Highlight on Illinois: Nursing homes may want to prep for on camera exposure

Illinois families with loved ones in skilled nursing facilities will soon have the ability to monitor the care of their loved ones via video or audio recording devices, and nursing homes will want to be sure that what they see is proper care. Legislation was signed into law in late August allowing the use of resident-installed surveillance systems in nursing homes, which supporters say will help to prevent abuse and neglect of nursing home residents. While the law is not intended to cost nursing homes any money, compliance with the law will ensure the elimination of added expense.

Specific provisions. The Authorized Electronic Monitoring in Long-Term Care Facilities Act, effective January 1, 2016, allows nursing home residents to install audio and video surveillance equipment in their rooms. To take advantage of this new law, residents and their roommates must consent to having the recording devices installed. Legal guardians and family members may give the consent for the residents if the residents themselves are deemed incapable of doing so by a physician. Consent for the devices may be withdrawn at any time.

Skilled nursing facilities will not be required to pay for the equipment, as residents will be required to install and run the surveillance equipment at their own expense. It must be positioned in a “conspicuously visible location” within the facility. Any audio visual materials recorded at the nursing home via the surveillance system will be admissible into evidence in administrative, civil, and criminal proceedings. Nursing homes will also be alerted to employees who may be involved in abusive or unacceptable behavior and by using the newly accessible information, would be able to take disciplinary measures.

Requirements. Nursing home residents unable to afford the surveillance equipment may receive funding for its purchase. The Illinois law requires the Illinois Department of Health to establish a $50,000 fund for the purchasing and installing of equipment, which will be dispersed annually via lottery, to residents wishing to have access to the equipment, but whom cannot financially afford it.

Penalties. Nursing homes will want to be sure they do not interfere with the use of the equipment. The law establishes legal penalties for hindering the installation of, or obstructing or destroying electronic monitoring equipment, and contains provisions that include notifying visitors of electronic monitoring and limiting facilities’ access to the recordings. It will be considered a business offense for a nursing home to discriminate or retaliate against a resident or prospective resident for consenting to the electronic monitoring. Nursing homes could be guilty of a petty offense if it interferes with or prevents the installation of an electronic monitoring device by a resident who has provided the facility with the required consent.

History. According to the Illinois Attorney General’s office (AG), the legislation stemmed from complaints received from nursing home residents and families concerned about their relatives’ care. The AG’s office noted that the Illinois Department of Public Health (IDPH) receives more than 21,000 calls annually and responds to approximately 5,000 complaints, the majority of which involve long-term care facilities. The AG further noted that, in 2013, the IDPH found 106 allegations of abuse, neglect, or misappropriation of property against residents by facility staff to be valid.

“Deciding to place a loved one into a nursing facility is extremely difficult, and as Baby Boomers age, more families will be faced with that decision,” said Illinois Attorney General, Lisa Madigan. “This law makes Illinois one of the first states in the nation to give families peace of mind by allowing them to monitor their loved one’s care when they cannot be present.” Illinois will be the fifth state to enact this type of legislation, as other states with similar laws include: New Mexico, Oklahoma, Texas, and Washington.

Highlight on Indiana: Senior health care firm sold for $1.2 billion

Trilogy Health Services LLC, a Louisville-based company operating more than 70 senior-living facilities in Indiana, was sold in an acquisition totaling $1.1 billion to Griffin-American Healthcare REIT III Inc., a closely held real estate investment trust based in Irvine, California. Griffin-American will buy Trilogy’s parent Trilogy Investors LLC in a joint venture with NorthStar Healthcare Income Inc.. The acquisition will result in Griffin-American and Northstar gaining senior assisted-living campuses across the Midwest. Trilogy, founded in 1997, operates 96 senior health and hospitality facilities comprised of more than 10,000 beds in Indiana, Ohio, Michigan and Kentucky, which offer residents assisted living, memory care and nursing services, and has at least a 14 properties in central Indiana, including two in Indianapolis. Most of the facilities were either built or substantially renovated in the past 10 years.

This was the latest large deal in the senior housing asset class, which industry experts expect to increase as the growing need for senior-living facilities continues as Baby Boomers and Gen Xers age. In early 2015 Trilogy Health Services, itself, partnered with Mainstreet, one of the nation’s largest developer of transitional care properties, as co-owner and operator of six senior-living centers in Indiana.

“This is a transformational event for Griffin-American Healthcare REIT III, which will nearly double in size upon completion of the Trilogy acquisition to approximately $2 billion in real estate and real estate-related investments,”  said Jeff Hanson, chairman, CEO and one of the largest stockholders in Griffin-American.

The transaction is subject to third party approvals, customary closing conditions and the satisfaction of other requirements as detailed in the agreement. After the transaction, Griffin-American will own 70 percent of the enlarged venture and will act as its manager. NorthStar will hold the remainder. The joint venture agreement also contains rights and obligations relating to funding the joint venture and distributions, as well as customary forced sale and other liquidity rights.  The sale is expected to close by the end of this year.

