More than 50 Iowa nursing homes have agreed to repay taxpayers $13.9 million

More than 50 privately owned Iowa nursing homes have agreed to reimburse taxpayers for $13.9 million in unpaid fees owed to the state.

In August, Iowa Capital Dispatch reported that records obtained though the state’s Open Records Act showed that 49 Iowa nursing homes owed the state more than $10.7 million in fees the state had so far failed to collect.

At the time, the Iowa Department of Health and Human Services said it had entered into payment plans with many of the care facilities.

In response to the Capital Dispatch’s subsequent request for the amortization schedules that detail the schedule of payments for individual homes, DHHS recently turned over records pertaining to 52 care facilities, indicating a few facilities that hadn’t agreed to payment plans in August have since been added to the list.

The newly disclosed documents show that:

The payment plans total $13.9 million: The 52 nursing homes are in the midst of reimbursing the state for $13,914,672 in unpaid fees, with many of the monthly payments having been initiated in April of this year. Most of the agreements call for the companies to have their debt paid off by September 2025.

Two homes owed $1.3 million each: Two of the nursing homes that accrued a large amount of debt are owned by one for-profit company called Pacifica Health Services. That company operates the Carlisle Center for Wellness and Rehabilitation, which has agreed pay the state $1,357,454, and the Fleur Heights Center for Wellness and Rehabilitation in Des Moines, which has agreed to pay the state $1,351,653.

One chain owed $4 million: The nursing home chain that accrued the largest debt is Accura Healthcare, which operates 19 care facilities in Iowa that are now on payment plans totaling $4,073,725. Since 2018, Accura CEO Ted LeNeave has donated $47,000 to Gov. Kim Reynolds’ campaign coffers and $61,000 to the campaign committees of Senate Majority Leader Jack Whitver, an Ankeny Republican. The chain has been hit with more than $1.1 million in fines for quality-of-care violations, and regulators have suspended Medicaid payments to various Accura facilities at least 11 times.

In a written statement, the company said Friday that it is “fully committed to fulfilling its repayment obligations.” The company added that its facilities that owe the most — a few Accura-owned homes owed taxpayers more than half a million dollars each when the payment plans were executed — are those with a higher number of residents and a higher per-bed fee imposed by the state.

When the company began to experience difficulty in making payments at the end of 2022, the company said, it was “proactive and transparent” and reached out to the State of Iowa to make them aware of the debt and to establish a payment plan.

“Accura HealthCare is immensely grateful for the guidance and assistance provided by the State of Iowa throughout this process,” the company said.

Some homes charged interest: DHHS is characterizing some of the financial arrangements with nursing homes as the repayment of “loans,” rather than the collection of unpaid fees. In some cases, the documents show, the state is charging the facilities interest, but in other cases the payment plans speak only to the amount of principal that will be paid, with no mention of interest.

Debtors include closed facilities: Two now-shuttered care facilities — the Donnellson Health Care Center and Fremont County’s Tabor Manor — owe the state close to $1.3 million. The state appears to have no payment plan in place for Tabor Manor, which is currently in bankruptcy and owes the state roughly $1.1 million, but it does have a payment plan that calls for the Donnellson home to make an escalating series of payments through September 2025 to pay $282,265 it owes the state.

Million-dollar balloon payments: Many of the facilities that owe the state hundreds of thousands of dollars will pay a relatively small amount toward their debt until 2025, when balloon payments of $400,000 or more will come due. For example, the Carlisle and Fleur Heights homes are expected to each make monthly payments of $10,000 until May 2025, at which point they’ll each be required to pay $1.1 million.

Fee arrangement is supposed to increase worker pay

The unpaid fees, called Quality Assurance Assessment fees, are a mechanism that has been used since 2009 to artificially inflate nursing homes’ cost of doing business. When the fees are paid, it increases the cost of doing business for the homes. That increased expense enables the facilities to draw down more federal 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 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.

Maureen Barton of DHHS said in August that the department has been “working diligently” to ensure the nursing home adhere to their payment plans and that when a facility falls behind in payments, the state sends then “a demand notice” asking the facility to pay the entire amount that’s due.

If that doesn’t happen, she said, DHHS 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.

This article first appeared in the Iowa Capital Dispatch.