Bill targets NJ's worst nursing homes with new penalties

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New Jersey nursing homes that routinely receive low scores would face greater sanctions from state regulators, including the possibility of forced closure, under a bill making its way through Trenton.
The measure targets nursing homes that have scored one star on a federal rating system in two or more consecutive quarters — a hallmark sign that the homes' owners are likely misusing large portions of taxpayer funds intended for care, State Comptroller Kevin Walsh said at a legislative hearing on June 9.
"They don't get to be one-star nursing homes because the nurse is inexperienced or the administrator is inexperienced," said Walsh, whose staff has investigated nursing home fraud for years. "The reality is poor-quality nursing homes are usually in the condition they're in because of corruption and fraud."The hearing comes on the heels of an investigation by AARP into New Jersey nursing home finances. The organization found that from 2021 to 2023, nursing home owners paid $2 billion to companies in which the owners had a stake. This amounted to $285 million over federal guidelines.
A frequent practice is that a nursing home owner uses a corporation that owns the property to charge "unrestricted rent and lease fees" to the nursing home using Medicaid dollars to pay themselves, the AARP report said. This includes many other nursing home operations such as management fees, dietary services and staffing.
"There's a lot of money going to places it shouldn't," Walsh said.
Under the bill, S1951, nursing homes with one-star ratings in two consecutive quarters would be subject to several penalties from the state Health Department including barring admission to new Medicaid residents, limiting the number of Medicaid enrollees and reducing payments under a quality incentive program.
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The penalties get tougher if a nursing home has a one-star rating for three consecutive quarters. They include prohibiting the nursing home from admitting any new resident and removing current residents who are Medicaid enrollees.
Some lawmakers said the bill doesn't go far enough and that it should examine nursing homes that receive more than one star (on a five-star scale) but still perform poorly.
'What this bill will do is walk [owners] away from providing the worst-quality care,' Walsh said. 'This bill will not prevent every scam. This bill will not prevent fraud, waste and abuse in all cases. It will discourage nursing homes that have made a business decision to siphon money away."
Of New Jersey's 350 nursing homes, 15 had been one-star facilities for two or more years, Walsh said. Those facilities care for 1,850 residents and received $310 million in Medicaid payments from 2017 to 2019.
Walsh said it took his staff two years to uncover the labyrinth of shell companies and financial transactions that exposed misdeeds at a South Jersey nursing home.
About 57% of New Jersey nursing home residents are covered by Medicaid, taxpayer-funded insurance for low-income people. The average daily Medicaid payment to a nursing home is $193 per resident.
The star rating system by the Centers for Medicare & Medicaid Services was devised as a way for families to compare nursing homes and scrutinize the ones that continually score poorly. It is calculated based on health inspections, staffing ratios and other quality measures. But information on each facility is still limited.
"I know more about the used car I buy than a nursing home," Sen. Joseph Vitale, chair of the Health, Human Services and Senior Citizens Committee, said at the hearing.
The bill was approved by the committee. Nursing home trade groups opposed the measure but did not offer anyone to testify at the hearing.
This article originally appeared on NorthJersey.com: Bill targets NJ's worst nursing homes with new penalties