AJC Watchdog: First Alert

Keeping watch on those who hold the public trust and money

With no debate, new board OKs Gov. Deal's $27 million nursing home deal

Last summer members of the Department of Community Health board raised questions about a proposed $27 million rate bump for select nursing home owners, and it stalled.

A few months later, the nursing home industry's lobbyist told legislators that the owners didn't need the full increase.

But Gov. Nathan Deal and lawmakers budgeted the money anyway, and Thursday, the "rate adjustment" was approved by the DCH board with no debate.

It wasn't the same board because Deal replaced two of the members who raised questions about the increase last year. Their terms had expired, but they were called and told they were being replaced hours after the nursing home rate hike stalled.

The money will go to owners who bought nursing homes between Jan. 1, 2012 and June 30, 2014 and it was meant, according to supporters, to compensate them for upgrades to the facilities they bought. However, advocates for the elderly said there is no guarantee the facilities were or will be upgraded.

About $10 million of the $27 million a year will go to two companies - PruittHealth and Cypress Skilled Nursing. The Pruitt family are among Deal's biggest campaign donors and have long been one of the powers behind the politically connected industry.

The special rate hike was stalled in September by DCH after the Atlanta Journal-Constitution and board members raised questions about it. Deal replaced two board members, but the issue didn't come back up before the panel last year.

However, campaign contributions flowed in after rate increase stalled, including more than $60,000 in one day to Deal's re-election campaign about two weeks after the proposal was pulled.

Deal included the $27 million in his budget proposal for the upcoming fiscal year, which starts July 1. The industry's chief lobbyist told a legislative panel that not all the money was needed because some of the new owners had cut costs. He said the allocation could nearly  be sliced in half.

But the General Assembly approved spending the full amount, and Deal signed the budget last month. The only comments made by the DCH board Thursday came from the panel's chairman, who made it clear the General Assembly had included the money in the budget.

The industry's lobbying arm and top companies have given more than $1 million to legislative candidates, political parties and political action committees in recent years.

The industry contributed about $1 million to Deal's campaigns and Real PAC, the political action committee created to support Deal. Real PAC received about 40 percent of its contributions from the industry. The nursing home lobby also hired Deal's son-in-law just after the governor was elected in 2010.


Government funding is the lifeblood of nursing homes, as it is for some other health care industries. Jon Howell, then president of the Georgia Health Care Association, the industry's lobbying arm, told lawmakers that 72 percent of people in nursing homes have their stays paid through the Medicaid program. Others are covered through other government programs. Medicaid spends more than $1 billion a year on nursing home care in Georgia.

The special payments haven't been the only recent controversy for the Department of Community Health involving nursing homes.

The federal government wants the state to return more than $200 million in payments to nursing homes that it  said were not permitted by Medicaid regulations.

DCH says it has stopped making the higher payments --- as part of the Upper Payment Limit program --- to the 34 nursing homes under scrutiny by the federal government.


Using UPLs, the state can get higher, Medicare-level rates for providing services, like nursing home stays, paid for by Medicaid.

Medicare provides health coverage for the elderly. Medicaid is the state-federal health care plan for the poor and disabled, but it also pays for most nursing home stays in Georgia.

Under UPL, health care providers can put up matching funds and get the higher payments in return.

According to the federal report, the state said the 34 Georgia nursing homes in question were owned by local development authorities, which provided the matching money. In fact, the federal governemnt said the homes were privately owned by a Middle Georgia company, not owned by a public agency, as required, and the matching money came from a privately owned cash management company operating on behalf of the nursing homes.

The state is fighting the request to return the money, and DCH officials have said its handling of the payments has been approved by federal officials in the past.









Reader Comments ...

About the Author

James Salzer has covered state government and politics in Georgia since 1990.