The recent news by the Oceanview Nursing Home in Lubec that it is up for sale has many feeling a sense of déjà vu. When the Calais‑based nursing home, Atlantic Rehabilitation and Nursing Center, closed its doors in 2012, the city reeled from the loss of about 90 jobs. Calais families scrambled to find places for their loved ones in facilities nearby, but even placing an elderly parent or spouse in the relatively close facilities based in Eastport or Lubec meant a round‑trip drive of one to two hours.
The county as a whole felt the loss when the Department of Health and Human Services (DHHS) granted the parent company, First Atlantic Healthcare, the right to move the 52 bed rights to other more profitable counties. Washington County's total number of nursing home beds dropped from 220 to 168, a blow to the families with elderly relatives in need of long‑term care, and a distinctly worrisome trend for a county with an aging population.
Oceanview has 39 beds. Administrator Nathan Brown explains that a web of factors has contributed to the family's decision to sell the privately owned resource. Trying to break it down for the layman is no easy task, he notes, but he points to a few key areas: the high percentage of MaineCare residents and the lack of residents with either Medicare or private payment plans that allow for some profit to make up for the losses associated with MaineCare clients; the MaineCare funding formula disparity within DHHS designated regions that affects principles of reimbursement; and the inability of small facilities to create economies of scale in purchasing.
The list continues, but Brown explains that the MaineCare payment rate for services is formulated in such a way that a nursing home cannot make a profit. Just like any business, there are additional costs to running a facility that must be paid for through customer sales, in this case client payments. Long‑term care facilities in other parts of the state that have a higher percentage of Medicare Part A and private payment residents "are very profitable." They can afford the nice art, the gardens, the plush facilities. But that doesn't mean they garner awards for their patient care, and despite the very tight budget, Oceanview has, Brown says.
The tipping point
A tipping point occurred during the last year that has plunged Brown into a bureaucratic catch‑22 with severe financial implications for the facility. In brief, he explains, DHHS has placed the burden of legal action on the nursing home for back payment of at least $135,000. The bad debt is related to one former resident and one current resident whose family members, acting as powers of attorney, refused to comply with federal regulations about "look‑back" rules and asset transfer associated with eligibility for residential care MaineCare coverage when the Goold‑assessed status of their elderly parents was changed from residential to nursing home care. Brown explains that DHHS "protects the privacy of their members" and so could not tell him of the powers of attorney's refusal to cooperate. He was left with having no idea that his two elderly residents, suffering from severe dementia, no longer had MaineCare eligibility in place. He thought they were covered, until a few months into their new status he saw that DHHS was not submitting payment. The nursing home he had been running well, accumulating awards, was suddenly in financial jeopardy.
After a period of time, one of the residents had her eligibility restored. Brown says, "So I called the power of attorney to discuss the debt, and she pulled her parent out, leaving $39,000 unpaid." After having experienced this first financial blow, Brown acted quickly so that the second power of attorney situation wouldn't leave him in the same place. "I started the discharge process. The power of attorney appealed to DHHS." The agency told Brown the resident couldn't be discharged without an address. Brown pointed out the power of attorney address on the form. "Their second ruling why discharge could not occur was because it was 'unsafe.'" He adds, "We have a $96,000 penalty with no recourse except to take them [the power of attorney and resident] to court." He adds, "It's a horrible position that DHHS has created. Their stance is that it is my issue with the residents."
DHHS Communications Director John Martins says, "We cannot comment on this, or any other case, based on confidentiality laws." He explains that the following statement is not specifically related to the case and only speaks in general terms. "When it comes to policy, federal regulations govern the so‑called Medicaid penalty period, not state or DHHS policy. Federal regulations around asset transfer penalties can be found at 1917(c)(1)(A) of the Social Security Act. As it is when any person grants power of attorney [POA], it is the responsibility of the POA to provide appropriate guidance for the person whom they represent. Neither DHHS nor a nursing facility will discharge a resident into an unsafe environment. We work collaboratively to transition care to a safe and appropriate venue."
The end result, says Brown, is that up until this particular situation occurred, he was running a viable business on an extremely tight and efficient budget. "Other than this, our budget and costs are the same." He adds, "I don't see that Oceanview will ever be profitable. It never was. As far as survival, we can survive. Could we eventually dig out from this? Yes, until or unless the same situation happens again." He adds, "If the payback issue hadn't happened, we wouldn't be having this conversation. They [the state] needs to fill that hole" brought about by the power of attorney refusal to cooperate with the payback law. Other states, he points out, have significant fines of up to $250,000 that penalize powers of attorney for just such abuse of policy. "Maine has no teeth," he says.
Potential loss of bed rights
With Oceanview now on the market Brown acknowledges that the likelihood of selling to a business that would retain the resource in Lubec is low. "All the business value we have is in our bed rights. There's been interest in the bed rights for years." However, he notes, the value of the bed is in where it's located, thus the likelihood of the transfer of those bed rights out of the county and to a location where the mix of clients would include a much higher percentage of Medicare and private pay residents.
Maine law has set the total number of bed rights for the state, which explains why First Atlantic Healthcare was interested in moving the Calais nursing home's bed rights to a more profitable area of the state. They are a finite resource. Calais City Manager Diane Barnes, a member of the Commission to Study Long‑term Care Facilities that was formed this year by the legislature, says, "We cannot afford to lose another facility in Washington County." If the bed rights move to another county the only way to get them back would be to purchase them. "I don't see it. It's going to be really difficult because of the MaineCare patient numbers" being so high in the region.
Barnes and a fellow commission member, Maine Health Care Association CEO Rick Erb, explain that MaineCare reimbursement rates need to be adjusted for high MaineCare areas such as Washington County. Erb explains that the state average for MaineCare residents is 67%. According to a July report issued by the state, Oceanview is at 85%. While Eastport is at 92%, Brown notes that the Eastport facility received special legislative status a number of years ago and operates according to a cost‑based reimbursement structure unique within the state.
Erb points to Nathan Brown's right to be proud of Oceanview's awards. Rewarding high performing nursing homes should be a priority, Erb says. As for the number of bed rights in the state, Erb explains that in the 1990s there were more than 10,000. The number is now down to 7,000, partially because of more homecare services and assisted living facilities. "But in Maine those who have the highest level of need are in nursing homes," he says. The statewide occupancy rate is at 92%, which given the fluid nature of rehabilitation and other services, is about is high as it can get, Erb says. "It's not a wide margin to operate with."
The commission is meeting in October and must present its report by December 4. Commissioners are: Chair Senator Margaret Craven, Rep. Peter Stuckey, Senator David Burns, Rep. Richard Malaby, Rep. Richard Farnsworth, Brenda Gallant, John Watson, Phil Cyr, Diane Barnes, Rick Erb and one representative from the governor's office. Commission Chair Senator Margaret Craven may be reached at 783‑1897; Senator Burns may be reached at 733‑8856; Calais City Manager Diane Barnes may be reached at 454‑2521.