Investigative Summary:

The state will funnel more than a billion federal dollars to nursing homes this fiscal year, through the Quality Incentive Payment Program, or QIPP. Like its name suggests, nursing homes in the program are paid if they meet or exceed measurable standards of quality care for their vulnerable residents. But a KXAN investigation discovered federal officials paused some reporting requirements for the program, and the money has continued to flow.

AUSTIN (KXAN) — Cissy Sanders was scrambling last April to get information — to do something, anything, for her vulnerable mother living in a nursing home where COVID-19 was spreading.

Sanders phoned the facility, Riverside Nursing and Rehabilitation Center, directly. She called its management company Regency Integrated Health Services. She dialed up city leaders in Austin. She contacted local and national elected officials and news outlets.

Cissy Sanders heard reports of COVID-19 spreading inside her mother’s South Austin nursing home last year. Then she learned the facility was enrolled in a program called QIPP. (KXAN Photo)

As she desperately waded through the labyrinthine structure of nursing home administration and ownership, Sanders struggled to find someone, anyone, with authority to field her questions. Then she made a surprising discovery. She learned the nursing home’s owner, the holder of its license, was not in Austin and wasn’t the nursing home’s corporate operator. The owner was housed in a nondescript building in rural Hamilton County, 120 miles north of her mother’s facility.

“What is Hamilton County Hospital District? I had no idea,” Sanders said.

Hamilton County Hospital District, which is a government body and operates under the name Hamilton Healthcare System, describes itself as a “hometown healthcare system.” It has a 25-bed hospital and a handful of small clinics, according to its website. But what you won’t find on the hospital district’s website is any mention that it owns Riverside Nursing and Rehabilitation Center in Austin and more than 20 other nursing facilities spread from Brownwood in the center of the state, to McKinney in North Texas, to Bandera in the Hill Country, according to the Texas Health and Human Services Commission.

While this type of ownership structure seemed odd to Sanders, and few in the general public probably know about it, it is common practice for hundreds of Texas facilities.

It’s all part the Quality Incentive Payment Program, or QIPP, which has grown in the past four years to become a major funding apparatus for the industry. This fiscal year it will pump more than $1 billion from the federal government into about 860 nursing facilities. Over 540 of them are owned by government entities, like county hospital districts, which own the nursing home’s license and typically contract with nursing home operating companies, such as Regency, to run the facilities.

Just like the program’s name suggests, QIPP funds are based on quality improvements. Nursing homes get paid for meeting or exceeding certain measurable “metrics,” like reducing the number of residents getting pressure ulcers or taking antipsychotic medication.

Nursing homes in QIPP receive funding based on how they score on a series of quality care components – checkpoints and data that homes are already required to report to the federal government. However, the Centers for Medicare and Medicaid waived certain reporting requirements for Components 3 and 4 during the pandemic.See the next section in this story for more details.

Advocates and representatives of the nursing home industry tout the program as a success. They say it has linked funding to achievement, has resulted in measurable improvements and provides a critical supplement for Texas’ low Medicaid reimbursements.

But critics of QIPP question whether the program has delivered on its promise. And, a KXAN investigation has found that since the COVID-19 pandemic began, the federal government waived some reporting requirements that state health officials use as benchmarks to calculate payments to nursing homes. That means nursing homes have been paid as if they met some quality standards without having to prove it.

“So, is this program working effectively, or is it just another profit dumping from taxpayers into the owner’s coffers as a way to try to get more money into the facilities?” said Brian Lee, executive director of nonprofit Families For Better Care, which advocates for nursing home residents.

2021: Bigger payments, less reporting

The QIPP program pays nursing facilities based on whether they meet certain standards of staffing and care. A nursing home can be paid for exceeding all of the metrics, or just some of them, depending on how they score.  

There are four categories, called “components,” and each is broken down into multiple “metrics.” Each component addresses an important area for improvement.

  • Component 1 – Facility must meet monthly and review “Quality Assurance and Performance Improvement” plans
  • Component 2 – Three metrics requiring increased nurse staffing levels
  • Component 3 – Three metrics address rates of pressure ulcers, use of antipsychotic medication and resident mobility
  • Component 4 – Three metrics requiring improvement of infection control performance and processes

COVID-19 has hammered Texas nursing homes, killing over 8,800 residents in the past year. The rollout of the Pfizer-BioNTech and Moderna vaccines has drastically affected the virus’ spread. The number of active cases has plunged in nursing homes from a high of nearly 7,000 in early January to fewer than 2,600 a month later, according to HHSC records.