Feds announce record-breaking $17M SNF kickback settlement

A Florida skilled nursing facility (SNF) agreed to pay a record-breaking $17 million to settle claims that it violated the False Claims Act (FCA) (31 U.S.C. §§3729-3733) by paying kickbacks to doctors in exchange for Medicare patient referrals. The Department of Justice announced the settlement, which is the largest ever to involve SNFs and alleged kickbacks.

Kickback scheme

Hebrew Homes Health Network, Inc. provides skilled nursing services at seven rehabilitation and skilled nursing facilities in the Miami area. Hebrew Homes is alleged to have participated in an illegal kickback scheme from 2006 through 2013, during which time it contracted with and hired numerous physicians as “medical directors.” The medical director contracts set forth the physicians’ hours and job duties. Each facility had several medical directors who were receiving payments of several thousand dollars each month. These positions were actually “ghost positions,” and most of the medical directors performed only very few of their contractual duties because the payments were really made in exchange for Medicare patient referrals to Hebrew Homes facilities. Such compensation agreements were the subject of a warning contained in a recent Fraud Alert issued by the HHS Office of Inspector General (OIG) (see OIG warns physicians of compensation arrangement risks, Health Law Daily, June 10, 2015).

Anti-Kickback Statute and the False Claims Act

The Anti-Kickback Statute, 42 U.S.C. §1320a-7b(b), prohibits soliciting or making payments in exchange for referrals or services that are covered by federal health care programs. The statute is intended to prevent physician medical judgment from being compromised by improper payments. Additionally, the FCA prohibits false or fraudulent Medicare claims.

Settlement terms

To settle the claims, Hebrew Homes and William Zubkoff, former President and Executive Director of Hebrew Homes, will pay $17 million. In addition, Zubkoff resigned from the company, and Hebrew Homes entered into a five-year corporate integrity agreement (CIA) with the OIG, which requires it to change its medical director hiring and employment policies.


The lawsuit was initiated by Stephen Beaujon, former Chief Financial Officer of Hebrew Homes, under the whistleblower provisions of the False Claims Act. As a result of the settlement, Beaujon will receive $4.25 million.

Nursing homes shoot for the stars and land among one or two

Over one-third of the 15,500 nursing homes in the U.S. received ratings of just one or two stars on CMS’s Five-star quality rating system, according to an analysis by the Kaiser Family Foundation (KFF). The analysis, which examined the ratings used to score nursing homes based upon deficiencies identified during health inspections, reveals that a significant number of nursing homes—those responsible for 39 percent of the nation’s nursing home residents—are failing in terms of staffing and care quality.


In 2008, CMS modified its Nursing Home Compare website to include a more user-friendly five-star rating system based upon quality ratings for each of the Medicare and Medicaid certified nursing homes. As a result of 2015 changes, the rating system uses three domains—(1) state health inspections; (2) staffing ratios; and (3) quality measures—to rank nursing homes from the lowest in quality (one star) to the highest in quality (five stars). The CMS changes are part of an ongoing effort to increase the star ratings’ reliability, as mandated by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) and the Improving Medicare Post-Acute Care Transformation Act (IMPACT Act) (P.L. 113-185). One change mandated by the ACA will be the inclusion of “staffing data collected quarterly from electronic systems used for payroll reporting” as an alternative to self-reported data.


The KFF analysis used data from the Nursing Home Compare database February 2015 data release. The study looked at information including a “nursing home’s name, location, size, and number of recorded deficiencies and fines.” The analysis was restricted by the data set to only nursing homes with Medicaid or Medicare participation or both. KFF cautioned that the analysis does not demonstrate the validity or reliability of the CMS data set, but instead, is intended to show variation among states and nursing home characteristics.


In addition to the finding that 36 percent of nursing homes scored just one or two stars on the rating system, the analysis uncovered that 45 percent of nursing homes have an overall rating of four or five stars. Those 45 percent of high scoring nursing homes account for 41 percent of all nursing home residents in the nation. The analysis indicated that high scores may be due in part to self-reporting because scores on self-reported measures tended to outperform scores from state health inspections.

Profit and size

According to KFF, for-profit facilities performed less well than non-profit facilities. For example, one in five for-profit nursing homes received one star, whereas one in ten non-profit nursing homes received a one-star rating. Additionally, 33 percent of non-profit nursing homes received five stars, whereas only 18 percent of for-profit facilities received the highest rating. Smaller facilities also outperformed larger facilities with 39 percent of nursing homes with 60 or fewer beds receiving five stars and just 14 percent of nursing homes with 120 beds or more receiving five stars. KFF hypothesized that the lower scores among larger facilities are likely a result of the lower staffing numbers seen in large nursing homes.

State level

The analysis also found significant variation among states. For example, in 11 states, at least 40 percent of the nursing homes scoed one or two stars. In Texas, 51 percent of nursing homes received either one or two stars. Nine states, including Texas, Louisiana,

Oklahoma, Kentucky, Tennessee, New Mexico, West Virginia, Ohio, and Georgia, had more than 20 percent of nursing homes with one star. On the positive side, in 22 states and the District of Columbia, at least half of the nursing homes scored a four or a five on the star-rating system. Additionally, 66 percent of U.S. counties have a nursing home with a four or five star rating.