Over the last decade, Louisiana has sharply increased its payments to nursing homes even as occupancy rates have stayed flat and quality-of-care rankings have hovered near the bottom, according to a report released Monday by the Louisiana Legislative Auditor's Office. 

Related

The report also states that Louisiana's formula to determine how much nursing homes receive in public dollars is more generous than most states, and that Louisiana could save nearly $80 million dollars a year if the Legislature adjusted payments to match those of peer states. 

"We conducted this audit because payments to the approximately 260 private Medicaid nursing facilities have increased every year, even though occupancy rates have generally remained the same," the report said.

Over the last year, Louisiana nursing homes received about $1 billion in Medicaid payments.

Related

Nursing homes, which are largely dependent on Medicaid dollars, have increased their rates by 54 percent over the last decade, from $112.34 to $172.82 per person per day. That has meant a big increase in payments, even though occupancy rates over the same period have increased by less than 1 percent. Meanwhile, the generally low standard of care hasn't improved.

"Despite increasing payments to nursing facilities, Louisiana continues to rank poorly related to quality of care," the report said. For instance, the report notes that AARP this year ranked Louisiana 49th in the nation in the frequency of bed sores, 47th in the nation for the number of residents who are hospitalized and 51st in the nation -- including Washington D.C. -- for the proportion of residents receiving antipsychotic medications.

Michelle Alletto, deputy secretary of the Louisiana Department of Health, said the department agrees with the recommendations and criticisms issued by the legislative auditor. She noted that LDH has already implemented some of the changes recommended in the report, such as tightening up collection of late fees and assessing penalties for repeat offenders who don't turn in their cost reports on time.

But the more significant recommendations, which Alletto said she mostly agreed with, require action by the Legislature. And she said it's unclear at this point whether LDH will push lawmakers for action on the rate changes next year.

Earlier this year, a series of reports by The Advocate showed that Louisiana's nursing homes have received steeper and more regular increases in their rate payments than any other medical sector. Doctors, hospitals and home and community- and home-based health providers have seen their rates cut over the same period that nursing home per diems have skyrocketed. Louisiana is also a rarity in that most states are scaling back their state contributions to nursing homes in favor of ramping up home- and community-based alternatives, which tend to be preferred by seniors and are significantly cheaper to boot. 

Louisiana's nursing home industry enjoys strict financial protections built into state law that many other medical providers don't have. The deference lawmakers have shown the industry may owe in part to the generosity nursing-home owners have shown in donating to political campaigns: They are among the state's most prolific donors.

Related

The auditor's most recent report echoes some of the same findings the office has made in other audits, including a 2005 audit that recommended the state could save substantial money by changing the way it pays nursing homes. The Legislature, however, has never acted on the recommendations and instead passed new laws to further boost payments to nursing homes. 

The formula to determine a nursing home's Medicaid payment rate is complex, but advantageous to nursing homes. Other states typically only count Medicaid residents into their cost calculations, while Louisiana counts Medicaid, Medicare and private insurance residents into their costs. That drives up the Medicaid payment rate. 

The legislative audit found that the state could have saved $19.6 million in 2016 if it had changed that formula, and it recommended that LDH work with the Legislature to amend the calculation.

Related

Part of the rate payment is also calculated based on the value of the facility itself and a so-called "fair rental value." But the report found that LDH is using an artificially high metric to determine rental value. If LDH used the same methodologies as other states do to determine rental value, the state would save about $57 million per year, the report said. 

Mark Berger, executive director of Louisiana Nursing Home Association, said in a statement responding to the audit that perhaps Louisiana's nursing homes aren't getting enough money. 

"The current Medicaid payment structure results in Louisiana's nursing facilities receiving the fourth-lowest reimbursement rate in the nation," Berger said. "Despite this low reimbursement rate, Louisiana facilities are consistently improving the quality and value of services they provide."

Health officials have noted that Louisiana's reimbursement rate is based on the low cost of doing business in Louisiana. 

Berger said the comprehensive rate formula "encourages investment in direct patient care and staffing along with upgrades to nursing facilities, as technology and other healthcare innovations occur."

Alletto said last year LDH started a quality improvement initiative to address the most egregious nursing home weaknesses. She said the department partnered with an LSU professor who specializes in wound care to develop training sessions to reduce bed sores. Initially, 50 nursing homes volunteered to participate in the training sessions and 50 more have recently joined. 

She said she's hopeful that within a few years, the improvements will be reflected in national rankings.

"It's safe to say that in looking at our data there are many nursing homes that can improve in this regard," she said. "I do believe it's possible for us to improve."

Andrew Muhl, a lobbyist for AARP of Louisiana, said the report underscores the need for the state to provide more options for elderly and disabled people who want out of a nursing home and access to home- and community-based services. 

He said next year his organization plans to push for legislative changes to enact managed care for long-term services. Managed care means the state would hire private companies to oversee Medicaid services that include nursing home residents and other elderly or vulnerable people needing longer term medical care.

There's a waiting list of more than 30,000 people in the state who want to receive home- and community-based services. It's a measure that was previously supported by the governor when he ran for office, but more recently, he has expressed hesitation. 

"The governor and the Legislature need to put people before special interests and make the 30,000 people on that waitlist a priority," Muhl said.

Related

Follow Rebekah Allen on Twitter, @rebekahallen.