After the vaccine rollout began in Texas nursing homes in December, the number of active COVID-19 cases among residents dropped sharply through January and February. (Source: Texas HHSC data)

After the pandemic began, federal officials waived reporting requirements including data that are critical to calculating the third component (rates of bed sores, antipsychotic medication use and mobility). The Centers for Medicare & Medicaid Services (CMS) said the waiver would provide flexibility and allow facilities to focus on containing the virus. Without that data, HHSC has paid nursing homes, now on a monthly basis, as if they’ve hit targets for those areas of improvement, according to HHSC.

“Because the federal government chose to freeze the reporting of that data, the state does not have the ability to access those numbers in order to move forward on those aspects of the program. That’s why they waived those reporting requirements,” said Kevin Warren, president and CEO of Texas Health Care Association, which advocates and lobbies on behalf of nursing home operators.

The change has not stopped nursing homes from providing quality care, he said.

Quality care “doesn’t stop just because the federal government has frozen the ability to report that data. Those are still important requirements,” Warren said. “If a surveyor goes into a facility for a particular infection control reason and sees concerns or issues associated with one of those other measures, then part of their responsibility is to further investigate that issue.”

An HHSC spokesperson said QIPP is “not the sole program for monitoring and improving the quality of care in nursing facilities.”

Kevin Warren, President and CEO of the Texas Health Care Association, said the QIPP program was a “lifeline” for homes in need of funds due to the Medicaid shortfall in Texas. (KXAN Photo)

“Strong monitoring and oversight of facilities’ compliance with infection control and other health and safety requirements is critical to protecting all residents in these facilities,” HHSC said in a statement. “That is why HHSC surveyors continue to perform on-site investigations in Medicaid and non-Medicaid facilities statewide in response to concerns about COVID-19 or any other potential health and safety issue.”

Trent Krienke, an Austin based health law attorney and counsel for the Hamilton County Hospital District, agreed with the assessment that QIPP has been a critical source of funds for the nursing home industry.

“I don’t think you can’t question the fact that Texas has some of the lowest Medicaid rates in the United States,” Krienke said. “This is a program to make up for some of that shortfall.”

Krienke spoke generally about QIPP and referred specific questions about Riverside Nursing and Rehabilitation to the facility’s management company, Regency Integrated Health Services. Regency declined to comment for this report.

Krienke said it’s important to note the changes in reporting requirements were initiated at the federal level, by CMS. HHSC and nursing home facilities are operating under rules they did not create.

“We are in extraordinary times,” Krienke said. “You’d have to ask CMS why they issued that blanket waiver. But my understanding is it was to reduce the burden and the red tape on nursing facilities, so they could better address COVID outbreaks and other COVID-related issues in their nursing facility.”

CMS did not respond to requests for comment for this report.

‘Get some accountability

Meanwhile, critics of the program, like Texas Congressman Lloyd Doggett, question whether it has improved quality at all.

Doggett, a Democrat whose district stretches from Austin to San Antonio, said he began taking a closer look at QIPP after KXAN brought the reporting waiver to his attention. Now, Doggett said he is concerned the costs of the program outweigh the benefits.

Representative Lloyd Doggett (D-TX) told KXAN investigators he’s concerned the program isn’t functioning efficiently. His office will be taking a closer look. (KXAN Photo)

“It’s clear that Texas taxpayers, federal taxpayers, are not getting their money’s worth,” Doggett said. “I don’t deny … many people in these homes that are really making an effort. But this program has simply taken taxpayer money, and spent a great deal of it, and has very little to show for it.”

Doggett referenced an audit report produced last December by the federal Department of Health and Human Services Office of Inspector General. That audit of Texas’ QIPP program “raises questions” about its use of funds and whether it improved nursing home quality.

The audit found that in the first year of QIPP in 2017, nursing homes participating in the program received less than half the earned incentive payments, generally rated below average in overall quality and declined in quality — yet continued to receive quality improvement payments.

“What we need first and foremost is we need Texas legislators involved,” Doggett said. “Get the bureaucrats involved over there and get some accountability that the federal inspector general was trying to do.”

‘Decline in performance

The federal inspectors probed into the finances and nursing home quality in the QIPP’s first year, 2017. The federal report does not examine the impact of the current reporting waiver.

In the first half of fiscal year 2017, federal investigators found nearly half of the nursing facilities in the program declined in performance in two components yet qualified for over $9 million in payments “because they still performed better than the national average,” according to federal report.  

