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By Thomas Goldsmith

Federal regulators can fine North Carolina nursing homes upward of a half-million dollars when facilities go seriously wrong — as in the case of a Fayetteville resident who died after staff found her with fire ants covering her face and upper body.

The deadly 2019 incident described in state records brought a fine of more than $530,000 against Carolina Rehab Center of Cumberland. Federal law mandates that the fines, amounting to $35 million in N.C., must be used to improve quality of life for nursing home residents through grants to facilities and agencies.

Fines levied after an investigation into the fire-ant attack went into state coffers set up for this purpose, into a pot that bulges larger year after year and puts North Carolina third highest in such totals nationally.

But why is that money sitting unused?

Restrictions from the Centers for Medicare and Medicaid Services (CMS) on dispensing specific kinds of grants and a slow-moving process mean that the grants can’t keep up with the total of fines assessed against nursing homes — 2019 saw $13 million in penalties issued in North Carolina alone.

The fines, known as civil monetary penalties, against ill-performing nursing homes have kept accruing just as the COVID-19 pandemic was being linked to 1,293 deaths in North Carolina’s 427 nursing homes. However, no civil monetary penalties funds have been directed specifically to the costs of beefing up staffing, testing, PPE, hyper-increased sanitation and other COVID-related needs.

A state rescue bill and the federal CARES Act have brought much larger amounts to fight the pandemic, Department of Health and Human Services officials said.

Money flows faster, still outpaced

DHHS officials said recently that they have been using North Carolina’s accumulation of civil monetary penalties funds for increasing numbers of allowed projects and cash spent across the state. Total outlays have grown from just under $1.4 million in 2018 to $3.6 million in 2019 and $6.8 million to date in 2020.

“We tried to really think about, ‘How do we go about soliciting and attracting some projects that have the bigger impact and the broader reach?’” said Emery Milliken, deputy director, Division of Health Service Regulation. “Nothing in government ever changes immediately or overnight. Everything is a process, but I think you can see we really have worked hard.”

North Carolina’s status as third nationally in civil monetary penalties accumulated but not spent is based on previously unreleased information in a Freedom of Information Act request that NC Health News filed more than a year ago. Previous NCHN stories on the topic in January and April sparked the state government to place priorities on getting the funding out the door, state officials and advocates have said.

The top ten states for accumulated civil monetary penalties against nursing homes. Data courtesy: CMS

State records showed that only about $400,000 was dispensed to nursing-home-centered projects in 2017 through 2019. Seventeen grants gained approval in 2019; many were smaller-scale programs aimed at improving resident diets, intergenerational visits, redesigning common areas, and one called “The Sweet Shop” to offer residents monthly ice creams socials.

Larger efforts included the $818,091 spent on a statewide virtual dementia program designed “to provide hands-on training and help staff develop a personal view of what dementia may be like.”

Fund absent in pandemic fight

“We’re trying to make sure we’re getting the word out, being strategic about what we’re doing and thinking of new ways of approaching this,” Milliken said.

Two state coronavirus relief bills and the federal CARES Act have brought much larger amounts to fight the pandemic, Department of Health and Human Service officials said.

“That’s not to say that North Carolina hasn’t really supported nursing homes during the pandemic,” Milliken said. “We have used significant amounts from our CARES Act grants to specifically target and support nursing homes.”

Federal regulations limit the kinds of projects that can be funded with civil monetary penalties, excluding existing efforts that may simply need more money in favor of newly conceived programs. And a slow-moving federal bureaucracy at CMS means quality-of-life projects take a year or more to gain approval, people acquainted with the process say.

Many seniors in long-term care facilities have been isolated inside since March, when COVID-19 hit North Carolina. Advocates argue the funds from civil monetary penalties could be used to make their lives a little safer if federal regulators would allow the money to be used more freely. Photo credit: James Harvey/ Cherry Springs

“Grants are available only for quality improvement initiatives that are outside the scope of normal operations for the nursing facility or other applicant,” a Medicaid manual says. “Grants cannot be used as replacement funding for goods or services that the applicant already offers.”

Moving forward with civil monetary penalties

In April, federal DHHS suggested changes to the civil monetary penalties process, but not to the parts most important to helping out nursing homes’ finances. DHHS instead said civil monetary penalties should be brought when a facility or company committed fraud or information blocking.

At a time when federal lawmakers are discussing bills that could potentially mean trillions of dollars in spending, talking about tens of millions may sound like small potatoes. But in North Carolina, the fund could in theory deliver about $82,000 to each of the state’s 427 skilled nursing facilities, in what would certainly be helpful amounts in this pandemic year.

The Civil Monetary Penalty fund amount is equal to more than 75 percent of the state allocation to the Division of Aging and Adult services — $45,129,864, with an increase of $109,924 in 2021.

Former state official and long-time aging advocate Bill Lamb served for years on the Culture Change Committee, a state panel charged with recommending proposed new efforts for the Civil Monetary Penalty fund to finance. State DHHS and CMS also have to approve a project for it to move forward.

‘On the fast track’

Lamb is seeing the process from the outside now as he advocates for an ambitious effort to provide 1,000 Birdsong communications tablets to 10 residents in each of 100 nursing homes. The effort would cost $850,000 during a three-year period.

