Iowa nursing homes owe taxpayers $10.7M in fees

Forty-nine Iowa nursing homes owe the taxpayers more than $10.7 million in fees the state has so far failed to collect, according to newly released records.

One for-profit company based in West Des Moines operates 18 care facilities that collectively owe the state $3.6 million in unpaid fees. The company’s top two executives, meanwhile, have made $293,000 in political donations.

The state fees imposed on nursing homes, called Quality Assurance Assessment fees, are a mechanism that has been used since 2009 to artificially inflate the facilities’ cost of doing business. The increased expense enables the facilities to draw down more money in Medicaid reimbursement for resident care.

Often, the increased Medicaid payments more than offset the cost of the fees paid to the state, resulting in a net gain for the homes.

By law, the care facilities are supposed to use that additional Medicaid money to increase the pay of their front-line caregivers — which is why the fees are called Quality Assurance Assessment fees. It’s a circular, but legal, method of increasing the revenue collected by nursing homes and has been approved by the federal government in Iowa and other states.

Last month, the Iowa Capital Dispatch asked the Iowa Department of Health and Human Services for a list of the Iowa care facilities that were behind in their payments, along with the amount owed by each facility.

Last week, the department provided a list of the facilities. It includes eight nursing homes now subject to sanctions for failure to pay, plus 41 other care facilities that currently are on what the state calls a “repayment plan.”

Collectively, the 49 homes are $10.7 million in arrears on payments. Two of the 49 homes reportedly owe $1 million or more.

The company that appears to owe taxpayers the most is Accura Healthcare of West Des Moines. Eighteen of the for-profit company’s Iowa care facilities are currently on payment plans with the state, and they now owe a combined $3,644,432.97, according to the state.

Campaign finance records show that since 2015, Accura Healthcare’s chief executive officer, Ted LeNeave, has personally donated more than $239,000 to Republican campaigns in Iowa and to the political action committee of the industry’ main lobbying organization. That total includes $54,500 LeNeave donated to Gov. Kim Reynolds’ campaigns, plus $76,000 he donated to Iowa Senate Majority Leader Jack Whitver of Grimes.

Since 2021, the president of Accura Healthcare, Lisa Toti, has made $36,000 in political donations in Iowa, including $16,000 contributed to Reynolds’ campaign committees.

The Iowa Capital Dispatch was unable Friday to reach LeNeave and Toti at their offices.

Fees should result in pay increases

What’s still not clear is how many Iowa nursing homes currently are complying with the law that requires them to use their additional Medicaid money to increase the pay of front-line caregivers.

In 2022, the most recent year for which data could be found, the Health and Human Services Department reported that of the 379 Iowa nursing homes that were required to spend their new revenue on pay increases for certified nurse aides, 68 of them – or 18 percent — failed to do so.

An additional 37 homes – or 10 percent of the total – failed to meet a different standard that required them to spend 60 percent of their excess revenue on compensation for all staff.

The Quality Assurance Assessment fee program was devised in 2009 as a way for Iowa to provide additional revenue to nursing homes. At the time, state lawmakers assured the public that the influx of new money for care facilities would be used to enhance the pay of nurses, certified nurse aides and other direct-care providers.

However, the Health and Human Serviced Department has acknowledged that while the legislation went into great detail on the calculation of fees and the manner which pay increases were to be handled, the law didn’t give the department enforcement power over pay at nursing homes.

The department’s Maureen Barton said Thursday it is “working diligently to ensure providers are adhering to repayment plans” on the fees that are imposed, and said the department has “made significant progress in bringing down the overall balance.”

Barton said that when a facility falls behind in payments, the state sends “a demand notice” asking the facility to pay the entire amount that’s due. If that doesn’t happen, she said, the department can reduce the amount of Medicaid money flowing to the homes in an effort to offset the debt.

The department also has the ability to impose sanctions, she said, and can refer the matter to the Iowa Department of Revenue for collection.

In 2021, the Iowa-based QHC Facilities nursing home chain filed for bankruptcy and informed the court that it owed taxpayers more than $3.9 million in unpaid QAA fees that had accrued over a period of several years.

At the time of its bankruptcy, QHC Facilities also owed the state and federal government at least $2.2 million for unpaid fines and advance payments collected for resident care.

Three months ago, Tabor Manor Care Center in Fremont County filed for bankruptcy, stating that it owed $1,169, 257 in unpaid QAA fees that date back to 2019. The state says the debt now is closer to $999,000.

This article first appeared in the Iowa Capital Dispatch.