving them of crucial funding to fight the pandemic.

“We didn’t want to file suit against the Wolf administration, but when they ignore the clear language of state law, and essentially steal more than $153 million from nursing homes battling a once-in-a-century pandemic, it’s time to stand up for what’s right,” said Adam Marles, president and CEO of LeadingAge PA, which represents hundreds of nonprofit nursing homes statewide.

Gov. Tom Wolf has “simply turned his back” on nursing home residents and staff, he said.

A Department of Human Services spokesperson said the agency was preparing a response.

The suit asked Commonwealth Court to order the state agency to release the funding. The plaintiffs are LeadingAge PA and two other trade groups representing a total of more than 900 long-term care facilities in Pennsylvania, including county-owned nursing homes.

The trade groups said they went to court after months of negotiations with the state went nowhere.

Long-term care facilities in Pennsylvania and nationwide have been hit especially hard by the pandemic. Across the state, about 40,000 residents of more than 1,300 nursing and personal care homes have contracted the virus to date. About 7,000 have died, representing more than 60% of the statewide toll, according to the Health Department.

The legal dispute centers on federal coronavirus relief legislation that temporarily boosted funding for Medicaid, a joint federal and state health care program for poor and disabled people.

The new law should have generated an extra $153 million in Medicaid funds for Pennsylvania nursing homes, according to the plaintiffs, but the facilities have not received any additional money because the Department of Human Services diverted it to other programs.

The plaintiffs noted that state law requires long-term care facilities to pay an annual assessment that helps the state generate additional federal funding for the Medicaid program.

“The department’s refusal to distribute the federal funds is particularly egregious here because the funds were only received as a result of assessments paid by the nursing facilities,” the plaintiffs said in the lawsuit. “In other words, the department is taking money earned from the contributions of cash-strapped nursing facilities and using the funds derived from those contributions to support other programs instead of nursing facility services.”

The trade groups complained that nursing homes were already in a precarious financial state heading into the pandemic because of chronic state underfunding of the Medicaid program.

Earlier this year, state lawmakers appropriated $245 million from the state's share of federal coronavirus relief legislation to nursing homes.

But Zach Shamberg, president and CEO of the Pennsylvania Health Care Association, another statewide trade group that is suing, said that while the federal funding was important, “it was only one component of the promise our federal government made to providers.”

Shamberg warned Tuesday that nursing homes are under threat from the explosive spread of COVID-19 in the general population. Masks, gowns, gloves and goggles are in short supply, virus tests are taking longer to come back, and nursing home staffs are suffering from burnout, fatigue and exhaustion, he said.

“We fear a mass exodus may be coming,” he said, adding that “nine months into this fight, providers are faced with a question of sustainability.”