“These facilities decreased in certain quality metrics specific to their facility, which may indicate that the facility was performing more poorly,” the federal report states.

In a letter addressing the audit’s findings, HHSC said it had “taken steps to raise the performance standards for participating providers” since the first year of QIPP. Newer quality measures require stronger improvement. More broadly, HHSC said it “believes QIPP currently operates in a manner that promotes economy and efficiency in Medicaid.”

The financial structure of the program is complex. QIPP money moves from the federal government to the state, then through health care companies called “managed care organizations,” or MCOs, then to non-state governmental entities, like county hospital districts and authorities, then into nursing facilities, according to the federal report.

Hamilton Hospital District, for example, is a non-state governmental entity. Privately owned nursing homes are also in the program.

“QIPP provides some incentives for nursing facilities to improve the quality of resident care. However, the results of our audit suggest that further analysis of the program is warranted,” the federal report states.

‘Lifeline’ or profit engine?

J.T. Borah, an attorney with the Carlson Law Firm in Austin who specializes in nursing home abuse and neglect cases, said he has seen the same problems linger in nursing homes for years despite the QIPP.

Many of Borah’s cases have involved understaffed nursing facilities where residents have died after complications from a fall or bed sore.

JT Borah takes cases of negligence and abuse in nursing homes to court. (KXAN Photo)

“They just get worse and worse. They become infected. They go septic; the bone gets the infection —it’s called osteomyelitis — and then they die,” Borah said.

The federal government has accepted the nursing home industry’s claims of poverty without asking them to prove it, he said.

“Please don’t get me wrong. I’m fine with them making money. I’m fine with them making a profit. What I’m not fine with is them making a profit before meeting the needs of their residents,” Borah said.

In the process of suing these facilities, Borah said he has seen how they are financed, and he believes they receive ample money.

“If you were to add up all this money, in addition to everything else they’ve been getting, our Texas residents of nursing homes should be getting five-star treatment. But they are not,” Borah said. “There are some facilities that are getting lots of money, not providing for care, then having their facilities overrun with COVID.”

Kevin Warren, CEO of Texas Health Care Association, called QIPP a “lifeline.”

“Given the significance of the Medicaid shortfall in Texas, this has been a very popular and very important program in terms of not only recognizing its efforts to reward quality, but also ensuring that there are the additional resources necessary for these providers,” Warren said.

COVID-19 cases in Texas nursing homes

A KXAN review of the number of cases of COVID-19 at Texas nursing facilities shows homes in the QIPP program have had some of the highest numbers of residents with the virus, according to HHSC data.

Eight of the 10 nursing homes in Central Texas with the most confirmed COVID-19 cases among their residents are currently enrolled in QIPP. Five of those were enrolled in the last fiscal year, earning from $690,000 to $1.2 million that year.

Warren said participation in QIPP and the prevalence of COVID-19 are two separate issues and shouldn’t be connected.

“You really need to unbundle the COVID issues, COVID concerns, from the quality of care and the program in this way,” Warren said. There has been a significant focus on infection control and prevention in nursing facilities since the pandemic began, he said.

“COVID has affected almost every single nursing facility in the state of Texas. So, it’s affected the rural, and it’s affected urban. It’s affected your one-star facilities, your five-star facilities, your for-profit, you’re not-for-profits. No one was excluded from this,” Warren said. “It’s really about looking at, you know, the circumstances in each individual building, the goings on within the community around the building, and … the co-morbidities and other things associated with the residents in the building.”

Doggett disagreed.

He said the COVID-19 issues and QIPP payments are “all interrelated.” The QIPP program’s outcomes have been “outrageous,” Doggett said, with nursing homes continuing to be paid after getting low scores from CMS.

Cissy Sanders, whose mother remains in Riverside Nursing and Rehabilitation in Austin, echoed Doggett’s sentiment.

Sanders said her mother is doing well at her nursing facility and received both doses of the Pfizer-BioNTech vaccine with no side effects. Regarding QIPP, Sanders said nursing home operators should be held accountable, all the more so during a pandemic.

“I mean, sorry. You have to do your job in order to get paid,” Sanders said. “That’s just a basic rule. Just like you in your job. Just like me in my job. We have to produce certain things. We have to meet certain metrics and perform at certain levels, in order to get our paycheck.”

Director of Investigations & Innovation Josh Hinkle, Investigative Photographer Ben Friberg, Graphic Artist Rachel Garza, Editor Eric Lefenfeld and Digital Executive Producer Kate Winkle contributed to this report.