“It’s a device that you can put into facilities, and it does a lot of things, but one of the things that we really wanted to be able to use it for was video conferencing,” he said, noting that a crying need for residents, families and practitioners to communicate came along with the pandemic. “We were trying to get it on the fast track.”

With the Trump administration beefing up provisions for residents’ audio-visual communications, the plan seemed like a natural. But limitations under the CMS guidelines and problems with bandwidth and connectivity delayed the rollout.

What brings the fines?

The infractions that resulted in contributions to this fund can be horrific — not the sort that rest on technicalities. North Carolina nursing homes had more than $13 million imposed last year.

The largest penalty imposed in 2019 —  $530,433 — came in the case of the nursing home resident who was found covered in fire ants in the middle of the night

Nurses rushed the resident to the shower after discovering her late-night infestation, but in the process removed her oxygen and cardiac vest, according to state records. Regulators also found that the facility had learned on several previous occasions that insects including fire ants had entered residential areas through openings in walls and floors.

During 2018 and 2019, regulators also cited Carolina Rehab of Cumberland for multiple violations. The center was  instructed to “make sure medications are given accurately, to adopt procedures to prevent abuse, neglect and theft; to respect resident choice; and to honor the resident’s right to a safe, clean, comfortable and homelike environment.”

The second largest fine last year — $470,632 — went to Universal Health Care of North Raleigh. The direct language of a DHHS report tells that story:

“Universal Health Care failed to prepare a resident properly for discharge when her Medicare payments had run out. When neighbors of the woman’s home called EMS concerned about her wellbeing, she was found in the bathtub from which she had been unable to leave for several
days.”

The resident, with a history of heart failure, diabetes, COPD, asthma, depression, neuropathy and muscle weakness, told regulators that she called for help at her home for several days until EMS arrived. At the time of the report, she was living in another nursing home.

Can’t fight the feds

These violations of CMS regulations deserve stories of their own. But they also raise the question of why the penalty funds can’t be used to deal with the hard-core, sometimes life-threatening issues of skilled nursing facilities.

Kentucky, with the nation’s largest buildup of civil monetary penalties at the end of 2019, spent less than $300,000 of its $33 million funds during that calendar year.

Because the funds and fines were created under federal law, North Carolina officials and legislators have little sway over CMS, the supervising agency, which is a federal entity.

“CMS, just like everyone else, is required to follow the regulations in the law,” Milliken said. “And if we went and talked to CMS about, ‘Can we use this for other purposes than what’s in the regulation?’ CMS’s answer would be, as you would expect, they know that we’re required to follow regulations.

“It is your federal officials that have the ability to make changes with respect to the requirements for this program.”

Thomas Goldsmith

Thomas Goldsmith worked in daily newspapers for 33 years before joining North Carolina Health News. Goldsmith is a native Tar Heel who attended the UNC-Chapel Hill, and worked at newspapers in Tennessee...

4 replies on “As $35M in nursing-home fines sits mostly idle, COVID-ridden NC ranks 3rd among states with unused funds”

  1. This story brings forth more reason why Secretary Cohen should demand these funds in part be used to protect the residents of all nursing and family care homes in NC, the LME/MCO’s are still in a posture to be utilized if funded to monitor, inspect, report and create oversight of an industry that obviously cannot do that for itself.

  2. I think it is deplorable what effects bureaucracy can have on real live, real time problems that are happening right now in long-term care facilities. These residents need more staff immediately. They need people to have the time to don and doff their PPE properly, people to have the time to take them outside individually or in small groups. They need comfortable places to be outside. These people are withering away and dying of not just COVID but from the secondary effects of depression, like pneumonia and failure to thrive, lack of mobility and loss of function. They need licensed staff hired exclusively for infection control, not just another responsibility piled on the DON or ADON. They need additional staff to manage the arduous task of coordinating testing of staff and residents. The facilities need to build special locations on site where visitation can occur safely, and not just one spaced repurposed and refashioned for visitation utilizing temporary fixes. This is a PERMANENT problem. I also think it is absurd that assisted living communities are following the same infection control guidance as skilled facilities because that is how CMS, CDC and NC DHHS has written it, to cover all LTCFs. Yet funding is not being allocated for assisted livings to test their employees even when there is an outbreak in an ALF. The responsibility to pay for the staff testing falls on who? Incidentally, that’s me and my kids on behalf of the Henderson Co. Department of Public Health, outside the window in the picture of the sweet lady looking out at Cherry Springs. I am responsible for communications with LTCF in my county regarding COVID-19 and I care very deeply about this population and see first hand what the staff and residents are facing on a daily basis. All the money in the world can’t help these people if bureaucrats, who have never worked or spent one full day and night in one of these facilities, are acting as though there is plenty of time to meander through the decision making process to allocate these funds.

  3. My name is Carol Cooper, I am a retired RN. I have seen first hand disgusting care to our nursing home and assisted living residents. If you think for one second Mandy Cohen a Democrat under crazy democratic governor Roy Cooper will do anything to rectify this situation you are barking up the wrong tree. They both could care less about anything that happens in this state, let alone our elderly. Lets replace these idiots with competent leaders and I assure you this state that is now considered deplorable-able will be seen as a caring state of which it deserves the proper recognition for all its residents, especially those that cannot hep themselves. Pray to our GOD we can be lifted out of the disgraceful mire Cooper has put this Great state in.

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