Erin Jordan from Eastern Iowa Government wrote an article regarding how Iowa taxpayers reimburse nursing homes for legal fees including fees defending abuse and neglect citations.  Eastern Iowa nursing homes sought Medicaid reimbursement for more than $2.2 million in legal fees, accounting fees and professional services in 2010.  The nursing homes get reimbursement even if they lose citation appeals or lawsuits.

All nursing homes receiving tax funds file annual cost reports requiring detailed information about revenue, expenses, equipment purchases, assets and employee statistics. The cost report allows nursing homes to claim expenses for legal fees. Legal fees are an allowable cost and are included in the calculation of the nursing home’s per-bed, per-day Medicaid reimbursement rate.

The Medicaid division of the Iowa Department of Human Services drafted a proposed rules change in late 2009 or early 2010.  The proposal would have forbidden reimbursement for legal fees when a nursing home is defending itself against a criminal or state civil action that it loses or when the Iowa Department of Inspections and Appeals succeeds in suspending or revoking the nursing home’s license.  The rules change also would have prohibited reimbursement for legal fees, expenses and costs for lobbying Congress or the Iowa Legislature.  No final draft has been published.

Medicaid also reimburses nursing homes for association dues for lobbying groups.  Membership dues accounted for more than $950,000 of the Iowa Health Care Association’s budget in 2009, according to the group’s tax report.


San Antonio Express News had an article about Texas budget problems causing massive Medicaid cuts. Texas’ Medicaid rates already rank 49th in the nation but the proposed budget includes a 34 percent cut in Medicaid provider rates for fiscal year 2012-2013 — three times higher than expected.  David Thomason, senior vice president of public policy for TASA, said the current Medicaid reimbursement rate is less than $125 per day. The cut will reduce it to about $80 a day.

“If this budget remains as it is proposed, nursing facilities will close,” said Alvin A. Loewenberg, president and CEO of Morningside Ministries. He said those in the nursing home industry believed the cut would be 10 percent. “Medicaid residents will have no place to go,” he said. “I am embarrassed that the state of Texas has so little concern for older folks, their families, and those who care for them in nursing homes, many of whom are working poor.”

George Linial, president of the Texas Association of Homes and Services for the Aging, said nonprofit nursing homes that largely rely on Medicaid are going to be especially hard-hit by the higher cuts.

Another article from San Antonio Express News explains how lack of funds affects the quality of the care.  Texas will lose matching federal funds that total $1.47 per state dollar spent on Medicaid. An estimated 55,000 of the state’s nursing home residents are on Medicaid.  70 percent or more of the residents in about half of the state’s nursing homes are on Medicaid.  Nursing home residents need a high level of care — frequently round-the-clock nursing attention.

There is a NY Times article discussing the litigation against certain insurance companies for cheating patients and doctors from reasonable reimbursement based on an investigation of the industry’s arcane procedures for calculating “reasonable and customary” rates.

The investigation, by the New York State attorney general, Andrew Cuomo, indicates that  procedures used by insurance companies to determine what they will pay when patients visit a doctor is rigged to shortchange the beneficiaries.

When patients get treated by certain doctors, insurers agree to pay 80 percent of the "reasonable and customary rate" in the same geographic area. The patient pays the difference.  The rate always falls short of what their own doctor is charging.   The numbers are compiled by an obscure company known as Ingenix, which is owned by UnitedHealth Group, one of the nation’s largest health insurers. This system is abused for profit.

UnitedHealth and subsidiary Ingenix  both have a strong financial interest in cheating insured by keeping reimbursement rates low and making patients pay the difference.  Ingenix is unwilling to stand behind its numbers.  In licensing its database to insurers, it stresses that the data is “for informational purposes only” and does not imply anything about “reasonable and customary” charges. Yet that is precisely what the health insurers use the data for, as Ingenix knows. 

The  American Medical Association, which has a long-standing suit filed against Ingenix and various UnitedHealth companies, claim that the data is manipulated. They claim that health insurers and Ingenix disproportionately eliminate high charges, thus skewing the numbers for customary charges downward.   Ingenix uses outdated information, which would guarantee that reimbursement rates will always lag behind medical inflation. 

It is clear that the system for calculating “reasonable and customary” charges ought to be reformed by making it truly independent and objective. No consumer can reasonably trust numbers generated by a company whose loyalties and financial interests lie with the health insurers.